Budapest Business Journal 19/14

q&a György Mosonyi, president of MOL’s supervisory board, talks

BBJ

obituary

about giving up his executive role and the future of the industry 〉page 20

HUF 1250 | €10 | $15 | £7.5

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Vol. 19, number 14

Budapest Business Journal

I july 15, 2011 – aug 4, 2011

the drop in the value of international spam 〉page 4

Hungary’s practical business bi-weekly since 1992 | www.bbj.hu

Otto habsburg was the last crown prince of the Austro-Hungarian empire. yet he gave his whole heart to hungary 〉pages 18-19

Go small!

The government is considering banning the building of new hipermarkets and plazas in a bid to support small shops. But can it convince consumers to finally start buying stuff, and to do it in small shops, to boot?

FOCUS 〉 pages 8-17 EDitorial 〉 page 23

POLITICS Politician arrested, media self-gagged

BUSINESS Moneyless payment system wins Sziget deal

TRENDS Sports shoe sales sprint ahead in the beginning of 2011

Cold war words are in vogue. The former minister in charge of secret services has been arrested along with two of his associates on charges of espionage, but the matter was instantly classified for 80 years. In the meantime, the online press is censoring itself in fear that even a reader’s comment could get them into trouble. 〉page 5

A Hungarian innovation has displaced cash as the standard means of payment at Hungary’s biggest summer festivities. Its developer is now looking to expand and explore what other applications are possible for having your money on a tiny slab of plastic that you just have to touch to a screen to pay. 〉page 6

Judging from sneaker sales and chips taxes, Hungarians will soon become a very healthy nation indeed. While the rest of retail is limping along, sport shoe sales are rocketing at a 14% growth rate compared to last year. And its not just shoes – other sportswear and sports equipment is also in high demand again. 〉page 4

BUSINESS

LIFE

HUPX charged by small plants

Eat, art, food, thought

The Hungarian power exchange was flooded by small co-generated plants’ power as new legislation supporting their trade on HUPX took effect in the beginning of July. Analysts and power firms worry that their capacities are too much for the young exchange to take. 〉page 7

Daniel Spoerri, a Swiss artist who became famous for his Eat Art gallery and thoughtprovoking banquets visited Budapest at the end of June. He was cooked an hommage dinner by a new restaurant – provoking thought and bringing back memories. 〉page 21

2 news

News for this page is from the Budapest Business Journal’s daily briefing, Hungary A.M.

NEWS in brief

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Budapest Business Journal | July 15 – Aug 4

Hungary’s accession to the eurozone is realistic in 2018–2020, according to Economy Minister György Matolcsy, confirming Prime Minister Viktor Orbán’s earlier projection of the same date.

Matolcsy added that it does not make sense for Hungary to join the eurozone as a weak member.

Parliament to decide what constitutes a church A last-minute amendment to the bill on churches, passed on the last day before Parliament’s summer recess, stipulates that Parliament should be the arbiter of what does and does not constitute a church. In addition to the so-called historical churches, such as the Roman Catholic, Reformed, and Lutheran churches and the Jewish religious community, the status of church will be granted to the Baptists and the Faith Church, as “both of them have gained considerable support in society over the past two decades,” according to the ruling Fidesz party’s parliamentary leader, János Lázár. Under the amendment, other religious communities would be able to turn to Parliament and apply for the same status. Parliamentary approval will require a two-thirds majority, and the resolution will be non-appealable.

Economy MNB sees 3.9% inflation in 2011 National Bank of Hungary (MNB) governor András Simor has estimated that Hungary will have average annual inflation of 3.9% in 2011, identical to the forecast in the MNB’s most recent quarterly inflation report published in June. Simor said the central bank expects the average inflation rate to dip to around 3% by the end of 2012. The government’s updated convergence program published in April forecast average annual inflation of 4% in Hungary this year and average inflation of 3.4% next year. Inflation averaged 4.9% in 2010. Simor reiterated a statement made at the beginning of this month that contradictory forces are acting upon prices in Hungary.

Stability reserves to be tapped Parliament has approved changes to the 2011 budget to withdraw HUF 182.1 billion in frozen budget allocations because of the possibility of lower revenue and higher expenditures.

The change will not affect the budget deficit, which remains targeted at HUF 1,184.2 billion. The frozen spending is part of a HUF 250 billion stability reserve established by the government in the 2011 budget in February.

Economy Minister György Matolcsy recommended in April that the stability reserve be made permanent because of global risk. The legislation shows revenue from corporate taxes is expected to be HUF 84 billion under target this year. There are also foreseen shortfalls of HUF 69 billion from VAT, HUF 16 billion from the simplified business tax and HUF 6.6 billion from duties’ income. The law will cut budget support for the Research and Technol-

ogy Innovation Fund by HUF 9 billion and require financial market regulator PSzÁF to pay a further HUF 2.5 billion into the budget.

Trade surplus leaps in May Hungary had a trade surplus of €719.8 million in May, up from €479.3 million in April, and also up from €402 million a year earlier, the Central Statistical Office (KSH) said. The surplus widened after narrowing in April, which followed new peaks in the previous two months. The pace of both export and import growth increased from April, with a bigger increase in exports, as the gap between export and import growth widened.

Hungary to boost exports Hungary’s foreign trade and investment promotion strategy will be finalized in the autumn, according to plan, business daily Napi Gazdaság said. The government aims to boost Hungary’s exports from €72 billion a year at present to €120 billion by 2015, while raising FDI to an annual €4 billion, the paper said. As a result, 50,000 jobs could be created. The foreign trade and investment policy is not built on China; rather, Hungary’s existing target markets remain important in terms of exports and investment incentives, Krisztián Orodán, the spokesman for the National Office of Foreign Trade and Investment, told the paper. The strategy also aims to aid Hungarian companies in making investments abroad, with the most important targets being the Balkans and Eastern Europe.

IT fund available for SMEs Almost HUF 11 billion in grant money is being made available to SMEs for IT developments in a New Széchenyi Plan

NUMBERS

in the news

39.1 °C

was the temperature measured in the shade in Túrkeve, southeastern Hungary, on July 10, breaking the previous record for this date by over 1.5 degrees. The previous all-time high for July 10 was 37.5 °C (99.5 °F), measured in Szeged, in the south of the country, in 1927.

3.5% was the rise in consumer prices in June from the same month a year earlier, slowing from a 3.9% increase in May, the Central Statistical Office said. Consumer prices fell 0.2% from the previous month after rising 0.2% a month in May.

tender called on July 1. Companies can apply for grants of between HUF 1 million - 10 million for hardware or software, or to upgrade websites or internet storefronts.

politics Hungary to represent EU in Libya Following the request of the EU’s External Action Service (EEAS) for foreign affairs, Hungary’s embassy will continue representing the European Union in Tripoli, Libya during the second half of 2011, the foreign ministry said. The Hungarian embassy has been the EU’s sole representation in Tripoli since January 1 of this year. The mission also represents Canada, Greece, Croatia, Italy and the United States, at the request of the respective countries.

Gvt to sanction unraised wages Parliament has amended a law that would encourage companies to raise the wages of low earners whose pay fell due to income tax changes made earlier this year. The amendment was approved by 244 votes for and 86 against, with one abstention. Under the amended legislation, the government can specify in a decree to what extent companies should raise wages so that employees earning less than a monthly HUF 300,000 (€1,130), the rough watermark below which wages drop, should retain their net wages.

Companies that fail to raise wages appropriately will be excluded from public procurement opportunities and from access to state subsidies.

Companies that raise wages for at least two-thirds of the target group will not face any sanctions.

New Defense Act passed Parliament has passed Hungary’s new Defense Act, a key piece of legislation which requires a two-thirds majority under the country’s new constitution. The new law outlines the basics of Hungary’s defense concept, the operation of the army, and includes extraordinary measures. The law contains regulations concerning the system of voluntary reserve officers, the re-introduction of unarmed military service, as well as the legal framework for civil defense. Under the law, men under 18 or older than 40, or who are physically unfit, will not be conscripted, nor those caring for three children under 18. The opposition Socialist Party did not support the move, saying that it did not meet military requirements and that it was not up to European civil rights standards either. A statement the party sent to MTI criticized the motion for the lack of opportunity for conscientious objectors to do civil service leaving them unarmed military service as the only option.

domestic Banned GMO corn in Hungary Farmers in Baranya County, west Hungary, have been directed to plow under around 160 hectares of corn after the crops were found to have been grown with genetically modified seeds, regional radio MR6 reported. The Rural Development Ministry said that the GMO seeds came from several foreign producers, and have been used elsewhere in Hungary as well. MR6 has learned that the two biggest international seed producing companies are involved in the matter.

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Budapest Business Journal | July 15 – Aug 4

News for this page is from the Budapest Business Journal’s daily briefing, Hungary A.M.

COMPANY news The municipal council of Budapest has cleared up all disputed issues with France’s Alstom in connection with the purchase of metro cars, a source close to the matter told MTI. The source said Alstom had already accepted 11 points of the municipal council’s 12-point proposal, and the two sides had now come to an agreement on the last point concerning force majeure, which applies if the company is unable to get the relevant permit from Hungary’s transport authority.

The final go-ahead for the deal is still in the hands of the national transport authority.

No further details have been disclosed about the agreement so far.

Alstom CEO Patrick Kron is expected to travel to Budapest on July 20 and sign the agreement with the city.

China’s You Yuan Industrial Co plans to build a €5 million mushroom and vegetable farm in Kalocsa (south Hungary). The Shenzhen-based company plans to expand the farm later.

The farm is stated to generate revenue of €2 million in the first year, but this is expected to rise to €8 million by the third year.

German carmaker Audi laid the cornerstone of a €900 million expansion at its base in the Hungarian city of Győr on July 7. Audi chairman Rupert Stadler said that the company would set up its own pressing plant in Győr, making it Audi’s fourth base in the world where the entire manufacturing process is carried out. The pressing plant will raise the number of jobs created in Győr from the 1,800 announced earlier to 2,100. About 6,500 people work at the base at present. The expansion will raise output at the base in Győr to 125,000 cars a year from 2013.

ers are expected to deliver 21,807 tons of goods to McDonald’s restaurants in Europe this year, up from 21,067 tons in 2010.

The Demján Group has won a tender to build a new civic center for Saint Petersburg. The group will build the 80,000 sqm center in 24 months. It will have a 1,600-seat concert hall, an exhibition space and a conference area with capacity for 2,500 people. The city-issued PPP tender for the development of the state-of-the-art cultural center was won by Demján Group with its Russian partner, Invest-Stroy.

Detectives of the National Tax and Customs Office (NAV) have searched the headquarters of consumer electronics retailer Electro World, NAV spokesperson Alexandra Sárközi said, confirming a press report. NAV provided no further information as the investigation is on-going. Online crime magazine privatkopo.hu said there was suspicion of hundreds of millions of forints of tax fraud at the troubled company.

Troubled power plant Vértesi Erőmű, a unit of state-owned Hungarian power company MVM, said the Komárom-Esztergom County Court has approved an agreement made with its creditors while under bankruptcy protection. The company will soon start paying its liabilities under the deadlines outlined in the agreement, said chairman-CEO József Magyari.

Vértesi will have until 2014 to repay a loan to MVM. OTP Bank is no longer pursuing the acquisition of RBS Bank Romania because it could not agree on a price with the seller, Portfolio.hu reported, citing OTP’s Deputy CEO Antal Pongrácz. OTP, Hungary’s largest lender, may consider buying two smaller banks in Romania as it will not give up plans to increase its market share in the country, Pongrácz said. The bank’s goal is to reach 5–10% there.

Hungarian chemicals company BorsodChem, a unit of China’s Wanhua Industrial Group, has started test production at its new toluene diisocyanate (TDI) plant. Wanhua made €80 million available to BorsodChem to restart construction of the TDI-2 plant last autumn. The new plant adds an annual 160,000 tons to BorsodChem’s existing TDI capacity, and production at the new plant could be boosted to 200,000 tons later, depending on demand.

Hungarian financial market regulator PSzÁF has suspended the license of internet currency trading company iFOREX for six months because the company lacks the material and technical conditions for operation. The suspension will be lifted after six months if iFOREX shows PSzÁF the necessary conditions have been created. PSzÁF also said it fined the company HUF 20 million for breaking regulations on information provision.

Luxembourg-registered special purchase vehicle Pannunity will acquire about 98.8% of the shares of packaging company PannUnion as a result of a public purchase offer launched on June 1 and closed on June 30, PannUnion announced. The transaction is pending approval by competition authorities.

Hungarian suppliers will sell HUF 14.9 billion of goods to McDonald’s restaurants in Europe this year, up from HUF 14.6 billion in 2010, the Hungarian unit of the global fast food chain told MTI. Hungarian suppli-

The local council of Siófok has acquired 4,017 shares in passenger shipping company Balaton Hajózási Zrt from the local council of the neighboring village of Szántód, raising its share in the company to more than 40%, business daily Napi Gazdaság reported. The Siófok local council paid more than HUF 122 million, or HUF 30,475 per share, the daily reported.

Infrastructure developments underway at the Debrecen Regional and Innovation Industrial Park will create 1,300–1,500 new jobs this year and early next, regional daily Hajdú-Bihari Napló said. The number of businesses operating at the industrial park could reach 46 by the end of this year, and these companies are expected to have combined revenue of close to HUF 650 billion this year, the paper said.

Budapest’s Liszt Ferenc International Airport served more than 800,000 passengers in June, a new record, airport operator Budapest Airport said. Passengers using the airport reached an all-time high of 827,457 in June, exceeding the 800,000 watermark of 2008. In the first half of 2011, a total of 3.991 million travelers were registered at the airport. If the impact of the volcanic ash event last year were ignored, this figure represents a 7.7% increase on an annualized basis.

Hungary’s State Audit Office (ÁSz) has filed a police report in connection with CET, a public-private partnership project on the banks of the Danube in Budapest. ÁSz said that its audit of the Budapest Municipality’s financial reports suggested evidence of criminal activity and negligent business conduct resulting in the accumulated loss of assets.

Hungarian ISP Nordtelekom, listed on the Budapest Stock Exchange, has announced plans to raise capital by a maximum HUF 250 million to buy telco peer Beltav. Talks on the acquisition have started and due diligence is underway, Nordtelekom said.

Nestlé Hungária, the Hungarian unit of Swiss-based food giant Nestlé, has begun trial production at the company’s second, HUF 10 billion pet food plant in Western Hungary. Nestlé Hungária plans to hire 250 people to work at the 10,000 sqm plant in the village of Bük.

Finnish electronics company Elcoteq has told the local labor office and unions that it will lay off 680 workers at its plant in Pécs (southwest Hungary), news website pecsistop.hu said. About 2,800 employees work at the plant at present, down sharply from 7,000 before the crisis.

Elcoteq set up in Hungary in 1998. At one time it operated three plants, but now has just the one in Pécs.

Zwack recalls carbonated Kalinka vodka Hungarian spirits maker Zwack Unicum has recalled the company’s recently-introduced carbonated vodka Kalinka due to bottle quality issues. Zwack said there is a danger of explosion in one out of 10,000 bottles of the carbonated vodka launched on May 25, 2011. Zwack is an A-category issuer on the Budapest Stock Exchange. image: R-Co

Budapest clears last hurdle in Alstom deal

news 3

4 trends

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Budapest Business Journal | July 15 – Aug 4

CLOTHING

IT

EXPORT

employment

Dress sporty

Less spam

Landlocked SMEs

Great expectations

Small- and medium-sized Hungarian companies feel small.

Unemployment is high, yet salary expectations are rising.

Hungarians are spending more and more on sportswear.

12%

Spammers have switched from carpet-bombing to surgical strikes.

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luxury

11%

price increase usually seen pre-Christmas

the drop in the value of international spam

how SMEs see expansion abroad

of households have a jobless member

Hungarians are doing more and more sports – or, at least they are planning to, and their intention is clearly seen in what they spend on sports clothes. According to data from market research company GfK Hungária, the sports shoes, sportswear and sports equipment markets in Hungary, contrary to several other segments still suffering the effects of the crisis, are showing continuous growth.

The sports shoes market, for example, expanded by around 6% in 2010 and, keeping up this trend in 2011, sales in the first quarter of the year were 14% higher than in the same period a year before.

However, sales show seasonal trends.

Based on the sales of multinational sports retail chains in Hungary, traditionally the March–April and the August–September periods are the busiest in the sports shoes market. While the sales increase in March is likely linked to the arrival of the good weather, the August wave is possibly connected to the start of the new school year, GfK noted. The distribution between genders is quite even.

Men’s and unisex shoes make up half of the market, while the other 50% is shared by women’s and children’s shoes.

A similarly rising trend can be seen on the markets of sportswear and sports equipment as well. Sales of clothes at sports shops increased by 9.5% in the first quarter of 2011 compared to the same period last year, while sports equipment sales were up 5.9%.

The average price of children’s shoes is steadily around HUF 5,000 while women buy sports shoes for an average HUF 9,800 and men for HUF 10,300, GfK calculated, adding that prices rise somewhat in the pre-Christmas period.

Traditionally strong brands have maintained their market shares. Private-label products continue to sell well due to their good price-to-value ratio, and have been able to win market share primarily from lesser-known brands. ÁV

Cybercriminals have revised their strategies over the course of the last year and are no longer sending out tons of spam mail but are instead resorting to tailormade plans of virtual attack. The latest research published by IT services provider Cisco found that the volume of spam mail sent globally has dropped from 300 billion in June 2010 to 40 billion last month. This also marks a notable, roughly 50% contraction in the value of the market from $1.1 billion to $500 million over the same period of time.

At the same time, the phenomenon known as “spearphishing” – referring to attacks specifically targeted at individuals – is on the rise. The number of these attacks has tripled last year and increased fourfold in 2011. Cisco calculates that spearphishing causes $1.29 billion in damages every year. Other types of personalized scams and malicious attacks are also rampant.

As always, the vulnerabilities that allow these attacks to succeed are sometimes technical, but more often than not, they are the result of user negligence. Cisco notes that tricksters relying on people’s ability to trust strangers are the hardest to defend against, yet these are exactly the cases that cause the biggest volume of damages.

And even though market turnover – i.e. the sums that can be swiped from individual victims – is comparatively low and precision is costly for the attackers, the profit prospects are tempting. Compared to “traditional” mass-mail campaigns, spearphishers often end the day with a tenfold increase in profits when weighed against their old ways.

Cisco found that these efforts are the most likely to cause companies actual financial damages, making them persistently popular among cybercriminals. GR

Hungarian SMEs do not feel confident enough to start expanding in foreign countries in Europe. Around 70% of them do not see an opportunity in foreign expansion in the current state of the market, research conducted by M27 ABSOLVO, a finance and export consulting firm, revealed.

More than 10% of SMEs are not able to focus on foreign markets since they are fighting for survival on the domestic market, the research pointed out.

Around a fifth of the respondents do not try to attract customers from foreign markets, despite the fact that most companies see no chance for an increase of domestic customers’ purchasing power. A significant proportion of SME leaders consider foreign expansion a burden, as if it were some sort of a luxury, M27 ABSOLVO found.

This is one of the fundamental obstacles to entering new markets for SMEs. However, with a good expansion strategy, the costs of expansion are similar to the operational cost of a company for a a few days’ or at most a few weeks’ . In the meantime, they have the possibility of earning 50 times more income than on the domestic market.

M27 ABSOLVO finds that not even companies in segments dealing with products that are very much suitable for export, like agriculture, IT, food industry and manufacturing, exploit the potential of the European market of 500 million habitants. Around 20% of SMEs are looking for growth exclusively on the domestic market, and do not even consider foreign expansion without their contact network and the in-depth knowledge of the foreign market.

Turning to an expert who knows the target country’s market well is unusual. Around 50% of the participants would not turn to a consultant if expanding abroad. In the meantime, only 2% of respondents are interested in turning to an expert who provides counseling in entering foreign markets. ASz

Despite the oversupply of labor force on the job market, jobless people are not ready to take a job for a lower salary. The jobless rate increased radically in Hungary during the economic crisis, but this did not effect the salary expectations of jobless people. While there was at least one unemployed member in 11% of Hungarian households, the so-called reservation fee of people did not drop.

The reservation salary of jobless people, which is the minimal monthly wage that people are ready to start working for, was HUF 88,000 in 2010, according to the research by the Central Statistical Office (KSH). This means that the reservation salary grew 4.8% last year, KSH data showed.

In the meantime the average gross salary was HUF 202,576, which is a 101.4% increase comparing to the previous year.

The KSH research pointed out that jobless people’s expectations for a minimal wage grew more in 2010 than the average gross salary in the country: while gross wages increased by 1.4%, the expectation for a minimal salary grew 2.8%.

Women expected to earn at least a HUF 84,000 gross salary in 2010 to take a job.

Men were not ready to work for less than an average monthly HUF 92,000 gross salary. Women expected 5% more salary, while men’s wage expectations increased by 4.6% in 2010 compared to last year’s data, KSH reported.

Only 10% of jobless men were ready to take a job for less than HUF 65,000 net salary. This means that the minimal wage expectation of men was HUF 6,000 less than the average net salary of blue collar workers, and HUF 19,000 more than the 2010 minimum wage.

The minimum gross wage in Hungary was HUF 73,500 last year. ASz

Changing spams

Rising performances

things looking up

Shoe trends

Distribution of sports shoe sales in Hungary, 2011 (pairs sold, %) Source: GfK Hungária

Total annual cybercriminal monetary benefit ($ mln) Source: Cisco

Hungarian SME’s business performance (%) Source: K&H

Unemployed Hungarian’s net salary expectations (HUF1000) Source: KSH

politics 5

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Budapest Business Journal | July 15 – Aug 4

Media: no comments, please Following heated protests against the introduction of revised media content regulations, it seems that censorship is indeed rearing its ugly head in Hungary’s public sphere. Only it’s not the regulator but the publications themselves that are doing it.

BBJ gergő Rácz

After content providers and advertisers, MLE, the association of Hungarian publishers, has followed suit and signed a declaration of self-regulation with the National Infocommunications Authority (NMHH). Among other provisions, MLE made a commitment to take action against any of its 65 members should they violate human rights, harm the sound development of minors or incite against constitutional order.

The agreement comes as part of an – officially unprovoked – sequence of measures taken by publishers to filter out content that might be in breach of Hungary’s controversial media law. The regulatory scheme that took effect on July 1 envisions fines of up to HUF 25 million that can be levied on violating publishers, with the possibility of completely shutting them down if repeated serious offenses occur.

The government received furious criticism internationally that even soured the beginning of the country’s EU presidency. Heeding to international pressure, it eventually made some concessions and amended the regulations – although civil liberties groups still have concerns – but it remained to be seen how the activation of the new framework would play out.

Bad behavior To date, no publication has been penalized for offensive content, but the new law has moved leading publications to self-regulate. It all started on the website of left-leaning daily Népszava, when state secretary in charge of communication Zoltán Kovács filed a complaint, not against editorial content, but against something someone saw in the comments section.

An article was posted by President Pál Schmitt commemorating the merits of one of his predecessor, the late Ferenc Mádl. Apparently, one of the comments was insulting to the active President Schmitt and compelled a reader to advise Kovács, who promptly took the matter to media commissioner Jenő Bodonovich. In turn, the commissioner sought out the paper’s editor-in-chief to remove the offensive content and also notified NMHH of the situation.

At that point, online discussions proclaimed the end of the freedom of speech, when a publication could be targeted for giving readers the option to comment and thus express their views on public figures.

NMHH quickly responded to state that is not the case. The authority’s jurisdiction does not extend to comments, blogs and forum entries, and as such, NMHH is not investigating the case, the watchdog’s spokesperson Karola Kiricsi said. As she explained, Bodonovich initiated what is called “mediation” after his attention was called to content that was seriously offensive. However, no matter what the outcome of the mediation is, it is not mandatory, she added.

No comment But websites are by no means convinced their comments sections would be in the clear. Popular

news portal index.hu was the most notable in its reaction. The site simply terminated altogether the comments section on Velvet, its celebrity/tabloid section. As the site informed readers, its “moderation would pose an insurmountable and financially astronomical task for the editor’s office.”

Also, the blogs operating within the index.hu domain now display disclaimers stating that comments express the views of the readers and are in no way controlled by the operator of the site.

Some sites, like delmagyar.hu, decided to keep the comments section open, but introduced premoderation to filter out statements that could prove problematic before they appear in the public domain. “Our goal is to assure quality, pure content and to keep away those who would ‘litter’ the comments section,” the site informed its readers.

Why was this necessary? “As of late, a rising number of comments posted below our articles were personal and insulting and had little to do with the content matter,” goes the explanation.

What will be interesting to see is how and if media will attempt to give their readers the same experience as before. One alternative is social media. Velvet actively encourages its readers to visit its Facebook page, where they can comment without fear of retribution. Of

course, unless they bother to set up an alias, they cannot do it anonymously.

office so far. Despite the huge scandals kicked up around them, the documents of the BKV corruption case as well as the controversial property purchases in Sukoró have all been put back in their drawers since they were first aired.

Most recently, the MSzP asked the National Protective Service, the Consti-

tution Protection Office and the Military Prosecutor to decipher the documents of “the accusations in the most serious counter-state crime of the Third Hungarian Republic.” MSzP’s request had remained unanswered by the Budapest Business Journal’s deadline. n

BOX: Public media culling The state media support fund MTVA has started much-trailed headcount reductions at national public broadcasters, laying off 550 employees. The employees were reportedly called into short group sessions with none of them having any idea beforehand whether they would still have a job at the end of the discussion. The measure affected wellknown reporters and editors as well.

The government instantly received criticism for what is widely perceived to be a political cleansing maneuver to remove anyone from public media not loyal to the ruling political side’s agenda.

Fidesz does have a bad track record from its previous term in how it handled public media. But state-owned broadcasters are also known to be highly inefficient. Whereas state television MTV had 1,315 workers, its market-leading peer, commercial station RTL Klub, gets by with just 380 people – and reaches a far broader audience. n

I spy...well, something The arrest of former Socialist national security minister György Szilvásy has dominated Hungarian headlines over the past few weeks. Yet it is hard to see into the background of the case, partly because of its complexity, but primarily due to the veil of mystery that surrounds it.

BBJ Ágnes Vinkovits

Here are the facts: after a search of his house, the former chief director of the National Security Office (NBH) Lajos Galambos was put under house arrest on June 30. On the same day, again after his home was searched, György Szilvásy, former Socialist minister without portfolio in charge of the secret services, was also taken into custody.

One day later, Sándor Laborc, Galambos’s predecessor at the head of NBH, joined Szilvásy in the lockup. Szilvásy and Galambos are accused of espionage, but both were released from custody shortly after being detained. The charge against Laborc is aiding and abetting.

Not many facts indeed, but these are the only certainties made public about the case so far, and as things look now, no further details will come to light for a long while: the government has sealed all relevant documents until 2089.

While the Socialists spoke up for Szilvásy right after his arrest and called the entire process merely part of “a political showdown started by the Fidesz government,” the ruling party has not commented.

Still, some circumstances suggest that the incident might have had a political motive.

On Thursday, one day before Szilvásy’s arrest, Hungary handed over the rotating presidency of the EU to Poland and so shed the international spotlight. Fidesz’s party congress for the re-election of party officials took place on Saturday, one day after the incident. Prime Minister Viktor Orbán’s already shining political star was given extra glitter through his taking a crony of the “main enemy”, former Socialist Prime Minister Ferenc Gyurcsány, into custody, and this might have had a little part in Orbán’s 99.7% victory at the party president election at the congress.

Gyula Budai, the accountability government commissioner in charge of exposing earlier political corruption, who is also coordinating Szilvásy’s case, has rather little to show for his time spent in

6 business

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Budapest Business Journal | July 15 – Aug 4

[ expert opinion ]

Liability of board members

A modified solution in the new company rules tamás sándor, dr Managing Partner sándor szegedi szent-ivány komáromi eversheds – Attorney at Law

One of the much debated questions of the new company law, which shall be part of the new Civil Code, is how to settle the liability of the executive officers of a company. From this point of view, companies limited by shares (“részvénytársaság” or “‘rt’) are typical, since the board of directors of an Rt. decides as a body.

T

he rules of the Companies Act (Gt.) in force are rather strict. Subsection (2) of para. 30 sets out that executive officers (board members) should conduct the management of the company with due care and diligence as expected from persons holding such positions and – unless otherwise prescribed by law – give priority to the interests of the company. If third persons suffer damages as a consequence of a board decision, the company is liable towards the third persons.

According to subsection (3) of section 30 of the Companies Act, the executive officers must carry out their tasks by giving priority to the interests of the creditors of the company in the case of a threat of insolvency. Moreover, a separate act can declare the executive officers directly liable towards the creditors, if the previously mentioned rule about protecting the interests of the creditors is violated.

And finally, subsection (4) declares that where a company is managed by a body, the liability of the executive officers towards the company is joint and several.

The problems are obvious. The existing provision is particularly dissonant according to which the directors shall proceed by giving priority to the interests of the creditors in the event of the threat of insolvency. It is questionable how the directors can exactly determine when the threat of insolvency has arisen. The fact is that using this provision shows that the situation will be misunderstood, since the executive officers are either the employees or

the agents of the company and can not take actions against the company (which is their own employer or principal).

The essence of the problem is that executive officers in the case of limited companies are in slightly different positions depending on whether they are employees of the company or not. Directors being employed by the company have significantly more information about the businesses of the company than “outsider” directors. The author of this article has been a member of a board of directors in several companies and had to face the challenge and obligation of taking part in decisions with significantly less background information and knowledge of the details of the particular question compared to the directors employed by the company. This is the reason for the distinction in the liabilities between directors in different positions.

Compared to the above, in the course of drafting the new law, the idea arose that it is necessary to make a distinction between the members of the board of directors according to whether they are employed by the company or not. In the former case, the rules of the liability remain unchanged and are equal to the provisions of the previous Companies Act of 2006. This means that an executive officer being employed by a company will be jointly and severally liable towards the company also hereafter.

Contrary to this, an executive officer not employed by the company will be jointly and severally liable only when he personally participated in the decision making process resulting in an unlawful decision.

On the other side, those who are against making a difference between the members of the board insist on the provisions of the existing law and refer to the fact that the general rules of civil law liability of the Civil Code can solve this problem. The joint and several liability – according to the rules of common damage – is applicable only towards third persons not inside of the circle of the board members. Here the general rules of culpability must be used.

A further change has been proposed, that the draft should not include the provision according to which the executive officers should proceed in compliance with the interests of the creditors where the company is insolvent.

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Money in the clouds

A Hungarian innovation is becoming the standard for organizing events where goods and services are bought and sold without any cash changing hands.

BBJ Gergő RÁcz

When you visit Sziget festival, one of the largest of its kind in Central Europe, just place a plastic card to a reading device and your beer will be paid for. Within the boundaries of the festival, you simply will not see any cash changing hands.

The reason is that a payment system dubbed Metapay, successfully piloted last year and this, will be adopted by the summer events organized by the Sziget cultural office. The wireless payment system is a 100% Hungarian innovation which has little to no competition worldwide.

Metapay uses a short-range radio frequency to transfer payment and balance data between the card and the reader, which is then transmitted through heavily encrypted channels to a central information hub controlling the system, explained Gábor Lévai, managing director of the technology’s owner. Festival-goers visiting Volt, Balaton Sound or the upcoming Sziget event receive a card along with their passes upon entry, which they can top up the same way they would add credits to a pre-paid phone card. The store attendant punches in the value of the customer’s purchase, who in turn holds the card against the reader, and they’re done.

Metapay first received publicity last year.

Then too it was in relation to Sziget festivals, which were home to a pilot effort where certain sections used touch cards instead of cash.

The project was successful and so far, scaling up has caused no difficulties. “At the recently concluded Volt festival, the system had to service 150,000 people,” Lévai said.

White as electronic snow Apart from its convenience (boasting a 2-4 second transaction time, it is significantly shorter than debit card payment), Metapay is also promoted as a tool for legalizing or “bleaching” commerce, as it is commonly referred to in Hungarian. Since every transaction runs through the system, everything happens on the record with precise figures on sales and how much money metaphorically changed hands.

This blends in perfectly with the global trend of making cash payments a thing of the past. Governments prefer not to burden the state budget with printing money, which is costly with all the security provisions that are needed, and often leads to redundant production. This was the case with the HUF 1 and HUF 2 coins that were in plentiful supply but usually wound up between people’s couch cushions, never to be used again.

After terminating circulation of the two smallestvalue coins, the National Bank of Hungary also had to replace with coin alternatives the HUF 200 bills that were commonly used and therefore gave in to wear and tear more easily.

More importantly, and from a more general perspective, the greatest problem that states have with cash is that there’s no practical way to follow the money. Unsurprisingly, any payment that someone wants to keep off official records happens in cash placed in envelopes, briefcases – or Nokia boxes (as was the case in a recent Hungarian corruption scandal).

However, it is not only crooks that are unhappy with Metapay, but also employees working the beer taps, who are accustomed to getting a large part of their pay in tips. The system allows tipping, but it takes a slight additional effort. The attendant has to add the gratuity amount to the tab manually, which slows down the payment process.

While employees were initially told to notify customers that they can give tips, it was met with dissatisfaction, so it is now up to the buyer. Also, it has always been good for the service industry that tips are cash-based, thus untaxed earnings that go straight into their pockets. With the digital solution, even this is recorded.

Local money Metapay can also be considered a virtual version of local currency, like the kékfrankos that was introduced in the city of Sopron and is also on the agenda of other towns. The purpose of any such effort is to make sure that the amounts committed to the localized money get spent locally at local businesses.

Technologies like Metapay could be a tool for achieving that goal, even though Lévai does not have any world-changing plans for the time being. He considers the current exposure his company is getting from the festivals as good PR, but is still looking to develop the brand and the technology as a package meant to service specific events or venues.

Yet, he stressed that there are other applications that have not been explored and that the company is open to cooperating with other festivals, events or even the state, should demand arise. n

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Energy News Small CHP plants push HUPX in new subsidy system

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from ENERGY TODAY, the BBJ’s daily energy news service

Hungary closed the acquisition of a 21.2% stake in MOL from Russian peer Surgutneftegas on July 6. The transaction raised the state’s direct and indirect stake in MOL to 23.82%, including 2.6% it acquired in a recent transfer of private pension fund assets of former members to the state. Voting rights in MOL are limited to 10% per shareholder or shareholder group. The Hungarian government announced on May 24 that the state of Hungary will buy the 21.2% stake in MOL from Surgutneftegas for €1.88 billion.

The environmental impact studies of a €600 million, 920 MW CCGT power plant in Szeged will be concluded by the end of July, a representative of investor Advanced Power AG told representatives of the city municipality. The Swiss firm conducted studies on the possible air, noise, water and soil pollution of the plant.

If authorities grant the firm a license to build, construction could start in 2013 and the plant could begin producing power by 2015.

French-owned Hungarian electricity distributor EDF Démász Hálózati Elosztó has inaugurated a HUF 1.4 billion substation in Mórahalom. The substation was needed to meet increased demand by companies that moved into a nearby industrial park, said managing director Jean-Paul Sainte-Marie.

More than 30 companies employing more than 350 people operate in the Homokhát Regional Agri-Industrial Park, said Mórahalom mayor Zoltán Nógrádi.

AES Borsodi Energetikai Kft has filed

New legislation which came into effect from July 1 has fundamentally reshaped the financial environment for co-generated power plants in Hungary. Smaller producers might benefit, but some large district heating firms are suffering.

BBJ ANDRÁS ZSÁMBOKI

“Trading volumes reached a peak at HUPX this July,” Krisztina Iványi, communication manager of the Hungarian power exchange announced.

As opposed to 10,500 MWh, the typical trade volume of an average day in June, on July 4, 15,500 MWH of electricity was traded. In the unanimous opinion of energy experts, the reason behind the increased turnover is the small plants’ entry into the market.

This was stimulated by a modification of the Electrical Energy Act in June, which brought about enormous changes in the lives of Hungarian companies which co-generate heat and

electricity (CHP). Since the beginning of July, state subsidies were abolished as well as the state’s obligation to buy the energy. Meanwhile small power plants receive state help in marketing their co-generated electricity through HUPX, and 92 of 162 companies concerned have taken the opportunity.

However, Gábor Bercsi, president of the Hungarian society for co-generated energy (MKET) doubts whether the smaller plants trying their luck at HUPX will be able to reach a profit through trade. As far as spot prices are concerned, the first data is not too promising.

“Electricity commodity prices had already dropped before the entry of small CHP producers, and they may plummet further if new suppliers appear on the scene. The most profitable, HUF 18-20 per MWh price that can be achieved during peak time (between 6 AM and 10 PM) barely covers production costs,” Bercsi said.

Furthermore, several producers are forced to sell their electricity even cheaper than this, as they have to start heat production before 6 AM in order to supply hot water to households, he added.

For large CHP plants, legislative changes have had a negative effect. Their earlier subsidies have disappeared, and they have received nothing in return.

For Nicolas Katcharov, CEO of Budapest power plant company BERT, the largest district heat producer, the discrimination of 50 MW CHP producers and their customers is problematic. “In Budapest, BERT provides district heating to large communities, so its power generating capacity is necessarily larger, too. This, however, should not serve as pretext for negative discrimination,” he argues.

Since the Hungarian Energy Office is still working on the new regulations concerning CHP, such firms currently cannot predict what kind of financial environment they will have to operate in.

At BERT, the price cap regulation on district heating has already produced a total loss of approximately HUF 600 million, which could rise to HUF 2.8 billion if it stays in place until the end of the year.

This, Katcharov warns, could jeopardize the steady supply of district heat for Budapest residents. n

for bankruptcy protection at the Borsod-AbaújZemplén county court, online business portal Mfor has learned. The firm has already sold its two power plants after electricity prices slumped in the spring due to rising expenses.

The US-owned, Kazincbarcika-based company had revenues of HUF 17.7 billion last year with a loss of HUF 690 million.

A month after a public issue of new shares, energy-efficiency company E-Star Alternative has floated 240,000 dematerialized, registered ordinary shares at a face value of HUF 10 per share on the Budapest Stock Exchange (BSE). The newly floated shares bring to 2.64 million the total number of E-Star Alternative shares traded on the BSE. The Hungarian renewables target of 14.6% cannot be reached without strong biomass-based power production, the Hungarian biomass industry association BEE has said. According to the association, Hungary’s new national strategy for 2030 does not pay due attention to wood-based power plants, which only burn wood that is unusable for other purposes. The association also criticized subsidization decisions which split off energy and heat production in large district heating plants. The association also does not support the idea that only small biomass plants receive subsidies.

BBJ retail focus

still empty baskets Consumer spending is still deeply in crisis in Hungary, with a slow recovery expected in the fall. by then, consumers’ shopping habits might be much changed.

January and February retail data raised hopes that recovery was finally on the way and that Hungarians would once more start shopping the way they used to. A March fall could have been explained away as a temporary drop, but now that the April data has arrived, and shows a turn for the worse, it is certain: domestic demand is still in crisis.

Domestic retail turnover showed a 0.5% drop in the first four months of 2011, while in April it dropped by 1.3%, according to the report lately published by Hungarian Central Statistical Office (KSH). The disappointing data is a bitter surprise for both the government and market players who were hoping that the 16% flat rate personal income tax would kick-start domestic demand. Analysts are concerned that this negative data could endanger the recovery prospects of the Hungarian economy.

Many analysts were skeptical about the stimulus effect of a lower flat tax from the start. They argued that people will rather use the extra money to increase their savings instead of spending it. Gergely Suppán, a Takarékbank analyst noted that domestic demand did not start growing this year despite the “remarkable decrease” of personal income tax. He thinks people are still very careful in their spending.

Others agree. Zoltán Árokszállási, an analyst at Erste Hungary said that the April data is a “negative surprise”, as he was expecting 0.2% retail turnover growth this year. He agrees that the personal income tax decrease did not have any serious effect on domestic demand.

Changing shopping habits Retailers are also pessimistic. A Budapestbased supermarket’s stock manager says she has not experienced any increase in demand since the introduction of the 16% personal income tax. The consumption habits of the average consumer have gone through a major transformation, she added. The once-a-week big shopping in a hypermarket when people bought a huge amount of goods has decreased radically. “Instead, people are going to small supermarkets or corner shops close to their home, and are choosing very carefully what they buy and for how much, and spend a lot less money per occasion than previously,” she explained to the Budapest Business Journal.

Also, people tend to prefer basic fresh foodstuff, leaving the sales of non-essential nonperishable goods in stagnation.

The situation in the countryside seems to be the same or maybe even worse. “We see no reason to believe turnover will pick up this year,” says the owner of a supermarket from the same retail chain around Lake Balaton from the same retail chain. He explained that while his shop had generated most of its annual income during the spring and summer months, this seasonal pick-up has become a lot smaller in the past two years: his shop sells HUF 5-6 million less in a spring month than earlier.

At a snail’s pace Growth in demand is going to be slow even if it arrives, analysts say. Árokszállási

said he expects a retail turnover growth in 2011 at an estimated 1.5% followed by a 2-3% annual increase in 2012. He adds that the fall of 2011 could also bring some positive surprises. He projects retail turnover to pick up in the autumn after former private pension fund members are payed the real yields on their savings. This will be a one-time only positive effect on domestic demand, though, he points out.

More confidence However, despite the gloomy opinions, some positive trends seem to have emerged in June.

The decreasing tendency of both the complex Consumer Confidence Index (CCI) and the Consumer Expectations’ Index (CEI) beginning mid 2010, changed in June, recent research by the GfK Hungária market research institute, pointed out. The CCI showed 14 points growth, and is now at 154 points, while the CEI increased by 16 points, and is now at 187. The majority of people (59%) do not expect that the unemployment rate will grow. In the meantime, the Purchasing Willingness Index (PWI) rose, too: it has increased by 11 points and is standing now at 117.8 points.

The Swiss key Erste’s Árokszállási cautions that one should be careful to draw overtly optimistic conclusions from this positive data. He argues that consumer confidence is strongly dependent on changes in the Swiss franc exchange rate. The

trend of increasing consumer confidence will not last if the exchange rate remains high, since its changes dramatically affect Hungarian households with Swiss-currency-denominated mortgages.

Lasting growth in consumer confidence, which would result in more spending, will only happen if the Swiss franc weakens against the forint, and stabilizes at a lower level. In this case internal demand will pick up shortly, and will be followed by more shopping, Árokszállási concluded. This is very likely to happen, since the government plans to fix the exchange rate of the Swiss currency in order to protect people indebted in Swiss francs.

No job, no money Retailers are also reluctant to be too optimistic about future prospects. The Budapest-based shop manager hopes government measures will start having a positive effect on demand, but does not expect retail turnover to pick up sooner than early 2012. In the meantime, not everyone is confident about the short-term success of government measures targeting economic recovery.

“The government can say whatever it wants, but the fact is that people who do not have a job, have no money to spend,” the Balaton-based shop owner said. He thinks government measures will exercise a positive effect on domestic demand only in about two years time, and expects his business to grow earliest by mid 2013. ASz

www.bbj.hu ▶Budapest ▶ SmallBusiness mall Journal law could halt building | June 4 – June 17 ▶▶ MARKET ANALYSIS: Tenants rule ▶▶ 4 ways to hide your empty shops ▶▶ LIST: Largest shopping centers in Budapest ▶▶ LIST: Largest shopping centers outside Budapest ▶▶ MARKET ANALYSIS: Largest retail chains ▶▶ LIST: Largest food retail chains

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Eat local, unless salty or sweet in Hungary, they could not do so. In response, market players in the food industry have proposed raising the limit for foreign-originated materials from 5% to 10%.

Competitive edges The food industry has other problems with the bill, though, saying that Hungarian products would be helped better by means other than creating new labels. “The current draft bill does not help to provide the food industry with a real competitive edge,” Tamás Éder, president of the Federation of Hungarian Food Industries (FHFI), told the Budapest Business Journal. The biggest help for food industry would be getting funding to implement the long overdue modernization of facilities, he argues. Thus, his members would be able to keep pace with foreign products in terms of price and quality. Éder also explained that while in the past few years most financial aid went to plant

The government is making great efforts to protect Hungarian products and give them a competitive edge, but this may not be as easy as slapping a “Hungarian product” label on them: many segments also need modernization and funding. Meanwhile, the new tax on unhealthy foodstuffs could affect products traditionally considered to be Hungaricums, and further increase their already high prices.

BBJ anna szaniszló

One look at the dairy shelves of hypermarkets and small corner shops shows that regardless of the size of the shop, roughly two-thirds of yoghurt products are foreign made – mostly by French, German or Slovakian-owned companies. Looking at the selection of dairy products, it is easy to understand why so much effort is focused on the positive discrimination of Hungarian products – and producers.

A video widely circulated by two non-profit organizations, Magyar Termékek Nonprofit Kft and Magyarok a Piacon Klub, encourages consumers to choose Hungarian food products.

The video explains the negative consequences of the dominance of foreign products, and suggests that if consumers choose to buy Hungarian products, they can help boost the local economy.

The definition of “Hungarian product”, however, is not clear. The category of “national product” is currently defined by the European Union’s Community Customs Code. Based on this, a product made

of imported materials, but packaged in the country, can be labeled as a national product.

In order to provide better protection for Hungarian national products, the government is trying to create a legal environment that favors local products. The Rural Development Ministry is looking to differentiate Hungarian products that are made of mostly local materials from those that are made primarily of foreign products but packaged locally.

The ministry is working on a bill that would be more restrictive than the EU legislation in what could be called a national product in Hungary. The draft bill on Hungarian products would introduce two categories for national products: “100% Hungarian product” and “Hungarian product.” These are meant to provide clear indications to customers about the origin of the products, and a competitive edge for the manufacturers of Hungarian goods.

Defining the definitions The category of “100% Hungarian product” has met with criticism from the food industry, however, and market players do not believe it will live up to expectations. According to its definition, products labeled “100% Hungarian” cannot contain more than 5% foreign materials or additives – however, this would prevent numerous traditional Hungarian products from being included in this select category. For example, a jam exclusively made of Hungarian fruit would not be eligible for this label, since it contains more than 5% imported sugar. The ministry argues that manufacturers would be motivated to use Hungarian materials instead of imported ones.

But in the case of sugar, for example, domestic production can provide only an annual 105,000 tons, while local demand is 300,000 tons, Endre Fazekas, the managing director of juice maker Sió-Eckes Kft explained. So even if companies wanted to use only sugar produced

cultivation, other segments were neglected, such as manufacturing, animal husbandry and the growing of fruits and vegetables, leaving these struggling with a lack of modernization and capital. Under these conditions, it is difficult for farmers to match foreign competitors who use cost-efficient and high-performance facilities.

Sweet & expensive Meanwhile, the government is also planning to introduce a new public health tax from early September, levying an extraordinary tax on unhealthy food products that contain too much sugar or salt. This would mean that various traditional Hungaricums, such as jams or chocolate fondants, could be affected. Although the list of products subject to the new tax has not yet been finalized, it is certain that, with an already high 25% VAT rate the last thing these Hungarian producers want is a new tax. n

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Small mall law co

The government has embraced an opposition drive that would essentially outlaw the construction of new shopping centers and bigger retail outlets. Expected to aid the position of smaller domestic retailers, developers say that everyone involved would suffer.

The proposal submitted by the opposition party LMP aims to impose a size limitation on retail complexes of a maximum 800 square meters for townships with populations of more than 100,000, and 400 sqm everywhere else.

In contrast, the latest shopping mall to hit the Budapest market, Corvin, is 65,000 sqm in size. The newest, so-called big box outlet, or hypermarket, to be opened by UK retailer Tesco is 26,000 sqm. If the plans are passed, these could be the last of their kind for some time.

As the proposal submitted to Parliament on March 9 argues, shopping centers have a drastic impact on the social, economic and natural environment.

Apart from the direct effects of traditional retail suffering losses in turnover, increased vehicle traffic and changes to the city’s landscape, the quality of life in the areas concerned is likewise affected, the document states.

The market is already saturated, and LMP believes that the existing situation in itself is not sustainable, but this will especially be true if additional capacities are allowed to be built.

real. His company, along with fellow members of the real estate developers’ roundtable IFK, an umbrella organization comprising some of the largest property firms, has released a statement condemning the initiative.

The group argues that the moratorium would further worsen the situation of an already ailing construction industry and also goes against the government’s declared ambitions of job-creation. Given that the slide in retail earnings has recently stopped, while the reduction of personal income taxes is expected to be a boost for retail, IFK thinks that the ban would also hinder overall economic growth.

Futó argued that a moratorium would actually be counterproductive. “Without centers, people will simply get into their cars and visit more locations to do their shopping.

All it will do is add to pollution and lead to traffic jams,” he told the Budapest Business Journal. He also stressed that if anyone, it is Hungarian retailers that benefit from doing business in large retail outlets, where they are guaranteed footfall and don’t have to worry about additional business-generating amenities, like ample parking capacities.

Disgruntled builders

LMP on the other hand is sticking by the initiative. In fact, the party has a view on the matter that is the direct opposite of the developer’s convictions. “Experience shows that it is actu-

Pointless debate?

Of course, it might well be that the entire debate is a fuss over nothing, since market conditions would not change with or without a moratorium. Futureal’s own Tibor Tatár, CEO of the group’s development arm, said earlier that Budapest already has as many shopping centers as the city could probably sustain.

Retailers outside of Budapest are known to be struggling even more, with plenty of vacancies in hypermarkets as well, while strip malls go for warehouse prices, sometimes for €4 per sqm. This is naturally a fraction of what hyped shopping centers charge their tenants.

As such, retail generally being in a state of depression and lucrative openings few and far between, there is a good chance that the ban would prevent few if any new developments. Furthermore, experts admit that there may be some rationale to the move. But this is so only if it will

Mirror image

Etele City Center Company: Futureal Size: 40,000 sqm The investment is the Hungarian developer’s latest retail ambition in Hungary, planned for the southern region of Buda, an area it feels could still sustain another center since it is outside the range of all other larger retail hubs.

The center’s website designates the autumn of 2014 as the completion date, but the developer made no secret of the fact that the progression of the investment greatly depends on how fast construction of the M4 metro line continues, which is set to have its terminus at Etele tér and thus guarantee footfall.

image: : radikalbacsi / indafoto

image: Futureal

“I don’t really think they’re serious,” said Gábor Futó, CEO of property developer Futu-

ally the plazas and their huge car parks that attract bigger traffic. Especially so if they are built not in downtown locations but on the outskirts of town,” said party MP Rebeka Szabó, one of the signatories of the bill.

Asked by the BBJ on her views about the opposing arguments, she also refuted the notion that Hungarian businesses would benefit from the wide availability of big retail. “The few shopowners that get a spot in the malls are fortunate.

Others that go under on the main street or settle in plazas where there are too few shoppers or the rental fee is very high are less so,” she said.

The politician also stressed that shopping centers are not charity organizations devoted to helping the shop-owners with the car parks and customers but a highly concentrated form of commerce that typically deflects serious expenses on to society. As examples, she pointed to increased car traffic, folded small businesses, habitats paved over and the disappearance of domestic small producers.

compel municipal governments to give an additional boost to the retail industry by making upgrades, such as overhauling buildings that are in bad condition or building underground parking facilities. Without such projects, small retail is unlikely to improve its position against the market share plazas have.

The most likely near-term outcome is that the market status quo will remain. Landlords will hardly be inclined to take the gamble of launching new developments. Instead, they will more likely be working overtime to fill the vacant capacities that they have and give their shopping facilities facelifts to make them more appealing.

The potential victims Though not too many, there are still projects in planning that may or may not be affected if the moratorium is enacted. The limitations proposed

by LMP would not affect projects where the permitting process is already underway. However, if the government embraces the idea, as the situation would imply at this stage, last-minute modifications are to be expected, given the reigning FideszKDNP bloc’s track record in lawmaking.

Property developer TriGranit, furniture distributor IKEA, Polish developer Echo Investment and Tesco all have plans and projects in various stages to commence new developments. The BBJ sought out the companies that are possibly affected but was declined comment or received evasive answers.

Futureal’s Futó on the other hand voiced a strong opinion. “If we can’t build shopping centers, then we won’t build shopping centers,” he said.

His company is eyeing the construction of a new shopping center in the southern region of the capital’s Buda side. The CEO also expressed issues of principle based on which the ban would be implemented. “There are legitimate ways to do this. Let local governments, local communities have a look at their neighborhoods and decide what they want or do not want built there,” he concluded. GR

Tesco Company: Tesco Size: ?

The UK retailer has for years pursued an ambitious expansion strategy in CEE countries including Hungary. Despite the fact that the retail segment is in a bad state, it has this year already opened two new outlets, a 3,000 sqm store in Kőszeg and another, 1,000 sqm branch in Isaszeg. Albeit constantly at the business end of controversy, the company is fully committed to making its Hungarian operation work and is continuing to seek out new opportunities, whether that means the construction of further big box hypermarkets or the smaller outlets tailored to urban clientele. Nonetheless, Tesco is a company that is primarily interested in building big stores, preferably in locations that are untapped retail-wise.

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Budapest Business Journal | July 15 – Aug 4

uld halt building photo: darthwalk / indafoto

image: : BBJ

The site of the plaza several years ago. Not much has changed.

Company: TriGranit Size: 300,000 sqm Ikea 3 Company: Ikea Size: ?

The Swedish furniture maker has for a while been looking for another location to expand its Hungarian network besides the two arms it has in operation in Budaörs (pictured) and Budapest’s Örs vezér tere. The company has reportedly already found the ideal site in the outskirts of Budapest but has yet to divulge any official information.

Accordingly, there is nothing official to be known about its size. Based on the other two Hungarian outlets, it will be about 20,000–26,000 square meters.

image: : Echo Investment

WestEnd II

Mundo Company: Echo Investment Size: 130,000 sqm The Polish property developer has probably regretted time and again starting up this investment, which has caused it nothing but trouble. The retail hub to be built in the Zugló district was marred by a legal battle with the earlier local government over landscaping plans and contract violations, and there are still no reports that the venture’s finances would be available. Echo Investment also had high hopes that it too could benefit from the traffic-generating potential of the M4 metro, something which remains to be seen. The latest entry on the plaza’s website dates back to last November and the developer itself declined to give specifics.

Sándor Demján’s property group released an agenda in May detailing its plans for the year, which included restarting preparatory work on the WestEnd II investment to be realized next to the popular downtown shopping complex, setting up a sister facility. TriGranit put the venture on indefinite hiatus earlier, having failed to come to an agreement on certain aspects with the city’s previous management.

If the developer persists with the plans it earlier discussed in public, the investment will involve demolishing the Ferdinánd-híd overpass, to be replaced by an underground tunnel, as well as essentially converting Lehel tér into something of a park.

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Tenants rule in Hungarian plazas BBJ

+12% shopping centers in budapest

Change in total net retail space of listed centers in 2011

Although the development of new shopping centers fell sharply across Europe in 2010, with the largest decline since 1983, Budapest saw the opening of three major malls in the last two years, with two further projects in the pipeline that are very near completion.

The heydays of shopping mall construction might be over, but it would be wrong to claim that the market in Hungary is fully saturated. Since the end of 2008, when the global economic crisis hit the country, three shopping centers have been delivered in the capital. Újbuda’s Allee shopping center was up and running by 2009, the Corvin Shopping Center in district 9 opened its doors in the fall of 2010, followed by the Europeum this April on Blaha Lujza tér.

Currently under construction are the Váci1 and KÖKI Terminál projects, both scheduled to open by the end of the year. Although plaza construction might halt in the next few years due to a possible moratorium on building new malls, operators of existing facilities are more optimistic than they were a year ago.

“Last year was difficult. Retailers, both global and local, cut back on expansion, but from the beginning of the year, we’ve seen international expansion picking up again. This trend has brought six to eight new brands to the Hungarian market since,” said Viktória Szabó, partner and head of retail at Cushman & Wakefield, the agency that among other houses operates Arena Plaza and Campona in Budapest.

Location is still a primary factor when it comes to successful operation, but it is not the only thing that matters. “These days, a flexible approach from the owner’is at least as important as a good location. Operators need to be open to the needs of tenants,” Szabó said.

Cushman & Wakefield has been the retail agency of Arena Plaza, still the largest shopping mall in Budapest, since last year. The center, which opened fully leased in 2007, suffered the negative effects of the crisis, too. However, after a period of decline in occupancy in the last few years, it now operates at a vacancy rate of close to zero.

Good for the tenants Tenants are certainly in a better position now: rents have already been depressed because of the crisis, but some retailers’ weaknesses can be turned into others’ strengths to further push down prices. In general, the critical level for occupancy rates is around 75–80%. If the

rate drops below this, the remaining tenants – as stated in contracts in many cases – have the right to negotiate lower rents, or can even opt out of their contracts and leave the mall without any consequences.

In a time of recession, in addition to the lower rents, tenants can even manage to get a partially or fully furbished store. Before the crisis, this was pretty rare – all they got was a structurally complete area and fitting out the interior was done at their expense their budget. Also, many landlords are offering incentives and flexible lease terms to attract quality tenants.

There are, however, exceptions. Europeum, opened in April, currently boasts a 92% occupancy rate. “The timing was just right,” said Adrienn Lovro, managing director for Hungary at ABLON, the company that developed and owns the complex. “If we had opened last November, as originally scheduled, we would have had to face the same pressure from tenants as the others.”

Others, however, risked it. Corvin started operation last fall. “We think the fact that we managed to open in the midst of the crisis with a good tenant mix is a significant achievement,” Tamás Schmidt, leasing manager of Ségécé Hungary Kft, told the Budapest Business Journal. “And I can say that the crisis fostered communication between tenants and landlords.”

The occupancy rate in Corvin was not disclosed by the company, but there are currently several empty storefronts on the third floor of the three-storey building.

The tenant mix in Duna Plaza, another mall operated by Ségécé, went through a quality change over the last three years. “We were in a lucky position there due to the excellent location of the mall,” Schmidt said. “We managed to renew our tenant mix by bringing in strong names such as Gas, Yves Rocher, Marionnaud, UPC and H&M.” Rents have been stagnating since the crisis hit Hungary, he added.

Filling empty spaces Naturally, the crisis had an impact on tenants as well. Several retailers struggle with financial difficulties, and some were forced to fold operations in Hungary. Electronics retailer Electro World filed for bankruptcy protection in March and closed down five of its 13 stores in the country. Besides big box outlets in the outskirts of Budapest, stores in various shopping malls also went out of business.

Arena hosted one of the Electro World stores that closed down recently. The 4,000 square meter area is currently empty, but the agency already has plans for utilizing the area, although these are not yet public. When an anchor tenant is closing down shops in a mall, the most urgent task is to replace it as soon as possible. In order to prevent situations in which a space cannot be let immediately due to the existing contract with the troubled tenant, landlords usually secure special clauses in the contract that prevent such difficulties.

“Replacing an outgoing brand is in the mutual interest of both landlords and tenants,” Ségécé’s Schmidt said. PF

4 ways to fill westend Westend’s generic vacancy-covering canvases also, as appears to be common practice, serve as additional advertising, highlighting the various goods and services shoppers can get in the mall. Invariably, they have “one of WestEnd’s new stores opening here soon” written across them, indicating that it is only a matter of time before another tenant, without divulging any info on who it may be, will soon be opening. Of course, a tenant moving in-house could also choose a similar approach. One of the portals bears a company design informing customers that they have moved to a new location. Given that the store is still empty for the time being or is being fitted out for the successor, the sight of some additional shapes and colors is much welcome. Of course, this plaza too lost a tenant with folded Jeans Club, which seems to be strictly adhering to the chain’s design policies even when it is going out of business.

mammut The Buda-based shopping center, one of the first in the city is comparatively well-off when it comes to occupancy. Its operator recently concluded an overhaul to make the site more appealing to customers. It has had little in the way of problems with its anchor tenants, with a grocery store, sports store, twolevel book store as well as an electronics dealer operating without any major issues that would have warranted public attention. As such, only a handful of spaces are left empty. Mammut employs a common tactic where the portal of an unused store is converted into an advertising surface for another tenant that is adjacent or nearby. The center also has its own camouflaging design on the canvases used to cover the entrances of empty stores, which serve both as a colorful distraction as well as additional promotion for the plaza, even though it assumes the target audience is already inside the premises. In the BBJ’s experience, they also appear to have strict policies about taking pictures.

focus 13

www.bbj.hu

Budapest Business Journal | July 15 – Aug 4

empty shops Empty stores in a shopping center are always an eyesore. Besides the fact that they are not making money for the landlord they also convey a bad psychological message, since the disappointing sight of unsuccessful retailers could discourage shoppers from spending their money. The Budapest Business Journal’s gergő rácz took a field trip visiting some of the bigger plazas in Budapest to have a look at how operators respond and how creative their “camouflage” policies are. The solutions ranged from smart to utterly bland.

allee

The Buda-side shopping center built on the former site of the Budai Skála shopping complex was inaugurated with the goal of servicing the considerable number of people residing in the neighborhood who had no plazas in the direct vicinity. It has always produced pretty steady occupancy rates and has – up to now – not had any issues with anchors. Now, Allee too will have to look up a tenant to replace Jeans Club. However, the center has one of the few Electro World outlets still open for business. When it comes to hiding empty spaces, Allee came up with the blandest solution, covering up the portals with a plain gray surface. Even if a store is “totally out of business” as an employee in a nearby shop said, the stickers and displays promoting the discounts of the previous tenant are still there for all to see.

corvin

The operator had to think hard from the time of its opening last year, given that the center was not fully let. The solutions they came up with are actually quite clever. The upper level features an art gallery that showcases the works of artists in regular rotation. There is also a large area that has been furnished as a playhouse for the kids adjacent to a Corvin-themed video game screen. Earlier, the plaza was also home to the rehearsals of X-Faktor, a televised talent show on RTL Klub. When it comes to creative use of empty spaces, Corvin won our impromptu survey hands down. Unfortunately for the center, this approach is highly necessary given that its upper floor is practically deserted. The center is also unlucky in having to see an unforeseen spike in vacancy with the folding of its Electro World and Jeans Club shops.

the lists . .1

www.bbjonline.hu

Budapestfocus Business Journal | March 12 – March 26 14

www bbj hu

Budapest Business Journal | July 15 – Aug 4

Largest shopping centers in budapest

The BBJ’s Book of Lists contains 100+ sector-specific listings of leading companies. The Book of Lists comes free with a BBJ subscription, or can be ordered separately by e-mailing circulation@bbj.hu

6

7

www.polus.hu

Savoya Park

www.savoyapark.hu

Allee Shopping Center www.allee.hu

Árkád Örs vezér tere Shopping Center www.arkadbudapest.hu

8

9

Duna Plaza

www.dunaplaza.hu

Campona Shopping and Entertainment Center www.campona.hu

10

11

Corvin Shopping Center www.corvinbevasarlokozpont.hu

MOM Park Shopping Center www.mompark.hu

12

Europark Shopping Center www.europark.hu

13

Lurdy Ház Shopping and Office Center www.lurdyhaz.hu

14

Eurocenter Óbuda Bevásárló és Szórakoztatóközpont www.eurocenter-obuda.hu

15

16

17

18

Sugár Shopping Center www.sugar.hu

Csepel Plaza

www.csepelplaza.hu

Buy-Way Soroksár www.buyway.hu

Flórián tér Shopping Center www.piaconline.hu

NR

Köki Terminál Shopping and Entertainment Center (1) www.kokiterminal.hu

NR

NR

Váci 1 (1)

www.vaci1.hu

Europeum Shopping Center (1) www.europeum.hu

66,000

– 185,000

200 (approx.)

2 2,800



–

–





–

–



Mammut Szolgáltató Zrt 1024 Budapest, Lövőház u. 2–6.

(1) 345-8000, (1) 345-8005 www.mammut.hu

56,000

– 105,000

330 7 1,200

















WestEnd Ingatlanhasznosító és Üzemeltető Kft 1062 Budapest, Váci út 1–3.

(1) 374-6573 www.westend.hu

50,000

16,218 114,500

400+ 3 2,500

–

–

–





–

–

Pólus Center Üzemeltető Kft 1152 Budapest, Szentmihályi út 131.

(1) 415-2100, (1) 419-4034 www.poluscenter.com

48,700

– 62,600

200+ 2 2,500













CEGIS Hungary Kft 1117 Budapest, Hunyadi János út 19.

(1) 887-1330, (1) 209-9071 www.cegis.fr

48,000

75 3 2,000

–









ING Ingatlanbefektetés Kft 1061 Budapest, Andrássy út 9.

(1) 268-0140, (1) 255-5273 www.ing.hu

47,000

50+ 4 1,280









ECE Projektmanagement Budapest Kft 1106 Budapest, Örs vezér tere 25/a (1) 434 8200, (1) 434 8201 www.ece.hu

42,000

– 114,000

170 3 1,350



–



Ségécé Magyarország Kft 1138 Budapest, Váci út 178.

(1) 577-1100, (1) 577-1101 www.segece.hu

34,000

11,166 90,270

200 4 1,600



–



Cushman&Wakefield Kft 1052 Budapest, Deák Ferenc u. 15.

(1) 268-1288, (1) 268-1289 www.cushmanwakefield.com

40,091

– 58,760

160 2 1,800

















Ségécé Magyarország Kft 1138 Budapest, Váci út 178.

(1) 577-1100, (1) 577-1101 www.segece.hu

34,600

100 4 1,200

–

–

–

–



–



PBW Hungary Zrt 1072 Budapest, Rákóczi út 42.

(1) 487-5501, (1) 487-5542, www.pbw.hu

28,500

17,000 110,000

98 9 1,240



–









Europark Bevásárlóközpont Kft 1191 Budapest, Üllői út 201.

(1) 347-1601, (1) 347-1604 www.europark.hu

25,200

– 30,500

58 2 1,000



–







Lurdy-Ház Kft 1097 Budapest, Könyves Kálmán körút 12–14.

(1) 456-1200, (1) 456-1209 www.lurdyhaz.hu

25,000

22,000 50,000

131 4 1,350

–







Manhattan Real Estate Management Kft 1032 Budapest, Bécsi út 154.

(1) 437-4600, (1) 437-4650

22,059

– 49,106

55 3 1,000

–

–



Sigma Kft 1126 Budapest, Nagy Jenő u. 12.

(1) 487-37420 (1) 487-3721, www.sigma-property.com

22,000

– 35,900

90 4 400







–



–



–

–

–



–

Ÿ

6,775

Ÿ

–

Ÿ

Entertainment facilities

5

Pólus Center

Cushman & Wakefield Kft 1052 Budapest, Deák Ferenc u. 15.

(1) 268-1288, (1) 268-1289 www.cushmanwakefield.com

Restaurant

4

www.westend.hu

Food store

3

West End City Center

Concierge

www.mammut.hu

Wellness and sports

Mammut Shopping and Entertainment Center

Pharmacy

2

Net retail space (sqm)

Bank

www.arenaplaza.hu

Facility manager, address, phone, fax, website

Post office

Aréna Plaza Shopping Center

Services

Babysitting

1

Company Website

No. of retail units No. of levels No. of parking spaces

Net office space (sqm) Gross building area (sqm)

Access for disabled

Rank

Ranked by net retail space Major tenants in 2011

Ownership (%): Hungarian NonHungarian

Address Phone Fax Email





Peek & Cloppenburg, H&M, Zara, Stradivarius, Pull & Bear, Bershka, Oysho, Hervis, Tesco, Libri

– Lanebridge, a Rothschild Group Company (100)

1087 Budapest, Kerepesi út 9.

(1) 880-7010 (1) 880-7070 nikolett.nagy@arenaplaza.hu





Marks&Spencer, Rossmann, hervis, McDonalds, Cinema City

Mammut Zrt (100) –

1024 Budapest, Lövőház utca 2–6.

(1) 345-8000 (1) 345-8005 mammut@mammut.hu







C&A, dm, Rossmann, Media Markt, Palace Cinemas, Match

TriGránit Development Kft (100) –

1062 Budapest, Váci út 1–3.

(1) 238-7777 – info@westend.hu









C&A, Drogerie Markt, Douglas, hervis, Libri, Reno, Tesco

Pólus Shopping Center Zrt (100) –

1152 Budapest, Szentmihályi út 131.

(1) 415-2114 – info@polus.com



–







Auchan, OBI, ASKO, Maxon, Deichmann, New Yorker, Takko, dm, Merkur Spielo, Euronics

– (100)

1117 Budapest, Hunyadi János út 19.

(1) 887-1330 (1) 209-9071 office@savoyapark.hu



–

–







Adidas, Burger King, C&A, dm, Electro World, H&M, Humanic, Jeans Club, Regio Játék

ING Real Estate Kft (100) –

1117 Budapest, Október huszonharmadika utca 8–10.

(80) 205-046 – info@allee.hu





–







–

Interspar, Media Markt, hervis, ZARA, H&M, C&A, Deichmann, New Yorker, Douglas

ECE Projektmanagement Kft (100) –

1106 Budapest, Örs vezér tere 25/A (1) 433-1400 (1) 433-1401 @ info arkadbudapest.hu







–







H&M, Orsay, Saturn, Tally Weijl, Reserved, Bata

– Klepierre Group (100)

1138 Budapest, Váci út 178.

(1) 465-1600 (1) 465-1620 dunaplaza@segece.hu





Tropicarium, Tesco, Palace Cinemas Mozi, Charles Vögele, H&M, C&A, TAKKO, Deichmann, Hervis, Humanic, Libri, Camaieu, Pesto Cafe& Restaurant

– ING PFCEE (100)

1222 Budapest, Nagytétényi út 37–43.

(1) 424-3000 (1) 424-3001 info@campona.hu





–

CBA Príma, hervis, Müller, Deichmann, H&M, New Yorker, C&A

– Klepierre Group (100)

1082 Budapest, Futó utca 37–45.

(1) 267-8461 – @ zsofi corvinbevasarlokozpont.hu

–







Deichmann, Match, Mcdonalds, Alexandra, Adidas, Merkur Spielo

– AEW Europe (100)

1123 Budapest, Alkotás utca 53.

(1) 487-5500 (1) 487-5542 momparkinfo@mompark.com

–







–

Interspar hervis, Saturn, New Yorker, Deichmann, Humanic, Takko

Euro-Mall Ingatlanbefektetési Kft (100) –

1191 Budapest, Üllői út 201.

(1) 347-1601 (1) 347-1604 info@europark.hu





–







Palace Cinemas, Reál Élelmiszer, Game World, Pont Diszkont, KIK, Háda, Unicredit Bank

Lurdy Ingatlan Kft (100) –

1097 Budapest, Könyves Kálmán körút 12–14.

(1) 456-1200 (1) 456-1209 titkarsag@lurdyhaz.hu





–

–







Interspar, Palace Cinemas, Orsay, Bijou Brigitte, dm, T-Pont

– Atrium European Real Estate (100)

1032 Budapest, Bécsi út 154.

(1) 437-4600 (1) 437-4650 info-hu@aere.com





–









Match, Game World, Feminé, dm, Háda, Horváth Cipô

(100) –

1148 Budapest, Örs vezér tere 24.

(1) 469-5339 (1) 487-3749 sugar@sugar.hu





Cosmos City, Humanic, Leonardo, Libri, Match, Merkur Spielo

– Klépierre Group (100)

1211 Budapest, II. Rákóczi Ferenc út 154–170.

(1) 425-8004 (1) 425-8007 – csepel.plaza@segece.hu

Ségécé Magyarország Kft 1138 Budapest, Váci út 178.

(1) 577-1100, (1) 577-1101 www.segece.hu

13,675

– 19,803

61 2 473

ABLON Ingatlanfejlesztő Kft 1132 Budapest, Váci út 30.

(1) 225-6600, (1) 225-6601 www.ablon-group.com

11,400

– 12,260

7 2 420



–

–

–

–

–

–

–

–

–

Office Depot, dm, Líra, Brendon, WalterLand

– ABLON Group (100)

1231 Budapest, Bevásárló utca 8.

(1) 225-6600 (1) 225-6601 ablonretail@ablon.hu

Fővárosi Önkormányzat Csarnok és Piac Igazgatósága 1117 Budapest, Kőrösy József u. 7–9.

(1) 273-3100, (1) 273-3163 www.piaconline.hu

11,140

– 12,304

67 5 56



–









–

–



–

Magyar Posta Zrt., CIB Bank, Gilda Max Kft., Firenze Divatház, Garko Kft.

Budapest Municipality (100) –

1033 Budapest, Flórián tér 6–9.

(1) 439-3800 (1) 439-3887 csapi.ig@csapi.hu

Jones Lang LaSalle Kft 1123 Budapest, Alkotás út 50.

(1) 489-0202 www.joneslanglasalle.hu

59,000

7,000 200,000

200 3 1,900





















OBI, Libri, H&M, Müller, Tesco, C&A, Humanic, Euronics, Vögele

– Erian Holding AG (100)

1195 Budapest, Vak Bottyán út 75.

(1) 371-0245 (1) 371-0246 titkarsag@r-co.hu

Orco Property Group 1062 Budapest, Andrássy út 70.

(1) 880-7200 www.orcogroup.hu

11,000

–

80 5



–

–

–

–

–



–



–

Ÿ

Orco Property Group (100) –

1052 Budapest, Váci utca 1.

(1) 880-7200 – –

ABLON Ingatlanfejlesztő Kft. 1132 Budapest, Váci út 30.

(1) 225-6600, (1) 225-6601 www.ablon-group.com

5,000



–

–

–

–

–

–

–

–

–

H&M, Müller, Deichmann, Yves Rocher, Bijou Brigitte, Tally Weijl, Playersroom, Samsonite, Triumph

– ABLON Group (100)

1088 Budapest, József körút 5.

(1) 225-6600 (1) 225-6601 info@europeum.hu

notes: (1) The shopping center has opened or will open this year.

Ÿ – 6,000

Ÿ 16 3 300

thefocus lists 151

www www..bbjonline bbj.hu .hu

Budapest – March 26 BudapestBusiness BusinessJournal Journal | | March July 1512 – Aug 4

largest shopping centers outside budapest

The BBJ’s Book of Lists contains 100+ sector-specific listings of leading companies. The Book of Lists comes free with a BBJ subscription, or can be ordered separately by e-mailing circulation@bbj.hu

1

2

Facility manager, address, phone, fax, website

South Airport Park Duo Kft 1117 Budapest, Budafoki út 91–93.

(1) 382-5100, (1) 382-5101 www.aiglincoln.hu

44,000 – 155,000

31 1 1,550

Árkád Pécs Shopping Center

ECE Projektmanagement Kft 1106 Budapest, Örs vezér tere 25/A (1) 434-8200, (1) 434-8207 www.ece.de

34,500 – 35,000

116 2 850

Ÿ



–







–





Árkád Győr Shopping Center

ECE Projektmanagement Kft 1106 Budapest, Örs vezér tere 25/A (1) 434-8200, (1) 434-8207 www.ece.de

30,832 512 73,396

121 2 1,150

Ÿ



–

–





–



Malompark Shopping Center

Boston Bróker Kft 4026 Debrecen, Simonffy u. 1/a (52) 483-080, (52) 745-605 www.boston-broker.hu

30,783 – 39,240

34 3 610

85













–

Raiffeisen Ingatlan Üzemeltető Kft 1054 Budapest, Akadémia u. 6.

(1) 477-8492, (1) 477-8499 www.raiffeisenalapok.hu

30,000 – 40,000

80 4 400

90



–









–



WPR Alfa Kft 1095 Budapest, Máriásy u. 7.

(1) 451-4205, (1) 451-4762 www.wing.hu

24,000 – 33,000

106 3 520

Ÿ





–









23,500 –

Ÿ

15 1 620

Ÿ



–

–

–

–

–

–

ABLON Ingatlanfejlesztő Kft 1132 Budapest, Váci út 30.

(1) 225-6600, (1) 225-6601

21,000 – 22,400

13 2 600

Csaba Center Invest Kft 5600 Békéscsaba, Andrássy út 37–43.

(66) 524-530, (66) 524-525 www.csabacenter.hu

20,529 13,000 80,000

116 4 800

99











–

–



Europark Bevásárlóközpont Kft 2060 Bicske, Spar út (42) 799-100, (42) 799-123 www.europark.hu

19,000 – 51,000

73 4 640

Ÿ





–





–



Malom Ingatlanhasznosító Kft 6000 Kecskemét, Korona u. 2.

(76) 416-274, (76) 320-704 www.malom.hu

17,200 2,747 43,200

93 10 463

Ÿ





–





–

–

Ségécé Magyarország Kft 1138 Budapest, Váci út 178.

(1) 577-1100, (1) 577-1101 www.segece.hu

15,583 – 20,000

67 1 1,000

Ÿ

–



–

–

–



–



Ségécé Magyarország Kft 1138 Budapest, Váci út 178.

(1) 577-1100, (1) 577-1101 www.segece.hu

15,367 300 19,794

62 1 840

Ÿ







–



–

–

Ségécé Magyarország Kft 1138 Budapest, Váci út 178.

(1) 577-1100, (1) 577-1101 www.segece.hu

15,245 – 20,252

69 1 522

91



–

–





–

Ségécé Magyarország Kft. 1138 Budapest, Váci út 178.

(1) 577-1100, (1) 577-1101 www.segece.hu

15,085 98 19,800

65 1 450

88



–

–





Ségécé Magyarország Kft 1138 Budapest, Váci út 178.

(1) 577-1100, (1) 577-1101 www.segece.hu

14,750 – 38,650

80 11 420

Ÿ





–



Debrecen 2002 Kft. 1138 Budapest, Váci út 178.

(1) 577-1100, (1) 577-1101 www.segece.hu

14,620 – 17,000

Ÿ

2 420

Ÿ



–

–

Európa Ingatlanbefeketetési Alap, 1011 Budapest, Fő utca 14.

(1) 225-2500, (1) 225-2501 www.europaalap.hu

14,180 – 32,000

62 5 500

92



–

Ségécé Magyarország Kft. 1138 Budapest, Váci út 178.

(1) 577-1100, (1) 577-1101 www.segece.hu

14,111 100 21,258

Ÿ

Ÿ



Ségécé Magyarország Kft 1138 Budapest, Váci út 178.

(1) 577-1100, (1) 577-1101 www.segece.hu

12,666 – 19,800

73 2 675

Ÿ

–

Market Central Ferihegy www.marketcentral.hu

www.arkadpecs.hu

3

www.arkadgyor.hu

4

www.malompark.hu

5

6

Szinvapark

www.szinvapark.hu

Agria Park

www.agriapark.hu

Zala Park

www.zala-park.hu 7

8

9

Buy-Way Dunakeszi www.buyway.hu

Csaba Center Shopping and Entertainment Center www.csabacenter.hu

10

11

Korzó Shopping Center www.korzo.hu

Malom Trade, Finance and Entertainment Center www.malom.hu

12

Szeged Plaza

13

Pécs Plaza

14

www.szegedplaza.hu

www.pecsplaza.hu

Alba Plaza

www.albaplaza.hu

15

Győr Plaza

16

Miskolc Plaza

17

Debrecen Plaza

18

Vértes Center Shopping Center

www.gyorplaza.eu

www.miskolcplaza.eu

www.debrecenplaza.net

www.vertescenter.hu

19

20

Sopron Plaza

www.sopronplaza.hu

Nyír Plaza

www.nyirplaza.eu

ConvergenCE Kft 1014 Budapest, Dísz tér 14.

(1) 225-0912, (1) 375-0445 www.convergen-ce.com

2 760

93

72





7622 Pécs, Bajcsy-Zsilinszky utca 11/1.

(72) 523-100 (72) 523-001 –







Deichmann, dm, Rossmann, Interspar, Alexandra, Burger King

– Einkaufs-Center Győr GmbH & Co. KG Hungarian branch office (100)

9027 Győr, Budai út 1.

(96) 555-000 (96) 555-015 info@arkadgyor.hu







Interspar, Praktiker, Aktív Fitness, Brendon

Debreceni Shopping Center Kft (Ÿ) Budapest Properties B.V. (Ÿ)

4027 Debrecen, Füredi út 27.

(52) 483-080 (52) 745-605 malompark@malompark.hu





Media Markt, Hervis, Interspar, Benetton, Brendon, DM, UPC

– (100)

3527 Miskolc, Bajcsy-Zsilinszky utca 2–4.

(46) 502-306 (46) 502-301 info@szinvapark.hu







Libri, Pirex, Electro World, hervis, Neckermann, Tesco

Wallis Ingatlan Zrt (100) –

3300 Eger, Törvényház utca 4.

(36) 515-155 (36) 515-156 marketing@agriapark.hu





–

C&A, Aldi, Jysk, New Yorker, Decathlon, DM, Takko, Regio Játék, Diego

– Europa Fund II (100)

8900 Zalaegerszeg, Balatoni út 7.

(1) 225-0912 (1) 375-0445 office@converge-ce.com

–

Möbelix, C&A, Deichmann, DM, Líra, Reno, Kangaboo, Dockyard, Walterland, Office Depot

– ABLON Group (100)

2120 Dunakeszi, Nádas utca 8.

(1) 225-6600 (1) 225-6601 ablonretail@ablon.hu





Media Markt, Spar, C&A, hervis, New Yorker, Deichmann, Alexandra, dm

Elektroház Kft. (60) LBL Kft (40) –

5600 Békéscsaba, Andrássy út 37–43.

(66) 524-524 (66) 524-525 csabacenter@csabacenter.hu





–

SPAR, Hervis, Humanic, New Yorker, DM, Libri, Euronics, Douglas, Promod, Camaieu, Roland, Mexx

HVB Nano Leasing Kft. (100) –

4400 Nyíregyháza, Nagy Imre tér 1.

(42) 799-100 (42) 799-123 korzo@korzo.hu







OTP Bank, New Yorker, hervis, Deichmann, Jeans Club, Brendon, Alexandra

Individuals (100) –

6000 Kecskemét, Korona utca 2.

(76) 416-274 (76) 320-704 info@malom.hu





H&M, C&A, Tally Weijl, Gas, Alexandra, Cinema City, Rossmann

– Klepiérre Group (100)

6724 Szeged, Kossuth Lajos sugárút 119.

(62) 553-800 (62) 553-810 szegedplaza@segece.hu







Rossmann, Don Pepe, McDonalds, Alexandra, Telenor, UPC, Vodafone

– Carpathian Asset Management Ltd (100)

7632 Pécs, Megyeri út 76.

(72) 550-360 (72) 550-372 pecsplaza@segece.hu

–

–





Humanic, Don Pepe, Alexandra, Regál, hervis, Telenor, Vodafone

– Klepierre Group (100)

8000 Székesfehérvár, Palotai út 1.

(22) 513-300 (22) 513-317 marta.almasi@segece.hu

–

–







IT Cinema, Match, Merkur Spielo, Rossmann, Gas, Cosmos

– Klépierre Group (100)

9024 Győr, Vasvári Pál utca 1/A (96) 413-863 (96) 413-869 gyorplaza2@segece.hu



–

–

–





H&M, C&A, Humanic, Dockyard, Promod, Orsay, Roland Divatház

– Klépierre Group (100)

3525 Miskolc, Szentpáli utca 2–6.

(46) 503-000 (46) 416-121 miskolcplaza@segece.hu



–

–

–







Alexandra, Cinema City, Humanic, McDonalds, Raiffeisen Bank, Vodafone

– Klepierre Group (100)

4026 Debrecen, Péterfia utca 18.

(52) 456-700 – debrecenplaza@segece.hu

–



–

–

–

–

–



Media Markt, Palace Cinemas, Deichmann, Hervis, C&A, New Yorker, Takko, dm, Libri

Ÿ Ÿ

2800 Tatabánya, Győri út 7–9.

(34) 801-400 (34) 801-441 info@vertescenter.hu



–



–

–

–







CBA, Illy, Alexandra, Football World, Mister Minit, Cinema City

Sopron Plaza Kft (100) –

9400 Sopron, Lackner K. utca 35.

(99) 512-310 – sopronplaza@sopronplaza.hu



–



–

–

–



Reál Prémium, Szöszy Fashion, Sabatini, Opti Markt Optika, dm, Adidas-Reebok

– Klepierre Group (100)

4400 Nyíregyháza, Szegfű utca 75.

(42) 508-620 (42) 596-111 nyirplaza@segece.hu

–

–

–

–

–

–

–

–



–





–



Entertainment facilities 

– ECE Europa Bau- und Projektmanagement GmbH (100)



Restaurant 

Deichmann, hervis, dm, Rossmann, Interspar, Burger King



Food store

2220 Vecsés, Fő út 246–248.

(29) 557-000 (29) 557-001 mcferihegy@aiglincoln.hu

–

Lockers

South Airport Park Duo Kft. (100) –

–

Wellness and sports

–

Tesco, Praktiker, Retz, Vögele, C&A, Müller, DM, Euronics, Intersport, Fressnapf, PlayersRoom

Pharmacy

Address Phone Fax Email

Bank

Ownership (%): Hungarian Non-Hungarian

Post office

Major clients in 2011

Baby sitting

Company Website

No. of retail units No. of Occupancy levels rate in No. of 2010 (%) parking spaces

Szolgáltatások

Net retail space (sqm) Net office space (sqm) Gross building area (sqm)

Access for disabled

Rank

Ranked by net retail space

16 focus

www.bbj.hu

Budapest Business Journal | July 15 – Aug 4

[ expert opinion ]

Dilemmas in regulating supplier-retailer contracts lajos wallacher Lawyer Squire sanders

The Act XCV of 2009 on the prohibition of unfair commercial practices harmful to food suppliers entered into force in January 2010 and was amended at the beginning of this year.

The responsibility of enforcement lies with the Central Agricultural Office (MGSzH). So far the authority has closed seven cases, of which only one has ended with a commitment decision, the remaining six have resulted in heavy fines: HUF 780 million in total. Decisions imposing fines have been contested before administrative court; the suits are pending.

Predictability is a key notion when one thinks about the values of legislation and law enforcement. To make the implications of one’s behavior foreseeable is of utmost importance if the state wishes to create a safe legal environment for businesses, because it allows undertakings to invest without unnecessary risks. On the other hand, the dynamics of economy require flexible rules and enforcement methods.

This flexibility guarantees that individual decisions achieve the aims of the legislator notwithstanding changing business models and practices. The more rigid a rule is, the more predictability it provides, but unfortunately, the more unjust the result may be. It is not an easy task to strike the right balance. The following examples emerged in the application of the said Act, and they illustrate how difficult it is to find the best solution.

Several provisions of the Act specifically aim at predictability and legal certainty. For instance, the Act lists specific unfair terms. Regrettably, by doing so the Act leaves no room for individual, principles-based appraisal. For example, logistic services are deemed unfair. This provision tries to protect suppliers, but it may prove to be counterproductive. Presumably, SMEs can be better off if it is not their duty to deliver the goods to separate supermarkets. Consequently, in order for the enforcement authority to be able to take into account the relevant circumstances of an individual case, the application of the general, flexible rule, which says that services provided by retailers shall be deemed unfair if they do not serve the interests of the supplier at all, would be more effective.

It was an important step toward achieving predictability of enforcement policy when the MGSzH published a “working paper” in which it attached detailed

explanatory notes to the provisions of the Act. It deserves cheers, because it is good to know in advance the interpretation of the law to be applied by the authority.

Unfortunately, this advantage was immediately annulled by a statement which said that the MGSzH was not bound by the working paper. This approach runs counter to the legal certainty requirement. The Constitutional Court has declared that where an authority adopts guidelines, it constitutes a self-imposed limitation of its discretion. Similarly, in EU law it is settled case-law that the European Commission may not depart from rules which it has imposed on itself by issuing guidelines.

Therefore it is better to say less in guidelines, but stick strictly to the words that have been said.

The MGSzH may adopt commitment decisions. This means that if a retailer offers commitments to meet the concerns expressed to them, that is to say, it is ready to change its objectionable behavior, the MGSzH may deciside to make those commitments binding toward it. In this case, the procedure will be closed without deciding whether there has been an infringement or not. On the other hand, the behavior made binding in such a way is surely in conformity with the Act. For this reason retailers may find a safe harbor if they copy the conduct that was approved by commitment decision. That is why it would be very useful for undertakings to be able to get acquainted with the full content of commitment decisions, which is not the case at the moment.

The question of which rules should be applied where the Act is silent on a specific matter (e.g. how to calculate time limits) has surfaced on several occasions. In these situations predictability and legal certainty prefer the application of existing general rules instead of creating autonomous, new ones deduced freshly from the Act. To statutes that regulate contractual relationships it is the Civil Code (Ptk.) that should apply as a background, subsidiary act. Presumably, to resort to the Civil Code fulfills the expectations of the parties as well.

To sum up, both the Act and the enforcement practice have promising elements from the point of view of predictability and legal certainty, but some work is still to be done. At the same time, flexibility is equally desirable. In balancing these opposing values, the following can be proposed as a rule of thumb: to better regulate the economy, flexible legislation is needed, which simultaneously requires more predictable, more transparent law enforcement.

www.ssd.com

NOTE: ALL ARTICLES MARKED EXPERT OPINIONS are paid promotional content for which the Budapest Business Journal does not take responsibility

To market, to market!

-4% BBJ

largest retail chains

Change in total net revenue of listed firms in 2010

2010 was a troublesome year for the retail sector. So far, 2011 has not brought much optimism either. Yet, a number of changes in consumer behavior opened new opportunities for businesses.

BBJ SAIDA AYUPOVA

2010 was a bad year for retail in Hungary.

The volume of sales in the sector dropped by 2.1% from the previous year. July gave a glimpse of hope when sales went up, the first positive development in 41 months. However, what appeared to be a recovery did not last very long: Hungarians said “Bah, Humbug” to the spirit of Christmas spending and kept their wallets firmly closed.

The largest players in the market, hyper- and supermarkets, were worst affected by falling consumption: the top 13 chains in Hungary in our list suffered a decline twice as large as the average in the retail segment according to the Central Statistical Office (KSH) data.

Still, top players’ positions in the market are consolidated enough that there was no significant change in their ranking. Tesco, which remains the leader in the sector, was the only one of the top five food retail chains to increase its total assets. Meanwhile, everyone at the top of the list except Auchan suffered a decline in net sales of between 0.6% and 9.2%. The French chain managed to increase its net sales by 0.3% to HUF 227.4 billion.

The sector’s profitability also declined. SPAR Magyarország suffered the largest drop in its bottom line: it had a HUF 25 billion loss in 2010, HUF 11 billion more than in the previous year. Ironically, Auchan, the only chain to see its revenue, was only able to do this at the price of a 6.1% larger loss than in 2009, leaving it HUF 8 billion in the red.

Of course, not all large players closed the year with a loss. Tesco, for example, still made a HUF 9.7 billion profit in 2010 even though it increased its assets by 6.9%. Penny Market also had a HUF 700 million profit, a huge – 67.4% – drop from the previous year. Meanwhile, its assets decreased by 49% to HUF 25.7 billion.

The long-awaited recovery has yet to take place. The first four months of 2011 recorded a 0.5% decrease in the volume of retail trade turnover from the corresponding period last year. April witnessed the sharpest drop of 1.3% in annual terms.

Sales of food, drinks and tobacco, which constitute roughly 46% of overall sales in retail trade, stagnated in January–April

compared to the same period of the previous year. Non-specialized stores suffered the most since they account for 90% of all food, drinks and tobacco sales. A set of changes in consumer behavior explains these negative market tendencies.

First, the tax-reduction program operational from the beginning of the year, which was meant to boost consumption by increasing the level of disposable income, failed.

Households chose to save the extra money.

Second, consumers’ expectations of income and their predictions regarding the economy overall were quite pessimistic at the beginning of the year according to the GfK Hungária market research institute. Households expected their financial situation to worsen, and unemployment to rise. As a result, not only were they shopping less frequently, but they took planned shopping trips and were significantly less prone to impulsive purchases. As Katalin Gillemot, external communications and sustainable development director of Auchan Magyarország Kft, told the Budapest Business Journal, “as a result of the economic crisis our consumers behavior has changed - in every product category the customers look for low-price products.”

Another challenge that the retail sector has to face is a constantly changing legal environment.

This year alone brought developments such as the adoption of the “chips tax” on food high in sugar, salt, carbohydrates and caffeine along with Hungary-led EU food-labeling initiative and a proposed shopping mall ban. Last year brought the crisis taxes, of which retail chains have to pay 2.5% of annual revenues, regardless of whether they make a profit or not.

Although the retail sector was off to a rocky start this year, some data suggests that things might pick up in the coming months. GfK has recorded improvements in consumer confidence and expectation indices during Q2 as well as the likelihood of households to make major purchases in the near future. This is, in part, due to a 0.4% drop in unemployment in the March-May period.

Moreover, due to an increased tendency by consumers to make informed decisions, they pay closer attention to promotions, special discounts and leaflets. This opens a window of opportunity for stores to attract more customers. In fact, Katalin Gillemot predicts further increases in price-awareness as well as more sophisticated consumer behavior. This means that, on one hand, stores will compete more vigorously for customers’ loyalty, but, on the other, consumers will have an even wider range of fairlypriced quality products. “The task for the chains now is to launch programs that are able to shout louder than the marketing noise around them and can continuously maintain customers’ interest and active participation in the program,” said Krisztina Kovács, sector manager of GfK Hungária’s consumer tracking, in a press release.

Already now, most major store chains offer their customers a variety of promotional deals, from bonus cards to information packages on healthy dietary choices; to various contests and lotteries; to even issuing credit cards through major banks. n

thefocus lists 17 1

www .hu www..bbjonline bbj.hu

Budapest – March 26 Budapest Business Business Journal Journal | | March July 1512 – Aug 4

food retail chains

The BBJ’s Book of Lists contains 100+ sector-specific listings of leading companies. The Book of Lists comes free with a BBJ subscription, or can be ordered separately by e-mailing circulation@bbj.hu

Ranked by total net revenue 2010

Balance sheet earnings (HUF mln): 2010 in 2009

Equity capital in 2010 Accounts payable in 2010

Tesco-Globál Áruházak Zrt

573,309(1) 576,534

9,740 13,321

262,519 60,313

2

Spar Magyarország Kereskedelmi Kft

336,848 360,233

-25,945 -14,814

42,920 34,852

398

3

Auchan Magyarország Kft

227,404 226,741

-8,451 -7,965

33,568 40,653

4

Metro Kereskedelmi Kft(2)

180,182 198,360

-1,252 0

143,773 22,594

Lidl Magyarország Bt

141,963[1] 141,963[1]

9,762 -3,143

48,348 18,482

144

Penny-Market Kft

131,832 137,180

702 0

11,533 10,448

189

Magyar Hipermarket/Cora Kft

69,617 79,640

-3,604 -2,213

3,114 11,225

7

Csemege-Match Kereskedelmi Zrt

38,047 45,256

-3,340 -2,922

3,972 3,899

CBA Kereskedelmi Kft www.cba.hu

26,851 26,810

1,016 1,180

Profi Magyarország Kereskedelmi Zrt

20,946 25,163

Rank

Total net revenue (HUF mln): 2010 in 2009

1

5

6

7

8

9

10

Company Website

www.tesco.hu

www.spar.hu

www.auchan.hu

www.metro.co.hu

www.lidl.hu

www.penny.hu

www.cora.hu

www.match.hu

www.profi.hu

11

NR

Reál Hungária Élelmiszer Kft www.real.hu

COOP

www.coop.hu

NR Aldi Hungary Bt www.aldi-hungary.hu

No. of shops

No. of full-time employees in Hungary in 2010

Year established

Ownership (%): Hungarian Non-Hungarian

Top local executive Finance director Marketing director

Address Phone Fax Email

176

22,601

1989

– Armitage Holdings B.V. (99.72), Tesco Overseas Investments Ltd. (0.28)

Gerry Gray Erzsébet Antal –

2040 Budaörs, Kinizsi utca 1–3.

(20) 827-0000 (23) 449-201 internet_feedback@hu.tesco-europe.com

14,827

1990

– Aspiag Management (100)

Péter Feiner, Gábor Csiba, Judit Kiss, Kornél Saltzer – –

2060 Bicske, Spar út 0326/1 hrsz.

(20) 823-7000 (22) 567-042 info@spar.hu

14

5,646

1996

– Auchan S.A. (100)

Dominique Ducoux Jean-Marc Gassmann –

1113 Budapest, Bocskai út 134–146.

(23) 886-200 (23) 886-299 info@auchan.hu

13

2,956

1994

– Metro Cash & Carry International Holding B.V. (100)

Roland Ruffing Csaba Mándoki Gábor Dávid

2040 Budaörs, Budapark, Keleti 3.

(23) 508-393 (23) 418-040 info@metro.co.hu

2,998

2003

Lidl Holding Kft. (0.01) Lidl Magyarország GmbH (99.99)

Friedrich David Fuchs, Péter Tóth – –

1037 Budapest, Rádl árok 6.

(1) 364-6000 (1) 346-6010 info@lidl.hu

2,400

1994

– REWE-Beteiligungs-Holding International GmbH (100)

Péter Kásler, Jens-Thilo Krieger – –

2351 Alsónémedi, Északi Vállalkozói Terület, 5-ös főút (29) 339-100 (29) 339-101 titkarsag@penny.hu

2,747

1996

– Louis Delhaize Participation Nederland B.V. (100)

Philippe Lejeune, Gaston Egler György Zlinszky Christian Joel Beck

2045 Törökbálint, Torbágy utca 1.

(23) 515-543 (23) 515-599 –

121

2,147

1952 (2003)

– Louis Delhaize Participation Nederland B.V. (100)

Vincent Roussel – Andrea Kollár

1097 Budapest, Könyves Kálmán körút 12–14.

(1) 456-2300 (1) 476-8780 info@match.hu

– –

2,233

353

1992

(100) –

András Malasics – –

2351 Alsónémedi, 2402 hrsz.

(29) 620-010 (29) 620-157 ertekesites@cba.hu

-1,121 -1,025

2,387 1,977

77

887

1988

– Louis Delhaize Participation Nederland B.V. (100)

Serge Grégori Attila István Kolcsár –

1097 Budapest, Könyves Kálmán körút 12–14.

(1) 456-2300 (1) 219-0681 info@profi.hu

3,895 3,980

0 387

571 144

Ÿ

79

2001

(100) –

Tibor Kujbus – –

1097 Budapest, Könyves Kálmán körút 12–14.

(1) 456-1230 (1) 456-1237 mail@real.hu

510,000 (2009) 510,000

Ÿ Ÿ

Ÿ Ÿ

Ÿ

Ÿ

1997

(100) –

László Murányi – –

1097 Budapest, Könyves Kálmán körút 11.

(1) 455-5400 (1) 373-0455 uzletlanc@coop.hu

35,458 (2009) 35,458 (2009)

-7,207 -10,275

12,758 4,861

2006

Aldi Hungary Holding Kft (Ÿ) Hofer KG (Ÿ)

Christoph Schwaiger – –

2051 Biatorbágy, Mészárosok útja 2.

(23) 533-500 (23) 533-698 igazgatas.bia@aldi-hungary.hu

75

956

notes: (1) Data of business period March 1, 2009–Feb. 28, 2010. (2) Wholesale trade

Ÿ=

This list was compiled by researcher Mihály Kovács from responses to questionnaires received by July 13, 2011. To the best of the Budapest Business Journal’s knowledge, the information is accurate as of would not disclose, NR = not ranked, NA = not applicable press time. While every effort is made to ensure accuracy and thoroughness, omissions and typographical errors may occur. Additions or corrections to the list should be sent on letterhead to the research department, Budapest Business Journal, 1075 Budapest, Madách Imre út 13–14., or faxed to (1) 398-0345. Mihály Kovács can be contacted at mihaly.kovacs@bbj.hu.

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Pannonhalma Arch heart of a Habsburg, heart of Hungary The Archabbey is dedicated to St Martin of Tours, who was supposedly born at the foot of the 282m hill on which it stands – hence its alternative name, Márton-hegyi Apátság – though other accounts give his birthplace as Szombathely to the west. Either way, St Martin links Pannonhalma directly to Roman Pannonia, the great eastern preChristian province of the Roman Empire.

Martin’s stay in Pannonia was brief, but when Benedictine monks came north from Italy and lands further west in 996, to territory taken by the pagan Magyars a century before, the monastery lands that Grand Prince Géza granted them were duly dedicated to him. Géza’s son King Stephen I further endowed the abbey, which became a center of Christianization in the new Hungarian kingdom, but also of the transmission of Western European culture from Benedictine communities elsewhere. One of the earliest known documents to use Hungarian, the founding charter of the Benedictine abbey at Tihany near Lake Balaton, dating from 1055, is preserved in the Pannonhalma archives.

Pannohalma enjoyed royal patronage and a central place in Hungarian spiritual life all through the Middle Ages. Its early Gothic basilica was begun in the early 13th century and dedicated in 1224, above the remains of two earlier buildings. Much of the current fabric, though, dates from the reign of King Matthais, who found the abbey neglected and depopulated, and took it over in 1472 for his personal use. He decorated the nave, and built side chapels and cloisters in a more florid late Gothic/early Renaissance style.

When Hungary began its time of troubles after Matthais’s death, Pannonhalma suffered too, and was made an archabbey – independent of any local Christian hierarchy – in 1541, as the Turks drove deeper into Europe.

The archabbey was fortified and monastic life continued, with difficulties, but in 1575 a fire damaged much of the fabric and led to its abandonment: the Turks occupied the site in 1594, and almost all of its interior furnishings were destroyed. The monks were able to return in 1638, but real recovery only began

with the accession of Mathias Palfy as Abbot in 1683. From this period also dates the Pannonhalma Benedictine College, where Otto von Habsburg later studied, which was inaugurated in 1690. In the 18th century, Benedek Sajghó, Archabbot from 1722 to 1768, oversaw substantial Baroque additions to the Archabbey, including the current façade and the twostorey refectory with its frescoes. The attached Chapel of Our Lady was begun in 1714.

The Archabbey’s revival was interrupted

by Emperor Joseph II’s dissolution of the

Otto von Habsburg: Emperor of Memories Otto von Habsburg, head of the House of Habsburg and last Crown Prince of Austria-Hungary, died on July 4, 2011, requesting his heart to be buried in Pannonhalma Archabbey, close to the Austrian border.

Habsburg: it’s a name that trembles on the border between history and legend. It conjures up Charles V, the Spanish Armada, Maria Theresa, Sissi and Mayerling. And to meet a living Habsburg is to shake hands with history itself. Otto von Habsburg was more than just a 900-yearold name, though. Son and heir of the last reigning Habsburg Emperor and King, Charles I, godson of the legendary Franz Josef himself, head of the House of Habsburg from 1922, he was a true public figure, a career politician, and a tireless advocate of pan-Europeanism.

The young Otto von Habsburg was educated by the Benedictine monks of the Pannonhalma Archabbey school. Driven first from Hungary and

life 19

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Budapest Business Journal | July 15 – Aug 4

Pannonhalma Archabbey, where the heart of Otto von Habsburg, last crown prince of the Austro-Hungarian Empire, is to be laid to rest in an urn on July 17, is one of Hungary’s most significant and historic religious monuments. Home to a revived Benedictine community and the prestigious secondary school where the last Habsburg crown prince studied, it bears witness to almost every major epoch of Hungarian history, as well as the broader European and Christian heritage that he embodied and defended all his life. The Archabbey and its surroundings were designated a UNESCO World Heritage Site in 1996.

abbey: Benedictine Order in his domain in 1786, but Pannonhalma’s educational work ensured some continuity, with the monks able to stay on as teachers in the archabbey buildings.

In 1802 the archabbey was re-established, conditional on its continuing educational role. Its library, built in the 1820s and 1830s, now holds some 360,000 volumes.

The archabbey also added its arboretum, which now boasts more than

400 plant species, in the 1830s. Further renovation work in the 1860s and 1870s added a new high altar, pulpit, windows and frescoes.

With the approach of the Hungarian millennium in 1896, Pannonhalma was awarded its own Millennium Memorial, also part of the present World Heritage Site. The current monument has been shorn of its original dome, which was dismantled in the late 1930s after substantial

then Austria after the collapse of the Empire in 1918, he and his family fled to Switzerland and later Madeira and Spain.

Miklós Horthy governed Hungary from 1922 as regent, but with no suggestion of reinstating the Habsburgs.

A member of the International Paneuropean Union (IPU) from 1936, Otto von Habsburg staunchly opposed the Nazi Anschluss of 1938, offering to return to lead the resistance, and earned a place on the Nazi death list. In the 1930s he studied at the Catholic University of Leuven (also in formerly Habsburg territory), whence he fled with his family in 1939 to the US. During the war, he lobbied for the creation of a “Danube Federation” of peoples, but Stalin’s advance rendered this futile.

The post-war Austrian government expelled Otto von Habsburg and denied him citizenship. Nonetheless, he returned to Europe as a journalist and lecturer, and in 1950 met his future wife, Princess Regina of Sachsen-

deterioration. In the 20th century, the archabbey’s secondary school benefited briefly from a gift of new buildings in 1941, a donation from Mussolini’s Italian government. But after 1945, the Communists confiscated the site and its properties, though the secondary school was able to continue operating throughout the Communist period. Fortunately, the archabbey was little damaged, and following further renovation in 1995, received

Meiningen, in Berlin. Settling in Pöcking in Bavaria, where Sissi herself grew up, he took dual German-Austrian citizenship, confirmed in 1961 when he surrendered his claim to his Austrian titles. In 1973 he became president of the IPU, and in 1979 was elected MEP for Upper Bavaria, for the Christian Social Union. Among his parliamentary roles in his 20 years as an MEP, he was President of the Hungarian Delegation. In August 1989, he helped lead the Pan-European Picnic, a demonstration on the AustrianHungarian border near Sopron which allowed almost 700 East Germans to cross into the West. That same year he politely nixed suggestions that he should return to Hungary as head of state.

Stepping down from the IPU presidency in 2004, he retreated from public life after the death of his wife in February 2010. He died in Pöcking. After his funeral in Vienna, his heart will be taken in an urn for burial in Pannonhalma Archabbey. PM-ASz

its World Heritage Site status. Modern revivals of the complex’s traditions include the rebirth of winemaking there, with the purchase of new vineyards in 2000.

Pannonhalma Archabbey exemplifies the same continuity down through European history and across Europe from East to West that Otto von Habsburg himself represented. Truly a fitting resting place for the heart of an (almost) emperor. PM

20 life

www.bbj.hu

Budapest Business Journal | July 15 – Aug 4

Sticking to what he knows Having for many years been one of the top executives of Hungary’s biggest company MOL, György Mosonyi resigned from his post in May. He wasn’t away long, however, as he became a member of the company’s supervisory panel after relinquishing his executive duties and was picked to lead the board shortly afterwards. The BBJ spoke with Mosonyi after one of his regular speaking engagements, presenting MOL’s success story.

Q: What was the most significant aspect of Hungary’s EU presidency from a corporate perspective?

A: From our side, we greatly appreciate efforts made in creating a unified European energy market. This is an important direction that will greatly benefit the industrial sector and was the highlight of the term from our position.

The Hungarian presidency played a highly positive role in this respect.

Q: What do you think of drives to increase the EU’s CO2 emission targets to 30% by 2020 as opposed to the currently pursued 20%?

A: I believe this is just a target and we have to think about how realistic it is. This is especially true after Germany decided to part ways with nuclear energy. First, we have to find the technologies that can facilitate reaching the 30% goal.

Q: How is MOL preparing for the time when this “technological revolution” does indeed happen?

A: Our strategy for the next 10 years remains focused on fossil fuels. We are also conducting additional research into sustainables where we have the necessary competences. Fundamentally, refining is where our expertise is, this is what we are good at. But we are also investing in developing second generation biodiesel technology and we have promising pilot phase results.

Q: Are you considering any other technological investments?

A: What we are essentially doing is continuously reducing harmful emissions when using the technologies and procedures we have in place now. There are several reasons we are doing so. One is that we can conserve energy this way. The other is that this is the way we can make our technologies more competitive provided that the price of CO2 is rising. The quotas sold at auctions represent serious costs so we are trying very hard to develop in a way that allows us to reduce our ecological footprint.

Q: Other sustainables, like wind or solar?

A: We are not familiar with these technologies and we are not planning to change that. On the one hand, this would require an immense capital injection that would divert MOL’s resources from its core activities. Furthermore, we would not be able to make the kind of headway that would war-

〉(Governments) have realized

that energy and all other resources represent the challenge of the future rant this type of investments. To emphasize: we are staying with what we are good at.

Q: This is MOL’s strategy for the next 10 years. What is your perspective beyond that?

A: We expect that in the next 10 to 20 years we will have the technology that will see electricity gradually displacing fossil fuels as the primary source of mobility. Accordingly, we have to make sure we are familiar with electricity, its trade and its production. We have a joint venture with [Czech power company] CEZ that is looking to build power plants. We want to learn this part of the industry.

Q: The state has assumed a stronger role in the energy sector and it is possible that MOL will form strong ties with power wholesaler MVM. A: I am no longer involved in these matters on an operative level, so the question should be addressed to the management. In a general sense, it is a global trend that for producing and consuming countries alike, energy security has become a political matter. It is no surprise that the governments of all countries are becoming more heavily involved in this field. This is why we are no longer hearing about privatization, but instead about governments wanting to increase their control over energy. They realized that energy and all other resources represent the challenge of the future. It is no surprise that the Hungarian government is likewise increasingly taking steps to have a decisive influence on the entire sector.

Q: But this also raises scenarios when the government exercising control has interests different from those of the company. How do you see the short- and midterm implications of the Hungarian government’s growing control for the country’s energy sector?

A: Whenever a company’s profitability hinges on a state-regulated market with pre-set prices, I don’t see a positive longterm outcome for private companies. In this case, the state, being the owner has to decide whether it wants good company results or if it has other purposes. In the short-term, this could work as a solution, but in the longer run, somebody has to pay the bills. In this case, it will be the taxpayers.

Q: Earlier you stated that you expect oil prices to stay high. How do you see this affecting the population and energy companies operating in Hungary?

A: The current high prices have already been integrated into how economies operate, so I don’t expect it to have any spectacular effects. What I have to underline is that for processing and refining industries, high oil prices increase the costs of operation. The profitability of a refinery differs greatly when oil costs $100 or $20. It’s essential to minimize energy usage and optimize operation so they can reduce their own consumption.

Q: Which of MOL’s foreign markets present the best opportunities?

A: Currently we are seeing the best results in Kurdistan where we are involved in two exploration projects. We have achieved promising results. We are also hopeful of Kazakhstan as well as another effort, also in Kurdistan that involves natural gas. So the Middle East and Central Asia. These are our main focuses, exploration and then production in these areas.

Q: What about Russia?

A: We have three companies in Russia, one of them a joint venture, the other two fully owned by MOL. They do both exploration and production. They are operating, there is really nothing extraordinary to discuss about them.

Q: There are reports that Russian energy giant Gazprom is eyeing an ownership stake in E.ON. How would it affect you if that were the case?

A: In no way. We only operate gas pipelines, but have no other interest in gas. There was a reason we got out of the natural gas business.

Q: What about the research you conducted until recently in the non-conventional Makó trough gas deposits?

A: We are continuing exploration in the nearby Békés basin, but it is too early to tell whether we will be successful. In the Makó trough, we failed. We had to conclude that there is indeed gas there, but it is impossible to extract economically.

Q: How are you personally working now and how is that different from what your duties were earlier?

Curriculum vitae Mosonyi graduated as a chemical engineer from the University of Veszprém.

He started working at Shell in 1974, where he held numerous executive posts in Hungary and also worked for several years in London. Mosonyi became the CEO of MOL in 1999, a position he held until his recent retirement. He also holds board positions in various firms and organizations.

A: It’s very different. I am no longer active in operative matters, so I no longer spend eight or ten hours in the office. My tasks now involve supervising that the company operates within legal bounds for its shareholders’ interest. What is particularly important to me is sustainable development, I still take part in the relevant committee’s work and I want to see it become an organic part of how MOL operates. I think this is a very good transition for me from an operative post since I can still deal with issues that interested me before.

Q: Why did you retire?

A: Well, as of May, I am a pensioner. You might be surprised, but I’m 62 years old, so I retired. I decided earlier that this is what I would do and I was honored to be chosen chairman of MOL’s supervisory board, and I can stay close to the company. And I am happy to accept speaking engagements where I can talk about MOL’s successes.

Q: In the US, retirement coaching is already an industry since retiring managers have a difficult time adjusting to a slower pace in life. What are your experiences?

A: It’s only been a few months, so it’s too early to discuss experiences. Ask me again in a year.

Q: What are things that you can do now but couldn’t do before?

A: Well, I can read more, devote more time to issues that are important to me. Earlier I skimmed through the documents, now I have the chance to be engrossed. I am still keeping my finger on the pulse of the industry and keeping track of events.

More so than before. GR-MTD

Photo: Péter Kőhalmi / AmCham

Background

life 21

www.bbj.hu

Budapest Business Journal | July 15 – Aug 4

BUSINESS EVENTS photos: Vámos Foto

DUIHK conference on temporary employment, June 2

Lawyer Orsolya Bényi of the Bihary, Balassa & Társai Law Office Zsuzsa Fülöp, permanent placement director, Adecco Kft Zoltán Czellecz, key account manager, Adecco Kft

Lawyer Orsolya Bényi of the Bihary, Balassa & Társai Law Office makes her presentation.

DUIHK’s traditional garden party, organized jointly with Deutscher Wirtschaftsclub, June 16 photos: Best Relation

Left-right: DUIHK vice president Elek Straub, DUIHK managing director Gabriel A. Brennauer, outgoing German ambassador Dorothee Janetzke-Wenzel, and Deutscher Wirtschaftsclub president Manfred Bey

photos: Kőhalmi Péter

AmCham Independence Day Family Celebration, Ramada Plaza Budapest, July 3

Cutting the Independence Day celebration cake

The Budapest Ragtime Band keeps the party swinging

Hommage á spoerri, laci!konyha! , june 24 The art of cooking and presenting food has been an age-long topic for conversation and scientific study. However, using food as art was a pretty new development when Daniel Spoerri came up with the idea for the Eat Art Gallery in the 1970s. Indeed, the 81 year old Swiss artist’s pictures of dinners past are easily interpreted as an attraction to art being consumable by showing something that we all consume: food.

He also became well-known for his banquets, the sometimes disturbing, sometimes funny portrayals of the way our societies function and the patterns they take. In 1970, he held a dinner where each dish took on the shape of a human body part. In a 1974 banquet, participants had to roll a dice. If they were unlucky, they got a slice of bread with lard on top, while the lucky ones got the most expensive caviar.

These and other Eat Art banquets were “quoted’ at the banquet held in honor of Daniel Spoerri during his recent visit to Budapest. A hand-shaped cracker, a coffin-shaped cake at the end of the meal, a trio of beef (a slice of tongue, stomach and hindquarters) to show the progression of food through the digestion. The dishes compiled by the chefs of Laci!Konyha!, a newly opened haute cuisine restaurant in the 13th district of Budapest, were meant to make you think, remember his art, surprise your palate and feed you, all in one. And if they could do this, this kitchen is worth a dinner even on a mundane weekday night when Spoerri is not visiting.

UPCOMING

events July 20

▶ Conference: Public Location Procurement Act Best Western Hotel Hungaria, Budapest, Dist. 7, Rákóczi út 90 time 10 a.m.

Organizer Conforg Kft FEE HUF 18,900 + VAT Contact Szepcsik Tünde (Conforg Kft), email: szepcsik.tunde@conforg.hu, phone: 232-1123 July 28 ▶ Online Marketing 5.0 Conference location Hotel Tulip Inn Budapest Millennium, Budapest, Dist. 8, Üllői út 94-98 Time 9:30 a.m. – 6 p.m.

Contact www.marketingtorta.hu, 06 30 222-1635 Aug 26-27 ▶ Conference on Social Entrepreneurship Perspectives location Linz, Austria fee €80 (includes evening reception and lunch) HUF 25 000 HUF + VAT Contact www.acrn.eu Aug 31 – Sept. 1

▶ IT Outsourcing: 2-day seminar Location Novotel Budapest Centrum, Budapest, Dist. 8, Rákóczi út 43-45 time 9 a.m. fee HUF 209,000 + VAT Contact Tünde Takács, IIR Magyarország, email: conference@iirhungary.hu, phone: 459-7300 Sept. 6 ▶ DUIHK Jour Fixe Location Dunapark restaurant, Budapest, Dist. 13, Pozsonyi út 38 TIME 6 p.m.

Organizer German-Hungarian Chamber of Industry and Commerce CONTACT Marietta Németh, email: nemeth@ahkungarn.hu, phone: 345-7626 Sept. 13 ▶ AmCham Career School Series - 1st session with Lajos Mocsai, Trainer & Captain of the Men’s Handball Team location AmCham Conference Room, Budapest, Dist. 5, Szent István tér 11 Time 2 p.m. – 3:30 p.m.

Fee HUF 30,000 + VAT/person for the entire series Organizer American Chamber of Commerce in Hungary Contact László Metzing, email: laszlo.metzing@amcham.hu, phone: 428-2082 Sept. 28– Oct. 2 ▶ OMÉK National Agriculture and Food Industry Fair location Hungexpo Budapest Fair Center, Dist. 10, Albertirsai út 10 Time 10 a.m.–6 p.m.

Organizer Agrármarketing Centrum Contact Phone: 450-8800, info@amc.hu, www.amc.hu The Budapest Business Journal is happy to publish news on business, social or charity events in its Calendar section.

Please submit your request at least two weeks in advance of publication date to mihaly.kovacs@bbj.hu For community events visit our partner:

22 life

www.bbj.hu

Budapest Business Journal | July 15 – Aug 4

WHO'S NEWS

Name Anders Bade Current company/position Telenor Magyarország/ deputy CEO in charge of finance Previous company/position Telenor ASA/ head of strategy

Name Rafal Krasnodebski Current company/position PwC/ head of advisory services Previous company/position PwC/consulting partner

Bade will take his position as deputy CEO responsible for finance at Telenor Magyarország as of December 1, 2011. He will succeed Fridtjov Rusten in the position, who will continue to work within the Telenor group. Bade started his career as consultant at international consulting firm McKinsey & Company. He worked for child protection organization Save the Children Norway from 2003, and held financial, managerial and operational director positions at the company until 2010. He joined Telenor ASA last year.

Krasnodebski took over as the Advisory Services Line leader from July 1, 2011. He has been working in Hungary as a consulting partner since July 1, 2010. Before that, he was a consulting partner at PwC Poland. Krasnodebski’s major goal in Hungary is to further develop the portfolio of client services offered by the company’s practice.

[ better know a ceo ]

Carlos H. Zarlenga GE Lighting CFO for the EMEA region

Zarlenga has been chief financial officer of GE Lighting since June 2008. In this role, he directly leads a team of 300 finance professionals across more than 20 countries in Europe, Middle East and Africa. Before his current assignment, he was sourcing director with GE Lighting and earlier worked as finance manager for the supply chain in the EMEA region. From 2004 to 2006, he worked for GE Capital as financial planning and analysis director in charge of the EMEA region. In the year before that, he was senior audit manager at General Electric Corporate. He joined General Electric in 1998, and participated in the financial management program of GE Plastics & Lighting. He started his career with AC Nielsen in Buenos Aires in 1997, where he was associate consultant for a year. Zarlenga, a Spanish citizen, holds a master’s degree in economics from the Universidad de Belgrano in Buenos Aires. He speaks fluent Spanish, English and Portuguese.

Do you know someone on the move?

Send information to whoiswho@bbj.hu

Name István Kutas Current company/position Telenor/corporate communications director Previous company/position E.ON Hungária/ head of PR and media relations

Kutas arrived at Telenor from the E.ON Group, where he was responsible for the entire PR and media relations activities of the group since 2009. Before that, he was head of corporate communications at E.ON Földgáz Trade and E.ON Földgáz Storage. Between 2002 and 2006, he was head of the communications department at pharmaceutical company Béres Gyógyszergyár. He started his professional career at PR agency Hill & Knowlton. Kutas obtained a degree in economics and politics from the University of Oxford.

Name Nick Kós Current company/position PwC/assurance leader Previous company/position PwC Moscow/ head of the assurance business

Returning to Hungary, Kós was named the assurance leader for the Western region based in Budapest.

He previously headed PwC Hungary’s TICE (Technology, Information, Communications and Entertainment) group until 2007, after which he transferred to PwC in Warsaw, where he held the position of CEE assurance clients and markets leader.

He has now returned from Moscow where he worked as head of the assurance business for the Eastern region of CEE since the end of 2009.

Name Richard Eördögh Current company/position Simándi Bird & Bird/ partner, head of corporate/ M&A practice Previous company/position Chayton Capital LLP/ chief legal counsel

Name Graham MacMillan Current company/position CB Richard Ellis/ director of valuation department Previous company/position -/-

▶ Who is your favorite

▶ What is your favorite

Sisyphus, the absurd hero.

Goose liver. It is simply out of this world.

fictional hero?

Hungarian dish?

MacMillan will continue in his role as head of valuation in Hungary but with the additional responsibility of coordinating CBRE’s valuation departments throughout the region.

MacMillan joined CBRE Hungary as a senior valuator in June 2008 and was promoted to head of valuation in June 2009. Before joining CBRE, he was associate director of Allied Surveyors, Scotland Plc and prior to that worked for Grampian Assessors. He has a BSc in property management and development, and is a member of the RICS.

▶ What is your favorite

Hungarian word?

3

Repülőtér, igen and három.

What is your motto?

Own your destiny.

Cave walking. One time is enough to last for a long time.

What talent would you most like to have?

To play the violin or guitar. (Actually, any instrument!)

What are the activities that help you to cope with stress?

Family and opera. The Budapest Opera House is world-class.

What kind of job did you dream of when you were a child?

Race car driver. My mother did not agree.

Eördögh joined Bird & Bird in May 2011 as head of the law firm’s corporate/M&A practice in Budapest. He has more than 18 years of experience in international corporate, transactional and commercial work, including restructuring, acquisitions, private equity and joint venture projects. His practice also focuses on related financial, real estate and arbitration matters. Before joining Bird & Bird, he worked in London as the chief legal counsel of private equity firm Chayton Capital LLP and the Chayton Property Fund.

Which word do you tend to overuse?

“Great.”

What is your greatest regret?

I don’t carry the heavy bag of regrets, I’m always looking forward.

What is your favorite gadget? iPad & iPhone combo. Almost don’t need a PC.

What is your greatest fear?

Brazil winning another football World Cup. What is your most treasured possession?

My music record collection.

What does your dream dinner party look like (occasion, venue, guests, menu, music or whatever is important to you)?

Summer, outdoor, barbecue, family and friends, and the old hungry family pet.

What is the weirdest thing you have experienced in Hungary?

What is it your dream to live to see?

The pill for “eternal life” developed.

What three things would you take with you to a deserted island?

A satellite phone, sun block and my scuba diving gear.

What is your greatest extravagance?

Leisure travel. Recurring, and often.

What is your favorite holiday destination?

St Maarten. Holidays need to include a beach. But the 12-hour plane ride is a huge deterrent.

What would you do with €1 million?

Save it.

What was your favorite toy when you were a child?

My football.

PF

life 23

www.bbj.hu

Budapest Business Journal | July 15 – Aug 4

GREAT 〉

〉

QUOTES

The greatest danger threatening us is ourselves; If we believe we are smarter than everybody and that we know everything. That is not the case at all Deputy chairman of the governing Fidesz party Zoltán Pokorni, speaking at the group’s annual congress

〉We held off the attacks. Rambunctious

troublemakers in the European Parliament got a few raps, clipped ears and we handed out some friendly slaps to the back of the neck Prime Minister Viktor Orbán on the conflicts that arose during Hungary’s six-month EU presidency

〉An instructor told me at the tournament to

prepare for bizarre situations, since literally, a women’s game could bring events way more absurd than average

[ editorial ]

Calling for carrots

U

nder its obligation to create the laws that require two-thirds majority, stated in the new Constitution, the government has been running the law-making machine at full speed.

In a last rush of legislation before the summer recess, Parliament passed more than 20 bills, some requiring a two-thirds vote and some “regular” ones.

Among the pieces of ratified legislation were the so-called chips tax (formerly known as the hamburger tax), which imposes an additional burden on food groups considered unhealthy. The new tax will likely affect Hungarian products too – a group of goods the government wants to promote in order to help local producers to become competitive against importers.

Another tool of preference in the government’s hand, apart from introducing extra taxes on various sectors, is banning things. A strict smoking ban just came into effect recently; it has also barred the registration of new foreign-currency mortgages; and a proposal set to be discussed in the Parliament this fall would prohibit the construction of shopping spaces above a certain size.

It seems that the government wants to exercise its power by sheer force, and intervenes even in market processes that would be better left to the decision of market players and consumers.

Of course, there are areas where government intervention is necessary, but these are typically social issues. When it comes to investments and developments, the most a government should do is to improve the business and investment climate by introducing stability – for example by allowing market players to slowly adopt new practices via incentives instead of saying that they must introduce changes instantly, or else.

As things stand, it is clear that the government is not reluctant to nudge things along with sticks.

But why doesn’t it like carrots?

Football referee Gyöngyi Gaál reflecting on her serious mistake at the FIFA Women’s World Cup where she allowed a player to simply take the ball in play into her hands without blowing her whistle

〉There aren’t enough Jews that they should have such a big influence

Előd Novák, deputy chairman of the radical Jobbik party for what he assumed was excessive graciousness in registering Jewish churches

〉Greece is heading towards disorderly default and/or devaluation, with incalculable consequences

Business magnate George Soros in a piece published by the Financial Times

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