Budapest Business Journal 19/17

q&a Ludwik Sobolewski, CEO of the Warsaw Stock Exchange, talks

BBJ

Green business

about investment opportunities in Poland’s capital markets 〉page 20

HUF 1250 | €10 | $15 | £7.5

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Vol. 19, number 17

Budapest Business Journal

I sept 23, 2011 – oct 6, 2011

of those above 35 years of age are worried about their years as pensioners 〉page 4

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

Fenced in

A batch of bad macrodata has spurred the government to launch an about-face in its economic policy and introduce a set of new taxes as well as further profit-eating restrictions on FX-lending banks.

The program is called the “National Protection Plan”. article 〉 page 6 EDitorial 〉 page 23

ECONOMY The BSE hopes for new (and real) listings

BUSINESS Hungarians are unsuspecting digital victims

TRENDS Slowing growth worries analysts, politicians

So far, tight-fisted lending has not driven many companies to look for capital on the Hungarian stock exchange. Yet next year this might change as new listings in the pipeline include building materials producer Masterplast, insurance broker Brokernet as well as the newly introduced real estate investments trusts. 〉page 7

According to a fresh study by IT security giant Symantec, we are three times more likely to fall victim to a cyber attack than to a physical assault. The shift to mobile devices just adds to our vulnerability. However, most Hungarians just still don’t seem to care about the risks out there are in the virtual world. 〉page 8

The 1.5% Q2 growth figure was the worst since the second quarter of 2010 and was one of the weakest in the EU. Alarmingly, exports – the main driver of economic growth – showed a one-digit rise of just 8.8% in the period, after quarterly increases of well above 10% since the last quarter of 2009. 〉page 4

LIFE

The business end of the sword Interest is rising in kendo in Hungary, partly because the country competes well in the traditional Japanese sword sport, but also because its philosophy is useful for finding a better balance in our everyday lives – as well as business. A portrait of a businessman who lives by the sword. 〉page 18

ESSAY David Cameron: Britain opens its doors to the world The United Kingdom’s Prime Minister talks about how his country is preparing for the Olympic and Paralympic Games in 2012. 〉page 23

SUStainable real estate development, office technology and zero waste in industrial production is spreading 〉pages 10-17

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 | Sept 23 – Oct 6

There was an average of 27 applicants for every job Hungarian employment website Workania.hu advertised during the three-month period from June 1 to August 31, the portal reported.

Gov’t announces HUF 1,000 billion fiscal adjustment plan Hungary’s government said it is cautiously assuming 1.5% GDP growth for 2012 and plans a HUF 1,000 billion fiscal improvement to meet the deficit target. “The growth rate goal of the government for 2012 remains 2%, in line with market expectations. However, having considered the prevailing risk factors as well as the impact of new measures, we assume GDP growth of 1.5% for the 2012 budget calculations,” the National Economy Ministry said in a fresh macroeconomic outlook. The government remains “firmly committed” to meeting the 2.5% of GDP deficit target for 2012 in the Széll Kálmán Plan and the Convergence Program and will take further measures to improve the fiscal balance by HUF 1,000 billion, the ministry said. Most of these measures will be achieved by cutting expenditures. The ministry said HUF 250 billion in the Stability Fund established earlier would be added to the budget base, budget expenditures would be reduced by HUF 303 billion and budget revenue would be raised by HUF 445 billion due to tax changes and other revenue-side measures. National Economy Minister György Matolcsy said the government would raise Hungary’s VAT rate from 25% to 27%. HUF 150 billion in extra revenue from the increase will go into the National Protection Fund.

Economy Construction sector shrinks Output of Hungary’s construction sector fell 15.4% in July from the same month a year earlier, dropping at a faster rate than the 13.9% decline in June, the Central Statistical Office (KSH) said. Output of the building segment fell 14.9% year-on-year to HUF 69.2 billion in July after falling 17.2% in June. Output of the civil engineering segment dipped 18.3% to HUF 67.5 billion after declining 10.5% in June. In a month-on-month comparison, output of the construction sector fell a seasonally- and workday-adjusted 0.8% after declining 5.6% in June. Output of the sector fell 10.6% in January-July from the same period a year earlier.

Investment funds decline Assets in investment funds managed by members of the Association of Hungarian Investment Fund and Asset Management Companies (BAMOSz) fell 5.1% to HUF 3.49 trillion in August from the previous month, as share prices fell and units that were part of assets transferred from private pension funds to the state were converted. Pullouts from the funds came to HUF 110 billion in August, albeit less than the HUF 130 billion in July. The funds had a net loss of HUF 76.8 billion on price changes. Assets in open-ended securities funds fell 2.3% as investors took out almost HUF 23 billion, and the funds had a negative yield of HUF 25.6 billion. The funds accounted for 58.7% of all investment fund assets.

Pension funds saw bad H1 Hungary’s 18 private pension funds closed the first half of the year with operating losses of HUF 5.09 billion,

more than double the losses of HUF 2.38 billion for the full year 2010 and an eightfold increase from losses of HUF 643 million in H1 of last year, figures from the Hungarian Financial Supervisory Authority (PSzÁF) showed. The sharply higher losses came as revenues fell even more than costs as the sector was reshuffled in the period – legislation passed late 2010 gave members of private pension funds until the end of January to opt out of a move, along with their retirement savings, back to the state pension pillar. The fresh figures on the PSzÁF website show 3,011,149 pension fund members returned to the state system, and the funds transferred HUF 2.925 trillion – the departing members’ assets – to the state as required between June 1 and 11.

Temp tax contribution planned The National Economy Ministry has published a ten-point statement of its planned steps to compensate those who would earn less due to the new flat tax system. The plan includes that those earning above gross HUF 202,000 will have to pay a “temporary contribution” that would be otherwise lower than their former tax burdens.

This money will go into a fund and will be entirely spent on compensation. The amount of the contribution has not been made public yet. Also, the figure for the minimum wage will increase to HUF 92,000 while the ministry recommends a 5% wage hike in the private sector, the statement showed.

politics Fidesz maintains strong lead Support for Hungary’s parties remained unchanged in August compared to July, with ruling Fi-

NUMBERS

in the news

1.2 mln

people are estimated to declare they earn the minimum wage or less in their tax return. Tax experts say this number is unrealistic and shows how widespread personal income tax evasion is in Hungary.

6.2%

was the yr/yr rise in gross wages in July, accelerating from a 4.7% increase in June, data from the Central Statistical Office reveals.

desz leading the polls with 24% support from all voters, followed by the main opposition Socialists with 13%, a recent survey by Ipsos shows. Among voters with clear party preferences, support for Fidesz was twice as high as support for the Socialists. Trends reported earlier in the summer stopped in August: support for Fidesz did not drop and support for the Socialists did not increase, Ipsos said.

Gyurcsány’s immunity suspended The Hungarian Parliament has decided to suspend former Socialist Prime Minister Ferenc Gyurcsány’s immunity. It is the first time such a thing has happened to a prominent politician since the change of regime in 1989. Gyurcsány will be questioned about his role in disputed land swap deals concerning Casino development King City in Sukoró. “There is not a single word in the prosecutors’ indictment that would ring true,” Gyurcsány said in his speech before Parliament voted; his immunity was lifted with 306 yes votes from the Fidesz-Christian Democratic coalition together with opposition parties Jobbik and LMP, and also former Socialist Speaker of the Parliament Katalin Szili. The Socialists voted against with 52 nays.

Jobbik pushes for early elections The radical nationalist Jobbik party proposes early elections, chairman Gábor Vona said in Parliament.

General elections should be held as early as possible, because “that is what the country needs”, Vona said. He insisted that the ruling Fidesz had also called for early elections in 2006 when the Socialist government had “lost its credibility

and pursued a policy of austerity against the interests of Hungarian society”. Vona argued that those two conditions are once again met.

He suggested that the recently published WikiLeaks documents have undermined the prime minister’s credibility, and that the government has now announced its fourth austerity package contrary to its campaign pledges made before last year’s elections.

domestic MNB launches forgery fight New measures by the National Bank of Hungary (MNB) will promote the wider market penetration of new-generation banknote authenticators, the most modern tools in the fight against banknote counterfeiting. The MNB will require credit institutions and stateowned postal company Magyar Posta to gradually install ultraviolet banknote authenticators at teller’s desks in offices handling daily cash flow of more than HUF 5 million. The proportion of banknotes controlled by these machines in the nationwide cash flow will grow substantially by 2017.

Municipalities get state property Twelve state-owned properties will be transferred free of charge to ten municipalities and one to the Hungarian Academy of Sciences, the National Development Ministry (NFM) said. The ministry said the properties, which have a combined market value of HUF 376 million, have not been used efficiently, but are suitable for helping the day-today operation of the recipients.

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Budapest Business Journal | Sept 23 – Oct 6

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

COMPANY news Business analysis has become a key growth area for SAP in Hungary as well as other markets: it made up about a third of the firm’s revenues last year and new deals are expected to rise by more than 20%. SAP had revenues of HUF 13.6 billion in 2010, a HUF 100 million drop from 2009. SAP expects to increase its current 34% market share this year in Hungary.

The crisis tax dampened multinationals’ demand for development last year, CEO Balázs Ablonczy said.

Audi Hungaria Motor is spending €16.5 million to expand its tool factory in Győr.

Installation of machinery in the additional plant will start in October. Audi Hungaria will make 60 new hires by 2013 as a result of the expansion.

New cement plant completed in Királyegyháza

French cement giant Lafarge and Austria’s Strabag have inaugurated a €270 million cement plant in Királyegyháza. The plant can turn out 750,000 tons of clinker and 1 million tons of cement each year. It is expected to reach full capacity in two to three years. Lafarge chairman Bruno Lafont said the first new cement plant built in Europe in 30 years would create 3,500 jobs and inject an annual HUF 2.5 billion into the economy.

Lafarge is considering exporting some of the plant’s output in the future, he added, explaining that cement can be delivered profitably 200-300 km from the place it was made. Strabag chairman Hans Peter Haselsteiner said the companies had decided the investment was worthwhile even at a time when other industry players were avoiding capital expenditures.

Photo: MTI - Ferenc Kálmándy

SAP expects rising market share

news 3

German carmaker Daimler has presented to the local council of Kecskemét the first B-Class Mercedes to be made entirely at the company’s new base in the city.

The first car is to roll off the line at the €800 million plant in Q1 2012.

Hungary’s Liszt Ferenc International Airport will undertake a €300 million (HUF 82.5 billion) investment, creating 10,000 new workplaces in the next ten years, Világgazdaság.hu has reported. By 2014, a 200-room, three- and four-star hotel will be built opposite Terminal 2 and will be directly connected to the airport.

Hungarian student loan provider Diákhitel Központ has signed a contract with Budapest Bank for HUF 2.5 billion of revolving stand-by credit to finance its lending activities. The credit runs from September 12, 2011 until September 11, 2012.

The Hungarian unit of German kitchen and bathroom fixture maker Villeroy & Boch has recently completed investments of HUF 660 million at its base in Hódmezővásárhely.

The shares of Hungarian vehicle and vehicle parts maker Rába will be removed from the basket of the Budapest Stock Exchange’s main BUX index in October, according to a resolution on the composition of the bourse’s indices following a biannual review.

Austrian railway company ÖBB expects its Hungarian freight unit Rail Cargo Hungaria (RCH) to close 2011 with a €10-12 million loss, well under the €67

million loss in 2010. RCH could become profitable in 2013, ÖBB CEO Christian Kern told Austrian business daily Wirtschaftsblatt.

Spain’s CAF will deliver 18 new trams worth €38 million to the city of Debrecen after the local council won two procedures brought by losers in the tender to the Public Procurement Arbitration Board (KDB). European Union and state funding is covering 85% of the cost of the trams.

Venture capital fund PortfoLion, a unit of OTP Bank, has invested HUF 300 million in data mining company Gravity R&D. Gravity R&D owner Docler Holding raised capital in the company by HUF 50 million at the same time.

Hungarian building materials maker Masterplast has established a unit in Russia with startup capital of $100,000. Masterplast Rus will open up its first base in Aksay, near Rostov-on-Don, in southern Russia.

Mobile payment technology developer Cellum Gobal has signed an agreement with Bulgaria’s Corpbank to establish a joint venture in Bulgaria. The JV, called Cellum Bulgaria, is expected to start operating in Q4 2011.

Hungary’s Organica, which designs and builds organic wastewater treatment systems, has completed the first phase of a research and development project in the Chinese city of Shenzhen. Based on the success of the project in Shenzhen, which has a population of 15 million, the technology could be adopted all over China, Organica said.

4 trends

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Budapest Business Journal | Sept 23 – Oct 6

Economy

Retail

Pension

macro

Signs of recovery

Clothing the gap

Worrying perspectives

Slowing growth

Hungary is moving towards an innovation-based economy.

Baby clothes are hot sellers in second-hand shops.

The over 35s are concerned about how they will get by as retirees.

Weak GDP figures confirm need for further measures.

competitiveness ranking in the world

of clothes were bought in fashion store chains

of respondents are worried about saving

the government’s revised GDP target for 2011

Geneva-based non-profit the World Economic Forum (WEF) has recently released its Global Competitiveness Report 20112012, ranking Hungary 48th in the world. A total of 142 countries were assessed based on criteria such as institutions, infrastructure, education, market efficiency and size, technological readiness, business sophistication and others.

The leaders of the index were largely unchanged and are mostly European countries. Switzerland remained number one, followed by Singapore, Sweden, Finland, the United States and Germany. Although ranked lower than many other European countries, Hungary’s ranking has improved by four from last year and by eight from the year before. It is ahead of its regional neighbors, including Slovakia (#69), Bulgaria (#74) and Romania (#77). Austria, on the other hand, is way ahead of Hungary, occupying 19th position.

The report’s findings highlight a number of problematic areas that prevent Hungary from climbing even further up the index.

Challenges include access to financing, tax rates and regulations, policy instability, corruption and an inefficient government bureaucracy. Of all the pillars and sub-sections, Hungary got the lowest rankings in the public trust of politicians (#130), the burden of government regulation (#135), the willingness to delegate authority in businesses (#121) and brain drain (#121).

Not everything is gloomy, though. Hungary ranked #7 on the number of days needed to start a business, #33 on the strength of auditing and reporting standards and #43 on the availability of latest technologies.

As a result of the multi-level assessment, Hungary was placed in the transitory stage between phases two and three – from efficiency- to innovation-driven economies.

Other countries in this group include Turkey, Estonia, Croatia and Poland. SA

While the FMCG market saw a significant decline in terms of volume in the first half of the year, clothing items sold quite well, the latest data from market research company GfK Hungária shows.

Following a strong setback in the last few years, the clothing market seems to be on the way out of decline: Hungarian households spent nearly as much on clothes in H1 2011 as they did in the first half of 2010.

But there are wide differences within the sector; while shoes sales went up both in volume and value during the period, the sales of outerwear fell back.

The role of fashion chains, hyper- and supermarkets and second-hand shops has increased. In the overclothes segment, fashion store chains are the first port of call when shopping: their market share is more than 15%.

When looking for under- and outerwear accessories, sportswear and dungarees, the research reveals that Hungarians’ first choice is hyper- or supermarkets. But the most popular articles here are baby clothes, with a more than 20% market share.

Second-hand shops have also seen a growing number of shoppers. In the first half of the year, more than 25% of purchased baby clothes came from such shops. But while families with little kids visit second-hand stores quite frequently (due to the good quality/price ratio these stores offer), those under 40 with a higher income are more likely to go to boutiques and fashion store chains.

Clothing stores specializing in underwear have seen shoppers from all ages up to about 50; however, those older than 60 rarely go to such stores. The research indicates that the latter age group is a frequent visitor of hyper- and supermarkets and also Chinese markets when it comes to clothes shopping. PF

According to a recently completed study

by BellResearch, nearly half of the people above 35 years of age consider their postretirement financial perspectives most worrisome. The study, prepared for AEGON Hungary, pointed out that the reorganization of the pension system has made people pay more attention to their post-retirement years. The study found that four out of ten people are most concerned about their retirement, and every fifth person deals with this question on a regular basis.

At the same time, however, the majority of respondents, 59%, are not seriously concerned with preparing for retirement.

The study highlighted that the over 35s are most concerned about unemployment and staying afloat. These areas of concern are followed by retirement: around 51% of the active population is seriously worried about its future pension, and 90% expect a postretirement income lower than that of current pensioners. Also, 81% think that one should prepare for old age and start saving.

Some 60% of respondents are seriously worried about their savings, resulting from a loss of faith in the stability of banks and other financial service providers.

The majority of respondents estimate that between HUF 10,000-30,000 should be saved each month. However, only 21% of them are open to saving. Those who exclude the possibility consider their financial situation to be better than average.

Counter-intuitively, they justified not saving by a lack of resources.

As for the care of the elderly, it is the family that is primarily responsible, the majority of people taking part in the research agreed.

Some 40% would expect family members to support them in case of need. Interestingly, a greater proportion of respondents are willing to move into a retirement home than would be ready to send their family members to such an institution. ASz

Lower-than-expected growth in Hungary was mainly the result of external factors, according to National Economy Ministry.

Eurostat data shows that the gross domestic product of the EU27 was up by only 1.7% in Q2 2011, compared to the same period in the previous year. According to the available data, near half of member states showed a higher economic growth than the EU average. Five member states, including Hungary, had a performance near the EU average, while a decline was registered in Greece and Portugal.

The performance of the German economy, Hungary’s main export market, declined significantly, compared to the outstanding 5% growth in Q1. The disappointing 2.8% figure was mainly due to weak household consumption and capital formations in construction, according to Germany’s Federal Statistical Institute (DeStatis).

In addition, the Hungarian economy was badly hit by the dramatic appreciation of the Swiss franc, which led to a drop in purchasing power due to the growing burden of loan repayments.

Research institute GKI points out that economic policy, too, played an important role in the slowdown. The increase in real wages, which was limited to high earners only, was not enough to raise consumption, while crisis taxes have curbed corporate investment demand as well as lending activity. GKI also blames legal uncertainty and a lack of predictability for the slowdown.

Trends witnessed on the domestic market are not promising, either. Domestic sales in the industrial sector have been decreasing for four years, GKI said. Retail sales and construction have been declining for five and six years, respectively. In agriculture, however, the bad harvest of last year will be followed by an excellent one in 2011, helping GDP, exports, and also dampening inflation. GL

sales channels

Our biggest fears

weak figures

48th 15% 60%

competitiveness ranking

Unemployment Overheads Everyday expenses Amount of future pension Losing home Paying installments The global competitiveness index of Hungary and some neighboring countries Source: World Economic Forum

Yr/yr change in sales volume in certain types of clothing stores; 100%=total sales volume of clothes Source: GfK Hungária

Source: Aegon Magyarország - Bell Research

2%

86% 87% 84% 78% 41% 43% GDP growth, Hungary Source: KSH

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Budapest Business Journal | Sept 23 – Oct 6

ADvertising 5

6 economy

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Budapest Business Journal | Sept 23 – Oct 6

New FX plan a further blow to Hungary’s banking sectors The government’s plan for the early repayment of foreign currency mortgages sparked criticism both in Hungary and abroad.

BBJ BBJ-analysis

Hungarian borrowers will have until the end of this year to register for the early repayment of their foreign currency-denominated mortgages at a fixed rate: 180 HUF/CHF, 250 HUF/EUR and 2 HUF/JPY. According to the National Bank of Hungary, only about 20% of Hungarian borrowers could apply for the plan. The MNB estimates that HUF 1,000 billion-1,100 billion of retail forex lending stock will be repaid under the scheme. The central bank stressed that it has the tools to reduce the significant stability risks that the plan represents by providing foreign currency from Hungary’s FX reserves, which stood at €37,554 at the end of August, to commercial banks.

Prime Minister Viktor Orbán told HírTV that approximately 150,000-300,000 borrowers have enough savings to repay their loans in a single installment, but this number could be higher adding those who are helped by friends or relatives. He strongly recommended debtors grasp this opportunity, as the Swiss franc is unlikely to weaken to the level at which most borrowers took out their loans.

Another slap in the face for banks According to the FX plan, banks will pay the costs of the difference between market rates and the fixed rate. This is another blow to the Hungarian banking sector, which has already been hit by the extraordinary bank tax. OTP and FHB were suspended from trading on the Budapest Stock Exchange for an entire day waiting for Orbán’s announcement of the plan on September 12.

Some planned restrictions to the scheme could reduce the losses banks would have to face, but the damages for the banking system and the credit market could still reach a few hundred billion forints. The plan does not force banks to offer new forint loans to borrowers, who want to take advantage of the opportunity to pay back their FX loans, because “banks will do so anyway”, Orbán pointed out.

Planned restrictions to the repayment scheme n banks are not obliged to issue new forint loans for those choosing to repay the FX mortgage n the option will be available only for FX mortgages n only those are eligible who took out their loans at rates below 180 HUF/CHF, 250 HUF/EUR or 2 HUF/JPY n registration for the program will be open until the end of 2011

Stock of FX housing loans and mortgage-based loans in Hungary (HUF million)

Date Housing loans

Mortgagebased loans

2009.03 2009.06 2009.09 2009.12 2010.03 2010.06 2010.09 2010.12 2011.03 2011.06

2,314,702 2,021,872 2,020,619 2,048,125 2,074,914 2,364,138 2,226,246 2,320,206 2,091,174 2,186,236

2,738,578 2,414,145 2,427,017 2,461,149 2,490,371 2,845,222 2,697,263 2,818,669 2,549,311 2,676,361

Hungary’s government will end the “era of bankers” and will stop the practice of making borrowers bear all the losses and risks, Orbán said in an interview with the daily Metropol. “The era of bankers has ruined Europe, and within it, Hungary.” Over the past 15-20 years, banks have made people believe they could borrow without consequences, and that they would always have unlimited access to cheap loans, he added.

Countries such as Romania and Poland protected people from the negative effects of this period, but Hungary’s past leaders had stood by the banks, Orbán said. No solution could be found among the instruments of the era of bankers, thus the government had introduced new tools of its own, such as the moratorium on evictions, a fixed exchange rate for repayments of foreign currencybased loans and an option for early repayment of the loans, the PM explained.

Orbán pointed out that foreign-owned banks are backed by their parents, while the state stands behind Hungary’s OTP and mortgage bank FHB, if necessary. This does not mean the state wants to take an ownership stake in either bank, he stressed.

The Hungarian Banking Association responded by saying the proposal was “unacceptable for the banking community because it leads to substantial financial, macroeconomic and growth risks”. If the measures are implemented, banks will turn to the Constitutional Court and the relevant authorities of the European Union to seek legal assistance.

However, the Association insisted it was still willing to discuss the proposed measures with the government.

Austrian outrage The plan drew sharp criticism from leading Austrian officials, little surprise, given that Austrian banks hold 40% of Hungary’s Swiss franc denominated loans. Austria’s finance minister Maria Fekter was first to react, saying in a letter to Hungarian opposite number György Matolcsy that the plan would generate gigantic and immediate losses in Hungary’s banking sector and jeopardize the financial stability of the entire Central and Eastern European region.

The National Protection Plan 1.

Source: MNB

The planned measures undermine legal stability to an extent unprecedented in the EU, she claimed. If the proposal is adopted, the equal treatment of Hungarian and foreign banks must be ensured, Fekter stressed.

Austria is reviewing whether the proposal is in line with current regulations, according to Austrian Chancellor Werner Faymann. He said that the Hungarian government was aware of the Austrian banks’ concerns about the plan. Ewald Nowotny, the governor of the National Bank of Austria, said that the country’s government should utilize all possible legal means to block the plan, as it threatens Austrian banks.

The European Commission expressed concerns about the plan, too. While the plan reduces household exposure to the crisis, it could have negative effects on the banking system, Commission spokesman Amadeu Altafaj Tardio said. It is too early to announce a final position on the plan, but the Commission said it is in contact with the Hungarian authorities about the planned measures. The Commission will look at whether the plan is in line with key European Union policies, such as the free movement of capital as well as state aid rules. Banks’ commitments under the “Vienna Initiative”, a crisis management framework established by banks, should also be considered, he added.

Plans B and C The government was not surprised that the plan had come under attack. Orbán said that he took about as many calls from prime ministers and the president of the European Commission as when the government introduced the extraordinary bank levy in 2010. Matolcsy noted that he understood, but did not share, criticism of the government’s FX loan scheme.

Government officials are aware that legislation enacting the scheme will go before the Constitutional Court as well as the European Court.

Orbán said in an interview that the government has a plan B and even a plan C if international courts prohibit the scheme, but would not reveal what they are. n

Fight against usury - stricter Criminal Code - limiting rates on loan agreements by law - 30% cap on APR - reduction of cash benefits in favor of in-kind subsidies to low-income families

2.

Maximized utility prices extension of regulated prices to garbage collection, water, and sewage fees

3.

Act on Stability to ensure the harmonized operations of the pension, health, tax and municipality systems

4.

Home protection plan - early repayment option of FX mortgage loans - forint-based banking costs to be charged in forints - pegging interest rates of FX loans to a transparent reference rate - establishment of positive debtors’ lists - personal income tax exemption

5. Financial protection

plan - continuous reduction of state debt - budget deficit under 3% - reverse taxation in agriculture - 35% VAT on luxury goods - strengthening defenses against economic crime and abuse

6.

Start Program launch of a test program in 2011, followed by Start programs in the agricultural and energy sectors

economy 7

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Budapest Business Journal | Sept 23 – Oct 6

BSE hopes for new listings Having closed down five foreign units, Masterplast is currently present in 12 countries, with the top markets being Romania followed by Hungary, Serbia and Ukraine. The company has opened a representative office in China, “however, this has not manifested in revenues yet”.

In 2011, the company’s sales revenues are expected to stagnate, although EBITDA and pre-tax profits will jump, Dávid said. As a result of streamlining the company’s operations, the remaining units and product groups have become much stronger, he noted.

Masterplast has six product categories. Within that, Dávid sees the main growth story in thermal insulation systems, while roofing will be a debut product group in the new Russian unit following its successful launch in Ukraine.

The company first decided to list its shares in 2006, but preparations were suspended during the crisis. In 2011, the company dusted off the project and Masterplast was converted into a public company (Nyrt) from a private one (Zrt) in April. “A board meeting in October will approve the final strategy, which will be published in November,” Dávid said.

“We wanted to float the company’s shares, even when practically unlimited bank financing was available to us,” Dávid said. “We could still get sufficient bank financing, if we wanted to, however, we would like to finance our new investments from the capital markets, too,” Dávid stressed.

Brokernet

There are a handful of Hungarian companies that have been considering a listing on the Budapest Stock Exchange for some time now, but have not taken the final decision either due to bad timing or the unfavorable business environment. Even the bravest will only go for a technical listing, and take a wait-and-see approach with a promise to raise new capital within a couple of years.

BBJ gabriella Lovas

The Budapest Stock Exchange hopes to be able to fulfill its main duty, to help companies

raise funds and to become the main alternative financing source to bank loans in the mediumterm. Despite its best efforts, it is just not happening yet, with only one real IPO in 2010 and none in 2011.

“Seeing three to five REIT IPOs in the next couple of years would be an extraordinarily good result,” said György Mohai, the CEO of the BSE at a small- and mid-cap conference organized by the bourse in cooperation with KBC Securities. Parliament gave a green light to real estate investment trusts, which operate as public companies, in mid-July, as reported earlier in the Budapest Business Journal.

As regards to classic IPOs, the representatives of only two potential issuers, Ottó Gecser, CEO of brokerage Brokernet and Dávid Tibor, the owner of building material producer Masterplast, gave presentations at the conference. The event provided the possibility of informal meetings for issuers, companies preparing to be

listed on the stock exchange and domestic investment fund managers.

In 2001, there were three technical listings on the BSE: feed company Visonka, asset management firm Plotinus and healthcare firm Biomedical Computer Technologies.

Masterplast Masterplast, which started in a garage in 1997, multiplied its sales revenues every year until 2008, Dávid said. He believes that the company could be an attractive story for investors, as the last couple of years proved that the business is crisis resistant. Masterplast managed to remain profitable during the crisis and the management was able to reorganize the company in response to the challenges of the economic downturn. “We did not have time to restructure the firm during the period of dynamic growth,” Dávid added, referring to one positive effect of the crisis.

The company was founded by its four private investors in 1999 and started operations with 30 brokers; it now has 2,800-3,000. “The global crisis forced the owners to restructure a very successful family business,” Gecser said. As a result, the Brokernet group continued its operation as a holding from 2009.

With the resulting cost-effective and transparent operations, the renewed and consolidated group was ready to undertake the steps towards regional expansion and a presence on the stock market, the company said.

Gecser sees no room to expand in the market of the sale of unit-linked products, where the company has a 62-65% share. “We have to find new markets, either by selling new financial products, or by expanding in the region or even further,” he said.

The company has been present in the Slovakian market for five years, and launched its Romanian unit in 2011. Building business from scratch, as in Romania, is just one of several options, including mergers, acquisition, swap constructions and long-term partnerships, noted Gecser.

Brokernet will be ready for an IPO next year, Gecser said. “We are planning a classic IPO with both a partial exit and raising new capital.”

An important advantage of being a listed company is that it provides a clear indication of the value of the business, he added. n

8 business

www.bbj.hu

Budapest Business Journal | Sept 23 – Oct 6

Unsuspecting digital victims Global IT security firm Symantec estimates the cost of cyber crime at $114 million annually. Threats occur every second; yet most users fail to take the necessary precautions.

BBJ zsófia végh

According to a fresh survey by global IT security firm Symantec, cyber crime has taken three times as many victims in the past year as traditional crime. The company, which boasts the largest number of protected users worldwide and is the maker of Norton AntiVirus products, estimates an average 20 threats occur every second and 14 users fall victim to them. That is an astounding number of 1,209,600 threats per day: the nastiest neighborhood could never produce that.

Though not as frightening as a traditional assault, cyber crime definitely is damaging.

The value of global cyber crime is $114 million annually, says Symantec. Considering financial and time losses, an overall $247 million in damages have been reported in the past 12 months.

The reason for the growing number of attacks lies in our increased dependence on the internet. We are logged in (or rather hooked on) the web all day long. The Google generation, those aged between 18 and 24, spend an average 31 hour/week online. Of those who spent more than 49 hours online, 72% experienced a cyber attack last year.

The change in the way we use the web is also to blame. The amount of information people collect is on the rise. Last year, information on the web grew by 62% to 800,000 petabytes, Symantec says. “We are all hoarders,” said Candid Wueest, senior security engineer of Symantec Hungary at the press conference presenting the findings of the poll. “We gather but don’t delete information in case we may use it later.”

Although the storage capacities of computers are almost infinite, IT developments have made it possible to store data online. As a result, more information is shared through cloud services, which increases vulnerability.

With the shift from desktops and laptops to tablets and smart phones, online exposure is increasing. People own a variety of devices, the majority of which can be only be made good use of if connected to the net. Wueest estimates that, in the next two years, 70% of people will use them as their primary device.

All of the above factors ease the job of cyber criminals. On a global scale, last year alone 431 million people experienced cyber crime. Some 65% of online adults fell victim to an attack. The damages amount to $338 million.

Hungary has had its fair share of cyber crime as well. The country’s ranking in terms of online crime rate is deteriorating: from 14th it has slid six places back on the global list of countries with the number of PCs infected by robot viruses. Seventy percent of people have met with some form of online crime. There are an average of 100 victims per hour; 8% use no cyber protection at all. “They’d be better off doing so,” said László Gombás of the Hungarian representation of Symantec. HUF 25,000–30,000 damages have been reported by 70% of people who were hacked. “That is way higher than the cost of installing anti-spyware. It is not the lack of funds, but the lack responsibility that drives this negative trend.”

The company carries out an internet security survey every year with aim of identifying future trends as well. To develop products that are more up to date and address the new generation of online threats, it categorizes web pages based on their safety.

Unsurprisingly, pages with adult content and file sharing sites are most likely to be infected. However, every day a few hundred websites will get hacked by an attacker who changes the normal content to include a malicious piece of software. Normal news sites, television sites, government sites: the attacks are indiscriminate. “It is possible that a website you have visited for the last few months to check the weather report suddenly infects your machine,” Wueest warns.

There is no pop-up, you won’t even notice it as the viruses stay dormant, waiting for a credit card number.

Symantec also studies user patterns. As a rule, men are the braver (or less risk averse) sex and the cyber world is no exception. They are willing to take the calculated risks of visiting pages with adult content. Women tend to spend their time online building and maintaining friendships, a seemingly innocent activity – but for a hacker just as lucrative.

From a developer’s viewpoint, the most challenging user is the reckless one. “He knows it is dangerous but doesn’t want to have a security feature. Even if he would have one, he would probably disable it to

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1.7

95%

victim/minute

spam infection rate

34.5% of men visit adult content

8%

don’t use protection

HUF 7 bln financial losses

4%

can’t live without the net

Hungary

Source: Symantec

go there,” Wueest said. It is no easy job to address this group with products, yet there are some solutions. Safe browsing, a function that in the background checks what the user is doing in the browser on a technical level, but not on a “you can’t do this or that” sort of way. So if one goes to a malicious site, it will stop the malicious part and you can

still read the news or whatever content you were looking for.

Depending how bad the experience was, users may change. Small inconveniences will not make a difference: it takes stolen credit card data and other painful losses for someone to become a regular client of anti-virus software makers. n

energy 9

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Budapest Business Journal | Sept 23 – Oct 6

Energy News

brought to you by

Biogas investments escalating in Hungary

NEWS

BBJ patricia fischer

Slovakia’s Eustream and Hungary’s OVIT have signed a deal to build a pipeline between the two countries. The 115-kilometer connection will become part of a proposed gas route to link the north and south of Europe. The companies signed a memorandum of understanding to complete the pipeline by 2015. The two countries signed a deal in January to connect their natural gas networks as part of efforts to secure alternative energy supplies. Slovakia was among the nations hit hardest when Russian natural gas shipments via Ukrainian pipelines were cutoff in January 2009.

A joint geological survey of geothermal resources in the western parts of the Pannonian Basin, shared between the borders of Hungary, Austria, Slovakia and Slovenia, is half-finished, the Hun-

garian State Geological Institute

photo: János Schmidt

said. The parties undertaking the survey, dubbed Transenergy, reviewed the results so far in Ljubljana in the middle of September. The survey shows the area with geothermal resources in Hungary is almost as big as the combined areas of the other three countries

Biogas plans This summer has seen the announcement of several plans to build new biogas plants.

In June, Vill-Korr Energia announced that it would build a HUF 800-850 million biogas-fuelled power plant next to the company’s existing wind power plant in Csorna (northwest Hungary) by the end of 2012.

The company will sell the power generated at the 800 kW plant to the town’s district heating provider.

LIGHTSPEED

Hungarian oil and gas company MOL and its Slovakian unit Slovnaft will spend about €80 million to modernize the stretch of the Adria oil pipeline running between the two countries. The investment will significantly boost the crude pipeline capacity between Slovakia and Hungary, and will finally give Slovakia an alternative source of supply, said Slovnaft spokesman Anton Molnar in Bratislava. With the investment, Slovakia’s dependence on the Druzhba pipeline, which delivers crude from Russia, will finally end. The cost of the project will mainly be met from private capital. The stretch of the pipeline that runs between MOL’s refinery in Százhalombatta, just south of Budapest, and Sahy, in Slovakia, is about 50 years old. The pipeline runs further south from Százhalombatta, connecting MOL’s refinery with the port of Omisalj in Croatia.

Hungary’s new biogas plant in Szarvas, inaugurated on September 13, supports the country’s renewable energy production goals and complies with the European Union’s 20/20/20 initiative.

The combined cooling, heat and power (CCHP) plant was built by the German company r.e Bioenergie GmbH, a subsidiary of BayWa r.e GmbH, and uses three gas engines supplied by GE. The biogas is created through the anaerobic digestion of an annual total of 22,500 tons of turkey and cow manure, 31,000 tons of pig slurry, 47,480 tons of mixed waste (slaughterhouse waste, whey and wastewater sludge) and 18,000 tons of sweet sorghum.

The plant is being run in close cooperation with Gallicoop Zrt, a poultry processor that provides much of the raw biomass that is converted into biogas to power the engines.

The anaerobic digestion facility is about four kilometers east of the poultry processing plant. To optimize the efficiency of the thermal energy, a special pipeline delivers the biogas from the anaerobic digestion facility to the Jenbacher engines at the processing plant. The CCHP system’s thermal power is then used to supply on-site heating and cooling, while any excess electricity is fed into the local grid.

“Our new biogas power plant illustrates the increasingly important role that biogas will play as Hungary seeks to expand its production of alternative energy in order to comply with the European Union’s 20/20/20 initiative to generate 20% of the continent’s energy from renewable sources by 2020,” said r.e Bioenergie GmbH managing director Ludwig Dinkloh, who oversees international business for the company, at the opening ceremony. “However, only projects that maximize efficiency with a sophisticated heat concept, such as our Szarvas biogas project, provide a sustainable business model.”

The total cost of the project was HUF 4.5 billion, financed mostly by r.e Bioenergie, with HUF 500 million in funding coming from the European Union.

AT

At the end of July, Biogas-Miskolc Kft said it would build a biogas plant at a cost of HUF 2.2 billion that will use the sewage sludge of Miskolc and its agglomeration as a renewable energy source. The founders of the project company are the local waterworks company, MIVIZ Miskolci Vízmű Kft, Bioenergy-Miskolc Kft and WIS Zrt.

Hungarian agribusiness Arany-Mező inaugurated an HUF 800 million biogas plant in Bicsérd (southwest Hungary) in July. AranyMező uses manure from its livestock to produce an annual 2.6 million cubic meters of biogas at the 635 kW plant. The plant will generate enough electricity for 950 homes and heat energy for 450 homes. n

A report on stress tests at Hungary’s Paks Nuclear Power Plant will be completed by October 31, but the tests so far have produced “positive results”, the director of the National Atomic Energy Office (OAH) told MTI. The stress tests, carried out on all European nuclear power plants on the directive of the European Council, revealed ways in which the Paks plant’s ability to withstand the most extreme conditions can be improved even further, the OAH said.

The Paks plant will present the finalized report to the OAH by October 31. OAH will assess it by December 31.

BBJ business green

special report

Don’t waste trash, reuse it all Industrialized economies produce enormous amounts of waste – and getting rid of it is becoming an increasing burden. Households generate a notable proportion of waste emissions, but the really frightening figures come from industry. Large corporations all over the world have already taken action, and there are some good examples in Hungary too.

Several solutions that have been drawn up to tackle the problem of polluting our environment. In the waste disposal hierarchy, the three Rs rule: reduce, reuse, and recycle. At the bottom of the pyramid are landfills and waste burning, the worst possible solutions.

In several Western European countries and in the US, an increasing number of companies and communities are putting the emphasis on prevention and focus on waste minimization, but recycling remains a booming business all over the world, with Hungary no exception.

However, the ultimate goal should be to send no waste at all to landfills – a policy commonly known

as zero waste. On a global level, companies from nearly all industries have seen significant savings by implementing it: for example, General Motors saved $2.5 billion on recycling over a four-year period, while Walmart has reduced the money spent on sending waste to landfills by more than 80% in one US state alone.

In Hungary, the first steps have already been taken towards zero waste – the Budapest Business Journal presents four large manufacturers and processing companies that are well on the way to implementing the policy.

www.bbj.hu

Budapest Business Journal | June 4 – June 17

▶▶ Green startups to smart up ▶▶ Carrots for trash collectors ▶▶ Hybrids waiting to be plugged in ▶▶ MARKET ANALYSIS: Sustainable offices ▶▶ Greener office technologies in practice ▶▶ LIST: Green office buildings

〉page 12

special report 11

〉page 13 〉page 13 〉page 14 〉page 14 〉page 15

Audi Hungaria Motor Kft: Aiming at 100% recycling Audi Hungaria produces an average of 45,000-50,000 tons of waste annually, depending on production output – in 2010, for example, this amount was nearly 51,000 tons. The majority of the waste is non-hazardous, coming from manufacturing processes. In 2010, the share of hazardous waste, such as emulsion fluid and sodium hydroxide, was 28%. Selective waste collection is a basic policy at the company. It spends several millions of euros a year on waste management, but it generates notable income from recycling. “Income exceeds expenses, thus the area of waste management at Audi is profitable,” the company’s press department told the BBJ. Nearly 99% (in 2010, this number was 98.75%) of waste is recycled, but Audi is also aspiring to reduce its waste emissions, the company said. In order to achieve this, it has invested in several technological optimization projects. “It is very important to plan technologies in a way that processes take place in a closed system, thus reducing the amount of waste during the production process,” Audi said. Also, the company aims to recycle in the strictest sense: producing a fresh supply of the same material. In the long run, Audi wants to achieve a 100% recycling rate.

“In addition, we continue to work on our waste reduction policy as well,” the company said.

Jabil Circuit Magyarország Kft: Less waste to landfills In spite of the company’s efforts, waste emission at electronics manufacturing services company Jabil Circuit has shown a rising trend in the last few years (2,557 tons in 2009 and 3,212 tons in 2010, app,roximately 25% year-on-year growth). The company attributes the figures to the high number of staff (approximately 6,000 full-time employees in 2010) and the increase in production volume. The company did not wish to disclose the amount it spends on waste management, but said that it watches closely the costs related to it and frequently announces tenders seeking more effective services. Jabil prefers recycling over landfills and burning: in 2009, it recycled 67% of all its waste, dumped 31% in landfills and burned 2%. Last year, the recycling ratio reached 85%, with 13% going to landfills and the same 2% burned. “We aimed to increase our recycling rate by five percentage points on a year-on-year basis, but we ended up lifting it by 18 after all,” Jabil’s environmental expert told the BBJ. According to the spokesperson, having the waste sent to landfills or burned is still more cost-efficient than recycling, but the company is committed to further increasing its recycling rate. Besides trying to find the best solutions to handle its industrial waste, Jabil also aims to raise awareness of environmental protection issues among its employees. It provides training on selective waste management, and besides implementing a selective waste program at the company, other actions have been taken as well, such as replacing plastic cups with metal mugs.

Coca-Cola Magyarország: Where waste is valued The waste output at the plants of Coca-Cola Magyarország reaches 5,000 tons a year, mostly consisting of packaging materials. The company’s goal is to recycle the largest possible amount of the generated waste: currently, the recycling ratio at the plants is nearly 90%. The company spends more than HUF 100 million on recollecting PET bottles, and it also supports selective waste management on a national level, Éda Pogány, communications director of Coca-Cola Magyarország told the BBJ. According to her, more than 30% of the company’s PET bottles are recollected and recycled. The firm plans to spend approximately HUF 700 million on its entire waste management program in 2011. “At the Coca-Cola plants, waste is value,” Pogány said, adding that the recycling rate was 50-60% ten years ago. “Besides recycling, the most obvious way of reducing environmental pollution is the use of less packaging material,” she explained.

Accordingly, the company has reduced the weight of its bottles. It produces the same amount of packaging from 730 tons less plastic a year, resulting in savings equal to the weight of 20 million bottles a year. “We are committed to go on with using less raw material, and want to achieve a 100% recycling ratio,” Pogány said. “Just by selective waste collection and recycling, we can save tens millions of forints a year. With our weight reduction program, savings at a yearly level can be several hundred million forints,” she added.

Gallicoop Zrt: Slaughterhouse waste no more Poultry processing company Gallicoop generates about 17,000 tons of waste from the slaughtering process. Most recently, Germany’s r.e Bioenergie GmbH has opened a biogas plant in the vicinity of the Gallicoop plant in Szarvas, where the biomass coming from the poultry processor will be turned into biogas. Before the cooperation with the biogas plant, Gallicoop spent some HUF 110 million a year on having its slaughterhouse waste taken away. Now, as a result of the cooperation (which will also provide cold and hot energy for the processing plant), it saves HUF 150 million a year, István Erdélyi, CEO of Gallicoop told the BBJ. The plant employs 900 people, therefore the amount of communal waste cannot be significantly reduced, but Gallicoop has recently started to operate its own biological wastewater cleaning plant. PF

12 special report

www.bbj.hu

Budapest Business Journal | Sept 23 – Oct 6

Green startups to smart up Technological research and financial investment form two separate worlds. Making a match between them, however, can yield huge benefits. To help cooperation between the two fields, a whole industry has evolved, offering lots of sophisticated services. The BBJ presents three startup enterprises that have arrived at various stages of development in their business. The team of SmartSocket is on the right track to business success, going through the phases that its American and Western European peers and predecessors have already passed. Geotem Invest is more on the investors’ side, founded by corporate finance experts.

HY-GO is just the opposite: a group of technical professionals struggling to incorporate their research enterprise.

SmartSocket In the beginning there was only a group of young technical scientists working together in the department of measurement and information systems of Budapest technical university BME. They managed to develop a method by which a software can recognize household, office and medical appliances merely on the basis of their power consumption profile. “Our IT algorithm can determine whether a vacuum cleaner or a copy machine has been attached to the power network with 99% probability; what’s more, it can even specify its type, e.g. Cannon 5018,” Szabolcs Erki, leader of the project told a venture capital forum this spring.

In 2008 they realized the business potential their invention carried: such software may serve the interests of all sorts of facility managers (be they medical, office or academic), as the system can both monitor and save much of the stand-by consumption energy. From then on, their purpose was to develop a commercial product that can remotely switch electric appliances on and off. “By the beginning of 2010 our development team was founded, that summer we formally established the company Remagine Technologies, and by the end of the year we had even created the prototype of SmartSocket,” said Erki, who is the majority owner of Remagine Technologies.

This spring SmartSocket was awarded first prize as most promising startup product of the year at the Elevator Pitch Competition. Currently, negotiations between Remagine and a European venture capital fund have entered into a “very advanced phase”, the Budapest Business Journal learned from a source close to the deal.

This seems to be a straightforward success story; when telling it, however, one should not omit a silent helper working behind the curtains: Secret Sauce Partners. This Californian startup consulting company has done a lot to help Remagine break through. It has accumulated a huge amount of experience in developing future products without narrowing down the circle of potential consumers. As a matter of fact, top executives of Secret Sauce are on the advisory board of Remagine. They have also helped Erki in gaining experience at prize-winning presentation techniques, which he has made use of at venture capital forums such as the Elevator Pitch Competition, and have assisted SmartSocket in developing along American models in a Hungarian environment.

Geoterm Invest Geoterm Invest (GI) is exclusively owned by venture capital fund Morando, whose owners are well-known investment leaders and portfolio directors like László Mészáros, Tamás Gazda and Gyula Gansperger, former CEO of Hungarian national asset manager MNV. Morando serves as one of the funds managing the SME investment sources of the EU, known as Jeremie (Joint European Resources for Micro to Medium Enterprises), to which it also contributes its own equity.

The owners of Morando are said to have picked geothermal energy as an investment sector in order to make use of the knowledge base of failed oil exploration projects in Hungary. “The documentation of unexploitable oil and gas deposits had been lying idle in the archive of the Mine Captain’s Office, until Geoterm Invest made use of it in exploring thermal water resources,” an oil-drilling expert familiar with the geothermal business told the BBJ. The brilliant idea lying behind this is that documented failures can spare GI a lot of trial wells: their success is almost guaranteed when drilling for hot water.

According to Morando’s business plans for this year, HUF 1 billion will be invested in geothermal energy projects related to GI. The geothermal firm has already acquired a majority stake in Materm, a project company that is planning to develop a geothermal district heating system and a spa for the city of Makó (southwest Hungary). Next it is planning to start a similar project in Csongrád, another town in the southern region of the country.

In the strict sense of the word, GI is not a startup company as its investors did not support an existing enterprise but created one for their own purposes. However, it serves as a good example for an idea related to renewable energy by a venture capital fund.

HY-GO A team of six people has been working on developing the first Hungarian fuel-cell vehicle, called HY-GO. Each member is employed at the science faculty of Budapest’s ELTE university: they are mostly physicists, two of them are mathematicians, and one is a meteorologist. This probably explains why they have never tried to establish a project company as a framework for their product development. Their quest for business opportunities has been limited to finding sponsors.

Like the SmartSocket team, they also took part in several venture capital competitions, and even won an award: last year in Düsseldorf their presentation earned a special prize of the European Venture Summit.

Their main sponsor is the Hungarian stateowned electricity provider MVM. It supports their scientific research on hydrogen fuel as well as experiments in modeling vehicles, but some experts still say that it is not in the interest of the power company to develop a fuel-cell engine on its own, however good the parameters of the engine might be. AZs

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Healthy is Beautiful The latest chair family of the US Herman Miller Inc. has been inspired by the principles of the Brooklyn suspension bridge. The frameless back of the SAYL work chair protects our health. The product, with a minimized use of material, is 90% recyclable and does not contain PVC. With this, it has achieved MBDC Cradle to Cradle and GreenGuard Certification.

special report 13

www.bbj.hu

Budapest Business Journal | Sept 23 – Oct 6

Carrots for trash collectors A new organization has been set up by the government to manage the collection and reuse of products charged with environmental tax. The National Waste Management Agency (OHÜ) plans to improve the country’s waste management by embracing a new philosophy.

BBJ zsófia végh

A more transparent and simpler system is about to replace and correct the faults of the previous one, Sándor Fazekas, Rural Development Minister promised. The aim of the new legislation is to improve the proportion of residential recycling (5-15%) and to make producers adopt practices that produce less waste.

The environmental tax is a means to help people differentiate between products that are environmentally friendly and those that are harmful to the environment. For change work, the government needs to make market players interested in working out eco-friendly solutions. An exemption from taxpaying and the administrative burdens of recyclable and returnable goods, which comes into effect as of 2012, is one way to achieve that. New legislation and a framework for the system are currently being drafted.

Consumers, too, must be engaged. Very few today would seem to grasp the benefits of selective trash disposal islands. Take the drop zones scattered in cities, which have failed to live up to the expectations. Only 10-12 out 100 people will take the trouble of carrying different kinds of waste to the color-coded bins and throwing them in one-by-one.

Learning from previous mistakes, the government wishes to follow an Italian example that

rewards citizens for taking part in waste selection (such as placing machines that collect used bottles in shopping malls). The establishment of a similar system begins next year. The agency will continue to rely on public waste collectors but will try and involve retailers and private waste management companies. Drop zones will gradually disappear, to be replaced by other methods like reverse vending machines, waste collection with sacks and various product fees.

OHÜ does not expect spectacular growth in 2012 in the amount of waste selectively disposed for recycling, mainly because residential waste collection is expensive – and it costs even more in the industrial sector. Aluminum cans, PET and non-returnable bottles and electric devices are an exception as it is anticipated they will be disposed of in large numbers even from next year.

To ease their collection, OHÜ will install reverse vending machines. Around 1 million drinking containers are in circulation in Hungary. A recent calculation (approved by manufacturers) has shown that approximately 600-700 reverse vending machines and the related infrastructure would be needed to reach a 65% return ratio. Of these, 100 can be put into operation next year to keep installation costs down. By 2014, the ministry wants to see several hundred machines working.

(By comparison, in the past five years, only 50 were installed.)

The government expects to generate HUF 49 billion from the environmental product-tax next year. Some 70% of the revenues would be spent on waste collection, transport, management and usage. Another 7% would cover awareness raising and 6% the operation of the agency. The government would invest the remaining 17% in projects to establish a modern selective waste disposal system. Machines that collect drink containers placed in shopping malls are one such example. n

The idea of reverse vending machines was born with the aim of making people interested and involved in segregated waste management by offering a convenient solution to the disposal of drink containers. An example of such a machine is Alupress, a 100% Hungarian developed product.

Alupress can compress both crushed and uncrushed drinking cans. The standard standalone machine measures 128cmx88cmx183cm. It requires only 1sqm of storage space and a 230V socket for operation. It has a simple user interface and is easy to operate.

After a can is deposited in the machine, it passes into the head unit, which quickly checks its thickness and size. Cans then pass into the built-in compactor that compresses them into thin sheets a 12th of their original size. Then they are sent to the storage container, which is made of plastic and has wheel to allow easy removal. An LCD monitor is integrated into the user interface and provides information about the function of the machine and the processes. Once a customer has deposited a can, a printer gives a ticket. Alupress comes with GPRS installed, allowing it to be monitored from company headquarters. All data generated is available online.

Machines have so far been installed in Auchan, Tesco, Spar, CBA and Match. For each can, customers get HUF 2. (Retail chains can determine the amount given for each can returned.)

Hybrids waiting to be plugged in Hybrid cars are not best sellers on the Hungarian market. High prices, and few charging opportunities, are the main obstacles that stand in the way of sales growth.

BBJ zsófia végh

On September 17, the first day of the car-free weekend in Budapest, a large group of people is hanging around the Toyota stand on Andrássy út.

They are studying the leaflets, listening politely to the presentation by the company’s representatives, but what they are really here for is to take a ride with one of the full hybrid cars on display. All the great breeds of the Toyota hybrid stable are lined up here: the world-conquering Prius, the Auris HSD (successor to the Corolla) and the Lexus CT 200h, a piece of affordable luxury. On the outside, they look just as neat as their peers that run on traditional fuel. But under the hood, they have something that saves both money and the environment.

Hybrid cars have been on the market for quite some time. First, they were labeled weird, sluggish and very uncool. It took several years and stars such as Leonardo DiCaprio and Cameron Diaz driving a Prius for their image to be revamped. The Hollywood boost was so successful that Prius has

Auris hsd usage engine maintenance fuel

local business tax insurance Source: Toyota Hungary

costs: three years and 45,000 km

auris 1.6 petrol

3

year

3

45,000

mileage

45,000

73

power kW

97

26

Hybrid power

-

86,964

cost of parts and maintenance

86,689

3.8

average consumption (liter/100 km)

6.6

380.9

fuel price (HUF/liter) 95-petrol

380.9

651,339

fuel cost

1,131,273

75,555

1-3 years (HUF 345/kW)

100,395

111,960

third party insurance

115,92

925,548

overall costs (HUF)

1,434,277

20.57

overall costs (HUF)/km

31.87

taken the lead in global hybrid sales. Since 2004, more than two million examples of this model have rolled off the assembly lines.

Japan and the US are the main consumers, but Europe has started to catch up thanks to a number of directives drawn up by the EU. It has become chic to drive a hybrid, though only a few can afford it.

In Hungary, the recession has left its mark on car sales in general. New car sales in the compact car category have been dropping and are not expected to turn around anytime soon. What is taking place now is downsizing and downgrading: people look for smaller cars with fewer extras.

In a market shrunk to a quarter of its previous size

(an approximation from market insiders), it is little wonder that hybrid sales have stalled too.

There are several obstacles to hybrid cars’ expansion in Hungary. Their relatively high price tag is one, especially here where the single most important consideration of car buyers is price.

That is followed by fuel consumption; rarely does anyone look at overall maintenance costs, something Western car owners and countries with a high number of hybrids watch. “Only a few will think of the costs of a brake replacement or tire changes that take place three times more in the case of a diesel than a hybrid,” Sándor Krajcsovics, manager of product communications and product training at Toyota Hungary told the Budapest

Business Journal. The price of fuel is another factor eco- and money-conscious people consider: it is still lower (though not significantly) than gas.

Full hybrids may promise much lower emission rates and overall costs, but it takes more to win people’s hearts. Convenience in the form of many charging stations could probably give the needed push to many. “To charge the batteries of a Prius (or any of Toyota’s full hybrids), you need a 230V plug,” Krajcsovics explains. For that, the driver gets to go 23 km without stopping again to recharge. Even if car owners have a plug at home, plugs in parking towers or the garages of office buildings would be needed, too.

Time spent charging could be incorporated in the price, Krajcsovics suggests. Being realistic about the country’s economic state, he would welcome ideas such as the free use of bus lanes by hybrid drivers. The lower registration fee (HUF 190,000 as opposed to anything from HUF 270,000 to HUF 3 million for non-hybrids) helps somewhat. But an emission-based tax system – like that used in the Netherlands – would do more to attract drivers. Until this is introduced however, carmakers cannot do other than try to adjust to low-budget needs.

In a bid to respond to affordability issues but also promote green thinking, Toyota will introduce the full hybrid version of the Yaris, its bestselling subcompact category car, next year. n

14 special report

www.bbj.hu

Budapest Business Journal | Sept 23 – Oct 6

Greener pastures for sustainable offices On the Budapest office market, rental fees are so depressed that owners of sustainable office buildings are unable to pass on the burden of higher construction costs to their tenants. On the other hand, green tenants are not concerned about operational cost efficiency, according to real estate consultants.

BBJ andrás zsámboki

BBJ

green office buildings

+43%

Change in total net green office space in 2011

Green offices are more expensive to build, but less expensive to operate than average ‘A’ category office buildings. Their rental fees are higher while their operating costs are somewhat lower, which makes them popular among tenants. Such an economic reasoning might sound safe anywhere in the world – but not in Hungary.

As far as the domestic property market is concerned, rental fees are so depressed that owners of sustainable office buildings are unable to put the burden of the higher construction costs on their tenants. On the other hand, green tenants are not concerned about operational cost efficiency, real estate consultants the Budapest Business Journal asked agreed.

“There are more or less three types of motivation lying behind the choice of a green office nowadays,” Dániel Pintér, the head of the office leasing division at Eston International said.

“The number one motivation is corporate social responsibility (CSR). Many Budapest-

based multinational companies have a CSR policy that prescribes that only offices with green qualifications should be rented,” said Pintér.

Demand for green building services on the part of employees is the second most common motivation in Eston’s experience. “Younger people working at shared service centers often express their need for commuting by bike.

Executives of these centers are easy to convince about this,” Pintér said.

Thirdly, Hungarian companies will sometimes pick a green office building just because their top executives are committed to sustainable development. Pintér declined to boast about their freshest deal, but real estate newswire Iroda.hu recently published that Eston International has just completed a rental agreement with national transport authority NKH for a 1,900 sqm space in the Quadrum complex.

Minimizing operational costs, however, is anything but a priority among green tenants, even though scientific inquiries have proven that green buildings consume at least 20% less energy and 50% less fresh water, let alone environmental benefits like reduced carbon dioxide emissions. “The problem is that energy and other public utility bills only form a minor part of all operational costs,” said Ákos Balla, head of valuation at Colliers International. “Operational costs amount to a fourth of rental fees, while energy makes up a mere third,” he added.

On the other hand, some 70% of operational costs consists of items like cleaning and reception desk service, as well as property taxes, which are hardly affected by sustainability at all.

“Therefore, savings on water and energy consumption can at most amount to 15% of average operational costs, a half of which is generally ceded to the tenants. A 7-8% price advantage, however, is not that appealing any more, especially if we take into account that rental costs of green office buildings are sensibly higher than those of average ones,” Balla said.

On the rental market, A category offices are currently rented for around €11-12 per month per square meter. With a green office qualification, the same could go up to €12.5-13.5, while green technology can at most keep the operational cost advantage under half a euro.

But things will not remain like this forever. Sustainable technologies are developing: energy efficiency parameters of office buildings in the pipeline are going to surpass those in the current building stock. “Operational cost savings of our office building Green House, still under development, will amount to €2,” Ildikó Rézműves, head of the communication and marketing division of developer Skanska Property Hungary said.

The Swedish real estate company has ambitious goals. Green House, its most recent, 17,800 sqm Budapest development on Váci út is currently applying for a Platinum qualification from green building qualifier LEED. “No other building in Hungary has ever qualified to meet such serious criteria,” Rézműves noted. As far as energy consumption is concerned, Green House will save up to 40% compared to an average building of the same parameters, while its water consumption will be less than a third of a non-green building.

Skeptics are still tough to convince about “green thrift”, though. “However impressive these buildings’ savings on fresh water are, it contributes little to reducing operational costs,” said Hajnalka Farkas, head of property management at DTZ Hungary. “Even now, water utilities comprise the tiniest bills among hefty operational cost items,” she added.

On the other hand, the direct geothermal cooling system built into Green House could save a lot for future tenants, as air conditioning is by far the most energy consuming office facility nowadays.

When constructing a green office building, extra costs can hardly be passed on to tenants under the current market conditions. Monthly rental fees might be €1-2 higher per square meter compared to average office buildings, but that does not cover the costs of high-end technical solutions. So, is it worth building it at all?

“Vacancy on the Budapest office market is around 25%, which is very high,” István Kerekes, leasing and acquisitions manager at Skanska Property said. “Fortunately, figures for the submarket of green offices look much better,” he added. As far as their last energy efficient property development is concerned, the ratio of “dead space” in Népliget Center has never sur-

passed 20%, even during the depths of the crisis, Kerekes told the BBJ. Sustainability forms the main trend of development nowadays. The buyer of Népliget Center confirms Pintér’s observation. “GLL Real Estate Partners has always had a preference for investments that retain their value for a long time. Energy efficient as it is, Népliget Center is just the right example of this,” Eva Weber, asset manager for the Hungarian portfolio of GLL Partners claimed.

Skanska Property is famous for developing real estate projects from its own resources, without any bank money. “Nowadays this may be a huge advantage, as they do not depend on bank loans when timing the delivery of Green House,” Balla from Colliers commented. Financing conditions have become much tighter since the crisis. By the time Skanska will finish its project, there will hardly be any competitors offering quality office space of 15,000 sqm. “In case a big client appears during the forthcoming year, they will surely bring Skanska into an excellent bargaining position,” Balla said.

As a matter of fact, there is only one possible competitor for Green House: V17, an office building by domestic developer Wing. V17 will also have a qualified green certificate (from BREEAM), it is also located along the Váci út “office corridor,” and it will also offer more than 10,000 sqm for rent. Wing, however, is 18 months late compared to Skanska. Even though it had obtained all the permits by 2009, launch of construction was continually postponed for financial reasons. Pintér told the BBJ that the project has not yet signed enough pre-leases, so it is still a question whether Wing will be able to catch up to Skanska. n

new buildings Eiffel Tér Irodaház Green House NewAge Center Akadémia Offices BudaWest Office Building V17

Greener office technologies in practice Despite troubled economic times, more businesses are willing to invest in green technology. Some take giant leaps and modify the entire office infrastructure. Others are doing it one step at a time.

BBJ saida ayupova

One of the most direct ways of limiting a building’s environmental footprint is through a reduction in energy consumption. However, with modern offices heavily dependent on technologies such as computers, printers, faxes and other electrical equipment, this is easier said than done. Yet businesses no longer limit environmentally conscious solutions to switching off lights or taking the stairs.

For example, in order to cut electricity consumption, the RiverPark office building uses T5 fluorescent lamps as well as motion-controlled lighting in common areas. Fluorescent lamps are known for their much higher light

efficiency than incandescent bulbs. Unfortunately, they are quite costly to install since they require a ballast – a device that limits the amount of current in an electric circuit.

In terms of reducing gas energy consumption, OTP Bank could be used as an example.

Through the installation of solar panels it has been saving much gas energy over the last few years. The practice is costly in the short-run, but pays off in the longer-term.

Since the complete green transformation of operations is expensive, especially in older buildings, most opt to take smaller steps, for example by replacing inkjet printers with laser units, which are not only more efficient but are also kinder on the environment. Inkjet-printed paper is practically impossible to recycle, while most such printers also release volatile organic carbons harmful to the environment.

Today the range of green office supplies on the market is endless and includes everything from desk accessories to networking equipment. Going green does not only mean reducing the amount of waste or energy consumption in the office, it also encompasses purchasing prod-

ucts that were produced in an environmentally friendly manner. Business cards, envelopes, planners, calendars and writing pads can all be found now made of recycled paper. Furniture can be produced using certified wood, meaning the timber comes from sustainably harvested forests.

Many companies now produce desks, chairs or bookshelves from reclaimed, or recycled, wood.

Much furniture is made from plastic, which in itself is not sustainable, since this material is made from petroleum. However, eco-friendly options may still include plastic and aluminum, with the important thing being that individual parts can easily be replaced (and the broken bits recycled) if repairs are required.

Green IT is an increasingly popular practice in Hungary. It refers to a system by which computers, printers and other devices and parts are disposed of without harming the environment.

Considering that 20 to 50 million tons of electronic waste is discarded globally every year, based on Greenpeace calculations, a growing number of businesses and non-profit organizations are now offering their services in this field.

For example, Sims Recycling Solutions offers

Hungary’s businesses recycling of such office technologies as copiers, fax machines, printers and toners. The importance of proper disposal of electronics cannot be underestimated. Computer monitors contain significant amounts of lead, hazardous both to the wider environment and to people. Many batteries also contain lead, as well as mercury and cadmium.

Another relatively easy step a company can take is to replace desktop computers with laptops. Findings show that using a laptop can save up to 50% in energy over a desktop, in annual terms. Another option is to replace old cathode ray tube (CRT) monitors with liquid crystal display (LCD) screens. A 14-inch LCD monitor uses up to 75% less energy than a 14-inch CRT monitor.

Many businesses also eliminate regular written correspondence with customers by introducing online services, while digital storage of documents is another common practice these days, combined with duplex printing and online faxing. Although still behind their Western counterparts, Hungarian businesses are becoming more environmentally conscious by the day. n

specialthe report lists 151

www.bbjonline bbj.hu .hu

Sept 2312 – Oct 6 Budapest Business Journal || March – March 26

green office buildings

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

BP, Castrol, Webváltó

www.nepligetcenter.hu

23,300 26,000

8 1,000

11,200 3

Ÿ Ÿ

2010

Ÿ







–

–



–





–

EU Green Building

Millenium Gate

22,500 23,000

9 2,800

23,000 5

13–15 3.9

2013

Ÿ

–





–

–









–

Green Building

–

TriGranit Holding (100) –

1095 Budapest, Lechner Ödön fasor 5.

(20) 369-6600 – mlaczko@trigranit.com

Millenium Tower III

20,050 20,500

9 2,500

– 5

13 3.9

2008

Morgan Stanley, Lexmark, Millenium Wellness, Volksbank, Gránit Bank

–





–

–



–





–

LEED registrated project

–

Trigranit Holding (100) –

1095 Budapest, Lechner Ödön fasor 8.

(20) 369 -6600 – mlaczko@trigranit.com

18,500 23,700

7 3,200

1,130 5

20 3.5

2010

Cetelem Bank, AXN, Grundfos, ESAB, Givaudan

1062 Budapest, Teréz körút 55–57.

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

17,800 18,400

9 2,400

6,000 5

13–13.75 3.9

2008

K&H Bank, Nestlé, Prologis, JTI, Oracle

1095 Budapest, Lechner Ödön fasor 7.

(20) 369-6600 – mlaczko@trigranit.com

www.hallergardens.hu





–

–









Green certificate

Real estate agent, phone

Ownership (%): Hungarian NonHungarian

Address Phone Fax Email

–

–

EHL Hungary (1) 451-8040, King Sturge (1) 451-1010

– Immofinanz AG (100)

1096 Budapest, Soroksári út 32–34.

– – –

Ÿ

Ÿ Ÿ

1097 Budapest, Könyves Kálmán körút 11.

(1) 382-9100 (1) 382-9129 property@skanska.hu

Other

–

Self-regulating illumination Local selective waste collection

2008

Natural ventilation

12-14 3.6

Natural light

20,000 5

Own sewage management Independent energy supply

Year constructed

7 4,270

Public transportation

Monthly rental fee in 2011 (euro/sqm) Monthly service charge in 2011 (euro/sqm)

32,500 57,000

Haller Gardens

Bicycle lock

Current leasable office space (sqm) Minimal lease term (year)

Major tenants

Company Website

Solar power

No. of levels Average level size (sqm)

1

Green services

Net office space (sqm) Total gross building area (sqm)

Rank

Ranked by net office space

Népliget Center 2

3

4

www.milleniumtowers.hu

www.milleniumtowers.hu

Eiffel Tér Irodaház www.convergen-ce.com 5

6

Millenium Tower II www.milleniumtowers.hu

–

–









–

–

–

–









–







–

–

–

– Europa Fund (100)

–

LEED registrated project

CB Richard Ellis (1) 374-3040, Cushman & Wakefield (1) 268-1288

TriGranit Holding (100) –

Methodology: for this list we selected office buildings in and around Budapest that have implemented at least one of the following measures: gained a green certificate, use renewable energy, support green transportation, waste disposal, or energy-conserving architecture.





–

–



–



Ÿ

5,756 3

10-12,9 2,9

www.skanska.hu

16,800 17,800

7 2,430

17,900 5

Ÿ Ÿ

Office Garden II

16,159 16,790

8 2,200

3,546 5

12-12.5 HUF 960

Office Garden I

14,277 26,000

8 2,040

3,753 5

Laurus Offices[2]

13,990 27,000

6-7 258-1165

13,200 21,100

12,885

8

–





–

–







10

11

12

www.officegarden.hu

www.officegarden.hu

www.laurusirodahazak.hu







–





–



LEED registered projects, Green Building

–

TriGranit Holding (100) –

1095 Budapest, Lechner Ödön fasor 6.

(20) 369-6600 – mlaczko@trigranit.com

JLL (1) 489-0202

Ÿ Ÿ

1117 Budapest, Neumann János utca 1/E (1) 382-7560 (1) 382-7570 office@ivg.hu

1134 Budapest, Kassák Lajos utca 22.

(1) 382-9100 (1) 382-9129 property@skanska.hu



Quality front and roof insulation, heatand sunproof window glazing, large-size active green area

LEED Silver



Geothermal energy utilization

LEED Precertificate

Ÿ

Ÿ Ÿ

– GRT Group (100)

1117 Budapest, Alíz utca 2.

– – office@gvarobertson.com

Green House[1] 9

Address Phone Fax Email

–

www.infopark.hu, www.ivg.hu 7 1,900-2,800

Ownership (%): Hungarian NonHungarian



Infopark E Building

17,000

Real estate agent, phone

Green certificate Other

Self-regulating illumination Local selective waste collection

Natural ventilation

Natural light

2009

Lufthansa Systems, Kraft Foods, ZTE, EIT

–

Own sewage management Independent energy supply

2006

Vodafone, Boehringer, Lufthansa, De Lage Landen, Bankkártya Zrt

Public transportation

13–14 3.9

Bicycle lock

3,000 5

Major tenants

Solar power

8 2,300

Green services Year constructed

Ÿ

Monthly rental fee in 2011 (euro/sqm) Monthly service charge in 2011 (euro/sqm)

www.milleniumtowers.hu

17,100

Current leasable office space (sqm) Minimal lease term (year)

Millennium Tower I

www.bbj.hu www.bbjonline

Budapest Business Journal | Sept – Oct26 6 Budapest Business Journal | March 12 –23 March

No. of levels Average level size (sqm)

7

Company Website

Net office space (sqm) Total gross building area (sqm)

Rank

16 special 2 the listsreport

2012

Ÿ

2010

Syngenta, TATA, Shell, Geberit, Eurest

–





–







–



–

–

GVA Robertson (1) 327-2050

12.3-13.2 3.5

2008

Philips, Hewlett Packard, Magyar Telekom, SióEckes, NAVTEQ, Genzyme, Virus Buster

–





–





–

–

–

–

–

GVA Robertson (1) 327-2050

– Heitman (100)

1117 Budapest, Alíz utca 1.

– – office@gvarobertson.com

10,400 3

12-13 3.9

2009-2011

Ÿ

–





–











Rainwater tank, "A" energy certificate

–

CB Richard Ellis Kft (1) 374-3040

– IR CEE Project Development Holding GmbH (100)

1138 Budapest, Népfürdő utca 24–26.

(1) 392-4080 (1) 392-4081 laurus@immorent.com

8 1,600

13,200 5

13.5–16 3.5

in progress

Ÿ

–







–



–





–

–

–

– Ablon Group (100)

1138 Budapest, Esztergomi út 44–48.

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

5 3,000

4,800 5

15–18 3.9

2010–2011

HBO







–

–









–

BREEAM Excellent

CB Richard Ellis Kft, (1) 374-3040 Varga Judit, Kistamás Ágnes, Hámori Zita

Ÿ Ÿ

1026 Budapest, Hűvösvölgyi út 21–23.

(1) 374-3040 (1) 374-3050 cbrebudapest@cbre.com

NewAge Center www.newagebc.hu 13

14

Akadémia OfficesOfficium Irodaház officiumiroda.hu

Ÿ

infopark E

riverpark

special report the lists 17 3

www.bbjonline bbj.hu .hu

16

17

Telenor Ház

11,344 26,500

4 –

– –

– –

–

–

V17[3]

10,580 13,000

8 1,008

12,400 5

14 3.2

9,865

7 400–900

5725 3

13–15 3.5

www.telenor.hu

www.eston.hu

2013

Ÿ

2009

Henkel, HUAWEI, Ukrenergy

Real estate agent, phone

Ownership (%): Hungarian NonHungarian

Address Phone Fax Email

Tarnóczay Szilvia

Ÿ Ÿ

1118 Budapest, Rétköz utca 5.

(1) 309-0909 (1) 309-0900 info@budawest.net

Other

2009

www.budawest.net

Green certificate

Self-regulating illumination Local selective waste collection

11–13 3.6

Natural ventilation

3,856 3

Natural light

6 2,800

Own sewage management Independent energy supply

12,818 27,500

Public transportation

BudaWest Office Building

Montana Kft, Qualysoft Zrt, Get-Energy Kft, TupperWare Kft, Vamsoft Kft, Helly Hansen Kft

Bicycle lock

Major tenants

Company Website

Solar power

Monthly rental fee in 2011 (euro/sqm) Monthly service charge in 2011 (euro/sqm)

Current leasable office space (sqm) Minimal lease term (year)

No. of levels Average level size (sqm)

Green services Year constructed

15

Net office space (sqm) Total gross building area (sqm)

Rank

Journal || March Sept 2312 – Oct 6 Budapest Business Journal – March 26

–





–







–



–

BREEAM in use (in progress)







–

–









–

–

–

Telenor Magyarország Zrt (100) –

2045 Budapest, Pannon út 1.

(20) 930-4000 (20) 930-4159 sajto@telenor.hu



Enclosed inner garden

BREEAM

ESTON International Zrt, GVA Robertson (1) 327-2050

V17 Kft (100) –

1134 Budapest, Váci út 17.

(20) 400-9060 (1) 877-1001 office@eston.hu

Ÿ Ÿ

1096 Budapest, Közraktár út 30–32.

(1) 382-7560 (1) 382-7570 office@ivg.hu









–







RiverPark

ww.riverpark.hu

18

Ÿ

–

–



–

–





–



–

–

GVA Robertson (1) 327-2050



Intelligent building management system, motion sensor heating, window shades, window opening sensor

–

–

– Kinnarps I. Falköping AB (100)

1133 Budapest, Váci út 92.

(1) 237-1251 (1) 237-1250 recepcio@kinnarps.hu



Landscaped garden

ESTON International

– AIG Lincoln (100)

2220 Vecsés, Fő út 246–248.

(20) 400-9060 (1) 877-1001 nora.bercsenyi@eston.hu

Kinnarps House

www.kinnarpshouse.hu 7,531 9,091

19

20

The Quadrum Phase 1 www.thequadrum.hu

5,390 5,961

8 1,000

6 900

–

Ÿ

2,896 3

Ÿ Ÿ

11.5–13 3.2

2006

Kinnarps Hungary Kft, Rail Cargo Hungaria Zrt

2008

Lufthansa Technik, Unicredit Bank, Nemzeti Közlekedési Hatóság Légügyi Hivatala

–

–









–



–















BREEAM

noTes: [1] Planed delivery date on December, 2012, [2) Planed delivery date on 28. September, 2011, [3) Planed delivery date on Q3, 2014

Ÿ=

This list was compiled from responses to questionnaires received by Sept 20, 2011 and publicly available data. To the best of the Budapest Business Journal’s knowledge, the information is accurate as of press would not disclose, NR = not ranked, NA = not applicable 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. The research department can be contacted at research@bbj.hu

[ case study ]

Environmentally and people friendly

The KÖVET Association regularly organizes events, courses, and conferences in Kinnarps House. One of the most important cooperations was the “Zöld Iroda Kiállítás”(Green Office Exhibition), which was hosted in Kinnarps House in the last three years. The exhibition areas on the ground and first floors are very friendly and cozy spaces, and their size is just right given the number of exhibitors. The same is true for the Jarl conference room, where the Green Office Award Ceremony took place.

We have a close relationship with Kinnarps Hungary, which has been a member of our organization since 2007; in additional we worked together on a tender related to “the green office”. This is one of the reasons why we choose Kinnarps House, whose operation has its roots in the Swedish culture, and who is committed to sustainability and ergonomics, with pleasure. This commitment is also reflected in the building design of Kinnarps House: the environment is modern, but not ostentatious. The building doesn’t set an example with its simplicity and people friendly outfit only, but provides a pleasant atmosphere for guests, partners and exhibitors. It is important that the office building is easily accessible by public transport, and by bike as well.

When people enter Kinnarps House, even a layman can see that the Kinnarps focuses on the environment, not just during the furniture manufacturing, but the building was built in terms of an environmentally friendly operation. The remarkable environment- and user-friendly solutions and the carefully selected colors and materials catch the eye for the very first.

When Kinnarps House was built, it was one of the greenest buildings in Hungary, and operates with an

[ expert opinion ]

The shades of green Kay-Uwe Blandow, managing director, IVG Hungary Kft Kay-Uwe Blandow Managing Director, IVG Hungary Kft.

intelligent building management system. More than 1,000 sensors detect the internal and external environmental conditions and the presence of users, helping to minimize the building’s emissions, but significant energy saving is also a result. Kinnarps’ environmentally conscious thinking has been an important part of its business philosophy from the beginning, not only an integral part of the real estate development, but in the daily operation of the offices. As a result Kinnarps was the first to be awarded with the Green Office certification by KÖVET Association in 2009.

The KÖVET Association is delighted to cooperate with a partner whose commitment to the environment and human based approach are the main pillars of its benefits for decades.

infopark expert opinion

Csaba Bodroghelyi Managing Director, KÖVET Association

1133 Budapest, Váci út 92. +36 1 237 1251 www.kinnarps.hu

NOTE: ALL ARTICLES MARKED case study are promotional content for which the Budapest Business Journal does not take responsibility

According to estimates, our “constructed environment” is responsible for 40% of global carbon dioxide emissions. We should look at this positively and say that green buildings have a huge opportunity to play an essential part in the global objective to reduce emissions.

Thus our industry is “being industrious”: more and more developers want to demonstrate with official certifications that they work in the true spirit of environmental awareness. Those who want to win the LEED (Leadership in Energy and Environmental Design) certificate, for example, had better get some skilled professionals from a consultancy company involved from the project planning period onwards.

Our parent company recently finished one of its projects with a LEED Gold certificate in Munich. The futuristic Medienbrücke, “floating” 30 meters up in the air, has done a lot for its gold certification. As early as the planning process

those executable and measurable solutions that later contributed to the high sustainability level of the building were identified. Future energy consumption was simulated and an emission plan was prepared as well. It gained a lot in efficiency with the “reuse” of primary energies; with the system in which water is circulated, the walls are covered with thermally active surfaces, and additional ventilation devices have been installed to contribute to the air-conditioning system of the building. All these steps resulted in a 42% improvement in energy efficiency, while the building’s automation and the introduction of smart control and monitoring can further strengthen this trend. By the time the house was finished, the occupancy level had reached 100%.

In the case of the Infopark E building, we targeted the LEED Silver certification (and received it for the first time in Hungary) together with our consultants, but we hope that we can also participate in bringing “deeper shades of green” to the Budapest office market.

Because we believe that, although acquiring certifications has a certain prestige value, building environmentally friendly buildings is not only a question of prestige. www.ivg.hu

kinnarps

NOTE: ALL ARTICLES MARKED expert opinion are promotional content for which the Budapest Business Journal does not take responsibility

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There is a sport where experience is more valuable then youth. It is called kendo, and is also known as “the way of the sword”, the Japanese martial art of sword fighting.

Gábor Váradi, a first-dan kendo master, filmmaker and producer talks about his experiences, the benefits of the sport and the application of its philosophy in business with a BBJ journalist and fellow practitioner.

Kendo evolved into a martial art in its own right from the exercises of the Japanese samurai. The formal exercises, the katas, as they are known, are centuries old and are still taught. In the early 1700s master Naganuma Sirozaemon Kunisato introduced bamboo swords (shinai) and armor (bogu) into the practice of kendo. Shinai and armor made it possible to deliver cuts and hits with full force without injuring the opponent.

Modern kendo is defined by cuts and stabs. Cuts can only be delivered to target zones, which are on the wrist (kote), the head (men) and torso (do) as well as around the throat (tsuki), all of which are protected by the bogu. The bout is two times two minutes long without intermission. A perfect attack scores one point (ippon). The first contestant to score two points wins the bout.

When the time limit is reached, the contestant with at least one point wins.

life 19 gábor váradi Born in Budapest in 1953. He spent his high school years studying rail engineering and later got a degree in economics. From 1978 he was employed by the international division of Hungarian film studio MAFILM, working in various fields. After the end of the Soviet occupation he and his friends founded Eurofilm Studio, which has produced several award-winning movies over the past 19 years, including Taxidermia, Fény Ösvényei, The Boy in the Striped Piyamas and Secret of Moonacre. He is presently a producer at Blue Danube Films Kft.

the sword Martial arts have always interested Gábor, who was born in Budapest in 1953, and still lives in the city, where he manages his own movie studio. Since he was busy and it’s difficult to find a period in the movie industry when one can plan ahead at leisure, it was a long time before he took up kendo. Of course, he pursued sports when he had the time, from table tennis to football and tennis. Sailing another passion of his, but kendo was always in the back of his mind. He really wanted to get around to giving it a try.

Four years ago, he finally got within striking distance of the sport: one of his movies was invited to a film festival in Tokyo. Strolling around Meiji park, he wandered into a dojo (a gym, hallowed ground) and was immediately enchanted. He asked the dojo’s sensei (master) if he could stay and watch the training. He was amazed by the immense knowledge, patience and dedication of the nearly 70-years-old master as he trained with children of five and six years old. From then on, he went to train two times a week.

In the age of the samurai, fighting was a matter of life and death. But, surprising as it may be, kendo teaches not belligerence, but perseverance, striving for perfection, patience, concentration and knowing one’s opponents. As in the case of most martial arts, the truly great masters are not aggressive.

In fact, it’s the exact opposite. Businesspeople who want to be successful have much to gain from the philosophy of kendo.

Delivering the blow Since he began practicing kendo, Gábor says he has found he doesn’t give in as easily when negotiations get tough. He can look into his partner’s eyes longer, he is more patient, more persistent. But this is not something he was aiming for: kendo did it. Of all the sports he has tried and pursues to this day, kendo is the only one that gave him these characteristics. A higher dan grade in kendo assumes more experience and knowledge. The higher ranked kendokas (trainees) get, the more serious they become about perfecting their skills through constant and hard training. And experience brings higher dan ranks. This is a self-fueling process, and although getting the next, higher rank is not necessarily the goal, once you get on board, there is no stopping. You will do kendo until the grave, learning and experiencing.

“Once, many years ago I saw a documentary about an old master at the first or second dan level. He was more than 60 when he started. He was very focused on his next dan exam, and this is what the movie portrayed.

Eventually, he failed. He was older than 80 by that time. The thing that really caught me was that after the results were announced, namely that he did not succeed, the reporter asked him what he would do next. He responded that he would train harder from now on so that he would pass the next time. It was so shocking for me to see someone with this kind of dedication that I was certain I had to start doing it myself. And I did.”

Hungarian samurai Having returned from Japan, where on and off he has spent six months of the past two years, he continued his kendo studies in Főnix Kendo Klub, learning the craft from sixthdan kendo master Tibor Bárány, a globally renowned master of the sport. As the others got to know more about his work as a movie producer, his master asked Gábor to make shorts about kendo to promote the sport to a broader public in Hungary over the internet.

Altogether, he made six or seven spots which are available on the club’s website. Their release has attracted many new applicants.

“Currently we are working on the script of a feature-length film with an American friend of mine about a story revolving around contemporary kendo. There was also a film shot in the Budapest gym that was an entry at Magyar Filmszemle (an annual Hungarian movie festival): The fourth dan. It was made by a young man who started kendo – he became inspired by what he saw during the shooting.”

Hungarian kendo is in the global elite. In the past years and decades the Hungarian team often came home from international competitions with medals and other excellent results to show.

“I can only encourage anyone – regardless of age or gender – who wants to do sports to try it, and also aspire to compete.

I would especially recommend it to young people because kendo brings out positive characteristics that people already have and it gives a clarity of mind, which is much better than going to a shrink. This is one of the key messages of kendo in the 21st century,” Gábor says. TT

If you are interested in…

what drives the winemaker of the year: You believe in making honest wines.

What do you mean?

“True or honest wines, I sometimes use different words. The characteristics and uniqueness of the site and the local values must be presented, not more, not something else. Over the years a lot of things change as far as your concept about the site and winemaking itself. But today I have the same opinion about this fundamental principle as 21 years ago when the winery was established.

You should not wish for more than what the specific site can yield. We do not consider the vine types decisive but more so the site with its uniqueness. The Balatonboglár wine region has loess as its topsoil as opposed to the volcanic rocks of Balaton-felvidék, the region north of Lake Balaton. This is why our wines taste fruity and different. Some mineral flavors may be added to the wine and using oak barrels can also make the wine more unique.”

(Ottó Légli, Winemaker of the year, 2011) how a castle hotel and model estate in Tokaj works to enhance the reputation of Hungarian wines: How were you able to catch up with the others?

“We placed equal emphasis on winemaking and hospitality. We wanted to create a château type vineyard estate in Tokaj. This tradition goes back a long way in France but in Hungary, especially in the 1990s, it was unknown. We also placed emphasis on bringing people out to the estate to introduce them to our wines and the brand. This is why we invested heavily in tourism in addition to vine growing and wine making. Back then there were few high-quality hotels and restaurants in Tokaj. Our objective was to bring well-off guests used to such types of accommodation and high quality services to Tokaj and make them stay here for a few days so that we can show them around the estate, the region and sell our wines to them. It all began just fine but the economic crisis kicked in and the estate developed slower than expected. Yet, I believe this is the one and only way, and that assumption has so far proven to be right.”

(Miklós Prácser, managing director of Gróf Degenfeld Castle hotel and model estate)

Place your order at circulation@bbj.hu

20 life

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Budapest Business Journal | Sept 23 – Oct 6

Paving the way to Warsaw Background

〉Now, when turnover of the WSE is more than twice that of the Vienna exchange, the competition between us is not my problem, but theirs

The WSE, which views Hungary as a strategic market, aims to lure both issuers and investors to the CEE’s leading bourse. The Polish stock exchange is becoming a truly international platform with 36 foreign listed companies from 19 different countries.

Q: Have you experienced an openness in the Hungarian market?

A: Yes, absolutely. My friend, a former CEO of the BSE, said, “You know, the best relations Hungary has with a neighboring country is with Poland.” I said, OK, I can confirm this, but we are not so much neighbors, not any more. He said, it does not matter and I fully agree with that.

Curriculum vitae Ludwik Sobolewski was appointed president of the Warsaw Stock Exchange Management Board in June 2006. He is also the chairman of the Supervisory Board of the National Depository for Securities and a member of the European Center for Comparative Commercial and Company Law. In 2009, Sobolewski became the chairman of the Supervisory Board of BondSpot S.A. (previously known as MTS CeTO), a unique institution in Poland licensed to organize and manage a regulated market and alternative trading system (MTF) and is also entitled to create others platforms for electronic trading in financial instruments.

From 1994 to 2006, Sobolewski was the executive vice president of the management board of the National Depository for Securities. Prior to that he worked as an advisor to the management board of the WSE and in the Office of the Council of Ministers of the Republic of Poland.

Sobolewski graduated from the law and administration faculty of the Jagiellonian University in Krakow and the PanthéonAssass University in Paris. He holds a PhD in law and legal counsel.

Warsaw. We used this opportunity to be in Budapest to get an update on their plans. I think that they are seriously considering the WSE as a platform to raise capital for development. They also use the WSE to broaden their investors’ base.

potential for creating this international exchange.

We do not want to build a national exchange, we want to have equal standards for issuers should they come from domestic or foreign markets, with not a shadow of discrimination.

Q: What sectors are these companies in?

A: Very different sectors. However, I was able to find the equivalent of each of these businesses among the listed companies on the WSE. This is important to the companies, because it is always better to be on a market where investors are already familiar with a given sector and it is Q: How was your day in Budapest? also good for us. In addition, the Hungarian firms A: From time to time I come to Budapest, we met are bigger than their peers already listed and Hungarian friends from Keler [the clear- in Warsaw. ing house for Hungary’s bourse] or others connected to the Budapest Stock Exchange visit us Q: Do you see a new Hungarian company in Warsaw to talk about what is going on in listed on the WSE within a year?

A: This is the basic purpose of our visit to HunHungary and in Poland.

Today, I had meetings with five companies. gary. I do not know if a new listing from this group Some of them are quite promising potential can- may happen within a year, but my experiences is didates to be listed in Warsaw, while others prob- that in some cases, the process can take up to two ably need more time. There are a couple of very or three years from the first contact to the actual interesting companies with a magnificent busi- listing. However I am sure that it is worth waiting ness, which are not restrained to the local mar- for. It is important to start a dialogue early to show ket. They have much larger operations, have cli- the benefits of such a project to potential issuers. ents from all over Europe or part of their business However, the next newcomer may not even come is related to Poland or other European countries. from this group of companies, it may be a business we do not even know about yet.

Q: Are these companies you met today Hungary certainly is one of the most imporalready listed on the BSE? tant countries and is a partner for us in the region A: Some of them are. We also had a meeting together with Ukraine, Czech Republic and probwith MOL and E-Star, which are already listed in ably Romania. Their economies have the most

Q: As a potential Hungarian issuer, why would I choose the WSE rather than the BSE? A: The BSE has a very high concentration ratio with three or four companies accounting for 95% of the trading volume. which means that it would be extremely hard for a debuting company to draw sufficient attention from investors. It has been clear for several years that MOL, OTP, Richter and Magyar Telekom are the ones to predominantly attract investors. The network of intermediaries is not developed, either.

And, I feel, there is not much real prospective about the future of the BSE in relation to the Wiener Börse, which is almost the only shareholder. This must have a negative impact on its competitiveness here in Hungary. The BSE is very often quoted as an example where there is a strategic investor that does not really contribute to the development of the local market. This is how the partnership between the BSE and the Wiener Börse is commented on, not only in Poland, but unfortunately in other European countries, too.

This is why I believe that for a business it is much more sensible to go to a financial market with all the infrastructure needed, and which is not actually in regression.

Q: Do you plan to organize more roadshows like this in the region?

A: These roadshows are not really new, as we started to organize special promotion of our markets in the region in 2006, but probably less actively in Hungary. We have a network of partners working in certain countries in the region helping us to bring issuers to Warsaw. We have a representative office in Kiev. We have organized two roadshows in the Czech Republic. We visit Slovakia and the countries of the former Yugoslavia very often.

I think it makes sense to come back and to repeat our message. It is especially important for us to be here, when we do not exactly have a peaceful economic situation. I see so many IPO projects suspended. As in to 2008, we will continue our efforts because we want to show that we can be a remedy, we can be an opportunity. We want to make it clear that we are very close to businesses, not only when everything goes pretty well, but also when there are problems. At such a critical time, selecting a good capital market is even more important than in better times.

Q: How do you see the role of the WSE in the region in the long-term?

A: We do not have the slightest intention to merge or to be taken over by anyone. We do not want to acquire anybody else, as it would contradict our strategy. The idea behind our privatization was to send the WSE to the market as a listed company.

I would not say that my concern is Vienna, now.

My concern is rather how to position the WSE on a broader European scene. Now, when turnover of the WSE is more than twice that of the Vienna exchange, the competition between us is not my problem, but theirs.

The main challenge for us is how to compete with bigger exchanges and with MTFs [alternative trading systems] and several other platforms. We are not yet affected by their activity, but we have to be prepared and we need to improve our technology and regulations. We need to broaden the supply of financial instruments and to diversify even more. We also have to develop the business line that is already in place.

Our main goal is to be one of the obvious choices for small- and mid-size European issuers.

Especially at the time of the huge consolidation on the market, the large exchanges may not be able or willing to provide services to small entrepreneurs.

I can see a very big niche for us here. GL

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Budapest Business Journal | Sept 23 – Oct 6

BUSINESS EVENTS

UPCOMING

events Sept. 27 AmCham-Siemens Visionary Leaders’ Club: Brain Waves and Creativity Location Hungarian Academy of Sciences, Dist. 5, Széchenyi István tér 9 Time 6:30 p.m. – 8:30 p.m.

Fee AmCham members: HUF 20,000 + VAT, nonmembers: HUF 35,000 + VAT Organizer American Chamber of Commerce in Hungary in cooperation with the Hungarian Academy of Sciences Contact Anita Árvai, 428-2086; anita.arvai@amcham.hu

duihk jour fixe

photos: Vámos Fotó

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 450-8800, info@amc.hu, www.amc.hu

The Jour Fixe event of the German-Hungarian Chamber of Commerce and Industry, held in Gerbeaud on September 6, welcomed new members

AmCham Career School

AmCham Communications School

Sept. 29 German gourmet days at the Budapest Marriott Hotel Location Budapest Marriott Hotel, Dist. 5, Apáczai Csere János u. 4 Time 6 p.m.

Organizer German-Hungarian Chamber of Commerce and Industry Contact 345-7626; www.ahkungarn.hu; nemeth@ahkungarn.hu

photos: Péter Kőhalmi

Sept. 29 Financial Crime Prevention conference Location Hilton Budapest WestEnd Hotel, Dist. 6, Váci út 1-3 Time 9 a.m. – 1:15 p.m.

Organizer SIA Central Europe in cooperation with Tonbeller Contact Éva Zsátos, 421-2264; zsatos.eva@sia-ce.eu

with Lajos Mocsai, Trainer and Captain of the Men’s Handball Team AmCham Conference Room September 12, 2011

with Eszter Szabó, GE Corporate Communications and Public Affairs, CEE AmCham Conference Room September 12, 2011

AmCham business forum with Tamás Fellegi Budapest Marriott Hotel, September 13, 2011

Oct. 4 AmCham Business Forum with President Pál Schmitt Location Budapest Marriott Hotel, Dist. 5, Apáczai Csere János u. 4 Time 12:30 a.m. – 2:15 p.m.

Fee AmCham members: HUF 12,000 + VAT; non-members: HUF 27,000 + VAT Organizer American Chamber of Commerce in Hungary Contact Anita Árvai, 428-2086; anita.arvai@amcham.hu Oct. 4 Finance conference in association with Citibank Location Continental Hotel Zara, Budapest, Dist. 7, Dohány utca 42-44 Time 9 a.m. – 3 p.m.

Fee HUF 18,000 + VAT Organizer Canadian Chamber of Commerce in Hungary Contact Gusztáv Rapp, gusztav.rapp@ccch.hu; www.ccch.hu

photos: Péter Kőhalmi

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 news@bbj.hu

National Development Minister Tamás Fellegi with AmCham President István Havas

US Ambassador Eleni Tsakopoulos-Kounalakis with Minister Fellegi, Péter Dávid, AmCham CEO and Markos Kounalakis

For community events visit our partner:

22 life

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Budapest Business Journal | Sept 23 – Oct 6

WHO'S NEWS

Name Gábor Héjjas Current company/position Invitel/deputy CEO in charge of retail Previous company/position Microsoft Magyarország/ head of corporate and partner division

Name Olivier Sainson Current company/position METRO Cash & Carry Hungary/operations director Previous company/position -/-

Héjjas was named head of the newly created retail division of Intivel on September 5. He started his career at Diversey Lever in 1996, then participated in the transition of Axelero (previously Matávnet). He was appointed deputy CEO responsible for sales at Axelero in 2004. A year later, he was named head of retail services at T-Com. He joined Microsoft Magyarország in 2008.

Sainson joined METRO Cash & Carry in October 2007 and transferred to METRO Cash & Carry India as head of operations and new store openings in December of that year. In March 2010 he was appointed head of the business practices operations at the METRO’s Corporate House of Training in Royaumont, France.

Do you know someone on the move?

Send information to research@bbj.hu

SPONSORED BY

Németh has returned to Sanoma, where he worked four years between 2005 and 2008 as internet publication director. Before his current assignment, he was with Kupon Világ. Previously, he worked at London-based Business Monitor International as head of digital marketing and e-commerce.

Name Norbert Németh Current company/position Sanoma Media Budapest/ecommerce product director Previous company/position Kupon Világ/operations director

Name Zsuzsanna Kasza Current company/position Danone Kft/purchasing director Previous company/position -/-

Name Árpád Szőcs Current company/position MAPI Zrt/division head Previous company/position CIB Bank/head of product development

Kasza started her career in the electronics industry and worked at the European supply headquarters of General Electric Consumer and Industrial from 1999 until 2007. She then joined British Telecom as general manager responsible for procurement in Central and Eastern Europe.

Name Mihály Patai Current company/position -/Previous company/position Hungarian Stock Exchange/ chairman

Szőcs has joined MAPI to launch the company’s financing division and develop its strategy. He has been in the financial sector for eight years, having started his career at PricewaterhouseCoopers, and later joined Erste Bank. Szőcs also worked at OTP Bank, where he was responsible for business development issues. At CIB Bank, he was in charge of product development.

Patai, who has been chairmanCEO of Unicredit Bank since 2006, resigned from his post as chairman of the board at the Budapest Stock Exchange amidst heated debates about the introduction of a new trading system. Patai was elected to the post in December 2008.

[ promotional content ]

Where business meets travel…

Business Travel Show, 12-13 October 2011 Online conference, trade forums, business meetings and many other programs will be featured at this year’s Business Travel Show, the largest exhibition for corporate travel in Hungary, held for the ninth time at the Hungexpo Budapest Fair Center on 12-13 October 2011. Participation for visitors is free, but registration is required.

Visitors can also enter a prize draw with their registration to win several surprises, offered by the exhibitors. Those who wish to develop their online and social media skills, can listen to the lectures of the twoday conference, where the experts of TripAdvisor, Expedia and Google, among others, will share some best practices and useful information.

Almost 100 travel suppliers from Hungary and Central Eastern Europe (Austria, Slovakia, Czech Republic, Poland, Slovenia, Croatia, Serbia and Ukraine) have already booked their stands, and foreign tour operators also showing interest. Business travellers can meet personally the representatives of dozens of hotels, airlines, travel agencies, event venues, conference and meeting organisers, just in time before the preparations of the Christmas corporate parties.

To facilitate access to the exhibition, scheduled shuttle buses will be launched from Budapest’s downtown to Hungexpo.

Further information and free online registration: www.businesstravelshow.hu

life 23

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Budapest Business Journal | Sept 23 – Oct 6

GREAT 〉

〉

QUOTES

It is important to understand that there are close to one million Hungarians with foreign currency loans. The government estimates that only 10% could repay their loans at the offered rates.

Economy Minister György Matolcsy, trying to reassure Austrian counterpart Reinhold Mitterlehner in a letter sent on September 15 on the limited effects of the government’s move to allow forex debtors to repay mortgages at a fixed exchange rate.

〉The government does not discuss certain

issues in advance; for instance, the bank tax could not have been launched if there had been talks about it beforehand.

National Development Minister Tamás Fellegi at an AmCham Business Forum

[ ESSAY ]

Britain opens its doors david cameron Prime Minister of the United Kingdom

N

ext year, when the Olympic and Paralympic Games come to London, the most exciting show on earth will arrive in one of the most dynamic cities on the planet.

Hosting the Games is a great honor, and I am proud that Britain is all set to stage a spectacular summer of sport. But it is also a great opportunity; a chance for the world to re-discover everything our country has to offer.

You might know us best for our castles and cathedrals, our history and our heritage – and yes, as we saw with the Royal Wedding earlier this year, tradition is alive and well in Britain. But that’s just one side of the British story. Today we’re a country that is modern, creative, one of the very best places in the world to visit, study, work, invest and do business.

So I want to do more than simply invite Hungary’s finest athletes to London next year. I want to extend that invitation to the whole of your country.

If you are an entrepreneur or investor, it’s a chance to discover new opportunities in a country that is rolling out the red carpet for people like you. My government is determined to make the UK the best place to start up a new business. We’re cutting corporation tax to the lowest rate in the G7, we’ve increased tax incentives to favor start-ups and highgrowth companies, and we’ve brought in a new visa

[ editorial ]

Wait a minute

X

eroxing money is at the moment one of the few things the Hungarian government has NOT tried to get consumers spending, taxpayers paying and companies hiring. First, it lowered taxes on personal incomes and introduced a flat-rate system. But that proved no magic pill for consumption. So it is now raising taxes by abolishing the supergross system and (temporarily, it says) reintroducing progressive taxation. First it hoped an extra wad of cash would get people spending, now it is lowering their purchasing power with an energy pricing policy that will make their bills higher, as well as raising VAT. First it said that it would not stick to the budget deficit targets the previous government had agreed upon, then it suddenly decided to go even farther and cut both the deficit and the state debt. First it said it would not use the IMF credit line, then it suddenly used the money to buy MOL-shares from the Russians. First it did not include insurance firms among the crisis-taxed companies, now it will.

Like the market, which has skyrocketed the forint exchange rate to almost 300 to a euro on a perfectly calm day, we are now unsure of anything. We are not sure whether we will be earning more or less. Whether the business sphere will be given stimulus or taxed and minimum-wage-raised to death. We have no idea whether foreign firms will find the government hot, or cold.

We are confused, we are tired, and we have reached the point of change fatigue.

The government is in a difficult spot, to be sure, like many other governments in many other countries. It has inherited many problems previous governments were unable or unwilling to solve. Most of all, the consequences of not keeping the deficit targets set in the eurozone convergence program loom over its head.

Yet we are quietly beginning to wonder whether we are not going to lose more in the uncertain environment created by the radical policy shifts than all the potential gains all the unorthodox measures might promise.

The best thing to do in some cases is to do nothing. At least, for a while.

especially for entrepreneurs, to attract the best to our shores. You can now set up a company in Britain in less than two weeks – that’s twice as fast as the average time it takes in Europe. Little wonder that a new company starts up every 100 seconds in the UK. If you’re a student, 2012 is a chance to find out more about a country that has four of the top ten universities in the world. We’ve already got more than 80 Nobel Prizes for science and technology to our name – and with investments in science, research and innovation centers, we want to see that number grow. One of the biggest draws to Britain’s universities are their close links with major global brands in everything from pharmaceuticals to engineering. So if you’re looking for fantastic opportunities to learn and get on, see what we’ve got to offer.

For everyone else – tourists and visitors – we’re inviting you to take a fresh look at Britain.

This is a country where great homegrown bands like Coldplay and Radiohead play at buzzing festivals like Glastonbury. It’s a place with breathtaking landscapes and fascinating heritage, where you can walk in the footsteps of figures like Henry VIII and Winston Churchill. Three of the top five museums in the world are in the UK, and beyond that there is cutting-edge music, theater and art to be enjoyed in every city and town. Above all, Britain is a country that is tolerant, open and friendly – a place where you’ll get a warm welcome.

The British may be known for our reticence and reserve, but in 2012 we have plenty to celebrate, shout about, and be proud of. It will be a great moment for Britain, and we are determined to ensure that the whole world can be part of it.

We look forward to seeing you soon.

Your first address if you would like to start business in Slovakia! cegekalapitasa.hu BBJ-PARTNERS Netherlands - Hungarian Chamber of Commerce

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