Budapest Business Journal

BBJ HUF 1250 | €10 | $15 | £7.5

VOL. 20, NUMBER 15

I JULY 27, 2012 – AUG 09, 2012

Budapest Business Journal

22.7 % YOUTH JOBLESS RATE IN THE EU IN MAY

HUNGARY’S PRACTICAL BUSINESS BI-WEEKLY SINCE 1992 | WWW.BBJ.HU

NEXT JOB 3,500 km

Proposals by the EU to boost employment among the youth sound enticing enough, but the question is when they will have an impact. Time is pressing: generation Y has no time to waste. PAGES 10-11

ECONOMY

SPECIAL REPORT

SPECIAL REPORT

Budget 2013

Ironing out the wrinkles

MAL - the afterlife of a disaster

Parliament voted in favor of the key numbers of next year’s budget, but analysts say they are not based on accurate forecasts about next year’s economic indicators, and some of the estimated revenues are not backed up with facts.

PAGE 07

After hitting rock bottom some four years ago, things are finally beginning to look better for the metalworking industry. In parallel with the signs of recovery, changes in the structure of the sector’s customers is becoming increasingly tangible.

PAGES 16

Toxic red sludge broke through a reservoir wall of aluminum company MAL in October 2010. Hungary’s worst man-made ecological disaster resulted in noteworthy legal solutions regarding the company’s management and its future.

PAGES 18-19

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It occurred to me that nothing is more interesting than opinion when opinion is interesting HERBERT BAYARD SWOPE, THE NEW YORK EVENING WORLD, 1921

WHOSE CITY?

– accusation against Gyurcsány dropped in Sukoró affair

LET US KNOW WHAT POLITICAL FORCES ARE BEHIND THIS DECISION?

at length in the previous print edition of HVG – the author only says that “I foretold in due time that it will end in tears.”

Hvg.hu adds that Orbán occupied the entire independent public power sector “in vain as the EU keeps an eye on him” and so he cannot take advantage of this inf luence.

Magyar Nemzet

Providing political ammunition to both the governing forces and opposition party Democratic Coalition (DK), the Central Investigative Prosecutor’s Office (KNyF) on July 20 announced that, due to a lack of evidence, it had dropped the investigation into allegations of abuse of office against former Socialist Prime Minister Ferenc Gyurcsány.

The case goes back to 2009, when the then-group leader of green-liberal opposition party LMP András Schiffer filed a lawsuit against Gyurcsány, who was still in office at that time, for abuse of authority. He said that during the preparation of the huge King City investment, which was declared a priority-status project by the government and was to create a casino and resort complex near the town of Sukoró at Hungary’s Lake Velence, laws were broken.

In the so-called “Sukoró affair”, chief prosecutor Péter Polt suspected that Gyurcsány overstepped his powers by supporting the Sukoró land swap deals that produced losses for the state in excess of HUF 1 billion. The case soon became one of the most often mentioned “outrageous corruption scandals” of the Socialist administration.

Finally, a year after Fidesz-KDNP’s overwhelming election victory in 2010, the National Economy Ministry (NGM) canceled the whole project, alluding to a violation of contract.

However, the compensation and indemnity supposed to be paid is still subject to legal procedures between the NGM and tender-winning company KC Bidding Kft. So while environmentalists, who raised their voices against the $1 billion investment from the very first minute saying that the complex would destroy the habitat of all the unique species living around Lake Velence, sighed in relief, all those involved in the case had reason to feel threatened. Parliament in September 2011 lifted Gyurcsány’s immunity and made him a suspect while also continuing investigations on other major office holders. Abuse of public office is punishable by a maximum of three years in prison.

Finally, on Friday July 20, KNyF announced that while it had closed the misuse of authority case against Gyurcsány, it had charged five other officials including Miklós Tátrai, the former head of Hungary’s national asset management company MNV Zrt, and Andrea Markó, a senior official at the former Financial Ministry.

The decision surprised many, and its interpretation varies: some call it a weakening of Fidesz’s power and its influence over state authorities, while others see the case as the evidence of the equality of rights before the law in Hungary.

July 24, 2012 Besides detailing the case in several factual reports, when it came to opinions, governmentfriendly daily Magyar Hírlap remained brief. In its threeline comment, presented as a fake sweepstakes named the Sukoró ticket, it gets straight to the point: “[national gambling company] Szerencsejáték Zrt launches a scratch card called Sukoró but the product, which has been designed according to a new license, will only be available to convicts and defendants. The charges of the winner will be dropped due to lack of evidence.”

July 21, 2012 “The case provides several lessons: it proved precisely, for example, that the System of National Cooperation is not a dirty autocracy, while it also showed why it is not a wellfunctioning, democratic constitutional state,” oppositionfriendly daily Népszabadság states in its short editorial. The article adds that Gyurcsány could hardly get away without going to prison if Hungary was an autocracy but, at the same time, framing a former prime minister and suspending his immunity would be unthinkable in a democracy. Regarding the responsibility of chief prosecutor Péter Polt, whom Gy-

urcsány has now called upon to resign, Népszabadság adds that “in the past 20 years Hungary had chief prosecutors who would know what to do in such a situation, but those persons were usually followed by Péter Polt in their seats.”

July 21, 2012 Matild Torkos’ article in the daily Magyar Nemzet openly states that Gyurcsány is guilty.

“The prosecution, nine months after it loudly accused an exprime minister, would now like to wash its hands,” it says, adding that the prosecution’s recent decision suggests that although “Gyurcsány has not been found innocent,” the abuse of office could not be properly proved. “Now we should make do with two former heads of the national asset manager company, a former state secretary of the Finance Ministry, an asset valuer, and a lawyer taking the blame” in a case that “could not have been put across without the will, compliance, or even the approval of the prime minister.”

The case has not come to an end yet, and “someone has to take the responsibility for all this” as there are two options: either Gyurcsány was accused without any basis, or the investigation was not carried out with the necessary thoroughness. The article also draws at-

tention to the fact that as a suspect, Gyurcsány had the right to refuse making a confession, while if he had been only a witness in the case he would have been obliged to give truthful answers to the questions in the legal process.

“Let us know what political forces are behind this decision [of dropping the question of Gyurcsány’s responsibility]?”

July 20, 2012 The opinion piece on Hvg.hu, the online edition of weekly HVG, draws in an interesting aspect of the recent decision: the one who loses the most in the end in Gyurcsány’s legal case is Gyurcsány himself as, due to this development, he is likely to get much less time on mass media, which is a great loss in his opportunities to promote his party, the DK. “He was not in real danger anyway as his role in the land swap was so indirect and so hard to detect that putting him in the wrong would become possible only if the System of the National Cooperation ate up the entire jurisdiction.”

About the “lost” corruption scandals of the former Socialist administration, which Fidesz had previously been so keen to unveil before the investigations came to a standstill one by one and got forgotten – a phenomena that was otherwise detailed

July 24, 2012 Although the article published on Canada’s Hungarian-language news site Kanadai Magyar Hírlap is not fully dedicated to the Sukoró case, the two paragraphs it renders to the case are so rich in passionate patriotism and heated tones to warrant the piece, headlined “Patriotism or high treason?”, to appear in this summary.

“It illustrates how twofaced the investigative authority is: they did not venture to make out a case [against Gyurcsány] in the conceptual mock trial, but – in order to maintain the illusion of his guilt – the case was dropped alluding to lack of evidence instead of lack of crime. However, it is obvious that there was no crime at all,” cries author Huba Búzás, who is otherwise a poet-writer living in Hungary.

According to him, the whole case is Orbán’s personal revenge, as the Prime Minister wants to liquidate “his most dangerous political enemy”.

“If only our society, now pushed into intellectual darkness and lameness, realized this!” Citing great Hungarian writer Imre Madách, Búzás insists that the term ‘mother country’ does not only mean the land we live on, but also the community we live in. “Patriotism: responsibility.” ÁV

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QUOTE OF THE WEEK

The IMF’s big problem is that they can not really ask for anything […] Actually, we don’t need the IMF’s money.

LÁSZLÓ KÖVÉR, SPEAKER OF THE HUNGARIAN PARLIAMENT, IN A RADIO INTERVIEW A FEW DAYS BEFORE THE IMF/EU DELEGATION ARRIVED IN HUNGARY TO NEGOTIATE A FINANCIAL AID PACKAGE FOR HUNGARY

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Photo: MTI / Tibor Illyés

Gov’t signs strategic partnership with Coca-Cola

Prime Minister Viktor Orbán has signed a strategic partnership agreement in the name of the government with Coca-Cola HBC Magyarország Kft at the soft drink maker’s base near the capital. Hungary’s government is building a new economic model, and Coca-Cola will be among its beneficiaries, Orbán said. After signing the agreement, Orbán inaugurated Hungary’s highest-capacity canned drink production line, capable of turning out 110,000 units an hour. Coca-Cola’s unit in Hungary will supply the domestic market as well as those in 20 other European countries via the new line. Coca-Cola had spent more than HUF 100 billion on investments in Hungary and provided for the livelihood of 1,250 families. The unit’s exports came to HUF 8 billion last year.

ECONOMY KEY RATE KEPT ON HOLD FOR 7TH MONTH IN A ROW The National Bank of Hungary’s Monetary Council decided to keep the central bank’s key rate on hold at 7% at its latest rate-setting meeting. The decision to keep rates on hold – taken for the seventh month in a row – was in line with market expectations although some analysts did not rule out what they termed a “premature” rate cut. The Monetary Council last changed the rate – a rise of 50 basis points – on December 21, 2011. The Council discussed two proposals, one to keep the rate on hold and another for a 25bp rate cut, and took the decision with a significant majority, MNB governor András Simor told a press conference held after the meeting.

SIX-MONTH GEN GOV’T DEFICIT AT 89.8% OF FULL-YEAR TARGET Hungary’s cash flow-based general government deficit, excluding local councils, reached HUF 517.7 billion by the end of June, or 89.8% of the full-year target, the

National Economy Ministry said, confirming a first reading released on July 5.

The government ran a deficit of HUF 173.6 billion in the month of June. The central budget recorded a HUF 188.6 billion deficit in June, the national social insurance funds had a deficit of less than HUF 1 billion and the separate state funds had a HUF 16 billion surplus, the ministry said. In the first six months of 2012, the central budget deficit reached HUF 592.3 billion or 99.7% of the respective full-year target.

The social insurance funds recorded a six-month deficit of HUF 3.3 billion, just 9.3% of the annual plan. The separate state funds had a surplus of HUF 77.9 billion in January-June, surpassing their targeted annual surplus by 47.3%. The June deficit was down from HUF 310.4 billion one year earlier and the six-month deficit was also down from a HUF 1,034.7 billion gap in June 2011. Adjusting both 2011 and 2012 figures to help comparison, the six-month general government deficit came to HUF 540.3 billion or 58.8% of the adjusted full-year target, the minis-

try said. The pro-rata deficit was down from 79.5% a year earlier, it noted.

ECONOMIC GROWTH TO STAY BELOW 1% BY 2015, ANALYSTS SAY The Patriotism and Progress Public Policy Foundation, headed by former Prime Minister Gordon Bajnai, has published a risk assessment projecting that economic growth will not exceed 1% by 2015 and that the number of employed in the private sector could drop by 50,000 during the same period. Former Finance Minister Péter Oszkó presented the findings of the study and added that the 50,000 decrease in employment could be balanced with fostered workers in the public sector, but that would draw funds from the budget. Oszkó, who is also the head of the foundation’s supervisory council, said general government debt could get stuck at 80% by 2015. Hungary requires a change in economic policy, he added.

EC TO SCRUTINIZE FINANCIAL TRANSACTION TAX The European Commission is looking into the introduction of a financial transac-

tions duty in Hungary. The European Central Bank said the duty, which must be paid by the central bank and the treasury, impairs the National Bank of Hungary’s (MNB) functional and institutional independence. Last week the Commission formally closed an infringement procedure over the independence of the MNB. The financial transactions duty, which Parliament approved on July 9, is expected to generated revenue of HUF 239 billion in 2013, including HUF 123 billion from commercial banks and HUF 116 billion from the MNB and the treasury, portfolio.hu said.

RETAILS SALES DROP 2.5% IN YEAR TO MAY Retail sales in Hungary fell a calendar year-adjusted 2.5% year-on-year in May, after dropping 2.7% in the previous month, Central Statistics Office (KSH) figures show.

Retail sales fell, in a yearon-year comparison, in five of the 12 months to the end of May. In the other months, growth was under 1%, with the exception of the run-up to Christmas. Adjusted for calendar year and seasonal effects, retail sales were

down 0.1% from the previous month. They fell 1% month-on-month in April.

CONFIDENCE INDEX IMPROVES SLIGHTLY IN JULY Both business and consumer expectations improved slightly in July from the previous month, remaining rather pessimistic though, the latest combined gauge of consumer and business confidence by research institute GKI and Erste shows.

The combined consumerbusiness confidence index rose to -23.3 in July from -24.5 in June. The industrial confidence index rose minimally, primarily due to a better production outlook, however, the assessment of the order stock did not improve, while the assessment of exports worsened. The gauge of confidence in the construction sector edged up on an improved assessment of order stock and the assessment of output in the previous three months. The gauge of confidence in the trade sector fell slightly on a worsened assessment of the selling position, while the outlook for orders improved.

Expectations in the service sector were unchanged. The

employment outlook improved in the industrial and trade sectors, while worsening in the construction and service sectors. People’s unemployment fears lessened.

Households’ outlook for their financial position improved, while fewer expected to be able to make savings than in June.

GROSS WAGE GROWTH ACCELERATES TO 6.4% IN MAY Gross wage growth in Hungary accelerated to 6.4% yearon-year in May from 2.5% in the previous month, fresh data published by the Central Statistics Office (KSH) shows. Net wages climbed 3.8% in May after edging down 0.2% in April. Real wages fell, calculating with May CPI of 5.3%. In absolute terms, the average gross monthly wage came to HUF 225,687 in May. The average net monthly wage was HUF 145,847. The data show gross wages, excluding premiums and one-of bonuses, rose 5.4% to HUF 209,374. In the business sector, gross wages were up 9.4% at HUF 237,327 and net wages climbed 6.5% to HUF 153,196. At budget-funded institutions, gross wages dropped 0.6%

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to HUF 201,527 and net wages dipped 2.2% to HUF 130,574. But the data shows the declines were the result of relatively low wages paid to participants in public work schemes. Excluding these fostered workers, gross wages at budget-funded institutions climbed 6.2% to HUF 218,978 and net wages were up 4.7% at HUF 141,771. In January-May, average gross wages for the whole economy were up 4.4% at HUF 220,692. Net wages rose 1.7% to HUF 142,709.

IMF/EU TO RETURN TO HUNGARY IN SEPT A delegation from the International Monetary Fund and the European Union will return to Hungary in September, Prime Minister Viktor Orbán said at a press conference on the last day of the delegation’s visit. The delegation held negotiations on precautionary financial assistance Hungary is seeking on July 17-25. Orbán said the joint delegation was expected to deliver a “case summary” to the government that would highlight points of economic policy they believe should be changed, name their conditions and offer their opinions on points that could be changed in the 2013 budget. The government will respond to these questions in earnest in September, he added. Orbán called the ne-

gotiations with the IMF/EU delegation “reassuring”. The government will study the European Central Bank’s reservations regarding the levying of a financial transactions duty on the National Bank of Hungary, but the financial sector – including the central bank – must be able to supply resources necessary for the government’s workplace protection plan, Orbán said. The ECB on Tuesday said the duty, which must be paid by central bank and the treasury, impairs the MNB’s functional and institutional independence.

and lower average revenue per subscription per month (ARPU), Telenor said. The number of subscriptions decreased by 47,000 during the second quarter of this year, due to cancellations of nonrevenue generating prepaid subscriptions. At the end of the quarter, at 3.263 million, the subscription base was 3% lower than at the end of Q2 2011. ARPU in local currency decreased by 3% mainly due to reduced interconnection rates from 1 January 2012. Calculated in NOK, ARPU was NOK 90 in H1, 11.8% less than in H1 2011.

BUSINESS

AAA AUTO MAY RETURN TO HUNGARY

TELENOR INCREASES OPERATING PROFIT IN H1 Mobile company Telenor Magyarország had operating profit of NOK 471 million in the first half of this year, 35% up from NOK 349 a year ago, Telenor of Norway announced in Oslo. In Q2, operating profit was NOK 233 million, also up from NOK 172 million a year ago. Revenue at Telenor Magyarország was down 13.8% to NOK 1.93 billion in H1 from NOK 2.24 billion a year ago. Revenues in local currency, that is in HUF, decreased by 5% mainly due n base to a lower subscription

AAA Auto Group NV will decide by the end of the year whether it will reopen its seven branches in Hungary, from which the company withdrew during the economic crisis, CEO Karolina Topolova told Czech daily Lidove Noviny in an interview. Average net margin per vehicle sold by the company is about 6,200 Czech korunas ($297), the CEO of the used-car dealership told the newspaper.

HUNGARY INVESTMENT FUND ASSETS EDGE UP 0.3% IN JUNE Assets in investment funds managed by members of the Association of Hungarian Investment Fund and Asset Management Compan Companies

talk of the town MURDER OF YOUNG WOMAN RAISES RACIAL TENSIONS The brutal death of 25-year-old police psychologist Kata Bándy has put the Roma topic on the agenda in Hungary again.

The young woman had said goodbye to her friends at a pub in the friendly city of Pécs at dawn on July 8 and left for home where, sadly, she did not arrive. Her naked body was found three days later in a bushy area near her home.

As a photo of Bándy, posted on Facebook by friends at a time when there was still some hope of finding her alive, reached hundreds of thousands of Hungarians in two days, the murder got special media attention from the moment the body was found. The fact that the accused murderer is of Roma ethnicity also did not remain a secret for long.

Although the liberal wing of the press made efforts to draw attention rather to the shortcomings of public safety and to the vulnerability of women, a huge part of

society was apparently more interested in demonizing Gypsies. It is not only that social websites were full of hate comments, demanding the government “solve” the Roma problem somehow, but also popular blog sites and even daily Magyar Hírlap came up with articles about the “Gypsy criminality”, saying that some types of crimes, most often petty thefts performed in a dirty and brutal way as well as very aggressive crimes, are more often carried out by Roma than non-Roma.

Most recently, on Monday July 23, a demonstration was held in Pécs to protest against Gypsy-crime and calling for the restoration of the death penalty. The crowd, estimated at around 500 people, marched on Felsővámház utca as well, a street mostly populated

by Roma. “Aren’t you so brave now?” the demonstrators, most of them dressed in black, started to shout when arriving at the street.

(BAMOSz) rose 0.3% to HUF 3,118 billion in June from the previous month.

Assets in open-ended securities funds, which account for 62% of all investment fund assets, grew 0.8%. Assets of money market funds inched up 0.5% and assets in bond funds grew 2.8%.

Assets in share funds rose 0.4% as yields outweighed net redemption of units.

Assets in property funds fell 5.8% on net withdrawals of HUF 3.9 billion.

TAKE-UP ON BUDAPEST INDUSTRIAL PROPERTY MARKET FALLS IN H1 Take-up on Budapest’s industrial property market fell 23% to 136,000 sqm in the first half from the same period a year earlier, the Budapest Property Consultants Coordination Forum (BIEF) told MTI. Take-up on the market rose 85% in Q2 from the previous quarter.

There were 22 leases signed for a combined 88,370 sqm of industrial property in the capital in Q2. Leases in logistics parks accounted for 97% of take-up. Vacancy on Budapest’s industrial property market climbed 38bp to 21.4% in the three months to the end of June.

POLITICS FIDESZ LOSES SUPPORT AS VOTERS SHOW APATHY Support for Hungary’s ruling Fidesz-Christian Democrat alliance has decreased further in July and only one in three people would bother voting if an election was held now, a recent poll conducted

by Ipsos showed. The FideszChristian Democrat alliance, which won a two-thirds majority in Parliament in 2010, has only 16% of the voters.

It is still the most popular party among voters, but is one point below its June results, the Ipsos poll points out. Largest opposition party MSzP has 14% support, also down one point from an Ipsos poll last month. More than half of the voters – 51% – have no party preference, up from 49% in June. Only 34% said they would vote if parliamentary elections were held now, down from 40% last month. Hungary is due to hold elections in 2014.

GOV’T GIVES DEBRECEN STADIUM PROJECT PRIORITY STATUS The plan to build a sports stadium in Debrecen, east Hungary has been declared a priority project under a government decree published recently. The construction of the Nagyerdei Football Stadium in Hungary’s sec-

ond largest city should start in the fall and completion is expected in the spring of 2014. The stadium will seat 20,020 and cost HUF 12 billion to build, government officials said earlier. Projects receiving priority status go through expedited licensing and administrative procedures. The four-star stadium will meet UEFA requirements, the Mayor of Debrecen Lajos Kósa said earlier.

DOMESTIC GOV’T TO MAINTAIN NATIONAL COMPETENCE OVER FARM LAND The government will maintain national competence over Hungarian farm land irrespective of the European Union’s response to a new land law, Rural Development Minister Sándor Fazekas said in an interview with daily Magyar Hírlap.

The government submitted the bill on land legislation to Parliament on July 12.

Hungary is prepared for the expiry of a moratorium on land purchases by foreigners due in 2014, and will withstand any aggressive land purchase wave, Fazekas said.

The bill before Parliament will continue to prohibit legal entities from acquiring land and there will be measures built into the system to indirectly prevent those not eligible from buying land in Hungary, he said. The bill states that its aim is to protect Hungarian farm land, to prevent its acquisition by either domestic or foreign speculators, and to promote the ownership of local farmers cultivating the land. Only individuals may acquire arable land, after approval from the respective authorities under the bill.

HOME PRICES IN HUNGARY FALL IN Q1 Current home prices have dropped 0.4% in Hungary in the first quarter compared to the last quarter of 2011, and were 2.6% lower than in Q1 2011, FHB Bank’s latest home price index shows.

The home price index was 170.2 points at the end of Q1, down from 170.8 at the end of 2011. The average price of homes in 2000 is 100 on the index. The index peaked at 200.7 points in Q1 2008.

BKK TO UPDATE ITS BOAT FLEET The Budapest Transportation Center (BKK) is considering the purchase of younger and more modern boats for its recently launched Danube route, online news portal Index.hu wrote. According to the site, the boats will arrive from the Neth-

erlands. On a daily basis, 4,500-5,000 passengers used the scheduled boat route of BKK and the Budapest Transport Company in the first two weeks of operation.

Occupancy rate has been continuously 100% on the boats from midday, Index. hu said, adding that the most likely candidates for the new boats are used canal boats from Amsterdam.

ALLEGED NAZI WAR CRIMINAL TAKEN INTO CUSTODY Hungarian prosecutors have detained a 97-year-old man accused of whipping Jewish prisoners in a Nazi concentration camp during World War II and helping to deport them to Auschwitz. Nazihunters from the Simon Wiesenthal Center had named László Csatáry, a Hungarian national, as their most wanted war crimes suspect.

Prosecutors in Budapest said he had hit Jewish prisoners with a dog whip when he was a police commander in the Nazi-occupied town of Kosice, then part of Hungary and now in Slovakia. He has denied the accusations.

The Simon Wiesenthal Center says it provided Hungary with evidence that in 1944 Csatáry helped to organize the deportation of around 16,000 Jews to the Auschwitz death camp from Kosice.

The Budapest Prosecution Office has taken Csatáry into custody and questioned him on suspicion of war crimes

FINAL DECISION ON BKV FINANCING TO BE TAKEN BY SEPTEMBER A final decision on the financing of the Budapest Public Transport Company (BKV) will be taken by September, Budapest mayor István Tarlós said after a cabinet meeting during which the government looked over the company as well as big investments in the capital.

Tarlós said it was reassuring that the central government had delivered the same assessment of the situation as the local government. He added that both sides expressed similar preferences regarding the several possibilities for a substitute to the earlier planned congestion fee, which was shelved because of concerns it could make the capital’s new metro line ineligible for European Union funding. Tarlós did not reveal any further details about the possible substitutes. “I think that on the basis of what was heard at the cabinet meeting, it will not be difficult to reach an agreement,” he said. He added that the talks took place in a good spirit and showed clear progress. ■

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WILDHORSE ENERGY, HUNGARY SIGNS COOPERATION AGREEMENT TO DEVELOP UCG PROJECT Australia’s Wildhorse Energy says it has signed a cooperation agreement with the Hungarian government to formalize the legislative and regulatory framework required to develop underground coal gasification (UCG) projects in Hungary.

“Both parties believe that this could provide Hungary with an opportunity to develop its extensive stranded coal reserves and potentially provide the blueprint for UCG project development across Europe as governments seek to develop their own resources and establish energy independence,” a statement said.

“The potential for UCG to establish itself as an important technology in the region is increasingly being recognized due to its ability to capture the energy content from billions of tons of stranded coal assets in a ‘frack-free’ way,” Wildhorse Energy managing director Matt Swinney was quoted as saying by state agency MTI.

EU SAYS UP TO €1.5 BLN READY FOR LOW-CARBON INVESTMENT Up to €1.5 bln ($1.83 bln) could be available by the end of this year to fund renewable

regional IRELAND OPENS JOB MARKET TO BULGARIANS, ROMANIANS The Republic of Ireland has removed all restrictions for work in the country for Bulgarian and Romanian citizens, the Bulgarian Ministry of Labor and Social Policy announced. Ireland initially considered taking advantage of the option to extend the restrictions for one year, but over the week the government has decided to remove them altogether.

Ireland thus becomes the 20th country from the EU and EEA to allow full access for Bulgarians to its job market, alongside Cyprus, Czech Republic, Denmark, Estonia, Finland, Greece, Hungary, Iceland, Italy, Latvia, Lithuania, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, and Sweden.

CEE ECONOMIC SENTIMENT WEAKENS IN JULY, ZEW SAYS Economic confidence in Central and Eastern Eu-

energy and carbon capture and storage (CCS) projects across the European Union bloc, the European Commission said on July 13. The funding will be allocated to two or three CCS projects and 16 renewable energy projects on a shortlist of proposals submitted by EU member states to the Commission, it said.

The Don Valley Power Project in the UK, the Belchatow CCS Project in Poland and the Green Hydrogen project in the Netherlands top the shortlist of eight CCS projects. The money comes from a program that auctions EU carbon permits to market participants taking part in the regional cap-and-trade scheme, with the revenue earmarked for various projects that were submitted in a call for proposals. The exact amount of funding will depend on how much is raised through the sale of 200 million carbon permits. The sales will be concluded in October.

MOL SIGNS AGREEMENT TO ACQUIRE 49% OF KAZAKHSTAN BLOCK Hungarian oil and gas company MOL Nyrt has signed an agreement to acquire a 49% stake in the holder of an exploration licence in the North Karpovsky block in Kazakhstan. MOL signed the share

purchase agreement with JSC Kazmunaigas Exploration and Production, a unit of the Kazakh national oil company JSC Kazmunaigas, which is listed on the Kazakhstan Stock Exchange. JSC Kazmunaigas Exploration and Production earlier said total prospective recoverable resources in the licence area came to 240 million barrels of oil equivalent. The block is near the Fedorovsky block, in which MOL has a 27.5% share and JSC Kazmunaigas Exploration and Production is also a stakeholder. MOL said it expects operational synergies between the two blocks.

GERMAN RENEWABLE COOPERATIVES INVEST $1 BLN IN ENERGY SHIFT German energy cooperatives have invested about €800 mln ($981 mln) in clean-energy sources in the past years, the BSW-Solar lobby said. At least 80,000 Germans own shares in community-owned generators, the group said on July 19 in a statement. About 500 renewable energy cooperatives were formed since 2005, BSW-Solar said.

RUSSIA, BELARUS AGREE $10 BLN NUCLEAR POWER PLANT DEAL Belarus and Russia signed a deal on July 18 under which Russian companies will build

the first nuclear power plant in the former Soviet republic with financing from Moscow. Russian Prime Minister Dmitry Medevedev signed the power plant contract, which has been the subject of prolonged negotiations and has raised concerns in neighboring Lithuania, during a visit to Belarus. Russia’s Atomstroyexport will build the new 2.4 gigawatt nuclear reactor in Belarus’ western Grodno region within eight years. The project has also raised concerns in the EU, where there are many calls to abandon nuclear energy after Japan’s Fukushima nuclear disaster. It has, in particular, worried Lithuania as the plant will be located about 50 km (31 miles) from its capital Vilnius. Lithuania has also considered building its own nuclear power plant but the Belarusian project could undermine its feasibility.

CHINA AGREES TO LEND UKRAINE $3.7 BLN TO CUT GAS IMPORTS China has agreed to open a $3.7 bln credit line for Ukraine to build coal gasification plants and cut down on natural-gas consumption, according to the Ukrainian Energy and Coal Industry Ministry. The funds will be also spent on encouraging

utilities to switch to coal instead of gas, the ministry, based in the capital of Kiev, said on July 16 in a statement.

The agreement was signed on July 13. Ukraine, which relies on Russia for more than 70% of its gas needs, wants to cut consumption of the fuel after prices jumped to $425 per 1,000 cubic meters last quarter. Gas imports of 45 bln cubic meters of gas from Russia last year cost $13.9 bln, or 8.4% of Ukraine’s gross domestic product, Deputy Finance Minister Anatilyi Myarkovskyi said on March 16.

EU OKS THREE STATES TO KEEP FREE CO2 PERMITS The European Commission approved on July 13 requests from Bulgaria, Czech Republic and Romania for a continued free allocation of EU Emissions Trading System (EU ETS) allowances to their power sectors beyond 2012. According to a statement of the EC press office, the Commission agreed under provisions that allow certain Member States exemptions from the general rule that, from 2013 onwards; the power sector must buy all its allowances at auctions or in the market.

The EU has already granted similar exemptions to pow-

er generators in Cyprus, Estonia and Lithuania, and the Commission said it would decide on requests from Hungary and Poland soon.

More than 268 million allowances will be allocated for free to power plants in the six countries from 2013 to 2019, with Czech Republic getting the most at just over 107 million.

LITHUANIA TO HOLD REFERENDUM ON CONSTRUCTION OF NPP Lithuanian lawmakers have approved a proposal to hold a referendum on whether to build a new nuclear power plant, rebuffing calls from Prime Minister Andrius Kubilius to reject the initiative.

Parliament voted 62-39, with 18 abstentions, to hold the plebiscite in October along with parliamentary elections, according to the votecount on the parliament’s website on July 17. The Baltic region is seeking to cut its dependence on energy imports from Russia by constructing a 1,300 megawatt reactor in Visaginas, 150 kilometers (93 miles) northeast of the capital, Vilnius. The Lithuanian government had planned to sign an agreement with Japan’s Hitachi Ltd to proceed with engineering and preparation work. ■

NEWS FOR THIS SECTION IS TAKEN FROM THE BUDAPEST BUSINESS JOURNAL’S DAILY BRIEFING, REGIONAL TODAY NEWSLETTER AT WWW.BBJ.HU/STORE/NEWSLETTER-PACKAGE

rope, including Turkey, deteriorated in July, data from a survey by the Center for European Economic Research (ZEW) and the Erste Group Bank shows.

The headline economic sentiment indicator, a measure of experts’ expectations of the region’s economy, decreased by 7.6 points from the previous month to -7.6 points in July. Meanwhile, the relevant index for the euro zone moved up by 4 points to -6.1 points. The indicator that measures the current economic situation in the CEE region decreased by 2.6 points month-on-month to -2.7 points in July. The corresponding index for the euro zone dropped modestly by 1.3 points to -68 points.

The region observed in the survey comprises Bulgaria, Croatia, the Czech Republic, Hungary, Poland, Romania, Serbia, Slovakia, Slovenia and, since October 2010, Turkey.

CONDITION OF POLISH COMPANIES DETERIORATES Close to 48% of businesses in Poland are in a “bad and weak” financial condition, with their situations having gotten worse in the last year, according to a report on sector risk by business intelligence firm Bisnode Polska.

The report says that small businesses employing 10 to 50 workers are currently in the worst position. At the end of June 2012, 55.6% of them were in a bad shape, with 20.4% of these being in very bad shape. The biggest decline in the financial standing of firms was recorded among micro-companies. When it comes to sectors, the clothes manufacturing sector is faring worst with as many as 72% of companies in the sector suffering because of the economic slowdown.

SLOVAKIA SAYS WILL GRADUALLY REVERSE INCREASE IN BANK LEVY Slovakia will gradually lower a levy on banks, in-

troduced this year to create a cushion for possible banking crises, once the tax has raised €500 million, Finance Minister Peter Kazimir said on July 19. The tax will be abolished altogether once it has raised €1 billion, he said. Slovakia’s previous government imposed the tax on banks’ corporate deposits in January, at 0.2%.

The new centre-left government, in power since April, has said it will raise the tax to 0.4% from October and widen it to cover retail deposits as well. “Once there are €500 million in the resolution fund the levy will be halved to 0.2% and when it reaches €750 million it will go to 0.1 until we have the estimated €1 billion,” AFP quoted Kazimir as telling reporters after a meeting of the parliamentary Budget and Finance Committee.

Victor Ponta has given written commitments on the 11 points of concern raised by the European Commission on the rule of law and independence of the judiciary in his country, the EU’s executive body said in a statement July 19. These commitments supplement the points made in the letter sent by Ponta to the EC President Jose Manuel Barroso on July 16, it noted. “Effective and speedy implementation” was crucial, the statement was quoted as saying

by AFP. The Romanian Parliament, which is dominated by Ponta supporters, voted recently to impeach President Traian Basescu for alleged interference in affairs that are not under his authority. A referendum will take place on July 29 on whether Basescu should be removed from office.

ROMANIA GIVES WRITTEN COMMITMENTS TO EU ON RULE OF LAW

HALF OF BULGARIANS TO SPEND SUMMER HOLIDAYS AT HOME

Romanian Prime Minister

Every

second

Bulgarian

will be spending the summer holidays at home and the reason is mostly lack of money, local media reported citing a fresh poll.

The number of vacationing Bulgarians, those primarily living in bigger towns and cities, has decreased to 48% in comparison with last year and about 2% of them have already enjoyed their days off. According to the survey conducted between June 27 and July 3, among 1,000 Bulgarians showed that the percentage of people staying home for their summer vacation is coming close to the pre-crisis levels in 2007. The report also shows that every third Bulgarian can afford a vacation, costing between BGN 200 (€100) and BGN 500, while 11% can put aside BGN 500 to BGN 1,000 (€510) for a holiday. Only 4% of the respondents have claimed they could afford a vacation that would cost more than BGN 1,000. ■

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Budapest Business Journal | July 27 – Aug 09

Budget 2013: Overwhelming optimism

BBJ KRISZTIÁN KUMMER

Parliament approved the main figures of the 2013 budget with higher revenue and expenditure lines but an unchanged deficit as a proportion of GDP. While the final vote on next year’s budget will only take place sometime in the fall months, as usual, the vote on the key numbers was brought forward to an earlier date, specifically to the last session of Parliament before the summer break. Altogether, 16 amendments were submitted to the draft at the last minute, basically rewriting the original numbers.

The expenditure figure approved by Parliament was HUF 15,737.4 billion, HUF 260.5 billion more than in the government’s original budget bill. The revenue target was HUF 15,083.6 billion, HUF 283.9 billion higher. The deficit figure cleared by Parliament was HUF 653.88 billion, HUF 23.4 billion less than the original government target but still equivalent to 2.2% of projected GDP.

JOB PROTECTION PLAN One of the main reasons next year’s budget needed rewriting is Prime Minister Viktor Orbán’s new job protection plan. The package aims to halve contributions paid on employees under 25 years or over 55

Photo: MTI / Attila Kovács

Parliament voted in favor of the key numbers of next year’s budget, but significant changes were made to draft even in the last minutes of the parliamentary debate. Analysts are concerned, saying that the numbers used in the draft are not based on accurate forecasts about next year’s economic indicators, and that some of the estimated revenues are not always backed up with facts. years of age, and on unskilled workers earning less than HUF 100,000 gross a month. When employing a long-term unemployed person, employers will pay no contributions on their employees in the first two years and will pay only half the current burden. The same rules apply to employees returning from maternity leave.

While the government believes the plan to boost employment and GDP growth in the long-term, analysts are more skeptical. “The job protection plan will considerably deteriorate the position of the budget without substantially expanding employment,” economic research company GKI said in an analysis. GKI said the job protection plan will not have a major impact as companies could save about 0.5% of their annual expenditures of HUF 63,000-65,000 billion, but they will be paying the telephone tax and transaction duty next year, and the compensation for the withdrawal of the income tax refund and the minimum wage raise will be lower than this year, increasing costs by a combined HUF 150200 billion for companies.

“Even if the basic concept of the plan is good, the financial resources for its expenses cannot be seen. Through the new measures, the number of employees can be maintained or slightly increased but only short-term. However, to base next year’s economic growth, even partially, on this plan

is highly optimistic,” Erste Bank’s Árokszállási said.

Furthermore, the introduction of an itemized tax for small taxpayers is expected to cause a HUF 77 billion fall in budget revenue. Companies now paying the simplified business tax (EVA) are expected to switch to the itemized tax, causing a further HUF 48 billion drop in revenue. However, the itemized tax is expected to generate HUF 74.3 billion in revenue as well as additional VAT, considering companies that switch from EVA may not reclaim VAT. A new tax for small businesses is seen as generating HUF 214.5 billion in revenues, but it also replaces social contributions, the training contribution, and the corporate tax. All this is expected to result in a HUF 307.5 billion decrease in revenue.

TRANSACTION DUTY ALREADY JAMMED The government has tried to counterweigh the expenses on the balance sheet, but there are many uncertain details about both the amount and the source of revenues. Originally, the government expected almost HUF 300 billion from a 0.1% duty on financial transactions from January 1, 2013. However, estimated income from the financial transaction duty – the source of many debates amongst analysts, financial companies, prominent figures at public institutions, and allegedly the members of an

IMF-EU delegation currently in Hungary to talk about a possible loan – is decreasing step by step. Compared to the first draft’s HUF 283 billion, the government is now expecting the new levy to generate HUF 239 billion, The revenue will include HUF 123 billion from commercial banks, with the rest coming from the central bank and the state treasury, but the latter item will almost certainly trigger the disapproval of the IMF and EU. “Even if the plan to tax transactions of the MNB is passed, the government will have to consolidate losses of the central bank in 2014, so basically it’s nothing else but a loan for the government for one year,” Erste Bank’s Árokszállási said. “In addition, the revenue of HUF 123 billion from commercial banks was calculated based on a cap of HUF 30,000 per transaction, but the latest version of the new measure indicates a cap of HUF 6,000. So actual budget revenue from the transaction duty is very hard to predict,” the analyst added.

MADE-UP REVENUES? Feeling the pressure to put up the money for the job protection plan and to recompense for the financial transaction tax revenue being short of original plan, the government brought up an idea that is to bring in billions for the bal-

ance sheet: increases in the efficiency of tax collection will generate an additional HUF 160 billion, it says. However, no concrete measures have been put in place by the government to back this up.

According to the key numbers, higher excise taxes on alcohol, tobacco and liquefied petroleum gas (LPG) used in vehicles is set to raise revenue by HUF 49 billion, and an additional HUF 2.8 billion is set to come from the tax on unhealthy food, but no forecast has been presented on the predictable decrease in demand due to the price hikes.

The GDP growth, expected to reach 1.6% in 2013 and to create additional income to the budget according to National Economy Minister György Matolcsy, has also been widely criticized. The National Bank of Hungary (MNB) predicted only 0.8%, saying that households’ consumption expenditures are expected to decline by 0.5% as opposed to the government’s forecast of a 0.3% growth.

ELECTION BUDGET? Analysts are surprisingly unified on the opinion that the 2.2% target cannot be met. According to the MNB, Hungary could reach a 2.4% general government deficit in 2013 if all reserves remain unspent and the 2013 budget bill contains no buffer to cover additional spending.

The general government

deficit ratio could be 2.8% of GDP if all untied reserves in the budget bill are used up, although the analysis did not take into account a HUF 300 billion job-saving and employment-boosting action plan announced just a few days before the parliamentary vote.

As elections will be held in 2014, next year’s tight budget could easily underscore the political will to raise the popularity of the governing Fidesz. “Viktor Orbán has already mentioned massive salary increases in the public sector, a minimum wage of HUF 100,000, but so far we can not see how the government can fund these expenditures,” Raiffeisen’s Zoltán Török said. “The original target can not be held, and it is a political decision whether the deficit remains under the 3% threshold as the IMF and the EU predict or the reserves will be spent on additional measures,” the analyst added.

“It is hard to imagine that this budget will gain the approval of the IMF-EU, so it will have to be changed if the government wants an agreement with them. But how far the government will go to defend its point of view is very hard to tell,” Árokszállási said; he forecasts next year’s deficit will reach 3.5% of GDP. National Economic Minister György Matolcsy said the 2013 budget was “suitable” for crisis management. ■

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Youth Packages – the unemployed youngster’s alternative?

10-11

Top 100 businesses list published

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Factories for sale Although reports on factory closures are not typically good news, one might take advantage of the current state of Hungary’s industrial sector. Investors looking to buy a factory, be it a rabbit slaughterhouse or a powder metallurgy plant, may now find cut-price offers on the market.

BBJ ÁGNES VINKOVITS

While plenty of promising news about plant inaugurations and future investments appeared in 2011, less cheerful reports about factories closing down also became more common from the second half of the year.

Many plants are now being offered for sale complete with assets and tools, related office spaces and social buildings and, increasingly, even factories featuring the latest tech-

nologies are becoming available, developed from loans the owners were eventually unable to repay. The great need for cash is resulting in significant price cuts: an increasing number of plants are offered for only the price of the land they are built on.

Although it is widely accepted that sales go better around Budapest and in the western region of the country, there are some counterexamples as well. A 1,200 sqm powder metallurgy factory on a 4,000 sqm plot near Opel’s plant in Szentgotthárd, west Hungary was built in 2009 with cutting edge technology but has not been used for a single day since then. The latest price for the plant was only HUF 200 million, but this was still not low enough to attract a buyer. Similarly, a plant in Szombathely belonging to high-capacity textile manufacturer Styl Ruhapiari, which is still producing despite being under liquidation, has been up for sale for eight years already without finding a taker.

Those charged with selling agricultural plants are having more luck. Modern mills, feed mixing plants, and fields

HUF 135 M Nice, recently renovated 168 sqm flat with 2 parking places in the heart of Budapest, right next to Hősök tere (Hero’s sq). The property is on the second floor, has 4 rooms (1 living room, 3 bedrooms), a big hall, terrace, a balcony and 2 parking places.

Phone: +36 30 303 1037, +36 30 401 3218 Web: tinyurl.com/lendvay-flat

used for animal husbandry all sell well, and do the properties of the Nyíregyházabased ABO Mill, currently under liquidation.

NOT FOR INLAND One of the reasons behind the closures is that domestic sales have kept falling since the breakout of the global economic crisis. Export sales – together with production – reached bottom in 2009 but have been increasing since then. Domestic sales were unable to find a way up, and the permanent drop in real wages does not suggest any real improvement soon to come in this aspect.

Global economic conditions are, obviously, not on the side of huge investments nowadays, on top of which are local elements such as the fairly unpredictable regulatory environment.

But beyond these banalities it is noteworthy that the number of factories operated by small businesses or entrepreneurs and now offered for sale has grown in the past few months, which suggests that decreasing demand and increasing taxes and costs made it extremely hard for little businesses.

The hard-to-break chains of debts are also causing another increasing problem.

According to a recent survey by credit management company Coface Hungary, insolvency among Hungarian companies showed a whopping 40% increase in the first six months of 2012 compared to the same period of 2011. This negative tendency might further boost the number of liquidations, which is expected to hit smaller businesses and factories hardest.

NOT ALL THAT BAD However, there is one sector still on its way up. Factory openings and corresponding staff recruitment mostly benefit the automotive industry

these days. While Hungary’s industrial output is already expected to improve due to the new Mercedes-Benz plant opened in the centraleastern town of Kecskemét in March, Audi will complete a €900 million development

at its Győr plant in western Hungary in early 2013, creating 2,100 new jobs in the region. Opel’s €500 million investment in its Szentgotthárd plant will also create 800 new jobs from the end of this year. However, new

opportunities do not come without a price: the Hungarian state has supported Opel’s development with HUF 5.5 billion, Audi got more than HUF 13 billion in state subsidies, and Mercedes was given HUF 30 billion. ■

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Budapest Business Journal | July 27 – Aug 09

Guide to the political summer If past summers are any indication, the next few weeks will not be very exciting politically speaking.

But you never know; contentious issues have a tendency to arise by surprise.

We will be taking our summer break in August, but we will review a few issues – the IMF, Fidesz’ plans for reforming the law on electoral procedure, and the culture wars – that may shape the political debate during this time.

BBJ POLICY SOLUTIONS

Like most everywhere else, summer is the one season in Hungary when the political life is so mellow that “man bites dog” types of articles tend to dominate the news.

Parliament will not be in session, of course, thus removing the chances of some largescale reform, and especially in early August most of the political elite disappear, taking with them their gaffes and grand announcements. Though we cannot prepare our readers for the unexpected events this summer, here are a few issues that may figure prominently on the political agenda in the upcoming “politics-lite” phase.

HERE COMES THE IMF The IMF agreement with Hungary has come to resemble Godot, constantly coming but never actually arriving. We have ourselves gone back and forth, expressing our pleasure over the government’s willingness to compromise its economic plans for the sake of staving off a default and then lamenting its retreat back into obstinate rejectionism. So we will not be tricked into predicting an end to this sorry saga, but we are of course aware that the country is once again closer to the euphoric end of this perpetual cycle.

In celebration of the compromise on the central bank, the forint went into overdrive and is back at the customary peak that recurs whenever the IMF is rumored to be about to offer a loan. Analysts claim that both parties have softened sufficiently to make a deal likely and, moreover, the IMF is allegedly committed to ensuring that Hungary does not become one of the dominoes that will either precipitate a wave of defaults or become a victim thereof. As far as the budget deficit is concerned, it appears to be finally under control, which the European Commission has acknowledged, also deciding that

in the EU where only voters who register before each election may participate.

The law on electoral procedure is full of mundane details, and at first glance is far less (or even less, if you prefer) exciting than, say, gerrymandering. Yet the mundane details might have an impact equaling or exceeding that of the more prominent issues that have been at the center of public discourse thus far. This is especially true of registration, which could substantially depress already low voter turnout.

SO MUCH LEFT TO RESTRICT But there are plenty of other

What is near certain is Hungary’s version of the American super PACs, that is, indirect campaign advertising disseminated by Fidesz-oligarchs, such as the vast poster campaign by the supermarket chain CBA in 2010 or the relentless Fidesz campaign in the shows of Echo TV, the channel owned by one of Hungary’s richest entrepreneurs, Gábor Széles.

Aside from indirect ads run by rich persons or enterprises (including state-owned enterprises), where Fidesz has a natural advantage, it might find that it has an interest in setting narrow rules for permissible ads run by parties, especially limiting advertisement in the internet, where the opponents

islation – e.g. the Trianon Memorial Day, the dual citizenship law, and most importantly the new Fundamental Law – of highly symbolic relevance.

The governing party has recently turned up its war efforts, however. A crucial move was the legally enshrined culpability of the leading opposition party, MSzP, for the crimes committed by the ruling party – MSzP’s legal predecessor – during the communist era. Fidesz has also moved against left-wing figures and symbols with the renaming of streets and the removal of monuments, and recently proposed to ban

FIDESZ HAS TINKERED SO MUCH WITH THE ELECTORAL LAW, ONE MIGHT FIGURE IT SHOULD BE ALL DONE BY NOW. ONE WOULD BE WRONG. Hungary would not suffer any penalties in terms of its structural funds. Despite ominous news from all over Europe, the government is emphatically nonchalant, which is either hubris or a realistic appraisal of the more solid footing of Hungarian public finances compared to those of Europe’s troubled economies.

ELECTORAL PROCEDURE: FINISHING TOUCHES As we have dutifully reported and analyzed at each step, Fidesz has tinkered so much with the electoral law, one might figure it should be all done by now.

One would be wrong. After reforms to the municipal and parliamentary election laws, the law on electoral procedure is still awaiting a massive overhaul, and we could find out a lot about this over the summer. One idea that has been floated for a while now is the introduction of voluntary voter registration, which would be extremely unusual in Europe – we are not even sure if there is a country

issues. Fidesz still has to reveal the deadline for collecting endorsement sheets, which qualify parties and candidates for the ballot. If the deadline will be exceedingly short, as many suspect – based also on the significantly shortened deadlines for municipal elections – then that could prematurely halt the emergence of new opposition parties, which would be unlikely to make it onto the ballot without adequate time to find citizens willing to endorse untested players. In fact, as the municipal elections of 2010 showed, even parliamentary parties can struggle with the requirement; LMP failed to qualify in most areas of the country.

An important issue that is still outstanding is the regulation of campaign advertisements (and of course campaign finance, but that is a discussion for another week).

It is likely that the regulation of campaign time and advertising rules will also attempt to track Fidesz’ narrow interests, much as other regulations have thus far, though in this area Fidesz’ interests are probably more difficult to define.

might find it easiest and most cost-effective to address voters.

Furthermore, a shortening of the campaign time is intensely in Fidesz’ interests, and it has already announced that this will occur: a shorter campaign primarily benefits those political players that are already known to voters, and unlike most of the opposition, Fidesz needs little introduction.

THE CULTURE WARS CONTINUED What will almost certainly continue over the summer are the culture wars. Of course they have been ongoing for an eternity now and are unlikely to end anytime soon. To a greater or lesser extent, each government since the transition has felt the need and the mandate to impose its own version of temporary cultural hegemony; they have sought to manifest their values through a variety of instruments, from street names through subsidies for culture and science all the way to school curricula. Fidesz has of course been active in this area from the very start, passing a wide variety of leg-

the remaining communist street names. At the same time as attacking the symbols attached to the left – and in the process seeking to conflate the post-communist (and occasionally precommunist) left with the communist regime – Fidesz is pushing for greater recognition of the right-wing heroes of Hungarian history to create a more balanced approach towards history, as the speaker of Parliament, László Kövér, argues.

HOW MUCH FURTHER? It is not entirely clear why Fidesz has felt the need to intensify cultural warfare right now, but of the various explanations, the pressure from Jobbik appears the most plausible. This would also explain why Fidesz’ efforts at giving greater prominence to historical right-wing political and cultural figures is reaching for role models ever further to the right.

During Fidesz’ first-term, the right-wing cult figures

par excellence were the politician István Széchenyi and the novelist Sándor Márai – both uncontroversial choices, even for those who criticized the manner of their celebration or the monopolization of their memory by the right.

The figures elevated since then are known considerably better for their controversial views concerning fascism and Nazism than for their political or literary achievements, which even some on the right admit was mediocre at best in the case of former Hungarian leader Miklós Horthy and novelists Albert Wass and József Nyírő.

Especially in their communication with international figures, government politicians have sought to portray these efforts as either innocuous or beyond their control. László Kövér, for instance, has downplayed both Nyirő’s documented exuberance for Nazism and the actual extent of his new prominence: Nyirő’s reburial was not a private matter, as Kövér suggests, but a political act whose weight stems precisely from the participation of senior political figures, Kövér among them. Prime Minister Viktor Orbán has said that he is not disturbed by the growing Horthy-mania, and argues that Fideszled municipalities that celebrate the authoritarian wartime leader are acting independently from – though not against – the party center. Fidesz is certainly among the most hierarchical organizations in Hungary, however, and it is inconceivable that any such decisions would be made without approval from the chairman. Fidesz is clearly aiming to legitimize figures who were once associated with the far right, and electorally this is a suave move: thanks in large parts to the groundwork provided

by Fidesz’ intelligentsia, the ideas that these historical personages represented are no longer at the fringes but in the mainstream of society. The question now is only how far Fidesz wants to take this process. ■

www.policysolutions.hu Political Research and Consultancy Institute

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Budapest Business Journal | July 27 – Aug 09

Youth Packages – the unemployed y Record rates of high unemployment have been hitting Europe. Countries not wanting to lose a whole generation of workers have put aid projects in practice.

The EU has also had some good ideas: the question is if these can be implemented in time.

This latest recession has been one of figures. Numbers, usually too boring to be noticed, have grabbed headlines and been the talk of the town all over Europe.

From “the euro fell as low as $1.2184 against the U.S. dollar” to “the European Central Bank cut its key interest rate to a record low of 0.75%,” we have seen everything. And here is the most recent: “Youth unemployment rate across the European Union hits 22.7% in May.” Quick math: two month ago, 5.517 million young people were out of jobs, of which 3.412 million were in the euro area.

The EU average of 22.7% sounds less alarming when

In Hungary, roughly one in three people with a completed education is unable to fulfill his or her talent.

Europe’s youth has had its ups and downs in employment terms. The reasons have been various, from being under qualified to overqualified to the older generation not wanting to retire. Lately, it has been the downturn. The economic crisis clearly has not helped, but such big figures cannot simply be attributed to a crisis. “We have 3,000 jobless graduates in one country and 3,000 vacancies in another. The problem is that they don’t match,” said Róża Gräfin von Thun und Hohenstein, MEP, to show-

mid- to long-term forecasts on what professions will be the most sought after, say, in 2025. (A hint from Hays: accountants, nurses and IT professionals).

SCHEMES TO THE RESCUE The problem with forecasts is that they always hold a good deal of uncertainty.

One can be trained an excellent bookkeeper, but what if a change of wind makes programmers more in demand?

Those looking for a guarantee instead of prospects should consider a non-academic path, and a model that has helped Germany keep its single-digit youth jobless rate for years: Vocational Education and Training.

A stepped-up version of the German apprenticeship, organized by the EU, is tailored to urge mobility.

Erasmus and Leonardo programs, which have become known as cross-border university scholarships, now offer young people placements abroad. It is a win for both parties: host organizations get access to highlyqualified European workers, while young employees can get a taste of both learning and working abroad.

Beyond giving their company “some European flavor” – as is listed among the benefits on the official webpage of the program – host organizations have access to screened and enthusiastic young workers eager to test foreign waters.

This is important because, when it comes to employment, mobility remains an issue.

Only 2.8% of the European population works abroad.

Among obstacles are language skills (see box on language learning) and the lack of mutual degree recognition.

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› WE HAVE 3,000 JOBLESS

GRADUATES IN ONE COUNTRY AND 3,000 VACANCIES IN ANOTHER. THE PROBLEM IS THAT THEY DON’T MATCH

compared to statistics from Spain and Greece. In these two countries, right now the pet subjects of the economic press, rates have already passed 50%. This means every second young Spaniard or Greek is checking the job vacancy ads. According to statistics from the Trades Union Congress, the umbrella body for UK trade unions, the country has seen a 900% rise in the number of 18 to 24-year-olds out of work since the year 2000.

case Europe’s two major shortcomings: mismatch in market demand and supply, and the lack of mobility.

Which is the more difficult to tackle is hard to say.

Changes in market demand usually outpace changes in education, says Tammy Nagy-Stellini, country manager of Hays Hungary, the local member of global recruitment firm Hays. Yet that does not mean youngsters cannot prepare. Analyst groups often publish

In this system, German high-school graduates apply to private companies for a two or three year training contract. They also continue learning at publicly funded vocational schools: for every two to three days at work they spend one or two days at school. What they learn in theory, they compliment with practice. The education is government-financed and, if good enough, the students are kept on by their employer.

TAILORED PACKAGES To harmonize a variety of qualifications, the European Commission adopted a legislative proposal to modernize the Professional Qualifications Directive in December 2011. This includes the introduction of a European professional card, which will serve to simplify and accelerate recognition procedures for the interested professions. Minimum training requirements for professions benefiting from automatic

recognition, in particular for doctors, nurses, midwives, and architects, will be set up.

The European Union, generally not known for offering quick fixes to problems, has switched into a higher gear this time and has come up with some packages tailored to youthful needs. Its executive body, the European Commission, has established action teams for the eight countries with the highest rate of youth unemploy-

ment (equal to or above 30%): Greece, Ireland, Italy, Latvia, Lithuania, Portugal, Slovakia and Spain. The role of these teams has been to pinpoint fields where help is most needed and to channel existing funds there. So far €7.3 billion has been earmarked for reallocation or accelerated mobilization to support 56,000 SMEs and almost half a million young people.

The rearrangement of funds has made it possible

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d youngster’s alternative?

NEXT JOB 3,500 km

LANGUAGE SKILLS In skills training, languages are always a safe bet. Learning two is a good starting point.

Candidates are not paid more for English, but fewer languages will limit opportunities.

“The tendency is that languages are a ‘must have’ rather than a ‘good to have’,” explained Nagy-Stellini. “Of course, having more scarce languages such as Scandinavian ones is always rewarded financially.” (Not always, though. At the shared service centers (SCC) of IBM, one of the biggest providers of SCC jobs in Hungary, there is no longer an extra bump for speakers of Dutch or Swedish, some employees claim.) They may not pay more, but SCCs are something of a safe haven for fresh graduates with language skills: they accept nearly all degrees as they train candidates in-house.

CONFIDENT YOUNGSTERS Figures do not seem to dampen the enthusiasm of high school graduates: regardless of market demand, they choose careers that are already saturated. If they cannot find a spot at home (as a result of a recent government decision to cut free university places at the most popular faculties like economics), they go beyond the borders.

Youth is characterized by confidence anyway, and youngsters claim they have plenty of time – three to five years, to be precise – before they have to get worried. They are quite right when they opt for cross-border education but are advised to choose more carefully. They should try to avoid fields where there is clearly an over-supply of labor and instead prefer areas where demand is high or developing. The Commission’s suggestion: choose the green, health, and IT sectors, where opportunities will abound in coming years.

DECEPTIVE FIGURES

for Greece to put into practice 180 priority projects with a budget of about €11 billion expected to create around 100,000 jobs, mainly in the construction industry. The Portuguese government will likely introduce an “Employment Passport”, an internship program in key economic sectors costing €140 million, to support 35,500 people.

Italy has focused on the south: half of the available money (€3.6 billion) was

spent on enhancing employment opportunities in the southern regions. An employability plan in Sicily to secure the future of 50,000 young people and 13,000 new Erasmus/Leonardo scholarships are among the items. Also, the government started a program worth €311 million to stop early school leaving and another one amounting to €100 million to support youth entrepreneurship.

The Hungarian government will pay all employee-

related costs and taxes for companies that hire fresh graduates (or skilled and unskilled young workers with no job experience) between September and December 2012.

Bilateral meetings were also held with the seven countries with youth unemployment rates higher than the EU average: Bulgaria, Cyprus, France, Hungary, Poland, Romania, and Sweden. Moreover, the Commission intends to present

a “Youth Package” by the end of the year. The package contains two items: a framework for traineeships and youth guarantees. This latter will ensure that young people will be offered either a job or further education or training within four months of leaving school.

The proposals sound enticing enough. The question is when they will have an impact. Time is pressing: generation Y has no time to waste. ZsV

That jobless rates among the young in European countries are high is unquestionable. But statistics are deceiving, too. Most continue to measure rates in the 15-24 age group (or, somewhat better, 18-24) and fail to note structural changes that have taken place in past decades. While 20 years ago it was normal for young people to start working at 18, today substantially fewer enter the job market at that age.

University graduates land their first jobs at the age of 21 or 23 at the earliest. Often this date is deferred a few years as a result of extra courses and scholarships.

DIVERSIFY! To ward off swift changes in the job market, young people should diversify. Instead of one, they should pursue studies of two or more fields. A lucky choice of fields pays off quickly.

Mix IT and economy with a field of your choice, and a smoother route should lie ahead.

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Overcoming the harmful flaws in Performance Appraisal Systems IF PERFORMANCE IS GOOD ■ What were the key factors that influenced how your performance turned out?

■ Which strengths of yours do you think benefited you most?

■ What ideas do you have in mind to leverage these strengths even more?

IF PERFORMANCE IS POOR ■ What are your feelings on where we are in terms of your performance?

■ What was happening to you when you stopped there?

■ What other options can you think of to solve this issue?

GOAL-SETTING ■ What are your goals for your current role?

Although service providers, consultants, HR professionals, and software companies spend ever more time and money on Performance Appraisal Systems (PAS), the increased effort can do little to decrease the gap between promise and reality.

BBJ DR. RÓBERT DOBAY

The Promise: Performance reviews are supposed to provide an objective evaluation that helps determine pay and lets employees know where they can do better.

The Reality: Reviews are inevitably political and subjective, and create schisms in boss-employee relationships. The link between pay and performance is tenuous at best.

It is negative to corporate performance, an obstacle to straight-talk relationships, and a prime cause of low morale at work. Even the

mere knowledge that such an event will take place damages daily communications and teamwork. I offered several reasons why I find performance reviews bogus in the previous issue of the Budapest Business Journal. I will now add some more and, of course, an alternative as well.

PERFORMANCE DOES NOT DETERMINE PAY It’s a nonsense idea that pay is a function of performance, and that the words being spoken in a performance review will affect pay. I believe market forces primarily determine pay, with most jobs placed in a salary range prior to an employee’s hiring. The boss, and the boss’ boss, then determines raises largely as a result of the market or the budget. The performance review is simply the place where the boss comes up with a story to justify the predetermined pay. If the raise is lower than the subordinate expects, the boss has to say, “We can work to get it higher in the future, and here are the things you need to do to get to that level.” Or the boss can say, “I think you walk on water, but I got push-back from HR and we’ll try again next year.” Too

many lines spoken in a performance review are a cover story for the truth and have little to do with performance.

ONE SIZE DOES NOT FIT ALL Employees all come with their own characteristics, strengths, and weaknesses that they orchestrate in every attempt to perform at their best. And yet in a PAS, employees are supposed to be measured along some predetermined checklist. In almost every instance, what is being “measured” has less to do with what an individual was focusing on in attempting to perform competently and more to do with a checklist expert’s assumptions about what competent people do.

This is why pleasing the boss so often becomes more important than doing a good job.

PERSONAL DEVELOPMENT IS IMPEDED You would think that the person in the best position to help somebody improve would be his or her boss. The number one reason for that reluctance is that employees want to turn to somebody who understands their distinctive talents and way of thinking or knows them sufficiently well to appreciate the reasons behind the

■ Is there a special challenge or skill you want to acquire?

■ What are your most important development or career goals for the coming year?

FEEDBACK ABOUT THE MANAGER ■ What is your view about the way I manage you as your boss?

■ What works well for you in my managerial style?

■ What would work better for you to make your job easier?

I often hear that managers resist the concept of ongoing coaching because they believe it is too time-consuming.

Actually, it is quite the opposite. Managing poor employee performances is extremely time-consuming. Managers have to provide written reviews, spend time with employees to discuss these reviews, monitor progress made based on these reviews, and provide corrective feedback as required.

In contrast, ongoing coaching might take 10 minutes of a manager’s time every week. With such enhanced and regular communication and interaction, corrective measures are more easily and seamlessly applied, and results are visible fairly quickly.

unique ways they are driven to operate. By contrast, people do not want to pay a high price for acknowledging their need for improvement – which is exactly what they would do if they armed the boss with the kind of personal information he or she would need to help them develop. It could all come back to haunt them in the performance review.

PERFORMANCE SURPRISE Most PAS suggest providing feedback on an annual or semiannual basis. It’s unfair to face the employees with their performance once a year. It gives both parties an opportunity to observe what has happened, but no corrective action can be taken, and it is too late recall where, when, and how the good or poor performance occurred.

Dr. Róbert Dobay, CEO, Menedzsmentor Coach, change manager, author of the Menedzsmentor blog: blog.menedzsmentor.com dobay.robert@menedzsmentor.com, www.menedzsmentor.com

If your spouse prepares your favorite dessert, you say thank you when you arrive home and do not wait until Christmas because it is the time to be grateful. Why do managers do it differently in the workplace? It is important for the subordinates to get recognized or razzed at the time the performance occurs, not at some future point in time.

WHAT IS THE ALTERNATIVE? Replace the traditional PAS with a continuous model and establish one-on-one meetings with team members as an opportunity for feedback and coaching. Every month or each time either the boss or the subordinate has the feeling that they aren’t working well together, one meeting should be dedicated to a discussion on how the person can enhance his own performance and play to his strengths.

The boss’ assignment is to guide, coach, and tutor, provide oversight, and generally do whatever is required to assist a subordinate in performing successfully. The discussions should be about how we, as teammates, are going to work together even more effectively and efficiently than we have done in the past. The meeting structure keeps the focus on the future and what “I” need from you as “teammate and partner” in order to accomplish what we both want to see happen.

Realistic assessment of someone’s positive qualities requires replacing scores on standardized checklists with inquiry.

As a result, step number one in giving effective feedback almost always involves “active questioning” inquiry. Both participants need an answer to the most significant issue at hand: “Given who I am and what I’m learning about this other individual, what’s the best way for us to complement one another in getting work accomplished with excellence?” Let me offer a few questions you may want to use during the reviews. ■

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Aging car fleet

Maternity leave

Top 100 companies

Fewer people are trading in for newer models

Hungarian mothers have the most paid maternity leave in CEE

MOL continues to lead Hungary top 100 list

12yrs

56days

IS THE AVERAGE AGE OF HUNGARIAN CARS

Nearly one-third of Hungary’s personal vehicle fleet was younger than five years old in 2008 – today, only a little more than one-tenth of Hungarian cars are below this age, a recent study by market research company Medián shows. The average age of cars has increased in all social groups since 2008, but the largest increase can be detected among people with low income. The average age of a Hungarian car is thus 12 years in 2012, the study reveals.

The owners of the youngest cars are between 30 and 40, have diplomas, a high income, and live in the capital.

But an aging car fleet certainly has its advantages too: used cars in Hungary are drawing interest from foreign dealers, mainly because of low prices, a recent analysis by Weltauto reveals.

Most cars went to Serbia and Germany, said Zoltán Horváth, brand manager for Weltauto, the used car unit of Porsche Hungaria. Serbian dealers prefer cheaper older vehicles and buy them for an average price of HUF 300,000500,000, while German buyers opt for younger cars for a value above HUF 2 million – although deals above HUF 10 million have also been registered, Horváth said. He noted that these cars attract the interest of domestic buyers as well. Foreign dealers mainly looked for diesel cars with 1.5-2.5 liter engines (5,401 cars of these types were sold last year).

Used Hungarian cars have made it halfway around the world: dealers from Malaysia, Angola, Nigeria, Libya and Afghanistan were among the buyers. The most expensive cars, which were sold for around HUF 30 million, were taken to dealerships in Switzerland and Luxembourg.

Data from the Central Statistics Office (KSH) shows that foreign dealers took 9,851 used cars from Hungary to be sold abroad last year. These vehicles had a combined value of HUF 7.9 billion.

Horváth said Weltauto sold fewer than 100 cars to foreign dealers last year. More than 31,000 used cars arrived in Hungary during the same period, nearly as many as newly registered cars. PF

How has Hungary’s car fleet changed in the past 4 years?

Hungarian mothers with newborn babies are in a very good situation when it comes to maternity leave compared to mothers in other countries in the region, according to a recent survey carried out by Accace in Czech Republic, Hungary, Poland, Romania, Slovakia, and Ukraine. Although the local social security funds finance maternity leave in all six countries, there are huge differences in the duration of time allowed off.

Hungarian mothers are the luckiest: the upper limit for maternity leave is three years.

For the first 168 days, a new mother is entitled to 70% of her former salary, paid by the state.

After this, there is a cap on this amount for the following two years (€460 per month).

Then, until the child turns three, the amount of subsidy comes to €100 per month.

Mothers in other countries are not allowed to stay home for such a long time, the study points out. Ukrainian mothers are in the worst situation: they can stay home for only 56 days after giving birth (in the case of more than one child or a complicated birth, this can go up to 70 days). The mother can apply to prolong her maternity leave for up to three years, but she will not receive any subsidy from the state for the remainder of the time.

Social security finances only 20 weeks in Poland, and an additional four weeks of maternity leave can be given upon request – without any subsidies from the state.

The Czech state is a bit more generous: it pays for 28 weeks, and mothers can stay home for three years but will not receive a state subsidy after that initial period.

In Slovakia, the standard duration of maternity leave is 34 weeks, but this includes a six-week period prior to birth. A single mother or a couple with several kids can modify the duration of the maternity leave.

Romanian mothers are not exactly spoiled: they can stay home for a minimum of 42 and a maximum of 63 days paid leave after giving birth, and will receive 85% of their salary during this time. They can stay home for another year or two on unpaid leave, but there is no further state subsidy. PF

Length of paid maternity leave in the region Hungary

28 weeks

Poland

20 weeks

Source: Accace

Top 5 employers in 2011

42-63 days+2 yrs

Ukraine

56 days

Slovakia

34 weeks

INCREASE IN COMBINED SALES REVENUE IN 2011 FROM 2010

Oil and gas company MOL retained first place in the list of Hungary’s Top 100 companies, according to Dun & Bradstreet, the company responsible for compiling it.

Based on 2011 consolidated sales revenue, Audi Hungaria Motor remained second, GE Hungary moved up to third (from fourth place in 2010), followed by E.ON Földgáz Trade (seventh in 2010), Samsung Electronics Magyarország (5), Nokia Komárom (3), Philips Magyarország (6), state-owned Hungarian Electricity Works MVM (13), Tesco-Global Áruházak (10) and Magyar Telekom (9). The only newcomer among the top 10 of the list was thus MVM, which replaced Panrusgaz, a company delivering Russian gas to Hungary.

Combined sales revenue for the Top 100 rose 10.3% in 2011. Sales rose by 11.6% in 2010 after dropping 10% in 2009. There are 12 new entries in the full Top 100 list, seven businesses have leapt forwards more than 10 places, while seven others have dropped by 10 or more positions. From the latter three – GDF Suez, EDF Démász and ÉMÁSz – are energy providers. Dunamenti Erőmű, a member of GDF Suez, suffered the largest drop, with revenue contracting by 40% and dropping 49 places on the list to 114th. Porsche Hungaria saw the biggest jump forward to 38th place from 59th. The Hungarian unit of Danish pump manufacturer Grundfos advanced nine positions to 64th. The Hungarian subsidiary of aluminum profile maker Sapa Profiles saw its revenue increase 32% in 2011, bringing the company to 74th position. Vodafone Magyarország, which was 52nd a year ago, is absent from this year’s list because the company’s figures are still being audited.

EMFESz and state-owned airline Malév were not featured because both companies are under liquidation. The five largest employers on the list – Magyar Posta, MOL, Tesco, MÁV and SPAR – employ a total of 120,000 people. Apart from SPAR, these companies laid off a total of 2,500 workers in 2011. MOL let 1,700 people go during the year, 5% of its total workforce. PF

3 years

Czech Rep. Romania

Source: Robert Bosch Kft/Medián

10.3%

THE SHORTEST MATERNITY LEAVE IN THE REGION IS IN UKRAINE

Source: Dun & Bradstreet

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Chemical industry stands firm in the storm The Hungarian chemical industry is still in better shape than most sectors, but its situation is deteriorating.

BBJ KRISZTIÁN KUMMER

The insolvency index in the chemical industry grew by 10% in the first half of 2012 year-on-year, which indicates that the chemical sector’s position is much more favorable than the national average, standing 30 percentage points higher, according to the latest figures of international credit insurer Coface.

The chemical industry is still one of the least risky sectors in Hungary, due to its relatively low insolvency ratio. Yet the chemical industry struggles with the same problems every area of the Hungarian economy experiences: shrinking domestic market, declining profitability, the crisis tax and new levies, pressure on cost reduction, deteriorating R&D and investment expenditures, as well as an uncertain management, business, and regulatory environment. “And the new fiscal austerity measures now taking shape will further increase uncertainty in the sector,” Coface executive director Gábor Kárpáti said.

RESILIENT BUSINESSES The surprisingly low insolvency index amongst companies in the chemical sector is very promising. Taking into account that the chemical industry is closely linked with almost all sectors of the economy, the result is even more heartwarming. Insolvency procedures in the sector remained relatively low, affecting only 0.5% of all registered businesses, according to Coface. The most common procedure was forced liquidation (52%), but no company filed for bankruptcy throughout this period. Procedures mostly involved plastic, ceramic, and glass manufacturing companies.

Enterprises subject to procedures have been smaller, with

a turnover of less then HUF 300 million, as these companies could not cope with elevated burdens on businesses and were thus forced to abandon operations. The indicator proves that the resilience of the chemical industry in the crisis is still relatively high, and this performance is particularly highly rated as it has faced a very difficult period recently. Almost all of its partner sectors were hit hard by the recession, which is clearly reflected in the sector’s orders. As the majority of chemical companies imports raw materials, exchange rate exposure is significant. But the chemical industry has a “secret weapon” to lower increasing risks on a deteriorating market. As multinational ownership is overrepresented in the sector, most of them are insured and are willing and able to use risk management tools to dodge losses from non-paying partners. Through continuous monitoring, credit rating services, and accounts receivable insurances, they have built up a reliable customer base, minimizing the possibility of losses, Kárpáti said.

INNOVATIVE NEW WAYS Hungary’s MOL Group, one of Central Europe’s leading international oil and gas companies, had tough experiences last year due to the depressed environment for the refining and petrochemicals industry. Crude prices increased and thus energy prices rose by more than 25% compared to 2010 levels, compounded by unstable product crack spreads (the difference between the price of crude oil and petroleum products). Amidst the economic crisis, fuel demand declined and markets shrank.

The annual average integrated petrochemicals margin hit its lowest level ever and shrank by 14% compared to 2010, thereby blighting European petrochemicals markets. However, MOL was able to not just manage the crisis but to grow in this period.

As the group reacted quickly upon the first signs of trouble, it was much better prepared than many of its com-

petitors. Maintaining a very strong financial background, the company believes that it will be stronger after the crisis than before. “We focused on optimizing our operations through the entire value chain. With the new structure in place, our aim is to increase profitability and reduce risk at group level through improved cost efficiency and more flexible operations and by finding global optimums rather than local ones,” MOL says.

On a completely different playground, the crisis swept across the real estate market and through closely linked chemical businesses (like the coatings market) as well.

The termination of residential building grants further complicated the position of the sector, which was already hit hard by the credit market collapse. The decorative coatings market has shrunk by almost 40% in the five

years from 2007, according to Hungary’s leading manufacturer Trilak. The huge fall in new homes sales (65% less homes were handed over last year than in 2007), the drop in sales of used flats (a 60% fall compared to 2007, according to real estate agency Dunahouse), and the downturn in general purchasing power are to blame for the market decline.

In addition, businesses had to struggle with increasing raw material prices and the negative side effects of the Hungarian forint’s depreciation as market players purchase 80% of raw materials from abroad. The deterioration of the market has continued in 2012: Trilak predicts a further 4% fall this year, marketing director Attila Raskó said. The only encouraging economic indicator right now is this year’s increase in real estate purchases due to

the early repayment scheme of foreign currency loans; however, its beneficial effects could not yet be seen in the paint market.

However, the company is trying not just to survive but also to increase its market share and profitability through new solutions. New products have been launched over the past four years in response to the ever-changing demands of customers, it has invested HUF 400 million a year in manufacturing and trade, and introduced a whole new scheme for trade policies that helps Hungarian paint shops get through the recession more easily.

EXTRA CHARGES As if just to increase the challenges the sector has to face, several industries were hit by extra charges. Petrochemical companies were slapped with extra levies, while formerly

existing burdens on the pharmaceutical industry, introduced in 2007, were kept in place citing the crisis.

“As a multinational company, we are in cooperation with the governments in every country within the MOL group, and we encourage them to do everything to have a more stable legal environment, as it is beneficial for investors and can contribute to economic growth. We understand and support the Hungarian government as it tries to manage the tension in the public budget. But we believe that these extra crisis taxes can not be used as a tool for the long-term,” the company said.

The changing trends in the chemical industry would be helped if commodity prices were consolidating, as it would allow companies to reduce their prices to generate demand. In a recessive economic environment, when demand falls, it is very difficult to cope with continuous price increases as well.

The players can compensate for the negative trend only by finding market segments not yet serviced, renewing their distribution strategies, or improving operational excellence. “Of course, it is essential for the industry to grow, and for the whole macro economy to recover, but I believe the seven lean years are coming to an end soon,” Raskó said.

But the future still does not look bright. Even the pharmaceutical and the over-performing chemical industry’s situation could be made more insecure by the new austerity measures penciled into the second Széll Kálmán Plan, an updated structural reform plan. While the plans actually serve the purposes of regaining the trust and confidence of investors in Hungary at the macroeconomic level, they could further escalate an already difficult situation, Kárpáti said. For example, further tightening of the drug support system could result in negative side effects spilling over into the whole industry, affecting small drugstores, wholesalers, and manufacturers alike. ■

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Chemicals are humans’ best friends Chemicals – no politician has so notorious a reputation as these substances.

In a world where people mandatorily pin their faith on all things organic, it is hard to generate good publicity for artificial materials. So, instead of praising polymers, showing a few examples of their everyday use probably makes more sense. They are so ingrained in our everyday lives that doing away with them completely would turn the most natural and mundane activities into painful ones.

ASPHALT: SMOOTH AND SILENT AND YES, GREEN Most runners avoid this kind of surface for long-distance runs to prevent injury but they may be the only ones who do not appreciate what the hard, even covering of asphalt offers. It has gone through many developments to becoming the noise-absorbing, load-bearing surface it is today. The main component of asphalt is bitumen, a thermoplastic material.

Its nature really shows off when the temperature changes: the higher this is, the more flexible the bitumen; also, the more it deforms under the pressure of traffic. To overcome this characteristic, several methods were tested, but polymers produced the best results. Adding a thermoplastic polymer like styrene-

butadiene-styrene (SBS) greatly improves bitumen’s durability: it takes longer for cracks to develop and the substance becomes 100 times stronger than ordinary bitumen. Bitumen, which is found in nature and was used 500 years ago in a water tank as an adhesive, is today made from crude oil distillation. In fact, it is the residue left behind in the process.

Roads take up 80% of the bitumen produced, but bitumen accounts for only a small fraction of the asphalt that comprises road surfaces. The rest is sand, aggregate, lime, rubber from old tires, and SBS (developed in the 1960s by Shell Chemicals). These contribute to the longevity of roads by enhancing bitumen’s best features: flexibility and elas-

ticity. When mixed into bitumen, SBS also raises its softening point so asphalt made with it is less prone to deformation under the weight of traffic even in hot countries. As an added benefit, polymers help lessen the noise traffic creates and guarantee a smooth ride.

STICKY SUBSTANCE: You may be a most fervent environmentalist – but you may well put hydro carbonated polymers in your mouth at least once a day. You are also likely to consume styrenebutadiene rubber, and isobutylene-isopropylene.

The history of chewing gum is a true success story, maybe too much so; engineers made it so sticky that it was almost impossible to remove.

Polymers are molecules with a long chain of atoms with the same repeating unit. The simplest of them is polyethylene, where the chain is made up of pairs of carbon atoms with hydrogen atoms attached.

Hydrocarbon polymers: The building blocks of rubbery hydrocarbons are isobutylene, butadiene, isoprene, and styrene. These molecules have a bond that enables them to form polymers.

The government of Singapore banned chewing gums in 1992 because it stuck into sliding doors and subways. Only a few years later did they partially lift the ban and allow sugarfree chewing gums to be sold in pharmacies to people who presented a prescription.

Ideally, this product allows people to chew it for an unlimited amount of time and then swallow and digest it. That is difficult to achieve because digestion must not begin in the mouth.

As usual, chewing gum has its natural ancestor too. Gums

TVK TO BUILD HUF 30 BLN PLANT IN HUNGARY, NOT SLOVAKIA Hungarian chemicals company TVK, a unit of oil and gas company MOL, has decided to build a butadiene extraction plant at its base in Tiszaújváros, rather than in Bratislava, Slovakia, the city’s MP, Roland Mengyi announced. TVK CEO Zsolt Pethő said in the company’s Q1 report in May that the HUF 30 billion plant would have an annual capacity of 130,000 tons. Expected to go online at the end of 2014, it will boost annual profit by HUF 8-15 billion, he added.

mation. Its planned total depth is 3,658m. MOL, via its 100% subsidiary, Kalegran Ltd., signed a production-sharing contract with the Kurdistan Regional Government for the Akri-Bijeel exploration block in 2007. The operator of the block is Kalegran with 80% participating interest. Gulf Keystone Petroleum International holds the remaining 20%. The participating interests are subject to dilution by a government-held Third Party Participation of 20% and a government interest of 20%.

people chewed for centuries came from the ooze of damaged bark of trees. The most notable type among those was chicle, a latex gum from the sapodilla tree (Achras zapota), which grows in Central America. This was replaced with synthetic polymers in the 1960s, as rising demand and perilous harvesting made it necessary to choose a more reliable alternative. Modern chewing gum is made from synthetic elastic polymers and numerous other substances including wax, plasticizers, humectants, sweeteners, and preservatives. They have quite a few advantages over their natural peers: chief among these is that they are tasteless. Natural gums had quite strong a taste, making it hard to add flavoring, which is the whole point of chewing.

What is more, they can contain substances that whiten our teeth (bicarb), strengthen the tooth enamel (fluoride) or free the nasal passages (menthol). Another suggestion is to add medication that would release slowly, although dosing may be a problem here. ZsV

Sector news EUROVENTURES IV, PRIVATE INVESTOR PUT €1.5 MILLION INTO UBICHEM Euroventures IV Venture Capital Fund and a private investor have invested €1.5 million in Hungarian pharmaceutical and chemical industries company Ubichem Pharma Manufacturing, Euroventures has announced. The investment supported the construction of a 55,000 sqm production unit in Budapest by the company, which is a new member of the Ubichem Group. The plant allows Ubichem to make large quantities of base ingredients beyond its capacity to make smaller amounts of active ingredients in the research stage. Ubichem Group employs 160 people. The European Union’s Jeremie Fund and the Swiss-Hungarian Cooperation Program made the investment possible.

BIOCIDES REGULATION TO HELP HEALTH, ENVIRONMENT AND ECONOMY New rules on biocides entered into force on 17 July, bringing a significant boost to the protec-

tion of health and the environment. Though necessary for the control of organisms harmful to human or animal health, biocides can also pose risks to humans, animals and the environment. Biocidal products include disinfectants used in hospitals and households, rat poisons, insect repellents, mold removal sprays and mold decontamination paints, as well as water purification tablets.

The new set of EU regulations should increase the safety of these chemical products and simplify their authorization on the EU market, improving their free movement. Environment Commissioner Janez Potočnik welcomed the entry into force as “another step to guarantee a high level of protection for citizens’ health and the environment”. He stressed that the new regulations should “ensure that only safe products are made available and that the most dangerous substances are kept out of our market”. The Commissioner added that the new regulation would also bring “con-

siderable economic benefits to European companies”.

ARRK HUNGARY SOLD BACK TO MANAGEMENT PARTNERSHIP A Hungarian automotive plastic parts offshoot of Japan’s Arrk Corporation, Arrk Hungary has been acquired in a management buyout and renamed Tisza Automotive.

The technical products injection and blow molder, based in Tiszaújváros, north east of Budapest, was bought earlier this year by a management partnership backed by a Hungarian investment group. Tisza Automotive, which operates on a site close to its former parent, the Hungarian chemical giant Tiszai Vegyi Kombinát (TVK), will continue operating as a manufacturer of technical plastic products. It stressed in a statement that production of automotive parts would remain “the top priority”. Apart from producing automotive parts, it turns out technical moldings for the electronics, telecoms and chemical sectors.

MOL STARTS DRILLING AT EXPLORATION WELL IN IRAQ Hungarian oil and gas company MOL has announced the spud of the Gulak-1 exploration well in the Akri-Bijeel block. The fourth exploration well in the block, it is situated 21.4 km east from the Bijell-1 discovery well, and 28.3 km east-southeast from the Aqra-1 appraisal well, and will finish the Triassic Kurra Chine For-

HUNGARIAN-CHINESE AGREEMENT ON MINING IN BORSOD SIGNED An economic and commercial cooperation agreement has been signed between high representatives of Shandong, the third richest province in the People’s Republic of China and Borsod-Abaúj-Zemplén county leaders. The parties agreed that the promotion and development of relations between chemical production, processing and trading companies is a

top priority. The opportunities of cooperation between automotive research and development companies in Shandong province and the automotive parts and components manufacturing in Borsod County will be also examined. The parties support the outlining of new business relationships between agricultural enterprises and will participate in spreading R&D results achieved in the chemical industry, material science, nanotechnology, mining and energy research.

The economic opportunities offered by deep coal mining in Borsod-Abaúj-Zemplén will also be looked into. As part of the cooperation, an independent Confucius Institute will be established at the University of Miskolc – in collaboration with a university in Shandong Province – and the University of Miskolc and the Shandong provincial universities will encourage R&D cooperation.

The parties will help to develop the business relationships between tourism enterprises. ■

16 2 BusinessSpecialReport BBJ

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Budapest Business Journal | July 27 – Aug 09

BBJ ZSOLT BALLA

Although the losses of other industries, like banking or construction, might have been more prominently featured in the news, the fouryear period since the financial crisis hit in 2008 has not exactly been a joyride for the metal sector either.

When its two key buyers, the car industry and the construction sector, collapsed, Hungarian steel production swiftly followed suit. From the neighborhood of two million tons a year before the crisis, the country’s steel output suddenly plunged 30% to 1.4 million tons in 2008.

And while the construction business is still flat lining, closing 2011 with another two-digit decline, the auto industry is now show-

duction will sneak back to pre-crisis levels, reaching the area of 2 million tons,” says Attila Kovács, CEO of DRW Danube Tube and Hollow Section Manufacturing and Trading Kft. Kovács’ company started to operate last October, reestablishing a 50-year-old tradition of steel manufacturing after four years of forced hiatus in Csepel, one of the industrial suburbs of Budapest. The company has published extremely ambitious plans, but Kovács said its expectations, based on the first ten months of operation, have proved to be well founded. “We will definitely meet our revenue target of HUF 5 billion this year, and we still think that four-fold growth by 2014 is a realistic goal,” he declares. In terms of production figures, this means that the output of the company will be around 30,000 tons this year, with the aim of reaching 120,000 tons in two years.

SEASONED EXPERTS While this might seem all too optimistic in a sector whose aggregate production is estimated to be around 140,000 tons this year, Kovács says his firm has tradition and experience on its side. “Although the machinery we use in the production process is brand new, the basic technology

Source: Association of the Hungarian Steel Industry (MVAE)

NUMBER OF FULL TIME EMPLOYEES IN THE STEEL INDUSTRY PER YEAR

ing clear signs of recovery.

This, topped with substantial investments such as the Mercedes-Benz plant that recently started production in Kecskemét (90 km southeast of Budapest), provides the metallurgy sector with a good deal of optimism.

“If all goes well, the volume of this year’s steel pro-

has not changed, and Csepel can provide us with seasoned experts in the field of tube manufacturing. Wellestablished infrastructure is also a contributing factor. Our plant has a direct railway connection, but we transport most of our products on the Danube using our own harbor. This means

2007

2008

2009

2010

2011

CONSUMPTION OF DOMESTIC STEEL (1,000 TONS)

686.6

634.2

384.5

377.9

375

CONSUMPTION OF IMPORTED STEEL (1,000 TONS)

2,123

2,173.8

1,236.8

1,555.2

1,721.6

IMPORT/DOMESTIC RATE (%)

75.6

77.4

76.3

80.5

82.1

that we can keep transportation costs at around €20 per ton, rather than the usual transportation costs of €3540 per ton, which is a significant competitive advantage,” he explains. And while competition still exists, the market is not nearly as saturated as it was before the crisis, as the rise in demand was not matched by a corresponding increase in pro-

Dunaújváros, 70 km south of Budapest), resumed its reconstruction program with the opening of a new furnace in June. The program was originally started in 2005 but was put on hold when the crisis hit in 2008.

Shareholders have now decided to resume the modernization project, as the HUF 10 billion investment will result in a 40% growth

NET REVENUE OF STEEL PRODUCTION (HUF BLN)

Source: Association of the Hungarian Steel Industry (MVAE)

After hitting rock bottom some four years ago, things are finally beginning to look better for the metalworking industry. While the scars of recent years still hurt, industry experts say that there are more reasons to believe that the worst is already over.

duction capacities. “We see growth potential both on the domestic market, where our high added-value tubes can replace imported products, and in neighboring countries. Especially so if, as we all expect, the EU introduces anti-dumping import duties on Ukrainian, Russian and Turkish hollow tubes,” Kovács concludes.

The promising growth of DRW is a spectacular success, but it is by no means an isolated example. Some 20 years after the collapse of the Soviet-type planned economy, most of Hungary’s traditional heavy industry centers (with the exception of Miskolc) are still operating, albeit with much lower production volumes.

But while in the past four years survival was the ultimate and only goal these factories could aim for, the picture now seems a little less menacing. For example, ISD Dunaferr, Hungary’s single biggest metal producer (based in

of hot-rolled coil and sheet production capacities. CEO Evgeny Tankhilevich says this considerable increase will largely be based on imported raw material from the Ukrainian affiliates of Dunaferr’s parent company, ISD Holding, whose shipping capacities are “virtually unlimited”. “I hope that we will always have local slabs in the furnace, but we build our growth expectations on the capacity of

our Ukrainian partners,” Tankhilevich said at a press conference in June.

As the metal industry is now beginning to get back into shape, the change in the structure of its customers becomes increasingly tangible. With one key buyer left and the construction industry practically removed from the picture, the gap seems to be filled by other sectors, mainly by machinery and vehicle manufacturers. Carmakers have always played an important role as the buyers of metal products, and although Suzuki and Mercedes largely rely on their own supply chains and imported metal parts, the rate of domestic production is still on the rise.

GREAT ENTHUSIASM Daimler AG’s greenfield Mercedes investment, for example, triggered great enthusiasm among Hungarian companies, but it turns out that becoming a partner is harder than they would have expected. To date, some 18 suppliers were reported to have local production, but according to business weekly Figyelő, no Hungarian-owned company has become a TIER1 supplier thus far. Attila Kovács confirms the difficulties of becoming a supplier in the auto industry. DRW has just completed sample shipments

of precision tubes used in the seats and pneumatic cylinders to a Hungarian carmaker. Although Kovács has not disclosed which company it aspires to partner, he said it was waiting to see whether these tests would lead to a long-term business relationship.

A more surprising source of demand comes from the producers of agricultural machinery. Brands like Caterpillar or JCB tend to use more and more Hungarianmade parts in their tractors, trailers, and other industrial or agricultural vehicles. These, combined with the traditions of Hungarian agricultural machine production, contribute to a steadily growing industrial sector. The former centers of state-owned giant Mezőgép in Győr, Orosháza, and Szombathely still operate under the ownership of various, mostly non-Hungarian parent companies. Other important domestic customers include the EU-subsidized wind turbine industry, and the few state-funded projects that remain from the construction business, such as the reconstruction of Budapest’s Margithíd (Margaret Bridge), the re-construction of railway bridges all across the country, and the extension of the southern sector of the M0 motorway around Budapest. ■

“THE COUNTRY OF IRON AND STEEL” The infamous slogan of Hungary’s economic restructuring in the 1950s, of becoming a “country of iron and steel”, originates from the first Hungarian post-war Communist dictator, Mátyás Rákosi, who introduced a Sovietstyle planned economy through the three-year plan (1947) and the five-year plan (1950). With Hungary lacking both a tradition of heavy industries and the necessary raw materials, the artificial creation of industrial centers in Miskolc, Salgótarján, Ózd, Dunaújváros, Csepel and various other locations proved to be disastrous from a market point of view. After the collapse of the Communist regime in 1989, these non-competitive state-owned industrial giants collapsed, posing both economic and a social issues, the effects of which still strongly affect entire regions of the country.

Source: Association of the Hungarian Steel Industry (MVAE)

Ironing out the wrinkles

2 BusinessSpecialReportPromotion 17

BBJ

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Budapest Business Journal | July 27 – Aug 09

Airport City logistics park: warehousing at advanced level Despite the harsh situation on the real estate market, when proprietors fight for tenants, the Airport City Logistics Park holds its position. While tenants still stand by the services provided by the logistics park, the construction of a new built-to-suit building was also started recently by Airport City, a subsidiary of the ABLON Group. The new warehouse will be available to the tenants at the end of the year, and with this, the third phase of the continuous development of the logistics park will be realized. We asked Adrienn Lovro, managing director of ABLON Kft, about the strategies of Airport City.

Q: WHEN MOST REAL ESTATE PROPRIETORS STRUGGLE TO KEEP AFLOAT, AIRPORT CITY HAS STARTED CONSTRUCTION. HOW DO YOU MANAGE TO SUCCEED?

A: Regarding the location and services, Airport City has many good qualities; this is one of the reasons we are increasingly popular amongst the so-called “classic” logistics companies and suppliers of industrial factories. The park is situated close to the Liszt Ferenc International Airport as well as the city center of Budapest.

Strategically important warehousing opportunities are provided both for air and road transportation by the vicinity of the airport and the M0-M4 motorway. The possibility of on-site customs administration is not only appealing but essential for international trading companies. Our tenants include many internationally significant companies such as Kühne+Nagel, FedEx Trade Network, Agility, Panalpina, and our latest client Benteler Distribution. In addition to these, companies with domestic interest like Trilak and Airmax Cargo are also among our partners.

Q: THE BUILT-TO-SUIT CONTRACT WITH BENTELER DISTRIBUTION HUNGARY KFT WAS SIGNED IN THE FIRST DAYS OF THE YEAR, AND CONSTRUCTION BEGAN A FEW DAYS AGO. WHAT DO YOU THINK MADE BENTELER CHOOSE YOU?

A: Benteler opted for working with us after a strict tendering process. I think our success hinged on our flexibility, the outstanding location and services of the logistics park, and our professional preparedness. Construction is going according to the plans, and the building, which will offer new services to our existing partners as well as to new ones, will be handed over by the end of the year. Due to our new developments, Airport City, whose current occupancy is above 80%, will gain 6,750 square meters of warehouse and office area.

area are of key importance, while for companies in airport logistics it is the size of the industrial gates and the option for cross-docking. For logistics and road transportation companies, headroom, variability of the shelf system, and the energy indicators are particularly important.

We always try to comply with the needs of our partners and emphasize the built-to-suit solutions and the redesignability of our buildings.

Another key to our success is that we constantly monitor and evaluate leading manufacturers’ news and base our strategic decisions on them.

The location of the logistics park is very favorable for our partners. For example, the easy access to the M0 motorway could be a decisive issue from the automotive manufacturers’ point of view, as both the Mercedes factory in Kecskemét and the Audi factory in Győr can be reached quickly and easily. As for electronics manufacturers exporting and importing in large quantities, the main attracting attributes are the vicinity of the airport and the on-the-spot customs administration.

Q: THIS YEAR YOU HAVE LET OUT MORE THAN 9,000 SQUARE METERS, AND SIGNIFICANT UPGRADES HAVE ALSO BEEN IMPLEMENTED. YOUR CURRENT TENANTS SEEM TO HAVE SETTLED IN FOR THE LONG TERM. A: Indeed, the numbers prove that. The past 12 months have been the most successful period in the history of Airport City, during which we have learned to watch for signs and to handle emerging situations. Airport City will soon celebrate the fifth year of its operation, and we have only had new tenants and contract extensions, meaning that no companies have moved out. I find that our customers are satisfied, which is also proven by the fact that some of them have expanded their storage space this year. Agility Magyarország Kft moved in last December and has already added another 700 square meters to its space. Trilak, with whom we intend to form an extensive long-term cooperation, has been present in the park since 2010, continuously expanding its floorspace.

Q: WHAT ENSURES LONG-TERM SUCCESS FOR YOUR COMPANY?

A: Location is very important of course, but I think our main attributes are our flexibility and very thorough costumer service. We are trying to create a rich portfolio. Our tenants include leading logistics companies, industrial manufacturers, and suppliers of trading companies.

With the growth and development of large multinational businesses, their suppliers’ turnover increases as well, which is also to our benefit.

The Airport City logistics park is continuously expanding despite the unfavorable economic environment. Since its opening in 2008, it has been providing storage and office space to logistics, trading, and manufacturing companies for whom fast access to the airport, motorways, and the inner city, the on-the-spot customs services, the decades of international experience in development, and the high level of services are of great importance. Airport City, currently offering 3400 square meters of immediately available free space, is the most active development in the region and is also a leading market player with regard to the diversity of its costumers.

The owner of the park, ABLON Group, is a significant player in the property development market in Central Eastern Europe. The corporation, publicly listed on the London Exchange, is also active in the Czech Republic, Poland, and Romania besides Hungary. Amongst its references are the Gateway Office Park, the M3 Business Center, the Business Center 99 and Business Center 30 office buildings, the Europeum shopping center, the four-star Courtyard by Marriott Budapest City Center hotel, Buy-Way Dunakeszi, and other office and residential buildings.

Q: BESIDES LOGISTIC AND TRANSPORTATION COMPANIES, YOUR CLIENTS ALSO INCLUDE TRADING AND INDUSTRIAL FIRMS. ARE THERE ANY DIFFERENCES IN WAREHOUSING NEEDS BETWEEN THESE TWO GROUPS OF COMPANIES?

A: There certainly are. For industrial tenants, the flexibility of the industrial area, the location of the warehouses, and the size of the manipulative

www.ablon-group.com

18 2 BusinessSpecialReport BBJ

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Budapest Business Journal | July 27 – Aug 09

MAL - the afterlife of In October 2010, the walls of a red sludge reservoir belonging to aluminum maker MAL broke, releasing a wave of toxic mud to sweep through the area, killing ten people in Hungary’s worst man-made ecological disaster. The case not only raised questions of criminal responsibility, but also resulted in noteworthy legal solutions regarding the company’s management and its future. What has happened to MAL since the catastrophe?

BBJ ÁGNES VINKOVITS

Toxic red sludge broke through a reservoir wall of the aluminum company MAL near the west Hungarian town of Ajka on October 4, 2010, killing ten people as it flooded the towns of Devecser, Kolontár, and Somlóvásárhely, as well as huge areas of agricultural land. The ecological disaster immediately grabbed the attention of the international press, which initially attempted to assess its longterm effects on nature and later followed up on the legal developments of the case.

The sludge is a by-product of the early stage of alumina production, a mix of metal oxides, mainly iron, which gives its red color. Strongly alkaline, the material irritates the skin. While some studies have linked the inhalation of titanium dioxide and silicon dioxide dust to cancer in animals, it has not been proven in humans. However, if the material, reaches farmlands, it destroys crops, but fortunately it can be quite quickly be neutralized given rain and slightly acidic substances in soil.

Still, to prevent further catastrophes, the govern-

ment and its institutions reacted immediately. Disaster crews built an emergency dam to protect the village of Kolontár, in case the weakened wall of the damaged reservoir collapsed further. Prime Minister Viktor Orbán himself visited the disaster area and promised to rebuild the destroyed houses as soon as possible.

He kept his word. “We were in despair. What would we do without our house? We are old,” a woman in Kolontár said a year after the disaster, sitting in her newly built home. Their street is now full of similar buildings, all given to people affected by the events nine months after the disaster. “Now we feel that this is our home,” she added. “Now some people in the town envy our new house, but they were not envious when we had to spend hours standing in the sludge and praying,” the woman’s husband adds.

The restoration process was an obvious success for the government, as it acted quickly and effectively to rebuild the towns according to the local needs; the legal aftermath of the disaster has proved somewhat more controversial elements.

As part of its immediate reaction to the catastrophe, the state took control of MAL on October 12, 2010.

As Prime Minister Viktor Orbán told Parliament on October 11, damages must be paid to those affected by the spill, jobs at the plant must be saved, those responsible must be held accountable, and further risks at the company must be identified. “We need to bring the company responsible for the red sludge spill under state control, and its assets under state closure, until all of these four tasks are taken care of,” he said in explaining the decision.

Orbán even ventured to suggest who the responsible parties might be: “In light of what happened, we have good reason to believe that there were people who were aware of the dangerously weakened state of the walls of the reservoirs, but driven by their private interests, they believed they were not worth repairing

and hoped that trouble could be avoided.”

CONTROL AND FINE The law enabling the government to practically nationalize MAL for an unknown period of time was criticized by legal experts, who expected it to be thrown back by the Constitutional Court (AB) for creating the possibility for the state to take control over companies with a retroactive validation in order to “act effectively in avoiding disasters or reduce their negative effects”. It also raised eyebrows that the regulation was built in to a law about national defense, even though the case has little to do with the Defense Ministry’s competencies.

However, the law was finally

passed without problems and was not questioned by the AB. It should also be noted that the company managed to keep its market position and MAL’s 1,100 workers also keep their jobs.

Although the company was under state control, meaning, for example, that the state supervisors’ approval was required for any money transfers from MAL’s bank account, the regular heads of the company kept their roles in drawing up business strategies, and managing director Zoltán Bakonyi kept his role as the main decision-maker at the company. Moreover, as an insider told the Budapest Business Journal, the situation at that time had several benefits, and Bakonyi “blessed his star for having

the state involved” as several crucial processes such as building permit applications, which were required for the development of the reservoirs and would normally take two months, were very much sped up. If Bakonyi wrote down in the evening what permission he needed, he had it by the morning, our source said.

Finally, MAL implemented the more accepted and safer technology of dry storage of red mud. As a result, in June 2011 the state control came to an end on grounds that “the region was no longer threatened by significant ecological risks, and MAL has successfully undergone a technological overhaul without losing its market positions.”

Meanwhile, the Mid-Transdanubian Inspectorates for

Environment, Nature and Water levied a HUF 135 billion fine on MAL for the catastrophe. The company appealed the amount, saying that it is not in proportion to the caused damage.

The inspectorate’s justification was that the breach of the dam allowed 1.8 million cubic meters of red sludge to flood the three towns, while the so-called red sludge report, initiated by green-liberal opposition party LMP and conducted by Greenpeace, says that the real amount was around 1 million cubic meters. This opinion is also supported by data published on a website the Interior Ministry dedicated to the disaster, which says that around 330,000 cubic meters of hazardous waste was carried

2 BusinessSpecialReport 19

BBJ

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Budapest Business Journal | July 27 – Aug 09

a disaster away from the communities affected and another 787,000 from the outlying areas. As such, MAL’s lawyer György Ruttner says that authorities took even the amount of rainwater into consideration when allocating the fine.

Further, as MAL had all the required permits, the walls of its reservoir met the prescribed rigidity standards, and none of the regular inspections conducted by authorities found any problems, the company says that responsibility may also lie with the authorities awarding the waste management licenses to MAL and with those who carried out the inspections; however, only MAL’s responsibility was brought up during the legal process. As for the fact that the toxic red sludge was not

even labeled as hazardous waste, and so could be stored under less strict requirements, state secretary for environmental issues Zoltán Illés blamed the European Union, saying that Hungary had considered red sludge as hazardous waste before 2004 but changed the regulation when it joined the EU. MAL head Bakonyi himself also said on the day following the disaster that red mud might irritate the skin but is not toxic, and “it can be properly cleaned off by a strong wash with a hose”, an opinion shared by experts worldwide.

If MAL loses the appeal and is eventually obliged to pay the entire fine, it will definitely bankrupt the company.

Even though MAL covers 5% of the world’s aluminum mar-

ket, and its pre-crisis revenues were above HUF 50 billion in 2007 and more than HUF 28 billion even in 2009, paying HUF 135 billion would be impossible for a company that, according to auditor KPMG, is currently valued at around HUF 20 billion.

However, it seems that the government could offer MAL another option.

According to a law amendment, introduced by an MP of the co-governing KDNP party and passed by Parliament in December 2011, the state has the right to gain ownership of companies that cannot pay environmental fines imposed on them. This opened the door for the partial or full nationalization of MAL or, indeed, any other company getting into similar trouble in the future.

DOUBTS ON THE RISE Perhaps inevitably, several conspiracy theories have emerged regarding the case.

All experts and insiders the BBJ talked to about the issue mentioned that “there might be some further interests in the background”.

Although parliamentary party Jobbik enjoys the support of 14% of voters, it is labeled as anti-democratic, and the party’s statements rarely get good coverage in the Hungarian press unless they touch on racial issues in a scandalous way. The suggestion last September

by Jobbik MP Lajos Kepli, speaking as co-chairman of the parliamentary committee investigating the disaster, that it was possible that the dam broke as a result of an intentional explosion, went

largely unreported. Kepli’s words were based on the expert opinion of a material physicist, who found that a strong hit was needed to break the dam, while the committee could exclude the possibility that the impact in question was caused by strong waves across the top of the reservoir. MAL’s explanation about the ground breaking due to the bad location of the reservoir and also to heavy rains before the disaster was found to be baseless.

LOCKED UP As ten people died in the red sludge flood and at least 200 were injured, the case might have serious criminal consequences as well. The prosecutor of Veszprém County pressed charges against 15 suspects, including Bakonyi,

in connection with the disaster. The indictment says that MAL’s leaders have committed several errors and, most importantly, failed to report that their measuring devices indicated some irregularities the day before the dam broke.

The devices even sent emergency signals an hour and a half before the disaster, which would have been enough time to evacuate the area.

However, the final report made by the parliamentary investigation committee shows that the body did not find anything suggesting that the disaster had detectable forewarning signs. Also, both the police and the directorate for disaster management confuted this theory.

The trial starts this September and is expected to take at least a year. ■

20 2 BusinessPartnerWatch BBJ

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Budapest Business Journal | July 27 – Aug 09

Chemical manufacturing companies COMPANY WEBSITE

1

MOL HUNGARIAN OIL AND GAS INDUSTRY NYRT

TOTAL NET REVENUE (HUF MLN) 2011

PROPORTION OF EXPORTS IN 2011 NET REVENUE (%)

ACTIVITIES

MAIN PRODUCTS

2,440,248

»

Fuels, lubricants, energy products, bitumen, car care products

»

416,308

»

»

257,764

75

172,755

YEAR ESTABLISHED

RANK

Ranked by total net revenue in 2011

OWNERSHIP (%) HUNGARIAN NON-HUNGARIAN

TOP LOCAL EXECUTIVE CFO MARKETING DIRECTOR

ADDRESS PHONE FAX EMAIL

1991

» »

Zsolt Hernádi József Simola –

1117 Budapest, Október huszonharmadika utca 18.

(1) 209-0000 (1) 464-1405 molenergy@mol.hu

»

1991

MOL Nyrt (86.79), other (13.21) –

Zsolt Pethő Gyula Hodossy –

3581 Tiszaújváros, TVK-Ipartelep, TVK Irodaház 2119/3 hrsz.

(49) 522-222, (49) 521-443 (49) 521-322 tvkinfo@tvk.hu

»

MDI, TDI, PVC powders, special chemicals and materials

1991

First Chemical Holding Vagyonkezelő Kft (100) –

Jiansheng Ding – –

3700 Kazincbarcika, Bolyai tér 1.

(48) 511-211 (48) 511-511 bc@borsodchem.eu

»

Rubber tire and tube manufacturing

Michelin tires

1993

– Compagniere Financiere Michelin (100)

John Young – –

1087 Budapest, Kerepesi út 17.

(1) 459-2600 (1) 459-2651 –

118,711

»

Rubber tire and tube manufacturing

Hankook tires

2005

– Hankook Tyre Europe Holdings B.V. (100)

Lee Sang Il – –

2459 Rácalmás, Hankook tér 1.

(1) 371-2394 (1) 464-3669 –

99,198

»

Coke, public energy coal

»

1991

– DBK GmbH (100)

Róbert Gara, Péter Naszódi Józsefné Juhász –

1072 Budapest, Nyár utca 32.

(1) 413-2900 (1) 352-8564 dbk@dbk.hu

90,773

45

Fertilizer production

Fertilizer

1931

László Tibor Bige (95), Zoltán Bige (5) –

István Blazsek Eszter Fábry –

8105 Pétfürdő, Hősök tere 14.

(88) 620-100 (88) 620-102 nrt@nitrogen.hu

81,909

»

Detergents and household cleaners, cosmetics, adhesive technology

Persil, Bref, Pur, Tomi, Purex, Dixan, Silan, Perwoll, Biopon, Sidol, Sofix, Picobello, MaxSan, Loctite, Pritt, Pattex, Palette, Schwarzkopf, Syoss, Schauma, Gliss Kur, Got2be, Fa, RightGuard, Vademecum

1992

– Henkel Austria (0.01), Henkel Central Eastern Europe GmbH (99.99)

Rainer Jentys – –

1113 Budapest, Dávid Ferenc utca 6.

(1) 372-5555 (1) 372-0200 henkel.hungary@hu.henkel.com

80,167

»

Food, detergents, cosmetics, hygiene

Cif, Coccolino, Domestos, Floraszept, Amodent, AXE, BABA, Dove, Rexona, Signal, Sunsilk

1991

– Brooke Bond South India Estates Ltd (100)

Moti Keren Mark Shadrack –

1138 Budapest, Váci út 182.

(1) 465-9300 (1) 350-0100 vevoinfo@unilever.hu

75,237

»

Household cleaners, cosmetics

Aerwick, Calgon, Bactopur, Cillit, Finish, Dettol, Strepsils, Vanish

1990

SSL Hungary Trading Limited Liability Company (47.76) Central Square Holding B.V. (52.24)

Edwin Roderick Driesenaar András Takács –

1013 Budapest, Bocskai út 134–146.

(1) 250-8393, (1) 453-4600 (1) 250-8398 info@reckittbenckiser.com

51,366

92,88

»

»

1993

– PM International B.V. (100)

Zoltán Nagy Miklós Staub –

6000 Kecskemét, István Király körút 24.

(76) 515-500 (76) 414-560 info@phoenix-mecano.hu

Franco Andrea Ossola – –

1023 Budapest, Árpád fejedelem útja 26–28.

(1) 345-7131 (1) 335-0684 pe.dunastyr@polimerieuropa.com

www.mol.hu/hu

2

3

4

5

6

7

8

TVK NYRT www.tvk.hu

BORSODCHEM ZRT www.borsodchem-hu.com

MICHELIN HUNGARY KFT www.michelin.hu

HANKOOK TIRE HUNGARY www.hankooktire-eu.com/hu

DONAU BRENNSTOFFKONTOR KFT www.dbk.hu

NITROGÉNMŰVEK ZRT www.nitrogen.hu

HENKEL HUNGARY PRODUCTION AND TRADE KFT www.henkel.hu

9

10

11

UNILEVER HUNGARY KFT www.unilever.hu

RECKITT BENCKISER KFT www.reckittbenckiser.com

PHOENIX MECANO KECSKEMÉT KFT www.phoenix-mecano.hu

DUNASTYR POLISZTIROLGYÁRTÓ ZRT 12 www.polimerieuropa.com

13

14

LINDE GAS HUNGARY ZRT www.lindegas.hu

COLUMBIAN TISZAI CARBON LTD www.birlacarbon.com

TRILAK KFT 15

www.trilak.hu

16

17

VITAFOAM HUNGARY KFT www.vitahungary.hu

CHEMARK KFT www.chemark.hu

DYNEA HUNGARY KFT 18 www.dynea.com

GENERAL-PLASTICS KFT 19 www.rejlek.at

»

Polystyrene production

Gas, electricity, fuel

1988

– Polimeri Europa Spa (96.34), Polimeri Europa Benelux S.A. (1.83), Polimeri Europa GmbH (1.83)

43,316

»

Pharmaceutical, food cooling, food freezing, production of gases and gas mixtures, water treatment

»

1992

– Linde AG (100)

György Érdi – –

9653 Répcelak, Carl von Linde út 1.

(95) 588-100 (95) 588-106 linde-gas@hu.linde-gas.com

34,898

78,57

»

Carbon black

1992

– Adityan Birla Group (100)

László Dobos Anita Kovácsné Gönczi –

3581 Tiszaújváros, TVK ltp hrsz2052.

(49) 544-000 (49) 522-003 ctc@adityabirla.com

11,463

»

Interior and exterior paints, varnishes

Héra, Lazurán, Trinát

1988

– PPG AC (7.23), PPG Europe B.V. (92.77)

Robert Mc Nicol Tamás Csernák –

1238 Budapest, Grassalkovich u. 4.

(1) 421-6100 (1) 283-0455 trilak@trilak.hu

6,688

»

Wall insulation, plastic packaging production

Foams

2003

– Vita Baltic International (100)

Tomasz Roland Stachura – –

7030 Paks, hrsz. 8806/2.

(75) 510-128 (75) 510-129 vita@vitahungary.hu

5,824

»

»

Pesticides and insecticides

1991

Individuals (100) –

Imre Varga – –

8182 Peremarton, Gyártelep (88) 455-045 (88) 455-465 info@chemark.hu

»

Chemical and cleaning products manufacturing and import

1995

– Dynea Austria GmbH (100)

Attila Ludányi – –

3700 Kazincbarcika, Bolyai tér 1.

(48) 510-281 (48) 510-290 dyneahungary@dynea.com

1995

– LaRej Beteiligungs GmbH (100)

Andreas Lachnit – –

8000 Székesfehérvár, Holland fasor 11.

(22) 516-300 (22) 348-274 gprejlek@gprejlek.hu

46,354

4,677

4,473

»

Plastic products

»

»

2 BusinessPartnerWatch 21

BBJ

WWW.BBJ.HU

Budapest Business Journal | July 27 – Aug 09

Metal industry companies

1

2

3

COMPANY WEBSITE

ISD DUNAFERR ZRT

272,882

www.isd-dunaferr.hu

ALCOA-KÖFÉM KFT

THYSSENKRUPP FERROGLOBUS TRADE ZRT

70

5

DUTRADE ZRT www.dutrade.hu

LE BÉLIER MAGYARORSZÁG FORMAÖNTÖDE ZRT.

7

8

9

ISD KOKSZOLÓ KFT www.dunaferr.hu

ÓAM ÓZD STEELWORKS KFT www.oamkft.hu

OTTO FUCHS HUNGARY KFT www.otto-fuchs.com

FERALPI-HUNGÁRIA KFT www.feralpi.hu

MISKOLCI VASIPARI ZRT 10 www.miskolcivasiparizrt.hu

11

SALGÓTARJÁNI ACÉLGYÁR ZRT www.sac.hu

CSAVAR- ÉS HÚZOTTÁRU ZRT 12 www.ch-rt.hu

HÁMOR ZRT NR

MAL HUNGARIAN ALUMINUM NR PRODUCTION AND TRADE ZRT www.mal.hu

»= would not disclose, NR = not ranked, NA = not applicable

TOP LOCAL EXECUTIVE CFO MARKETING DIRECTOR

ADDRESS PHONE FAX EMAIL

1951

– Steelholl Limited Company » ( )

Evgeny Tankhilevich – –

2400 Dunaújváros, Vasmű tér 1–3.

(25) 584-000 (25) 584-001 dunaferr@dunaferr.hu

Béla Forgó – –

8000 Székesfehérvár, Verseci utca 1–15.

(22) 531-200 (22) 315-373 erika.sas@alcoa.com

ACTIVITIES

MAIN PRODUCTS

Hot-rolled and cold-rolled steel products

Hot rolled products, hot rolled pickled products, cold rolled products, hot dip galvanized and other coated products, profiles, Steel Service Center, rough sheets

Hot rolled products, hot rolled pickled products, cold rolled products, hot dip galvanized and other coated products, profiles, Steel Service Center, rough sheets

Aluminum rolled semi-finished products, aluminum rims for large vehicles, aluminum fasteners for aerospace industry

EU

1941/ 1993

Alcoa Európai Keréktermék Kft (15.70), Alcoa Európai Keréktermék Kft (23.61), Fairchild Fasteners Kft (0.97) Alcoa Inversiones Internacionales S.L. (75.42) – ThyssenKrupp Services AG (100)

Zoltán Petró – –

1158 Budapest, Körvasút sor 110.

(1) 414-8700 (1) 414-8744 info@ferroglobus.hu

55,648

»

Cutting, steel, light and colored metal, plastics trade, flame and plasma cutting

»

»

»

1993

43,647

»

Steel products processing

»

»

»

1996

ISD Dunaferr Zrt (90), Steel-Invest Kft (10) –

Iván Kroó Olga Ferter László Hajdu

2400 Dunaújváros, Papírgyári út 49.

(25) 586-902 (25) 586-900 dutrade@dutrade.hu

33,598

»

Foundry, aluminum smelting

»

»

»

1994

(9.90) Fonderies et Atelier du Bélier S.A. (49.60), Le Bélier S.A. (40.50)

Tibor Skobrák – –

8401 Ajka, Gyártelep –.

(88) 521-400 (88) 521-401 general@lebelier.hu

30,049

7.10

Coking

Blast coke, foundry coke, benzene, coke-owen gas

Benzene

Germany, Cechy

1992

ISD DUNAFERR Dunai Vasmű Rt. (100) –

István Orova – –

2400 Dunaújváros, Vasmű tér 1–3.

(25) 581-660 (25) 410-614 koksz@dbk.dunaferr.hu

21,893

»

Hot-rolled steel concrete, square, flat and round bars, welded reinforcing steel meshes manufacture and sale

Hot-rolled steel concrete, square, flat and round bars

Reinforcing steel

Germany, Poland, Slovakia, Romania, Croatia

1995

– Max Aicher GmbH & Co (100)

Max Aicher – –

3600 Ózd, Kovács-Hagyó Gyula út 7.

(48) 575-500 (48) 575-510 oamkft@oamkft.hu

16,578

»

Forged wheels

»

»

»

»

– Otto Fuchs Kommanditgesellschalf, Germany (100)

Zoltán Szűcs – –

2800 Tatabánya, Búzavirag utca 12.

(34) 516-500 (34) 312-578 info@otto-fuchs.com

5,800

40

Steel concrete processing

Steel concrete mesh, fiber, roll

Steel concrete mesh

Slovakia, Croatia

1990

– Feralpi Stahlhandel GmbH (100)

Csaba Koós – –

1211 Budapest, Terelő út 10.

(1) 427-0877 (1) 427-0878 feralpi@feralpi.hu

2,586

»

Metal and steel structures

»

»

»

2000

» »

Ferenc Soós – –

3527 Miskolc, Vitéz utca 7.

(46) 346-433 (46) 346-423 info@mvazrt.hu

1,748

21.79

Cold drawing of wire

Drawn steel products, cold-rolled flat steel, welded pipes

Cold-rolled steel strip, cut, drawn wire, welded pipes

Germany, Poland, Romania

1993

Csavar- és Húzottáru Zrt (92.31), Individuals (7.69) –

Zsolt Szalai – –

3101 Salgótarján, Borbély Lajos utca 2.

(32) 416-466 (32) 310-410 acel@sac.hu

Cold drawing of bars

Drawn, peeled, polishedsteel

Drawn, peeled, polishedsteel

Germany, Romania

1990

Individuals (61.50), Treasury shares (38.50) –

Zsuzsanna Szalai – –

3571 Alsózsolca, Gyár út 3.

(46) 406-000 (46) 406-946 titkar@ch-rt.hu

»

Forging, machining, heat-treating

Rolled rings, forged disks, forged bushes, forged round and square bars, forged rings, forged shafts

»

Sweden, Slovakia, Germany, the Netherlands, Austria, Denmark, Italy

1989

Brinvest Zrt (81) Edelstahl Rosswegag GmbH (19)

Ottó Brindza, Ádám Brindza István Grafjódi –

3540 Miskolc, Vasgyári utca 43.

(46) 370-000 (46) 379-199 info@hamorzrt.hu

»

Aluminum foundry, Hydrate and aluminum products

2000

ALUG Kft (40), FeedBack 2000 Kft (30), KP Zeusz Kft (30) –

Zoltán Bakonyi Géza Gulya –

1012 Budapest, Logodi utca 34/B (1) 309-4200 (1) 309-4211 mal@mal.hu

1,660

»

hamorzrt.hu

OWNERSHIP (%) HUNGARIAN NON-HUNGARIAN

»

www.lebelier.com

6

Germany, Poland, Cechy, Slovakia, Austria, Italy, Romania, etc.

YEAR ESTABLISHED

Aluminum castings, semifinished rolled products (coils, sheets, disks, tapes, brazing)

www.ferroglobus.hu

4

MAIN EXPORT DESTINATIONS

MAIN EXPORT PRODUCTS

93.98

160,282

www.alcoa.com

PROPORTION OF EXPORTS IN 2011 NET REVENUE (%)

TOTAL NET REVENUE (HUF MLN) 2011

RANK

Ranked by total net revenue in 2011

»

1.92

»

»

»

This list was compiled from responses to questionnaires received by July 25, 2012 and publicly available data. To the best of the Budapest Business Journal’s knowledge, the information is accurate as of press time. While every effort is made to ensure accuracy and thoroughness, omissions and typographical errors may occur. Additions or corrections to the list should be sent on letterhead to the research department, Budapest Business Journal, 1075 Budapest, Madách Imre út 13–14., or faxed to (1) 398-0345.

The research department can be contacted at research@bbj.hu

3 Socialite

BBJ

WHO'S NEWS

Do you know someone on the move?

Send information to research@bbj.hu

As of July 2012, Bíró heads the fraud investigation and dispute services department as partner at Ernst & Young. He started his career as a corporate auditor. Before joining Ernst & Young in 2007, he worked for U.S. pharmaceutical company BristolMyers Squibb. He had also worked in the U.S. and Germany.

Insurance company UNION launched its customized business solutions services in July and named former broker director Pintér as head of the new directorate. Pintér joined UNION in 2008 as sales project manager. He also worked at Uniqua and Garancia Biztosító, but started his career at former national airline Malév in 1989. He received his first degree in foreign trade in 1988, and then completed two postgraduate courses at the Budapest University of Economics and at the Budapest University of Technology.

Name Ferenc Bíró Current company/position Ernst & Young/partner, head of fraud investigation and dispute services

Name Gábor Balázs Current company/position PwC Hungary/assurance service line partner

Name Zsolt Égi Current company/position McDonald’s Magyarország/ chief operations officer

Balázs was named assurance service line partner as of July 1. He joined PwC after graduation, and gained international experience working in the Central IFRS Group of PwC London for two years from September 2004, where he assisted several major clients with transitioning to IFRS and worked on complex IFRS technical issues. In recent years, he has served as PwC Hungary’s IFRS Group leader and has played an active role in setting up PwC’s Academy training center in the country.

Égi, chief operations officer of McDonald’s Magyarország, has received the company’s President Award at the annual ceremony of McDonald’s Corporation in Chicago. Égi is the fourth Hungarian McDonald’s employee to be so honored since the award was launched 40 years ago. Égi joined McDonald’s in 2000, starting as deputy restaurant manager at the Régiposta venue of the fast food chain. He was promoted to chief operations officer in November 2010.

Name Csaba Pintér Current company/position UNION Biztosító/head of customized business solutions

Name Balázs Mészáros Current company/position PwC Hungary/assurance service line partner

Name György Rábai Current company/position BDO Magyarország Hotel és Ingatlan Szolgáltató Kft/ managing partner

Mészáros has also been named a new assurance service line partner at PwC Hungary. He has worked at PwC for 16 years, spending two years in PwC’s San Jose office, where he provided audit services to technology companies, and one year at PwC’s Moscow office as assurance leader for CEE. There he gained experience with companies operating mainly in the energy, retail and consumer goods and telecommunications sectors.

Rábai heads the new real estate advisory services of BDO as managing partner. He has nearly two decades of experience in the property industry, and had held several leading positions at consulting companies during this period. Between 1994 and 2002 he was with American Appraisal Magyarország, then joined Auchan Magyarország where he worked as expansion manager until 2004.

He also spent eight years with KPMG Magyarország.

Name Gergely Dányádi Current company/position UNION Biztosító/ broker director

Name Tamás Bernáth Current company/position PwC Hungary/partner, head of the financial advisory practice

Before joining the insurance company, Dányádi was vice president at Marsh Kft, where he spent nearly eight years, first as office manager, then in several sales positions, and finally assistant vice president, and then vice president.

He graduated from the College of Trade, Catering and Tourism and currently studies law.

From July 1, Bernáth leads PwC Hungary’s financial advisory practice as partner. Bernáth has worked in this sector for over a decade: he was a consultant at McKinsey & Company, then continued his career at Erste Bank, and later became managing partner of Scale Consulting, a regional firm. He and his team joined PwC Hungary at the end of 2010, when it acquired Scale.

Langsteiner has more than 20 years of experience in marketing.

Before joining Invitel, she was marketing director of national airline Malév Zrt. Before that, she was with Magyar Telekom, where she worked as retail marketing director for T-Mobile and T-Home.

Name Marianne Langsteiner Current company/position Invitel/head of product development

SEPT 11

SEPT 15

SEPT 17

SEPT 27

AmCham Career School with Andrea Juhos, Managing Partner, Lee Hecht Harrison, Hungary LOCATION AmCham Conference Room, 1051 Budapest, Szent István tér 11. 6th floor TIME 6:30 – 8 p.m.

FEE AmCham members in good standing: HUF 30,000 + VAT/ person; non-members: HUF 45,000 + VAT/person ORGANIZER American Chamber of Commerce in Hungary CONTACT László Metzing, laszlo.metzing@amcham.hu, +36 1 428-2082

AmCham Family Sports Day and Annual Soccer Tournament LOCATION GLOBALL Football Park and Sporthotel, 2089 Telki, Szajkó u. 39 FEE Registration required ORGANIZER American Chamber of Commerce in Hungary CONTACT Ildikó Takács, ildiko.takacs-berka@amcham.hu

AmCham Communications School with Gergely Mikola, Director of Corporate and Regulatory Affairs, British American Tobacco LOCATION AmCham Conference Room, 1051 Budapest, Szent István tér 11. 6th floor TIME 6:30 – 8 p.m.

FEE AmCham members in good standings: HUF 30,000 + VAT/person; non-members: HUF 45,000 + VAT/person ORGANIZER American Chamber of Commerce in Hungary CONTACT László Metzing, laszlo.metzing@amcham.hu, +36 1 428-2082

DUIHK Jour Fixe LOCATION Manna Lounge restaurant, 1013 Budapest, Palota út 17 TIME 6 – 10:30 p.m.

ORGANIZER German-Hungarian Chamber of Commerce and Industry CONTACT: Marietta Németh; nemeth@ahkungarn.hu

WWW.BBJ.HU

23

Budapest Business Journal | July 27 – Aug 09

The Happiness Advantage by Shawn Achor Traditional psychology tells us that success makes us happy. But this is not the case. The Happiness Advantage explains why and reveals the steps we can take to become happier and more successful at work and at home.

Most people want to be successful in life. And, of course, everyone wants to be happy. When it comes to the pursuit of success and happiness, most people assume that if you work hard, you will become successful, and once you become successful, you will be happy. The only problem is that a decade of cutting-edge research has proven that this formula is backwards. Success does not beget happiness.

Shawn Achor is a lecturer at Harvard University, where he has studied with pioneers in the field of positive psychology. He is the co-designer of Harvard’s “Happiness” course – one of the most popular courses in Harvard history.

He is also the founder and CEO of Aspirant, a research and consulting firm that uses positive psychology to enhance individual achievement and cultivate a more productive workplace. Based on his work with dozens of Fortune 500 companies throughout the world, as well as on the largest study ever conducted on happiness and human potential, Achor shows us that in a world of increasing workloads, stress, and negativity, we can become more positive in order to gain a competitive edge.

If success really did cause happiness, argues Achor,

then everyone who has ever received a promotion or accomplished a goal should be happy. “But with each victory, our goalposts of success keep getting pushed further and further out, so that happiness gets pushed over the horizon,” he explains.

“Waiting to be happy limits our brain’s potential for success, whereas cultivating positive brains makes us more motivated, efficient, resilient, creative, and productive, which drives performance upward.”

The Happiness Advantage shares seven core principles of positive psychology that every one of us can use to improve our performance and build our careers.

It shows us how to retrain our brain to see patterns of possibility rather than negativity; how to find a mental path that, in times of stress, leads up rather than down; how to replace bad habits with good

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ones; and how to invest in friends, peers, and family – our “social support network”.

However, Achor stresses that this is not a book about “positive thinking”. Wishing away problems or pretending that they do not exist are not useful strategies. Instead, he asks us to be realistic about the present while helping us to maximize our potential in the future.

With clear explanations and clever anecdotes, The Happiness Advantage not only reveals how we can get ahead at work but also helps us maintain a more positive mindset in all aspects of our lives.

The Happiness Advantage: The Seven Principles of Positive Psychology that Fuel Success and Performance at Work by Shawn Achor Virgin Books ISBN 9780753539477 Available to order through www.hungaropress.hu