Budapest Business Journal 21/12 by Business Publishing Services Kft.

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MANAGEMENT HEALTH JUNE 14, 2013 – JUNE 27, 2013

VOL. 21. NUMBER 12

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HOLDING WATER 891cm

the highest water-level ever measured on the Danube in Budapest

Hungary faced the biggest Danube flooding to date and held its ground against the record amount of water that flowed through the country’s central artery. The full damage tally hasn’t been taken yet, but the authorities – and a legion of volunteers – made sure it won’t be as bad as it could have been. 03

BUSINESS

Summer festivities about to begin Festival organizers are hoping to see a whole year’s preparation pay off in what promises to be yet another successful summer season of music, fun and treats. 11

SPECIAL REPORT

Off to the doctor A planned new provision in the healthcare system would get Hungarians to take better care of their health; it is unclear whether the carrot or the stick is the better method, or even if either would work. The profession applauds the idea nonethless. 14

BUSINESS

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SUBSCRIPTIONS

THE EDITOR SAYS

Call +36 1 398-0344, or email circulation@bbj.hu BUDAPEST BUSINESS JOURNAL 1 year HUF 27,500+VAT 6 months HUF 13,750+VAT 3 months HUF 6,875+VAT Newsletters HUNGARY A.M., ENERGY TODAY, REGIONAL TODAY 1 year HUF 179,000+VAT 6 months HUF 104,900+VAT 3 months HUF 58,900+VAT BOOK OF LISTS 2012-2013

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FINANCIAL WEDDING The government is opening a can of worms that it surely expects will spark more international criticism of its poli− cies when it plans to merge the central bank and the finan− cial watchdog. The idea is anything but new. It first arose in 2011 as another chapter in the Orbán government’s unwavering efforts to make the National Bank of Hungary more compliant and supportive of central policies. At the time, the new model would have demoted central bank governor András Simor to a deputy in the newly formed giant regulatory institution, essentially ousting him from his position by reshuffling the playing field. The European Central Bank firmly objected to the measure. It saw the revised legislation, especially how it would have handled Simor, as a clear violation of the central bank’s insti− tutional independence. The governing Fidesz party nonethe− less went ahead and passed the law. As a result, delegates from the European Union and the International Monetary Fund, who were conducting informal talks in Budapest at the time after the Economy Ministry’s surprise application for a credit line, cut off negotiations and left Hungary early. After markets reopened from the holidays, the forint embarked on a calamitous−looking slide against the euro,

reaching historic lows of 324, which compelled the govern− ment to backpedal regarding the central bank to avoid the total collapse of the economy. The ECB said that it has also stared evaluating the resur− faced version of the plan. It is difficult to speculate what the criteria of its evalua− tion will be. Earlier it said that a concentrated financial regu− latory institution would suit the Hungarian financial system and only objected because the merger was clearly aimed at Simor, who was also the regular target of political attacks, and government rhetoric was frequently hostile towards the MNB management. Now, with former economy minister György Matolcsy in charge at the central bank, not to mention a Monetary Policy Council exclusively comprising Fidesz−delegated members, the MNB is already highly cooperative not only in monetary policy, but also through taking action to support growth. The merger would mean that the entirety of the Hungar− ian financial sector would be under Matolcsy’s supervision for his six−year term. The ECB will have to decide which one of its positions to stick to in the matter. Either way, there is cur− rently nothing in the way of international pressure as there was in 2012 that could stop the move.

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THE MAN IN CHARGE Hungary struggled through the biggest Danube flood in recorded history and Prime Minister Viktor Orbán said ‘surf’s up!’ From the very start of the levels starting to rise, the premier was wherever there was more water than comfortable and used all means and channels to show the public that he was in charge of every levy that needed another helping hand and, more importantly, that he was in charge of the situation in general. It can be debated how helpful a career politician who has a degree in law can be when it comes to bodies of water that become unusually large, but judging from the footage, his leadership was con− vincing not only to those on duty, but also those observing. His political oppo− nents were quick to accuse him of showboating, trying to play the ‘great leader’ while actually achieving nothing but obstruct− ing those who were busy trying to get the sandbags into place. He was, of course, accused of using the water and

the dams as props for his own political purposes through the intense coverage his close staff produced of his tra− vails through social media. While the amount of photos and videos that poured onto his profile verged on spam− ming, they were also a means of dispens− ing information rel− evant to the public who otherwise don’t consume news and also acted as an encouragement, not only to his loyal fol− lowers but also to those who followed the events specifi− cally because of the floods. Of course, it didn’t exactly harm his political image either that the record flooding has passed relatively painlessly, even though there is no way of knowing how much the damages total. If a prime minister’s presence played any positive role in that, either through motivating the authorities or giving encouragement to the volunteers, then by all means, he should be in attendance at every major disas− ter. Facebook can handle the extra load.

FROM THE VERY START OF THE LEVELS STARTING TO RISE, THE PREMIER WAS WHEREVER THERE WAS MORE WATER THAN COMFORTABLE

BBJ

1 News

NEWS IN BRIEF

Industrial output rises 5.3% in May

NEWS

Xetra go live scheduled for Dec 6

macroscope

HOLDING STEADY AGAINST THE FLOW Hungarian authorities and thousands of volunteers have successfully kept the flooding Danube at bay, even as the water reached historic levels. Now comes the time to assess the full extent of the damage and calculate exactly how much the repairs will cost.

STORY HIGHLIGHTS ■

Hungary successfully holds off historic Danube ﬂood ■ Cost of operation soon to be assessed

As of June 12, things are getting back to normal in Budapest. The subway is once more running on its normal sched−

other means of transport in the days ahead, and to keep track of its regularly updated map on its website that details any further obstructions. THE CLEANUP “Today is the first day we can finally say, we are winning,” Orbán said on Wednes− day, June 12. He also announced that he is appointing the head of the disaster

will be paying out €40−45 million to com− pensate for flood damage. There was no breakdown by country, apart from the fact that most damage had occurred in Austria and the Czech Republic. In comparison, the Austrian insurer paid €20 million to its cli− ents after the last great flood of 2002. The full costs of the flood defense operation are likewise not yet known, but the government has already published the available budget

“From here on the water is ours, since the flood wave has crossed the bor− der,” Prime Minister Viktor Orbán told reporters on June 7. The flash flooding that flowed through Central Europe already held the promise of breaking all historic water level records before reaching Hungary and the deluge delivered: the Danube swelled to 891 cen− timeters in the capital, compared to the previous record peak of 860. The government started preparations with intense efforts that impacted on the disaster prevention service, the military, law enforcement as well as thousands of others. The Interior Ministry told the Budapest Business Journal that police reserves provided another 6,000 people who could be deployed, not to mention stu− dents in police education and their teach− ers, both in secondary and at tertiary lev− els, who were also called to help. Most spectacularly, legions of volunteers crowded the most endangered sections of the river in Budapest, as well as other troubled parts along the river’s course, to help carry sandbags for building and raising levies and helping out in whatever way they could. DRIFTING ALONG The flood in the capital has passed its peak water level, but as the BBJ goes to print, it still presents a serious challenge fur− ther south. There remain numerous locali− ties along the banks of the river where resi− dences are built in flood plains that are hard to protect against the record flood. In Baja, the Danube is set to reach a depth of 10 meters late on June 12. “So far, we have concentrated our flood pre− vention efforts to the north of the country, which we must now shift to the south,” Orbán said on June 10. Hungary has also offered to send 1,000 sol− diers to assist in Serbia, which Defense Min− ister Csaba Hende announced Belgrade had kindly declined, for the time being.

Photo: Attila Dubniczki

GERGŐ RÁCZ

THE DISASTER PREVENTION AGENCY DISPOSES OVER MORE THAN HUF 51 BLN, PARTS OF WHICH CAN BE USED FOR REPAIRS ule, having earlier skipped Batthány tér, and the large number of roadblocks and traffic diversions that led to somewhat chaotic conditions in the days before have mostly been lifted. The Budapest transport authority BKK nonetheless advised motorists to take

prevention agency, György Bakondi, to oversee the repairs. Since the flood isn’t even over yet, there is no clear indication as to the extent of the damage caused. The Vienna Insurance group was the first to issues an estimate. It projected that its business in Central Europe

and the fact that it is ready to allocate fur− ther resources if necessary. The disaster pre− vention agency disposes over more than HUF 51 billion, parts of which can be used for repairs, local governments have ‘act of god’ earmarks totaling HUF 8 bln and the government also decided to raise this year’s disaster recovers allocation by HUF 154 bln, the Economy Ministry said. The annual bud− get also has reserves of HUF 100 bln that can be tapped into if necessary, it added. “We’ll be dealing with the post−flood situ− ation at the government’s meetings, and the available relief funds; the head of the Euro− pean Bank for Reconstruction has also sent us a letter saying we have money available. We’ll gather what we can,” Orbán said. Local insurance firms are also looking ahead to a record number of flood−related filings in the ensuing period. Insurer K&H advises clients to make certain that the prop− erty damaged by the flood isn’t disturbed until an expert can assess the situation and sum up the costs.

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NEWS FOR THESE PAGES IS TAKEN FROM THE BUDAPEST BUSINESS JOURNAL’S DAILY BRIEFING, HUNGARY A.M.

NEWS

IN BRIEF

Budapest Business Journal | June 14 – June 27

It’s unacceptable to draw false conclusions from the facts and for the European Parliament to make recommendations outside its jurisdiction Foreign Ministry state secretary Enikő Győri, on the report compiled by MEP Rui Tavares condemning Hungarian lawmaking

BKK STARTS TEST ON NEW ENTRY SYSTEM The Budapest public transport authority BKK has commenced a test−run of a new computerized payment system for the capital’s subway system. The gates were set up at the Corvin negyed station of the M3 line and will operate for two times three months, BKK said. The project marks one of the initial steps of introducing a fully electronic payment system for Budapest metro travel, which is planned to be in place and running by next year.

ECONOMY BILL INTEGRATING PSZÁF ACTIVITIES WITH MNB SUBMITTED National Economy Minister Mihály Varga has submitted a bill to Parlia− ment that would integrate the activities of financial market regulator PSzÁF with the National Bank of Hungary (MNB). The bill, if approved, would replace the existing law on the MNB. “The integration is an underlying con− dition for following and controlling system−level risks that threaten the stability of the financial system as a whole,” according to the bill’s justifica− tion. The bill would give the central bank the consumer protection and market oversight functions of PSzÁF in addition to oversight of money, capital and insurance markets. The bill would make the Financial Stability Council – a body comprising the finance minis− ter, the central bank governor and the head of the financial market regulator that started operating in 2010, under the previous government – part of the MNB organization. INDUSTRIAL OUTPUT RISES 5.3% IN APRIL Output of Hungary’s industrial sector rose an unadjusted 5.3% and a work− day−adjusted 2.9% in the 12 months to April, a first reading of data published by the Central Statistics Office (KSH) shows. The unadjusted 12−month rise came after seven months of declines and workday−adjusted output rose after declining for six months. The increases came from a low base, with output dropping steeply in April 2012. Adjusted for the number of workdays and for seasonal effects, output rose 1.2% in April from March, after a 0.4%

monthly increase in the previous month. In an adjusted month−on− month comparison, output rose every month of the year. Output in the first four months was down 1.2% from a year earlier. Last year, output fell 1.7% after rising 5.6% in 2011. TRADE SURPLUS REACHES €700.5 MLN IN APRIL Hungary had a €700.5 mln trade sur− plus in April, the Central Statistics Office (KSH) said in a first reading of data. Exports rose 11.6% to €6.848 bln from the same period a year ear− lier. Imports were up 7.8% at €6.147 bln. The trade surplus amounted to €2.440 bln in January−April 2013. Exports rose 2.7% to €26.759 bln and imports were up 1.6% at €24.319 bln. KSH will publish a second reading of the data on July 2. CPI EDGES UP TO 1.8% IN MAY Hungary’s 12−month consumer price index rose to 1.8% in May from 1.7% in April, the Central Statistics Office (KSH) said. Analysts had put the head− line figure around 2%. The 12−month index was close to a record low in April, supported again by a 10% cut in house− hold gas, electricity and district heating prices mandated by the government from the start of the year. Household energy prices were down 8.5% year− on−year in May. Prices in the category that includes vehicle fuel edged down 0.7% and consumer durable prices fell 1.8%, but food prices rose 3.7% and al− cohol and tobacco prices jumped 9.8% because of excise tax increases. Service prices were up 4.1%. MNB ALLOCATES €8 MLN IN TENDERS UNDER ‘FUNDING FOR GROWTH SCHEME’ The National Bank of Hungary (MNB)

Numbers in the news

36% yr/yr increase in the number of companies wound up in March−May, according to data from Opten

63.5% of annual target is Hungary’s general government deficit in the first five months of the year, data published by the National Economy Ministry show

allocated €8 mln of 30−month interest rate swaps (CIRS) at an auction the central bank held under its ‘Fund− ing for Growth Scheme’ on June 10, information on the bank’s website reveals. The bid, submitted at the lon− gest CIRS maturity available, was at the maximum acceptable spread of 85 basis points over BUBOR. There were no bids on the other seven maturities. The tenders were the second under the scheme. The ﬁrst tenders, held on June 3, attracted no bids.

DOMESTIC MINISTRY SAYS COSTS OF FLOOD REPAIRS WELL COVERED There are ample funds available to cover the cost of any damages that the ongoing ﬂoods have caused, the Economy Ministry told political dai− ly Magyar Hírlap. The disaster pre− vention agency disposes more than HUF 51 bln, parts of which can be used for repairs, local governments have ‘act of god’ earmarks totaling HUF 8 bln and the government also decided to raise this year’s disaster recovery allocation by HUF 154 bln, the ministry said. The annual budget also has reserves of HUF 100 bln, which can be tapped into if necessary, it added. FEW THOUSAND CHINESE SEEN APPLYING FOR ‘PERMANENT RESIDENCY BONDS’ A few thousand Chinese investors could request an accelerated ap− plication procedure for permanent residency in Hungary that involves the purchase of at least €250,000 in special ﬁve−year government bonds through an agent, Hungary State Special Debt Fund (HSSDF)

CEO Liang Wang said. HSSDF, reg− istered in the Cayman Islands, is one of four agents mandated by the Hungarian parliament’s economic and IT committee to buy the special ‘Permanent Residency Hungarian State Bonds’ and to issue and sell, in turn, potential investors their own papers. The mandate gives the agents exclusive rights for the investors of speciﬁc countries. HSS− DF has a mandate for Chinese and Vietnamese investors. The fund will operate for eight years, Wang said. BUDAPEST ASSUMES OWNERSHIP OF MARGITSZIGET Parliament has passed a bill submitted by Justice Minister Tibor Navracsics that transfers ownership rights of Mar− gitsziget to the Budapest municipality from the 13th district. Navracsics said the island is of key touristic impor− tance and the necessary investments and developments on the site can bet− ter be realized and monitored with the city council in charge. The law takes effect of June 30. IAEA SAYS NUCLEAR SECURITY PRACTICES HAVE IMPROVED IN HUNGARY A team of International Atomic Ener− gy Agency specialists has concluded at the end of a two−week mission in Hungary that nuclear security has improved signiﬁcantly in the coun− try over recent years, the IAEA an− nounced. The team of nine specialists from Australia, France, Germany, Slo− venia, the United Kingdom, and the United States, conducted the mission at the request of Hungary’s govern− ment. The IAEA team also provided recommendations and suggestions aimed at helping Hungary further en− hance nuclear security in the country.

Photo: Zoltán Máthé / MTI

04 News

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News 05

Budapest Business Journal | June 14 – June 27

COMPANY NEWS

PUBLISHERS, BROADCASTERS AND OUTDOOR ADVERTISERS with annual revenue of more than

HUF 1 bln would pay a tax on advertisements, if the government goes ahead with plans, a draft obtained by local papers shows.

The government eyes a 25% stake in Rail Cargo Hungária (RCH), politi− cal daily Magyar Hírlap reported. RCH is owned by Austria’s Rail Cargo Austria, which acquired the Hungarian business through purchasing MÁV Cargo, the shipping arm of state rail company MÁV in 2007.

Hungary’s government has signed a strategic partnership agreement with the local unit of German engineering giant Siemens. National Economy Minister Mihály Varga and Dale A Martin, chairman-CEO of Siemens’ Hungarian subsidiary, signed the agreement. Siemens has created 400 jobs in Hungary over the past two years, bringing total headcount in the country to more than 2,400, Varga said. More than 2,400 Hungarian suppliers made deliveries worth €80.5 mln to the German-owned company, he added. Martin said the agreement outlined cooperation that supports sustainable economic growth, job creation and a bigger role for innovation. It promised to contribute to the strengthening of Hungary’s competitiveness on foreign markets and support domestic industrial production, paving the way to export markets for Hungarian SMEs and drawing Hungarians deeper into the global innovation network, he added.

Hungarian holding company Phylaxia said its shareholders have unanimously ap− proved a proposal to change the company’s name to Opimus Group at a general meeting. Opimus Group has holdings in the tourism, farm and media sectors. To date, 6.3 terawatt−hours of electricity have been traded on the Hungar− ian electricity exchange, which accounts for 36% of Hungary’s consumption. Overnight auctions have 48 registered traders while there are 29 traders on HUPX’s long−term market currently. DispoAmecor, a 60%−40% joint venture of Hungary’s Dispomedicor and Egypt’s AMECO, has inaugurated a second plant at its base near Cairo. The new plant will raise annual output of the base to 18 mln infusion sets. The investment was supported with a €5.5 mln loan from Hungary’s Eximbank. Erste Bank Hungary, the Hungarian subsidiary of the Vienna−based Erste Group, will close five loss−making branches in the interest of rationalizing the bank’s operations, Erste has announced. The bank said it would close four branches in Budapest and one branch in the city of Pécs. A HUF 71.5 bln expansion by Japanese tire maker Bridgestone at its base in Tatabánya will raise headcount by more than 500 from 350, Prime Min− ister Viktor Orbán said, speaking at a ceremony to mark the start of the ex− pansion. The state had supported the investment with a HUF 2.7 bln grant. German certification company TÜV Rheinland hopes a partnership with Hungarian peer KTI Közlekedéstudományi Intezet Nonprofit will expand its position in Hungary, managers of the two companies said. TÜV Rhein− land InterCert generates annual revenue of HUF 3.5 bln. The Hungarian unit of Swiss high precision drive maker Maxon Motor is spending HUF 1.2 bln to renovate a production hall at its base in Veszprém. The investment will be completed by year−end and create 40 jobs. The Hungarian unit of German high−quality industrial−glass company Schott AG will invest HUF 10 bln to expand its plant in Lukácsháza by the year 2016, the company told state newswire MTI. The company has already completed a machine−renovation plant in the first phase of the expansion. Kékkúti Ásványvíz, which bottles mineral water brands such as Theodora and Sanpellegrino, turned out more than 112 mln liters of product last year, up from 108 mln in 2011, the company told MTI. The company’s market share reached 12.4% in volume terms. Russia’s Rosatom has said it expects Hungarian companies to deliver at least 40% of the content of a project to expand the Paks nuclear power plant, which generates about 40% of Hungary’s electricity. Rosatom aims to bid in a tender to expand the plant.

Audi AG CEO Rupert Stadler, Hungary PM Viktor Orbán and Volkswagen Chairman Martin Winterkorn posing with an Audi S3 Limousine

Photo: Szilárd Koszticsák / MTI

GOV’T SIGNS STRATEGIC PARTNERSHIP AGREEMENT WITH SIEMENS

AUDI LAUNCHES PRODUCTION AT €900 MLN EXPANSION IN HUNGARY German carmaker Audi marked the start of production at a €900 mln plant at its base in Győr (northwestern Hungary) on June 12. Audi will make about 125,000 A3 Sedan models a year at the plant. The car will be the first Audi manufactured entirely in Hungary. Until now, local unit Audi Hungaria Motor has made engines and assembled sports cars. “Audi is at home in Hungary,” Prime Minister Viktor Orbán said in a speech at the ceremony, acknowledging the alliance between the country and the carmaker. Audi CEO Rupert Stadler said the plant in Győr was “one of the engines of Audi’s growth”. Audi Hungaria Motor managing director Thomas Faustmann said the unit had made 2,100 new hires in the past months, raising headcount at the base to almost 9,200. Including people who work for Audi Hungaria Motor’s suppliers, the plant provides a livelihood for some 15,000 people. Audi has invested €5.7 bln at the base in Gyor since it was established 20 years ago. Last year, Audi Hungaria Motor made 1.9 mln engines and assembled about 33,500 cars.

Volvo Group−owned Renault Trucks Defense and Hungarian automotive− industry company Rába have signed a declaration of intent to jointly devel− op and produce the chassis of firefighting vehicles, the National Economy Ministry told MTI. Rába is 73.2% state−owned after the government ac− quired shares in the company through a takeover of private pension fund assets and a public purchase offer in 2011. The government has signed a strategic−cooperation agreement with DEN− SO Manufacturing Hungary, the Hungarian unit of Japanese automotive− components company DENSO. It has been present in Hungary for 15 years, investing €500 mln in the country over that time. Gebrüder Weiss has signed a lease for 1,334 square meters of warehouse space and a corresponding 116sqm of office space in the VGP Industrial Park of Győr. A total of 26% of waterworks and 40% of sewage companies operating in Hungary are currently sustaining financial losses, which are likely to grow as a result of the government’s 10% utility−fee cut to kick in the summer, according to company−information compiler Opten.

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06 News

Budapest Business Journal | June 14 â&#x20AC;&#x201C; June 27

SHINZO ABE SHOOTS HIS THIRD ARROW

BIG IN JAPAN PĂŠ PĂŠter SOMOGYI S CITIBANK CIT CE CENTRAL EUROPEAN CLUSTER, IN INVESTMENT HEAD

EQUITIES

Monetary Policy Big Bang he first policy easing measures under Governor Kuroda were bold, decisive and represent a clear break from the past, according to Citi analysts. The policy board of the Bank of Japan (BoJ) indeed decided on major upgrades to Japanese Government Bonds and equity ETF purchases along with the introduction of monetary base targeting. The measures far exceeded market expectations and got the thumbs up not only from the Japanese PM but from rating agencies (Moodyâ&#x20AC;&#x2122;s and S&P), IMF President Christine Lagarde and senior Fed officials. In fact, the net annual asset purchases by the BoJ comprise nearly 15% of nominal GDP, significantly larger than any recent QE operation globally. The measures equally reflect a clear determination of the new BoJ Governor to cement his credibility with the financial markets. The fact that he established a two year time frame by which to achieve his 2% inflation target and was able to get unanimous support from his board for the measures (which was not expected), has gone a very long way in establishing his credentials. Citi analysts think this could increase investor confidence in the BoJâ&#x20AC;&#x2122;s â&#x20AC;&#x153;regime changeâ&#x20AC;?

GABRIELLA LOVAS

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he new Bank of Japan leadership has just taken over the helm. So far, they have simply repeated their previous intentions of achieving inflation and implementing additional monetary easing. Citi economists expect additional easing and an extension of the maturity of Japanese Government Bonds purchased. Citi analysts think that, over the long-term, JPY appears particularly vulnerable to a combination of higher inflation and disappointing economic outcomes. Indeed, the fiscal situation will force the BoJ to maintain low rates to prevent debt servicing from running up sharply which is likely to encourage capital outflow. Citi analysts target 105ÂĽ/$ in a sixmonthsâ&#x20AC;&#x2122; time horizon.

The Japanese economy seemed to respond well to the governmentâ&#x20AC;&#x2122;s first two rounds of economic policy measures, however, the highly anticipated growth strategy disappointed investors. Analysts expect to see continued bondâ&#x2C6;&#x2019;market volatility.

YEN OUTLOOK

Nikkei 225 Index

NOTE: ALL ARTICLES MARKED E XPERT OPINIONS ARE PAID PROMOTIONAL CONTENT FOR WHICH THE BUDAPEST BUSINESS JOURNAL DOES NOT TAKE RESPONSIBILIT Y

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and thus lead more investors to return to the Japanese market. Indeed BoJâ&#x20AC;&#x2122;s newly announced decision caused a great reaction among foreign investors. And as foreign investors could remain net buyers, Japanese equities may continue to rise. In these monetary policy circumstances, Citi analysts believe that sectors such as real estate, land transport and any of the warehousing and transport sectors that have high weightings of real estate to total assets are likely to outperform.

Source: Bloomberg

Important Disclosure Citi analystsâ&#x20AC;? refers to investment professionals within Citi Investment Research and Analysis, Citigroup Global Markets and voting members of the Global Investment Committee and Global Portfolio Committee of Citi Private Bank. This document is based on information provided by Citigroup Investment Research and Analysis, Citigroup Global Markets, Citi Private Bank and Citigroup Alternative Investments. It is provided for your information only. It is not intended as an offer or solicitation for the purchase or sale of any security. Information in this document has been prepared without taking account of the objectives, financial situation or needs of any particular investor. Accordingly, investors should, before acting on the information, consider its appropriateness, having regard to their objectives, financial situation and needs. Any decision to purchase securities mentioned herein should be made based on a review of your particular circumstances with your financial adviser. Investments referred to in this document are not recommendations of Citibank or its affiliates. Although information has been obtained from and is based upon sources that Citibank believes to be reliable, we do not guarantee its accuracy and it may be incomplete and condensed. All opinions, projections and estimates constitute the judgment of the author as of the date of publication and are subject to change without notice. Prices and availability of financial instruments also are subject to change without notice. Past performance is no guarantee of future results. Subject to the nature and contents of the document, the investments described herein are subject to fluctuations in price and/or value and investors may get back less than originally invested. Certain high-volatility investments can be subject to sudden and large falls in value that could equal the amount invested. Certain investments contained in the document may have tax implications for private customers whereby levels and basis of taxation may be subject to change. Citibank does not provide tax advice and investors should seek advice from a tax adviser. Investment products: (i) are not insured by the Federal Deposit Insurance Corporation; (ii) are not deposits or other obligations of any insured depository institution (including Citibank); and (iii) are subject to investment risks, including the possible loss of the principal amount invested.

â&#x20AC;&#x2DC;Abenomicsâ&#x20AC;&#x2122;, the economic policy of Shinzo Abe, Japanâ&#x20AC;&#x2122;s prime minister elected in December 2012, is shaking up Japanâ&#x20AC;&#x2122;s econâ&#x2C6;&#x2019; omy and stock market. The measures include massive fiscal stimulus, aggressive monâ&#x2C6;&#x2019; etary easing from the Bank of Japan (BoJ) and structural reforms. Abe, who refers to the monetary, fiscal and growth strategies as his â&#x20AC;&#x153;three arrowsâ&#x20AC;?, aims to raise growth and inflation and reverse the rise of public debt. The first of the three arrows was a monâ&#x2C6;&#x2019; etary one. In January, the BoJ published a price stability target of 2% with a view to overcoming deflation and achieving susâ&#x2C6;&#x2019; tainable growth with price stability. This was followed by announcement of a masâ&#x2C6;&#x2019; sive monetary easing in April with the aim of doubling the monetary base and the balance of the BoJâ&#x20AC;&#x2122;s holdings of longâ&#x2C6;&#x2019; term government bonds. The second arrow was shot in January, when the government decided to adopt an emergency economic package in order to avoid further economic decline and enacted a supplementary budget. In addition, it announced plans to draw up a midâ&#x2C6;&#x2019;term fisâ&#x2C6;&#x2019; cal consolidation scheme to half the primary deficitâ&#x2C6;&#x2019;toâ&#x2C6;&#x2019;GDP ratio of the central and local governments by 2015 from their 2010 level, and to achieve a surplus by 2020. The first two arrows seemed to work well, at least for investors. The most spectacular effect was a soaring stock market. Shares had rallied since midâ&#x2C6;&#x2019;November on specuâ&#x2C6;&#x2019; lation that the new governmentâ&#x20AC;&#x2122;s measures would end the era of deflation. The Nikkei 225 Stock Average rose more than 76% since November 15, 2012, when it stood at 8,830 to its peak of 15,627 on May 22. In the first quarter, GDP grew by 3.5% and the IMF projâ&#x2C6;&#x2019; ects growth of 1.6% for the year as a whole. Abeâ&#x20AC;&#x2122;s speech on the last and most imporâ&#x2C6;&#x2019; tant arrow, Japanâ&#x20AC;&#x2122;s growth strategy, delivâ&#x2C6;&#x2019; ered on June 5 disappointed investors, sending the benchmark Nikkei 225 Stock Average down 3.8% to JPY 13,015 that day. The government promised an â&#x20AC;&#x153;ambitious growth strategy that includes bold reguâ&#x2C6;&#x2019; latory reformsâ&#x20AC;?. In his speech, Abe did not offer the details investors were hoping for. In addition, the implementation risks of the strategy are considered to be high. This clearly indicates that investors want more information and they want it now. Will Abenomics work? It could be years before the outcome of the new meaâ&#x2C6;&#x2019; sures becomes clear. According to IMF

SHINZO ABEâ&#x20AC;&#x2122;S THREE ARROWS 1. BOLD MONETARY POLICY April 4: Bank of Japan announces it will buy JPY 7 trillion of government bonds a month and double the monetary base over next two years in order to achieve 2% inflation 2. FLEXIBLE FISCAL POLICY January: emergency economic package to boost real GDP by 2% Mid-term fiscal consolidation plan: reform of the tax system, such as a consumption tax increase from 5% first to 8% than to 10%, spending cuts 3. AMBITIOUS GROWTH STRATEGY Reforms in the power sector, in labor policy and in healthcare Agricultural competitiveness Joining the Trans-Pacific Partnership, a free-trade agreement managing director Christine Lagarde, monetary policy is on the right track, but it needs to be paired with a more balâ&#x2C6;&#x2019; anced fiscal policy. A strategy to bring down public debt should include comâ&#x2C6;&#x2019; mitting to the planned consumption tax increase from 5% to 10% in 2014â&#x2C6;&#x2019;15 and addressing entitlement reforms. Under structural reforms domestic services and agriculture need to be opened up. She added that Japan also needs to provide more employment opportunities for older workers and women. UBS WARNS OF â&#x20AC;&#x153;ABEGEDDONâ&#x20AC;? UBS global chief investment officer Alexâ&#x2C6;&#x2019; ander S. Friedman outlines two possible scenarios for the outcome of Abenomics. In the successful one, where increasing inflation and growth expectations would boost personal consumption and business investment, he expects more than 2% GDP growth and 2% inflation. He notes that it would represent a real transformation for Japan after average growth in the past decade of just 0.6%. In the soâ&#x2C6;&#x2019;called â&#x20AC;&#x2DC;Abegeddonâ&#x20AC;&#x2122; scenario, the BoJ monetary stimulus is successâ&#x2C6;&#x2019; ful in boosting inflation expectation, but higher growth and higher tax reveâ&#x2C6;&#x2019; nues do not accompany it. He estimates that debtâ&#x2C6;&#x2019;toâ&#x2C6;&#x2019;GDP ratio would rise above 300% from the current 225% and the 10â&#x2C6;&#x2019;year yield could approach 5%.

Source: Statement by Taro Aso, Deputy Prime Minister of Japan, April 20, 2013

EXPERT OPINION

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Budapest Business Journal | June 14 – June 27

XETRA GO LIVE SCHEDULED FOR DECEMBER 6 is launched. Average daily turnover on the BSE has been declining since 2007, when it peaked at HUF 35.6 billion. In 2012, average daily turnover was only HUF 10.2 bln, less than half of its 2010 level of HUF 22 bln. In 2013, it is expected to be unchanged, as the Hungarian bourse will experience the posi− tive impact of the new system from 2014 at the earliest. Katona also announced that the BSE’s ‘A’ and ‘B’ categories would be renamed ‘Premium’ and ‘Standard’ respectively. Fur− thermore, there are plans to introduce a sepa− rate multilateral trading facility for SMEs with less strict transparency requirements.

With the planned implementation of XETRA in Budapest on December 6, 2013, all the exchanges in the CEESEG group will operate one uniform trading system.

The Budapest Stock Exchange plans to intro− duce the Xetra trading system on its spot mar− ket on December 6, 2013. The BSE will be the fourth member of the Central and Eastern Europe Stock Exchange Group (CEESEG) to use Xetra alongside the bourses in Vienna, Ljubljana and Prague. The switch to the sys− tem, which is operated by Deutsche Börse, will open up the Hungarian capital market; some 250 participants in 18 countries and more than 4,500 authorized traders are con− nected to Xetra. Local investment service providers and investors will also have direct access to about 900,000 German and interna− tional securities via their trading screens. BSE CEO Zsolt Katona argues that the big− gest winners of the introduction of the new trading system are the listed companies on the Budapest bourse, as investors from 18 European countries will be able to directly purchase their shares. BSE shareholders approved the replacement of the existing MMTS system and the introduction of Xetra on the spot market at a general meeting in April 2012. The MMTS will continue to oper− ate on Budapest’s derivatives market. Katona stressed that the legal status of the bourse will remain unchanged after Xetra is launched. The market will continue to be operated by the BSE under the supervision of the Hun−

Photo: Adam/Flickr

GABRIELLA LOVAS

garian financial watchdog PSzÁF. The role of central clearinghouse the Keler group remains unchanged, too. The XETRA system includes several innovative features. Katona pointed out that it enables the use of new trading mod− els that are more flexible in adapting to the special needs of the market of the individ− ual security types. In addition, the BSE aims to launch a new, comprehensive mar− ket making system later, to The BSE management foresees a long− awaited surge in liquidity as the new system

MARKET CONSOLIDATION “The BSE management is aware that the intro− duction of the new system represents both a challenge and a sacrifice for local traders,” stressed Katona. The costs of the switch for brokers are estimated at roughly HUF 15−20 million. The BSE will offer various packages depending on the needs of the individual bro− ker, said Katona, adding that a relatively low− cost minimum package will be available. Local traders have always feared that as the new system gives foreign brokers unre− stricted access to the Hungarian market, domestic players will be put at a disadvan− tage. The BSE management hopes that the positive effects brought on by the expand− ing market will compensate local brokers for their efforts. It is widely believed the introduction of the new system will accelerate market consolida− tion. The biggest players have been continu− ously monitoring the market searching for strategic fits. Based on 2012 figures, the top six Hungarian brokerages, Erste, Concorde, Wood, Equilor, UniCredit and KBC, have a combined 65% share of the spot market.

BE COMPETITIVE BY BEING SUSTAINABLE While earlier it was used mostly to make a company look better, sustainability has become part of the core business strategies for many companies today, and something that can significantly contribute to growth – that is the essence of a recent seminar on corporate social responsibility, organized by the Netherlands−Hungarian Chamber of Commerce. BBJ

Sustainability should be integrated into a company’s business strategy in order to be competitive and successful, said Prof. Dr. Jan Peter Balkenende, former Prime Minister of the Netherlands, in Hungary at the invitation

of the Netherlands−Hungarian Chamber of Commerce. He mentioned Africa as a good example where international companies increasingly pay attention to the environment of the business and are in search of more sustainable business models. Balkenende is currently a partner at Ernst & Young. Guest speakers at the seminar included Inka Pieter, director of CSR and environmental strategy at KLM Royal Dutch Airlines. She talked about sustainable aviation. In 2006, Air France KLM decided to set the CSR standards in the airline industry, Pieter said. She noted that 2−3% of the global manmade CO2 emission comes from air transport today – therefore the use of biofuel is more important than ever. However, she added, there are still dilemmas about whether biofuel really is sustainable Henk de Bruin, senior vice president and global head of sustainability at Philips International spoke about how to create value through sustainability. He said that today, 47% of total revenues at Philips come from green

products. “Sustainability is a great engine for innovation,” de Bruin said. “CSR is all about dilemmas,” said Heineken’s CSR manager, Jan−Willem Vosmeer. The company’s sustainability program, entitled ‘Brewing A Better Future’, was launched in 2010, and, according to Vosmeer, sustainability is one of the company’s six strategic priorities. He also said that in order to achieve results in the field of sustainability, one should engage with stakeholders. For example, Heineken has regular dialogue with Greenpeace. “It is important to speak not only to those who are thinking with you but also with those who are not,” he noted. András Gyenes, managing director of Unilever Hungary & Adria, talked about the company’s vision: doubling the size of the business, while reducing its environmental footprint and increasing positive social impact. He mentioned that Unilever’s logistics network has reduced CO2 emissions by 15,000 tons per year.

LOGMEIN’S CUBBY WINS CTIA AWARD LogMeIn Inc., the remote access software company with Hungarian origins, has announced that its new enterprise file sync and share service, Cubby, has won the 2013 CTIA Emerging Technology (E−Tech) Award in the ‘Enterprise Solution – Mobile Cloud’ category. KRISZTIÁN KUMMER

The CTIA E−Tech Awards honor the industry’s most innovative new wireless products and services in mobile apps, consumer electronics, enterprise & vertical markets, and network. A panel of highly respected industry experts, reporters and analysts judged nearly 300 entries. An easy−to−use, secure cloud service for sharing files across devices and with other people, Cubby offers the flexibility to turn any number of PC or Mac folders into ‘cubbies’ that can be accessed from Android phones and tablets, iPads and iPhones, as well as other PCs and Macs, from virtually anywhere in the world. People can quickly share individual files or entire folders with others via a simple one−click link, or can choose to invite colleagues, clients, and business partners into their ‘cubbies’ to collaborate across shared files and projects. ‘Our goal with Cubby was to create a purpose−built sync and share product that addresses the realities of cloud app adoption in today’s bring− your−own (BYO) workplace. To win over business users, we’ve been laser−focused on Cub− by’s ease−of−use, while at the same time have provided the security, management tools, and controls IT needs to fully embrace – and even extend – use within the enterprise,” said Matt Kaplan, VP of Col− laboration Products, LogMeIn. “We’re honored that our peers at the CTIA chose to recog− nize Cubby for this unique combination,” he added.

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Climate change suspected culprit in flooding Summer festivities about to begin

BUDAPEST ANDRÁSSY AVENUE 3. WWW.ST-DUPONT.HU

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INSPIRING CREDIT MANAGERS An event to put Hungary on the Credit Management map of Europe, as well as an important platform for the expert exchange about the current status and ongoing developments in the field of European credit management. The Pan European FECMA Credit Management Congress held in Budapest in mid−May was successful from both perspectives. ZSOLT BALLA

The Federation of European Credit Man− agement Associations (FECMA) organized its first Pan−European Credit Management Conference in Budapest. The event was co−hosted by the Hungarian Credit Man− agement Association, which is considered recognition that acknowledges the profes− sional work done by Hungarian industry experts in the recent years. The conference was titled ‘European Best Practices – Inspiration for Credit Manag− ers’, and it focused on the latest trends and current developments of the credit manage− ment scene of the continent. The event was attended by some 250 industry profession− als from all over Europe, eager to discuss their recent experiences as well as their the− oretical knowledge on the subject. The high profile of the event was well in line with its venue, the Hungarian Academy of Sciences in the historic downtown of Budapest. “The Pan−European Credit Management Conference of FECMA is an event of fore− most importance, as the economies of the countries represented here unequivocally go through an extremely tough period, which results in more focus on credit man− agement, and the value it can contribute to other business areas, than ever before,” FECMA chairman Glen Bullivant was quoted as saying after the convention. “No doubt, the crisis of recent years has substantially raised the profile of credit management,” said Péter Szentirmay, the president of Hungarian Credit Man− agement Association. “Countries across

the old continent are faced with several difficulties; we all have to find the right answers to new challenges. Credit Man− agers are in the frontline, taking much more responsibility than ever. Credit Managers have direct links to customers, know all the industry players, take part in elaborating business strategies and give support to sales. The Pan European Congress is the event for discussing cur− rent issues and developments that have impact on our daily work,” he added. FOCUSING ON BEST PRACTICE The first day of the conference focused on professional best practice. Claes Jacobsson of Scania Financial Services demonstrated the impacts the financial crisis had on its credit management operations, and the solutions found to resolve the situation. Willibrord Van Leeuwen, a credit manage− ment expert at Wolters Kluwer, Nether− lands, highlighted the need to harmonize the activities of sales and risk manage− ment, when it comes to client management. The first Hungarian presenter, Dr. Erzsé− bet Antal of logistics giant Waberer’s Inter− national, explained the company’s interna− tional credit management procedures. The panel was concluded by the presentation of György Barcza of the Századvég Gazdaság− kutató think−tank, focusing on the macro− economic trends of Europe. The vivid discussion of the day’s round− table concerning the tendencies and per− spectives of European credit management featured credit managers from Donna Karan (I), Sagem Defense Securite (FR) and Sapa Group (HU). The professional program of the second day began with two presentations focusing on theories and principles: recent research was summed up by Prof. Ludo Theunissen of Ghent University, Belgium, followed by SHS Viveon’s demonstration of the build− ing of its credit management processes on a block−by−block basis. Shortly thereafter practical presentations completed the theo− ries, showcasing best practices: Maarit Sii− järvi from The Biofore Company, Finland showed real−life examples from its inter− national credit policies and KPI; Andreas Wenzel, the global credit manager of Agfa Graphics explained the organization’s IT background supporting its credit manage− ment procedures; ABB Schweiz’s Alberto

STORY HIGHLIGHTS ■

Budapest hosts European credit management conference ■ Hungarian Credit Management Association is amongst the youngest national organizations in Europe ■ Lifetime Achievement Award goes to former FECMA chairman

Bottoni highlighted the building of an inter− national organization from scratch; and finally Brian Morgan of Veolia Environ− mental Services demonstrated its new qual− ity standards, as key criteria to the devel− opment of its credit management processes. The conference program also saw the introduction of leading international ser− vice providers like AON, Atradius, Bisnode, Bureau van Dyk, Euler Hermes, Guardean, Opten, Prof. Schumann GmbH and Sun− gard, whose credit management services range from providing business informa− tion, to credit insurance, to the implemen− tation of IT systems supporting credit man− agement processes. LIFETIME ACHIEVEMENT AWARD The informal program consisted of a gala dinner, where the FECMA Lifetime Achievement Award was presented for the first time, the association honoring the

decade−long work of Oswald Royaards, ex− president of FECMA, and founder of the Dutch Credit Management Association. FECMA is a non−profit organiza− tion that was founded by Sir Roger Cork in 1986, and that now represents more than 20,000 credit management organi− zations and professionals from 15 Euro− pean countries. It aims to support and

encourage the sharing of information and best practices among its member organi− zations. The Hungarian Credit Manage− ment Association, as one of the youngest national credit management organiza− tions, was founded in 2010, intended to improve the Hungarian state of company risk−awareness, the spreading of basic risk−management principles among com− panies, and with the ultimate objective of increasing the quality of supplier credit− ing in Hungary. FECMA provides member organiza− tions with a platform of communication as well as helping the integration of the credit management functionality into cer− tain corporate hierarchies. As a FECMA member, the Hungarian Credit Man− agement Association also aims to make international know−how and industry novelties accessible to Hungarian credit management professionals.

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Budapest Business Journal | June 14 – June 27

COINS OR CHANGE? A Ponzi scheme or the beginning of a new financial order? These are the two extremes of opinion concerning bitcoins. The system, designed by an unknown developer in 2008, is gradually becoming mainstream. Think of it as the bittorrent of money, and you’re close to an understanding of what it is. ZSOLT BALLA

First things first, Mark Zuckerberg’s visit to Budapest had nothing to do with bitcoins. Although the Facebook−founder jokingly hinted that there was a tie−up, and his words triggered avid speculation in the local media, it turned out that he was staying in Hungary to get his hands on a somewhat more tradi− tional ‘Hungaricum’: a puli shepherd dog. All in all, even in the face of the inevi− table disappointment of Zuckerberg not

GETTING STARTED WITH BITCOINS Traditionally, bitcoins are generated via a procedure called ‘mining’, which basically consists of a computer program processing complex mathematical operations. Since, unlike a government-issued fiat currency, a bitcoin has no central issuing authority, the system needs to limit the amount of bitcoins. Currently around 10.5 million bitcoins are traded on the market, and the system is designed to make the mining operations more complex as the number of participating computers grows. So while mining is technically ‘money for nothing’, unsurprisingly it is an increasingly competitive area, and the entry costs of the industry is already very high. To start participating in the bitcoin frenzy, therefore, it is better to buy bitcoins for traditional money (there are stock exchanges that make this possible), or simply to start accepting bitcoins as payments for your products and services. One bitcoin currently goes for around $110, although the volatility is extremely high. Currency rates in April 2013 have seen highs of $266 and lows of $76.

attention. But the real value, I believe, is in the other perspective: bitcoin as a pay− ment network,” he says. These two understandings of the bitcoin are virtually (pun intended) independent from each other. Although as the only cur− rency to date without any physical form whatsoever, bitcoin has novelty in itself, the revolutionary part is the peer−to− peer network that enables users to transfer money without the participation of a third party, be it a bank or any other service pro− vider. Needless to say that subtracting this element from the system results in dramat− ically lowered transfer costs, and increased speed. The extent of this change, bitcoin experts agree, is so epic that it might as well mean the end of the world’s finan− cial system, as we know it. Alternatively, if they are wrong, and bitcoin−skeptics turn out to be right, the whole scheme might collapse in an instant. In a world where virtual products and services account for a two−digit part of the GDP, the importance of a standardized and integrated virtual currency cannot be over− estimated. As the first currency whose only

STORY HIGHLIGHTS ■ Bitcoins may change the face of the ﬁnancial market ■ The system provides fast and secure transactions ■ The areas of usage are practically unlimited

attending, the first Hungarian Bitcoin Meetup hosted by Colabs turned out to be a great success. Three of the five present− ers have just got back from the Bitcoin 2013 conference in San Jose, fully informed and inspired by the buzz. VALUABLE NETWORK “There are two important aspects of bit− coin, one is often over−emphasized, and the other is usually overlooked,” says Tamás Blummer, founder of Bits of Proof Zrt, a startup that aims to bridge the gap between the decentralized nature of the bitcoin world, and the requirements of an enterprise−class IT environment. “Bitcoin as a currency is very spectacular due to its highly volatile currency rate against the dollar, and it tends to grab everyone’s BITCOIN VS US DOLLAR 150 120 90 60 30 0

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BITCOIN AS A CURRENCY IS VERY SPECTACULAR DUE TO ITS HIGHLY VOLETILE CURRENCY RATE Source: bitcoincharts.com

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form is one that can be transferred over the wire, unlike gold or Hungarian forints, the bitcoin enables payments to be truly and inseparably tied to the purchased service or product. “If you have ever tried the ‘one click buy’ option on Amazon, you know how mas− sively euphemistic that name is to describe the service,” says Tamás Blummer. “You have to register yourself, then register a credit card, before that specific one click. And it is highly likely that your account will only be charged days after the transaction. With bitcoins and a digital wallet installed on your computer or smartphone, a one− click buy is, indeed, possible. The transac− tion is completed and confirmed immedi− ately, and all this in an irreversible manner. Just as with cash: once you give it away, it belongs to the recipient, and the only way to get it back is to ask him or her to give it back. No charge backs or card frauds are possible,” he explains. KNOCK, KNOCK, NEO‥. Payments are the most spectacular part of the system, but they are only the begin− ning, experts say. With the third party and the necessary – and sometimes unfounded – trust avoided (instead of trusting banks, states, and financial institutions, the only thing you have to trust in a bitcoin world is the cryptographic algorithm that is in the core of the entire system and that accounts for the validation of all transactions) some important limitations of the traditional financial world become meaningless. For one, transactions in the “traditional” world require human beings to initiate them – a limitation that is no longer nec− essary when it comes to bitcoins. It is pos− sible to design an application that auto− matically purchases everything it needs to keep running, and collects the reve− nue from its operations all by itself. Digi− tal rights management can also face dra− matic changes, as the cryptography used to secure the bitcoin transaction can also protect the product itself. Since the pro− tection is purely provided by digital data, it can be carried by practically anything from an audio file to a car key. And if you fear that this leads to a world where the machines will rise, and we all end up run− ning away from Arnold Schwarzenegger, while a Guns’n’Roses soundtrack thunders in the background, well, you might not be too far off the mark, after all.

THE LEGAL BITS Although it is often emphasized that the anonymity of the bitcoin allows it to be related to illegal businesses, pro-bitcoin experts highlight that cash has precisely the same characteristics. But, as with cash, anonymity doesn’t mean that bitcoins fall outside of the legal and tax system. Bitcoins traded for traditional money pose us with an easy case, as each bitcoin sold means ‘real’ revenue that is subject to taxation. But as the bitcoin is not currently recognized as a currency, bitcoin transactions currently count as product for product or barter transactions from a taxation point of view. “The legal environment’s reaction to this new currency will be critically important,” says Tamás Blummer, adding that since the system directly harms players in the financial sector, the usual money centers of the world, where these players are particularly strong, are unlikely to come up with pro-bitcoin regulations. “This is where Hungary has huge potential,” the expert says. “Coming up with a bitcoin-friendly regulatory system may draw in vast amounts in the form of this new currency, and may transform the country into one of the financial hotspots of the new world,” he adds.

EXPERT OPINION

CLIMATE CHANGE FOR SKEPTICS

NOTE: ALL ARTICLES MARKED E XPERT OPINIONS ARE PAID PROMOTIONAL CONTENT FOR WHICH THE BUDAPEST BUSINESS JOURNAL DOES NOT TAKE RESPONSIBILIT Y

István ZSOLDOS

Péter Simon VARGHA

Diána SZŐKE

dvocates of the scientific method never accept or refute anything with 100% certainty. While we cannot be completely sure that man ever walked on the moon or that the universe was not created 4,000 years ago, we do have very robust hypotheses on the issues. And until we come across convincing counterarguments, it’s better to accept these theories. The same holds true for climate change. We now have robust hypotheses on whether more CO2 leads to higher temperatures, whether CO2 concentration is rising, and whether all this is man-made. The scientific consensus on climate change is also reflected by the fact that it’s supported by the science academies of all developed countries. Therefore even climate change skeptics should assign just a small, maybe 1% or 5% probability to the notion that climate scientists’ views are, in fact, true, and that the consequences are real. In the case of many other hypothetical events, even such a slight chance would be shocking. Just imagine the following headlines: “Giant asteroid has 5% probability of hitting Earth” or “New virus 1% likely to exterminate 90% of humans”. Real action on climate change is deterred by many factors: economic costs, knee-jerk emotional reactions, prevalent conspiracy theories and a lack of public consensus. Also, the danger only presents itself in the longer-term, meaning that we still have the illusion of controllability. But both energy infrastructure and the global climate are systems that change only very slowly, with a great degree of inertia… so we may not have as much time as we would like to believe. Thousands of people, scientists and laymen alike, have weighed in on the arguments in favor and against climate change. Based on the evidence, we think that the scientific consensus on climate change is correct. Below we summarize the main premises of the debate: CO2 causes global warming. The greenhouse effect is a simple mechanism in physics: the atmosphere is transparent for most sunlight, whereas it is only partially transparent for infrared radiation coming from the Earth’s surface. Higher CO2 concentrations thus reduce transparency. Human activity is responsible for rising CO2 concentration. This is based on the study of carbon isotopes and the decreasing oxygen concentration. Other factors (i.e. volcanic activity, plant absorption, etc.) have net negative effects, meaning that CO2 emissions increase at roughly half the rate than if they were to come from human activity-related emissions. The climate is warming. This raises many other questions, such as measurement accuracy, uncertainty over the temperature in previous time periods, fluctuations between average temperatures from one year to the next, the different behavior of various regions, etc. But even keeping all this in mind, there is a fairly large chance than underneath all the “noise”, the main trend points to rising temperatures. Warming is mostly due to rising CO2 concentrations. The effects of CO2 on warming are easy to measure and predict. Doubling CO2 levels increases temperatures by around 1C°. However, due to climatic feedback loops, the likely overall effect (aka climate sensitivity) substantially exceeds 1C°. In general, we’re all for skepticism, but until we see more convincing counter-arguments, we suggest accepting the climate change hypothesis (at least with a small degree of confidence). The exact parameters are of course open to scientific debate, but it’s fairly difficult to question the phenomenon itself.

Budapest Business Journal | June 14 – June 27

CLIMATE CHANGE SUSPECTED CULPRIT IN FLOODING While thousands of professionals and volunteers are busy loading sandbags along the Danube, scientists continue to argue whether such epic floods as those of 2013 are the consequence of climate change. GERGŐ RÁCZ

The evidence remains inconclusive regarding the causality between climate change and floods, but it is commonly noted that the odds of extreme and sometimes downright freakish weather conditions have increased in the past years. “We have a new normal,” as Kevin Trenberth, senior scientist at the U.S. National Center for Atmospheric Research, told the Live Science journal. Since floods are definitely linked to precipitation and global warming speeds up evaporation, rain clouds become super saturated and expel substantially larger amounts of rain than normal, frequently leading to floods. Such eventualities aren’t merely theoretical in Hungary. The first quarter of 2013 brought an outstanding amount of rain at

weather office. They compared the conditions in 2000 and ran another scenario that didn’t include the green− house gas effects of the 20th century. After running the simulation thousands of times, they concluded that the odds of major floods were double or more in the model that incorporated emissions. Different researchers reached similar results. Scottish and Canadian scientists published the findings of a study in a 2011 issue of Nature magazine that focused on rain patterns between 1951 and 1999. They concluded that the most recent precipitation entailed 7% more moisture than in earlier years. SKEPTICS CALL SHENANIGANS The research results are compelling, but even so, scientists acknowledging the existence of climate change can never cite a definitive outcome. They also face opposition, from politicians as well as their peers. The Oregon Institute of Science and Medicine has over the course of a decade collected the signatures of 31,000 scientists who believe “there is no convincing scientific evi− dence that human release of carbon dioxide, methane, or other greenhouse gases is causing or will, in the foresee−

Photo: Attila Dubniczki

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an average 250 millimeters across the country, according to the records of the Hungarian Meteorological Service (OMSz); this is around 250% percent of the normal amount. MORE WATER Floods are becoming more frequent in past years. They have been all too common in the United Kingdom, as well as Asia, where China and the Philippines in particular have suffered. In Russia’s Krasnodar region, flooding in 2012 claimed 170 lives. Live Science points to a British study that has produced enticing evidence that man−induced climate change was directly linked to flooding in England and Wales in 2000. That deluge led to damage in 10,000 real estate assets and caused an estimated $2 billion in costs. The researchers simulated the events through com− puter modeling relying on weather data from the UK’s

able future, cause catastrophic heating of the Earth’s atmo− sphere and disruption of the Earth’s climate.” “Concern over ‘global warming’ is overblown and misdi− rected,” Joseph Bast, head of the conservative Heartland Foundation policy think tank wrote, adding, “We should pull the plug on this scam before it destroys billions of dol− lars of wealth and millions of jobs.” While Bast’s list of arguments dates back to 2003, they have changed little over the years, and normally raise the lack of conclusive evidence in the research. They note that modeling isn’t sufficient, that a modest degree of warming is actually beneficial to humanity, while politicians some− times even cite the Biblical flood as the counterargument. As a bottom line, the strongest argument is that taking the necessary measures against an unproven phenomenon would be a waste of billions of dollars not to mention the loss of jobs worldwide.

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2 Business

Budapest Business Journal | June 14 – June 27

SUMMER FESTIVITIES ABOUT TO BEGIN GERGŐ RÁCZ – KRISZTIÁN KUMMER

Adding up visitor numbers from the past and what organizers are expecting this year, it is reasonable to assume that the var− ious popular summer festivals will see a turnout of close to a million people in 2013. As with ever year now, the summer cal− endar is littered with festival after festi− val, incorporating the full spectrum of tastes and fancies. Hyped musical events like Balaton Sound, Volt or Sziget, their more thematic counterparts like Hegyalja, EFOTT or SzIN, all the way to the myriad cultural events like the Balatonboglár har− vest festival or the Agora Lecsó festival gas− tro bash are all under preparation. Budapest’s Sziget is set to once more be the biggest spectacle of the season. The festival is undoubtedly the most popular on an international scale. Csaba Marinka, PR and communications manager for the organizers, said that 85% of the event’s weekly passes are sold to foreigners, while Balaton Sound, also organized by the Sziget group, has already sold all of its weekly tickets for the 2013 events. Others, like the Hegyalja fest in Tokaj, are equally determined to stay appealing. The event, more focused on the domes− tic crowd, is introducing what it hopes are attractive prices and discounts to tempt prospective visitors, while also offer− ing benefits to those returning year after year, as the Budapest Business Journal learned from the event’s head organizer Béla Bukovinszky. FESTIVE CHALLENGES Some innovations work better for some than others. For instance, various festi− vals have had different rates of success with the elimination of cash payment to be substituted by a card that can be topped up. “This is the fourth year we are using the near field communications (NFC) payment system, and we can firmly declare that everyone is happy. Queues are much shorter in front of bar counters and payment is much quicker,” Sziget’s Marinka said. As Marinka explained, the costs are divided so that the organizer oversees the installation of the necessary systems and in return gets 2% of turnover of the bars and various other services. The sys− tem works since it’s easy to sell enough goods for all parties to make a cut they are happy with.

STORY HIGHLIGHTS ■

Festival organizers prepare for summer season with new attractions ■ Crammed calendar set to attract diverse groups

But what has worked for Sziget’s festival proved an annoyance in Tokaj in a trial in 2012, which is why Hegyalja is reverting to cash payments this year. “We asked our audience through a sur− vey and the overwhelming majority voted for cash over the cards. They clearly felt cash was more comfortable to pay with,” Bukovinszky said. This year, festivals face the effects of the monopolized tobacco trade system, which comes into effect on July 1. This is likely to

cause some concerns, since the law doesn’t allow retailers to set up temporary points of sale within the territory of a festival. Volt and Balaton Sound are in a reas− suring position, because, as Marinka explained, the law still allows retailers that operate at a given spot throughout the year to sell stockpiles amassed before the tobacco limitation came into effect, providing for locally available tobacco. “In the case of the Sziget, the situation is being discussed and negotiations are under way,” he added. KEEPING GIMMICKY Needless to say, every festival has to rein− vent itself each year while striving to stay familiar to returning guests. The EFOTT fest in Zánka this year prides itself in introducing a new

approach in the presented music through concerts where folk is mixed with mod− ern and popular genres. The festival also enjoys the endorsement of the Justice Ministry as a venue where it can offer var− ious opportunities to young people about future perspectives. Sziget promises the biggest novelty for its centerpiece festival in Budapest through the installation of the giant Ferris wheel cur− rently on display and open for sightseeing in downtown Budapest. Marinka also promises a spectacular closing concert along with new venues and a beach. Hegyalja is looking to make standing in line in the blazing sun waiting for entry more bearable by installing a temporary “lobby” tent along with new ways to enjoy the Tisza River circling the venue. The season is about to get under way.

Photo: István Bielik / Sziget.hu

Even in a tough economy, festival organizers are about to embark on what is promising to be another successful summer season, but that doesn’t mean they don’t have to up their game this year, just as any other, to keep the partygoers interested.

EVERY FESTIVAL HAS TO REINVENT ITSELF EACH YEAR WHILE STRIVING TO STAY FAMILIAR TO RETURNING GUESTS

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2 Business

Budapest Business Journal | June 14 – June 27

PROMOTIONAL FEATURE

NOTE: ALL ARTICLES MARKED PROMOTIONAL FE ATURES ARE PAID PROMOTIONAL CONTENT FOR WHICH THE BUDAPEST BUSINESS JOURNAL DOES NOT TAKE RESPONSIBILIT Y

CASHABLE ADVANTAGES FOR CORPORATE CUSTOMERS Raiffeisen Bank offers its corporate customers not simply products, but bespoke solutions. At the bank, groups of companies with a presence in several countries can open cash pooling accounts, while the Treasury service could benefit customers to the tune of tens of millions of forints every year. We spoke to head of business line Zoltán Kiss and department head Gábor Liener. WHAT DOES RAIFFEISEN BANK’S CASH MANAGEMENT SERVICE OFFER? Zoltán Kiss: It includes bank account management in forints and the major currencies – although there is also the option to manage an account in Chinese yuan, for example –, as well as the electronic banking channels that are indispensable today: the “Raiffeisen Expressz” software, which is compatible with most internal resource management systems, and the MultiCash system. These basic services are topped off by the most sophisticated part of the Cash Management service: the group account management service for medium-sized and large companies. This package of services, which includes automatic balance settlement, consolidated interest calculation and group coverage checking, is available in one form or another at most banks, but we, on the other hand – building on our international network – offer specific additional advantages to our customers. WHAT KIND OF ADVANTAGES? Z.K.: As one of the largest banking groups in Central and Eastern Europe, we have a presence in the same countries as our customers (including Hun-

garian multinationals). For example, if a company group has business interests in several countries, we can set up a group banking system, known as a Cross Border Zero or Target Balancing system. We pool the companies’ accounts, so that even if the account of one of the subsidiaries is overdrawn, if the account balance

ALL COMPANIES HAVE DIFFERENT NEEDS. HOW DO YOU HANDLE THIS? Z.K.: We make an effort to map out our customers’ requirements as fully as possible, so that we can offer the financial solution best suited to the specific needs of the given customer. Each of our customers has a dedicated relationship man-

managers are available from eight in the morning until eight in the evening. This is rare, as most banks can’t be reached after five in the afternoon, although there are situations in the market (especially the currency market) in which these three hours mean a great deal: possibly as much as tens of millions of forints

DEPARTMENT HEAD GÁBOR LIENER AND HEAD OF BUSINESS LINE ZOLTÁN KISS

is positive elsewhere the company group will be capable of financing itself. Funding options are also available: all of our customers – depending on annual sales revenue and subject to a risk assessment – can be granted an overdraft facility and/ or investment loan if they apply for it. Our customers also receive a 20% discount on the fee for euro transfers if they use our IntraGroup Payments service. DOES THE TREASURY SERVICE ALSO HELP WITH LIQUIDITY MANAGEMENT? Gábor Liener: Yes. We recommend that all companies with revenues or expenses in a foreign currency make use of our Treasury service, which enables them to manage the risks arising from fluctuations in the exchange rates. With the right hedging strategy, companies can avoid having the profit from their core activity wiped out or even turned into an overall loss by an unfavourable change in the exchange rate.

ager, who can be reached at virtually any time and is immediately on hand to assist with any acute problem. G.L.: We only provide our Treasury service to customers that we know in person. Although each customer is different, the needs and problems that arise are often similar, so the pool of knowledge accumulated at the bank allows us to offer a solution to any problem that a customer might have. THIS PRESUPPOSES A CLOSE RELATIONSHIP OF TRUST BETWEEN THE BANK AND ITS CUSTOMERS. G.L.: That is precisely where Raiffeisen Bank can offer more than others: we don’t offer a product, we offer tailor-made solutions. At Treasury more than 20 relationship managers, more than twice the usual number, are on hand to take the calls of customers, so the amount of time and attention devoted to each customer is higher than average. Our relationship

a year, as the markets often continue to move even after the close of business in Europe. The fee structure is transparent; customers know before each transaction how much they will pay. DOES THE BESPOKE SERVICE COME AT A HIGHER PRICE? Z.K.: We believe that today you cannot be successful through good prices alone. This is why we offer a tailor-made service at favorable prices, and pay a great deal of attention to the quality of the service. These factors, together, make for a successful business.

www.raiffeisen.hu

BBJ

3Special Report Off to the doctor

Employeesâ&#x20AC;&#x2122; health is an asset

LIST:

Private hospitals and clinics

MANAGEMENT HEALTH

18-19

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Budapest Business Journal | June 14 – June 27

OFF TO THE DOCTOR The government is taking steps to improve the often−troubling state of the Hungarian population’s overall level of health and is preparing to introduce a system of mandatory screenings. The profession appreciates the sentiment, but remains doubtful about implementation. GERGŐ RÁCZ

It is a commonly known fact that preven− tion is the best cure, as well as being the cheapest way to address a country’s over− all health situation. Similarly, it is also well known that Hungarians tend to neglect their health, which alongside the obvious grief caused by premature deaths, also damages the state and costs the economy. According to the latest figures from the Central Statistics Office, Hungary spent 8% of its gross domestic product on healthcare in 2010, largely on par with the total costs seen in the preceding years. Longevity in Hungary is definitely improving: the World Health Organi− zation’s ‘World Health Statistics 2013’ shows that life expectancy for both male and female Hungarians rose by five years between 1990 and 2011 to 71 and 78 years, respectively. Both are still lower than the Central European average, and substan− tially below Western Europe. The latest plans from the government are aimed at striking some discipline into the populace and making certain that more of them will get screened for the most com− mon diseases. AS THE DOCTOR ORDERED The plans entail for people aged 21 to 65 to have an annual cursory physical with a more thorough set of examinations on a five−yearly basis. General laboratory screenings would be conducted every five years for the 21−39 age group and every two years between ages 40 and 65. The plans also target specialist examina− tions like colon cancer screening every two years for those aged above 50, annual den− tist visits for all ages, gynecologist exams on a regularity determined by age, as well as prenatal screening. The government is also hoping the nationwide plan, which was drafted with input from professional organizations, will improve administration. “Ultimately, the goal is to link public health screening data with the database of the public health fund,” the Human Resources Ministry told the BBJ. SOCIAL IMPACT “We think the government’s idea to intro− duce a wider range of mandatory screen− ings is an excellent concept that can have a genuine impact,” said Gyula Csermely, managing director at the Rózsakert Medi− cal Center. He said the success of the initiative would largely depend on the final shape of the accompanying regulation. If the state

STORY HIGHLIGHTS ■

Government plans to introduce mandatory health screenings ■ Doctors welcome sentiment, voice doubts over implementation

decides to allocate funding then private providers, which currently receive no state funding whatsoever, could also benefit. There are still doubts about how the new system will be implemented and how the state should go about making certain that much higher numbers show up for examinations. “Incentivizing participation will be a more difficult matter. I could imagine the use of already existing practices where neglecting screenings will lead to higher overall costs,” Csermely said. Echoing Csermely’s concerns, András Kiss, sales and marketing director at Buda

Health Center said he would prefer to see a scheme that is already used in the insur− ance system that relies more on rewards than penalties. Accordingly, he would encourage the introduction of positive incentives awarded to those who actively care for their health. PROBLEMATIC INTRODUCTION This, however, likely won’t be the case according to a Budapest general practitio− ner, who voiced doubts about the measure overall. She expects that there will be penalties, as with the subsidy scheme for diabetics, where those who neglect their check−ups won’t be eligible to get state contributions in buying the highest−qual− ity medicines. She largely dismissed the concept, in part because there are still so many details left to finalize and also because

it is unclear what the new system would demand of the profession. “I tell everyone in my district that I want to see them once a year for a checkup. They probably can’t expect us to take a lasso and drag people into the doctor’s office from the street,” she added. In contrast, Kiss and Csermely both highlighted the overall positive attitude shown by the government in the mat− ter, as well as the importance for society in general, even if there are admittedly blanks that need to be filled in. “Prevention is very important, and this is a well−intentioned plan, even if it doesn’t become a reality in the very near future,” Csermely said. The ministry said the specifics will be subjected to an inclusive social debate and the finalized version of the proposal will only be made public afterwards.

ULTIMATELY, THE GOAL IS TO LINK PUBLIC HEALTH SCREENING DATA WITH THE DATABASE OF THE PUBLIC HEALTH FUND

WWW.BBJ.HU

Budapest Business Journal | June 14 – June 27

STAY FIT - BUSINESSMEN’S SPORTS No matter what you do, what kind of business you are in, if you are always either sitting in your car, behind your PC or laptop, or at meetings, lack of exercise means you will grow fat. That’s why so many businessmen are keen on practicing at least one kind of sport daily. We review the top five popular sports for busy businessmen and managers alike. GERGELY HERPAI

There are many sports that can be practiced in Budapest, but we have focused on those that are either very popular or very simple to arrange. Since getting rid of weight or simply staying in shape is one of the most important factors, we have indicated the calories burned for each sport – all numbers according to edzesterv−online.hu. BICYCLING (About 1,000−1,300 calories burned per hour at an average speed of 32 km/hour) According to the Encyclopedia Britan− nica, the first two−wheeled rider−propelled machine was invented by Baron Karl von Drais de Sauerbrun in 1817, but it took more ADVERTISEMENT

than a century to become “chic” for busi− nessmen. The real problem with cycling and work is the sweat, so you always have to have access to bathrooms before meetings. If you wear a suit, you need to transport it safely, or have one in your office ready. Another prob− lem is finding safe cycle routes: in Budapest there are only 187 km of designated bike lanes, compared to 880 km in Amsterdam, according to cycle activist group Critical Mass (www.criticalmass.hu).

running tracks in the capital are on Mar− gitsziget, but if you live far from the island, running in small forests, like Káposztás− megyer’s “Forest of Wolves” in Újpest (dis− trict four) is also quite a nice experience. You can find the best running tracks on www. futoterkep.hu. If you are more serious about running, there are several events in the capi− tal: Nike’s Budapest international half−mar− athon will be held on September 8. Registra− tion can be done via www.futapest.hu.

BOXING (700−1,000 calories/hour) “Boxing is not a sport, but a state of mind. It’s a liberating, carefree masculine game,” said Zsigmond Adler, one of the most famous of Hungarian boxers. Whatever you call it, it burns a serious amount of calories and also allows you to blow away frustration. There are several boxing clubs in Hungary, Zuglói Boxklub being one. “Boxing is a very popu− lar sport for Hungarian businessman who were not really practicing any kind of sport when younger. Besides getting rid of calories, it’s also a perfect sport to learn how to defend yourself, which is why it’s one of the favor− ites for businessmen,” Tibor Bodori, Zuglói Boxklub’s boxing coach told the Budapest Business Journal.

SQUASH (700−1,000 calories/hour) Squash may seem like a modern sport, but it older than you might think, having been invented in Harrow School out of the older game of rackets in around 1830, accord− ing to www.squashplayer.co.uk. There are six squash clubs worth visiting in Buda− pest, says www.budapestinfo.hu: Gold Cen− ter; Aktív Squash Club; Mammut Squash; Zugló Squash Club; Hotel Griff Squash; and Rózsadomb Squash Club. “About 50% of our casual squash players are businessmen”, Tünde Budai, a coach at Zugló Squash Club, told the BBJ.

RUNNING (900−1,300 calories/hour) If you are a woman, or don’t really fancy get−

ting bruises from boxing, good old running is still one of the best sports in Hungary. Of course, it can be practiced almost every− where, still, try to avoid running on concrete, as it damages the joints in your leg. The best

RUNNING UPSTAIRS (900−1,300 calories/hour) The busiest managers are all aware that one of the best and also cheapest “sports” is sim− ply skipping the elevator and running up or down the stairs.

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Budapest Business Journal | June 14 – June 27

EMPLOYEES’ HEALTH IS AN ASSET It is easier to prevent than to cure − that’s the idea behind many Hungarian company’s healthcare programs. While ‘manager screenings’ has become usual practice for many workers, the government has proposed regular health checks for everyone. KRISZTIÁN KUMMER

“Are you nervy, irritable, depressed, tired of life?” asks the Second Undertaker in one of the famous sketches from Monty Python’s Flying Circus, before winking to camera and adding, “Keep it up!” More than 40 years after the first airing of the famous show, stress and health issues related to physical inactivity are more common than ever. Once a year every employee is obliged to participate in a health check, but it’s usually nothing more than a five min− ute chit−chat with a doctor about diet and activities. And yet, while the number of fatalities linked to the most well−known causes of death, such as liver failure, fatal traffic accidents, and suicide have

decreased in the more than two decades since 1990, the number of those suffering from coronary heart disease in Hungary has doubled. CONSCIOUS PATIENTS Fortunately, a more health conscious life− style is also gaining ground, parallel to the growing factors of stress and disease, if not among the overworked employees, then at least with employers. Preventive health checks (or manager screening as Hungarians call them) are ever more com− mon in every day business practice. And a complex gender and age specific screen− ing involves not just a general check of the body, but an examination of the car− diovascular system, all the major organs and also the predisposition of risk factors. “Heart stroke, diabetes, digestive dis− eases, even cancer can be prevented, if noticed in time. We can not always pre− vent the development of a disease, but its course becomes more manageable, if we are prepared for it,” says András Kiss marketing director of Buda Health Cen− ter. “However, the most common prob− lems we meet are musculoskeletal prob− lems, vision problems, digestive and cardiovascular diseases,” he adds. While employers send the majority of patients attending regular health checks, a new, more health conscious generation

is forming, and according to the Rózsak− ert Medical Center. “Those coming on their own volition are typically in their 30s, have family and work in a lower or middle man− agement position,” says Zsuzsanna Rad− vány, marketing director at the center. “Many of them have no symptoms of a dis− ease, but visit us to check and maintain their health on a regular basis.” To find the optimal depth of an examination between the ineffectively superficial and unneces− sarily thorough, the test set of the center is based on age and knowledge of risk factors closely associated with it. HEALTH PROGRAMS Magyar Telekom provides ‘manager screening’ to all its employees in ‘leader’ positions. Based on medical recommen− dations and the patient’s own request, the basic screening could be complemented with several other examinations. The company gives a significant contribution to members of the self−help health fund Dimenzió, used by 40% of employees, communication manager Ágnes Veronika Kovács says. The examination packages are announced in advance every year and colleagues can choose the most appropri− ate for themselves. “Healthcare providers act under strict compliance with privacy rules, but we receive feedback from both providers and recipients that unexpected

test results have helped to identify and treat lesions and diseases,” Kovács added. Unilever has created a complex and wide reaching health program that focuses on prevention and personal evo− lution: participants (a healthy 70% of the workforce) receive a personalized devel− opment plan on diet, mental health and physical activity. “Focusing primar− ily on prevention, we organize appropri− ate screenings based on the risk factors for the health and age of employees, as well as training to fulfill the real needs of them,” says Beáta Vince, head of com− munications at Unilever. “As we focus pri− marily on prevention, and inspections and screenings are carried out in−house as far as possible, our lifestyle program is cost effective,” she adds. MANDATORY SCREENINGS Last month, the state secretary of health care announced there would be manda− tory health screenings. According to the amendment, a general physical examina− tion – blood pressure, weight, etc. – would be taken place yearly, while more complex tests would have to be carried out every five years. “We still don’t know if examination results carried out in private medical cen− ters will be accepted or not. If yes, demand could be raised and the market can clean up a bit. We’d like to see that,” Kiss says.

READY, STEADY, OLD! A n ever-growing life expectancy would seem to offer a silver lining for most of us. The dark side? Longevity is riddled with myriads of diseases, the result of environmental pollution and unhealthy lifestyle. The question is looming: how can any government and health system contend with the masses of future patients? The problem is universally pressing the world over, whatever the GDP. “Why live for a 100 years, you may ask,” says Dr. Mónika Solymos, cardiologist at Dr. Rose Private Hospital. “Old age

GOOD TO KNOW One out of 600 people are likely to live to 100 years, and one out of seven million live to be 110. Since British scientists discovered and mapped the sequence of longevity genes in 2010, we have been able to tell with more precision than ever who is privileged to live a Methuselah lifespan. The same research, on the other hand, revealed that people destined for long life are genetically just as prone to cardiovascular disease, diabetes or Alzheimer, but the genes responsible for longevity suppress the genes predisposing for illness. Having said that, even the lucky genes are losing a game against the bad habits of smoking, alcohol abuse, sedentary lifestyle and unhealthy diet.

is most often associated with crippling health conditions, painful diseases and gradually dwindling life comfort. As if the last decade of your life was really about death and dying. Far from it.”

A point in case is the leading cause of death in our day and age: cardiovascular diseases, heading the black statistics with a commanding 54%. Health conscious lifestyle alone could turn the tide dramatically in favor of life.

“Rapid change for the better is what we really need,” says Dr. Solymos, “because statistics are alarming: we are but a single generation away from a serious crisis that caring for the masses of inactive old people would impose on humanity. That’s the social aspect. On a personal level, how long someone lives is actually secondary to how actively one can enjoy those years. Health and vitality rules over longevity.”

For an appointment, call (+36)1-377-67-37 or go online at www.rendelo.drrose.hu Széchenyi square 7/8, 1051 Budapest

NOTE: ALL ARTICLES MARKED PARTNER CONTENTS ARE PAID PROMOTIONAL CONTENT FOR WHICH THE BUDAPEST BUSINESS JOURNAL DOES NOT TAKE RESPONSIBILITY

PROMOTION

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Budapest Business Journal | June 14 – June 27

CAN HEALTH TOURISM HELP HEAL HUNGARY’S ECONOMY? The Hungarian health industry and associated tourism services are well known for promoting appealing destinations for visitors seeking treatment and pampering at prices much lower than they could get at home. The government promises to further support any such efforts. GERGŐ RÁCZ

Before being confirmed as economy minis− ter earlier this year, Mihály Varga was already telling a parliamentary committee that tour− ism, especially health tourism, is a key area for the government. Accordingly there is ample funding currently available and the money taps are set to stay open. Varga reaffirmed what his predecessor György Matolcsy announced last October, likewise highlighting tourism and the related health services as a key component of the so−called ‘Wekerle plan’, which is aimed at boosting economic performance in the next budgetary period of the European Union between 2014 and 2020. The fundaments of the approach were drafted last summer in a study meant to facili− tate the best strategy for spending EU money in the 2014−2020 cycle and with the aim of making Hungary “the most competitive Cen− tral European country by 2020”. The document compiled by the national planning office (NTH) highlights the health and tourism industries as segments that could reduce the dominant reliance of the country’s economy on the automotive sector. The NTH study identified diversification as the key source of competitiveness and growth. RIGHT END OF THE MONEY Accordingly new developments are con− tinuing in the sector. The Espa Bio & Art Hotel in Zsámbék received HUF 90 million in funds to construct a health center and a conference hall in the town. The opera− tor hopes to increase visitor numbers by an annual 2−300 as a result. The Budapest College of Communication and Business was awarded a hefty HUF 300 million support package to allow it to par− ticipate in an international research project into health tourism. The industry itself is active in the field. The start of June saw the organization of the III. Health Conference orchestrated exactly around the theme of promoting health− related tourism. The presentations ranged from presenting unique natural features that spa visitors can enjoy all the way to the ser− vices offered by healthcare providers. MINDING THE IMAGE At the same time the government is also look− ing to push recreational tourism to avoid a

TOURISM, ESPECIALLY HEALTH TOURISM, IS A KEY AREA FOR THE GOVERNMENT single−dimension aspect in promoting Hun− gary abroad. Deputy state secretary at the Economy Ministry Viktória Horváth spoke on the subject at a session of the Balaton develop− ment council in late May. She stated the government doesn’t want a ‘hospital country’ image to develop around Hungary. Accordingly this summer more effort should be made to advocate vacations in the Balaton region, which is still popular among Germans, she said. Tourism – health and recreational – could well use some bolstering. April saw a 6.9% year−on−year drop in the occupancy rate of hotels, the latest figures from the Central Statistics Office (KSH) show. The number of foreign visitors dropped 4% on the year while domestic tourism produced a considerable 11% slide compared to the fourth month of 2012. In particular, the spa segment saw a 53% occupancy rate, which is still well short of profitability.

WWW.BBJ.HU

Budapest Business Journal | June 14 â&#x20AC;&#x201C; June 27

Private hospitals and clinics COMPANY WEBSITE

TOTAL NET REVENUE (HUF MLN) 2012

AREAS OF SPECIALITY

OTHER SERVICES

3,188

Anesthesiology, internal medicine, dermatology, diabetology, dietetic counseling, endocrinology, endoscopy, vascular surgery, dentistry, occupational health care, physiotherapy, ear-nose-throat specialist, gastroenterology, pediatrics (pediatric radiology, pediatric cardiology, pediatric dentistry, children's dermatology, pediatric allergies, child psychology), hematology, immunology, infectology, cardiology, nephrology, neurology, gynecology, oncology, osteoporosis, plastic surgery, psychiatry, psychology, rheumatology, spine surgery, opthalmology, traumatology, orthopedics, urology

Complex spine care, in-patient care, manager screening, cancer screening, alternative medicine, physiotherapy, sports medicine, research and development, international medical tourism

1,746

Occupational health, corporate health programs, GP, manager screening, patient transport, medical service, rescue, special rescue Healthcare: andrology, anesthesiology, internal medicine, dermatology, diabetology, endocrinology, vascular surgery, ear-nose-throat, occupational health care, children's medicine, cardiology, gynecology, oncology, plastic surgery, sports medicine, ophthalmology, urology, same-day surgery, image diagnostic

)Ĺ&#x192;QL[ 0HGLFDO 5HVRUW

,QWHUQDO PHGLFLQH J\QHFRORJ\ XURORJ\ GHUPDWRORJ\ paediatrics, ophthalmology, occupational medicine, radiology (X-ray, ultrasound), neurology, cardiology, gastroenterology (digestive diseases), endocrinology (hormonal illnesses), otolaryngology, pulmonology, allergology, rheumatology, orthopedics, psychiatry, sports medical advice, dietetics, physiotherapy, paediatrics, ENT, laboratory tests, diabetology, work psychology

Outpatient care, GP service, health consulting, corporate health development and prevention, screening, KRVSLWDO 9,3 FDUH vaccination campaigns, dentistry, prenatal care

722

General practice, pediatrics, gynecology, obstetrics, urology, allergology / immunology, cardiology, dermatology, dietetics, otolaryngology, endocrinology, internal medicine, neurology, oncology, occupational healthcare, ophtalmology, physical therapy, psychiatry, psychology, psychotherapy, pulmonology, radiology, traumatology, minor surgery

Laboratory, x-ray, ultrasound, 4D ultrasound, mammography, regular VFUHHQLQJV Ă&#x20AC;UVW DLG training, prenatal exercise, prenatal education, prenatal care, breastfeeding consultation, baby club, baby massage education, vaccinations, drug screening, travel clinic

638

Allergology, facial-jaw-oral surgery, audiology, internal medicine, dermatology, diabetology, dietetics, endocrinology, vascular surgery, occupational medicine, ear-nose-throat, gastroenterology, genetics, children's gastroenterology, pediatric cardiology, pediatric neurology, pediatric orthopedics, pediatric psychiatry, pediatric psychology, pediatric endocrinology, pediatric radiology, therapeutic massage, hematology-oncology, neurology, cardiology, chiropractic, conductor activity, orthopedics, plastic surgery, proctology, psychiatry, psychology, radiology, rheumatology, surgery, ophthalmology, cardiac surgery, obstetrics and gynecology, pulmonology, urology

Maternity care, embryonic medicine center, Down GLVHDVH WHVW LQ WKH Ă&#x20AC;UVW trimester, PrenaTest â&#x20AC;&#x201C; embryonic chromosome disorder test, manager screening, stroke test, same-day surgery, lab tests, vaccinations, 24-hour duty

444

Allergology, angiology, internal medicine, dermatology, diabetology, endocrinology, vascular surgery, dentistry, occupational health, orthodontics, ear-nose-throat, gastoenterology, homeopathy, implantology, cardiology, cosmetology, laboratory diagnosis, neurology, gynecology, orthopedics, plastic surgery, rheumatology, sports medicine, oral surgery, ophthalmology, prenatal care, alternative medicine, ultrasound diagnostic

Outpatient care, corporate health development and prevention, maternity care, dentistry, implantology, 3D CT, aesthetic dermatology, same-day surgery, manager screening

Occupational health, clinic thick legs, oedema discharge, CT Laser Mammography, X-ray mammography, cardiology, pediatric cardiology, angiology, gynecology, urology, ultrasound, laboratory tests, manager screening, diabetology, dermatology, VOLPPLQJ ERG\ WUHDWPHQWV ( , 6 H[DPLQDWLRQ HDU acupuncture, massage, physiotherapy, rheumatology, neurology, sleep disorder studies, ear-nose-throat, vascular surgery, immunology

Âť

Gastroenterology, internal medicine, endocrinology, diabetology, surgery, proctology, dermatology, rheumatology, eye specialist, neurology, psychology

BUDAI EGĂ&#x2030;SZSĂ&#x2030;GKĂ&#x2013;ZPONT KFT www.bhc.hu 1

)Ĺ&#x201A;1,; 0(' =57 www.fonixmed.com

MEDICOVER HEALTH CENTER ZRT www.medicover.hu

FIRSTMED-FMC KFT ZZZ Ă&#x20AC;UVWPHGFHQWHUV FRP 4

RĂ&#x201C;ZSAKERT MEDICAL CENTER / BBCS KFT www.medical-center.hu

OXYGEN MEDICAL KFT www.oxygenmedical.hu

MEDOC EGĂ&#x2030;SZSĂ&#x2030;GKĂ&#x2013;ZPONT www.medocklinika.hu

PROFESSIONAL MEDICAL KFT, GASZTROENTEROLOGIAI CENTRUM www.professional-kft.hu

[1]

Occupational medicine, physical therapy, dietetics

YEAR ESTABLISHED

RANK

Ranked by total net revenue in 2012 NO. OF FULL TIME EMPLOYEES ON MAY 1, 2013

OWNERSHIP (%) HUNGARIAN NON-HUNGARIAN

TOP LOCAL EXECUTIVE CFO MARKETING DIRECTOR

ADDRESS PHONE FAX EMAIL

248

Medikomp Kft (40), &RQĂ&#x20AC;GHQW ,QYHVW .IW (10) PrimĂĄtum FCP ,QYHVWPHQW

PĂŠter PĂĄl Varga, KornĂŠl Papik Rita Gottgeisl AndrĂĄs Kiss

1126 Budapest, 1DJ\ -HQĹ&#x192; XWFD info@bhc.hu

)XWXUPHG .IW 2SLQLRQ ,QYHVW .IW

â&#x20AC;&#x201C;

ZoltĂĄn TakĂĄcs Laura Csidei ViktĂłria OrdĂłdy

%XGDSHVW DiĂłs ĂĄrok 1â&#x20AC;&#x201C;3. (1) 488-0413 fonixmed@ fonixmed.com

141

â&#x20AC;&#x201C; ABC Medicover Holdings B.V. (100)

PĂŠter Grossmann LĂĄszlĂł Benedek â&#x20AC;&#x201C;

1037 Budapest, 0RQWHYLGHR XWFD info@medicover.hu

â&#x20AC;&#x201C; )0& +ROGLQJV ,QF (100)

Dennis Diokno Andrea VĂzvĂĄri â&#x20AC;&#x201C;

%XGDSHVW HattyĂş utca 14. (1) 224-9090 (1) 224-9014 info@ Ă&#x20AC;UVWPHGFHQWHUV FRP

Gyula Csermely (Âť), Eszter BodnĂĄr (Âť), Tibor Elekes (Âť), ,PUH %RGy Âť), Kinga JĂłkay (Âť), Orsolya Gudor (Âť), 9LOPRV %HQNĹ&#x192; Âť) â&#x20AC;&#x201C;

Gyula Csermely, Zsuzsanna Kadala Zsuzsanna Kadala AnikĂł Kiss

1026 Budapest, GĂĄbor Ă ron utca 74â&#x20AC;&#x201C;78/A info@ medical-center.hu

2008

,QGLYLGXDOV

Hammond sales LLC (70)

Katalin Putz JĂşlia Weszely Melinda Boros

1042 Budapest, Ă rpĂĄd Ăşt 47â&#x20AC;&#x201C;49. (1) 799-7986, (1) 799-7989 info@ oxygenmedical.hu

2010

AndrĂĄs VĂŠrtes (Âť), GĂĄbor VĂŠrtes (Âť), Ă gnes Elischer (Âť) â&#x20AC;&#x201C;

BeĂĄta TakĂĄcs BeĂĄta TakĂĄcs ,VWYiQ (F]HW

1133 Budapest, *RJRO X Â˛ 9,, (1) 783-6004 info@medocklinika.hu

$QGUiV /iV]Oy (GLW .HOHPHQ

â&#x20AC;&#x201C;

AndrĂĄs LĂĄszlĂł â&#x20AC;&#x201C; â&#x20AC;&#x201C;

1037 Budapest, %pFVL ~W (1) 317-0631 info@ professional-kft.hu

2001

1990

1998

2011

2001

1990

WWW.BBJ.HU

ISTENHEGYI PRIVATE CLINIC www.ihklinika.hu

KELEN HOSPITAL 11 www.kelen.hu

www.telkihospital.com www.telkikorhaz.hu www.telkiegeszsegcentrum.hu

ADDRESS PHONE FAX EMAIL

2007

Âť

,QGLYLGXDOV

â&#x20AC;&#x201C;

ElemĂŠr Illanitz M. D. â&#x20AC;&#x201C; â&#x20AC;&#x201C;

%XGDSHVW 6]pFKHQ\L WpU (1) 377-6737 (1) 348-0486 info@drrose.hu

1991

Âť

/iV]Oy 5XGDV Fabian Group Anti Aging Medicina Kft

â&#x20AC;&#x201C;

â&#x20AC;&#x201C; Zsuzsanna DĂĄnyi â&#x20AC;&#x201C;

%XGDSHVW ,VWHQKHJ\L ~W % info@ihklinika.hu

1998

Âť

Zsuzsanna KĂśvesd (Âť), PĂĄl TamĂĄs NĂŠmeth (Âť) â&#x20AC;&#x201C;

TamĂĄs SzĂŠkely â&#x20AC;&#x201C; â&#x20AC;&#x201C;

1119 Budapest, Than KĂĄroly u. 20. kelen@kelen.hu

Âť

â&#x20AC;&#x201C; ,QGLYLGXDOV

AndrĂĄs KĂłkay â&#x20AC;&#x201C; â&#x20AC;&#x201C;

1117 Budapest, Hunyadi JĂĄnos Ăşt 9. info@pet.hu

Operations, baby movie, hospital hotel, tests, subintensive department

1998

Âť

BankĂĄr Zrt (100) â&#x20AC;&#x201C;

JĂşlia MolnĂĄr 2OLYpU 6FK|QHN KornĂŠlia Boda

2089 Telki, KĂłrhĂĄz fasor 1. (40) 372-300 (26) 372-267 info@telkikorhaz.hu

Âť

Allergology, anesthesiology, internal medicine, dermatology, diabetology, dietetics, endocrinology, vascular surgery, ear-nose-throat, gastroenterology, pediatrics, immunology, cardiology, manual therapy, neurology, gynecology, orthopedics, plastic surgery, psychiatry, pulmonology, proctology, radiology, rheumatology, surgery, ophthalmology, somnology, urology, occupational medicine

,Q DQG RXW SDWLHQW VHUYLFH obstetrics, screenings, international vaccine center, travel advice, annual card services for inviduals and corporate clients

Âť

,QWHUQDO PHGLFLQH LPPXQRORJ\ FDUGLRORJ\ dermatology, dietetics, endocrinology, vascular surgery, otolaryngology, neurology, gynecology, orthopedics, plastic surgery, proctologic, psychology, surgery, ophthalmology, urology

Occupational medicine, gene diagnosis, menopause clinic, cerebrovascular diseases care

Âť

Allergology, cardiology, dentistry, dermatology, diabetology, food intoleance test, gastroenterology, genetic counseling, gynecology, impotence treatment, internal medicine, laboratory, lasertherapy, nephrology, neurology, occupational health, ophthalmology, orthodontics, ortopaedics, otolaryngology, pediatric orthopaedics, pediatric surgery, pediatrics, plastic surgery, podiatry, psychiatry, psychology, pulmonological counselling, radiology, rheumatology, surgery, ultrasound, urology

â&#x20AC;&#x201C;

Âť

PET-CT tumor diagnostic, Cardio-CT heart and coronary diagnostics, diagnostic CT, cardiology, laboratory diagnostics, psychiatry

Âť

Andrology, anesthesiology, intensive care, internal medicine, infant and pediatric medicine, diabetology, dietetics, endocrinology, occupational medicine, gastroenterology, pediatric orthopedics, physiotherapy, incontinence management, cardiology, laboratory, obstetrics, gynecology, orthopedics, proctology, surgery, urology, plastic surgery

TELKI HOSPITAL KFT 13

TOP LOCAL EXECUTIVE CFO MARKETING DIRECTOR

OTHER SERVICES

POZITRON-DIAGNOSZTIKA 12 KĂ&#x2013;ZPONT www.pet.hu

OWNERSHIP (%) HUNGARIAN NON-HUNGARIAN

AREAS OF SPECIALITY

www.drrose.hu 9

NO. OF FULL TIME EMPLOYEES ON MAY 1, 2013

TOTAL NET REVENUE (HUF MLN) 2012

DR. ROSE PRIVATE HOSPITAL

YEAR ESTABLISHED

RANK

COMPANY WEBSITE

Budapest Business Journal | June 14 â&#x20AC;&#x201C; June 27

Notes: [1] Data excludes the revenue of Medicover BiztosĂtĂł [Medicover FĂśrsĂ¤krings AB (publ) Hungarian Brach]

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

This list was compiled from responses to questionnaires received by June 10, 2013 and publicly available data. To the best of the Budapest Business Journalâ&#x20AC;&#x2122;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, %XGDSHVW 0DGiFK ,PUH ~W Â˛ RU ID[HG WR 7KH UHVHDUFK GHSDUWPHQW FDQ EH FRQWDFWHG DW UHVHDUFK#EEM KX

HEALTHCARE NEEDS CLEANSING Private healthcare is becoming a perk in several professions and patients are also willing to pay more given the stretched capacities of the state system. The biggest challenge is the continued presence of questionable practices in the healthcare sector. GERGĹ? RĂ CZ

Companies are constantly looking into options that keep valued employees happy; providing them with healthcare coverage, especially higherâ&#x2C6;&#x2019;quality services than those available in the state system, is an obvious choice. â&#x20AC;&#x153;In our experience, companies provide health packages as a show of appreciation to key personnel,â&#x20AC;? said Ă kos Zajdon, marâ&#x2C6;&#x2019; keting manager at Medicover, which proâ&#x2C6;&#x2019; vides insurance as well as actual services. â&#x20AC;&#x153;This group mainly works in executive positions, but it is becoming more comâ&#x2C6;&#x2019; mon for an employer to insure the entire staff,â&#x20AC;? he added. Consequently, the providers surveyed by the Budapest Business Journal all reported expansions to their businesses to various degrees, and expect that trend to continue. There is also a growing cliâ&#x2C6;&#x2019;

entele that is showing a different attitude towards healthcare services. â&#x20AC;&#x153;We are seeing more â&#x20AC;&#x2DC;consciousâ&#x20AC;&#x2122; patients, they want their treatment to be properly documented, they do their research before seeking out the services of a private medâ&#x2C6;&#x2019; ical institution, and demand to be fully informed about what theyâ&#x20AC;&#x2122;re paying for,â&#x20AC;? said AndrĂĄs Kiss, sales and marketing director at Buda Health Center. Kiss stated that there is now a group of Hungarians, typically younger individuals under 40, that are willing to spend on their health, even if the higher quality available at private medical institutions is easily 10% to 20% more expensive than otherwise. A LITTLE ON THE SIDE The biggest issue that providers cite both, in terms of their own operations as well as the prime systemic issues is the wideâ&#x2C6;&#x2019; spread nature of providers abusing reguâ&#x2C6;&#x2019; latory flaws. â&#x20AC;&#x153;For us, the biggest competition comes from semiâ&#x2C6;&#x2019;legal or illegal practices prevaâ&#x2C6;&#x2019; lent in the healthcare system,â&#x20AC;? said Gyula Csermely, managing director of RĂłzsakert Medical Center. This is still an appealing option for many to get easy money, since the state covers a number of expensive procedures and examiâ&#x2C6;&#x2019; nations, leaving the entirety of the profit with the providers, who often neglect to provide adequate documentation, Csermely explains.

â&#x20AC;&#x153;The number of people disappointed with the quality they can achieve in the state system even if they pay their doctors extra is growing, driving them to private providers,â&#x20AC;? he added. Kiss agreed that finding loopholes for financial gain is a problematic issue, one that has been around for decades. Besides siphoning the system financially, looser regulatory principles also endanger patientsâ&#x20AC;&#x2122; rights if they donâ&#x20AC;&#x2122;t get a receipt

for examinations or procedures they undergo, or if the results of the treatment arenâ&#x20AC;&#x2122;t documented properly. He added that new regulatory efforts from the govâ&#x2C6;&#x2019; ernment would surely have a cleansing effect on the market. He added that the outlook for private providers is favorable, since the â&#x20AC;&#x153;mysteryâ&#x20AC;? surrounding private healthcare has disapâ&#x2C6;&#x2019; peared and a broader range of patients now takes advantage of the services.

WWW.BBJ.HU

Budapest Business Journal | June 14 – June 27

PROMOTIONAL FEATURE

NOTE: ALL ARTICLES MARKED PROMOTIONAL FE ATURES ARE PAID PROMOTIONAL CONTENT FOR WHICH THE BUDAPEST BUSINESS JOURNAL DOES NOT TAKE RESPONSIBILIT Y

IT’S NOT ‘COOL’ TO CHEAT To promote ethical business conduct, and recognize commitment to fight against corruption, Telenor launched its Ethical Company Award last year. We talked with Christopher Laska, CEO of Telenor Magyarország Zrt about the differences between Hungary and Scandinavian countries, about the award and the role of Transparency International. Q: WHY DID YOU DECIDE TO ESTABLISH YOUR ETHICAL COMPANY AWARD? A: Let me start by explaining why we decided to talk about anti-corruption publically in the first place. All Telenor Group companies operate according to the same ethical and fair principles throughout the world. It is a great challenge to keep the same standards regardless of circumstances. We are aware of the enormous cultural differences from Norway to Pakistan or Bangladesh, both in society and business. I know the economic environment does not always favor such values, however we should not surrender to ethical relativism. ADVERTISEMENT

There are many areas of corruption threats, and it was a revelatory study I read by Transparency International last year that showed to what extent the Hungarian business sector was affected. We believe that it will only change if there are companies willing to prove that there is another way, a better way. Telenor, as a large Hungarian company, has a responsibility and an agenda to do so. There are other companies as well that refuse all kinds of ethical misconduct, fortunately, and by establishing the Telenor Ethical Company Award we want to encourage them further. Q: WHAT BUSINESS ETHICS COULD YOU TEACH OR TRANSFER TO HUNGARIAN BUSINESSES FROM NORWAY? A: It is quite characteristic in Norway, and in fact in all Scandinavian countries, that values like fairness, respect and diversity have become part of the national culture, and hugely determine individual decisions. People don’t try to avoid their taxes and it is simply not ‘cool’ to cheat. We want to share with our partners and entrepreneurs that it is possible to run a business fairly. But it is not enough to operate ethically within Telenor. We have to make a step forward, talk about these issues, educate both our partners and the general public, and try to make an impression on other companies as well. One could say that we are very straightforward in a Scandinavian way: we don’t handle ethical issues as taboo, and we are not afraid to make a stand on these issues. Q: HOW FAR ARE HUNGARIAN AND NORWEGIAN BUSINESS ETHICS FROM EACH OTHER? A: Our partner Transparency International issues regular Corruption Perception Index data. Norway is a leading country in this regard, whereas Hungary has some room for improvement. Scandinavian countries are in the top seven, Hungary ranks number 46 according to the 2012 research. As a Hungarian company, we are dealing with hundreds of business partners in Hungary, and have a clear view of local business culture. We know that corruption creates an unfair business environment that decreases effectiveness, productivity, development

an insecure business environment, and unfair competition that hinders companies from concentrating on quality. Fortunately, several companies have realized by now that they can only be successful in the long-term if they are ethical. I hope that many more will follow our lead because this is the only way to create a corruption free business environment and a competitive Hungary. Q: WHAT KIND OF EXPERIENCE AND HELP DOES TI HUNGARY OFFER YOU? A: Transparency International is one of the best-known organizations fighting against corruption globally; its reputation is based on its vast professional experience and independent functioning. We received invaluable professional help from them when we established our free e-learning anti-corruption material called ‘SME Courage’, and they also play an important part in the jury process of Telenor Ethical Company Award.

Christopher Laska graduated from Bradford University Management Center in 1995. He joined Telenor as a project director in 2000. After various positions, he became CEO of Telenor Magyarország in 2011. and healthy competition for entire sectors. It is not only dangerous for individual companies but for the whole country as well. We have great hopes that, together with our partners, we will achieve a real change in our business environment. Q: DO YOU EXPECT ANY IMPROVEMENT IN HUNGARIAN BUSINESS ETHICS DUE TO THE AWARD AND YOUR EFFORTS? A: It is difficult to change our business environment radically and fast, but we believe that open communication, transparency and good examples do work. Corruption creates

Q: THERE IS ALREADY A BUSINESS ETHICS AWARD IN HUNGARY; INDEED, TELENOR WON IT SOME YEARS AGO. WHAT IS THE DIFFERENCE BETWEEN THE TWO AWARDS? A: We are very pleased that this issue is becoming widely raised and accepted and we would only encourage any company or organization to contribute with their own efforts to improve business ethics. We appreciate that another institution has a long standing dedication towards ethical conduct. Their award is about general conduct, ours has a somewhat different approach: we acknowledge specific corporate programs that focus on ethical values, decrease corruption risks, or increase corporate integrity and that have actually been implemented. We rely on a jury completely independent of Telenor, all entries are double-checked by Transparency International to make sure that applicants are not involved in current proceedings or have not been charged by the Competition Authority.

www.telenor.hu

BBJ

4 Socialite BOOK REVIEW

The start−up of you

FESTIVAL REVIEW

PEOPLE ON THE MOVE

BBJ’s festival faves

Judit Mészáros

SZÁLLÁS.HU / MARKETING DIRECTOR

BORKONYHA

WINE LOVERS WELCOME I am often suspicious about downtown restaurants located too close to touristic sites. They seem to base their business too much on tourists that might never return again. But by check− ing the classic signs of a poten− tial tourist rip off place, one can surely see that Borkonyha is cer− tainly not one of them.

and creamy cauliflower. I think that cooking chicken in a restaurant is one of the great− est challenges. Borkonyha gets free−range chicken specially bred for them by a farmer. It tastes rich and light, its meat is juicy and ten− der. It was one of the highlights of our meal. The fish was perfectly grilled, and the roasted crispy hazelnuts reminded us of the tastes of the Far East. The yellow carrots were sliced as thin as tagliatelle and were lightly seasoned with spring greens. For dessert we ordered basil ice cream and sweet crumbs with dried carrots and apple essence and bitter chocolate with citrus. I don’t have a sweet tooth so the

When you enter you first notice the wall−to− wall glass cabinet that contains at least 200 types of Hungarian wines. The guest may choose from each bottle by the glass, so you get the chance to try wines that you’ve never had and finish the evening with your all time favorite. The wines are not overpriced as they are in many other restaurants, so everybody is encouraged to try and to taste a few glasses. The menu is kept simple, but each dish has a twist to it. Besides the menu card there is a black board on the wall with weekly offers and specialties. We chose scallops with sweet corn puree and crispy duck liver with toasted seeds and small yellow cherry tomatoes to start with, and could not resist trying the mangalica bacon with honey and mustard vinaigrette, pearl onions and rad− ish. All three appetizers were rich and tasty, creative and perfectly composed, and the fresh homemade bread that we got as a wel− come bite was a great accompaniment for the duck liver and the bacon. For the main course we opted for pikeperch in hazelnut crusted with spring salad and yellow carrots, and rolled farm chicken and quail breast with cottage cheese, fava beans

basil ice cream was a perfect choice for me. I loved it! It is sweet but not too much, tastes fresh, and the jolly orange carrot slices made the whole dish happy and fun. The chocolate was the opposite in terms of being rich, sweet and indulging. The owners, Zoltán Kalocsai and Tamás Horváth, have a common professional history of more than a decade. They both know that it is better to be friendly than fancy; that you have to give the best every day; and always being among the guests is a secret that makes them able to react immediately to each request. Borkonyha is surely one of the most favorite places in Budapest among those who enjoy quality food, made with true heart. RATATOUILLE

BORKONYHA

11051 Budapest, Sas u.3. +36 (1) 266 0835, www.borkonyha.hu 14 Terrace

Price range

Reservation

Pets allowed

Wifi

Gault Millaue

Credit cards acc.

WWW.BBJ.HU

Budapest Business Journal | June 14 – June 27

BOOK REVIEW

START ME UP! We live in a world where wages are virtually stagnant, creative disruption is rocking every industry, global competition for jobs is fierce and job security is a thing of the past. In the face of such uncertainty, what is the key to success? In their book, LinkedIn cofounder and chairman Reid Hoff− man and author Ben Casnocha show us how to thrive in today’s competitive environment. The key is to manage your career as if it were a start−up business: a living, breath− ing, growing start−up of you. Why? Because start−ups – and the entrepreneurs who run them – are nimble. They invest in themselves. They build professional networks. They take intelligent risks. They make uncertainty and vol− atility work to their advantage. And these are the very same skills that professionals need to get ahead today. The ‘Start−Up Of You’ isn’t a book about cover letters or resumes. It’s a book about the best entrepreneurial prac− tices and strategies, and how these can be applied to your career, whether you work for a multinational corporation, a small local business, or you’re launching your own venture. One of the book’s most important messages is that we should always think of ourselves as being in ‘beta’ mode – in other words, in a test phase. The authors explain, “We are all works in progress. Each day presents an opportunity to learn more, do more, be more, grow more in our lives and careers. Keeping your career in permanent beta forces you to acknowledge that you have bugs, that there’s new

development to do on yourself, that you will need to adapt and evolve. But it’s still a mind−set brimming with opti− mism because it celebrates the fact that you have the power to improve yourself and, as important, improve the world around you.” As well as providing examples of entrepreneurial strate− gies and experiences, ‘The Start−Up Of You’ has a section of practical exercises (headed ‘Invest in Yourself’) at the end of each chapter. These help you to improve your skills, and have a particular focus on networking. Hoffman and Casnocha perhaps sum things up best in their introduction: “We aim to equip you with the strategies that help you break out from the pack and flourish as a glob− ally competitive professional. Whether you want to move up in a corporation, start your own small business, or transi− tion into an entirely new industry – whatever your ambitions for a successful career, we’ll show you how you can achieve them by thinking and acting like an entrepreneur. These entrepreneurial career strategies aren’t a magic bullet. But they will help you move up that jammed escalator and not only survive, but thrive, in today’s fractured world of work. Let’s get going. You have a start−up to run.”

THE START-UP OF YOU by Reid Hoffman and Ben Casnocha Random House Business Books ISBN 9781847940803 Available to order through www.hungaropress.hu

BBJ FESTIVAL FAVES

June 29 VINAGORA WINE GALA Location: Boscolo Conference Center (Erzsébet körút 9−11, enter from Osvát utca) Time: noon−8 PM

June 14−23 DUNA CARNIVAL Location: Vörösmarty tér, 5th district

June 17−30 VI. CZECH BEER FESTIVAL This is a colorful series of events with folk Location: Winemakers and wine experts all know dance and music, contemporary dance, world, Városház tér, 5th district that come early summer, it is time for Hun− symphonic and brass music featured by per− gary’s most prestigious wine contest, the The season starts with beer and brewers. Hun− formers from various countries. The carnival If you’re a real fan of the famous Czech beers, VinAgora International Wine Competition. gary’s smaller breweries already presented will incorporate many European and Asian and you just can’t afford to travel to Prague to This is the only competition in the country their products in early June, so now it is time performers as well as exotic guest ensem− taste all of them, the second part of June is where local and foreign wines are evaluated to go international: the III. Beer Festival in the bles from overseas. Every year 12−15 inter− the time to indulge your passion. In the cen− side by side by internationally recognized Castle District will offer almost 200 types of national ensembles with nearly 300 artists ter of the city, almost 70 Czech beers from 26 judges. On June 29, wine lovers can tastes beer specialties. Alongside the best from the perform at the Danube Carnival. On June breweries will await thirsty visitors. Of course, all the competitors in an elegant environ− Hungarian breweries, visitors can also sam− 16, more than 1,000 participants will join in plates of Czech and Moravian cuisine and ment. In 2012, a record−breaking 630 ple Belgian, British, Czech, German and Irish a parade. Defiling from St. Stephen’s Basilica, even some cultural events will accompany wines entered the VinAgora competition, offerings. And, by the way, cider will also play the groups celebrate with a non−stop dance the alcohol, because Czech beer is not just a and every single one of these were available gala at Vörösmarty tér. beverage, but a lifestyle, too! to be tasted at the Wine Gala! a larger role than before. JUNE 13-16 III. BEER FESTIVAL IN THE CASTLE Location: Hunyadi Courtyard, Buda Castle, 1st district

budavarisorfesztival.hu

www.dunakarneval.hu

www.csehsornapok.com

www.borkulturakft.hu

WWW.BBJ.HU

Budapest Business Journal | June 14 – June 27

WHO'S NEWS

Name GÉZA RÉCZEI Current company/position DELOITTE / PARTNER

Réczei has been appointed partner at Deloitte from June 2013. He graduated from ELTE University, where he is also a lecturer in financial law. He spent a decade in various senior positions in the public sector, at the tax authority and the Ministry of Finance. Later, he worked at PwC. At Deloitte Hungary, while organizing services for domestic and foreign companies, he emphasized the development of the German Desk and services for the automotive industry. He became president of the Hungarian Pentathlon Association in 2013.

Do you know someone on the move? Send information to research@bbj.hu

Name TAMÁS GAIDOSCH Current company/ position DELOITTE / PARTNER

Gaidosch began his career at IBM, where he designed and introduced business systems for banks and insurance companies. He expanded his knowledge in the United States, then in 1999 joined KPMG, where he was responsible for IT risk management services, and later became head of risk management services. As a partner of Deloitte, Gaidosch will be responsible for Enterprise Risk Services (ERS) and Management Consulting businesses, and also for ERS in Central Europe.

Name JUDIT MÉSZÁROS Current company/position SZÁLLÁS.HU / MARKETING DIRECTOR

Mészáros has been appointed marketing director at the szállás. hu accommodation search site. She graduated from the Eszterházy Károly College of economics and management. Before joining szállás.hu, she was the marketing manager of Symbol Budapest, an entertainment complex where the Showder Klub stand-up shows have been recorded, among others.

UPCOMING EVENTS

JUNE 18

JUNE 27

JUNE 29

‘TOOLS OF ECONOMIC RECOVERY’ CONFERENCE LOCATION Budapest Mercure Buda,

BUSINESS FORUM WITH ATTILA MESTERHÁZY, PRESIDENT OF THE HUNGARIAN SOCIALIST PARTY LOCATION InterContinental Budapest,

BCCH-FIRSTMED FAMILY DAY IN COOPERATION WITH BRINGÓHINTÓ AND THE HUNGARIAN CRICKET ASSOCIATION LOCATION Margitsziget TIME 11 AM ORGANIZER British Chamber of Commerce in Hungary CONTACT www.bcch.com

1013 Budapest, Krisztina krt. 41-43. REGISTRATION 9-9:30 AM TIME 9:30 AM-12:30 PM ORGANIZER Joint Venture Association FEE JVA members, HUF 9,000 + VAT; non-members, HUF 14,000 + VAT CONTACT www.jointventure.hu

1052 Budapest, Apáczai Csere János u. 12-14. REGISTRATION noon-12:30 PM TIME 12:30-2:15 PM ORGANIZER American Chamber of Commerce in Hungary FEE AmCham members in good standing, HUF 12,700; non-members, HUF 31,750 CONTACT www.amcham.hu

JULY 4 COMMUNICATION AND MARKETING CLUB: NEW TRENDS IN EXPATRIATION PROCESS AND EMPOWERMENT LOCATION Restaurant Pavillon de Paris,

Budapest 1011, Fő utca 20. ORGANIZER French-Hungarian Chamber of Commerce and Industry FEE CCIFH members, HUF 7,900 + VAT; non-members, HUF 10,300 + VAT CONTACT www.ccifh.hu