Budapest Business Journal 22/14 by Business Publishing Services Kft.

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SPECIAL REPORT: VOL. 22. NUMBER 14

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Mr. Mobility HIGHLIGHTS

STORY up again in has been a Q Activity picking in Stuart McAlister around market, both the relocation face the region familiar expat Hungary and just 1990s, not least no longer limited Q Relocations wider town since the but also to the in the to Budapest, as a noted performer In 2002 country bars. capital’s karaoke Relocation to he founded Inter of others is the help ease the move Stuart McAlister Hungarian like him into the owner and managing His company Inter working system. director of the offices a Group, now has member Eastern Relocation and in across Central company he founded he estimates he Europe, and he 2012 working December In year a 2002. days spends 50 an Eastern exclusively was elected as abroad. He talked member for Business region council to the Budapest the Relocation in changes the European Journal about three−year strength of Association, a marketplace, the in June and role that started the economic recovery, g of transportin 2013. From 2005−2012 the difficulties of the he was chairman bees across borders. ROBIN MARSHALL

Budapest 12

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al Robert Burns Internation Foundation’s annuala Supper, Budapest Burns

How has the relocation run by over major charity event people market changed the years? March volunteer business was founded in hundreds A: The company could still consider the which has raised 2002, in what you from a business point euros for of thousands of “good old days” was not yet a member Hungary a great of view. Hungary hospitals across immigration was for of the EU, so children. supporting paperwork caring for sick business. The was fairly fiendishly up Inter entry to Hungary Prior to setting either managed worked in own HR difficult. Companies through their Relocation, he the paperwork more often, looked to firm removals departments or, Budapest for was a time consuming attended outsource what if the person coming Interdean. He operation, even University citizen. You could Sheffield Hallam in was an EU/EEA at 120 days from looking in the UK. hire potentially be “I would like to the time of saying,the day that person to this person” work. would could walk into traditional expat mean less common Back then the do then it was muchhouse, though man – and I women Back have been a were very few find a furnished thanks a man, there probably to often were. Now, are his 30s−50s, in apartments – houses even assignees children, likes of IKEA, his wife and latter. to the moving with offered furnished. is much the age of the today depending on house in sometimes looking for a The expat population are less expat They would be We would be dealing in Hungary; there decided the Buda Hills. as what was the best reduced Companies either that children managers. not afford these guys, or with issues such school for the they could locally. international whether the property they would look to invest to attend, and or unfurnished. should be furnished

RELOCATION JULY 18, 2014 – JULY 31, 2014

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Although the CEO of Hungary’s largest commerial broadcaster says the goal of a new tax “is either to kick us out of the market or to buy us cheap”, he promises the station will stay, and continue to investigate the government. 4

NEWS

BUSINESS

SOCIALITE

State goes shopping, and debt rises

Budget airline or national carrier?

Sziget brings the party to northern Budapest

Hungary is getting its budget deficit under control, but renationalization is increasing the size of government debt. Officials tell us not to worry, but analysts say we should expect more taxes. 03

As Wizz Air negotiates possible flights to Győr and Kecskemét, which would turn airports for carmakers into commercial destinations, Hungary’s resident airline is set to step up its service here. 06

Find out about the party up in Óbuda, or figure out where to make a musical escape to the countryside, with our handy guide to summer music festivals all around the Hungary. 13

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Budapest Business Journal | July 18 – July 31, 2014

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SPECIAL REPORT: VOL. 22. NUMBER 14

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RELOCATION

HIGHLIGHTS

STORY up again in has been a Q Activity picking in Stuart McAlister around market, both the relocation face the region familiar expat Hungary and just 1990s, not least no longer limited Q Relocations wider town since the but also to the in the to Budapest, as a noted performer In 2002 country bars. capital’s karaoke Relocation to he founded Inter of others is the help ease the move Stuart McAlister Hungarian like him into the owner and managing His company Inter working system. director of the offices a now has member Eastern Relocation Group, and in across Central company he founded he estimates he Europe, and he 2012 a year working 2002. In December Eastern spends 50 days an exclusively was elected as abroad. He talked member for Business region council to the Budapest changes in the the European Relocation Journal about three−year strength of Association, a marketplace, the in June and role that started the economic recovery, of transporting 2013. From 2005−2012 the difficulties of the he was chairman bees across borders. ROBIN MARSHALL

Robert Burns International Foundation’s annuala Burns Supper,

Budapest How has the relocation run by over major charity event people market changed the years? March volunteer business was founded in hundreds A: The company could still consider the which has raised 2002, in what you from a business point euros for of thousands of “good old days” was not yet a member Hungary a great of view. Hungary hospitals across immigration was for of the EU, so children. supporting paperwork caring for sick business. The was fairly fiendishly up Inter entry to Hungary Prior to setting either managed worked in own HR difficult. Companies through their Relocation, he the paperwork more often, looked to firm departments or, Budapest for removals was a time consuming attended outsource what if the person coming Interdean. He operation, even University citizen. You could Sheffield Hallam in was an EU/EEA at 120 days from looking in the UK. hire potentially be “I would like to the time of saying,the day that person to this person” work. would could walk into traditional expat mean less common Back then the do then it was muchhouse, though man – and I women Back have been a were very few find a furnished thanks a man, there probably to often were. Now, his 30s−50s, even houses are assignees – in children, apartments likes of IKEA, his wife and latter. to the moving with offered furnished. is much the age of the today depending on house in sometimes looking for a The expat population are less expat They would be We would be dealing in Hungary; there decided the Buda Hills. as what was the best reduced Companies either that children managers. not afford these guys, or with issues such school for the they could locally. international whether the property they would look to invest to attend, and or unfurnished. should be furnished

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BUSINESS

NEWS

SOCIALITE

State goes shopping, and debt rises

Budget airline or national carrier?

Sziget brings the party to northern Budapest

Hungary is getting its budget deficit under control, but renationalization is increasing the size of government debt. Officials tell us not to worry, but analysts say we should expect more taxes. 03

Find out about the party up in Óbuda, or figure out where to make a musical escape to the countryside, with our handy guide to summer music festivals all around the Hungary. 13

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State ownership rises from its grave Twenty−five years ago, Viktor Orbán and his young associates in the then newly formed Fidesz Party were dancing on the grave of state ownership: Communism was dead and Hungary was entering a bold new era of democracy with a free market. The government began divesting itself of property and private owners began to take control of most of the country’s capital. Now it is Orbán and Fidesz who are telling us that the Hungarian government needs to maintain control over “strategic sectors”. It’s ironic that Fidesz, the enemies of communism, have become the champions of state ownership. But, more than ironic, it is also disconcerting, because these efforts appear to be bad for business – and democracy. On July 15, Economy Minister Mihály Varga sent Parliament an amendment to raise the state budget by HUF 152 billion – to finance renationalization of firms like gas delivery company Magyar Gáz Tranzit, waste management company AVE Magyarország, Budapest gas distributor Főgáz and Antenna Hungária, which owns the country’s broadcast infrastructure. Meanwhile, the government has been talking a lot this month about more acquisitions. The state has already started buying out foreign shares of Bombardier MÁV, a firm that maintains the country’s trains, and the Budapest public maintenance company (FKF) and its sewer company (FCSM) are said to be next on the renationalization list. Renationalization can be bad for business for some obvious reasons: A private, for−profit company will generally be leaner, more competitive and more efficient than a state−run concern. While Ronald Reagan, Mikhail Gorbachev and dissident writers may all deserve some credit for hastening the end of Soviet−style communism, the majority of the credit should probably go to the market. Big, bloated government companies were wasteful, ineffective and unable to compete, and the old system died a natural death. Although they may be wasteful, companies with government aid can squeeze out private competition that could be

supporting the economy. When the recently renationalized truck−axle manufacturer Rába signed a deal with the private Volvo Bus Corporation last year, the Association of Hungarian Bus Manufacturers cried foul. The association rejected the government’s assertion that propping up this socialist−era relic would create more jobs than the private sector could. On July 15, we learned from the official gazette that Rába won a HUF 2.3 bln contract as the only bidder in a tender to build 32 buses for the South Alföld transport center. Private competitors were not even allowed to try for the job. That is part of why renationalization is bad for democracy – especially when you have leadership like the Fidesz government, which is able to pass laws in a matter of weeks and steamroll any opposition. Even the best−meaning officials can hurt private enterprise and hinder free markets by enforcing their will. During negotiations to increase government ownership in Főgáz, the company that the state was buying from felt that they were being strong−armed into handing over their assets. RWE East Chairman Martin Herrmann reportedly complained that the Hungarian government was acting inappropriately and engaging in “expropriation”. Other foreign−owned companies, from banks to broadcaster RTL Klub, have said that special taxes levied against them felt like part of a campaign to force them to sell locally – if not to the state, then to ownership that is friendlier to the government. In these, and other cases, the renationalization seems more politically driven than economically motivated. On July 15, we heard concerns from Hungary’s Fiscal Council that the extra funds Varga is seeking for privatization will mean that Hungary makes no progress on paying down its public debt this year. That’s bad for business. And until we are shown that every renationalization is being undertaken for economic reasons, we can assume that there’s also some politics involved. That’s bad for democracy.

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The Szabadság híd, or Freedom Bridge, was called the Ferenc József Bridge when the photo above was taken in 1900 (courtesy of Fortepan.hu). At left is a view of the bridge now (photo by Amy Brouillette).

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RTL Klub CEO is ready to keep ﬁghting

macroscope

Government losing war on debt

MACRO Speaking X of ﬁgures

But officials are not yet concerned.

The Budapest Business Journal presents some of the most important macro data of the past fortnight.

GABRIELLA LOVAS

−0.3% Change in Hungary’s CPI y.o.y. in June. Although this was the biggest drop in Hungarian prices since figures were kept, analysts said here is no need to sound the alarm about deflation.

Talking trade Constantin Nita, left, of Romania, and Hungarian State Secretary Péter Szijjártó co-chair the Hungarian-Romanian Joint Economic Committee meeting in Budapest on July 15. The two reportedly agreed to raise bilateral trade to a balanced €10 bln a year in the coming period.

Photo: Noémi Bruzák / MTVA

28.7% Increase in construction in the first quarter of 2014, according to the

achieve the deficit target. He says the second half of the year is always much better than the first and there might be some significant one− off revenues, such as the approximately HUF 100 bln sales fee of a frequency tender for broadband services. He considers the online connection of cash registers as a success, and is happy with VAT revenues. He does not rule out the possibility that revenues from online tills will be twice the HUF 95 bln government forecast. There are signs that personal income tax revenues will pick up, too. Speaking of government debt, he thinks that “Brussels still has not learnt to do the maths”. He claims that heavier than necessary state borrowing combined with the weak forint rate are responsible for the increase of the national debt to over 84% in the first quarter of 2014. But, plans to scale back government securities by the Government Debt Management Agency (ÁKK) in the second half, and a forint rate of under 300 HUF/€ at the end of 2014, government debt could fall to around 78.8%. He added that the scale back promised by the ÁKK would result in investors queuing up for Hungarian securities, thus pushing down yields. All in all, he does not expect big surprises in the tax system in 2014, although he would welcome the introduction of the one−digit personal income tax rate as well as lower VAT rates. He thinks that the PIT rate will be cut in three or four steps from its current level of 16% during several years starting maybe in 2015. These rate cuts would also contribute to the whitening of the economy.

Questor chief analyst Bálint Háda expects additional government measures after Hungary’s local elections in the autumn. In lack of other reliable statements, he cited Viktor Orbán’s words after a summit in Brussels last May. The prime minister said the government would freeze budget expenditures and suspend big, one−off state investments unless it can cover their costs from the sale of state assets. “When I arrive back home, I’ll get the law on tax increases that could mean [an increase of] the financial transactions duty, the bank levy, the energy tax and the introduction of a new advertising tax,” Orbán added. Buda−Cash analysts cannot rule out corrections worth several tens of billions forints. They named another increase in the transaction tax or the expansion of the online cash register system in the longer run as potential sources. Taxing new sectors, which the government has spared so far, such as construction, could also “pop into the head of decision makers”. They believe that the budget deficit should be pushed below 2% rather than just 3% in order to put government debt on a firm downward path. As the proportion of foreign−currency debt is still high, they see a need for a predictable and EU conforming economic policy, which would help to strengthen the exchange rate. This, in turn, could quickly and significantly reduce debt levels. It would also be a good idea to cut the number of prestige investments, they added.

Central Statistics Office (KSH). The majority of this was down to road and rail improvements, which, together with other civil engineering work was up 40.4% KSH said. Construction of buildings was reported to be up 17%.

HUF 90bln Fine Hungary would have to pay if the EC determines that discriminative restrictions were used in some of the state’s road construction tenders.

2.3% Hungary’s current base rending rate, but not the bottom, according to central bank officials who will meet in late July and could set a new rate.

Source: KSH, MTI, BBJ.hu

While Hungary’s budget deficit is considered to be within reach, there are serious concerns about the downward path of government debt. The Economy Ministry submitted its first amendment to the 2014 budget on July 14 in order to finance the purchases of Antenna Hungária, Hungarian Gas Transit Zrt, waste management company AVE Magyarország and Főgáz Rt. Although this is an extra burden of HUF 152 billion on the budget, the Ministry claims it will not threaten the 2.9% EU deficit target. The budget deficit reached HUF 813.7 bln in the first half of this year, which was already 82.6% of the total deficit previously planned for the entire year of 2014. Hungary’s Fiscal Council warned that the reduction in the debt−to−GDP ratio could be only minimal as a result of the purchases. According to the latest ministry forecast, public debt will practically stagnate in 2014, at 78.15% of GDP. The first serious warning about the debt has been made by the European Commission (EC). After reviewing recent economic developments and policy initiatives during its fifth post−program surveillance, the EC said in a memo on July 1 that “compliance with the debt reduction benchmark would likely require additional fiscal consolidation efforts”. The EC also said that “an inadequate pace of debt reduction could trigger the re−opening of an excessive deficit procedure (EDP) in spring 2015”. Based on the EC’s government debt forecast, Hungary is at risk of breaching the requirements of the Stability and Growth Pact as public debt does not decrease sufficiently towards the 60% threshold. Not only the Commission is worried. In the country−specific economic policy recommendations the Economic and Financial Affairs Council published on July 8, it confirmed that there is a “need for additional structural consolidation efforts in view of the risks of significant deviation from the medium−term objective.” According to Hungary’s Fiscal Responsibility Institute, fiscal adjustment worth 0.3% of GDP may be needed this year on top of freezing expenditures in order to meet Hungary’s convergence plan targets. Mihály Varga wasted no time in soothing nerves by stressing that there was “absolutely no talk” about launching an EDP against the country. The EU freed Hungary from the EDP after nine years last June. Unlike Varga, the head of the Prime Minister’s Office János Lázár ruffled feathers by saying that the ad tax will not just stay but possibly grow, and new taxes will be introduced in further sectors “where extra profit is made” in 2015. An analyst of a Hungarian state−owned bank, who wished to remain unnamed, says there is no need for further measures to

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Budapest Business Journal | July 18 – July 31, 2014

RTL Klub CEO is ready to keep fighting Despite being singled out by a special tax, RTL Klub vows to continue broadcasting investigative reports that are critical of the government.

If you are just back from a long trek to Nepal and haven’t watched the evening news on RTL Klub for a month, be prepared for a shock. Where Hungary’s largest commercial channel previously concentrated on crime stories and light news, its evening news is now twice as long as it used to be. The first part is still light but the second half is full of investigative reports that are highly critical of the government. “Our audience rating is going up,” says RTL Klub CEO Dirk Gerkens. For its part, government officials see RTL Klub as waging a “war of revenge” against the advertising tax. Adopted on June 11, the tax hits Hungarian media companies’ annual advertising revenues in several steps, rising to a maximum rate of 40% on revenues above HUF 20 billion. Prime Minister Viktor Orbán has justified the tax, saying it was targeted against “companies who make large profits”, like earlier levies imposed on banks, telecoms and utility companies. But RTL Klub, a subsidiary of RTL group, and fully owned by the German company Bertelsmann, believes it is specially targeted. “No other company has the turnover we make, so we’ll be the only one to be taxed at 40%. This is clearly designed as an anti−RTL tax,” Gerkens said on July 15, at a press briefing with the Hungarian International Press Association. With €100 million turnover and a €15 mln profit in 2013, RTL Klub has been profitable. Its main competitor, privately owned TV2, is not. In 2013, TV 2 lost HUF 6.7 bln. Already this year it has lost HUF 10.8 bln. Last December, German owner Pro Sieben Sat 1 sold TV2 to the channel’s CEO ADVERTISEMENT

RTL Klub CEO Dirk Gerkins: Sees ratings rise.

and CFO, two persons said to be close to the ruling party. That was when RTL Klub’s problems started. The channel lost big advertisers, like pharmaceutical companies Richter−Gedeon and Teva. Teva, one of RTL’s most faithful clients, shifted in December to TV2 without an explanation, Gerkens said. “We know clients and agencies have been approached by circles close to Fidesz. Pharmaceutical companies, for example, have being offered state benefits if they shift to TV2,” Gerkens said. On top of that, TV2 was exempted from paying advertising tax – this year only – thanks to a special amendment. “The tax’s goal is either to kick us out of the market or to buy us cheap,” says Gerkens. Since RTL changed its news format, it gets tons of emails and messages from its growing audience, according to Róbert Kotroczó, head of news at the station. “Some people are even sending us stories, with lots of information and documents, so our journalists can start

working on it. We have hired new staff and have started cooperating with the investigative website Atlatszo,” Kotroczó says. But why wait for the tax to become critical of the government? Kotroczó, who has been with ADVERTISEMENT

Photo: Bence Barsony

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RTL Klub for 14 years, says it is the result of a business strategy rather than a political one. “We had a political profile before, but things changed in 2008. Hungarians were not curious about politics any more and we were losing audience on the prime−time slot whereas TV2 was doing well with its crime stories and light news,” he said. “So we chose the same format as they did. Then, before the elections, we realized there was a renewed interest in politics. Last year we launched a political news program on our cable channel RTL 2. The test proved successful; that is why we now go deeper into political coverage.” RTL Klub says it will pay more than €9 mln in advertising tax this year. But according to the CEO, “we will not cut costs on news production. On the contrary, we will invest in investigative journalism. I would rather save money on American fiction.” Asked whether RTL’s shareholding company would sell if it got a decent offer, Gerkens said the issue was not on the agenda. “The shareholders are fully committed, and leaving Hungary would be a bad precedent,” he explained. Fortunately, he added, RTL Klub only represented 1% of the German group’s profit, so its losses would have a limited impact on the mother company. “It is better that such a crazy story happens on a small−size market like this one,” he said.

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but the number will reach 14,000 in the ﬁrst full year of production. This year, the plant will turn out a combined 107,000 engines.

NEWS

K&H BANK NAMED HUNGARY’S BEST BY EUROMONEY AGAIN the K&H Bank, subsidiary of Belgian KBC, has been named “Hungary’s best bank” in Euromoney’s 2013 Awards for Excellence, K&H announced. The bank won the title for the second year in a row. Euromoney evaluated the liquidity of the bank to be the best among Hungary’s leading banks in terms of loan−to−deposit ratio, KBC CEO Hendrik Scheerlinck said. KBC’s ﬁrst−quarter after−tax proﬁt nearly doubled to HUF 6.1 bln year−on−year. Total assets rose 2% in 12 months to HUF 2,502 bln at the end of March, unaudited consolidated IFRS data show.

OPEL LAUNCHES PRODUCTION OF SMALL ENGINES German carmaker Opel launched serial production of small petrol engines at its base in Hungary, the carmaker announced. The launch completed the product palette at Opel’s €700 mln plant in Szentgotthárd which started operating early in 2013. The plant can turn out an annual 650,000 1.4−, 1.6− and 1.8−liter petrol and diesel engines, but output is expected to reach 560,000 units by 2016. About 46% of Opel’s suppliers are Hungarian, state secretary Péter Szijjártó commented on the announcement. General Motors vice president Joachim Koschnicke said most Opel engines would be made in Szentgotthárd from 2017. Opel will make about 12,000 of the small engines this year,

AUDI TO ADD THIRD SHIFT AT GYŐR PLANT German carmaker Audi is planning to add a third shift at its Hungarian plant in order to meet the expectations posed by high demand for premium models, Audi Hungária Motor announced today. The shift is expected to be introduced in the middle of August, the unit reported. With the introduction of the third generation Audi TT model, the factory in Győr will operate at full capacity, the managing director for vehicle production, Gerd Walker said. The preparations are in full swing for the launch of the new coupé’s serial production, the director added. The entire production of the Audi TT and TTS models will be hosted in the carmaker’s Győr plant. The new plant can produce 160,000 vehicles a year. U.S. AUTOMOTIVE COMPANY TO EXPAND IN HUNGARY BorgWarner, U.S. automotive industry supplier, is planning to raise headcount at the company’s

BUSINESS

Wizz Air on the rise BUSINESS

Property investors return? 7

Hungarian base located in Oroszlány by more than 300 in the upcoming years, the managing director of the unit’s turbocharger production division informed Hungarian news agency MTI. Currently, the American company provides jobs for approximately 700 people at the Oroszlány base, however the planned expansion of the 20,000 square meter production hall will generate more job opportunities, Frederic Lissalde said. Should the new production hall reach its full operation, 300 people will be employed in the new unit. Last year’s revenue of BorgWarnerTurboSystem reached €350 mln, Lissalde added. BORSODCHEM PLANS TO BUILD NEW PLANT FOR €84 MLN Chinese−owned chemical company BorsodChem is planning to establish a new hydrochloric acid condensation plant in Kazincbarcika, via an €84 mln investment, supported with a €3.2 mln Hungarian government grant, CEO Chien− sheng Ding and state secretary for foreign affairs and foreign trade Péter Szijjártó announced in Budapest. BorsodChem is owned by the Chinese Wanhua group. The investment is expected to create at least 70 jobs, bringing the number of BorsodChem employees over 2,500.

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Budapest Business Journal | July 18 – July 31, 2014

Wizz Air begins to feel like a national carrier Photo: Arpad Foldhazi

Thanks in part to the success of carmakers in Győr and Kecskemét, those cities may be in line for commercial flights. GERGELY HERPAI

Hungary does not have an official national airline, but Wizz Air is doing a pretty good impersonation. The low cost carrier’s success has sparked a lot of speculation, including about the flying to smaller airports that previously had no commercial flights: Both Győr and Kecskemét, which have airports that serve local carmakers, are reportedly being eyed for commercial flights by Wizz. The Hungarian government is fully behind the plans, which could see Hungary receiving a better domestic airline service than it did when there actually was an official national airline. And, while plans for an IPO in London were put on hold, the airline seems ready for more growth. As they denied rumors of a buyout, Wizz executives claimed the gossip is a function of the firm’s success. Based in Budapest, and specializing in cheap, low−frills flights, Wizz Air has been growing at an impressive pace since its founding ten years ago. In 2012, when Hungary’s last real national airline, Malév, collapsed, Wizz Air had 12 million travelers, which was 12%

more than the year before, when Malév was still operating. “That’s actually the biggest growth in the European aviation sector,” József Váradi, the Hungarian CEO of Wizz Air, said at the time. Growth continued, with 13.5 million travelers in 2013 and bookings in Q1 2014 going at a slightly faster pace, according to the company’s own website, wizzair.com. The company now claims to be “the largest low−cost airline in Central and Eastern Europe”, citing Innovata, a leading source of airline schedules data, and based on scheduled departing seat capacity for the year ending on March 31, 2014. Meanwhile, thanks to carmakers in Hungary, airports have been upgraded in Győr and Kecskemét, and Wizz is being courted to serve those cities. The expansion of Győr−Pér Airport, with a price tag of €6.6 mln, was officially inaugurated on

July 3. The airport is now capable of accommodating larger airliners, like the Boeing 737 and Airbus 320. The expansion was possible due to the support, and passenger traffic, of the Audi factory in Győr. Thomas Faustmann, the managing director of Audi Hungária Motor, said 165,000 passengers have used the airport over the past ten years, including 30,000 last year alone. He added that direct flights between Győr and Ingolstadt, where the Audi HQ is located, save the company 120,000 work hours a year compared to the time it would take to make the journey by car. At Kecskemét, where Mercedes− Benz Manufacturing Hungary Kft. has been in operation since 2012, a similar demand for commercial flights is being felt, and for similar reasons. Sightings of Wizz Air jets taking off and landing there in early July fueled speculation that Wizz will expand flights to that airport soon. Deputy Foreign Affairs Minister− designate Péter Szijjártó has previously maintained that the government would like to see commercial flights to both Győr and Kecskemét. “The Hungarian government will provide all the support necessary to increase the passenger traffic in Győr, so we are in the process of constant negotiations with Wizz Air,” Szijjártó said.

Szijjártó has reportedly said that an agreement on a new route between Győr−Pér and London is expected to be reached by the end of this year. Zsolt Borkai, the mayor of Győr, said that to support such a route, the airport needs an investment of several hundred billion forints – with the involvement of the state – to build a passenger terminal. Among the other rumors flying around about Wizz Air are those of sales to Air France−KLM, something that was reported by a Dutch website. The rumors followed the news in June that Wizz Air was cancelling plans for an initial public offering on the London exchange because the company saw “market volatility in the airline sector”. There was speculation that Wizz would get the capital it sought from a buyer, but CEO Váradi said the company was well capitalized. As speculation continued, Wizz felt compelled to issue a formal denial on July 9. “Because of its success, Wizz Air receives unsolicited inquiries from time to time from interested potential investors. There are no such discussions currently underway,” the airline said. If anyone did try to buy the company, they would probably need deep pockets. While Wizz Air tickets may be inexpensive, it seems unlikely such a successful firm would come cheap.

MEASURING IS NOT ENOUGH! You want to know the real value of your property? Get in contact with the nearest TECNOCASA agency for a free evaluation. Our professionals, with an extensive knowledge of the local market, are at your service.

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2 Business

Budapest Business Journal | July 18 – July 31, 2014

More property investors consider Hungary Annual projections for the real estate market in Hungary give reason for optimism. DAVID LAWRENCE

When the experts took a look at their crystal ball, they found reasons to be cautiously upbeat about developments in Hungary, and the region. Summer is the time when commercial property consultants release their half− year market figures with a view to predicting investment and development trends for the year. In positive news, newly released research indicates that investor appetite for Hungary has increased significantly in the first half year as €230 million of investment transactions in the retail, office, logistics and hotel sectors was concluded according to JLL. This represents a significant year−on−year increase compared to the same period of 2013. The largest investment deals were agreed with foreign investors; however the local investment market has also been active with a number of smaller deals in the retail and industrial sectors. Sentiment is improving with regard to investment in Hungary according to Tim O’Sullivan, from the Capital Markets Group at CBRE. “Investors are re−entering Hungary after 2−3 years in addition to new equity that is looking at the country,” he said. The less positive news is that, although various private equity funds, Middle East funds and CEE regional investors are actively investing in Hungary, the major Austrian and German funds are still pursuing a “wait and see” strategy, preferring the thriving Polish and Czech markets. A liquid investment market is a central element for a working development market, as developers, lenders and investors require a possible exit strategy when making a decision as to whether to enter a particular country. Investment, development and tenant demand in Hungary has been subdued in the aftermath of the 2008 economic downturn and subsequent eurozone crisis as the country has suffered from “negative sentiment”. Uncertainty from both an economic and political perspective has been deterring the more conservative institutional investors from making acquisitions, despite the fact that Hungary was the first CEE country where an established investment market was created in the ’90s. However it is now Poland, the Czech Republic and increasingly Romania that are attracting most interest from investors. SIGNS OF RECOVERY Distinct signs of a recovery in the investment market are evident, as the Dutch ING Real Estate has completed the sale of its remaining 50% stake in the 47,000 sqm Allee shopping center in Budapest to an ING insurance fund for a reported €95 mln. The German investor, Allianz Real Estate has already bought a 50% share in the

Skanska’s Green House on Váci út is fully let and nearly sold.

Currently, it is mainly opportunistic investors, exotic and new wealth, private wealth and a number of local investors targeting Hungarian assets. leading Budapest retail center for €100 mln. The mall in the central Buda area opened fully leased in 2009 and there is an additional 7,000 sqm of offices. Prime Budapest shopping center yields are put at 7.25−7.50% compared to 5.75% in Poland according to JLL. In an office sector deal the IVG Group has sold the 5,300 sqm Stefánia Park to a private German investor after a successful tender. “Hungary offers good quality product at a yield premium on other CEE markets,” commented Colliers International, who acted for the buyers in the deal. Prime Budapest office yields are put at 7.50% compared to 6% and falling in Prague. In a hotel transaction the Dubai− based Al Habtoor Group has purchased the InterContinental Hotel in Budapest for an undisclosed fee. The group, which is active in hospitality development, bought the Le Meridien Hotel in 2012. Total investment transactions for CEE reached €2.87 billion for the first half of 2014 according to preliminary figures released by JLL. This represents a circa

65% year−on−year increase in volume compared to the same period of 2013 when investment volume was €1.7 bln. Unsurprisingly, Poland remains the leading CEE investment market with a circa 50% share of investment (or €1.433 bln), followed by Czech Republic with 25% (or €719 mln), Romania with 15% (or €431 mln), Hungary with 8% (€230 mln) and Slovakia 2% (€34 mln). Cushman & Wakefield (C&W) has recorded around €2.480 bln in transactions for CEE for the first half year, representing a 12% increase in volume compared to 2013 for the first half year according to its research. The figure for Hungary is €283 mln. GOOD NEWS FROM THE GREEN HOUSE A further sign of improving investor sentiment is that Skanska’s Green House, completed in 2012 and almost fully let, is under due diligence and a sale to a Hungary−based fund is expected to be completed this summer. The 17,800 sqm office building with

LEED Platinum certification is located in the ever popular Váci út Corridor business district. Skanska is also set to commence construction of the first phase of the 26,000 sqm Nordic Light in Váci út. In Warsaw Skanska has sold the Atrium One office center to the German investor, Deka for €94 mln. Opportunistic property investors were already active last year and a more active institutional sector with more bids from cross−border investors is expected. However when the major Austrian and German investors return to Hungary remains to be seen. “Interest from institutional investors is slowly picking up for Hungarian assets but we do not foresee their cautious enquires translating into successful transactions in 2014,” commented Marcell Szotyori, Assistant Director for Capital markets at JLL Hungary. “It is more likely they will be in the second wave of investors following the closing of a number of large deals in the market. Currently, it is mainly opportunistic investors, exotic and new wealth, private wealth and a number of local investors targeting Hungarian assets. We believe that this will not change in the near term, however, according to our forecast the 2014 investment volume might exceed the 2013 volumes by 30−40%, reflecting appetite for Hungarian property,” he added. Total investment for Hungary for the year is expected to exceed €500 mln. Michael Edwards, Partner at C&W sees the closing of the Skanska deal as significant for Hungary. “The institutionals are holding back, however a significant move by one will open the door,” he concluded.

BBJ

3Special Report They want to lend a hand

10-11

International schooling in Budapest 12

Mr. Mobility Stuart McAlister has been a familiar expat face around town since the 1990s, not least as a noted performer in the capital’s karaoke bars. In 2002 he founded Inter Relocation to help ease the move of others like him into the Hungarian working system. His company now has member offices across Central and Eastern Europe, and he estimates he spends 50 days a year working abroad. He talked exclusively to the Budapest Business Journal about changes in the marketplace, the strength of the economic recovery, and the difficulties of transporting bees across borders. ROBIN MARSHALL

How has the relocation market changed over the years? A: The company was founded in March 2002, in what you could still consider the “good old days” from a business point of view. Hungary was not yet a member of the EU, so immigration was a great business. The supporting paperwork for entry to Hungary was fairly fiendishly difficult. Companies either managed the paperwork through their own HR departments or, more often, looked to outsource what was a time consuming operation, even if the person coming in was an EU/EEA citizen. You could potentially be looking at 120 days from the time of saying, “I would like to hire this person” to the day that person could walk into work. Back then the traditional expat would have been a man – and I do mean a man, there were very few women assignees – in his 30s−50s, probably moving with his wife and children, depending on the age of the latter. They would be looking for a house in the Buda Hills. We would be dealing with issues such as what was the best international school for the children to attend, and whether the property should be furnished or unfurnished.

STORY HIGHLIGHTS ■

Activity picking up again in the relocation market, both in Hungary and the region ■ Relocations no longer limited just to Budapest, but also to the wider country

Stuart McAlister is the owner and managing director of the Inter Relocation Group, a company he founded in 2002. In December 2012 he was elected as an Eastern region council member for the European Relocation Association, a three−year role that started in June 2013. From 2005−2012 he was chairman of the Robert Burns International Foundation’s annual Budapest Burns Supper, a major charity event run by volunteer business people which has raised hundreds of thousands of euros for hospitals across Hungary caring for sick children. Prior to setting up Inter Relocation, he worked in Budapest for removals firm Interdean. He attended Sheffield Hallam University in the UK.

Back then it was much less common to find a furnished house, though apartments often were. Now, thanks to the likes of IKEA, even houses are sometimes offered furnished. The expat population today is much reduced in Hungary; there are less expat managers. Companies either decided they could not afford these guys, or that they would look to invest locally.

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Presumably things got easier, at least for Europeans, when Hungary joined the EU in 2004. A: Yes and no. With the exception of Britain, Ireland and Sweden, all the other member states placed restrictions on immigration from the new joiners (the last of those limitations were only lifted in 2011), and so Hungary took a reciprocal tit−for−tat approach. If you were one of our HR partners and thought it was suddenly going to be much easier to relocate a German colleague on May 1, 2004, you would have been mistaken. But over time it became far simpler, and from 2011 on citizens from all over the EU/EEA have been able to move in quite freely.

Doesn’t that mean less work for you now? A: Since 2011 it has certainly been a lot less “exciting” for us as a service provider. There is still a process to go through, albeit a much simpler one, but what has also happened that has helped us is that Hungary has become a major location for Shared Service Centers, where a company brings an entire function, like HR, IT, or Finance to one office and services the entire region, and possibly the globe, from here. There is something like 75 of them now, and many of these have foreigners who are new hires, often with limited or no mobility support from the employer. So nowadays we might be helping individuals with their own EU registration needs, and the companies with organizing tax and social security details for each new hire.

Are there other trends we can talk about? The global financial crisis led to far more creative solutions in terms of international mobility. The weekend commute, for example, simply would not have happened 10 years ago. But it is a lot more common for a married person (and now we can talk about both men and women) to work here during the week, staying in rented accommodation, and return home for the weekend. Some see that as a better option than taking children out of school or trying to sell or rent out their property at home. And the type of package an expat gets has also changed. A lot of people will be taken on as local hires, on a local wage, meaning there is no – or at best a very limited – “relocation” package. In 2002 it was not unusual for an incoming expat to get personal travel costs, removal costs, housing and education costs all covered by the company.

And it used to be the case that we had minimal work beyond Budapest. Now as much, if not more, is going on outside the capital as in. In the last five years we have seen major investment and expansion by Audi in Győr and Mercedes in Kecskemét; even the NATO base in Pápa, which is not on the same scale, has seen 300 expats come into a small town of 33,000.

2004 and then 2011 were obviously important dates for your business, but in between them came 2008 and the crisis. Hungary’s economic indicators finally seem to be improving. Are you seeing evidence of that? A: Yes. In the last two years we have seen a 20−25% recovery in terms of growth in income. Hungary has distinctly picked up in the past 18 months or so and has definitely started to wake up. It is the real estate guys that tell you first; if their business is increasing, it means people feel able to spend again. And we are starting to see people wanting to look at €3−4,000 per month villas again, people with serious housing allowances. That suggests to me that companies have used existing local management to cut costs and fight fires during the crisis, but now recovery is underway are bringing in expat managers once more to take a more dynamic approach and encourage growth.

Inter Relocation isn’t just a Hungarian company anymore, as it was when you founded it. What kind of geographical spread do you have? A: We are present in 18 countries on a franchise basis. We go no further west than Austria (as we do a lot of business with Western Europe, if we set up offices there we would become direct competitors and lose that work), but as far east as Russia, as far north as the Baltics, and we go as far south as Greece. Poland is doing very, very well, and has probably weathered the storm better than most. Russia is doing well again, even with the sanctions. To be honest, business has carried on regardless. Even when the Euromaidan protests were going on in Ukraine we had property searches being done within 100 yards of the square, because people understood then that the violence had been engineered, shall we say, by the now ousted leadership. We did do work in Donetsk for a major multinational company that has now stopped, but with most of the major

STAT ATTACK Average number of expatriates supported per month (both by Inter Relocation Hungary and the group): Hungary, 45 group, 80 Number of employees (Hungary and the group): Hungary, 14. Across the group, 110 Year-on-year revenue growth, 2012-2013: 23% Estimated y.o.y. revenu growth for 2013-2014 (based on results to date): 8%

Budapest Business Journal | July 18 – July 31, 2014

REMOVALS VS. RELOCATION So what is the difference between the two? “We call ourselves mobility professionals. Removals were formerly done by men in brown coats, the likes of Pickfords if you are from the UK. It is blue-collar work, big boxes and big trucks,” explains Stuart McAlister, who has worked in both industries in his time. “Relocation is more like consultancy work, very much more white-collar.” Have there always been relocation firms? “Yes and no. Both industries used to be served by three sectors: removals, real estate and legal. So if you were moving countries, you would have had to hire three different companies: one to do the move itself, one to handle the immigration paperwork, and one to find you a new house. “What we would begin to think of as relocation or destination services started with the law firms and more especially the real estate firms seeking to add extra services. Removals firms then also followed, but that was also driven by market changes. Today, 70% of relocations do not involve a household move. People obviously move into a new home, but relatively rarely take their own furnishing with them.” And how long have relocation services been available in Hungary? The longest serving person in our industry is said to be Klára Fóti, the managing director of ARC (All-round Connections), who has been in the business for 20 years.

clients we do work for into Ukraine there has not been any change. Czech has always been strong, Slovakia less so and that was one of the real “tigers” of the region for a long time. That said, my colleagues there have told me they have been extremely busy recently, so maybe things are turning round there. Greece is quiet, but there is more interest in the Balkans, where there was a real surge up to and beyond Croatia joining the EU. We did see quite a bit of business go into Serbia, only for that to fall off again. I don’t think Serbia is quite ready yet: we’ve seen the pioneers go in and pull back.

Any plans to expand further? A: Not really, I’m happy with 18 countries in terms of CEE. There is no desire to move into Central Asia or the CIS because our philosophy is to offer a uniform level of service across the entire region. If we expand much further that becomes more difficult to maintain.

What’s the oddest thing you have been asked to transport? A: Bees. We weren’t involved in the actual process of transporting them, but we were asked to get involved with the Ministry of Agriculture here. These were German bees, and German bees and Hungarian bees don’t meet often, you imagine, so the ministry had to give its approval, make sure they were going to a suitable rural location, that sort of thing. It went fine and they are here now.

And the most challenging? A: On the immigration side we did once have to suggest a couple get married. There was an Indian animator who does amazing stuff and was being brought

to Hungary. To be fair, his income was not massive by European standards, but it was significantly higher than the average Hungarian salary, and he was making an application to move himself and his fiancée from Delhi. Although the application is made at the local consulate, the decision is made in Budapest, and it is our job to know what the decision is likely to be in advance. For non−EU/EEA citizens it is a four−month process for each application from hiring to starting work; multinational companies do not want to have to start that process over again if they get a negative response. When a single man wishes to claim support for his non−married spouse there is greater scrutiny of his financial ability to do so. If the couple are married then, so long as the employee qualifies for legal work status and has a reasonable salary for a couple by Hungarian standards, there would be no question about him bringing his wife. So we went back to the couple and they duly got married and the application was granted. As I say, they were already engaged, so this was hardly a marriage of convenience. The other challenge we still have is in writing the job descriptions that go with applications. You try and make them as specific as possible, to justify bringing someone in, but they still have to match the Hungarian list of acceptable job titles, and people have to be qualified for the role. We had a British regional branding manager for a major multinational brewery who was particularly difficult, as he had not even graduated from high school, but clearly he was very good at his job. But then, Bill Gates would have struggled to get an application to work in Hungary because he had no qualifications to run Microsoft when he started; he just happened to be very good at it.

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Budapest Business Journal | July 18 – July 31, 2014

They want to lend a hand Whether you need a work permit, housing or help finding a good school, handling basic tasks in Budapest can be daunting. Fortunately, local relocation assistance companies promise to cut red tape and make life easier. We asked some of the bigger firms in the market to tell us what they do and explain why someone should hire them. BBJ STAFF

AGS BUDAPEST

Ingrid Lamblin Branch Manager What kind of services do you offer? Our services include: • international and domestic removal, including complete office and factory moves; • export/import customs arrangements; • comprehensive relocation services for executives, staff and diplomats, private persons, students including assistance with residence and work permits, tax, social security cards, real estate searches, vehicle purchase/ selling etc.; • special shipment of fine art on behalf of galleries, museums and collectors; • transport of exhibition and concert materials; • vehicle transport and registration; • integrated short− or long−term secure storage of personal effects; • worldwide small−parcels services; • professional advice whenever you need it. What are the services you most often provide? What kinds of questions do customers typically ask? On moving, they ask about transit time, price, languages spoken, if they have to pack themselves or if we do it. For relocation matters, they often ask if they have to come with us or if we can do everything on their behalf. Do you deal directly with clients or with HR departments more often? Both. We visit all the customers, as we have to make a premove survey to assess the volume of material – and meet them for any relocation related questions. Are the people hiring you usually the direct beneficiaries or is it their employers who hire you? This varies from case to case, of course depending on who’s settling the invoice. Why should customers go with your services?

Because we offer a worldwide solution within the same brand name, we offer and adapt our range of services to the needs of our customers, and most of all because we are dedicated to them. We understand the human situation, and make sure the experience of relocation goes as smooth as possible – to avoid stress and headaches. Is there anything else you’d like to add? You cannot do this work if you don’t have the following personality traits: altruism, a sense of organization and an ability to make decisions, an ability to adapt to unexpected situations, and logic.

See previous question. Why should customers go with your services? Expat−Center offers a 100% guarantee for its services, which is unique on the market. We do this because we are absolutely committed to the highest standards. We also strive to offer the widest range of services.

HELPERS HUNGARY

EXPAT-CENTER HUNGARY

Andrea Szalczer−Leifheit Head of Relocation Services

Györgyi Cziczárdi Owner and General Manager What kind of services do you offer? We offer comprehensive relocation services. Our aim is to make moving to and from Hungary as smooth as possible for our clients. Our door−to−door service ranges from international moving and immigration services to orientation tours and finding housing that suits the client’s budget and needs. We take care of all the hassle that large companies don’t have the time or human resources to deal with and someone new to Hungary may be bewildered by, such as establishing contracts with utilities, opening a bank account and finding the right school for families with children. What are the services you most often provide? What kinds of questions do customers typically ask? International moving, orientation, work and residency permits, visas, opening a bank account, preparing a rental contract. Do you deal directly with clients or with HR departments more often? We usually have a business relationship with multinational companies and serve their expat employees. Are the people hiring you usually the direct beneficiaries or is it their employers who hire you?

What kind of services do you offer? We offer assistance to foreigners who want to do business and/or to immigrate to Hungary. We help them with any issues that can come up during and after the business set−up or the relocation, e.g. negotiate with the different government offices, collect the necessary documents, accompany clients to the bank, provide legal advice, accountants, moreover housing and employee search. What are the services you most often provide? What kinds of questions do customers typically ask? Our most popular product is resident permit through company set−up. We also participate in the EUR 250,000 Hungarian government bond program, through which businessmen (and their families) may receive permanent residency in Hungary through a five−year investment. Customers often ask why they should choose Hungary when they want to relocate to Europe. We usually say that in Hungary it is relatively simple to set up a company, through which they can easily receive a resident permit, which in turn can be used instead of their non−EU passport when travelling within the EU. Moreover, it is quite cost−effective to run a company here, as the corporate tax is only 10%. Hungarians are often unaware of the many benefits Hungary offers – including not only low living and business costs, a central location in the EU and Schengen zone, and a qualified work force but also excellent public transport and safety, great climate and living conditions, and a generally pleasant life experience for expats. Often it is our foreign clients who

bring our attention to benefits that we as locals take for granted. Do you deal directly with clients or with HR departments more often? We usually deal directly with clients, although we are happy to work with HR departments. Are the people hiring you usually the direct beneficiaries or is it their employers who hire you? Our clients usually contact us directly. Why should customers go with your services? With 10 years’ experience in this field, we know well the processes necessary for immigration, resident permit application, citizenship application as well as various business services including company formation, back office and management support; we are familiar with the requirements of the various government offices, and have an extensive network of professionals, with whom we work on a regular basis. This makes us an expert partner. We provide all− round support for the clients’ business as well as private relocation, making us their trusted partner in Hungary to whom they can turn both at the start and also at any time during their stay here. Is there anything else you’d like to add? Over our 10−year period we have gathered a lot of experience in the field of relocation and business immigration. We have learnt how to best analyze and then satisfy our clients’ needs, this way we can give our customers all the possible assistance necessary for embarking on a successful venture in Hungary.

HUNGARY ASSISTANCE

Dr. Péter Sipos Company Representative What kind of services do you offer? Through our many years of experience working with expatriates and their families in Hungary, we understand that our clients need assistance on both the immigration and legal aspects but also on all aspects of day−to−day life to achieve a smooth and successful relocation. Our services therefore cover the entire expatriation cycle:

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Budapest Business Journal | July 18 – July 31, 2014

11 meaning that we manage all aspects of the process to allow a foreign worker and their family to work and reside in Hungary legally. We also provide a range of administrative services in the same area, ranging from arranging tax and social security cards, driving licenses, car registration and so on. The other main area of focus is helping expatriates to find a home, settle in to life in Hungary, find a school for their children and generally helping them to orientate themselves in their new home city. What are the services you most often provide? What kinds of questions do customers typically ask? Immigration compliance is a legal requirement in Hungary and something many HR departments are fearful of because it’s a complex process and one that can have real financial consequences if it goes wrong. We have many years’ experience of managing such processes and take on this process for a number of multi−national and smaller corporate clients and even individuals. We also manage a lot of home searches, where the corporate client hires Inter Relocation because we represent only the tenant’s interests in negotiations and are truly independent of any real estate agent or property owner. Our goal is to deliver cost savings that actually save more in actual cash terms or in terms of saved time than we actually charge for our support.

Don’t do it yourself! These people tell why you should get them to help.

Immigration and administration: We manage the application process from start to finish, organize official translation of documents, accompany our clients to the required government offices and follow−up on applications submitted for: work permits, residence permits, business and tourist visas, registration with local authorities including Hungarian tax ID, social security insurance and accommodation registration. Relocation services: Pre−arrival assessment: for each of our clients, we prepare and provide a custom− tailored detailed immigration and relocation to Hungary plan. Moving services: moving assistance, customs clearance, and importation of vehicles. Housing and temporary living assistance: Because finding the right home is key to a successful relocation, we assist our clients with research and viewing of properties, negotiation and drafting of lease agreements, extension and termination of leases, and we can act as a liaison with the landlord throughout the duration of the lease. Schooling: custom−tailored list of international and/or Hungarian schools available, appointments and school visits, application and registration. Invoice and utilities management: (including utilities, internet, local TV and cable/satellite, alarm system installation and monitoring): service providers’ review, set−up of services, billing inquiries and termination of contracts. Bank & insurance: opening bank accounts, finding a broker/insurance company, etc. Pet immigration and pet sitting. Local area orientation tour: a custom− tailored tour of the city and the area where our clients are relocating including English speaking medical services, pharmacies, malls, restaurants, schools, gyms and more. “Take it easy” services: Car services: buying and selling, services, importation and registration of vehicles into Hungary and also vehicle maintenance,

including seasonal tire changes, oil changes, technical inspections (M.O.T. test) and more. Home and property management: we take care of your leased property for you including managing utilities, organizing and coordinating repairs, organizing full legal representation if you are away, etc. Property buying: we assist our clients with buying a property in Hungary whether it is their own home or for investment purpose throughout the whole process including searching for property, organizing viewings, contract negotiation, contract translation and finding a lawyer. What are the services you most often provide? What kinds of questions do customers typically ask? We cover the whole spectrum of services listed above and have experience with all of them. We most often provide services related to immigration (work permit, residence permit, etc.), visas, housing, home and property management, car−related services and property buying. Over the years, our clients have typically asked us about those topics, as well as questions about international schools, banking and driving licenses. Do you deal directly with clients or with HR departments more often? We assist equally HR departments and private individuals. We usually assist HR departments for matters related to immigration (work and residence permits), registrations and visas. We assist private individuals with immigration matters as well, but mostly provide relocation, car, property management and property purchase services. Are the people hiring you usually the direct beneficiaries or is it their employers who hire you? We usually directly assist the beneficiaries of our services. When we are hired by their employers, we also usually work directly with the person receiving the service and coordinate with their management.

Why should customers go with your services? We are passionate about our work and we go the extra−mile. We deliver professional and customer− focused services to meet the needs of each individual client and ensure a smooth, well− coordinated and successful relocation. Our goal is to make our clients’ life easy so that they can focus on their work and family. All our clients’ issues and questions are therefore important to us – whether they are work related or private – and we assist them in every aspect of their day−to−day life. Is there anything else you’d like to add? We are more than a relocation company. We also want our clients to enjoy living in Hungary and experience the best the country has to offer. We therefore have an entire section of our website where you can find information about local events and trips, search our directory for museums, restaurants, doctors, etc., place a free ad to sell items and share your own tips with other expatriates. We hope you will enjoy Hungary as much as we do and are looking forward to assisting you.

INTER RELOCATION KFT.

Dominika Muzslay Operations Manager What kind of services do you offer? Inter Relocation has two main areas of service delivery: the first is immigration compliance,

Do you deal directly with clients or with HR departments more often? The vast majority of our clients are corporate with Inter Relocation supporting any expatriate employees via an HR department. We do have a growing number of private individuals who turn to us for support, mainly for immigration assistance but also for ongoing issues with tenancies and other consultancy. Are the people hiring you usually the direct beneficiaries or is it their employers who hire you? The majority are employers who hire Inter Relocation as a company to manage certain processes related to employee mobility. As previously mentioned we do have an increasing number of private individuals who find our support to be of value. Why should customers go with your services? Inter Relocation has the largest and most experienced team of trained, salaried immigration and relocation consultants of any such provider in Hungary. Unlike some of our competitors we don’t provide relocation support as a secondary service line to household goods moving, real estate or legal services. Instead we focus only on our core competences and that also allows us to offer very competitive pricing both to our corporate and private clients. Is there anything else you’d like to add? Inter Relocation is the only company in Hungary to hold the European Relocation Association’s prestigious Global Quality Seal. Based on an ISO 9001 process management model, the EuRA Global Quality Seal specifies the processes and key performance indicators that reflect the very highest standards in relocation services. The scope of the program actually exceeds that required for ISO 9001 as it includes all the generic aspects required for this internationally recognized quality standard but then adds additional elements specific to the relocation industry.

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Budapest Business Journal | July 18 – July 31, 2014

International schooling in Budapest Where will we find a proper school for the kids? That’s the question faced by any expat with a family when he or she relocates to a country like Hungary. It is a goal for the child to study the main subjects in his or her mother tongue; it is also important to learn a foreign language. A further concern for the family is how much the tuition fees will be. ANDRÁS ZSÁMBOKI

“Our main concern was that our children could easily reintegrate into the educational system back home in France when we return from Hungary,” Gérard, a regional executive at Gas de France (GDF) Hongrie told the Budapest Business Journal. “This was the most important issue. This is why we chose the Lycée Gustav Eiffel [better known as the Lycée Française dans Budapest]. It is a plus that the institution includes everything from kindergarten through grade school to secondary school,” he continued. Gérard and his wife have three children, and this means they can drive all three kids to school together in one journey. Gérard and his family live in south Buda, relatively far from the Lycée. “It would be simply impossible for my wife to drive the children to three different institutions every day,” he says. The family does not feel separated from Budapest, but they definitely enjoy the fact that they have a living connection to France through their children’s school. “My elder son and his class visited France twice during the last academic year with the school: once they attended museums, and once they went on a ski trip to the Alps,” Gérard says. The financial side of the children’s education is favorable for the family: study trips are financed largely by the French state, whereas the tuition fee at the Lycée is mostly covered by GDF. The Lycée is one of a range of international schools located in the green hillside district of northwestern Buda. Pupils live their lives rather isolated: either in the school itself or in the large park surrounding the school. “Lycée Eiffel is special in the sense that it is financed and supervised fully by the French state,” Rafael Erdődi, admissions officer of the school explained to the BBJ. “In our school, all teachers are civil servants of the French state, and the French Ministry of Education controls our operations. The Paris superintendent of secondary schools has recently visited the Lycée.” At the same time, it is an explicit aim of the school’s leadership to not to run the school as a French capsule. “Nearly half of our pupils are neither French nor Belgian citizens, nor do they come from other Francophone countries. This minority is made up half ADVERTISEMENT

Lycée Française dans Budapest.

by Hungarian pupils and half by children of foreign employees working long−term in Hungary, including British, Japanese and other parents. Our school, in cooperation with the French Institute, organizes several extracurricular programs in Budapest. During one recent event, our pupils attended performances at the Theater Festival of the Handicapped, at venues including the Hungarian National Theater as well as the theater hall of our own school. MORE ANGLO-SAXON, MORE PRIVATE Of the schools from the BBJ’s Book of Lists, the French Lycée Eiffel is certainly untypical as far as cost is concerned: about one third or one half of the tuition fees required by English−language schools in the same category. “The explanation for that is simple: the Lycée Français is financed by the French state, while there is no similar state−funded school among the British or American ones,” György Horn, secretary of the Association of Private Schools told the BBJ. European continental traditions favor educational systems characterized by a high degree of state participation and state supervision. “It is not a coincidence that the three international schools which are financed by their mother countries − The Austrian Foundation School, the Lycée Gustave Eiffel, and the Thomas Mann German Secondary School – are all part of the continental tradition,” the secretary explained. In the EU, it is compulsory for member countries to accept each other’s secondary school final exams. In a German−French relationship, that kind of mutual acceptance functions perfectly well. British schools, by comparison, only aim that the knowledge represented by their final exams should be compatible with the elite universities of Great Britain, namely Oxford and Cambridge. The same applies to American private schools, which prepare students for the standardized

exams, e.g. GRE and its subject−specific variants, typically required of applicants by American universities. “British and American private schools work on a fully self−financed basis,” the secretary added. Anglo−American schools regards themselves as representatives of world cultures, and believe there will always be an affluent audience willing to pay high sums to acquire the competences they teach. Thus they are able to survive without state support, and neither the United States nor the UK regards it as their mission to financially support these schools in Budapest or elsewhere. THE TOP THREE Of the three schools with the highest tuition fees and perhaps the highest prestige, two follow the National Curriculum of the UK, while the third one is based on the American system. “As expat families move several times while raising their children, it is important for them to smoothly transfer the children from one school to the other. If one began school in the British system, one would like to continue in the same system later on,” Katalin Bodnár, admissions officer of the famous Britannica International School says, explaining why it is crucial for the school to tailor its curriculum to international standards. Having two schools following the British system of course also creates a certain degree of competition between them. “Britannica School has fewer students, it is closer to downtown Budapest, and it has a more familiar atmosphere, while the British International School Budapest is located in a larger and more modern building farther away from the city center, and students are driven by school bus,” Nigel, whose children have tried both British schools, points out the differences. What does that mean in practice? Britannica School’s eight years/classes are attended by 330 students, while the British School has 580 students altogether. At

Britannica, the percentage of native English speakers is somewhat higher, just above 20%, whereas in the British School the proportion is 15%. Hungarians or students who have some kind of a Hungarian background make up about one−third of students in both schools. In Britannica, less than half of the students come from third−country backgrounds (i.e. from neither British nor Hungarian families), while in the British School international students constitute the majority. Britannica can be found in one of the elegant side streets at Istenhegy, an upscale area near Buda Castle, and most of its students go to school by public transportation. The British School, in comparison, is located in a relatively remote area of Remethegy in the Buda hills, which would be hard to approach without a school bus. “In our school, the fluctuation of pupils is low, around 10%, thanks partly to the cozy and family−like atmosphere. From each year/class numbering 20−30 pupils, only two or three leave each year,” Bodnár boasts. Britannica, of course, has one rather obvious appeal: its annual tuition fee is €2,800 less than that of the British School, which costs €15,100 per year. “This is particularly important for expats working for multinational companies. Since the crisis, it has been less and less typical for employers to provide unlimited funding to cover the tuition fees of their employees’ children.” The American International School of Budapest is the most elite and, at the same time, the most expensive private school in Budapest. Located in the middle of a 13−hectare park with giant trees in the Buda hills, it is completely secluded from the city – in fact it is formally outside Budapest, in a suburb called Nagykovácsi. The U.S. Embassy founded the school 40 years ago by for the children of diplomats and employers working for it. In time, it became a popular choice among employees of other countries’ embassies as well. “Ten years ago, the school used to boast about teaching 20 national minorities. Today, we have only one minority, namely the Americans,” Katie, an American parents and mother of three, describes the situation ironically. “The schools’ faculty is mostly American, as Americans are still heavily represented among pupils. But it is the Asians who make up the highest percentage; the next two largest groups are Hungarians and Russians,” Andrea, one of the Hungarian parents explains. Up to the age of 12, children find the transfer among English−language schools relatively easy. “Above that age, however, the content of the British curriculum becomes euro−centric and open toward the world, while the American curriculum concentrates on the history, culture, and political traditions of the United States,” Horn explained to the BBJ. “For Hungarian pupils above a certain age, getting familiar with the British and American attitudes may represent a problem, too,” he adds.

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Musical Getaways SZIGET FESTIVAL (August 11−18) www.sziget.hu Location: Budapest, Óbudai Sziget Headliners: Macklemore and Ryan Lewis, Queens of the Stone Age, Manic Street Preachers, Placebo, Lilly Allen, the Prodigy, Madness, the Klaxons, Bonobo Sziget was Budapest’s first major music festival, and now it’s not just the biggest in Hungary, but one of the major European music festivals. A huge part of Sziget’s appeal is the laid−back, anything−goes party atmosphere that pervades there. The festival is simply too big, and too Hungarian, to be ruined by an overabundance rules and regulations. It’s rough and ready – and that’s the charm. The location is wonderful: The big green park on Óbuda Island, which is relatively underused and quiet most of the year, is closed off to everyone but ticketholders for a week in the summer. Once you’re on the island, it’s easy to wander among the nearly 100 stages, enjoying a dizzying array of concerts. In between acts, you can take in a lot of non−music diversions too – whether its bungee jumping, hose−washed football

matches, hanging on the “beach” at the end of the island, learning to paint, playing paintball or getting married “for the duration of the festival”. Now consistently drawing crowds of between 350,000−400,000, the festival was a smaller, all−local affair, known as Diáksziget, or “Student Island” when it was first held in 1993. Since then, its name has been shortened to “Sziget”, or “Island”, and it now attracts some major international acts. Prices have also gone up, and it currently costs HUF 15,000 to spend a day at the Sziget, or HUF 74,000 for a full week’s pass. That’s still a reasonable price, especially by Western European standards, and organizers say that sales are moving at a record pace – with early bookings from the UK, Germany, France and Italy up nearly 100% from last year. The headliners here can still sometimes have a sort−of second−tier feel to them – often they were the hottest acts a couple years ago and have since passed their peak in popularity. It’s often the big−name DJs in the dance tents who are more current. In fact, some of the most interesting acts are not the big name bands, but the lesser−known groups waiting to be discovered on the smaller stages: the folk−fusion oriented Roma stage has some of the liveliest late−night bands, and the LGBTQ−oriented Magic Mirror tent has some of the best dancing.

Photo: Bence Szemerey

Every summer, more than 100 music festivals serenade Hungary, offering party weekends in pretty, rustic settings. For those who don’t want to leave Budapest, there’s always the massive Sziget festival. Here we preview some of the classics events that are coming up.

There’s a good range of international foods, and plenty of bars too, all priced pretty reasonably. To get the full Sziget experience, many visitors – at least 50,000 of them – choose to sleep onsite in the their own tent. It’s a great way to live and breath the music, to share close quarters with young people from around Europe, and to avoid the worry of getting home at the end of the night. Still, for Budapest residents, trains, boats and taxis make it easy to get there and back, so you can pop in for a few hours and not wake up on the ground, next to a stranger.

The festival moves to a new location almost every year, and this time, they are taking www.efott.hu over Miskolctapolca’s Egyetemváros, or Location: Miskolctapolca university town, an 85−hectare (210−acre) Headliners: Quimby, Carbonfools, campus. Your festival tickets get you a Tankcsapda, Bëlga, Punnany Massif, discount at the barlangfürdő, the town’s Brains, Karthago, Dorothy, Helland, thermal baths inside a cave. Zanzibar

Photo: Sándor Csudai

EFOTT (JULY 15-20)

If you are ready for some Magyar rock, and a student crowd, head out to this suburb of Miskolc. The first EFOTT, back in 1976, was truly underground – held in communist Hungary under the covert name of the “National Tourist Meeting of University and College Students”. Now that it’s legal, it still maintains its dedication to the subterranean by choosing a lot of underground bands from among its host of Hungarian acts.

of the historic Old Town of Veszprém are taken over by bands and music lovers for this 11−year−old festival. VeszprémFest tries to touch all genres – it boasts opera, classical, and pop – but the main focus seems to be world music, jazz and the places where those styles meet.

VESZPRÉMFEST (July 15−20)

ALTERÁBA (July 16−20)

www.veszpremfest.hu Location: Veszprém Headliners: Brand New Heavies, Fatoumata Diawara & Roberto Fonseca, Vaya Con Dios, Youssou Ndour A good festival for grownups, this one promises a range of music in a mellow setting. Several stages set up in the heart

www.alterabafesztival.hu Location: Körmend, Rába Park Headliners: Deák Bill Blues Band, Péterfy Bori, Magna Cum Laude, Anna and the Barbies, Quimby, 30Y This low−cost festival with PAGE 14 onsite camping caters to lovers of Hungarian

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alternative rock and motorbikes in a small with the stages, there will be an influx of western Hungarian town on the banks of street musicians, who perform all over the Rába River. The all−Magyar lineup town, mostly for free, although the favorites, performs in beautiful rustic surroundings. chosen by the audience win big prize money. Splashing fun can be had at St Gotthard Spa & Wellness nearby. CAMPUS FESTIVAL (July 23−27) www.campusfestival.hu BABEL SOUND (July 18−20) Location: Debrecen, Nagyerdő www.babelsound.hu Headliners: Quimby, Tankcsapda, Location: Balatonlelle Kowalsky meg a Vega, Intim Torna Illegál, Headliners: Desenvoltura, Cha Cha Bëlga, Carbonfools Budapest Trió, OI DIPNOI, Edward The Campus Festival, held in a large Powell trio, Calcutta Trio, Khamsa Tribe, forested area just north of Hungary’s RumbAroma, Jazzrael, KAL, Csőke second city, hosts around 200 performers. Renáta Quartet They are mostly Hungarian bands, but they A mellow festival along Lake Balaton cover much musical ground, from house to emphasizes folk and world music, with electronica, to Balkan to reggae – and even acts coming from Hungary, Algeria, Czech jazz – all in a pretty rural setting. When Republic, Egypt, Greece, India, Indonesia things get hot, festivalgoers can take a dip Morocco, Portugal, Spain, and Serbia this at the nearby water park. year. There are 18 concerts scheduled, and they are preceded by dance workshops. VALLEY OF THE ARTS (July 25−August 3) BÁNKITÓ (July 20−22) www.muveszetekvolgye.hu www.tekerjatora.hu Location: Kapolcs and nearby villages Location: Bánk Headliners: Kaláka, Cabaret Medrano, Headliners: The Qualitons, Bëlga, Puszi, Cimbaliband, Dresch Mihály, Hobo Blues Mary Popkids, Žagar, Alex Rae Band, Veronika Harcsa Jazz, electronic and world music concerts Folk music and folk art represent the core of complement swimming and fishing at this this festival, which was born of the happy scenic country lake. Getting to this friendly sisterhood of six lovely villages. Kapolcs, event is worthwhile, but first you’ll have to Vigántpetend, Taliándörögd, Monostorapáti, scale the steep hills surrounding the remote Öcs and Pula sit in a valley among the soft sight. Arriving by bicycle is a real plus slopes of the North Balaton area, which here, and the grass roots, cyclist and green is also a wine region. Going for near 25 culture gives the festival its trademark focus. years, the festival still has the special atmosphere of slow country life. Arts and VESZPRÉM STREET MUSIC crafts are in focus as well as world music FESTIVAL (July 23−26) and gastronomy. Locals offer food and wine www.utcazene.hu in homey surroundings. Location: Veszprém Headliners Random Trip, Holywoodo, OZORA (July 29−August 3) Romungro Gipsy Band, Wombo www.ozorafestival.eu Orchestra and a host of street performers Location: Dádpuszta Musicians take over the streets of Veszprém, Headliners: Ozric Tentacles, Ace Ventura, a beautiful, historic old town north of Dick Trevor Balaton, with stages scattered around the Billed as a “psychedelic tribal gathering”, city offering free performances of folk, jazz, OZORA raves on as a direct descendant of a ethno, dance, pop and other genres. Along 1999 solar eclipse party that quickly became

Budapest Business Journal | July 18 – July 31, 2014

one of continental Europe’s premium Goa− trance events after its reinvention in 2005. A big UK contingent flies over for this one every year. Driven largely by an agenda of DJs, live acts and chill−out events, OZORA also pays particular attention to the visual component, which includes intricate projections, LED modules and a colorfully decorated main stage area. In keeping with the free spirit and independent vibe, international food stands and market booths sell vegetarian food, hand−made crafts and other earth−friendly fare. Though you can find accommodation nearby, on−site camping is considered the way to go.

FEZEN (July 30−August 2) www.fezen.hu Location: Székesfehérvár, MÁV tracks Headliners: Destruction, Tarja Turunen, Europe, Magna Cum Laude, Quimby Metal and rock are well represented at this festival about 60 kilometers from Budapest that’s been going for around 20 years. FEZEN highlights foreign acts as well as the Hungarian festival favorites for reasonable prices. Don’t be fooled by the slightly industrial setting, Székesfehérvár is a beautiful town, with an old city center worth exploring.

ÖRDÖGKATLAN (August 5−9) www.ordogkatlan.hu Location: Nagyharsány and nearby villages Headliners: Lajkó Félix, Romungro Gipsy Band, Quimby, 30Y, Budapest Bar, Csík zenekar, Wombo Orchestra Ördögkatlan, or “Furnace of the Devil”, is much more pleasant an environment than the name would suggest. The otherwise peaceful southern villages in the Villány wine region welcome a lively buzz for this festival, which makes an effort to link music, the arts, food and wine appreciation. Acts offer mainly folk and world music with some blues and reggae thrown in. It’s all on a friendly scale, with many locals cooperating, allowing visitors to sample country life. The

Photo: Balázs Mohai

late songster and actor Tamás Cseh founded the festival in 2008 and his spirit lives on in the valley, drawing tens of thousands of visitors each year.

SZEGEDI IFJÚSÁGI NAPOK (SZIN) (August 27−30) Szeged (www.szin.org) Location: Szeged Headliners Magna Cum Laude, Kiscsillag, Quimby, Vad Fruttik, Bëgla, Csík, PASO, Random Trip, Carbon Fools This festival in a campsite by the Tisza River features mostly Hungarian bands, and that’s how it was back in 1968, when it was first held. The forerunner of all Magyar festivals, SZIN took a break after the fall of communism but returned in 2003. In recent years, the festival has introduced an eco−friendly edge with many events to promote environmentally conscious attitudes. Visiting the festival also allows you to visit the city of Szeged, a charming mix of Hungarian and Balkan architecture and lifestyles.

26 July, 2014 8pm GIFT COUPON Use this coupon until 25 July at the Szabad Tér Ticket Office (1065 Bp., Nagymező st. 68.) and we give 20% discount of the entrance fee.

Arrive by Theater Boat Service to the ‚Open-air Stage and Water Tower’ port Spend a night in Budapest and get a free theater ticket! Cultural hotel package deals with discounts.

Further information and online ticket purchase:

www.szabadter.hu

Szabad Tér Színház Nonprofit Kft. is operated by the Local Government of Budapest Capital.

Highlighted mediapartners:

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Budapest Business Journal | July 18 – July 31, 2014

Restaurants FINE

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This is an extract from Fine Restaurants, the Budapest Business Journal’s Restaurant Guide 2014 (www.facebook.com/fine. restaurants). To order your copy of the publication, which costs HUF 2,990, send an email including contact details to Andrea Bognár, bognar.a@amedia.hu

ÉS BISZTRÓ Wine bar, beer pub, terrace, bistro, restaurant, brasserie. In ÉS you don’t need to have traditional dishes and follow dining traditions. The menu has three separate parts: nibbles to share, typical dishes from the time of the Austro-Hungarian Monarchy and grilled meat and ﬁsh. A unique, unconventional wine and beer selection rounds off this delicious gastro experience. Breaking with the formality of dining traditions, i.e., the sequence of starter, main course and dessert, guests can have nibbles while enjoying a glass of wine or beer. Night and day. With friends and family.y

Address of restaurant: 1051 Budapest, Deák Ferenc utca 12–14. · Telephone number: +36 (1) 429−3990 · Telephone number for reservations: +36 (1) 429−3990 · E−mail address: info@esbisztro.hu · Website address: www.esbisztro.hu · Name of manager: Kőrösi Norbert · Name of chef: Vajna Tamás · Executive chef: Roland Holzer · Creative chef: Litauszki Zsolt · Opening hours: Monday−Sunday: 07:00–23:45 · Type of cuisine: Austro−Hungarian · Number of seating places: 120

A Hungaroring infokommunikációs partnere az Invitel

Világszínvonalú háttér a hazai versenypályán Minden sikeres pilóta mögött kimagasló technológia és felkészült csapat áll. A nyári Formula 1™ PIRELLI Magyar Nagydíj hírei az Invitel infokommunikációs rendszerein keresztül jutnak el a világ minden pontjára, immár több mint tíz éve.