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Going down into the Hospital in the Rock

Private banking: margins shrinking

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On the 70th anniversary of the end of the Siege of Budapest, we visit an unusual underground museum that provides an eerie reminder of a time when German forces made a stand in the Hungarian capital. 18

A report on the subsector in Hungary notes the risks of derivative funds, the potential impact of excessive state involvement and the growing lure of foreign tax havens. 06

Whether it was caused by EC pressure or, as some claim, a vow from RTL Klub to reduce government criticism, the plan to change the ad tax apparently enraged a Fidesz-friendly media oligarch. 07

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Javier González Pareja displays his BBJ Expat CEO of the Year award, presented to him by this newspaper and HIPA in recognition of his unique contribution to Hungary’s development. 11-15

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Top expat CEO

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Going down into the Hospital in the Rock

Private banking: margins shrinking

Advertising tax moves rattle the market

A report on the subsector in Hungary notes the risks of derivative funds, the potential impact of excessive state involvement and the growing lure of foreign tax havens. 06

Whether it was caused by EC pressure or, as some claim, a vow from RTL Klub to reduce government criticism, the plan to change the ad tax apparently enraged a Fidesz-friendly media oligarch. 07

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Stop using taxes as a weapon It is generally understood that tax cuts are good for business, and can actually increase government revenue by encouraging private−sector activity, which in turn generates more taxable revenue. In Hungary, tax cuts seem to have become the bargaining chips that the government uses to get what it wants. And the opposite of tax cuts, the special sectoral levies of which the leadership is so fond, appear to have been turned into weapons, as if the government were saying: “Give me what I want or I will tax you out of existence.” Recently we have seen the government use both the advertising tax and the banking tax as something between enticements and threats. The proposed reduction of the advertising tax looks like an especially cynical deal, from both sides. After talks with Bertelsmann, owner of local TV station RTL Klub, the government says it is ready to eliminate the punishing tax, which currently makes RTL Klub the only media outlet on the market that must pay 50% taxes on all advertising revenue. The government and Bertelsmann executives maintain that the deal is being made to avoid an infringement proceeding from the European Commission’s Directorate−General for Competition. But it has been widely reported that the deal started as a promise by RTL Klub to cut back on its criticism of the government in exchange for a break on taxes. And it is hard to be sure that there is still not some kind of promise of softer coverage for the government after the tax: Why have we not heard about the fate of RTL Klub’s firebrand of a CEO, Dirk Gerkens, who is apparently despised by government officials? And why must the final deal be negotiated by the Prime Minister of Hungary and executives of Bertelsmann? Some even more disturbing questions are: Why did RTL Klub first seriously increase its less−favorable coverage of the government only in June, after the TV channel was

singled out by the tax to begin with? Where was RTL Klub before? It should be the main mission of the media to be a critical watchdog of the authorities, but apparently RTL Klub wasn’t going to take this mission too seriously until the government started harassing the station. From the government’s side, there was very little effort to hide the impression that the advertising tax was an economic cudgel that the government would use against RTL Klub until they got in line. The reduction in the bank tax seems like a clear improvement for the market, and something that could help the economy. The question in this case is: Why did we have to get into a situation where relief was necessary? Although the special bank taxes were never aimed at one particular company, they did seem to take calculated aim at pushing foreign banks out of the market. The prime minister and his cabinet frequently said they would like to reduce foreign ownership, so that more Hungarian banks are held locally. They created special bank taxes and special laws that made it particularly expensive to do banking here. As foreign banks looked for an exit, the government eagerly bought them up, with the stated intention of eventually selling them to local owners, though these sales do not seem to be happening in a hurry. The situation has become bad enough for Erste Bank Hungary to need recapitalization. By agreeing to reduce taxes and create more transparent regulations, the government won a chance to buy into Erste, but that never would have been necessary if they hadn’t brandished special taxes to begin with. Hungary would surely enjoy a more stable, predicable economy – one that draws in more investment – if the government used taxes as part of responsible fiscal policy, rather than as a weapon.

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A man and his daughter stand in front of a pleasure boat on the Danube, with the Castle in the background, back in 1935, left. Above, is a more recent Danube scene, with a newer pleasure boat and a Castle that had to be rebuilt, following bombing in World War II. For a story on that bombing, and a museum that commemorates it, see page 18.

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Bank taxes to be reduced as gov't buys into Erste 6 NEWS

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macroscope

EC sees slower growth, more debt for Hungary On the bright side, the country’s debt rating and government deficit are expected to improve. The European Commission’s 2015 Winter Forecast projects a slowdown in economic growth in Hungary through 2016, while in the EU and in the euro area, economic activity is expected to pick up somewhat this year and accelerate further in the following year. Nevertheless, with the stronger fundamentals, hopes are high for an upgrade in Hungary’s credit rating. Economic growth is projected at 2.4% and 1.9% in 2015 and 2016, respectively. This is slightly more pessimistic than the 2.5% and 2% projection in the Autumn Forecast, despite a relatively brighter outlook for the EU. The EC attributes this optimism about the European economy to declining oil prices, the weaker euro and the ECB’s recently announced quantitative easing program. At the same time, downside risks, such as geopolitical tensions, financial market volatility, and a long period of low inflation, have intensified, too. So why this slowdown in Hungary’s economic growth? The EC says that strong growth in 2014 was primarily due to one−off factors, such as the high absorption of EU funds and the central bank’s Funding for Growth Scheme. The effect of these factors is set to diminish from this year onwards. Furthermore, export growth is expected to decrease this year due to lower demand from Hungary’s main trading partners. Thus, domestic demand continues to be the main driver of growth fuelled by private consumption rather than investments. Hungary’s current account surplus is expected to remain above 4% of GDP in 2015. Unemployment is set to be slightly above 7.5% this year and fall below 7% in 2016 due to further increases in public works. Wages will remain subdued in both the private and the public sector because of low inflation and nominal wage freezes in the public sector.

There was a significant downward revision to 2015 inflation from 2.5% in the Autumn Forecast to just 0.8%. However, the effect of the low oil prices and low inflationary pressures in the euro area will likely diminish, which is reflected in the EC’s 2.8% inflation forecast for 2016.

Optimistic about public finances The EC is more optimistic about Hungary’s public finances. The 2015 budget deficit forecast is 0.1 percentage points lower than the previous one, at 2.7% of GDP. The EC stressed that the forecast does not include the planned one−off revenues from still unspecified asset sales. Government deficit is projected to further decrease to 2.5% of GDP in 2016. Positive budgetary risks in the forecast horizon include anti−VAT avoidance measures and asset sales, meanwhile a higher than expected financial correction of EU funds and spending overruns in education are the main downside risks. By another key measure of fiscal health, the structural balance adjusted to remove the cyclical components and one−off measures, the budget is in relatively poorer shape. The structural balance, which indicates long−term fiscal sustainability, is expected to double to 2.6% in 2014 and remain at that level this year, too. The EC expects the debt−to−GDP ratio to increase to 77.7% in 2014 mainly due to the weakening of the exchange rate. In 2015, it is projected to fall back to 77.2%. However, the EC warns that debt reduction may be hampered by the need to provide domestic advance payments for the closing of EU co−financed projects. In 2016, the ratio is projected to decline to 76.1% of GDP.

Hoping for an upgrade Evermore experts seem to believe that Hungary’s current economic performance and its more or less favorable outlook

European Commission predictions for Hungary GDP growth (& y.oy.) Inflation (%, y.o.y.) Unemployment (%) Public budget balance (% GDP) Gross public debt (% of GDP) Current account balance (% of GDP)

2013 1.5 1.7 10.2

2014 3.3 0 7.7

2015 2.4 0.8 7.4

2016 1.9 2.8 6.6

-2.4

-2.6

-2.7

-2.5

77.3

77.7

77.2

76.1

4.2

4.1

4.4

4.9

Photo: World Economic Forum/Remy Steinegger

GABRIELLA LOVAS

European Central Bank Chief Mario Draghi’s quantitative easing is expected to help the eurozone. could already lead to an upgrade of its sovereign rating. “The hottest topic in Hungary this year is a possible upgrade by the big international credit rating agencies,” said András Szántó, head of retail services at Equilor at a press conference. National bank governor György Matolcsy fuelled hopes by recently saying that he expects an upgrade this year because of the predictable and stable path of the economy. Hungary is currently in a non−investment grade with a stable outlook at all three main agencies. Standard & Poor’s credit rating for Hungary stands at BB. Moody’s rating for Hungarian sovereign debt is Ba1, while Fitch’s credit rating is BB+. Moody’s will be first to review Hungary’s rating, on March 6, followed by S&P on March 20 and Fitch on May 22. Expectations have built for an upgrade primarily because 2015 is a turning point in the structure of household debt, explained Szántó. Due to the forintization of forex household debt, the percentage of consumer loans carrying forex risk has dropped from 70% to just 3%. Other positive factors include more than 2% GDP growth, expanding lending for SMEs, strict budgetary discipline

“The hottest topic in Hungary this year is a possible upgrade by the big international credit rating agencies.” and a high current account surplus. Moody’s said last November, when it changed Hungary’s outlook to stable, that it “could consider upgrading the government bond rating if there were signs of stronger growth prospects supported by greater policy stability, particularly with regard to the banking sector. Moreover, evidence of debt trending on a continued downward path could also provide support to an upgrade”. On the downside, Szántó mentioned the high budget deficit, unpredictable economic policy and low FDI inflow, excluding the banking sector. “It could be a big help if the government would try to reach an accord with the multinational firms,” said Szántó adding that the current conflict with the retail chains does not exactly facilitate this.

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expectations, the central bank will cut interest rates further”. Despite the falling CPI figures of recent months, Somi believes that there is no ground to talk about a “serious deflationary spiral in Hungary, so far”. Somi argues that the falling CPI in the last months of 2014 were chiefly caused by the Hungarian government’s reduction of utility prices, while January’s CPI was deteriorated by falling oil prices. The dropped consumer prices “can generate residential consumption which will, in the long−term, drive CPI back to positive figures” Somi forecasts. Török sees no tendency for deflation in Hungary either, and that no deflationary cycle would reach the country, however, Török foresees that the eurozone could be affected by deflation.

IN BRIEF

Illegal cigarette factory raided

Photo: MTI/NAV

Szijjártó: Merkel’s visit shows Germany’s appreciation

Shown is equipment from what authorities are calling Europe’s largest illegal cigarette factory. Located on the outskirts of Budapest, the factory was shut down and some 22 tons of tobacco and 2.3 million cigarettes were seized at the site, National Tax and Customs Authority (NAV) officials said at a press conference on February 10. Packaged under the Golden Mount brand name familiar in the U.K., the cigarettes had an estimated market value of HUF 2.5 bln abroad. NAV officials said that the illegal factory defrauded the Hungarian state of HUF 200 million in taxes. Nine Bulgarians, one Israeli and one Hungarian citizen were taken into custody as a result.

Analysts: Falling CPI not a cause for concern January’s falling CPI figure of 1.4% was chiefly caused by the drop in the oil prices and does not put Hungary into a deflationary cycle, analysts told the Budapest Business Journal on February 11. “Although the underlying market tendencies have been known, the fall is still a minor surprise” András Somi, Head of Research and Content at KBC Securities Hungarian Branch Office said. However, “the measure shows a rise of 0.7%, excluding the changeable oil and food prices, which reveal stagnation”. According to Buda−Cash analyst Bálin Török, “the negative figure is not a surprise, but its extent can be [...] since the end of last year the price of oil and the government’s

utility price reduction have been affecting CPI, but in general, the prices of food are not growing either.” For this year Somi expects stagnation in the tendency of CPI. “Regarding the whole year, the measure is expected to be around 0%, which means stagnation, however, this can well be affected both directly and indirectly by the price of oil” Somi added. Török also foresees stagnation as “inflation is expected to stay low for the upcoming period, however it will probably start increasing”. Török added that he believes that “inflation will stay under 1% for the whole year, but it is very much dependent on oil prices and on the forint’s exchange rate.” Based on the lowered underlying inflation indicators of the National Bank of Hungary (MNB), Somi foresees that “in line with the

Hungary’s Foreign Minister Péter Szijjártó described the visit of Germany’s Chancellor Angela Merkel as a sign of Germany’s appreciation towards the importance of the bilateral cooperation of the two countries, Hungarian news service MTI reported. Szijjártó said that Germany is Hungary’s most important European ally, adding that the industries of the two countries have “practically grown together”. Szijjártó added that cooperation between Germany and Central Europe is “crucial for the competitiveness” of Europe as a whole. According to the minister, cooperation between the two countries is “not burdened with any open or difficult issue which could not be resolved very quickly”. He noted that more than 6,000 German companies are active in Hungary, employing approximately 300,000 local residents, and added that Hungary’s exports to Germany exceeded a record €21 bln in November.

Merkel questions Orbán’s term ‘illiberal democracy’ In a joint press conference following her meeting with Hungarian Prime Minister Viktor Orbán in Budapest on February 2, Germany’s Chancellor Angela Merkel said she could not understand the use of the word “illiberal” in connection with the word “democracy” – a reference to a speech Orbán made in July. Also at the press conference, the two leaders said they had agreed during their meeting that the Ukraine crisis needs to be solved with diplomacy, and that the European Union should not be sending weapons to Ukraine. Another area where they said they agreed with one another is on the idea of fostering energy cooperation in the EU, to reduce energy dependence on Russia. Merkel’s comments on “illiberal democracy” came in response to a question about the term that Orbán first used during an address in July, when he said he was not convinced of the value of liberal democracy just because many Europeans seem to favor the concept. After being widely criticized, Orbán said in December: “Hungarians welcomed illiberal democracy; the fact that in English it means something else is not my problem.” Orbán also said, “It’s not true that a democracy can only be liberal. There’s democracy in Hungary – period – it doesn’t need any modifiers.” In her remarks, Merkel seemed to suggest that she was not satisfied with that explanation, and added that she wishes to “deepen talks” on the matter of democracy with Orbán.

will discuss natural gas deliveries, but not nuclear issues, Hungary’s foreign minister Péter Szijjártó told Hungarian weekly Figyelő. Putin is also scheduled to meet Hungary’s President János Áder. “There is no reason to revisit the topic of Paks” as a bilateral deal has been signed by the two parties, Szijjártó said, adding that key topics Orbán and Putin are expected to speak about include gas deliveries and trade ties. According to the foreign minister, the most important agenda for the pair will be to discuss the gas surplus Hungary has not yet requested but which was agreed upon in the gas contract set to expire in 2015. Szijjártó said that the leaders will also discuss the Ukraine crisis, however, he did not disclose any further details.

Rogán: Hungary must crack down on abuse of asylum rules Hungary must tighten legislation to stop economic migrants from abusing political asylum laws to gain entry to the country, Antal Rogán, the head of the ruling Fidesz party’s parliamentary group, said on February 6. Rogán said the number of asylum seekers in Hungary had risen dramatically in the past two years, and most were economic migrants for whom there were no jobs in Hungary. Many used Hungary to enter the European Union and move on to Western Europe, he said. Rogán said that, in January alone, some 14,000 applications for political asylum were registered. “We think this is extremely worrisome and therefore the Fidesz−KDNP party parliamentary group expressed very clearly to the government that Hungary’s gates must be shut to economic immigrants,” Rogán told a news conference. He said neighboring Austria was expected to tighten rules by this summer, which meant the Hungarian government had to take action by then to prevent immigrants from landing back in Hungary.

PM urges ‘flexible and renewable’ agreement with Russia As the agreement regarding gas supplies between Hungary and Russia nears expiration, Hungary’s Prime Minister Viktor Orbán told commercial HírTV on February 4 that the country needs to ﬁnalize a “ﬂexible and renewable” agreement with Russia. Only through a such an agreement can the government’s utility price reduction program be maintained, the PM said. In the long−term, the agreement needs to take into consideration uncertainties regarding oil and gas prices, Orbán said ahead of a meeting with deputies of the ruling Fidesz−Christian Democrat parties in Mezőkövesd. When queried on Hungary’s EU−Russia ties, the prime minister said that Hungary needs to maintain the “most fair and balanced relations possible” with Russia, which is why he had invited Russia’s President Vladimir Putin to visit Budapest.

Report: SME confidence improves A gauge of SME conﬁdence by the Hungarian Chamber of Commerce and Industry’s Economy and Business Research Institute rose to 16 points in January from 9 points in October. The index rose on improved expectations, mirrored by better assessments of investment activity, use of capacity, business position, production and headcount. The measure of SMEs’ uncertainty edged down a single point, to 35.

Putin to discuss gas, trade in visit, official says

Analysis: Special sectoral taxes are here to stay

During his February 17 meeting with Hungary’s Prime Minister Viktor Orbán in Budapest, Russian President Vladimir Putin

The Hungarian government has become highly dependent on sectoral levies introduced in the past few years, a napi.hu analysis

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Budapest Business Journal | February 13 – February 26, 2015

revealed on February 9. The sectoral levies, which have reached an annual HUF 400 billion a year, are on the one hand needed to ﬁnance the government’s central budget deﬁcit, but on the other hand deteriorate the Hungarian economy’s competitiveness and undermine fair competition. According to the State Audit Office of Hungary, HUF 2.976 trillion was collected through sectoral taxes between 2007−2014, two thirds of this amount within the last two years.

reported. The renovation of the 128 km−long stretch of pipeline will increase bidirectional cross−border capacity between Hungary and Slovakia to an annual 6 million tons from the current 3.5 million tons. The project was undertaken by Hungarian oil and gas company MOL and Slovakia’s Transpetrol. It will allow MOL’s Slovakian unit Slovnaft to tap supplies from the Adria pipeline, which is connected to MOL’s reﬁnery south of Budapest.

AmCham puts ambassadors on its podium

SkyGreece to launch Budapest-Toronto Report: Ministry will not lower public flight transport fares Athens−based Greek SkyGreece airline is

Belarus removes ban on Hungarian cattle imports Belarus has lifted a ban on imports of live cattle from Hungary, the farm ministry announced on February 6. Belarus’ animal health authority lifted the ban, effective February 3, for cattle from all regions of Hungary with the exceptions of Csongrád, Bács−Kiskun, Baranya, Békés and Tolna counties. The ban was introduced due to an outbreak of bluetongue, an insect− borne viral disease of ruminants, in Hungary.

OECD publishes proposal for economic growth in Hungary Hungary should reduce the tax wedge on labor income, scale back disincentives for those wishing to work at an older age and improve outcomes and equity in education in order to support economic growth, OECD said in an annual report, dubbed “Going for Growth”, published on February 9. OECD took stock of Hungary’s recent policy reforms and made recommendations for actions to support growth. It also recommended further reductions in the tax wedge on low salaries through better targeting of cuts in social contributions and introducing an employment tax credit that would progressively decline with wage levels. It added that Hungary should index the statutory retirement age to gains in life expectancy and close pathways into early retirement for women. Among its recommendations for education, the OECD suggested postponing the implementation of a student tracking system and instead improving general skills and promoting equity as well as extending tuition exemption to all disadvantaged students who meet higher education admission criteria.

Hungary, Slovakia inaugurate oil pipeline after $80 mln renovation Hungarian Prime Minister Viktor Orbán and his Slovakian peer Robert Fico inaugurated a section of the Friendship I oil pipeline on February 9, following an $80 mln renovation ﬂagged as an investment of “extraordinary signiﬁcance” by both prime ministers, as it would increase security of crude supply to the region, Hungarian news agency MTI

scheduled to launch direct flights between Budapest and Toronto this summer, becoming the second airline after Canada’s Air Transat to offer the route, the operator of Liszt Ferenc International Airport said on February 11. SkyGreece will operate the flight twice a week, on Thursdays and Saturdays, from May 21, while Air Transat is planning to launch a weekly Budapest−Toronto flight in the summer.

Retailer Pepco to open stores in Hungary Retailer Pepco is expected to open stores in Hungary as it is offering open positions in Budapest, Tatabánya, Veszprém, Siófok, Eger, Miskolc, Debrecen and Nyíregyháza, Hungarian online daily index.hu reported on February 11. The chain is owned by South African Pepkor Investment Holding and has been operating in Europe, Africa and Australia since 1965. Currently the chain has approximately 3,000 stores in the aforementioned continents. Pepco has been present in Poland since 2004 with more than 500 stores, and according to index.hu, is a market leader in Poland. The chain has been expanding in the region since 2013. The open positions in Hungary are being offered by Pepkor Hungary Kft., which was launched in July 2014 with capital of HUF 3 mln, index.hu said, citing public records.

Suzuki to launch serial production of the Vitara in March Japanese carmaker Suzuki is scheduled to launch the serial production of its new Vitara model at its Hungarian plant in March, Magyar Suzuki communications director Viktória Ruska told Hungarian economic daily Napi Gazdaság on February 11. The communications director added that production and investment details would be made public at a later date. Last November CEO Ryoichi Oura said the Hungarian unit will start selling the new model next spring and will export the cars to all Suzuki markets, according to Hungarian news agency MTI. Magyar Suzuki sales rose by a year−on−year 11.6% to €1.567 bln in 2013.

Telenor Magyarország sales on the rise Telenor Magyarország, the Hungarian subsidiary of Norwegian multinational telecommunications company Telenor Group, saw sales rise by 4.5% y.o.y. to HUF 45.15 bln in Q4 last year, Telenor Magyarország announced on February 11. Company EBITDA fell by 9.6% y.o.y., to HUF 9.83 bln in the same quarter. The company believes that sales were boosted by higher revenue from the sale of phones through interconnect fees. Excluding money spent on frequency licenses, invested assets rose HUF 1 bln in the fourth quarter, Telenor added. The number of Telenor subscribers in Hungary rose by approximately 22,000 in Q4, reaching 3,482,000 by the end of 2014. Average monthly revenue per subscriber rose to HUF 3,494 from HUF 3,413, Telenor said.

Photo: András Hajnal

Hungary’s Development Ministry is not planning on lowering public transport fares, as the fees set out in public service contracts cannot adjust to fast−changing market conditions, such as the drop in crude oil prices, the ministry told Hungarian economic daily Napi Gazdaság on February 6. The ministry said that analysts do not expect low crude oil prices to be in place for long, and added that base fares for public transportation services have remained unchanged since 2010 despite the rise in oil prices almost every year since then. According to estimates made by the daily, lower oil prices generated savings of HUF 410 mln for state−owned Hungarian railway company MÁV in 2014.

Ambassadors on the Podium: (From left) Réka Szemerkényi, former AmCham President Willy Benkő, and Colleen Bell.

ROBIN MARSHALL

For probably the first time in its history, AmCham Hungary hosted both the Ambassador of the United States of America to Hungary, and the Hungarian Ambassador to Washington, at the same event in Budapest on Wednesday (February 11). Newly appointed Ambassador Colleen Bell and soon−to−be appointed Réka Szemerkényi shared the AmCham Podium at the Budapest Marriott Hotel in an event which perfectly chimed with the recent diplomatic mood music; everyone seems keen to move beyond the “little local difficulty” that has blighted political, though not commercial and security, relations between the two NATO allies. There also seems to be a genuine friendship that has developed by the two women in the short time since Bell arrived in the country. The rubber stamping of her appointment had been held up by more than a year by the political stalemate in the United States (Hungary was not the only country deprived of its top American representative), and even then Republican Senator John McCain was damning of her credentials and unflattering – to say the least – about Hungary’s government. Neither fact was mentioned on Wednesday. Instead there was much talk about future potential, based on good, and improving, trade figures. Bell said the latest 2014 figures showed the Unites States provides Hungary with 2% of its imports, while Hungary similarly sends around 2% of its exports to America. “Two−way trade was up 35%,” she said, with a 7% increase in U.S. exports to Hungary and 28% growth in Hungarian exports to the States. “For me, the commercial relationship between Hungary and the United States is critical,” Bell said.

The best way to attract development was through “transparency and predictability”, she said, noting investors had to know the rules in place today “won’t be arbitrarily changed tomorrow; this is the number one thing investors look for.” Laws occasionally need updating, she acknowledged, but added “consultations are an important part of that process; without it, potential investment goes elsewhere”.

T-TIP opportunity She, and indeed Szemerkényi, noted that the Transatlantic Trade and Investment Partnership (T−TIP) negotiations presented a great opportunity for improved bilateral trade, even though it would be a EU−U.S. rather than a U.S.−Hungary agreement. (Szemerkényi described it as “a unique opportunity, the importance of which goes beyond economics”.) There had been, Bell noted, “some misinformation in the Hungarian press recently” suggesting Hungary might be forced to abandon its strong anti−GMO position (the Hungarian constitution actually forbids the use of all GMOs). “Let me be clear, this has never been on the U.S. agenda,” Bell insisted. “The United States and Hungary may have different views on this, but we respect that Hungary has written its view into its constitution. Period. We absolutely respect this.” For her part Szemerkényi – who presents her credentials to President Obama (the last step for an incoming ambassador, and purely a formality) on February 23 – said the longstanding friendship between Hungary and its largest trading partner outside of the EU was beyond question. “Our transatlantic commitment remains unchanged,” she said. “The ‘Opening to the East’ policy is not an alternative.”

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Budapest Business Journal | February 13 – February 26, 2015

Gov’t to cut bank tax, improve regulation State and EBRD agree to buy stakes in Erste Bank after signing a memorandum that will cut levies in 2016 and should help add clarity to the local market. BBJ STAFF

The Hungarian Government signed a Blochamps Capital CEO István Karagich: New net assets will be more important than yields for the first time in a decade. memorandum of understanding with the European Bank for Reconstruction and Development (EBRD) that offers reductions in the banking tax, starting next year, as well as other legal changes Karagich. He pointed out that the value that are expected to improve the situation In its annual report on the sector, Biochamps notes of Hungarian offshore deposits is only for banks in this country. The memorandum was announced in a the risks of Hungarian derivative funds, declining slightly lower than the value of deposits February 9 press conference, where it was managed by the Hungarian private banking sector. also announced that the Hungarian state yields and the lure of foreign tax havens. and the EBRD would both be buying 15% stakes in Erste Bank Hungary, by adding not expected to drop below the current Tax amnesty GABRIELLA LOVAS to the bank’s capital. Erste Bank had 90%. However, only three or four big indicated that it needed recapitalization providers could be the real winners of Karagich expects that the average new for its unit in Hungary, and that it would While the 2008 financial crisis questioned the reorganization of the banking sector. deposits in Stability Savings Accounts be amenable to selling a stake to Hungary the justification for structured products According to Karagich, these include, (SSA), which were designed to lure and the EBRD if the government would globally, the recent decision of the Swiss for example, Erste, OTP, the Concorde customers out of “off−shore” bank agree to make improvements in the National Bank to scrap the euro peg has Fund Manager and Gutmann. The private accounts, will further decline in 2015. banking environment. revealed risks – not previously perceived banking arms of Unicredit, K&H and CIB He claims that those who wanted to Indeed, the memorandum of by domestic investors – for the entire have the potential to be winners, but are return their assets to Hungary could understanding does seem designed Hungarian market of derivative funds, in need of further developments. have already done so, as in the past few The consequences of the excessive years there has always been some kind to improve both the tax situation and according to Blochamps Capital CEO state involvement in the banking sector of amnesty available. During the past transparency in Hungary’s bank market. István Karagich. Speaking at the February 4 presentation on high net worth individuals are as yet three years, HUF 150 bln worth of funds The bank tax is to be reduced by 0.31% from the beginning of 2016 and 0.21% of his firm’s annual private banking unseen, but it could strengthen capital returned to Hungary through one or the from 2017. According to economy minister survey, Karagich said that investors, flight from Hungary, warned Karagich. other of these amnesties. Mihály Varga, this will mean HUF 60 who were spoiled by these funds before He pointed out that most private banking The HUF 8.5 bln in new SSA deposits billion less revenue for the government now, realize at last that yields and prices customers are not really attracted to made in the fourth quarter of 2014 is next year, and HUF 22 bln less revenue can move the wrong way, too. Karagich state−backed service providers. That “dramatically low”, Karagich noted. the following year, though he added that stressed that this is not necessarily a said, however, there is a set of wealthy Blochamps projects new deposits to reach he expects the cuts to buoy GDP growth, death knell for absolute yield funds. He business owners with close ties to the only HUF 4 bln in the first quarter of thereby improving the government’s total said that, for a HUF 100 million portfolio, government, who may feel they are this year, and HUF 8 bln in each of the he would personally keep up to HUF 30 expected to keep some funds at, for remaining three quarters. The number tax take. The memorandum signed with the EBRD mln in a variety of the top ten Hungarian instance, Takarékbank or MKB. of SSAs could increase from 610 at the further promises that the government will hedge funds. He maintained that the end of Q4 2014 to 1,494 by the end of limit state ownership. “The Government performance of these funds has been Seeking taxation abroad this year, while total deposits will be up from HUF 37.88 bln to HUF 72.39 bln in of Hungary does not intend to take direct outstanding even on an international or indirect majority ownership stakes scale. In addition, in the low−interest Private investors may continue to the same period. At least HUF 5 mln has in systemically important local banks, environment, these funds can ensure geographically diversify their assets and to be deposited in an SSA and the same except in case of a threat to the stability higher than average yields compared to seek taxation outside Hungary, although individual can open an unlimited number the way they do it has changed, said of accounts. The SSAs are available of the overall banking system, and is other investment vehicles. In Hungary’s private banking market, Karagich. Money is not carried abroad at OTP Bank, FHB, UniCredit Bank, committed to transferring all direct and indirect majority equity stakes it currently margins are shrinking further in the in large suitcases any more; instead it is Raiffeisen, MKB Erste, Gránit Bank, and, holds in local banks to the private current low interest rate environment, transferred as, for instance, a dividend from January, K&H Bank. The raison d’être of SSAs depends on sector within the next three years,” the thus growth will be driven by net new payment or director’s fees from companies document says. assets (NNA) rather than yields for the outside the EU. Private banking clients whether the holders of domestic assets EBRD President Suma Chakrabarti said first time in ten years, said Karagich. The tend to transfer any extra revenues – rather than the owners of assets held the deal would be instrumental in leading number of private banking clients has abroad. More than half of the Hungarian abroad – will start taking advantage of the to a “stable and predictable” environment stagnated at between 18,000 and 20,000, private banking assets abroad are held tax relief they offer, said Karagich. SSA for banks. He added that the decision while the number of such accounts is in three countries, namely Switzerland, holders may benefit from tax exemptions, while they do not have to justify the by the EBRD and the government to more than 46,000. As private banking Austria and Luxembourg. Funds deposited in foreign banks by origin of these assets. Tax liability arises recapitalize Erste Bank in Hungary will clients usually have more than one make it easier for the bank to stay in this account, Blochamps calculated with an Hungarians could increase by another only when a part or the total sum is market, and said it is essential “to retain average 2.3–2.5 accounts per client. HUF 200−300 billion in 2015, while the withdrawn from the account, however, if The market share of the eight or nine value of offshore deposits is estimated to this happens after more than five years, the presence of strong private players” like Erste. biggest private banking businesses is be around HUF 3 trillion, according to the income is fully tax exempt.

Private banking: Margins shrink

WWW.BBJ.HU

News 07

Budapest Business Journal | February 13 – February 26, 2015

Government, RTL near deal to cut ad tax Media oligarch threatens ‘war’ Lajos Simicska’s obscenity−laden tirade against his friend the prime minister led to speculation of a split in the ruling party, but the feud may fizzle before things get really ugly. BBJ STAFF

Out of public eye lately: RTL Klub CEO Dirk Gerkens.

Both sides deny claims that the result would mean more favorable news coverage for the government. CHRISTIAN KESZTHELYI

After negotiations with the owners of RTL Klub, Hungary’s most−watched local TV station, the government has announced plans to reduce the advertising tax to a flat rate of around 5%. A final deal is due to be discussed during a February 24 meeting between Hungarian Prime Minister Viktor Orbán. This is good news for RTL Klub, which was paying a crushing 50% tax on revenues, but bad news for media oligarch Lajos Simicska, who threatened a “media war” against his former allies in the government when he learned that the tax burden for his media outlets would increase by about five−fold. There has been much speculation about what could happen if the long−time Fidesz insider truly breaks with the party. (See story on this page.) Both the government and RTL’s German owners say the deal was meant to prevent a moves against the advertising tax brought by the European Commission’s Directorate−General for Competition. Both parties deny rumors that began circulating in late January that any tax reduction would be made in exchange for RTL Klub’s news show cutting back on its criticism of the government. The tax was originally introduced in June – apparently because the government was unhappy with RTL Klub’s critical newscasts. In reaction, RTL Klub took up a stated policy of being even more critical, inspiring open distaste from government officials but earning higher ratings for its news show. When the Budapest Business Journal asked RTL whether it would now cut back

on criticism, we were referred to Oliver Fahlbusch, Senior Vice President of Corporate Communications & Marketing at RTL Group, who said: “We have said many times before, RTL in Hungary will continue its independent news coverage. This was also made clear recently by our co−CEO Anke Schäferkordt in an interview with German daily Frankfurter Allgemeine Zeitung. Anke Schäferkordt is also a member of the Bertelsmann Executive Board.” Indeed, up until February 11, there has been no perceptible change in RTL Klub’s news coverage – the tone has remained critical. But Fahlbusch would not say anything about the fate of RTL Klub CEO Dirk Gerkens. Gerkens, who has been the public face of RTL Klub’s opposition to the tax and a champion of the news show’s more critical bent, has been out of the public eye

“I can imagine that they have been negotiating, but I don’t believe that RTL Klub would immediately change news coverage. Even if they change, I think it will be gradual.” since news about the talks between RTL Group and Cabinet Chief János Lázár first hit the media. According to rumors, there was discussion of sacrificing Gerkens, perhaps be reassigning him to another RTL position in another country, as a way to appease the government. Fahlbusch could not put these rumors to rest. “Please understand that we do not comment, as a principle, on this kind of speculation,” he said. Whether or not there was a deal to soften coverage, political analyst Attila Juhász said it would not be obvious right away. “I can imagine that they have been negotiating, but I don’t believe that RTL Klub would immediately change news coverage. Even if they change, I think it will be gradual,” he said.

Apparently enraged at the news that the tax bill for his TV and radio stations and newspaper could increase from 1% to 5%, reclusive media oligarch Lajos Simicska, a long time Fidesz supporter, and a close associate of Prime Minister Viktor Orbán since high school, promised an all−out “media war” against his friend and the government. But after hurling obscenities at the prime minister and his party on Friday (February 6), Simicska had noticeably toned down his rhetoric by Monday (February 9), leaving open the question of whether there would be a true split. In the meantime, the editors and executives of many of Simicska’s media began to quit, apparently eager to show their loyalty to the Fidesz power base and perhaps hoping for new jobs in a planned state− owned news station. While many believe that Simicska knows about the more questionable dealings of Fidesz party politicians and could do damage to the reputation of the ruling party, it is not clear if he could do so without also implicating himself. It is also not clear that he wants to do so. “The fact that Simicska’s editors resigned and left their positions to back Orbán shows that Simicska is the weaker party in the Orbán−Simicska conflict, despite his economic and media power,” said Attila Juhász, an analyst at Political Capital. “However, he can pose problems, as he can leak information that could weaken the prime minister and his government. One must not forget that the two parties know almost everything about each other.” The dealings between the two go way back. Although he has long been close to Fidesz, and has owned Fidesz−friendly media outlets since as far back as the 1990s, Simicksa has mostly remained out of the public eye. During Orbán’s first government in 1998, Simicska was appointed to the head the tax authority, but he stepped down within a year and has not held public office since. When Fidesz took power again in 2010, Simicska’s media empire began to grow, to the point where he now has ownership in such high profile outlets as Magyar Nemzet newspaper, HírTV and Lánchíd radio. While his media outlets received lucrative state advertising, his construction firm Közgép also won big government contracts – including HUF 93 billion in 2014, more than any

Angry oligarch: Lajos Simicska. other government contractor last year, according to atlatszo.hu. But the government funds may be drying up. According to several sources, Orbán met with leaders of government− friendly media – including those belonging to Simicska – in January, and told them that they would no longer be getting state advertising. Instead, Orbán reportedly said, the government would start spending its advertising budget on a proposed all−news TV station run by the state−owned public media. A new all−news station would apparently compete for the audience of Simicska’s HírTV. But the bigger problem for the media oligarch would be the loss of state advertising. The state is by far the biggest advertiser in Hungary, and advertisements from the state make up the majority of the ads in media owned by Simicska. Even many of the non−state advertisers who use Simicska’s media presumably choose to do so because of the government approval that the media oligarch enjoys. If Orbán truly leaves his old friend without a source of income, the oligarch could cause trouble, according to Juhász. “He might possess information that can weaken Orbán. The main question is whether he will do that,” said Juhász. Should Simicska decide he wants to share damaging information, he certainly has the news outlets to do so.

WWW.BBJ.HU

08 News

Budapest Business Journal | February 13 – February 26, 2015

New tolls temporarily block congestion charge The government forced “If it depended on the political the mayor of Budapest elites, the levying of the to delay a plan to charge congestion charge would be drivers for going through delayed forever.” the middle of the city because they want 2018, which means he is not as worried as he might be about political pressure to give drivers a free from above. With the new toll system introduced by alternative to the ring the government effective from January road. But the capital’s 1, drivers seeking to avoid tolls on the M0 orbital highway that circumvents congestion charge is the capital take detours on minor roads around Budapest, driving through likely to return. ANDRÁS ZSÁMBOKI

The Hungarian government’s new highway tolls put it on a collision course with a plan to push drivers out of Budapest’s city center via a congestion charge and, for now at least, it is the congestion charge that has had to get out of the way. But the congestion charge was a requirement in exchange for EU funding, which makes it unlikely that it will be shelved forever. And Budapest’s Mayor István Tarlós, who favors the charge, says he is not running for re−election in ADVERTISEMENT

nearby settlements in the agglomeration area. Or else, they choose to drive right through Budapest, perhaps even through the center, using the main thoroughfares of the city. The planned congestion charge would have meant drivers going through the heart of Budapest would have to pay a fee, but apparently the government, already facing criticism for its new tolls and the way they were introduced, was not willing to leave drivers with no free options. That’s why Mayor Tarlós was recently forced to announce that the congestion charge would be delayed until late 2016.

No free rides: As of January 1, those driving on Budapest’s M0 have to pay a toll, so some cut through the city instead.

Competing concepts Under the government’s new toll plan, those who choose to use the M0 around Budapest will have to pay about HUF 5,000 a month or more. (Confusingly, the charge does not – yet – apply to all of the M0. Sections built with EU money are not allowed to have a toll applied, at least until that moratorium ends in about three years’ time.) The congestion charge would have pushed Budapest traffic toward outer areas, and encouraged drivers who wish to drive through the capital city to drive around it instead – ideally using the M0 road. These are mutually exclusive concepts and, given the current set up, the government’s new toll system is likely to push through traffic into Budapest, as drivers look for alternative routes that don’t cost anything. A congestion charge would have taken away cheaper routes through the heart of town, and probably have turned Hungária körút into a parking lot. Already stinging from criticism about the new tolls, the ruling Fidesz party apparently pushed the mayor to forgo his congestion charge. The competition between the two concepts did not end well for the inhabitants of Budapest. The traffic that used to pass around Budapest via the M0 ring is now passing through Budapest itself, dramatically increasing pollution in the city’s environment. Moreover, Budapest does not even profit from the transit traffic; the capital city is clearly the absolute loser in this situation.

Political risk? Ipsos opinion polls show that governing party Fidesz has seen its popularity decrease by 3% following the introduction of the new measure, but things could have been worse: At HUF 5,000 a month, the highway toll would cost HUF 60,000 per year, whereas the congestion charge would be much more – HUF 500 per day, or more than HUF 180,000 per year. “If it depended on the political elites, the levying of the congestion charge would be delayed forever,” András Boros, senior analyst of research institute Political Solutions explained to the Budapest Business Journal. But the city was committed to the congestion charge back in 2008, in exchange for HUF 180 billion in EU support for the construction

of the city’s newest metro line. “If the city fails to do what it promised in the contract then the whole sum will have to be repaid. So the capital city does not have a choice,” Boros added. Of course the city of Budapest still has room to play some tricks. The EU has not defined exactly the details of the congestion charge. Therefore either the amount of the charge could be lowered to a reasonably small amount, or the geographical area within which the charge would be introduced could be reduced and limited. Mayor Tarlós, however, has called for an expensive congestion charge, comparable to western cities like London or Stockholm. In addition, the area affected under Tarlós’s plan would radically exceed the central business district, which was originally designated as the area meant to be protected by the congestion charge: On the Pest side, the affected area reaches way into the outer industrial zone, and in Buda, it covers eight square kilometers. “Mayor Tarlós plays like a real gambler: he wants double or nothing,” Boros commented. Part of the incentive for expanding the affected area is to improve the city’s bargaining position before discussions begin with the suburbs and the Hungarian government. The suburbs have reason to object, because the congestion charge would go to the capital city, while they would have to deal with increased parking and traffic problems. According to Boros, the development of a congestion charge system will cost approximately HUF 15 bln. “It takes HUF 3 bln to develop the access points; HUF 2 – to 3 bln to carry out the traffic investments; in addition, real estate development (such as the construction of parking houses) can cost up to HUF 7 bln,” Boros told the BBJ. The capital would self−finance the project, but, as Tarlós mentioned, Budapest can in fact also take out a loan for that purpose. “The congestion charge is not a bad source of funding in itself, either: the investments would yield a return within a year, and the yearly income would amount to ten times the operational costs,” the analyst said. Detailed documentation from the Budapest Transport Center (BKK) received by this newspaper suggests that an HUF 500 daily entry fee would produce HUF 30 bln annually; and even HUF 400 would generate HUF 25 bln per year.

GRUPPO T.F.M. KFT. 1068 Budapest, Király u. 102.

1ST DISTRICT

3RD DISTRICT

6TH DISTRICT

10TH DISTRICT

12TH DISTRICT

15TH DISTRICT

53 SQM – 3 ROOMS, LOGODI STREET

166 SQM – SHOP, NAGYSZOMBAT STREET

94 SQM – 4 ROOMS, IZABELLA STREET

67 SQM – 3 ROOMS, KISTORONYPARK STREET

50 SQM – 2 ROOMS, TRENCSÉNI STREET

174 SQM – 4 ROOMS, PESTÚJHELY

At the bottom of the Buda Castle, this renovated, garden facing, high ﬂoor apartment has separate rooms and fully ﬁtted open kitchen and it is situated in a building with elevator.

This very spacious, well divided shop has large shop window, private gas heating and it is located next to a busy road.

This apartment is in good shape, beneﬁts of a balcony, spacious rooms, private gas heating and situated within a nice period building.

49.900.000 HUF

23.900.000 HUF

This completely renovated, two storey family house has 40 sqm of lot, fully ﬁtted kitchen, air conditioning system and garage. Good connection to public transport.

This completely renovated, sunny apartment beneﬁts of nice view from the big balcony, open kitchen and air conditioning system and it is located in the quiet hillside.

This spacious, bright, two storey family house in good condition has 560 sqm of lot, 2 bathrooms, big garden facing terrace, fully ﬁtted kitchen and garage.

14.900.000 HUF

24.300.000 HUF

42.500.000 HUF

22.900.000 HUF

+36.1.201.0403

2ND DISTRICT

+36.1.430.1403

3RD DISTRICT

+36.70.3156.087

7TH DISTRICT

+36.70.268.5017

10TH DISTRICT

+36.1.789.2846

12TH DISTRICT

+36.70.398.8754

15TH DISTRICT

95 SQM – 2 ROOMS, ERŐD STREET

173 SQM – 5 ROOMS, KEVE STREET

108 SQM – 4 ROOMS, ALMÁSSY SQAURE

99 SQM – 4 ROOMS, NOSZLOPY STREET

55 SQM – 3 ROOMS, GALGÓCZY STREET

180 SQM – 6 ROOMS, KERTVÁROS

This very spacious, street facing apartment that needs renovation has separate rooms and balcony and it is situated in a period building with elevator.

In a renovated villa house, this renovated, triplex apartment has 18 sqm of terrace, 3 bathrooms and 151 sqm private garden and it is located in a very quiet, green area.

Nice view over the Almássy Square, this very bright and spacious apartment has separate rooms, private gas heating an d it is situated in a renovated period building.

This two storey family house in good condition has 170 sqm of lot, separate rooms, two bathrooms, terrace, balcony and garage and it is located in a quiet area.

This completely renovated, very bright, garden facing apartment has balcony and private gas heating and it is located in a quiet, green area. Garage possibility for 3.000.000 HUF.

This completely renovated, two storey family house has 450 sqm of lot, 2 fully ﬁtted open kitchens with 2 living rooms, 4 bedrooms, 2 bathrooms and parking space in the garden.

20.500.000 HUF

68.900.000 HUF

93.000 EUR

28.900.000 HUF

25.900.000 HUF

44.000.000 HUF

+36.1.201.0403

2ND DISTRICT

+36.1.430.1403

4TH DISTRICT

+36.70.322.3697

+36.70.268.5017

7TH DISTRICT

11TH DISTRICT

+36.1.789.2846

13TH DISTRICT

+36.70.398.8754

16TH DISTRICT

78 SQM – 3 ROOMS, FILLÉR STREET

57 SQM – 2 ROOMS, REVICZKY STREET

156 SQM – 4 ROOMS, CSENGERY STREET

107 SQM – 4 ROOMS, BUDAFOKI STREET

59 SQM – 2 ROOMS + HALL, TÁTRA STREET

122 SQM – 4 ROOMS, SASHALOM

This sunny and spacious, park facing apartment with separate rooms and balcony is situated in a quiet subdivision, a few minutes walk from the Millenáris Park.

This bright, street facing apartment has separate rooms, balcony and private gas heating and it is situated in a well maintained building. Good connection to public transport.

This very spacious and sunny, street facing apartment that needs renovation has 2 entrances, 2 bathrooms and private gas heating and it is located close to the Erzsébet Circuit.

Nice view over the garden of the Budapest University of Technology, this spacious, well divided apartment with private gas heating and balcony is situated in a period building with elevator.

This well divided, street facing apartment that needs renovation has separate rooms and private gas heating and it is located a few steps from the St. István Circuit.

This spacious, well divided, two storey family house has 406 sqm of lot, 2 bathrooms, 13 sqm of terrace, garage and it is located in a quiet side street.

31.900.000 HUF

10.700.000 HUF

34.900.000 HUF

37.900.000 HUF

20.990.000 HUF

27.900.000 HUF

+36.1.336.1706

2ND DISTRICT

+36.1.782.7275

4TH DISTRICT

+36.70.322.3697

7TH DISTRICT

+36.1.784.0707

11TH DISTRICT

+36.70.414.7759

13TH DISTRICT

+36.70.337.2499

16TH DISTRICT

86 SQM – 3 ROOMS + HALL, BAKA STREET

140 SQM – 5 ROOMS, SZÓFIA STREET

97 SQM – 3 ROOMS + HALL, KÁROLY CIRCUIT

95 SQM – 3 ROOMS, BARÁZDA STREET

84 SQM – 3 ROOMS, MÓR STREET

113 SQM – 4 ROOMS, RÁKOSSZENTMIHÁLY

In a nice, Bauhaus style building, this street facing apartment in good condition with balcony and private gas heating is located in a quiet street, close to the Mammut shopping mall.

In a quiet, garden suburb area, this very spacious, two storey family house in good condition has 487 sqm of lot, balcony, two bathrooms and garage.

Historical Jewish area. This sunny apartment is situated on a high ﬂoor within a nice Art Deco building, adjacent to the Main Synagogue.

This top ﬂoor apartment has 89 sqm of terrace, separate rooms, 2 bathrooms, 2 wardrobe rooms, parking space and it is situated in a new building.

In a new building with elevator, this very bright, street facing apartment beneﬁts of separate rooms and balcony.

In a quiet side street, this well divided family house in good condition has 1080 sqm of lot, separate rooms, 53 sqm of terrace and garage.

31.900.000 HUF

25.900.000 HUF

37.900.000 HUF

41.900.000 HUF

29.500.000 HUF

31.900.000 HUF

+36.1.336.1706

2ND DISTRICT

+36.1.782.7275

5TH DISTRICT

+36.70.3156.087

9TH DISTRICT

+36.1.720.2433

11TH DISTRICT

133 SQM – 3 ROOMS, FERENCHEGYI STREET

130 SQM – 4 ROOMS + HALL, KECSKEMÉTI STR.

88 SQM – 3 ROOMS + HALL, BAKÁTS STREET

63 SQM – 2 ROOMS, IGLÓI STREET

Breathtaking panorama over the Buda Hills, this very spacious and sunny apartment has 30 sqm of closed terrace, separate entrance and garage and it is situated in a renovated condominium.

This very well divided, street facing apartment that needs renovation has private gas heating and balcony and it is located next to universities.

Nice panorama over the Bakáts Square and the Danube, this very well divided apartment that needs renovation has balcony and it is situated in a Bauhaus style building in good condition.

On the top of the Gellért Hill, this completely renovated, well divided, luxury apartment with beautiful panorama from the terrace (20 sqm).

64.900.000 HUF

23.900.000 HUF

+36.1.376.6080

2ND DISTRICT

+36.70.457.4943

5TH DISTRICT

+36.70.414.7126

9TH DISTRICT

43.900.000 HUF

+36.1.784.0707

11TH DISTRICT

340 SQM – 10 ROOMS, ÜDÜLŐ STREET

138 SQM – 4 ROOMS + HALL, GARIBALDI STR.

83 SQM – 3 ROOMS, RÁDAY STREET

180 SQM – 5 ROOMS, MAJOR STREET

In a landscape protection area, next to pine forest, a few minutes walk from the Budakeszi Wildlife Park, this very spacious family house has 3523 sqm of lot and beautiful panorama.

Adjacent to the Parliament, this completely renovated, high ﬂoor apartment beneﬁts of separate rooms and beautiful panorama over the Danube from the big balcony.

In a pedestrian zone in the city centre, this very bright, street facing apartment is situated in a beautiful, renovated period building.

This three storey semi-detached house in good condition has 356 sqm of lot, 4 bathrooms, balcony, loggia and garage and it is located in a quiet garden suburb area.

159.000.000 HUF

105.000.000 HUF

+36.1.376.6080

+36.70.457.4943

31.900.000 HUF

+36.70.414.7126

47.500.000 HUF

+36.1.720.2433

+36.70.414.7759

+36.70.337.2499

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2Business COMPANY NEWS

Raiffeisen Bank International will close some of its branches in Hungary and instead focus on its corporate and premium clients, although it insists it is staying in the country, as it is a market “far too important to give up” CEO Karl Sevelda announced at a press conference in Vienna on February 10. Sevelda said RBI would “review our business model to reﬂect the new environment” in Hungary, national news agency MTI reported, Among positive developments in the country, Sevelda noted a portfolio improvement and said the Swiss franc problem had been “solved”, adding that the bank “can see the light at the end of the tunnel”. Earlier, in an announcement released together with its Q4 earnings report, RBI reported that it was planning to “optimize” its business in Hungary, sell its businesses in Poland and Slovenia, and reduce its exposure in the Russian market.

Magyar Telekom CEO: Network integration expected Magyar Telekom CEO Christopher Mattheisen sees an integration of the information, media and entertainment markets, as well as the ﬁ xed line and mobile networks, as the future of the telecommunication industry, he told MTI on February 6. Mattheisen predicts an expansion of mobile data transfers, fuelled in particular by the sharing of video and other media, to become the engine of growth for the sector. The CEO envisages a future where not only handsets will be connected to mobile networks,

Hungarian EU Edge develops for U.S. FreshDirect but cars and “wearables” as well. The 4G coverage of Magyar Telekom, the Hungarian subsidiary of German telco giant Deutsche Telekom, has exceeded 80% in Hungary since it acquired the spectrum in a frequency tender last year. As such, the number of 4G subscribers in Magyar Telekom’s network exceeded 450,000 last year, and another 920,000 were TV subscribers, approximately 450,000 of whom had interactive TV service, Mattheisen added. Magyar Telekom supports the government’s aim to bring broadband internet to all Hungarian households by 2018, two years prior to the deadline noted in the Digital Agenda for Europe, Mattheisen said. Magyar Telekom feels that the establishment of a regulatory environment that provides incentives for investment will produce predictable and equitable conditions for market players of prime importance, he said. This would stimulate the country’s competitiveness, spur investments and also create jobs, he added.

Zwack profits jump 22% to HUF 2.3 bln Zwack Unicum, Hungary’s best-known spirits maker saw a 22% y.o.y. increase in after-tax profit of HUF 2.3 bln in the first three quarters of its business year ending on March 31, an earnings report published on February 5 reveals. The company attributed the profit to increasing revenue and cost controls. Zwack revenue increased 11% to HUF 19.4 bln and, after paying excise tax, revenue came to HUF 11.6 bln, up 12%. Operating costs rose by 2% to HUF 4.1 bln in the same period, lifting operating profit by 35% to HUF 2.9 bln. In the first three quarters

Budapest-based software developer EU Edge has ﬁnished a development project to standardize the trading system of U.S. online grocery marketplace FreshDirect by giving a uniform visual appearance to every category and product, EU Edge told MTI. Product managers have also been given a new framework, which enables them to create new product categories, search options, product pages and advertisements without additional IT assistance. EU Edge was formed in 2005 and focuses on startup projects, software development and process management. Its clients include Prezi, Dragontape, LogMeIn, and PocketGuide. The company saw revenue of $1 mln and employed 14 people in 2014.

Wizz Air seeks London IPO again Hungarian low-cost airline Wizz Air said on February 4 it was planning an initial public offering (IPO) on the London Stock Exchange, adding that it expects to raise about €150 mln from the share offering. Wizz Air did not disclose further details on the number of shares to be offered or the prices, but the listing is expected for the first quarter. Wizz Air first reported in May 2014 that, in search of better financial opportunities, the company had decided to list shares on the London bourse, although it insisted the company was not in need of external financing. Almost a month later, the company announced it was cancelling the IPO due to volatility on the market. CEO József Váradi now says it is a more favorable time to list the company’s shares as the operating environment in the air travel sector has become far more stable, Hungarian news agency MTI reported. Váradi believes that the listing “will give Wizz Air a new perspective”, because its access to capital has been limited. Following the floating of shares, the company’s liquidity is expected to improve. Váradi added that 20% of the company shares are expected to be floated, but he gave no estimates on the number of shares on the secondary market. The goal is to maximize financial performance, he added.

Bakamo.Social enters second round of Insight Innovation Competition Hungarian startup Bakamo.Social, which provides a new way to analyze data from social media, is participating in the second round of the Insight Innovation Competition organized by Insight Innovation Exchange Europe (IIeX), the startup announced. Five ﬁnalists have been selected to pitch their ideas to a panel of judges at Insight Innovation eXchange Europe 2015, where they will also receive free exhibition space. The winner will be awarded $15,000, receive mentoring, have the opportunity to gain some recognition and be exposed to potential funding partners. Bakamo.Social made it to the second round

Photo: Tibor Rosta

Raiffeisen to close some branches in Hungary

of Zwack’s current business year, domestic sales grew by more than 24% as business partners brought forward purchases prior to a health tax being extended to a broad range of spirits from the start of the calendar year.

Bottle business Glass testing equipment is put through its paces as the Öblösüveggyár (hollow glass) factory in Orosháza prepares to begin manufacturing in mid-April. The factory’s most recent creations are custom wine bottles featuring unique internal patterns. The proprietor – O-I Manufacturing Magyarország Üvegipari Kft. – is planning on manufacturing several thousand pieces. after winning second place in the ﬁrst round. Bakamo.Social uses text mining, computer linguistics and machine learning technologies in order to understand social media. The platform it developed was designed to solve the problem of automatization and the paradox of social media research. The program explores and analyzes trending topics in social media.

Hungarian startup KwaliTools acquired by VisionLive Online qualitative research specialist VisionsLive has acquired Hungarian startup KwaliTools, which was created to capitalize on online opportunities in the market research sector. “We’ve focused on ensuring that we deliver the most innovative research solutions for our clients, and the acquisition of the KwaliTools business adds value to our platform and services portfolio. We intend to make the most of this excellent technology to enable our research clients to do even more of their work online,” VisionLife CEO Andreiko Kerdemelidis said. “We are excited to see the features and innovations, such as the participant tech check, and the ﬂexible room manager that drove KwaliTools, to live on in the fantastic suite of VisionsLive products,” KwaliTools CEO Daniel Fazekas said. “We are proud to have been acquired by the market leader in the online qual research industry.” According to a press release, “VisionsLive is currently working on a release of its new product suite – available February 2015 – and the KwaliTools portfolio is set to complement the main VisionsLive products in the online qual space.”

BBJ

3Special Report Intervew with Bosch CEO

Interview with TAKATA CEO

Help from abroad

HIPA Prseident Róbert Ésik presents the HIPA Local Partnership award to Kersten Bachmann, CEO of TAKATA Safety Systems Hungary, as part of a program started by the BBJ and HIPA to shine a spotlight on foreign CEOs whose work benefits Hungary.

WWW.BBJ.HU

Budapest Business Journal | February 13 – February 26, 2015

Awaiting the first course of the evening are, from left: AmCham President Ferenc Pongrácz, PwC Country Managing Partner Nick Kós, and HIPA VP Róbert Bödőcs.

Ford CEE CEO Andrea Kővágó-Laky, left, and BridgeBudapest CEO Veronika Pistyur.

Shown above at the Expat CEO of the Year Gala are the winners and members of the jury who chose th Chamber of Industry and Commerce President Dale A. Martin, AmCham CEO Írisz Lippai-Nagy, Bosch M CEO Kersten Bachmann and Parliamentary Secretary of State of the Hungarian Ministry of Foreign Affa

Expat CEOs reco

Frank J. Klausz III, Telenor Hungary Chief Corporate Development Officer, and his wife Gyopár Klausz.

The first annual Expat CEO of the Year awards were announced at a gala held to celebrate the difference that foreign business leaders can make in the economy and development of this country. HIPA VP Dr. Bettina Hruby.

HIPA President Róbert Ésik.

Kempinski Hotel GM Stephan Interthal, left, and Corinthia Hotel GM Thomas M. Fischer.

BBJ STAFF

The contribution foreigners make to the Hungarian economy received official recognition as the Budapest Business Journal and the Hungarian Investment Promotion Agency (HIPA) presented the Expat CEO of the Year awards during a February 3 gala at Budapest’s Kempinski Hotel. Javier González Pareja, CEO of Bosch Magyarország, which employs close to 10,000 people in Hungary, received the top prize, and Kersten Bachmann, CEO of the relatively new ﬁrm TAKATA Safety Systems Hungary Kft., received the HIPA Local Partnership award in recognition of his ﬁrm’s use of local suppliers. Sponsored by the BBJ and HIPA, in cooperation with PwC Hungary and the

Kempinski Hotel, the awards honored the expat CEO who was seen as making the most important contribution to the Hungarian economy and society. This was the ﬁrst year the awards were given, but the organizers promised to continue an annual tradition, built on the understanding that, along with direct investment, foreign countries support Hungary through the direct involvement of knowledgeable, talented people. Supporting education “We think expat CEOs, with their experience, their skills, and their leadership, have helped make Hungary an immeasurably better place,” said Robin Marshall, associate editor of the BBJ, and a hard-working master of ceremonies for the

WWW.BBJ.HU

Budapest Business Journal | February 13 – February 26, 2015

Photos: Marianna Sárközy

Shown above are (from left) GE Corporate Communications and Public Affairs Director Eszter Szabó, BBJ publisher Tamás Botka and Amcham Marketing and Communications Manager Zsófia Juhász. At right is BBJ Associate Editor Robin Marshall. In the photo at lower right are Sameer Hamdan (far left) and Zuhair Awad (far right), heads of Mellow Mood Group, with friends. Below right, Aftab Ahmed, CEO of Citibank in Hungary, (left) shakes hands with the Expat CEO of the Year, Javier González Pareja.

hose them. From left: BBJ CEO Balázs Román, German-Hungarian Bosch Magyarország CEO Javier González Pareja, TAKATA Hungary eign Affairs and Trade Dr. László Szabó.

cognized for their contribution evening. “We think that should be honored and encouraged, and that is what we plan to do tonight.” Nick Kós, CEO of PwC, presented the Expat CEO of the Year award to González, the head of Bosch, who is originally from Spain and came here in 2011. Since then, González has increased the total number of people working directly for Bosch in Hungary from 6,300 to 8,900, with roughly another 1,000 working as contractors. Marshall noted that, although the jury had expected their decision would be difficult, the choice of González was made quickly and became unanimous, because he has clearly been working hard to promote development. The massive plant in Hatvan, one of several Bosch facilities in Hungary, produces control units and sensors for automobiles, and employs a host of local engineers. Along with overseeing growth at the company, González “has been actively involved in the series of collaborations with universities and colleges, through which the Group provides technical and ﬁ nancial support for Hungarian engineering education,” according to a company statement.

“When I was appointed to Hungary, I set the establishment of innovation, trust and success as the main aim for my work in the country. The corporate successes of the last year prove that I have chosen the right path. With my team, we work to make Bosch an important player of the Hungarian economic scene,” Gonzalez told the gala audience as he accepted the award. “The biggest development center of Bosch in the European Union is located here in Hungary.” Earlier in the evening, HIPA CEO Róbert Ésik presented the special HIPA Local Partnership award, created by his organization to recognize foreign ﬁrms who make use of local providers. “HIPA is not only concerned with bringing investors into Hungary; we are also seeking domestic suppliers who are reliable and do their work according to high quality standards. In this area, our duties are two-fold: We provide advice, training programs, professional forums and business meetings to support SMEs, in order to help them join the supply chain of large enterprises. At the same time, we also help investors and major enterprises with our services, to help them make contact with these SMEs,” said Ésik, who

added that, in 2014, HIPA’s work to promote foreign investment lent support to 60 projects, which were worth €1.7 billion and created 10,745 jobs. The recipient of the HIPA award, TAKATA CEO Bachmann, leads a company that only began operations in October, but Ésik noted that the firm used many local suppliers while building its 6,000 square meter plant in Miskolc. The factory makes airbags for automobiles, and is expected to turn out four million pieces in its first year. Ésik noted that Bachmann proved very flexible and creative in working with HIPA. In accepting his award, Bachmann reciprocated the compliment, saying that HIPA’s cooperation was important to him and the firm. “We have received strong support from the Hungarian government and HIPA, for which we are grateful,” Bachmann said. “This award is a milestone in the activities of our company, and I am honored to receive it.” He also noted that, along with using local suppliers, he was happy to hire local workers. “Currently 300 people work in the facility, double what we expected, and we are planning to exceed the headcount of 400 soon,” Bachmann said.

The Jury The selection of the Expat CEO of the Year was made by a group of professionals who are deeply familiar with the local business scene: Dr. László Szabó, Parliamentary Secretary of State of the Hungarian Ministry of Foreign Affairs and Trade. Írisz Lippai-Nagy, CEO of the American Chamber of Commerce in Hungary. Dale A. Martin, President of the German-Hungarian Chamber of Industry and Commerce, and President and CEO of Siemens Hungary. Vazul Tóth, Chairman of the British Chamber of Commerce in Hungary, and Head of Business Transformation at Vodafone. Balázs Román, CEO of Absolut Media and the publisher of the BBJ.

WWW.BBJ.HU

Budapest Business Journal | February 13 – February 26, 2015

His secrets: Trust, innovation, success-orientation Javier González Pareja, the head of Bosch in Hungary and Expat CEO of the Year, shares his advice for growing a company in this country. BBJ STAFF

Under your leadership, Bosch has grown tremendously. What has been the secret to this success? A: The operations of Bosch in Hungary are managed in every operational unit by my colleague plant managers, so this is their achievement. Referring to my work, this is guided by trust, innovation and success−orientation. Quite honestly, I have had no difficulties managing the company, because for four years I have been working with an outstanding team – people who are motivated and represent the highest values in their respective professions. It has been a remarkable experience. I see my role as putting my management abilities to best use in order to maintain Hungary’s role as a strategic base, a role it has held for many years.

Javier González Pareja has been working in the Bosch Group since 1994. He started his career as a member of the Junior Managers Program in Madrid. Over the last 21 years, he has held management positions in Germany, Spain, and Portugal in finance, controlling, Human Resources, purchasing, logistics, IT, and other areas. Before coming to Budapest at the end of 2011, González headed the Corporate International Assignments Human Resources Department – a department he started in 2009 – at the Bosch headquarters in Stuttgart.

key support for Hungarian universities for years, and we intend to keep on promoting expertise and innovation. There is a whole range of motivational programs that help students make Do you think that Hungary their skills competitive. Those who are is a good place to hire motivated and join Bosch are sure to find engineers? their place and their calling. Although A: My answer is a definite yes. I am not an engineer myself, the Hungarian engineering theoretical continuous development opportunities training is world−class. A large part of and the atmosphere of motivation that the company’s outstanding performance permeate the Bosch corporate culture is due to the expertise, attitude and have made it possible for me to work creativity of Hungarian engineers. in many different areas. Bosch offers These qualities a wide spectrum make them of opportunities “Bosch is supporting the excellent worldwide, partners introduction of practice-oriented and pays great in Bosch’s attention to the higher dual training in Hungary. development century−old culture of This enables students in Hungary to and continued innovation. training of its Bosch is acquire practical experience even employees. The supporting the while they are still at university, motivational introduction programs and of practice− international and it should have substantial oriented higher experience dual training opportunities benefits in the long-term. ” provide such in Hungary. This enables students in Hungary a wide spectrum for career building to acquire practical experience even within the company – even for new while they are still at university, and it recruits – that nobody has to leave should have substantial benefits in the the company if they want to change long−term. Bosch has been providing direction and work in a different area.

About Bosch in Hungary Bosch’s unit in Hungary produces control units and sensors for automobiles. Bosch has been present in Hungary since 1899. After its re−establishment as a regional trading company in 1991, Bosch has grown into one of Hungary’s largest foreign industrial employers. In financial 2013, its 10 Hungarian subsidiaries then had a total turnover of HUF 719 billion and sales of the Bosch Group on the Hungarian market – not counting trade among its own companies – was HUF 161 billion.

Javier González Pareja, the head of Bosch in Hungary.

What are the special challenges of doing business in Hungary? A: Domestic political and economic factors have limited impact on the operations of the Bosch Group in Hungary. Because of its global presence, Bosch’s activities are primarily determined by world−market trends, so that internal political and economic measures have little short−term effect on decisions concerning Hungary. Of course, a favorable environment is an encouraging factor for us, too. This includes reliability as well as stability in socio−political decisions. Bosch has always been involved in technological innovation. To develop solutions and products that are useful to people, and to the wider society, you have to think in terms that go beyond maximizing profit alone. We have to take risks, and pump life and capital into solutions that few people initially know of or believe in. A true innovator must look further than the horizon of short− term business interests. It is essential for us to recognize values beyond profits; in fact this is almost a basic outlook. I think that the history of the company demonstrates that Bosch has succeeded in combining this outlook with rationality and with the interests of corporate development.

What do you enjoy most about living and working in Hungary? A: I am a long−term runner, and that helps me work off the day−to−day stress. Furthermore Bosch in Hungary supports several sporting activities, so it is a pleasure also to be able to run with my colleagues. And, of course, I like to spend time with my kids and wife, discovering the countryside, which is always a revitalizing experience

“A true innovator must look further than the horizon of short-term business interests. It is essential for us to recognize values beyond profits; in fact this is almost a basic outlook. ”

What would you like to see changed about Hungary, or what do you miss about home? A: Hungarians are often very talented, but they lack self−confidence and are not optimistic enough. Day after day, I find that the positive energies I try bring from the Mediterranean give confidence and motivation to my colleagues. I miss two very simple things, the amount of sun, or rather sunlight, as well as a request to drink a coffee with ice cubes and not to have to explain it!

Have you undertaken any special efforts, outside of your immediate work that might impact the Hungarian economy or society? A: I have been on the board of the German−Hungarian Chamber of Industry and Commerce since 2013, as well as in the Hungarian Automotive Industry Association, and I try to make the best use of Bosch’s global knowledge in my activities there. Furthermore, some of my colleagues and I take part in consultations with several authorities in order to take both Bosch and Hungary further.

WWW.BBJ.HU

Budapest Business Journal | February 13 – February 26, 2015

Believing in the potential of local suppliers Kersten Bachmann, CEO of TAKATA Safety Systems Hungary Kft., received the HIPA Local Partnership award in recognition of his firm’s use of Hungarian suppliers. Here he talks about how and why he became known for buying within this country. BBJ STAFF

You have been here a short time, and only started production in October, and already you have made an impression. What helped you win recognition for employing local suppliers? A: From the early phases of the project, we fully believed in the potential of the local supply base. This new plant in Miskolc strengthens our supply structure in Europe and helps to meet the needs of our customers. Since the start of the project, we have been focused on contracting Hungarian suppliers and we will keep this as part of our long−term strategy. For example, the plant itself was 100% built by local Hungarian companies. It’s not only one of the fastest construction projects undertaken here; we have also seen that all the construction work meets the highest quality levels. During the construction period, we have been working together with Hungarian suppliers and therefore also contributing to Hungary’s economic targets, thereby strengthening the excellent available supplier base. As evidence of these words and efforts, we started not only to order individual components from Hungarian companies for our production processes, but also some assembly machinery, too. And we will continue with this approach in the future.

Do you think that Hungary is a good place to locate a production facility? Why or why not? A: Hungary, and more specifically Miskolc, was chosen as our investment location among other reasons due to the availability of a developed infrastructure, strong industrial traditions and background, as well as due to the availability of skilled workforce. Also, the renowned technical university at Miskolc played a crucial role in considering our long− term plans and strategy.

What are the special challenges of doing business in Hungary? A: In the beginning it took some more

Kersten Bachmann has been working for TAKATA since 1996. Having started as a Project Manager, he spent more than 10 years in foreign countries all over the world, where he gained his overall professional experience. After serving in several management positions, since 2006 he was Plant Manager at two TAKATA steering wheel plants. From 2006 to 2011 he was managing the TAKATA airbag plant at Aschaffenburg Nilkheim, Germany. With his extensive background , he became Director of the Airbag & Electronics European operations, in Europe, which include seven airbag and electronics plants. In this position, he played a significant role within the company’s investment proposals, including the investment decision concernig the new plant in Miskolc.

Kersten Bachmann, CEO of TAKATA Safety Systems Hungary Kft. effort from my side due to my lack of Hungarian language skills and a lack of familiarity with the bureaucratic processes. Also, the legal advisors kept me busy at the beginning due to all the contracts and administrative work. However, most of the authorities are already making a lot of effort to accelerate their processes and to make decisions faster. In the meantime, I have further developed my Hungarian language skills. What impressed me very much was the high degree of trust among the involved parties and the reliability of verbal agreements. Also the speed of realization and the target−focused approach was quite impressive for me.

What do you enjoy most about living and working in Hungary? A: Working and living in Hungary made a very good impression on me. I have lots of positive experiences with the people’s commitment, reliability and helpfulness. I enjoy living and working in Hungary and I am looking forward to the forthcoming months, too. Right from the beginning when I came to Hungary, I felt myself at home.

What would you like to see changed about Hungary, or what do you miss about home? A: Hungarian people could be prouder of their impressive results and activities, and maybe they could even try to do more business abroad, with foreign countries.

Have you undertaken any special efforts, outside of your immediate work, that might impact the Hungarian economy or society? A: At the moment, our cooperation with the local university concerning education and training systems is under development. We see a great potential in the adaptation of the dual education system, which could not only have an impact on our industry but be for the benefit of the whole region as well. We regularly participate at various university related events, exhibitions, open days, etc. In November, we also participated in the automotive exhibition in Budapest together with other companies and the representatives of Miskolc city. As a sign of our corporate social responsibility and our commitment to

local sport activities, we are supporting the local ice hockey team, the “Miskolci Jegesmedvék” team, and we also support the Formula Student university team, which is made up of university students from Miskolc.

Is there anything else you would like to add? A: This new plant is our first in Hungary and the 17th in Europe and it is located in the city of Miskolc, at the Miskolc South Industrial Park. TAKATA Safety Systems Hungary Kft. started production of airbag technology at this new facility in October 2014. The company’s investment in the new plant is €68.3 million, with a 25−hectare ground and up to 60,000 sqm of built−up area. The number of new employees at Miskolc will be around 1,000, and they will produce life−saving automotive technology products, such as complete airbag modules, airbag components and inflators for car manufacturers across all of Europe. The new facility also features state−of−the−art systems for product development, testing and quality control.

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WWW.BBJ.HU

Budapest Business Journal | February 13 â&#x20AC;&#x201C; February 26, 2015

Relocation firms Ranked by total net revenue (HUF mln) in 2014

AGS BUDAPEST KFT.

INTER RELOCATION KFT.

www.agsmovers.com

331

256

600

www.interrelo.com

HELPERS HUNGARY KFT.

204

115

www.helpers.hu

EUROMOVE KFT.

WORLDWIDE MOVERS GROUP KFT.

160

www.euromove.hu

120

354

180

www.gosselin.be

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OWNERSHIP (%) HUNGARIAN NON-HUNGARIAN

TOP LOCAL EXECUTIVE CFO MARKETING DIRECTOR

ADDRESS PHONE FAX EMAIL

Worldwide

Paris French, English, Spanish. German

â&#x20AC;&#x201C; Mobilitas S.A. (98), SA de la Bongarde (2)

Ingrid Lamblin KrisztiĂĄn Tausz â&#x20AC;&#x201C;

1116 Budapest, Hunyadi JĂĄnos Ăşt 162. (1) 204-8674 (1) 204-8670 chris.tausz@ agsmovers.com

Central and Eastern Europe

Budapest English, German

â&#x20AC;&#x201C; Stuart McAlister (10), GATR Inc. (90)

Stuart McAlister Ă gnes Bartha Edit McAlister

1068 Budapest, )HOVĹ&#x192; (UGĹ&#x192;VRU utca 12. (1) 278-5680 (1) 278-5688 info@interrelo.com

USA, Canada, Brazil, Chile, Mexico, UAE, Budapest South Africa, Kuwait, English, German, Qatar, Lybia, Algeria, French, Romanian, Barbara Ă&#x153;rĂśgdi (50) Pakistan, India, Iran, Slovakian, Serbian, Nenad Ignjatovic (50) Afghanistan, China, Croatian, Farsi, Russia, EU, AusCzech, Norwegian, tralia, Turkey, Togo, Spanish Nigeria, Egypt

Barbara Ă&#x153;rĂśgdi AndrĂĄs RegĂĄsz Nenad Ignjatovic

1094 Budapest, Tompa utca 9. (1) 317-8570 (1) 328-0363 info@helpers.hu

VilĂĄgszerte

Budapest English, German, French, Russian, Bulgarian

Adrienne DeĂĄk (80), Andrea MĂźller (10), *iERU .Ĺ&#x192;KDOPL

â&#x20AC;&#x201C;

Adrienne DeĂĄk â&#x20AC;&#x201C; *iERU .Ĺ&#x192;KDOPL

1116 Budapest, BarĂĄzda utca 40. (1) 382-0990 (1) 204-3572 info@euromove.hu

All

Antwerp English, German, Russian

â&#x20AC;&#x201C; Gosselin Mobility N.V. (100)

Zsolt SĂĄrĂĄndi â&#x20AC;&#x201C; â&#x20AC;&#x201C;

1094 Budapest, Liliom utca 1/B (1) 261-2651 (1) 260-1055 hungary@ gosselingroup.eu

English, German, French, Italian, Russian

(75) (25)

Katalin Varga GyĂśngyi Pados â&#x20AC;&#x201C;

1027 Budapest, SzĂĄsz KĂĄroly utca 2. (1) 212-5017 (1) 212-5017 settlers@settlers.hu

PETS

SCHOOL SEARCH

CITY INTRODUCTION TOURS

TRANSLATION

BANK AND INSURANCE

MOVING

REAL ESTATE MANAGEMENT

CAR MANAGEMENT

COMPANY DOCUMENTS

BILLS AND PUBLIC UTILITY SERVICES

COUNTRIES SERVED

HQ OF CENTRAL OFFICE FOREIGN LANGUAGES SPOKEN

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SETTLERS RELOCATION KFT.

118

390

Âť

785

Fragomen del Rey Bernsen and Leowy, Citibank, BP Business Service Center, Celanese, Cartus Global Network

â&#x20AC;&#x201C;

USA, EU, Japan, India, Mexico

Budapest English, French, German, Japanese, Hebrew

KlĂĄra FĂłti (70), TĂŠda Krausz (15), Ă dĂĄm Krausz (15) â&#x20AC;&#x201C;

KlĂĄra FĂłti Ă dĂĄm Krausz Gergely PalotĂĄs

1036 Budapest, Lajos utca 93-99/D (1) 453-0491 (1) 453-0494 arc@arc.co.hu

550

GE, ExxonMobil, Daimler

USA, Germany, France, India, etc.

Budapest English, German, French, Spanish, Russian

Ă ron Balla (95), Ă gnes Csaba (5) â&#x20AC;&#x201C;

Ă ron Balla $QGUHD %HQNĹ&#x192; Ă gnes Csaba

1138 Budapest, Danubius utca 6. (1) 878-0710 (1) 878-0712 info@expatserv.hu

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GyĂśrgyi CziczĂĄrdi (Âť) Expat-Center LLC (Âť)

GyĂśrgyi CziczĂĄrdi â&#x20AC;&#x201C; â&#x20AC;&#x201C;

1113 Budapest, Karolina Ăşt 63. (70) 618-1838 (1) 209-1607 info@expatcenter.hu

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â&#x20AC;&#x201C; Interdean Group Holdings Ltd. (100)

Antal Heszberger â&#x20AC;&#x201C; â&#x20AC;&#x201C;

1211 Budapest, SzĂĄllĂtĂł utca 6. (1) 888-6750 (1) 277-2877 budapest@ interdean.com

Szilvia Sipos â&#x20AC;&#x201C; â&#x20AC;&#x201C;

1117 Budapest, Neumann JĂĄnos utca 1/E (1) 266-0181 (1) 266-3010 budapest@ moveoneinc.com

www.settlers.hu

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RESIDENCE CONDITIONS

100

Auchan, Bosch, Boeing, GE, Decathlon, Samsung

RESIDENCE PERMIT

MAJOR CLIENTS IN 2014

WORK PERMIT

COMPANY WEBSITE

NO. OF RELOCATIONS IN 2014

TOTAL NET REVENUE (HUF MLN) IN 2014

RANK

SERVICES

ARC KFT. www.relocationhungary.com

EXPATRIATES' SERVICES TRUST KFT.

107

www.expatserv.hu

EXPAT-CENTER KFT. www.expatcenter.hu

INTERDEAN NR HUNGĂ RIA KFT. www.interdean.com

MOVE ONE KFT. www.moveoneinc.com

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After the siege: Scenes of destruction in Budapest from 1945 include the destroyed Szabadság Bridge, left, bombed buildings near the foot of the Castle, top and bomb craters around the Kopaszi gát in South Buda, immediately above.

WWII memento: The Hospital in the Rock Seventy years ago on February 13, the Siege of Budapest ended and the defeated German forces fled Budapest. One of the more unusual souvenirs they left behind is an underground hospital and bunker inside Castle Hill. ANDRÁS ZSÁMBOKI

February 13 marks the 70th anniversary of the end of the 46−day Siege of Budapest: On that day in 1945, the city fell to the Soviets, and the final Germans forces retreated, blowing up the Danube bridges as they fled. It was a major milestone in the ultimate defeat of Nazi Germany and the capture of Berlin. The “Liberty Statue” on a hill overlooking Buda is a memorial to the Russian victory and an obelisk at Szabadsag tér (Freedom Square) memorializes the Russian soldiers

who died in the siege. But otherwise mementos of the time are not very obvious, and you have to scratch beneath the surface to find them. One of the more unusual such sights is literally beneath the surface: A bunker and hospital built under Castle Hill. The facility is now an unusual tourist attraction, the Hospital in the Rock – Nuclear Bunker Museum. “The museum is itself one of the entrances to the cave system under Castle Hill. It was created explicitly in a way that the access to the caves should remain hidden. Therefore passers−by would never come across the entrance accidentally unless they consciously looked for it,” Fanni Lukács, resident historian at the hospital museum points out to the Budapest Business Journal. It is, however, worth persisting in trying to find the Hospital in the Rock; it is recommended by the New York Times as among the Top Ten Must See Places of Budapest in a travel section titled “36 hours in Budapest”. “The Hospital was opened eight years ago from private funding,” Lukács says. “We rent the cave system from the City of Budapest. The furniture and the equipment are in a large part original. Much of the equipment was taken care

of by Szent János Kórház (Saint John’s Hospital) after the war and remained in usable condition; we have been constantly working on adding to those pieces with further restored equipment. We are still in the process of collecting original tools.” The outcome is an astonishing time journey. What the visitor encounters is a striking mixture of effects that come partially from the atmosphere of the caves, partially from the bunker−like character of the facility, and partially from the functionalist design of a past epoch’s medical equipment. “Our goal was not to make the place look sinister. Our aim was to restore the hospital faithfully, and be expressive rather than didactic, for example by the use of explanatory signboards,” the resident historian explains. And indeed, as you proceed deeper into the cave system under Castle Hill, you will find the experience ever more gruesome, as your knowledge about the Siege of Budapest also becomes deeper.

Travel in time “Back in the 1930s, the idea that the government district needed a bomb−proof section was raised by leading political

circles,” says military historian Imre Nyári, an expert in the period. At that time, the government district was located in the Buda Castle area; Governor Miklós Horthy himself resided in Buda Castle, while the Prime Minister’s office, the Ministry of War, the Ministry of Foreign Affairs, and the Ministry of Finance were all also located in the Castle area. “The need for a bomb−proof shelter was linked to a discovery made in the late 1920s, namely that there was an extensive cave system underneath Castle Hill. Of course, many knew beforehand that there had been wine cellars under the houses of the one−time Buda burghers, but nobody thought that, once connected, those cellars could be joined into an intricate tunnel system,” Nyári explains. As a first step, the major public institutions of the Castle were connected to the subterranean system. Then a national air−raid alarm center was moved into the caves in 1937. A bombproof government bunker was constructed; and finally, the underground Hospital in the Rock was set up between 1942 and 1944. The Hospital in the Rock had a transit function: it was accessible from the underground government bunker, but it also had an exit to the outside world.

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Budapest Business Journal | February 13 – February 26, 2015

Immediately above is the entrance to the Hospital in the Rock. Elsewhere on this page are scenes from inside the unusual museum. When the hospital was inaugurated in early 1944, it was advertised to the public as a new medical institution catering to the population of the Castle area. But the political elite was well aware that the new hospital could also fulfill emergency functions during a potential siege. “The truth is that most doctors of the Hospital in the Rock were steadfast in their belief that Hungary should remain on the German side,” says Kristóf Erdős, another of the hospital’s historians. “After the defection attempt of Miklós Horthy on October 15, 1944, most of the staff at the hospital supported the idea that Hungary should remain an ally of Germany. On the other hand, the same doctors – István Kovács MD, András Seibriger MD and others – also protected some of their Jewish colleagues at Saint John’s and helped them continue in their profession at the hospital as well as its affiliated Hospital in the Rock. The Jewish doctors in question were so−called ‘Governor’s exempts’, i.e. exempted from the effects of the discriminative anti−Jewish laws that forbade most Jewish professionals to work in their professions at the time.” Today, the furniture and equipment of the Hospital in the Rock looks eerily old−fashioned. At the time in World War II, however, the same equipment represented cutting−edge medical technology. The X−ray machine, for example, was so modern that patients were driven from the Pest side of the city to the Hospital in the Rock for examinations. The hospital’s “big moment” of course came when the Red Army closed its encirclement of Budapest on December 21, 1944. Not only military targets but also residential districts of the city were bombarded with heavy artillery. “After the beginning of the siege, the number of beds was raised

to 120 by the installation of bunks. The number of patients by that time, however, had already reached 300,” says Erdős. The further the siege unfolded, the worse conditions in the hospital became. “After the Soviets had liberated the whole Pest side of the city on January 18, 1945, the situation in the Hospital in the Rock became unbearable. Instead of civilians, most of the patients by that time were soldiers, the number of whom had reached 600 by mid−January. On December 28, the link with Saint John’s Hospital was broken, and doctors could no longer work in shifts. From that time on, doctors in the Hospital in the Rock performed 24−hour service.” In the final stage of the siege, the assistance of Swiss businessman Friedrich Born became essential. As a major representative of the Red Cross, he provided tens of thousands of Hungarian Jews with protective passes, and saved Jewish children who had been cut off from their families. Thanks to Born’s mediation, the Hospital in the Rock became an internationally protected Red Cross institution. He took care of the supply of medication; he was even able to get antibiotics, worth their weight in gold in those difficult times. Born himself lived through the siege in the Hospital in the Rock; his one−time cell is today one of the memorial rooms of the hospital−museum.

Unprepared women The dual role of the hospital, i.e. the fact that it was part of a governmental shelter system institution as well as a medical institution serving the population, created the ground for some unlikely encounters. Several young women from aristocratic families, for instance, worked in the hospital as employees of the Red

Cross: mostly the daughters of the social elite, aristocrats who held positions in the Ministry of Foreign Affairs or worked in other branches of the government. Among them was Baroness Ilona Gyulai−Edelsheim, the widow of fighter pilot István Horthy, the Governor’s son, killed on the Eastern Front, as well as the Countesses Aliz Cziráky, Ilona Széchényi and Ilona Andrássy. At first, these women were supposed to perform a kind of charitable activity; but in the end they were forced to perform real and extremely demanding medical service, for which most of them had been completely unprepared. According to eyewitness accounts, towards the end of the siege the air− refreshing generators were no longer able to exchange the air exhaled by 600 people. Therefore, the air was not only extremely hot in the wards of the hospital but unbearably stale as well. The morgue was full, and eventually it was no longer even possible to carry out amputated body parts from the hospital. “Seventeen− year−old Mária Daróczy narrated that her mother sent her to the hospital to work as a volunteer sister,” recalls Lukács. “When the young countess fled back to her family from the terrible conditions, her mother slapped her and ordered her to return. She apologized to her daughter only when, forced into it in the last stage of the siege, she had to move into the hospital herself; the elder Countess admitted only then that the conditions were indeed infernal and a young girl should not have been forced to work there,” the hospital historian says.

Cowardly men From January 1945, the government bunker also assumed an important

role. “Although the bunker had been prepared for Governor Miklós Horthy, he never stayed there,” Lukács explains. “Karl Pfeffer−Wildenbruch, the German military commander of Budapest from January 1945, directed the approximately 44,000 defenders of the Buda Castle from here. His headquarters were located about 200 meters from the hospital.” Together with the subservient Iván Hindy, commander−in−chief of the Hungarian troops, SS−Obergruppenführer Pfeffer− Wildenbruch spent all his time in January 1945 in the bunker. In today’s hospital−museum, there is a separate room dedicated to the two commanders: the room features wax figures of the two officers, dressed in replica uniforms, working on plans for the joint German− Hungarian military troops to break out from Buda Castle. “The two commanders did not display much courage. While German and Hungarian soldiers did break out from the Castle toward Széll Kálmán Square, Pfeffer−Wildenbruch and Hindy attempted to flee through the cave system, and to get past the Soviet posts underground,” says Lukács. Of the 44,000 soldiers and Arrow−Cross defenders of the Castle, less than 500 soldiers survived the breakout attempt; but the two commanders−in−chief fared only a little better: they ended up being caught and arrested by the Soviets in the end. The two men’s fates, however, diverged radically afterwards. Hindy was sentenced to death as a war criminal by a People’s Court in Hungary and was executed in 1946. Pfeffer−Wildenbruch, although sentenced to 25 years of forced labor in the Soviet Union, was released in 1955 and lived on; he died in a car accident in 1971, an 83−year−old pensioner in Germany.

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Budapest Business Journal | February 13 – February 26, 2015

WHAT’S

Fun things to d o in Budapest for the nex t t wo weeks.

Boat Show

February 12−15, HUNGEXPO

The Great Hungarian Songbook

Get your feet wet at the 24th annual Budapest Boat Show on from February 12−15 at HUNGEXPO’s G pavilion. The focus this year is on sea and ocean sailing and in particular the Volvo Ocean Race. And if you want to get into boating as a profession, presenters will provide information on that as well. Hungarian World champions will also speak about the trials and tribulations of boat racing. boatshow.hu

February 15, Palace of Arts Hungarian nostalgia at its finest, this evening of song will feature old waltzes and chansons presented in their more modern renditions. A cast of local musicians will transform the classics into anything from airy pop tunes, to jazz standards and even rock ballads. mupa.hu

Ripoff Raskolnikov Band February 19, Muzikum Klub

Cirque du Soleil - Quidam February 13−15, Papp László Budapest Sportaréna World−renowned Canadian entertainment franchise Cirque du Soleil returns to Budapest to present their latest: Quidam. Gravity−defying performances, aerial contorsionists and visually stunning sets make it a must see for Cirque fans with more focus on acrobatics and less on plots. Quidam is suitable for all ages. shop.ticketpro.hu

p.A.R.T.y: The last night February 14,15, Museum of Fine Arts This is your last chance to do it up at Budapest’s Museum of Fine Arts prior to the museum closing for three years to undergo a massive renovation project. The soundtrack for the evening will be provided by local DJs Žagar, Headshotboyz and Crimson while artful cocktails will be served up at the bar. Guests are encouraged to dress as their favorite figure from the annals of art history with a prize going to the best dressed. On the following day, Sunday, the museum will host thematic concerts, workshops and film screenings. szepmuveszeti.hu

Austrian−born singer−songwriter and blues guitarist Ripoff Raskalonikov will perform with his band at a classic Budapest music venue. A born performer known for his dry sense of humor, Raskolnikov has perfected his art over three decades, drawing inspiration from such blues greats as Blind Willie McTell, Skip James and John Lee Hooker while always infusing the music with his own personality. On this night he will perform with his trio. muzikum.hu

Scallabouche 15 Festival February 20, 25, Jurányi Inkubátor Ház Bilingual theatre company Scallabouche, led by Briton Alexis Latham and composed of a mix of foreigners and Hungarians, offers a rare occurrence of English−language theatre in Budapest. On February 20, the group will present Storyroom, a night of improvisation that relies on audience participation to construct its narratives. On February 25 the group will stage Scabaret, a production inspired by the traditions of theatre sports improvisation and guerilla theatre. scallabouche.com

Izakaya is the first Japanese bistro in Hungary, a little sister of Fuji Japanese Restaurant just opened! Lunch menu, snacks, wide range of á la carte dishes, Japanese coctails, beers, sake, high quality service.

New Menu Soon!

ͳͲͷͷ Szent István körút ͳ͹., Phone: +͵͸ (ͳ) ͵Ͳͳ Ͳ͵͹͵, www.kanpaiizakaya.hu

Budapest’s Museum of Fine Arts hosts its closing party on February 14.

Bin-Jip February 20, A38 Hungarian songstress Veronika Harcsa will perform material off the latest release from her band Bin−Jip, an outfit that merges jazz and trip hop sounds to produce a powerful hook. The eclecticism of Bin− Jip’s music can be attributed in large part to the very collaborative way in which the group compose. Harcsa first became known on the Budapest music scene as a singer of jazz standards. This is Bin−Jip’s second studio release. a38.hu

Reis Demuth Wiltgen February 21, Budapest Music Club Pianist Michel Reis, bassist Marc Demuth and drummer Paul Wiltgen are three of Luxembourg’s most compelling young jazz musicians. They formed the Reis Demuth Wiltgen Trio in 1998 while still in high school and performed on a regular basis until parting ways a couple of years later. Reunited since 2011, each member is responsible for composing music for the trio, strongly influenced by popular music and the singer−songwriter genre, while staying ahead of the groove with a modern jazz sound. bmc.hu

Fred Frith Trio and Hauschka February 22, Palace of Arts English guitarist and composer Fred Frith has been active on the avant−garde music scene since the 1960s. With a career spanning more than four decades Frith’s sound has meandered into every corner of

free improvisation from rock to jazz and even classical and has brought him together with the likes of John Zorn, Bill Laswell and Fred Maher. The second half of the evening will feature a very energetic performance by Düsseldorf−based musician, Hauschka, who takes an ordinary piano and modifies it with electronic signals, resonators and delayers to produce a mesmerizing and very unpiano−like sound. mupa.hu

Fanny Mendelssohn February 25, Budapest Music Center Felix Mendelssohn’s sister Fanny was an accomplished composer in her own right. She wrote music largely for piano in a style similar to that of her brother, a popular composer of the Romantic era. From 1819 until her death, Fanny composed about 500 works, piano pieces, songs and chamber music, some of which were published, mostly under her brother’s name. On this evening, Hungarian musicians will perform works by Fanny in solo and duo formations as well as in a string quartet. bmc.hu

Félix Lajkó February 27, 28, Palace of Arts Félix Lajkó’s music is as colorful and varied as his collaborations, leaning heavily on traditional folk but frequently meandering over to classical, jazz and even blues. In honor of his 40th birthday, Lajkó will play a round of shows as part of the “Félix Lajkó marathon” with three shows at the Palace of Arts on February 27 and 28, each with a different set of musical guests. mupa.hu

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Budapest Business Journal | February 13 – February 26, 2015

BOOK REVIEW

WHO'S NEWS

How to Fly a Horse

Do you know someone on the move?

A thought−provoking book rejects the myths about creativity and explores how ‘new’ comes to be. leads to breakthroughs and inventions. “How to Fly a Horse” also proposes that many organizations actually stifle creativity. Ashton argues that certain people are “truth−tellers” – people who are genuinely passionate about their vision, yet harangue listeners with their “truth”. Such individuals are essential for regeneration, yet are often not popular within organizations, where the truth may be unwelcome. As well as examining why innovators meet opposition, Ashton shows the steps that can be taken to overcome resistance. Passionate and insightful, this book is a profound exploration of the brilliance of the creative process and the possibilities within us all. As Ashton writes, “all stories of creators tell the same truths: that creating is extraordinary but creators are human; that everything right with us can fix anything wrong with us; and that progress is not an inevitable consequence but an individual choice. Necessity is not the mother of invention. You are.” − Samantha Wade

HOW TO FLY A HORSE By Kevin Ashton Published by William Heinemann ISBN 9780434022915 Available to order through www.hungaropress.hu

Name TIBOR KACZUR Current company/ position AVNET TS MAGYARORSZÁG/ REGIONAL MARKETING AND PR CHIEF

Tibor Kaczur has been appointed regional marketing and PR chief at Avnet TS Magyarország. Kaczur joined the company in April 2012. Before that he worked as a senior consultant at Hill & Knowltonnál, as well as for Hochegger Com and Café PR agencies. “We have been traveling around Balkan countries since last summer, and we have seen great potential in the companies of the region. I am sure that by making Avnet TS’s knowledge base and global network available for experts of the region, we can open business opportunities for them,” Kaczur said. “It is important that the expansion is operated in Hungary, because this way we can help Hungarian companies who see expansion possibilities abroad. Many Hungarian IT companies whom we can help in international expansion have already approached us,” Kaczur added

Name ZSUZSA KRIZBAI-ORBÁN Current company/ position HAYS HUNGARY/ HEAD OF MARKETING & COMMUNICATIONS

Name DÁNIEL GERA Current company/ position SENIOR LAWYER/ SCHOENHERR HETÉNYI ATTORNEYS AT LAW

Zsuzsa Krizbai-Orbán has been appointed marketing manager for the Hungarian market at Hays Hungary. She has extensive experience in all aspects of marketing and PR, digital communication and social media management. Before joining Hays, she worked for BIG4 advisory firm EY as brand, marketing & communications business partner. In this newly created role, she will be responsible for leading a combined marketing and communications function, and continue to strengthen the Hays brand in Hungary and support the group’s objectives.

Dániel Gera was appointed new senior lawyer of Schoenherr Hetényi Attorneys at Law in Budapest as of February 2015. Gera arrived from Gide’s Budapest office and he started his career at PricewaterhouseCoopers Legal. He specializes in corporate and employment law, and is an author and regular presenter in these topics. “The nearly 10 years’ experience and knowledge of Dániel Gera provides a significant competitive advantage for our constantly expanding law office,” said Kinga Hetényi, the managing partner of Schoenherr Hungary.

The State of State Health Care in Hungary Private health practicioners are on the rise, but competition does not always guarantee better quality of service National health care is struggling to keep up with demand, often focing patients to wait years for an operation. Hungary is not alone with the problem – it is a phenomenon all too familiar the world over. Expect an excrutiatingly long waiting list if you have a chronic condition that calls for expensive treatment, such as spinal disc herniation or knee prosthetics. Meanwhile, postponing the operation for cost reasons is false economy, as it might permanently impair the patient’s health and quality of life, imposing further costs on the health care system.

The appalling state of state health care in Hungary presented a lucrative opportunity for private practitioners as an alternative choice. But quantity and quality do not always overlap, and few private practices comply with the expectations of expatriates who live in Hungary. Dr. Rose Private Hospital caters to the high demand in that niche. What started as an outpatient medical service in 2007 is now a fully fledged hospital with a maternity ward, orthopaedic center, plastic surgery and corporate health care division, encompassing

nearly 30 medical fields. The inpatient services range from same-day surgery to complex treatment, such as hip replacement prosthetics. Expat-friendly concept One reason behind the long waiting lists in state clinics and hospitals is the freedom of choosing one’s doctors or surgeons in Hungary. The best specialists are naturally more popular and hard to come by. Dr. Rose Private Hospital is collaborating with the best specialists, making them available for consultation and

Good to Know Now that the Telki Private Hospital has closed down, Dr. Rose is one of the best private hospitals offering a wide scope of complex inpatient medical services at a high professional level. Despite the fact that insurance companies and health funds refer their clients to the institutions of state health care, the specialists at Dr. Rose Private Hospital conducted more than 800 operations and had 15,000 patient visits last year, while 3,500 new patients registered at the same time. With more than 2,000 health screenings in 2014, prevention plays an increasingly dominant role at Dr. Rose. Orthopaedics and surgery are on top of the list, with gynaecology and urology being the most frequented branches of medicine. The home-away-from-home comfort of the maternity ward is the most popular with patients, not least because it offers comprehensive care for the full term of a pregnancy.

operation within a matter of days, so patients can comfortably go through the necessary examinations without leaving the hospital. From the start, Dr. Rose has always been focusing on expatriots living in Hungary, employing a team of internationally renowned medical professionals who speak foreign languages, and liaise with insurance companies and health funds. As a result, patients from more than 90 countries all around the world are seeking their services.

TEL: (+36) 1 377-6737 WEB: www.drrose.hu ADDRESS: Széchenyi square 7/8, 1051 Budapest

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

A myth has shaped the way we think about the creative process; we assume that geniuses have dramatic moments of insight where ideas are born in their entirety, that science is discovered with shrieks of “eureka” and that poems are written while one is asleep. This belief in invention as a magical process suggests that few people can create and that innovative endeavor is doomed. In this thought−provoking book, Kevin Ashton argues that this myth is wrong. An acclaimed technology pioneer at MIT, the leader of three successful start−up companies and the innovator behind the “internet of things”, Ashton has experienced the challenge of creating something new. He believes that one learns to succeed through learning to fail. Ashton explores humanity’s greatest creations to understand who creates and how they do it. From Archimedes to Kandinsky, Apple to Woody Allen, and Mozart to the Muppets, Ashton uncovers the apparently unremarkable people, endless failures and numerous ordinary acts that led to humanity’s most astonishing discoveries. He describes the Ohio bicycle shop where the Wright brothers tried to “fly a horse” and the crystallographer who first revealed the secrets of DNA. Using examples from science, art and business, Ashton shows the long, tortuous process that

Send information in English to research@bbj.hu

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Budapest Business Journal | February 13 – February 26, 2015

Wine: Flagship Furmint continues The grape has long been associated with dessert wines, but it also makes a fine dry tipple. ROB SMYTH

Fine dry Furmint was flowing last week at the Magyar Mezőgazdasági Múzeum (Hungarian Agricultural Museum) with Hungary’s flagship grape showing the kind of pedigree associated with legendary Hungarian racehorse Kincsem. The museum has long been the home to Kincsem’s skeleton and has also become the established venue for the main tasting of Furmint February, which once again rocked the charming old building to the rafters on February 5. While Furmint’s pedigree in making Tokaji Aszú and other sweet late−harvest wines dates back centuries, it is only relatively recently that it has been used for making dry wines of serious breeding in Tokaj as producers, led by István Szepsy, sought to find alternative outlets once demand for the sweet stuff diminished. This year’s Furmint February tasting was notable for the overall high standard of ADVERTISMENT

Sampling wine at Furmint February.

István Balassa shows off his Tokaj Furmint.

offerings as well as some exciting newcomers, which built on the progress shown over the last couple of years. For a long time, even wines from some of the biggest Tokaj names were often smothered in too much oak to allow the characteristics of the grape or the place of growth to come through. Then, the high alcohol and searing acidity would often finish your palate off. The wines were for the most part balanced and varietally pure at this year’s

tasting. Here are some impressions gleaned from among the 79 producers present, (from so many it is impossible to taste all). From Tokaj, Carpinus is the new family winery of Edit Bai of Chateau Dereszla winemaking fame. Carpinus Deák dűlő 2013 comes from the south−facing Deák vineyard that lies on the south end of Tokaj Hill in one of the region’s warmest spots. Deák has predominantly loess−based soils, which tend

to bare forth Furmints of more fruitiness than those edgier, leaner wines coming from the more predominantly volcanic soils that prevail around, for example, the town of Mád. This one was totally made in the tank to emphasize the fresh and pure fruit character, which it possesses in delicious abundance. It’s got the Williams pear that’s so typical in Furmint, but also mango and tropical fruit salad, which both reflect the warm site. It also had a touch of stoniness to make it more than just a fruit bomb, and is an outstanding debut. Attila Orsolyák, who I first met last year when he was running the restaurant at the Gróf Degenfeld Kastélyszálló in Tarcal, has parted company with the hotel to pursue his winemaking. His Az én világom 2012 (It’s my life) was another stunning debutante with the wine striking a great balance between fresh fruitiness and complex minerality. While this particular wine is all but sold out, Orsolyák is definitely a name to watch out for. Incidentally, the Degenfeld winery is the exciting hands of Vivien Ujvári, who has harnessed her experience of making wine in New Zealand to inject fresh zip and zest into the portfolio. Furmint is characterized by – and usually prized for – its high acidity, which nevertheless got a tad out of control in 2013. This saw many winemakers leave quite a few grams

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Budapest Business Journal | February 13 – February 26, 2015

to raise the bar per liter of residual sugar in the wines in order to balance the searing acidity, sometimes pushing the wines into the off dry category. However, most of the wines still feel fairly dry. 2012 was such a drought that even Furmint struggled to keep zesty freshness. There has been a rush to plant Furmint well beyond its original strongholds of Tokaj and Somló and the results have already been impressive. VinCE Magazine’s white wine of the year for 2014 was dry Furmint 2011 from Eger’s Nimród Kóvács winery, which comes from the limestone slopes of Eged hegy and has apple and pear fused with stony notes and a rich, oily texture. It pushed Gizella’s delightfully layered, vibrant, fruity and mineral Szil−völgy Firmint 2012 into second place. It is hardly a case of producers beyond Tokaj and Somló jumping on the Furmint bandwagon, as many winemakers have merely replanted a grape that thrived in their regions before the ravages of Phylloxera in the late 19th century. From the southern shore of Balaton, where the grape was once called Szigeti, Ottó Légli’s Furmint 2013 is the most exciting wine I’ve tasted from him for a good while. The result of his first effort at a single varietal Furmint is a wine of such vitality and crisp structure. On the other side of the lake, Pálffy makes varietally pure Furmint oozing juicy Williams pear in ADVERTISMENT

the Káli Basin, while in Csopak, St. Donát is making complex Furmint in the winery’s trademark rich style. Over the border into Slovakia, ethnic Hungarian Frigyes Bott makes his top blend Super Granum from the three varieties that were cultivated on Muzsla Hill in the pre−Phylloxera era: Furmint, Juhfark and Hárslevelű. The Juhfark was macerated on its skins for four days to extract richer flavor. The 2013 is intensely aromatic but also full− bodied, concentrated, waxy, layered, long on the finish, and rich in tropical fruit. Back in Tokaj, Nobilis impressed with wines that were a tad restrained on the nose, but saved most of the action for the dense, rich palate. In the last issue, I reviewed István Balassa’s three dry 2013 Furmints from the three different types of soil (rhyolite tuff, andesite and quartz) present in Mád’s Betsek vineyard. The 2011 Betsek dry Furmint is from all three soil types and has matured nicely with mature notes of apricot and a touch of petrol (as is typical in aged Riesling), alongside the stony minerality and candied pear. Balassa’s wines are among those with high alcohol, which is something you would normally drag them down a peg or two for, but there’s so much else there to keep the palate pleasantly occupied and the alcohol doesn’t burn. Balassa also consults at the Mád’s buzzing St. Tamás winery and

Ethnic Hungarian Frigyes Bott’s top wine from Slovakia. is also now responsible for bringing the considerable vineyards of state−owned Tokaj Kereskedőház up to scratch. From Somló’s volcanic basalt soils Kreinbacher Barát−Szikla 2006 showed Furmint’s ability to age and this full−bodied wine was oozing complexity with beeswax, paraffin, oil, pineapple and candied tropical fruit, with sufficient acidity still in place to hold it all together. A tiny but exciting producer from the same region is Barnabás,

who in 2012 left a lot of green in the vineyard to protect the grapes from the intense sun. The resulting Furmint had soft acidity and delicious fruit. By the way, the winery expects 20% of the usual quantity in the horror vintage of 2014. Tibor Dénes is an exciting Somló vintner who is out on the smaller Ság hegy. His 2011 Furmint had quince, which is another classic Furmint note, along with juicy pineapple, plus the rarely encountered gunflint.

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