Budapest Business Journal 3218

Government Gives Green Light for Geothermal

More than 40 speakers at the second Budapest Geothermal Summit, held in the Hungarian capital on Sep. 20, spoke of hopes for increased use of geothermal energy as a source for power, heating and cooling in Hungary, Europe and worldwide.  19

Hungary Well-placed on Energy Front as Fall Begins to Bite

As cooler temperatures arrive with the onset of fall, the Ministry of Energy Affairs assured Hungarians that regulated household gas prices would not change in the fourth quarter in a statement issued on Sep. 26.   24

Building From a Solid Base

Budapest’s Best Guidebook Back in Print Soon

FOCUS

A new edition of András Török’s updated cult book “Budapest. A Critical Guide” is due to be published in November. It is written in a wryly amused and amusing, poetic style and illustrated with evocative black and white photographs.  29

National Bank of Hungary Returns to Rate Cutting

Germany’s Ambassador to Hungary Julia Gross discusses the economic and personal connections that bind her home country with her current home. They are, she says, based on a centuries-old foundation, and ‘essential for both countries.’ 14

The recent interest rate cuts of the major central banks gave room for the National Bank of Hungary (MNB) to maneuver: as expected, the central bank lowered its base rate by 25 basis points on Sep. 24.  3

U.S. Election and German Economy Pose Challenges

After the summer recess, the Hungarian National Bank may follow the U.S. and European central banks in further lowering interest rates, potentially bringing the benchmark rate down to 6.25% by year-end.  7

EDITOR-IN-CHIEF: Robin Marshall

EDITORIAL CONTRIBUTORS: Luca Albert, Balázs Barabás, Zsófia Czifra, Kester Eddy, Bence Gaál, Gergely Herpai, David Holzer, Gary J. Morrell, Nicholas Pongratz, Gergő Rácz.

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• Independence. The BBJ’s journalism is dedicated to reporting fact, not politics, and isn’t reliant on advertising from the government of the day, whoever that might be.

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For

THE EDITOR SAYS

IN PRAISE OF STRONG, MATURE FRIENDSHIPS

For all the talk of Eastern Openings and Asian battery giants, few can rival the economic footprint in Hungary of Germany. By its own estimation, the embassy puts the cumulative German capital investment in Hungary at around EUR 20 billion. That’s not exactly small change. The German-Hungarian Chamber of Commerce and Industry (DUIHK) reckon German investors employ more than 220,000 local people in Hungary, more than is the case in Italy or the Netherlands.

Those up-to-date in their modern Hungarian history will know the role this country played in facilitating not just the fall of the Iron Curtain, which freed it from the Eastern Bloc, but also in putting Germany on the path toward reunification. The setting for events of such magnitude was the unimpressive sounding Pan-European Picnic (well, unimpressive if you ignore that “PanEuropean” part), a pivotal moment when hundreds of East Germans were able to flee to Austria thanks to Hungary opening its border. As recently as Aug. 19, German Federal President Frank-Walter Steinmeier visited Sopron, where he commemorated the 35th anniversary of the picnic and reaffirmed the bond this piece of recent history represents between the countries.

But it would be wrong to put too much emphasis on just one day, however momentous. As Julia Gross, Germany’s Ambassador to Hungary, tells us in an exclusive interview on page 14, “This relationship grew over centuries; it did not begin in 1989, but it came into special focus in a historical moment.”

It would also be wrong to think that the Germans would accept whatever the Hungarians do based on that shared moment. Germany and Hungary have rock-

solid economic and cultural relations. They are friends, and true friends are prepared to point out differences of opinion from time to time. So, we have Ambassador Gross concerned that Prime Minister Orbán’s trips to Moscow and Beijing at the start of Hungary’s EU Presidency of the Council of the EU overshadowed the good work done in preparation leading up to it. The unilateral and self-styled peace missions “cast doubt on the role of Hungary as an honest broker: they were not coordinated with EU partners and used the presidency function and logo to pursue a strictly national position.”

Equally, we have Barbara Zollmann, CEO of the DUIHK, puzzled by the special taxes that often seem to target specific non-Hungarian companies. “This is not good marketing for Hungary from an investors’ perspective. We advocate phasing out all unnecessary special regulations and taxes because this would strengthen the competitiveness of the whole economy and leave more resources for companies to invest and for private households to consume,” she tells us in her own exclusive interview on page 16.

Do not think either of these German leaders is negative about doing business in Hungary. Both point out how integrated German companies are here. I heartily recommend reading their interviews. It is, however, refreshing to have people talk publicly about elements of the bilateral relationship they are less than happy about. Whether such honesty is welcome is a different question. It should be: it is a sign of a mature and strong friendship.

Robin Marshall Editor-in-chief

THEN & NOW

The black-and-white picture from the Fortepan public archive shows an arm wrestling competition organized by Liget SE at the Petőfi Csarnok (in Városliget, but demolished in 2017) on Nov. 27, 1988. The color image, from state news agency MTI, features Hungary’s Tibor Szűcs (left) and Romania’s Alin Nedelescu battling in the men’s left-arm, 75 kg category at the Judgement Day World Cup series in the Phoenix Sports Hall at Fót (22 km northeast of central Budapest by road) on Sep. 28.

Photo by Tamás Urbán / Fortepan

Photo by Zoltán Kocsis / MTI

1News

• macroscope

National Bank of Hungary Returns to Rate Cutting

The recent interest rate cuts of the major central banks gave room for the National Bank of Hungary (MNB) to maneuver: as expected, the central bank lowered its base rate by 25 basis points on Sep. 24.

Development of the Central Bank Base Rate in Hungary (2006-2024, Sep. 24)

Following a pause in August, the MNB reduced the base rate once again at its latest rate-setting meeting in September. With the 25-basis point cut, the rate dropped to 6.5%. According to analysts, one more rate cut will likely occur this year before monetary easing continues in 2025.

The decision met expectations and had been priced in by the market, so it is hoped that it will not cause a larger movement. The decision was primarily supported by two factors: on the one hand, the favorable August inflation data, and on the other hand, the recent interest rate decisions of the major central banks, Gábor Regős said, commenting on the Monetary Council’s decision.

The senior economist from Gránit Alapkezelő said that, while the European Central Bank’s decision had been expected, it hadn’t been clear whether the Fed’s easing would be 25 or 50 basis points; that it went big created room for maneuvering for domestic monetary policy.

According to Regős, the perception of risk hindered the easing of monetary policy: the exchange rate of the forint was relatively (but not significantly) weak, and the budget

deficit had also developed unfavorably in August. The risk assessment and the forint exchange rate may well be the factors determining the further framework for relaxing monetary policy in the remainder of this year.

The loosening of monetary policy is expected to be reflected in market interest rates sooner or later, the analyst said. This makes it easier for companies to finance their investments, for example. For this, however, it is necessary that, as the external environment improves and demand rises, it makes sense for companies to make investments.

Room for a Further Cut

“According to my expectations, the ECB will reduce its benchmark rate at least one, possibly two more times this year, while the Fed will reduce it two times. This enables the MNB to cut interest rates one more time this year so that by the end of the year, the base rate could be 6.25%,” Regős said.

“When it comes to further reductions, however, the development of risk assessment is important. The change in the budget balance, the relationship with the European Commission, and the issue of access to EU funds play a role in this,” he added.

If these develop favorably, then by the end of the year, the interest rate may be 25 basis points lower than the baseline expectation and could drop to 6%;

if there is unfavorable news in these areas, it is more likely that the rate

will remain at 6.5% at the end of the year, according to the analyst.

“The MNB did not cause any surprise with today’s interest rate cut after the August inflation data brought a positive surprise, and the Fed also acted in line with heightened expectations the previous week,” commented Péter Kiss, investment director of Amundi Fund Management, immediately after the cut.

“It was possible to do this in the relatively favorable international environment, but at the same time, careful communication still seems necessary, as the exchange rate of the forint against the euro is stuck in the weaker half of the trading range of the last period,” Kiss added.

Consistent Communication

The communication guidelines have not changed. In the statement following the decision, the MNB indicated: “The risks surrounding international and domestic disinflation, as well as the volatility of investor sentiment, justify a cautious and patient monetary policy looking ahead. The council continuously evaluates incoming macroeconomic data, inflation prospects, and the development of the risk environment, on the basis of which it will carefully, and data-driven, decide on the rate of the basic interest.”

Deputy governor Barnabás Virág emphasized several times in the background discussion following the meeting that the council members will have the option of maintaining interest rates or a modest (25 basis points) interest rate cut in the following meetings.

Source:

According to Virág, the current situation made it possible to reduce interest rates cautiously, hence the decision to reduce the base interest rate by 25 basis points.

However, he emphasized that the MNB still sees that it has to make decisions in a rapidly changing macroeconomic, global financial market and geopolitical environment.

“We can’t sit back. We cannot declare victory over inflation too soon,” added Virág, who believes that a cautious, patient and disciplined monetary policy is still justified.

“Our inflation forecast for next year has risen a bit compared to June,” he noted. Virág also said that despite this, disinflation continues, the background of which is the lower external cost environment and the more moderate retrospective repricing expected next year

The MNB has significantly worsened its forecast. The central bank now expects an inflation rate of 3.5-3.9% this year, 2.7-3.6% next year, and 2.5-3.5% in 2026. Economic growth may be 1-1.8% this year, 2.7-3.7% next year, and 3.5-4.5% in 2026. Overall, this year’s inflation forecast was reduced, and next year’s was raised slightly compared to the June forecast, the latter due to the increase in the transaction tax. Growth prospects for this year and next were reduced, while it was raised for 2026.

ZSÓFIA CZIFRA

RTL Hungary moves HQ to Renovated Liget Center

RTL Hungary has moved into the Liget Center, owned and redeveloped by Wing and located next to the Városliget or City Park. The reconstruction of the listed building has preserved its original modernist architectural features, while incorporating the latest technology and the special functional needs of RTL’s broadcasting activities, Wing says.

GARY J. MORRELL

The building, which has been modernized to serve as RTL’s newsroom and studios, was originally the congress block of the former National Federation of Hungarian Construction Workers (Mémosz) headquarters and has been a protected building since 1999.

Faedra Group Expands in Budapest

The Hungarian Faedra Group is set to develop the eponymous Faedra Business Park and Faedra City, two new logistics warehouses in Budapest totaling more than 21,000 sqm, with delivery expected in the second and third quarters of 2025.

Due to their proximity to the city center, the buildings are ideal for “last-mile” logistics operations, according to the developers. The value of the two investments is more than EUR 23 million.

“The recent economic challenges and high vacancy rates have made many developers hesitant to invest. However, Faedra Group’s successful projects and leasing results, achieved with the exclusive assistance of 108 Real Estate, have encouraged the company to pursue new investments,” says Máté Szoboszlay, business development and investment director at Faedra Group.

Real Estate Matters

A biweekly look at real estate issues in Hungary and the region

“The renovation focused on preserving the historic character of the building, the special technological needs of RTL Hungary, along with ESG considerations. Liget Center Auditorium, a 70-year-old facility, has been transformed into a nearzero energy building with an ‘A’ energy efficiency and an ‘A+’ CO2 emission efficiency rating,” Wing comments.

“We are delighted that RTL Hungary has chosen Liget Center as its new downtown base. The Liget Center fits perfectly with our office development goals of building state-of-the-art, high-quality, sustainably operated headquarters that meet the needs

He believes the South Buda location is ideal for urban and suburban logistics operations, supported as it is by convenient public transport access.

“Sustainability and low operational costs are important for both tenants and developers. By installing green solutions such as solar panels, electric chargers, and smart metering systems, Faedra Group not only ensures sustainable operations but also creates real opportunities to reduce operating costs, which is particularly important in the current economic climate,” the developer adds.

Panattoni Launches EUR 600 mln European Logistics Income Fund

Panattoni has announced the launch of a pan-European fund that will invest in modern, sustainable, incomeproducing logistics properties.

The Panattoni Income Fund, with an open-ended, evergreen structure, aims to raise EUR 300 million

and vision of renowned domestic and multinational tenants in good locations,” adds Noah Steinberg, chairman and CEO of the developer.

“Our group has delivered a number of major headquarters projects over the past 25 years, tailored to the specific needs of large corporations. However, a commercial media company has specific technological needs, which also presented us with a significant professional challenge, but I believe our team successfully met these challenges,” he adds.

The designer of the renovation was the Tiba Architects Studio, general construction was carried

of equity by 2026 and acquire EUR 600 mln of assets developed and managed by Panattoni.

The fund hopes to generate sustainable income with a good capital appreciation for its investors. It will acquire stabilized assets and forwardpurchase pre-let developments with the highest sustainability ratings in countries where Panattoni operates, including CEE (and Poland in particular), Austria, Germany, Italy, the Netherlands, Scandinavia, Spain, and the United Kingdom.

The fund’s advisory team is based in Poland with its managing director, Krzysztof Dudek, who will manage the operations, investment activity, portfolio and asset management, as well as fundraising and capital flows.

“This is an opportune time to be creating Panattoni’s first income fund. The post-COVID market correction has resulted in yields for industrial and logistics properties becoming more attractive. There has been a significant amount

New Supply Falling in CEE

New industrial supply in the CEE-5 (the Czech Republic, Hungary, Poland, Romania and Slovakia) for the first half amounted to about three million sqm, representing a 26% year-on-year annual fall for the region. Unsurprisingly, 1.6 million sqm was delivered in Poland, accounting for 55% of the CEE volume, followed by the Czech Republic with 260,000 sqm and Romania with 250,000 sqm.

Total stock in Hungary has surpassed 5.1 million sqm while the pipeline has reached 503,000 sqm with 200,000 sqm under construction.

Consultancy CBRE has traced more than 70 million sqm of space in the CEE region, with a further 4.5 million sqm under construction, representing a 10% year-on-year decrease. The overall pipeline is expected to remain on a similar level. Overall, Poland has by far the most significant pipeline, followed by the Czech Republic and Romania. The Czech market has the lowest vacancy rate at less than 2%, while Poland and Hungary have the highest at more than 8%.

out by Workup, the specialized division of Fitout Zrt., and the interior design was by Lab5 Architects. The Liget Center project will be completed this fall when the 2,200 sqm Liget Center Vitrum, a new boutique office building, will be delivered.

of capital waiting on the sidelines for repricing to settle and for more favorable financing conditions,” Dudek says.

“Investing in industrial and logistics properties offers a compelling opportunity and attractive long-term returns, bolstered by structural drivers.

The market is currently experiencing a shortage of supply, coupled with a growing emphasis on ESGcompliant assets, which gives the fund a competitive edge through access to premium projects,” concludes Daniel Raemy, a member of the advisory board at Panattoni Income Fund.

Panattoni is one of the largest industrial developers in the world, operating from 26 branches across North America, as well as in Europe and India. The company has been present in Europe since 2005. It has offices in Austria, the Czech Republic, Denmark, France, Germany, Hungary, Italy, Slovakia, the Netherlands, Poland, Portugal, Spain, Sweden and the United Kingdom.

The Liget Center Auditorium.

Political Director Apologizes for 1956 Comments

Balázs Orbán, Prime Minister Viktor Orbán’s political director, triggered a maelstrom for controversial remarks in which he seemed to suggest that, given its experience fighting Soviet aggression during the 1956 Revolution, Hungary would not have defended itself in the way Ukrainian has in the wake  of Russia’s full-scale invasion in February 2022.

Hungary would not have taken defensive measures against Soviet aggression in

“Based on the ’56 experiences, we probably wouldn’t have done what President Zelensky did 2.5 years ago because it’s irresponsible,” Orbán said on Stratégiai Részleg, [Strategy Department], a podcast produced by conservative weekly news magazine Mandiner that Orbán co-hosts with Mátyas Kohán, published on Sep. 25.

Orbán continued that “it seems that [Zelensky] put his country on the defensive, so many people died, somuch territory was lost, and I repeat, it’s their right, it’s their sovereign decision, they could do it, but if we had been asked, we wouldn’t have advised it, because, in ’56, it was what it was.”

Outraged by the implication, opposition parties quickly condemned Orbán for his remarks. The Hungarian Green Party (LMP) claimed that Orbán had suggested

1956.

LMP co-leader Péter Ungár insisted that Hungary had the right to defend its territory, adding it was “shocking” that any politician claiming to be “a patriot” would think otherwise.

The Socialist Party (MSzP) was even more scathing, labeling the PM’s political director “a traitor” to his homeland. They called for his immediate resignation from politics and public life and even urged him to leave the country altogether.

Péter Magyar, leader of the opposition Tisza Party, similarly rebuked Orbán. He said the political director had “crossed all lines” with his “outrageous remarks,” accusing him of misusing “the 13 most brightly shining days of 20th-century Hungarian

my hand at Corvin köz,” an iconic point of resistance during the 1956 conflict.

Prime Minister Viktor Orbán defended his political director when asked about his comments during his weekly interview with public broadcaster Kossuth Rádió, but admitted it was a “mistake” for him to have made “ambiguous comments” about defense against Russia and 1956. “Hungary always defends itself, as it has in the past, as it does today and will do so in the future with every possible means,” the Prime Minister insisted.

Balázs Orbán, the Prime Minister’s Political Director, speaks at the conference entitled “European Competitiveness, Hungarian Economic Neutrality” at the National Ludovika University of Public Service on Sep. 25, the day his controversial podcast was published.

history for foul everyday propaganda purposes.” The Tisza party leader was another to demand Orbán’s resignation.

Orbán’s Apology

In response to the public outcry, Balázs Orbán apologized in a statement on Facebook on Sep. 27. “It was not my intention to be ambiguous about the case of 1956. It was a mistake on my part, and if I offended anyone, I apologize for that,” he said. “I confirm that if the need arises, I will be there with a gun in

On the diplomatic front, and away from the verbal fallout, Minister of Foreign Affairs and Trade Péter Szijjártó met with newly appointed Ukrainian Foreign Minister Andrii Sybiha on Sep. 30. Szijjártó congratulated his counterpart on his appointment on Sep. 5, while Sybiha thanked Budapest for supporting EU sanctions against Russia, adding that Kyiv was “committed to developing pragmatic and predictable good-neighborly relations.”

Szijjártó said Hungary and Ukraine have a vested interest in developing neighborly relations. “Hungary is supporting all initiatives bringing about a swift peace, and those raising the hope that the war can be concluded with negotiations and diplomacy.” Sybiha replied that he hoped Hungary would continue to support “Ukrainian initiatives,” referring to plans that reject any Russian territorial gains.

Shaping the Future With Confidence Through EY-Parthenon

EY-Parthenon is the strategic and management consulting arm of the EY global network. It can assemble locally connected, internationally experienced teams from more than 7,000 distinguished professionals across more than 120 countries. Its presence in Hungary is bolstered by a dedicated team with profound local knowledge and extensive experience, making it a trusted ally for corporate leaders navigating the complexities of today’s most challenging business environments.

customer insights. Its suite of services includes commercial due diligence and feasibility studies, business model innovation, portfolio assessments, and digital transformation initiatives, all aimed at boosting both top-line growth and operational efficiency.

Turnaround

EY-Parthenon is recognized for its expertise across three pivotal domains. Strategy Consulting: The strategic and management consultancy collaborates with organizations to design growth strategies informed by deep market, competitor, and

Transaction Strategy and Execution: EY-Parthenon assists clients in realizing the full potential of their businesses, steering them from initial tactical evaluation to impeccable post-deal execution. The skill set includes seamless cross-functional integration, carve-out strategies, and customized regional advisory.

and Restructuring Strategy: In times of critical need, the consultancy provides rapid performance enhancements and value preservation, offering bespoke solutions for liquidity management, synergy exploration, process refinement, cost reduction efforts, corporate reorganizations, and insolvency planning.

EY-Parthenon’s approach is anchored in data-driven accuracy, ensuring its deep industry specialization is leveraged with maximum precision. This positions it to act promptly and adeptly to its clients’ changing requirements.

Its advisors enable leaders to capitalize on nascent opportunities and establish a sustainable competitive edge in a dynamic economic environment, especially in sectors like energy, where strategic foresight is crucial.

EY-Parthenon assists clients in realizing the full potential of their businesses, steering them from initial tactical evaluation to impeccable post-deal execution. The skill set includes seamless cross-functional integration, carve-out strategies, and customized regional advisory.

As companies face concurrent challenges of climate change, fluctuating energy prices, supply security, technological progress, an increasingly demanding customer base, and the quest for optimal strategies to sustain their competitive edge, EY-Parthenon takes pride in its globally competitive team capable of delivering comprehensive and actionable solutions in the energy, manufacturing, and transportation sectors.

NICHOLAS PONGRATZ

Attila Ságodi, Partner, EY-Parthenon

Tamás Pazsiczky, Partner, EY-Parthenon

Photo by Szilárd Koszticsák / MTI

PastPay Raises EUR 12 mln to Fuel Expansion Across European Markets

STARTUP SPOTLIGHT

PastPay has secured EUR 12 million in Series A funding, the largest for a B2B buy now, pay later provider in the CEE region. The investment, led by Platina Capital, is set to fuel the company’s growth, enabling it to expand its innovative payment solutions across Europe.

Currently, PastPay operates mostly in Central Europe, including the Czech Republic, Germany, Hungary, Italy, Poland, Romania, and Slovakia, with expansion plans for other EU markets. PastPay’s funding round also includes participation from financial institutions such as MBH Bank, Advance Global Capital, Quantic Financial Solutions, STRT, and BNL Start Partners, as well as high-profile private investors Jared Schrieber and Mark Ransford.

PastPay offers innovative financing solutions that empower merchants and their business customers to manage payments on their own terms. The platform facilitates seamless transactions online and off, providing flexible payment terms that enhance liquidity for companies across the EU. Specifically, PastPay

enables businesses to extend payment terms for purchases from more than 170

merchants by 15 to 90 days, the company tells the  Budapest Business Journal .

PastPay will use the new funds to expand its current offerings, making B2B transactions and financing as seamless as possible for users across Europe. This will involve a two-stage strategy focused on investment in product development and expanding its digital services and infrastructure, ensuring that merchants operating in digital or traditional formats are fully supported.

“B2B commerce is becoming an increasingly digitized market, and the demand for flexible payment options is matching the need for innovative solutions,” Benjamin Berényi, co-founder and CEO at PastPay, tells the BBJ

“This funding shows that investors are keen to leverage this demand and

in Brief News

Parliament to Debate 2025 Draft Budget Mid-November

Parliament is expected to start debating the 2025 draft budget in mid-November and approve it in midDecember, Speaker László Kövér told Inforádió. Kövér said a precise date was not yet at hand, but he said he was confident that the budget would be approved before Christmas. Changes to parliamentary procedures meant that the detailed professional debate of the draft budget would take place in the budgetary committee. The plenary session will then vote on the amendment package adopted by the committee, and party groups will be able to propose plenary votes “on a few amendments not featured” in the package, Kövér said. He also said that

the hearing of the new central bank governor is expected to take place during the spring term. Should the head of one of the economic portfolios be nominated, and the two ministries merge, as has been rumored, Parliament will only have to decide about the name change for the ministry, he added.

Record Summer for Tourism Claimed

Hungary’s tourism sector reached record highs this summer, Prime Minister Viktor Orbán told lawmakers in Parliament on Sep. 30 at the start of the fall session. According to state news agency MTI, Orbán said the number of Hungarians who took domestic trips and foreigners who visited Hungary had never been higher than this summer. He added

lead in a market still in its early stages but with the promise of robust growth and profitability. For this to happen, we need to invest further in the product side and, with the growing threat of AI-enhanced cybercrime, strengthen our risk infrastructure,” he adds.

Pan-European Goal

“Historically, we have focused on the CEE region,” Bálint Réti, co-founder and COO at PastPay, notes. “However, our goal is to become a panEuropean provider and a reliable payment and financing partner for

that the number of Hungarians who had traveled abroad had also reached a new record. Orbán noted that the government had repurchased the operator of Budapest Ferenc Liszt International Airport in the summer and said passenger numbers there are set to climb to 17.5 million this year.

EBRD Projects 3.3% Growth for Hungary in 2025

The European Bank for Reconstruction and Development (EBRD) forecasts Hungary’s GDP will grow by 1.8% in 2024 and 3.3% in 2025 in its latest Regional Economic Prospects report released on Sep. 26. The EBRD lowered the forecast for 2024 by 0.4 of a percentage point from the previous report published in May. The EBRD noted that Hungary’s economy grew 1.3% year-on-year in the first half, driven by a close to 10% surge in real wages. The bank said Hungary had become a “key destination” for Chinese foreign direct investment and that,

all transactions within the European Union and EEA. The past years have been a less supportive environment for fintech startups. This raise showcases the quality and resilience of our product and team,” he says.

“Our partnership with these new investors aligns with our vision of making financing accessible to as many SMEs as possible. They bring significant expertise in finance and technology, as well as a robust network we can leverage. With the current funding round, we have the ability to finance over

300 mln worth of invoices per year,” Réti adds.

Mark Ransford, a private investor who participated in the Series A raise, comments that he decided to invest in PastPay based on the company’s high-quality team and efficient overhead structure.

“The founders’ ambition to expand into Western Europe is also particularly compelling and [….] will be greatly bolstered by this significant raise. PastPay’s commitment to delivering a platform that seamlessly integrates both online and offline transactions truly sets it apart, with its ability to offer flexible payment solutions that significantly enhance liquidity for smaller enterprises across Europe,” he explains. Since its inception, PastPay has enabled more than 170 merchants to offer flexible payment terms, allowing customers to pay later on over 15,000 transactions. In doing so, the company says it has allocated more than EUR 33 mln in financing to support SMEs across the EU.

in 2023, the country had captured 44% of all Chinese FDI flows in Europe, primarily directed towards the electric vehicle sector. The EBRD added that FDI inflow, estimated at nearly EUR 5 billion in 2023 and the first half of 2024, had created around 9,000 jobs.

Unemployment Rate at 4.2% in August

Hungary’s jobless rate stood at 4.2% in August, level with the rate in July but up from 4% 12 months earlier, data released by the Central Statistical Office (KSH) on Sep. 27 shows. The rate covers unemployment among people between the ages of 15 and 74. In absolute terms, there were 209,900 unemployed in August, 500 more than in July and 14,500 more than this time last year. The rolling three-month average jobless rate stood at 4.3% in August, edging up from 4.2% in July and from 4.1% 12 months earlier. The monthly jobless rate for the 15- to 64-year-old age group stood at 4.2% in August, unchanged from July but up from 4% a year earlier.

BENCE GAÁL

Benjamin Berényi, co-founder and CEO at PastPay.

2 Business

U.S. Election and German Economy Pose Challenges for Hungary’s Economy

After the summer recess, the Hungarian National Bank (MNB) may follow the U.S. and European central banks in further lowering interest rates, potentially bringing the benchmark rate down to 6.25% by the end of the year, according to Equilor Investment Ltd.

Trump seeks greater control over the Federal Reserve, which could lead to a significant fiscal deficit.

Over a decade, his policies could add USD 4.5 trillion to the deficit, compared to Harris’ projected USD 1.4 tln.

Many promises, however, are unlikely to materialize due to a divided House of Representatives.

In presenting its latest analysis, Equilor said Hungary’s economic outlook is negatively impacted by the struggling German industrial sector, with a projected GDP growth of only 1.8% this year. The Hungarian forint is expected to remain stable, with the euro trading at around HUF 395 at yearend. The firm notes that uncertainties surrounding the U.S. economy, primarily due to what seems sure to be a highly contested presidential election this fall, will affect Hungary indirectly.

Equilor views the forint exchange rate as stable and anticipates growth in the Hungarian economy next year. The domestic stock market is seen as undervalued, while international markets are less so. Gergely Muhi, chief analyst at Equilor, highlighted that the U.S. presidential election is the most critical factor influencing the economy in the near future. The race is extremely tight, with polls within the margin of error and a handful of battleground states likely to decide the outcome. Both presidential candidates aim to reduce inflation, although not much remains to be done on this front since it is already nearing target levels.

The U.S. economy is growing at around 2%,

but downside risks remain, including high consumer credit reliance and the end of COVID-era financial support, Equilor says.

The U.S. economy is cooling due to monetary tightening, making a ratecutting cycle more urgent, potentially starting soon. The market expects a 110-basis point cut this year, but Equilor predicts a more modest 75 basis points. There may also be a reduction or halt in the buyback of uncollateralized money due to shrinking liquidity in the U.S. banking system.

The European Picture

In Europe, Germany’s manufacturing sector is faltering, while southern countries, particularly those reliant on tourism, are growing. The Eurozone has seen two rate cuts, with another expected this year, and a reduction to 2.25% in four steps next year.

The German market is critical for Hungary due to the latter’s high dependency, which is evident

early in the year but decreased over the summer. New production capacities next year should boost exports. EU funds are a decisive factor; many previously blocked funds are expected to reach businesses, but EUR 32.5 billion remains blocked. Limited time is available for utilization, risking a EUR 1 bln loss this year if no agreement is reached. Major credit rating agencies are unlikely to change Hungary’s rating, but vigilance is needed to prevent deterioration. Economic growth is forecasted at 3.5% next year, with inflation at 3.8% and a fiscal deficit of 4.1%, according to Equilor.

Stock Market Rally

A significant rally has occurred in stock markets, driven mainly by seven major tech stocks, while others in the S&P 500 index have not shown similar gains. The tech rally seems to be losing momentum, partly due to the rapid closure of Japanese carry trade positions. The Bank of Japan is inclined to tighten monetary policy, reducing the significant interest rate differential and diminishing the yen’s role as a funding currency.

in the lack of a rapid economic rebound and weaker consumer spending. Equilor forecasts 1.6% growth for Hungary this year, contingent on increased consumer spending, which has been delayed as households remain cautious due to rising costs. The budget deficit has increased to 4.5%, with further adjustments needed. Next year’s budget is expected in November, potentially reducing uncertainty.

The National Bank of Hungary (MNB) has room for a rate cut, with the market expecting a 75-basis point reduction this year. Equilor, once again, is predicting a more conservative 50 basis points, resulting in a 6.25% rate by year-end. The rate could decline further next year, but it is hard to predict by how much. Apart from anything else, a change in the MNB governor is due in March. After pausing the easing cycle in August, the national bank reduced the base rate by 25 basis points to 6.5% on Sep. 24, which was in line with projections. Actions by major central banks, particularly the Fed, will be crucial to the direction of the future path.

The inflation target might be met next year, with consumer spending picking up and national energy bills remaining favorable. Lower interest rates will reduce public debt servicing costs. The balance of payments showed a strong performance

The Budapest Stock Exchange (BSE) is one of the best-performing stock markets this year due to low valuations and the gradual pricing out of negative news. Of Hungary’s four blue-chip shares, 70% of OTP Bank’s profits come from abroad, with stable profits and potential for further share buybacks. MOL, meanwhile, faces challenges with declining refinery margins and rising windfall taxes. Richter’s acquisitions have expanded its portfolio, and inflationary fee adjustments have boosted Telekom’s results.

Szilárd Buró, head of financial innovation at Equilor, discussed the outlook for the forint. The exchange rate has approached the

per euro

level but has not crossed it. Risks remain, including budget issues, credit ratings, and EU funds, though conditions could strengthen the forint. The MNB remains cautious, as indicated by the 25 basis points cut in September, and that will likely be enough to keep the rate below HUF 400 per euro this year.

Buró emphasized the importance of the Japanese yen: the country’s monetary policy is changing fundamentally, moving away from its ultra-loose policy, reversing the weakening trend of the yen. The shrinking interest rate differential between the dollar and yen diminishes the latter’s role as a funding currency. Due to weaker Chinese demand, oil prices have fallen below USD 70 per barrel for Brent crude. OPEC is struggling to maintain a USD 75 price level as non-OPEC producers increase exports. Gold prices are rising, driven by falling interest rates, substantial central bank purchases (it was announced on Oct. 1 that the MNB had decided to increase the gold reserve from 94.5 tonnes to 110 tonnes), and increased investor confidence in exchange-traded funds, with room for further gains before any significant correction.

GERGELY HERPAI

Photo by Gergely Herpai

From left: Bálint Szécsényi, Equilor CEO; Gergely Muhi, chief analyst; and Szilárd Buró, head of financial innovation.

Hungary’s 1st Women’s Esports Tournament Breaks New Ground With Hunesz and K&H

Hungary has reached a significant milestone in esports with its first women’s competition, the Valorant 2v2 Spike Queen Challenge powered by K&H. The event represents more than just a tournament; the organizers say it’s a turning point for women in competitive gaming.

The Valorant (a character-based first-person shooter game) 2v2 Spike Queen Challenge powered by K&H saw the top four female teams advance from the qualifying rounds for the final at the Delta1 Esports Café.

Dedicated Supporter

As the popularity of esports surges across all demographics, women have become a growing force in the community. To support these developments, the Hungarian Esports Association (Hunesz) created a Women’s Esports Division earlier this year.

The competition took place as part of the Women’s Esports Division Day on Sep. 20, showcasing opportunities and career paths for women in this rapidly growing sector. Hungary’s top four female teams battled it out in the landmark event, highlighting the growing opportunities for women in competitive gaming.

Globally, female esports players are receiving increased recognition and opportunities, with organizations tied to the industry acknowledging the importance of a more balanced gender representation. Hungary is aligning itself with these trends, as demonstrated by the formation of the Women’s Esports Division by Hunesz.

Already this year, a Hungarian women’s team participated for the first time in the European regional qualifiers for the International Esports Federation (IESF) World Championship, playing CounterStrike 2, a tactical first-person shooter game. Eszter Németh represented Hungary at the Global Esports Federation’s 2024 Global Esports Games in China, competing in Assetto Corsa, a racing video game developed by the Italian video game developer Kunos Simulazioni.

“The K&H Group is not only a dedicated supporter of Hungarian esports but also a pioneer in championing the women’s division,” emphasized Nóra Horváth Magyary Voljč, communications director at K&H Group.

“Creating equal opportunities, not just in business but across all areas of life, is vital. Esports, as a dynamically evolving discipline, benefits immensely from advancing equality from the very start. It’s crucial that every committed and determined female player is given the chance to develop their skills and achieve excellence,” she said.

“Esports, much like traditional sports such as football or motor racing, unfortunately, grapples with sexist stereotypes against female players, and there is also the persistent issue of online harassment.

Statistics from Wifitalents show that while 46% of gamers are women, many choose gender-neutral usernames to avoid negative comments,” Horváth Magyary Voljč added.

In conjunction with the tournament, the Women’s Esports Division Day was held at the same venue. Experts discussed career opportunities in women’s esports, female representation in gaming, and the challenges women and mothers face in this competitive space. The goal was not only to highlight the achievements of female

“We are working to eliminate gender inequality in esports so that female players receive the same recognition and opportunities as their male counterparts. Women’s presence in esports is not only important for equality but also reflects the diversity and richness of the sport. However, to make esports truly inclusive and accessible to all, it is essential first to increase the societal acceptance and participation of female players.”

esports athletes but also to inspire the next generation through their stories of success.

An essential aspect of the day was the focus on breaking down gender barriers in esports. Hunesz emphasized the importance of increasing female participation and its determination to create a more inclusive and balanced environment for female players.

Significant Challenges

It highlighted that, despite the growing popularity of esports among women, there are still significant challenges, including societal

acceptance and combating sexist stereotypes. The Women’s Esports Division is designed to address these issues by creating more opportunities for women in competitive gaming.

“We are working to eliminate gender inequality in esports so that female players receive the same recognition and opportunities as their male counterparts. Women’s presence in esports is not only important for equality but also reflects the diversity and richness of the sport. However, to make esports truly inclusive and accessible to all, it is essential first to increase the societal acceptance and participation of female players,” stressed Balázs Biró, secretary general of Hunesz.

Participants in the Valorant 2v2 Spike Queen Challenge had the chance to showcase their skills in a professional setting, with industry experts and sponsors like K&H supporting the cause of gender equality in gaming. K&H has been a longstanding supporter of esports in Hungary. Its involvement in the tournament underlined its commitment to ensuring that female players receive the same opportunities for growth and recognition as their male counterparts.

This tournament is part of a broader movement in Hungary and globally to foster greater inclusion in esports, ensuring that women have the same access to the platforms and support they need to succeed at the highest levels of competition.

GERGELY HERPAI

The inaugural winner of the Valorant 2v2 Spike Queen Challenge powered by K&H was a team called 1C2G, whose players go by the handles Nana and Bius.

From left, Balázs Biró, secretary general of Hunesz; Nóra Horváth Magyary Voljč, of sponsors K&H Group; Mara Molnár, Hunesz Women’s Esports Division co-chair; and Balázs Kis, vice president of Hunesz.

Empowering Global Leadership: Innovation, Diversity and the Future of Executive Talent

The Budapest Business Journal talks with Norbert Nagy, Stanton Chase’s managing partner and vice president for the EMEA region and Kristof Reynvoet, global chair, ahead of the global partner meeting in Budapest.

BBJ: Stanton Chase is bringing together executive headhunters from 38 countries for its global partner meeting in Budapest. What are the key goals for this gathering, and how does Budapest as a location reflect the company’s global leadership and local expertise?

Norbert Nagy: We’ll host our 68th global partners meeting in Budapest from Oct. 2-6. The key goals are to strengthen collaboration across regions, share best practices, and strategize for the future of executive search and leadership consulting. And, as the leader of the Budapest office for over a decade, I’m personally thrilled to show off our beautiful city to my colleagues. Kristof Reynvoet: Budapest is at the heart of Central and Eastern Europe, which is showing resilience and potential despite worldwide challenges. By bringing our international team here, we show how seriously we take this market and its growing influence on the executive talent industry. This follows our last global meeting in Sydney, Australia, and sets the stage for our next gathering in Cartagena, Colombia. We thank Norbert and the Stanton Chase Budapest team for organizing this exciting gathering, and we look forward to experiencing the city’s vibrant culture while connecting with our partners.

BBJ: Stanton Chase specializes in CEO and other C-level placements. How challenging is the market at present? Are people happy to move between roles or looking for more stability? Who holds the upper hand, the candidates or the companies?

NN: The current market for C-level placements is both dynamic and challenging. While many executives are open to new opportunities, especially those offering a chance to drive growth or transformation, others are more

cautious, seeking stability amid economic uncertainty. The balance of power shifts depending on the industry and region, but overall, top candidates with a proven track record of leadership in crisis and innovation tend to hold the upper hand. However, companies with a compelling vision, clear strategy, and strong values are still highly attractive to talented leaders.

BBJ: In recent memory, we have lived through the pandemic, an energy crisis and very high inflation. Two conflicts are raging, one in our backyard, and growth is sluggish. What qualities are boardrooms looking for in their CEOs today, and how has this changed?

NN: The business world has undoubtedly been through the wringer lately, and it’s changed what companies want in their CEOs. We’re seeing high demand for CEOs who can manage crises, change strategies quickly, and make the most of technology for business transformation. There’s also been a shift from purely growth-focused leaders to those who can balance growth with resilience, sustainability, and stakeholder management. Today’s CEOs need to execute effectively in unpredictable environments.

As for the tech side of things, it’s become more important than ever for leaders to be tech-savvy. Technology is no longer just another tool in the business toolbox; it’s driving strategy and competitive advantage now.

BBJ: As AI and digital transformation reshape industries, how does Stanton Chase ensure that the leaders it places have the technological expertise and vision to drive innovation in their organizations?

KR: At Stanton Chase, we understand that AI and digital transformation are not only reshaping industries

but are also critical to driving future success. To ensure the leaders we place can navigate this landscape, we focus on finding candidates who possess a mix of technical, managerial, and communication skills to lead teams, coordinate projects, and communicate with stakeholders. We thoroughly assess candidates’ experiences with digital transformation initiatives and their understanding of emerging technologies. This includes evaluating their ability to leverage data and AI to enhance decision-making and operational efficiency.

C-level executives do not always need to be technological experts, but they do need to be able to bring the right people on board, those who possess both the technological expertise and the capacity to drive collaboration. We also look for adaptability and a growth mindset in candidates, ensuring they can lead innovation.

BBJ: We often hear about the importance of increasing diversity at all levels, particularly in executive roles such as CEOs and CTOs. Is it becoming easier to find top-quality candidates who don’t fit the traditional leadership profile? And who is driving the push for more diverse leaders: companies, headhunters, or societal expectations?

KR: The diversity landscape in executive leadership is changing, that much is certain, but it’s a gradual process. In the past year, 24% of the executives Stanton Chase placed are women. Our diversity recruitment strategy focuses on tackling unconscious biases to attract and retain top-qualified candidates. We passionately champion the cause of diverse boards and openly endorse

the goal of ensuring a minimum of 30% female representation on all boards. We are dedicated to helping our clients achieve this milestone, too. But we’re not there yet. Some industries still have a limited pipeline for diverse candidates, and unconscious biases can still sway hiring decisions.

The push for more diverse leadership is driven by a combination of all three: companies aiming for innovation, headhunters seeking competitive candidates, and societal pressures advocating for inclusivity.

BBJ: While your partners are in Budapest primarily for work, what specific cultural and business opportunities do you anticipate the capital will provide beyond the workshops and meetings?

NN: Budapest will offer cultural and business opportunities that enrich our experience, from networking events in historic venues to teambuilding activities. The city’s rich heritage will not only enhance our stay but also foster stronger connections among our partners.

About Stanton Chase

Stanton Chase is a top-ranked global retained executive search and leadership consulting firm. From humble beginnings in 1990, Stanton Chase has grown to more than 70 offices in 45 countries. Its team of more than 350 specialized consultants works tirelessly to provide exceptional service to their clients.

Norbert Nagy

Kristof Reynvoet

House of Unicum Takes Visitors on a 270° Immersive Trip Through Time

The House of Unicum has unveiled a new addition to its visitor experience: since September, guests have been able to immerse themselves in the history of the Zwack family and the Unicum brand through a 270° film projection.

The immersive film is an extension of the video presentation that has long been a central feature of the museum tour. This enhanced version provides a much richer visual experience, projected across three walls surrounding the audience, drawing viewers into the narrative.

Hungarian, English, German, and Italian, with subtitles in six additional languages, including Chinese. The film’s soundtrack was composed by Zsolt Hauber, a wellknown figure in the Hungarian music scene and a founding member of the band Bonanza Banzai.

Barista and Unicum Riserva special editions if you buy a premium ticket).

Awarded the Value and Quality Grand Prize in

2023,

the House of Unicum continues to expand and innovate its visitor offerings. Since 2020, the museum has introduced a series of digital enhancements to its exhibits. QR codes have been added to various displays, enabling guests to access additional digital content, including photographs and short films that provide further insights into the family’s legacy.

One particularly popular feature is the “Then and Now” tool, which allows visitors to see how the building has evolved, comparing historical and current images of the facility’s exterior and interior. It offers a compelling look at how the physical space has changed while remaining an essential element of the brand’s heritage.

The film aims to give a broad international audience an in-depth look at how the brand has evolved and the historical context in which it developed. It is available in Hungarian, English, German, and Italian, with subtitles in six additional languages, including Chinese.

This state-of-the-art, panoramic visual presentation offers a detailed look at the family’s legendary story, significant milestones, and some of the most iconic advertisements of the Unicum brand. Zwack says it is the first technology of its kind in Hungary’s beverage industry, an innovation allowing visitors to explore the brand’s history in a unique and engaging way, bringing over 200 years of tradition to life through dynamic, visually compelling storytelling.

Visitors can delve deeper into the brand’s history, gaining insights into pivotal moments such as the safeguarding of the original Unicum recipe during World War II and the fate of the barrels that were repurposed by soldiers. The film also touches on Péter Zwack’s return to Hungary and includes numerous archival materials and family photos.

The film aims to give a broad international audience an in-depth look at how the brand has evolved and the historical context in which it developed. It is available in

Behind-the-scenes

As previously, visitors can also take a guided tour of the factory, which offers a behind-the-scenes look at the production process. The tour includes a visit to the traditional distillery, known as the “Heart of Unicum,” where the iconic drink is still produced using methods passed down through generations.

Guests also have the opportunity to taste various Unicum varieties directly from the barrel, including the original Unicum and the increasingly popular Unicum Szilva (and the Unicum

Another example of the museum’s modernization is the selfie machine, introduced in 2021, which allows visitors to capture their experience in a fun and interactive way. This blend of traditional heritage with modern technology is a hallmark of the museum’s approach to visitor engagement, ensuring that both the historical significance and contemporary appeal of the brand are highlighted and that the House of Unicum remains an engaging cultural destination for local and international visitors.

GERGELY HERPAI

The immersive film surrounds guests on three sides.

Tourists can also take a tour into the “Heart of Unicum.”

Guests are offered a sample of the iconic drink straight from one of the 500 barrels in the cellar.

Radványi Succeeds Lőcsei as PwC Hungary Managing Partner

Effective Oct. 1, László Radványi succeeded Tamás Lőcsei as the new country managing partner of Big Four consultancy PwC Hungary. His predecessor will now concentrate on  overseeing key projects in Central and Eastern Europe and driving local business development in Hungary.

László Radványi has been with PwC since 2003, beginning his career there as a fresh graduate and becoming a partner in 2015 at 35. He has led numerous domestic and regional transformation projects within the auditing business, as well as major Hungarian and German client projects.

In 2020, he was appointed assurance services leader at PwC Hungary, overseeing accounting consulting, risk management, cyber security, and PwC’s Academy, the firm’s adult education center. Under his leadership, the Hungarian auditing business doubled in size, establishing itself as a significant player in the CEE region. Radványi says he is deeply committed to fostering innovation, enhancing employees’ digital skills, and promoting a diverse and inclusive corporate culture.

“PwC is one of Hungary’s leading firms in auditing, tax advisory, and business consulting. My objective is to further strengthen our market-leading position in our core service areas while expanding into new markets,” Radványi said, commenting on his appointment.

“I believe that the foundation of a successful company lies in trust, collaboration, and responsible, engaging leadership. Beyond financial metrics, sustainable business performance is demonstrated by our ability to attract talent, drive innovation, support the professional development of our employees, and positively impact society,” he said.

Diverse and Transparent

“Therefore, I advocate for a diverse and transparent corporate culture where employees strive for excellence, all grounded in mutual trust. As the head of PwC, my mission is to leverage our

company’s expertise to bolster economic and social trust while delivering comprehensive, high-quality services to our clients. I firmly believe that we should not merely react to global trends but actively shape them,” Radványi added.

Alongside his professional responsibilities, Radványi is actively engaged in PwC’s social responsibility and diversity initiatives and supports various causes. As a father of two, he says he enjoys spending his free time with his family and pursuing sports activities.

Tamás Lőcsei served as the country managing partner at PwC Hungary

from 2018. An internationally recognized expert in taxation and state subsidies, he has facilitated numerous investments in Hungary and the region over the past decades.

During his six-year tenure as CMP, he navigated PwC through challenges such as the COVID-19 pandemic, the war in neighboring Ukraine, and the related economic and labor market difficulties.

PwC Hungary said he had created an inspiring and sustainable environment for employees through an innovative strategy and a strong focus on technology. His new role will see him lead business development in Hungary and foster economic cooperation between CEE and the Asian region.

“I am proud of what PwC Hungary has achieved under my leadership. Despite economic challenges, our service portfolio has consistently expanded, we opened an office in Debrecen, our employee count has surpassed 1,000, and our revenue has nearly doubled in six years,” Lőcsei said.

“I am optimistic that this momentum will persist, allowing me to further contribute to PwC’s local and regional success. Furthermore, I am happy to be able to dedicate more time to our clients, an aspect of my role that I find particularly fulfilling,” he added.

Yepp App Plays ‘Digital Leapfrog’ in Hungary’s Telco Market

Yettel recently brought some of its services directly into the digital age through its Yepp app. Chief commercial officer Nemanja Zilovic describes the fear the company had “dreamed too big” in bringing to market, and its joy in confirming that the time was ripe for it.

BBJ: What sets Yepp apart from services offered by competitors, or from other services offered by Yettel?

Nemanja Zilovic: It gives more freedom to the user than any other solution on the market. Firstly, it can be activated at any moment from any location if you have a phone and any kind of internet access. There is no need to go to store or call anyone; the customer can start using the Yettel mobile network within minutes. A subscription covers unlimited internet and you can add voice or SMS only when needed. You are free to suspend or cancel the service at any moment with no questions asked, no paperwork, and no penalty of any kind. This is only possible because we have been able to move all interactions to the app.

BBJ: What are some of the recent trends in the mobile market that informed the launch of Yepp?

NZ: We were not looking for inspiration from the mobile market. We were

looking at the services with which customers are most satisfied and tried to learn from that. Kifli, Wolt and Netflix are the best loved services in Hungary, especially with younger audiences, and we were trying to apply some of that “digital first” philosophy to telco. Several industries have already taken this journey; food ordering, content distribution, hospitality. It was about time for mobile providers to break away from the old ways and embrace the digital age fully.

BBJ: Some time has passed since the launch of Yepp. What has been the customers’ reaction so far?

NZ: Based on our preliminary research, we designed Yepp for the 18-35 target group. During customer discussions, it was they who mostly felt they would be happy to use such a service. We have been surprised but happy to find out that it’s not just young people who make up the circle of Yepp users! The 18-35 and 36-55 age groups are equally present in the Yepp subscriber base.

“We were trying to apply some of that ‘digital first’ philosophy to telco. Several industries have already taken this journey; food ordering, content distribution, hospitality. It was about time for mobile providers to […] embrace the digital age fully.”

This shows that the demand for easy-to-use, convenient services spans generations. These groups will use unlimited internet for completely different purposes, but the convenience of access is just as important to both.

BBJ: What expectations do you have for Yepp? What will make it a success from your perspective?

NZ: Yepp is the first step in the expansion of digitized products. Although the role of personal contact and occasionally consultative customer support and sales remains, customers increasingly prefer digital solutions where they do not depend on others, their time, their mood, etc. We also put the focus more on digitized customer service by expanding the customer service and convenience functions available in our application, which is visibly popular. Yepp is a leapfrog in telco digitization. We took a risk with it; there was a chance that we had dreamed too big and that this concept was ahead of its time. I can happily say that, based on customer feedback and the market reception, we launched Yepp at the right time; the market is mature enough to embrace an innovative telco service like this. It’s supported not only by subjective opinions but objective facts, like the constantly growing number of subscribers.

Nemanja Zilovic, CCO, Yettel.

NICHOLAS PONGRATZ

László Radványi, country managing partner of PwC Hungary.

AutoWallis Maintains Growth Projections Despite Market Challenges

Despite turbulent market news, AutoWallis remains confident, with analysts projecting a one-year target price of HUF 223 for the company’s shares. The firm is also expected to announce at least one more acquisition by the end of the year.

Richard Végh, CEO of the Budapest Stock Exchange (BSE), highlighted in his remarks that AutoWallis stands out among successful Hungarian companies as it has achieved growth not through bank loans but by relying on its own performance. He pointed out that AutoWallis has been a member of the BSE for five years and has completed multiple acquisitions and bond issuances during this period, which Végh described as “exemplary.” He also noted a broader market trend, with the number of Hungarian companies issuing bonds rising from 40 in 2016 to 70 today.

Meanwhile, Sándor Mátrabérci, managing director of Wallis Motor, explained the reason behind showcasing the latest business results in the group’s BYD outlet. Since introducing the Chinese brand nine months ago, the BYD showroom has been expanded, as the brand has swiftly secured a leadership position in Hungary’s electric vehicle market. The company has captured a 26% share in state-supported tenders, and in recent months, more than 600 contracts have been signed for Chinese models.

“The automotive industry is an extensively analyzed sector,” remarked Csaba Debreczeni, chief equity analyst at MBH Investment Bank. His analysis

follows MBH’s recent initiation of coverage on AutoWallis Nyrt., with a one-year target price of HUF 223 for its shares.

Debreczeni emphasized that the target reflects current economic, industry, and corporate conditions, although adjustments may be needed in the future. He also mentioned that AutoWallis had outlined ambitious goals for the next five years in May 2024. These targets include the potential doubling of revenue, EBITDA, and net income by 2028, alongside the goal of executing two to three acquisitions annually.

Debreczeni also drew attention to the increasing need for European policymakers to shield the automotive sector, which has been increasingly affected by economic policies in the face of competition with China.

Industry Churn

“The European Union’s automotive sector directly employs 6.5 million people and indirectly supports 13 million jobs while

contributing 32% of the EU’s total R&D expenditures,” Debreczeni pointed out.

Furthermore, he observed that around 500 Chinese automotive companies, primarily focused on electric vehicles, had been established over the past decade. However, many of these firms have since disappeared, with only a few remaining in an industry that rapidly consumes state funding.

Despite these challenges, Debreczeni remains cautiously optimistic about European automakers. He believes the sector still holds potential, although there is no room for significant expansion.

“European manufacturers can only take market share from each other,” he explained. From an investment perspective, luxury car manufacturers remain the most profitable, with Ferrari trading at 12 times its revenue.

“I wouldn’t want to be a car manufacturer in Europe, but I would like to be a car dealer,” Debreczeni noted, adding that several subsectors, though becoming more expensive, have managed to weather the economic turbulence.

According to MBH’s analysis, AutoWallis Group’s revenue is projected to reach nearly HUF 400 billion in 2024, with further growth expected to increase this figure by 50% by 2028.

These included a HUF 5.7 billion capital increase, a five-year extension of the Opel import contract, and the acquisition of SsangYong’s import rights in four additional countries.

He also announced plans to open the company’s first Renault and Dacia dealership in Budapest on Oct. 1, 2024. Furthermore, AutoWallis expanded its reach in the Czech market by acquiring three BMW dealerships from Stratos Auto.

Ormosy underscored that the firm’s retail division consistently outperformed the market across all regions and brands.

“For example, AutoWallis now controls 10% of the BMW market in the Czech Republic,” Ormosy said, emphasizing the significance of the Czech market due to its larger GDP (USD 326 billion) and higher per capita GDP (USD 29,000) compared to Hungary.

Ormosy also addressed the topic of Chinese manufacturers, noting that despite “incredibly turbulent news and a challenging negotiation environment,” no significant changes have been observed. He anticipates further consolidation among Chinese automakers, with some failing to survive the intense competition.

Discussing the impact of the EU’s new tariffs (ranging from 17.4% to 37.6%, up from the previous 10%), Ormosy acknowledged that while the new tariffs have created setbacks for some Chinese manufacturers, “BYD’s performance has not been affected, though other brands have been impacted.”

Source: MBH

(in

HUF)

Source: AutoWallis

Critical Developments

Gábor Ormosy, CEO of AutoWallis Nyrt., highlighted several critical developments over the past six months.

He added that the market share of Chinese automakers in Europe reached 5% last year and continued to grow in the first half of 2024. However, with a potential shrinkage of up to 25% in the cost advantage of Chinese brands, their competitiveness could be diminished. Despite the short-term fluctuations in the market, Ormosy remains confident that the company’s strategic goals for 2028 are not at risk and the targets set for 2024 are stable. He further revealed that AutoWallis is engaged in more than 10 negotiations, primarily with international partners. Some deals could take 18 months to finalize, while others might conclude sooner. According to Ormosy, an announcement on another acquisition could be made before the year’s end.

GERGELY HERPAI

Gábor Ormosy, CEO of AutoWallis Nyrt., in the BYD showroom.

Brain Bar Continues to Offer Plenty of Food for Thought

Could we live forever thanks to cuttingedge tech? Does it matter if we run out of energy? Who will rule the world before that happens, and where does AI come into the picture? The speakers of the annual Brain Bar futuretainment festival sought to find answers to such questions, among others, in the 2024 edition.

The audience was assured early on that stopping by was a great idea. Data scientist Igor Tulchinsky informed them that Donald Trump would win the U.S. elections, based on the available data. The speaker added that AI’s prediction capability doesn’t cover “black swan” events. Since Trump has won before against the odds in 2016, a repeat victory would not be considered as such. Hence the prediction. The growing power of artificial intelligence was acknowledged by many on stage time after time. Yet, it was also agreed that it won’t be able to replace personal relations. Nor can it pass on values. That’s where the ever-increasing role of teachers gains significance, as their ultimate mission will, more than ever, be to teach kids how to think.

AI needs immense amounts of energy, as showcased by Microsoft’s latest deal to reopen the Three Mile Island nuclear power plant to power the tech giant’s AI projects. But that’s just the tip of the iceberg regarding the soaring global energy appetite. Although many demand that we should stop burning fossil fuels right now (the United Kingdom has just ended its reliance on coal-fired power stations, becoming the first major economy to phase out coal as an energy source completely), it will take long to find new ways of energy generation regarding everything we do.

Take aviation. As Alejandro Rios Galvan, director of the Sustainable Bioenergy Research Consortium at Khalifa University in Abu Dhabi, explained that planes need an energy-dense propulsion form. At the moment, only liquid hydrocarbon fuels can provide that.

Battery Disruption?

“Let’s face it: if we don’t see a huge disruption in battery tech, large planes will still be running on liquid hydrocarbon fuels in 30 or 50 years,” he said. Alternatives are being sought, of course. Galvan talked about a project his university is working on to bring seawater inland for use at shrimp farms. The wastewater is then used to grow salicornia, a plant with high salinity

Emergency Plan Needed

“Human activity is so strong, it makes the future unforeseeable,” was the ultimate message of another session of renowned scientists. The Club of Rome, for instance, could predict in the 1960s whatever could be estimated in terms of math. But there wasn’t a word about the internet or cell phones, for instance.

“With eight billion people, our systems are not designed

“So, while molecules might get cheaper, your bill is set to go up,” Mátrai said. Our future will also be shaped by the evolution of the balance of power on the global political stage. Eurasia Center director Levente Horváth stressed that the rising influence of the BRICS alliance (Brazil, Russia, India, China and the Republic of South Africa) will likely ensure the gradual loss of appeal of values represented by the United States. Foreign policy expert Yaro Patrice, in turn, noted that Western liberal democracy needs to be protected more than ever.

Freedom or Prosperity

“China did help millions emerge from poverty, but the price society pays is that people have to give up freedom for relative prosperity. It might have given the impression that a highly centralized autocratic regime can cope with problems, in general, better than a democratic market economy, but the Great Recession and the current slowdown show it is not the case,” Patrice said. He concluded that censorship and totalitarianism are what the world is afraid of, not the Chinese people.

Speakers were somewhat skeptical as to what extent the EU would have a say in the game for global supremacy. Geopolitical provocateur Thomas Fazi talked about “the lost decade” for the bloc, whose unaccountable bureaucratic structure is now causing a “revolt” in member states.

tolerance. Its crushed seeds are turned into a bio-oil that can fuel vehicles.

“We are facing huge challenges for scaling here. On the other hand, it’s going to take the effort of all industries to decouple from fossil fuels completely,” Galvan said. MVM CEO Károly Mátrai drew attention to another challenge: long-term energy storage.

“As long as summer energy can’t be saved for wintertime, self-sufficiency remains risky,” he warned. He praised the fact that 20% of retail and business energy used in Hungary is sourced from solar, enough to rank this country second in the EU in that category. Despite solar’s apparent victory march, don’t count on dropping energy prices. All those small power plants make grid operation more complex, generating extra costs.

to solve the big problems; disasters will solve our problems,” was the somewhat dire insight of ethologist Vilmos Csányi. Collapse researcher Balázs Stumpf-Bíró painted an even grimmer picture.

“It’s like we are in a car with faulty brakes that’s zig-zagging down the mountain, and those up front are arguing about what music to play,” Stumpf-Bíró said. According to him, people don’t

“The EU worked out for the political elite great, but they isolated themselves from any form of democratic pressure, with the masses having less and less of a voice,” he said. Historian David Engels added that in six years, there will still be a European Union, but it will be a fully transformed one, with more Muslim influence and a smaller periphery.

“I would compare it to the fall of the Roman Republic with civil unrest and the eventual emergence of a new form of common EU organization,” he commented. Engels called for the defense of this civilization, saying implementing a common foreign policy would be critical. MP Péter Ungár, the co-chair of the Hungarian Green Party (LMP), called the EU an “imperfect edifice that is still better than anything we have had before.”

want change; they want to buy the illusion of change. Since he is convinced the world as we know it is bound to collapse, he would like to see at least some sort of preparation for a worst-case scenario.

“In the U.S., the Federal Emergency Management Agency has a plan even for the zombie apocalypse. [Yet] we don’t have one for the total breakdown that is set to happen,” he concluded.

LEVENTE HÖRÖMPÖLI-TÓTH

Levente Horváth (left) and Yaro Patrice (right) debate “On the Brink of a new Cold War? Is China or America Ushering in the 21st Century?”

3 Country Focus

Germany

Centuries-old Relationship the Foundation for Economic Partnership

Germany’s Ambassador to Hungary Julia Gross discusses the economic and personal connections that bind her home country with her current home.

BBJ: Where does Hungary rank as a destination market for German goods and a source of goods for the German market?

Julia Gross: Germany and Hungary have strong economic ties, with Germany being Hungary’s largest trading partner. German companies have significant investments in here. These relations are essential for both countries, supporting trade, employment, and innovation. Hungary ranks 13th in the export market for German goods and 12th as a source of imports to Germany. All the countries ahead of Hungary are either larger or geographically closer. What’s particularly remarkable is that Hungary has a substantial trade surplus with Germany. The only other countries that manage this at a similar scale are China and the Czech Republic. That said, these rankings shouldn’t be taken too seriously; this isn’t a race! In the single market, we all contribute to shared prosperity.

BBJ: We all know about the strength of the German automotive industry in Hungary. What are the most significant industrial sectors for German FDI here?

JG: Germany’s manufacturing sector in Hungary is broad and diverse, just as it is at home. Similar to Germany, the automotive industry plays a crucial role in Hungary. The biggest German investors are companies like Audi, Mercedes, BMW, Bosch, and Continental. There are also machinery manufacturers like Krones or Körber. Siemens Energy recently expanded its plant in Budapest, and the same goes for Knorr-Bremse, which is active not just in automotive. Diehl Aerospace produces aircraft parts in Nyírbátor, and Airbus Helicopters is in Gyula. In terms of revenue, food retail matches the automotive industry. Lidl, Penny, and Aldi play a key role in supplying the Hungarian population.

BBJ: What is the running total for German investments? How is it distributed across the country?

JG: We estimate that German capital investment in Hungary amounts to around EUR 20 billion. Cumulatively, German companies account for the most significant slice of FDI in Hungary. The first major German investments flowed into the Greater Budapest area due to its infrastructure and talent pool and into northwestern Hungary because of its proximity. However, other regions have managed to attract foreign capital. BMW is building its new plant in Debrecen, Mercedes-Benz is in Kecskemét, and ThyssenKrupp opened a new production facility in Jászárokszállás. It was one of the first companies to recruit talent actively from universities in the provinces. The same goes for companies like Telekom and Bosch, along with many others.

BBJ: How many jobs have been created, in what sectors and in which regions?

JG: That’s difficult to answer precisely, but we can safely assume that more than 200,000 Hungarians work directly or indirectly for German companies, and just as many jobs are tied to trade with Germany. The most important factor is Hungary’s integration into the European single market. The German and Hungarian economies are integrated with all other European national economies. Together, we serve the world. Alone, we would perish. Together, we are stronger!

BBJ: Are any sectors bubbling away that might be below the radar today but could become significant in the future regarding bilateral trade?

JG: It’s no secret that the German economy faces a series of upheavals. In particular, the automotive sector is set to undergo dramatic changes. After 150 successful years of developing internal combustion engines, we are now transitioning to e-mobility and other technologies. Mechanics, in which Germany has been a global leader, will lose importance, while data and electronics will gain prominence. In this new world, German business and industry, like businesses everywhere, will have to reorientate and adapt.

BBJ: Hungary is about midway through its presidency of the Council of the European Union. What is the German evaluation of it?

JG: It’s only half-time in the presidency, so it might be too early to draw definitive conclusions. We welcomed Hungary’s presidency program, which identified important priorities like competitiveness and EU enlargement. Unfortunately, right at the start of the presidency, Prime Minister Orbán’s trips to Moscow and Beijing cast doubt on the role of Hungary as an honest broker: they were not coordinated with EU partners and used the presidency function and logo to pursue a strictly national position. This has, to some extent, overshadowed the good work that the presidency team has put into many important issues. We remain prepared to engage, and we do engage, with the presidency wherever it aims to bring issues forward in a constructive manner, but this depends on Hungary.

Against this backdrop, it is not helpful if issues are conflated in ways that impact the functioning of the single market and the overall investment climate: for instance, tying the fines related to EU asylum laws with special taxes imposed on foreign investors, especially since the legality of those taxes is still under review. We need to have these discussions on the rule of law, on the questions of support for Ukraine, and the functioning of the single market. Resolving these issues should be made both easier and more urgent by realizing that we need each other, and both of our countries need the EU. Our roles may seem different: Germany is a net contributor; Hungary is not and will not be for some time. But they are not so different after all. Both countries have a shared interest in a functioning and stable single market, in the free trade agreements the EU will conclude for us, and in supporting and defending European business and trade in an increasingly challenging environment.

BBJ: Hungary has a special place in German hearts because of its role in helping reunite the country. Political relations, however, have not been so happy in the past 10 years or so. How would you characterize the political relationship today?

JG: Germany and Hungary are partners and allies within both the EU and NATO. This relationship grew over centuries, it did not begin in 1989, but it came into special focus in a historical moment when Hungary shaped German and European history: Federal President Steinmeier reaffirmed this bond during his visit to Sopron on Aug. 19, where he commemorated the 35th anniversary of the Pan-European Picnic, a pivotal moment when hundreds of East Germans were able to flee to Austria thanks to Hungary opening its border.

Beyond the political relations, we have an exceptionally strong economic bond, hundreds of university partnerships, youth exchanges and twin towns, and thousands of personal friendships. This is a very strong and resilient base on which to build our relations for the future. It is all the more important at a time when we have a lot of controversial issues and differences at the EU and NATO levels, which increasingly also influence our bilateral relationship. In recent weeks, the Hungarian government has intensified its discourse about “economic neutrality” and “geopolitical non-alignment,” concepts that are irreconcilable with the EU’s (and the Hungarian presidency’s) priority to strengthen competitiveness and alien to membership in a defense alliance. The strong and vibrant relations in many areas remind us that the people of our two countries do not want to move away from each other; they want to preserve a friendship that has been given a secure and mutually beneficial framework in the EU.

ROBIN MARSHALL

Julia Gross, Germany’s Ambassador to Hungary

German Investors Remain Keen on Hungary in 2024

German companies continue to play a crucial role in Hungary’s economy, with 2024 showing no signs of slowing down in terms of new investments.

The first half of the year saw nine new investment decisions, amounting to nearly EUR 320 million, according to the Hungarian Investment Promotion Agency. This marks a notable improvement in the number of projects, investment volume, and job creation compared to the same period in 2023, the agency tells the Budapest Business Journal

The continued confidence of German investors in Hungary is demonstrated further by recent research conducted by the German-Hungarian Chamber of Industry and Commerce (DUIHK). According to its findings, four out of five German investors would choose Hungary again as an investment destination, a solid testament to the favorable conditions the country provides.

According to HIPA, one of the most significant announcements in 2024 came from the German automotive supplier Schedl, which chose Hungary for a new greenfield investment. The company’s

HUF 37.5 bln

(EUR 101.1 mln) projects in Debrecen (230 km east of Budapest by road) and Kecskemét (89 km to the southeast) will include the construction of manufacturing and warehouse units to handle wheel assembly and sequencing. These facilities will support the production of electric vehicles by BMW and Mercedes-Benz, scheduled to begin in Hungary between 2025 and 2026. The investment will create 160 new jobs, further bolstering Hungary’s automotive sector.

Technology R&D

In the technology field, Evosoft Hungary Kft., a German-backed software development company, has expanded its research and development operations at its Budapest and Miskolc (182 km northeast of the capital) locations. The HUF 3.4 bln project, which will create 75 new R&D jobs.

German-Hungarian Bilateral Trade (2023)

EUR 71.1 bln +4.9%

The aim of this investment is to develop new drive technology that will enable the virtual commissioning of production lines, improving time and cost efficiency in manufacturing processes. The inventive nature of this project earned it the “Innovative Product Investment of the Year” award from HIPA in February 2024.

The investment decisions made by German companies in the first half of 2024 are expected to create around

new jobs, predominantly in the automotive sector, which remains the backbone of German investments in Hungary. The demand for skilled professionals in this field continues to grow as companies focus on expanding their high-value production activities in the country.

Looking ahead, opportunities for cooperation between Hungarian and German companies are expected to thrive, particularly in emerging sectors such as automotive engineering, alternative propulsion technologies, autonomous driving, and premium vehicle manufacturing. These areas are seen as complementary to the existing strengths of the Hungarian economy and offer higher value added for both investors and the country.

According to the German chamber’s 2024 business climate survey, nearly half of the respondents highlighted Hungary’s robust supplier network as one of its key advantages. This places Hungary second among

Hungarian Exports to Germany (2023)

EUR 39.5 bln +10.2%

German Imports to Hungary (2023)

EUR 31.6 bln -1.1% y.o.y.

Volume of Hipa-guided German FDI Deals (2014-2024 H1) EUR 10.6 bln

the six regional countries the DUIHK surveyed, with nearly 800 domestic suppliers, both direct and indirect, listed in HIPA’s database.

Pivotal Role

The Hungarian Investment Promotion Agency continues to play a pivotal role in attracting new investments and supporting the reinvestment of existing German companies in the country.

“The government continues to place significant importance on its relationship with Western European industries and expects that German investors will remain active players in the Hungarian economy in the future.”

A range of state aid schemes, including regional investment aid, R&D support, training aid, and funding for renewable energy investments, are available to encourage continued growth. In recent years, significant changes have been made to support these structures, including increasing

the maximum R&D grant from EUR 15 mln to EUR 25 mln and raising the cap for training aid to EUR 3 mln. These strategic incentives aim to boost the competitiveness of companies operating in Hungary and help them move up the value chain. With continued reinvestment from long-term players alongside the arrival of new companies, Hungary remains an attractive destination for German capital, and the expectations of HIPA remain positive.

“The government continues to place significant importance on its relationship with Western European companies and expects that German investors will remain active players in the Hungarian economy in the future,” said István Joó, HIPA CEO and also the Government Commissioner for the Implementation of Large Foreign Direct Investments, on September 20

at the Audi plant in Győr.

He was speaking during a ceremony to mark the launch of the series production of the Cupra Terramar in Hungary. Originally a sub-brand of Seat, Cupra is now a stand-alone marque within the Volkswagen Group.

“The appearance of the sister brand model in the company’s portfolio is a tribute to the company and a tribute to our country. It shows that it is worth investing in Hungary and that it is worth further expanding the capacities built up through initial investments,” Joó noted.

BENCE GAÁL

DUIHK: Supporting a Competitive Business Environment for Competitive Companies

The Budapest Business Journal sat down with Barbara Zollmann, CEO and board member of the GermanHungarian Chamber of Commerce and Industry (DUIHK), to discuss the issues that matter most to German investors in the country.

BBJ: How do you see the current business sentiment of your member companies in Hungary?

Barbara Zollmann: German companies in Hungary have mixed feelings about the current market environment and their own business prospects. This is mainly due to the weakness of the German economy, Hungary’s most important trade partner. According to the latest signals (we have just launched our fall survey), this sentiment has not improved thus far. The critical concern of the firms is still the lack of demand in both domestic and export markets. However, Hungary remains an attractive destination for German companies. In our daily consultancy business, we receive many inquiries from potential new investors, especially in the manufacturing sector but also from other industries and services sectors. For the near future and in the medium term, how the government will restart the domestic economy and how external markets, first and foremost the German one, will recover from its current weakness will be crucial.

BBJ: Do you see new trends in German-Hungarian Business?

BZ: A key trend is the continuing shift towards high-tech, valueadded industries. German companies are moving beyond traditional manufacturing into the research and development and services sectors. For instance, automaker Audi has launched a business service center that serves the Volkswagen Group (now sourcing one-third of its product groups from the CEE region) globally. Retailer Aldi runs an IT service center in Debrecen which provides IT support to more than 8,000 outlets and 55 logistic centers

in eight European countries, while automotive supplier Bosch operates the group’s largest European R&D center outside Germany in Budapest, with about 3,500 developers and engineers. Another trend is the growing emphasis on sustainability. This is not only a question of social responsibility but also a decisive factor for future competitiveness. Since small- and medium-sized companies often lack the necessary knowhow and resources, we partnered with the Budapest Stock Exchange last year to support SMEs in implementing measures to comply with ESG requirements, thus helping them to strengthen their longterm competitiveness. Our DUWZ Training Center offers ESG managers training that assists companies in fulfilling their ESG requirements.

BBJ: DUIHK is part of a global network of German chambers abroad. How does Hungary fare compared to other countries in the CEE region from the perspective of German business?

BZ: In Central and Eastern Europe, Hungary remains a key destination for German businesses, particularly in manufacturing but also in many other industries. German companies annually invest roughly EUR 15 billion in new assets in the Eastern EU member states, about EUR 2 bln-3 bln of which goes

to Hungary, placing the country third after Poland and the Czech Republic in terms of German capital expenditure. Or look at the number of jobs created by Germany abroad: In the V4 countries plus Romania, German investors employ more than 1.4 million local workers, more than 220,000 in Hungary alone; this is more than in Italy or the Netherlands.

Although investment conditions are quite similar in the more advanced Eastern EU member states, Hungary features some competitive advantages that put it on the shortlist of international investors. One is the labor force, which has comparatively low costs, while skills levels and the higher education system are attractive to employers. Another advantage is the well-developed infrastructure, as transportation, logistics and telecommunications networks ensure smooth and efficient operations in Hungary. In the Hungarian Investment Promotion Agency, investors have an agile and supportive partner, which can make a huge difference when pitching countries in the CEE region.

On the other hand, Hungary ranks somewhat below the regional average in categories such as predictability or legal security, according to international surveys by German chambers in the CEE region. Any progress in these areas

would be helpful as it could foster more corporate investments from foreign as well as from Hungarian companies.

BBJ: How do the various special or “extra profit taxes” and other regulatory measures affect German companies?

BZ: We believe in the mechanisms of a market economy and in free trade. In Hungary, in recent years, companies have faced direct state interventions into specific markets, such as the retail sector, the construction material industry or the import of agricultural products. Such interventions cause market distortions that, at the end of the day, result in higher price levels for consumers and extra costs for companies, which reduces the competitiveness of the economy as a whole. Hungary’s general income and corporate tax rates are very low and competitive in European comparison. However, sectorspecific special taxes put substantial burdens on companies and ultimately also exert upward pressure on overall price levels. Moreover, some tax rules affect only a very limited group of market players who, understandably, regard this as unfair or even as not compliant with EU law. This is not good marketing for Hungary from an investors’ perspective. We advocate phasing out all unnecessary special regulations and taxes because this would strengthen the competitiveness of the whole economy and leave more resources for companies to invest and for private households to consume.

BBJ: The chamber has recently intensified its activities outside Central Hungary. How do you reach out to the Hungarian countryside?

BZ: About one-third of our members are based outside of Budapest and Pest County. Many are important and wellrespected industry players, exporters and employers. In cooperation with local chambers of commerce, we established “Info-Points” in Debrecen (231 km east of Budapest by road) and Székesfehérvár (64 km southwest) a few years ago, which serve as a point of first contact. Beyond this, we organize business meetings with and visits to regional companies across the country. In October, we will be in Debrecen with our “TechGirls” campaign, which aims to promote careers in technical and scientific professions for female students. Our company visits usually focus on industry-related or management topics. In Győr (120 km west of the capital), the Bavarian Büchl company’s local unit hosted an event on sustainable waste management; in Törökszentmiklós (122 km southeast), production managers met at agricultural machinery maker Claas, and in Gödöllő (30 km northeast), global market leader Trumpf gave insight into state-of-the-art laser and machine tool technologies. All these activities not only intensify the connections within the chamber network but also help share best practices and thus boost developments in SMEs across the country.

BBJ STAFF

Barbara Zollmann, CEO of the DUIHK.

‘Continuous Improvement’ Crucial Amid Seasonal Fluctuations

As the European airline tourism season begins to tail off post-summer, the aircraft maintenance business of Lufthansa Technik at Budapest Ferenc Liszt

International Airport starts to ratchet up.

Think about it, and the timing makes sense. During the summer tourism peak, the airlines need their planes in the air as much as possible, which means holding off on hangar maintenance time. That pressure to be airborne is relieved in Europe as summer slips into fall.

That’s not to say Lufthansa Technik Budapest has been idle; there are always aircraft in the hangars. Certain parts must be inspected once they hit a given number of air miles. Airline safety being what it is, there is little wriggle room here.

“The airlines book their inspection and overhaul slots a long time ahead, and we clearly see how our intake of aircraft is seasonal,” explains Thoralf Wagner, CEO of LHT Budapest. “The winter months are fully sold out, and what I call the ‘shoulder months,’ May, June, and September, are used to a certain extent by the airlines, but peak summer, July and August, are rarely required by them.”

The direction of travel is, therefore, clearly established, and part of Wagner’s job is to try and smooth out some of that fluctuation. Even so, the 2024 trend

is more marked.

“What we have seen this year, especially, is that this seasonality was quite strong,” Wagner says. The reason is apparent: “There is a shortage of aircraft in the worldwide fleet.”

Boeing is still recovering from the grounding of the 737 Max between March 2019 and December 2020.

On top of that, its 33,000 unionized employees have just downed tools for the first time since 2008, leading Ryanair Group CEO Michael O’Leary to warn that a prolonged strike could delay the expected aircraft delivery schedule.

Meanwhile, Airbus has its own problems, though not of its own

making, with more than 1,000 Pratt & Whitney engines needing to be removed from aircraft and inspected. There is, however, a business upside to this for LHT. Like cars, older aircraft require more maintenance than newer planes, meaning that as the global fleet ages, it must spend more time in hangars like those at Budapest.

Economic Recovery

That seasonality aside, the economy is clearly in a better position today than when Wagner first arrived in July 2021. The inflationary situation has improved significantly, meaning wage pressure has decreased.

“It’s much more stable. It’s more plannable. And that’s super important for us,” says Wagner. Apart from anything else, it means greater attention can be devoted to managing the cost implications of higher salaries and rising service charges. Productivity increases will be the order of the day.

“How can we do things differently instead of only optimizing? It’s more about innovation; therefore, you also need some research and development. That’s the main topic, and not only for next season but for the next few years,” Wagner says.

LHT’s various aircraft overhaul centers (Hungary, Bulgaria and Malta in Europe) discuss processes that

but the physical document must also be kept for some years. LHT wants to digitize the whole process by replacing paper with an iPad or tablet.

“We already had a trial project here, so we are still learning from all of that, but this should be introduced within the next year,” Wagner estimates.

While productivity increases can help control costs, there is also a plan to grow the business across the Lufthansa Technik Group. The target is for LHT to reach EUR 10 billion in revenue and more than EUR 1 bln in profit by 2030. Currently, the figures stand at around EUR 6.5 bln and EUR 630 mln, respectively.

“We have clear targets now for our segment, for maintenance, for aircraft overhaul. We are looking at how we can increase our capacities within Europe. And Budapest is one of the possible locations for that. Therefore, we have a project ongoing here to look into how we could increase capacities and what the business case would look like,” Wagner says. Given that the Hungarian operation is already booked for the next few winters, growth would require both more staff and more hangar space.

could be improved and decide who would be best placed to trial them. The production steering system is one example that is undergoing review in Hungary.

“The Budapest facility has the longest history; we are now over 20 years

old. With this history comes a level of experience, and that is sometimes really beneficial; if you have people who have seen a lot, they can judge new developments and say, ‘This is worth following,’ or, ‘This looked good in theory, but in practice, it won’t work.’” It would be wrong, however, to imply that LHT has only just woken up to this.

“We have an operational excellence department. It’s their continuous job to look for small things we could easily change, and also bigger projects like paperless maintenance.”

Ditching the Paperwork

As you would expect, aircraft maintenance is highly regulated. Every job comes with a paper checklist, which the technicians must complete and sign off on with their personal stamp. Steps are precisely detailed, including who has the technical authority to do or approve the work, which tools should be used and so on. That paper is scanned and sent to the Cloud,

“We are discussing that internally and with some stakeholders; we definitely see Budapest as one possible location in Europe to grow. From LHT’s point of view, a strong focus will be to keep our marketleading position in Europe, but also to grow, especially in the regions, the Americas and Asia, and in the defense area. We have created a new brand, Lufthansa Technik Defense, because this is an area where we see a lot of demand for technical expertise.”

LHT Budapest is already involved in that in a small way, educating mechanics for the German Navy.

Checking an aircraft requires precise attention to detail.

“The navy has bought an aircraft called the P-8a Poseiden, which operates on the same platform as the Boeing 737NG and is used by the German Navy to patrol the coast. We are a 737 excellence center; therefore, we are currently educating the mechanics here in Budapest,” Wagner explains.

ROBIN MARSHALL

Thoralf Wagner, CEO of LHT Budapest, in one of the airport hangars.

Photo by LTB Tamás Hopka

Bosch and Richter Research: Gen Z’s Vision for Innovation

The future of innovation is being shaped by Generation Z, according to a recent study conducted for Bosch Hungary and Richter Gedeon Nyrt. The research was presented at the Bosch×Richter Innovators Day on Sep. 25 at Bosch’s Budapest Innovation Campus.

Born between 1997 and 2012, Gen Z has a unique perspective on the challenges facing society, particularly regarding environmental sustainability and social innovation, the study found.

“Generation Z identifies the top global challenges as the consumerism-driven issues, climate crisis, and the depletion of natural resources,” emphasized Krisztián Steigervald, the research lead for the SteiGen Consultancy. He is a nationally recognized expert in the generational research field, author of the book “Generations Fight: How do We Understand Each Other?” and the bestseller “Generations Struggle for Attention.”

He told the Innovator’s Day the concerns identified by Gen Z are not abstract to them. On the contrary, they are willing to adjust their lifestyle choices to contribute to environmental protection and sustainable future practices.

The research highlights that young people prioritize sustainability when it comes to innovative companies. They expect these companies to not only focus on technological advancements but also place significant emphasis on social innovation. According to the study, 53% of respondents “believe companies could play a key role in addressing major global issues like climate change and resource depletion.”

When asked about their vision of the future, members of Gen Z are most optimistic about breakthroughs in healthcare and transportation.

“They see these sectors as areas where innovation can deliver the most practical impact,” noted the research report. For these young respondents, it is essential that educational institutions support talent development through international projects and professional internships in real corporate environments.

While “innovation” is a commonly used word today, often associated with cutting-edge companies and

products, Gen Z wants more than just technological advances; its members crave solutions that address the root causes of societal challenges.

According to the study, “Seventyeight percent of respondents understand the term ‘innovation’” and express a clear desire for businesses to focus on sustainability innovations. This is reflected in the 45% of respondents who cite consumer society’s challenges and 44% who mention the climate crisis as the most pressing global issue.

Protecting Values

“Over 53% believe that companies could play a significant role in resolving these issues,” the report found. Another 41% expect companies to protect environmental values, and 32% want to see the development of sustainable-focused innovations.

This demand for responsibility from companies extends beyond environmental concerns, with “36% of respondents expecting firms to focus on social innovation,” while 34% prioritize individual growth and development as a critical company responsibility. It seems that Gen Z is prepared to make personal sacrifices for a sustainable future.

“Thirty-nine percent of respondents indicated that they would purchase products with a low environmental footprint,” while 29% plan to adopt electric or hybrid vehicles, such as scooters, bicycles, or cars. An additional 22%

are interested in transitioning to alternative energy sources like hydrogen.

The Bosch×Richter study also reveals that sustainability concerns are increasingly influencing employment decisions.

“More than a quarter (27%) of respondents stated they would prefer to work for companies with strong environmental initiatives, such as achieving zero carbon emissions,” or those with exemplary social responsibility programs (23%).

Gen Z envisions a future where medical breakthroughs, improved transportation infrastructure, and robotics redefine the world.

“Nearly half (47%) of the respondents expect treatments to emerge for diseases previously deemed untreatable,” while 44% foresee advancements in the transportation sector. Autonomous vehicles are no longer considered far-fetched, with 31% predicting they will become commonplace.

“The use of robots in the workplace is also on the horizon,” with 32% expecting their integration into daily work environments for increased efficiency.

Hands-on Mentoring

This vision of the future aligns with the growing expectations of Gen Z for more hands-on mentorship and personal development. Young professionals are not merely looking for traditional education but seeking opportunities for real-world experience in international projects and research settings.

Flexibility and work-life balance are also paramount for Gen Z when considering future employers.

“The study shows that more than two-thirds (70%) of respondents aim to work at innovative companies,” with a particular focus on flexible work arrangements and home office opportunities. Companies offering the latest technology, modern and ergonomic office spaces, and an environment conducive to collaboration and relaxation are highly valued.

Interestingly, Gen Z’s approach to innovation is distinctly humancentered, focusing on personal connections and relationships. This prioritization of human factors even surpasses the importance of adopting artificial intelligence (24%) or robotics (14%) in their workplace preferences.

While the generation is aware of global challenges, the cohort also sees a bright future for Hungary in the world of innovation.

“Nearly half (46%) of the respondents believe that the country can benefit from global innovations,” while 35% believe that local implementation of these innovations is critical. Only 15% see a Hungarian inventor’s direct involvement as crucial to an innovation’s success.

The survey also identifies three key areas where Hungary is perceived as a leader in innovation: software development (34%), pharmaceutical research (33%), and the automotive industry (31%).

“Three-quarters of the respondents (75%) believe that Hungarian companies and experts should play a critical role in global innovation efforts,” noted the report. Notably, Bosch and Richter were named by the vast majority of respondents as leading innovators, with 88% and 89%, respectively, acknowledging their contributions to international innovation.

The detailed study, conducted by SteiGen Consultancy in July 2024, involved 5,090 respondents, of which 513 were from Generation Z, representing a significant insight into the expectations and vision of this influential demographic group.

GERGELY HERPAI

Krisztián Steigervald (at center) presents the Gen Z research conducted for Bosch and Richter.

Photo by Gergely Herpai

4Special Report

Energy

Government Gives Green Light for Geothermal Exploitation, but Hurdles Remain for Hungary

More than 40 speakers at the second Budapest Geothermal Summit, held in the Hungarian capital on Sep. 20, spoke of hopes for increased use of geothermal energy as a source for power, heating and cooling in Hungary, Europe and worldwide.

Hungary plans to double its use of domestic geothermal energy sources by 2030, saving some 500 million cubic meters of natural gas annually, thereby boosting the country’s competitiveness and increasing energy sovereignty, State Secretary for Energy and Climate Policy Attila Steiner declared in his opening address to the summit.

Noting that geothermal energy is “undoubtedly one of the largest potential means” of progressing along the decarbonization path, Steiner assured attendees that the government is encouraging its utilization with various means of support, not least because, unlike other renewables, namely solar and wind power, it is independent of weather conditions and available for base-load needs.

As the current holder of the rotating presidency of the European Union, Hungary has put geothermal energy at the top of its priorities, and the country is ready and willing to cooperate with member states on delivering tangible proposals to address obstacles facing the sector, Steiner said.

Enthused by the state secretary’s address, Marit Brommer, executive director of the International Geothermal Association, bounded onto the stage to praise Hungary’s stance and proclaim, “We need more political love for geothermal energy [...] and we need more people because it’s going to grow.”

However, aware that she was preaching to an audience of the converted, for the sake

of a reality check, she quickly interjected: “I speak sometimes to the six billion other people alive on this planet, and they have no clue, no idea what geothermal is.”

“When the wind doesn’t blow, and the sun doesn’t shine, geothermal is fine.”

Árni Magnússon

Chief

executive officer, Iceland GeoSurvey

Public Promotion Needed

Hence, it is vital to market, promote and educate the public about geothermal energy as a source that can effectively provide heating and cooling and deliver affordable electricity to the grid, Brommer said. This lack of awareness is puzzling, considering that 88 countries currently exploit geothermal resources, including 31 that generate electricity.

“When it comes down to power, that’s no mean feat. However, it took us 120 years to install 16.3 GW of capacity. This sounds a lot, but it represents 0.05% of the global electricity market, meaning that the others look at us as being dwarfs. We are minute. We are, relatively speaking, invisible,” she said.

Nonetheless, 180 countries pledged to triple their renewables at the COP28 climate change summit in 2023, representing massive potential for geothermal development.

“We did a bit of a back-of-anenvelope calculation as to what this means for us. It means we need to add 63 GW [of capacity] for power, heating and cooling every year until 2030. And that translates to approximately 20,000 new wells [per annum],” she said. This is a staggering number for the industry, even spread out among 180 countries.

“If you really look at how many wells we have drilled [so far], it is just not enough, meaning we have to change our industry to become more on par with our oil and gas friends,” she reasoned. Achieving the target will entail a superhuman effort by those in the sector.

“That magnificent skill set, the knowledge, the experience, but also the physical equipment, the rigs, the people and resources that know how to drill: we need them all in order to drill the 20,000 wells per year needed to keep the pledges of our government leaders.”

Improving Regulations

As for Hungary, as several speakers noted, the regulatory environment governing geothermal exploration changed in March last year, with the responsible body for licensing projects moving from the water directorate to the mining office, although both come under the Supervisory Authority for Regulatory Affairs (SzTFH). Bence Gonda, strategic vice president for the SzTFH, focused on the progress made since the change.

“Most importantly, we have issued more than 60 licenses for geothermal exploration; I think this is a great number, and there are ongoing explorations throughout the country,” he said.

“Geothermal heat pumps are an important source, a way of extracting heat by conduction from underground. We are again [seeing] the second consecutive record-breaking year for heat pump sales; more than 150,000 units were sold in the EU, an 11% increase, so it’s a steadily increasing market.”

Miklos Antics president of the European Geothermal Energy Council.

On top of this, a team had conducted extensive research in the Budapest region to establish a more detailed hydrological model for the area, and some 150 data packages covering municipalities had been developed for potential investors in the geothermal sector.

KESTER EDDY

Attila Steiner, State Secretary for Energy and Climate Policy, opens the summit.

“We have an abundant amount of data; we are trying to develop the data packages, and we share these with investors and companies that would like to enter the Hungarian geothermal market,” Gonda said.

Richárd Albrecht, head of geology with Mecsekérc, a Pécs-based mining company with operations across the country, offered support for the new regulatory environment, saying it has provided new opportunities and allowed deeper drilling, although this had brought its own challenges.

“The heat demand is increasing with every project and is getting more and more complex […] We had data up to[depths of] 1.7 – 2 km, but our target and our end depth is 3.3 km, so most of the depth we went through we were lacking information [for],” he said.

Getting Into Hot Water

At such depths, the temperatures soared to 120-130°C and reached 160°C in one borehole. While such conditions hold out excellent potential for more lucrative geothermal electricity generation projects (high water temperatures are essential for this), the systems needed to monitor such conditions inevitably become more complex and expensive, Albrecht explained.

Unsurprisingly, MOL, the listed Hungarian energy group, and MVM, the state-owned electricity company, intend to expand their roles in the geothermal sector. Dávid Kapes, head of MOL’s E&P Low Carbon and New Energies division, told the summit that geothermal energy plays a critical role in MOL’s “Shape Tomorrow” strategy aimed at meeting the company’s decarbonization goals,

“We have significant expertise; we have drilled 4,000 wells so far in Hungary and Croatia. We know what’s down there, let it be geological, let it be field development, so we should rely on our expertise [...] gathered throughout the centuries,” he said.

Kapes said MOL had won four licenses for geothermal exploration in Hungary and plans to begin drilling in early 2025.

“Now, we have to work on the permitting side, where to drill and how deep to drill and how much energy we can extract and utilize. The timeline for this exploration is very short; it’s between 15-27 months, but we are capable of doing this,” he assured his audience.

Meanwhile, the company has two exploration licenses in Croatia, valid for five years, although MOL is keen to begin soon.

Investors: Make Your Project Bankable

There will always be a need for infrastructure projects, but the evergreen question is how to attract private capital to finance them, Viktória Szilágyi, a partner at Lakatos, Köves and Partners Law Firm, noted in an afternoon panel on regulatory challenges and financing models for geothermal projects.

“I think there is a common misconception that I’ve seen

“The state-owned Mining Property Utilization Nonprofit company is responsible for abandoned wells in Hungary. They have 2,334 wells, and approximately 150 could be good for geothermal purposes.”

“We have already had previous drillings in one of these areas, near Lescan, so our target is to start drilling this year,” Kapes said.

While MOL targets heat and power from its geothermal operations where possible, its primary goal in Croatia is electricity generation, he stressed.

specifically with geothermal infrastructure projects, but also generally […] that the bank that will make a project bankable. This is not the case. It’s the project owners’ responsibility to make a project bankable,” she stated unequivocally.

To avoid later, “very timeconsuming and costly exercises” to redesign and renegotiate a signed contract, “from day one, investors

oil and gas wells for carbon dioxide storage. More exotically, it is examining the brine at its existing wells in Pusztaföldvár, near the Serbia-Romanian border in southeast Hungary, looking at its potential for lithium extraction.

“We identified a high lithium content at Pusztaföldvár a few years ago [and this could support] a direct lithium extraction [operation], which is much more sustainable than the other two [common] methods. It’s much more sustainable, much better and greener,” Kapes said.

Yet despite its broad, multi-pronged approach to exploiting the geothermal potential in the region, Kapes made clear MOL would not allow enthusiasm to conquer cold business facts. He had a response to the earlier talk of the possibility of double-digit returns on geothermal investment.

“Yes, double digit ROA can be achievable, maybe worldwide, that’s true, but we have to break it down for the different regions, and we have to check for our region how we can make the business case viable. This is our primary goal. Once the business case is there, then we must act, and then we can do geothermal.”

must talk to their bankers at the same time as they start talking to their engineers to set up a project,” she said. They need to know the requirements that all banks will ask when putting together a project finance plan.

“If this is not done from day one, […] when it turns out that ‘Oh my God, we never thought that the bank would ask for this and that’ [...] it may not be bankable,” Szilágyi warned from experience.

where […] we are trying to identify the best places for drilling to mitigate risk and reduce the capex,” Kiss said.

In contrast to MOL’s broad-based approach to geothermal, Kiss made it clear that MVM’s strategy is to concentrate on power generation, with seemingly minimal regard for heating potential. Quite how this will affect the business case for any projects in Hungary must be an open question.

Ferenc Fedor professional manager, Transgeo Well Research Project and research fellow, Pécs University “Geothermal for district heating is a source which has been active in France since 1332. So, we have had seven centuries of geothermal development [...] It’s no new invention; we just need to speed it up and develop it.”

“We see double-digit potential for megawatt capacity [there].”

Repurposing Wells

The company is open to other forms of exploiting its in-house knowledge and sub-surface assets and is eyeing the possibility of repurposing depleted

Csaba Kiss, deputy CEO, chief generation officer and chief nuclear officer at MVM, claimed he represented “the biggest energy company in Hungary,” with a renewables portfolio of more than 900 MW generation capacity. However, MVM has yet to dip its toes into geothermal waters; its renewable assets are comprised of solar, wind, and some small hydro assets. Nonetheless, the state company is determined to change this, targeting an additional 100 MW of electricity by 2035.

‘Very

Ambitious’

“I know this is very ambitious. We started investigations less than one year ago, and we have six areas

Łukasz Koliński, unit head for renewables and energy system integration policy at the European Commission’s Directorate-General for Energy, sought to highlight the apparent lack of interest within some EU countries in exploiting geothermal for heating and cooling.

“We’ve seen, in recent years, a lot of renewables coming online, and as was already said, this has been mainly wind and solar, so electricity from variable sources,” he said.

While in and of itself, this is fine for security and sustainability, it tends to hide a significant problem.

“[The] trouble is, we see this growth has been very uneven between sectors. In heating and cooling, we still see fossil fuels dominating this sector, and over 10 years to 2022, the share of renewables has grown by a ‘whopping’ 6%!” he pointed out sarcastically.

“We need to change, and there is a need for it to be changed

because we have, overall, a 23% share of renewables in the energy mix, [but] we need to get that to 42.5% by 2030. We need more renewable energy, not only in electricity but also in the heating and cooling sector […]. We do the projections, we do the modeling, we see the potential for further development of geothermal energy. There is potential in the heating and cooling option in many countries, but its share, and there is no hiding this, is much too limited today,” Koliński concluded.

Miklos Antics president of the European Geothermal Energy Council

As Árni Magnússon, CEO of Iceland GeoSurvey, stated in an earlier panel, except for the three “hot water” countries of Iceland, Turkey and Italy, “I think that we must face the fact that electricity production from geothermal sources is going to be limited in Europe.”

While he argued that this “does not limit the opportunities, because 50% of the energy needs in Europe is for heating, and a lot of that is for house heating,” any policy ignoring the heating potential must limit the business case for power generation. Indeed, as Zsófi Beck, managing director and partner of Boston Consulting Group, intoned in a general warning at a later panel: “We’ve seen a lot of numbers today, super high numbers, I’m sorry, unrealistically high numbers. Yes, everything is possible [but] is it smart to spend that much money? We have to have much, much more realistic targets in all the different segments.”

Distributed Power Generation Forcing Changes in the Electricity Sector

Increasing complexity and resultant data loads are leaving the classical management of systems unable to cope, says KPMG’s Artúr Böröcz.

The entire European energy landscape has been undergoing rapid change in the last 10 years, with the European Commission eager to expand green energy sources and reduce CO2 emissions and the spread of distributed, if weather-dependent, power sources.

In Hungary, this is best illustrated by the rapid development of solar photo-voltaic (pv) generation in what Artúr Böröcz, KPMG’s director of energy and utilities, terms the “democratization” of power generation.

As Böröcz told a joint British Chamber of Commerce in Hungary-KPMG business forum in September: “If you think about the fact that, some time ago, you needed multi-billions of euros to build a largescale power plant. Then, as renewables came into play, it was already enough to have some hundreds of millions of euros for solar PV and wind energy parks. Nowadays, as a private person, you can take EUR 10,000 and have your own power plant on your rooftop. I’ve simplified it a bit, but this is the direction.”

Indeed, solar capacity expanded by 673 MW, or 11%, in the first half of this year to a little over 6,700 MW, a figure that includes some 275,000 households and small PV plants, Hungarian media reported in July

These figures have pushed Hungary up among the EU leaders in terms of renewable energy production, Böröcz noted.

“This year, we have reached already, in certain [summer day] time periods, the case that, more or less, solar PV generation has been able to cover the entire country’s demand,” he said.

Meanwhile, driven by the need to replace existing generation capacity, along with increased demand envisaged by the rapid expansion of both electric vehicles and battery manufacturing plants (which have significant power demands), the government has been working to radically expand and enhance the country’s generation capacity in what could mostly be termed “traditional” generation facilities, Böröcz highlighted four major ongoing projects, the most important of which is the expansion of the Paks nuclear plant.

Designated Paks II, the two new Russian-designed reactor blocks will add 2,400 MW to state energy

company MVM’s base-load capacity, creating Hungary’s largest single power facility in an investment which KPMG puts at EUR 10 billion-15 bln.

Parallel Development

Almost in parallel with this, MVM is planning to extend the life of the four smaller reactors which comprise the Paks I station at an estimated cost of EUR 1 bln-2 bln. Assuming this goes ahead, and according to Böröcz, MVM specialists have indicated they are optimistic in this regard, Paks I’s 2,000 MW capacity will remain online into the 2050s.

(The Paks I reactors, first commissioned in the 1980s, have already had their original 30-year design life-span prolonged by 20 years in a first extension project.)

In addition to the two nuclear projects, the government is also actively planning to build three new gas-fired combined cycle gas turbine (CCGT) generation facilities with a combined capacity of

1,500 MW,

representing a total investment estimated at between EUR 2 bln-3 bln. The fourth project identified by Böröcz is less traditional, at least in Hungary. As he put it: “Hydro power has been a very disputed topic in Hungary since the end of the ’80s.” This was a period when public antipathy focused on the partially

to be able to reduce its dependency on electricity imports, indeed, to potentially become a net power exporter, while simultaneously cutting its greenhouse gas emissions.

But there are complications, not least from the increase in solar generation capacity going offline at night, as well as the massive number of small PV producers.

Incredibly Complex

“The entire system has been getting incredibly complex in the last years, the decentralized systems generate immense amounts of data […] and conventional methods are not sufficient to steer and control the entire system,” Böröcz told the forum.

Moreover, the system has to maintain capacity to back up the intermittent, weather-dependent generators, in Hungary’s case, most particularly the heavy use of solar generation.

According to KPMG’s estimates, by

2035,

the average daytime solar capacity will be in excess of 3,000 MW, “around half of the generation of the country, and this generation is half of the usual consumption, and this will all disappear at night […] so you will have a huge dispute [over] who will take responsibility for the system balance,” Böröcz said.

The “obvious” solution is that the distributed systems will have to take a much more important role in system balancing but, in parallel, the infrastructure, the grid, the “backbone of the entire system, also needs to change,” he argued.

built, joint Czechoslovak-Hungary Gabčíkovo-Nagymaros Danube hydroelectric scheme. (Hungary unilaterally pulled out of the project in 1990, leading to an international dispute with Slovakia, which was then in the process of becoming an independent state.)

However, the new project involves two, far less ambitious, “pumpedstorage” hydro-power schemes with a total capacity of 600 MW, both planned to be located in northeast Hungary representing a total investment of between EUR 1 bln-2 bln.

(See “Pumped-storage Explained.”)

Naturally, at least on paper, all these developments bode well for Hungary

Pumped-storage Explained

Pumped-storage hydro stations use power which is surplus to normal demand requirements (typically in the early morning hours) to pump water from a lower reservoir to a second located at a higher elevation. This stored water is later released to drive the system’s turbines as and when required to meet periods of peak electricity demand and to help balance the available generating capacity with demand fluctuations. Because nuclear stations work most efficiently under constant, full

“Grid infrastructure is a very capital intensive and we can say a bit old-fashioned business, which moves very slowly, like a giant elephant, but nevertheless the environment is forcing this elephant to move and respond faster,” he said.

While a solution will surely be hammered out, Böröcz said industry players are already having difficulties planning for the future.

“We can already see this in our practice. Recently, I had a chat with one of the relevant power companies which has certain challenges in some modeling processes, and they have so many data with such high complexity that, most obviously, the way to sort it out [is that] they will have to deploy solutions involving large models and AI and so on. Otherwise, with conventional tools, it will not be possible to sort it out,” he concluded.

power conditions, pumped-storage capacity is ideal to absorb the excess power generated by nuclear stations at times of low electricity demand, typically during summer nights.

As KPMG’s Böröcz puts it, given the massive increase of nuclear capacity created by the building Paks II and extending the life of Paks I, “the need is there to construct these [schemes] […] already two preliminary drillings have been performed, so the site selection is already under process, and these will be the backbone of the system.”

Artúr Böröcz

How does GloBE Affect Hungarian Subsidiaries?

LeitnerLeitner Dr. Nóra Rácz Partner, Senior tax advisor

The world of international taxation is undergoing significant change with the introduction of the global minimum tax (GloBE) framework. This new system aims to fairly distribute tax rights among countries where these corporations operate, ensuring that they contribute to the tax base of each country.

In the new GloBE system, early preparation for fulfilling obligations is extremely important, as is the involvement of experts with a deep understanding of local special rules. Multinational corporations should take the opportunity to classify and organize their tax data now to avoid more significant administrative burdens later. Proper data management and classification will ensure that subsidiaries comply with GloBE requirements and prevent unexpected issues.

Given the complexity of navigating between local and international tax regimes, it is highly advisable to involve local tax experts. Hungarian advisors understand the nuances of the GloBE framework in the national context and can help ensure subsidiaries qualify properly and provide accurate information to their HQs.

Based on our experience in recent months, many MNC HQs have begun collecting data from their Hungarian subsidiaries to comply with GloBE regulations. As the deadline is quickly approaching (the first year of reporting will be FY 2024), it is strongly advisable to do the preparatory work, contact advisors and make test calculations with the year-end data of 2023.

In addition, according to our current knowledge, this year – i.e. by 31 December 2024 – taxpayers will have to notify the tax authorities that they are subject to the regulation, although the required form for this is not yet available.

What the Heck is GloBE?

GloBE is a solution developed by the OECD to overcome aggressive tax planning. It introduces a 15% global minimum tax that MNCs must pay on their profits, regardless of location. This system aims to curb tax avoidance practices and encourage

companies to pay taxes where the actual economic activities take place.

The framework primarily applies to large multinationals with global revenues exceeding EUR 750 million (data from the previous four years must also be examined). Under this regime, companies must demonstrate that their subsidiaries in each country are paying at least the minimum tax. If not, the difference should be paid. This means that “smaller” Hungarian subsidiaries of large enterprises could also fall under the obligation.

In Hungary, the difference will be mainly collected as Qualified Domestic Minimum Top-Up Tax (QDMTT), which means that the local group members must pay the tax here.

What Taxes are Covered

by GloBE?

GloBE primarily targets corporate income taxes, ensuring that companies pay taxes on their profits in every country where they operate. In Hungary, this means that corporate income tax, local business tax, the innovation contribution and income tax of energy suppliers are considered as covered (acknowledged) taxes in the calculation. At this stage, neither retail tax nor other sector-specific taxes are included.

Given the differences in tax regulations across countries, it is essential to review the specific rules and any potential exemptions, especially in the early years of implementation. Moreover, every company and fiscal year can be different. We have already met with an example where the effective tax was only 12%; in another case, it was 27%. Those companies whose total tax burden already reaches 15% but must pay special taxes in Hungary that will be considered on top of that will be in the most unfortunate situation; their tax burden could be unfairly high.

Hence, it is crucial for multinational companies and their Hungarian subsidiaries to stay updated on the changes and ensure that their tax practices remain compliant with the latest international standards.

LeitnerLeitner and LeitnerLaw have a long tradition of offering their clients high-quality full-scope (tax, accounting, payroll audit and legal) consulting in Central Europe. Creating integrated and multi-disciplinary onestop solutions is the main element of our client-focused approach when approaching the needs of private clients, SMEs and corporate groups on general and specific questions.

Green Energy Solutions Could Pave the Way for Future Investments

While consumer price increases have normalized, Hungary has faced high inflation in recent years, with fluctuating energy prices playing a significant role. These spikes in costs have placed considerable strains on businesses, households, and the government. However, as inflationary pressures begin to ease compared to the early 2020s, there is a renewed focus on finding sustainable and economically viable solutions.

With the world increasingly turning its attention to Hungary’s green energy advancements, the country is positioning itself as a critical player in the future of green investments, driving long-term stability and growth.

Hungary’s green energy potential offers not only a response to the energy crisis but also a path to attract future green investments. The country is looking to emerge as a leader in renewable energy, particularly in the solar, geothermal, and biomass sectors. This focus on sustainable energy aligns with Hungary’s goal to reach a 35.5%

share

of renewable energy by 2030, contributing to a 60% reduction in greenhouse gas emissions compared to 1990 levels, according to analysis by the Green Policy Center.

As Hungary modernizes its grid and expands its renewable energy capabilities, the country becomes an attractive potential destination for international green investors. Investments in solar and wind energy, as well as innovative technologies like geothermal, are crucial to ensuring that the country remains competitive in the European energy market.

Moreover, upcoming EU initiatives and international financial programs aimed at climate mitigation will likely support Hungary’s future developments, according to the Ecoscope blog, which publishes research by OECD economists on various issues beyond the traditional scope of the organization’s reports.

Hungary is well-positioned for several renewable energy sources. Solar installations have seen rapid growth, especially in areas where households are increasingly generating their own electricity. Investors are taking notice of the country’s solar potential.

Record Energy Generation

The total production of solar systems above 50 kW reached a record 3,242 MW on one day in August, the Ministry of Energy Affairs said that month. It also noted that, together with household-sized and private production facilities, the installed solar capacity had already exceeded the 2030 target of 6,000 MW by February of this year.

Geothermal energy is another up-and-coming resource for Hungary. “The way to further increase the renewable energy target compared to the revised draft NECP [National Energy and Climate Policy] could be mainly [through] wind, geothermal and biomethane,” the Green Policy Center said earlier this year. Audi, for example, has utilized geothermal energy at their plant in Győr (120 km west of Budapest by road) since the mid2010s, showcasing the economic viability and sustainability of the energy source. However, according to Ecoscope, the regulatory environment for geothermal

BENCE GAÁL

Csaba Bartal of City Construction Global Kft.

and wind projects is still restrictive, despite recent improvements in the latter case in particular.

“The adoption of green energy, especially geothermal, in real estate projects is becoming more common in Hungary. We’ve integrated this into several developments, and it’s clear that the financial benefits for property owners are substantial. Energy autonomy will be a game-changer for both residential and commercial real estate projects across the country.”

“We’ve seen a significant drop in demand for large homes as energy costs have surged. In response, our company has created autonomous power stations for clients, allowing them to generate their own electricity independently. This has become a key selling point for us, as homeowners increasingly prioritize energy efficiency and autonomy.”

Csaba Bartal, a project manager at City Construction Global Kft., which is involved in international real estate developments using green energy, comments that the firm he works for is a good indicator of what is a growing trend.

VIEW

The Significance of PPAs in Light of Hungary’s Solar Boom

“Hungary could make better use of its potential for wind and geothermal energy, but that will require removing restrictive rules on windmill installation and easing licensing procedures for geothermal energy projects,” Ecoscope says.

Across the past decade, Hungary has developed a history of governmentbacked programs that have helped businesses and households transition to renewable energy. In the past, households were incentivized to install solar panels, and the government would purchase the excess power generated by these systems. This initiative spurred investments in the solar sector.

The Grid Conundrum

However, Hungary has somewhat become a victim of its own success. Electricity grid capacity has become a problem. As Ecoscope notes, “The development of intermittent energy sources like solar and wind energy will require massive investments in the electricity grid.”

Anar Karimov, an international real estate developer and founder of the Green City residential complex in Győr, shares his perspective.

“The adoption of green energy, especially geothermal, in real estate projects is becoming more common in Hungary. We’ve integrated this into several developments, and it’s clear that the financial benefits for property owners are substantial. Energy autonomy will be a game-changer for both residential and commercial real estate projects across the country.”

MMNZ, an energy consulting group, argues that fixing the grid connections and reinstating government programs could significantly reduce Hungary’s reliance on imported energy and create a more resilient energy infrastructure while also attracting further green investments into the economy.

Lukonits Virág Lőcsei Senior Associate Associate

In recent years, Hungary has witnessed a remarkable surge in solar energy development, signaling the dawn of a new era in the power purchase agreement market. As numerous planned solar power projects begin to materialize, the significance of PPAs has come into sharper focus. But how do they serve as a vital tool for securing the necessary financing for developers and price stability for buyers in Hungary’s expanding solar energy landscape?

PPAs are entered into between a power producer and a buyer, typically large industrial consumers such as factories or malls. There are various types of agreement, each with its own structure.

Physical PPAs involve the delivery of electricity from the producer to the buyer, either via a direct connection to the generation site or by using the public grid. The on-site power generation model is becoming more common in Hungary due to recent legislative changes. In contrast, virtual PPAs do not involve physical delivery but act as a hedge against market price fluctuations, with the parties paying each other the difference between market and agreed prices, making them ideal for those wanting financial benefits without managing electricity logistics.

Physical PPAs are often pay-asproduced or baseload contracts.

In a pay-as-produced PPA, the energy producer is compensated based on the actual energy metered and delivered. This structure is ideal for renewable energy sources, as producers are not penalized for lower production caused by natural factors like the lack of sunlight. Consequently, pay-asproduced PPA prices are generally lower than baseload PPAs, where the price is set at a fixed amount for a fixed volume of energy delivered, ensuring a more predictable and stable revenue stream.

Risk and Reward

While PPAs offer significant opportunities for securing renewable energy, they also have certain risks. In cases where market prices exceed or fall below the price agreed upon

in the PPA, the party concerned may lose on the prevailing market rate for electricity. This can be mitigated by thoroughly evaluating energy market forecasts and pricing trends before entering into an agreement.

PPAs are also subject to regulatory risks, as changes in market rules or government policies can significantly impact their viability. For instance, recent price caps introduced in European markets have forced the termination of many PPAs. Such regulatory interventions can disrupt agreed pricing structures, affect profitability, and create uncertainty for all stakeholders. Therefore, adequate contractual mechanisms are essential to cope with these regulatory risks.

Despite this, PPAs present numerous benefits, one of the most compelling being price stability. By locking in electricity prices for a certain period, counterparties can protect themselves from the volatility of energy markets, allowing for more predictable budgeting and financial planning. Another advantage is that PPAs offer access to renewable energy for buyers who might not otherwise have the infrastructure or resources to develop their own solar projects. By participating in a PPA, companies can demonstrate their commitment to reducing carbon emissions and transitioning toward a greener future.

As Hungary’s solar energy sector continues to grow, the role of PPAs will become ever more significant. For those seeking to take advantage of the renewable energy boom, understanding the different types of PPAs, assessing the associated risks, and recognizing their numerous benefits is essential. Hungary’s energy landscape will continue to evolve, so engaging with PPAs will be crucial to unlocking the full potential of the country’s solar energy revolution. In this process, legal support and counsel are essential to navigate the complexities of these agreements successfully. www.wolftheiss.com

WOLF THEISS BUDAPEST

WOLF THEISS BUDAPEST

Ádám

Anar Karimov, founder of Green City in Győr.

Hungary Well-placed on Energy Front as Fall Begins to Bite Energy Matters

As cooler temperatures arrive with the onset of fall, the Ministry of Energy Affairs assured Hungarians that regulated household gas prices would not change in the fourth quarter in a statement issued on Sep. 26.

The ministry said a draft decree it had submitted for social consultation fixed prices and volumes for utility companies providing gas to households in the fourth quarter, which would keep regulated end-user prices for households unchanged.

“From the first of October, those living in apartments heated with district heating will pay the same rates as they have for 10 years,” the statement said.

With six billion cubic meters of natural gas in storage facilities, more than the 5.7 bcm

consumed during last year’s heating season, the ministry said that Hungary would be suitably prepared for the winter in a statement issued on Sep. 28. The current capacity is double the three bcm of natural gas consumed by households in 2023, and exceeds the 5.5 bcm required by the economy, the ministry added.

Last year, total gas consumption amounted to 8.5 bcm, of which 70% was available before the onset of cold weather. According to its latest estimates, the ministry anticipates total consumption could fall below eight bcm this year, so reserves would likely cover a greater proportion of actual needs. In the first half of 2024, gas consumption in Hungary reached 4.37 bcm, down 6.5% from the same period a year earlier.

Beating EU Targets

The European Union mandates that all member states fill a designated capacity of their gas storage facilities by specific target dates. In each case this year, Hungary achieved this target in advance. With gas storage facilities at 75% capacity in May, Hungary

A regular look at energy issues in Hungary and the region

exceeded July’s 65% target by two months. It repeated this feat by filling November’s 90% target by Sep. 1.

Despite being a fossil fuel, natural gas is indispensable to the green transition, Minister of Energy Affairs Csaba Lantos said at the 54th International Gas Conference on Sep. 24. In pursuing its national energy policy, Hungary must meet the expected growing demand for electricity with its own resources, Lantos said. To this end, the government is committed to utilizing existing capabilities to reduce the country’s exposure to external procurement.

In his speech, Lantos recalled Hungary’s commitment to reduce greenhouse gas emissions by at least 40%, compared to 1990, by 2030. With emissions already falling by 43%, exceeding preliminary expectations, he said the new objective is to reduce greenhouse gas emissions by 50% by 2030.

Hungary is also proving itself a frontrunner in achieving other sustainability goals, such as advancing electromobility, State Secretary for Industrial Policy and Technology Gergely Fábián said at a roundtable talk on transitioning to zeroemissions vehicles in Brussels on Sep. 9. One example has been the government treating the automotive industry and battery manufacturing as a strategic sector, he said.

Hungary has also been demonstrating these efforts with its high adoption rate of electric vehicles. Between January and August this year, the number of EVs newly put into circulation in Hungary increased by more than one and a half times compared to the same period last year, according to a ministry statement issued Sep. 19. This figure was only eclipsed in the EU by Malta, which saw a 53.5% increase.

4th Largest Increase

In July alone, some 63.9% more pure EVs were put on the market in Hungary than in the same month of the previous year, according to data from the European Automobile Manufacturers Association. This was the fourth-largest increase in the EU, just behind Croatia, the Czech Republic, and Denmark.

The government has also worked to increase adoption through a HUF 30 billion program to subsidize company purchases of EVs, funded by the European Union’s REPowerEU scheme. Launched in February this year and open until March next year, the program offers up to HUF 4 million per vehicle and up to HUF 64 mln per company, depending on the number of employees, for purchasing an electric car, van or minibus.

So far, around 3,700 businesses have submitted applications for more than HUF 17 bln in subsidies to buy nearly 4,500 vehicles, among them 3,400 passenger cars and a further

1,000 light commercial vehicles. BYD products were among the most popular among applicants for both LCV and passenger cars, accounting for 1,083 applications.

By Sep. 18, the energy ministry said the first HUF 1 bln had been paid out.

Although this program had caused a surge in the number of green license plates issued earlier this year, the government announced in August that, from Sep. 1, the special plates would be limited to fully electric, zero-emission vehicles. Green license plates offer vehicle owners benefits such as free parking in Budapest and other cities, as well as certain tax advantages.

Earlier this year, the Ministry of Construction and Transport said any change would be “to meet environmental targets, further promote the greening of transport and reduce emissions.” While green license plates may have incentivized the purchase of hybrid vehicles, some may have thought their privileges were being abused. “The era of green plates for luxury SUVs is over,” the energy ministry said in the statement announcing the change.

According to data from the Ministry of the Interior, there were 101,840 vehicles registered with green plates in Hungary at the end of June, of which 59,209 were full EVs. Owners of plug-in and rangeextender hybrids now have until Nov. 30, 2026, to hand back their green plates.

NICHOLAS PONGRATZ

Photo by János Vajda / MTI

Minister of Energy Affairs Csaba Lantos (left) and Imre Mécs, co-owner of Green Cloud and President of Solar Markt, give a speech at the inauguration of the group’s solar power plant on the outskirts of Szihalom (128 km northeast of Budapest by road) on Sep. 10.

Gas Traders

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6 PRÍMAENERGIA ZRT. www.primaenergia.hu

7 FLAGA HUNGARIA KFT. www.flaga.hu

Decree to Boost Renewables Share in District Heating

State Secretary for Energy and Climate Policy Attila Steiner said a draft decree recently published for social consultation aimed to raise the share of renewables in district heating while reducing gas dependence and cutting costs. In an interview with business news site portfolio.hu, Steiner noted that the European Commission had approved a HUF 95 billion funding plan by the Ministry of Energy Affairs to support investments in green district heating technologies and efficiency upgrades of existing networks. He said tenders for the funding are expected to be called by year-end. Steiner added that

the government is also working to raise the 2% profit threshold for district heating providers after 2025 to advance investments.

MOL Signs Deal to Develop Gas Reserves in Azerbaijan

Hungary’s MOL and its joint venture partners have signed commercial agreements to develop gas reserves in Azerbaijan, the oil and gas company said in a press release. MOL is the third-largest shareholder in the Azeri-Chirag-Deepwater Gunashli (ACG) field, after the State Oil Company of the Republic of Azerbaijan and BP, which operates the JV. MOL said non-associated gas reservoirs were identified beneath and above the oil-producing reservoirs of the ACG field. The commercial agreements amend the existing ACG production sharing agreement framework, enabling the parties to advance the exploration, appraisal, development of and production from the gas reservoirs of the ACG field, MOL said. ACG non-associated gas

resources are believed to be significant, with up to four trillion cubic feet (around 112 billion cubic meters) in place, it added. Drilling of the initial producing well has already started, with the first gas expected in 2025.

Biomethane Output Must Triple

Hungary will need much more biogas, and the biomethane purified from it, than in currently produces, writes business daily Világgazdaság [Global Economy]. According to the biogas and biomethane action plan, Hungarian biogas production must be increased to approximately three times the current level, to 600 million cubic meters per year, by 2030. Of this, 340 million cubic meters can be used to produce 184 million cubic meters of biomethane through purification, but this assumes the establishment of 25 new plants with a capacity of 1,000 cubic meters per hour. A series of subsidies, obligations, and incentives could stimulate the product path

Kantiné

1081 Budapest, II. János Pál pápa tér 20. (1) 474-9999 ugyfelszolgalat@mvm.hu

1138 Budapest, Váci út 144–150. (20) 597-0000 info@ceenergy.hu

1139 Budapest, Fiastyúk utca 4–8. (20) 459-9600 versenypiac@audaxrenewables.hu

1117 Budapest, Dombóvári út 26. (1) 464-1111 info.methu@met.com

4200 Hajdúszoboszló, Rákóczi utca 184. (52) 558-100 ugyfelszolgalat@tigaz.hu

1117 Budapest, Alíz utca 3. (1) 209-9900 vevoszolgalat@primaenergia.hu

2040 Budaörs, Puskás Tivadar utca 14. (23) 507-600 flaga@flaga.hu

of biogas and biomethane. FGSz Zrt., the owner and operator of the Hungarian high-pressure natural gas pipeline system servicing gas distribution companies, power plants and large industrial consumers, is investigating what role it can play in the future biomethane supply.

Szijjártó Meets Qatari, Turkish Counterparts

Minister of Foreign Affairs and Trade Péter Szijjártó met with his Qatari and Turkish counterparts to discuss mediation and energy security in New York on Sep. 26, his ministry said in a statement. Ahead of a meeting of the Group of Friends of Mediation, Szijjártó acknowledged the efforts of Turkey and Qatar as go-betweens advocating peace. Szijjártó said energy would also be discussed, noting that Hungary got most of its gas through the TurkStream pipeline while talks were ongoing with Qatar on deliveries of LNG starting in 2027. The foreign minister was in New York for the United National General Assembly.

Electricity Traders

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5 AUDAX RENEWABLES KFT. https://audaxrenewables.hu/

6 BC-ENERGIAKERESKEDŐ KFT. www.bcenergia.com

NR BUDAPESTI ENERGIAKERESKEDŐ KFT. www.energiakereskedo.hu

Zrt. (100)

Sándor Varga

Budapest, Szentendrei út 207–209. (1) 304-2000 info@mvmp.hu

1085 Budapest, Kálvin tér 12. (1) 886-3400 admin.hun@alpiq.com

1134 Budapest, Váci út 17. 20/30/70 459-9600 eon@eon.hu

1139 Budapest, Fiastyúk utca 4–8. (20) 459-9600 versenypiac@audaxrenewables.hu

3700 Kazincbarcika, Bolyai tér 1. (48) 511-816 energiaker@borsodchem.eu

1061 Budapest, Liszt Ferenc tér 5. (1) 240-7504 ptakacs@energiakereskedo.hu

Szijjártó: Hungary

Opposes ‘Punitive’ Tariffs on Chinese EVs

Hungary opposes punitive tariffs levied by the European Union on Chinese electric vehicles, Minister of Foreign Affairs and Trade Péter Szijjártó said while in New York for the U.N. General Assembly, according to a post on his Facebook page. Earlier, Szijjártó met with his Chinese counterpart, Wang Yi, to discuss the implementation of agreements signed in May during a visit to Hungary by Chinese President Xi Jinping, the development of ties between Europe and China, and political steps on the global stage in the interest of peace, the Ministry of Foreign Affairs and Trade said. “Hungary is a good example of the big economic benefits a civilized East-West

cooperation can bring,” Szijjártó said, pointing to business partnerships between Western European and Chinese automotive industry companies to advance electromobility. He said the EU’s competitiveness could improve “dramatically” if the bloc cooperated with China instead of “creating confrontation.”

E.ON Hungária

Inaugurates District XI

Substation

The E.ON Hungária Group has established a new substation in Őrmező, thereby making the electricity supply in the southern Buda region even more secure, writes business daily Világgazdaság [Global Economy]. The facility, handed over a few days ago, serves almost 22,000 residential customers; it will also provide electricity to the South Buda Central Hospital, which will be built in the coming years. For the first time in Hungary, a smart transformer was used for residential energy supply; the substation is

fully automated and remotely operated. The HUF 3.76 billion investment has been realized partly from the funds of the Recovery and Resilience Facility (RRF), supported by the European Union within the framework of the Széchenyi Plan Plusz program, and was partly financed by the company’s own resources.

Opus Titász Spending HUF 42 bln on Network Upgrades

Electricity distributor Opus Titász is spending around HUF 42 billion on network upgrades in the east of Hungary, deputy CEO Balázs Péli said at a press conference in Debrecen (225 km east of Budapest) on Sep. 30. According to novekedes.hu [Growth], Péli said European Union and state funding covers about HUF 21 bln of the investment costs. He added that the upgrades will help Hungary boost the share of renewables in its energy mix. According to public records, Opus Titász had revenue of close to HUF 160 bln last year.

MVM H1 Revenue Falls 22% Y.O.Y.

The first-half sales revenue of state-owned energy group MVM fell 22% year-on-year to HUF 2.156 trillion, according to an earnings report posted on the website of the Budapest Stock Exchange on Sep. 17. After-tax profit rose 6% to HUF 222 billion. In a separate statement, MVM said revenue fell on the back of lower gas and electricity prices as well as a decline in gas consumption due to mild winter weather. MVM noted that around 85% of the electricity it generated was carbon-free, and it was continuing to expand its solar park portfolio. To reduce Hungary’s energy dependence, MVM said it was making investments to boost the output of local gas fields and was looking for alternative energy sources, including new LNG contracts and alternative energy delivery routes. It pointed to its recent acquisition of a stake in the Shah Deniz gas field in Azerbaijan among efforts to diversify supply.

Fuel Retail Companies

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Retail International S.A. (100) Gergely Polgár, Dominique André Ducoux

1117 Budapest, Október huszonharmadika utca 18. (1) 209-0000 ugyfelszolgalat@mol.hu

2040 Budaörs, Kinizsi út 1–3. (20) 827-0000 tescoglobalzrt@hu.tesco-europe.com

1117 Budapest, Október huszonharmadika utca 6–10. (1) 381-9700 info.hungary@omv.com

1113 Budapest, Bocskai út 134–146. (1) 436-3200 info-hu@shell.com

2040 Budaörs, Sport utca 2–4. (23) 886-200 info@auchan.hu

1016 Budapest, Mészáros utca 58/B (1) 450-2960 mabanaft@mabanaft.hu

RPA s.r.o. (100) Jaroslaw Przemyslaw Szeliga, István Nagy

1112 Budapest, Boldizsár utca 2. (1) 465-7600 –8

Csaba Bognár, Péter Csapó, Csaba Vasi

1112 Budapest, Boldiszár utca 2. (1) 465-7600

1138 Budapest, Népfürdő utca 22. (1) 465-7600

1185 Budapest, Liszt Ferenc Nemzetközi Repülőtér (1) 296-5107 companysecretary@bud.hu

9092 Tarjánpuszta, Baross Gábor tér 8. (96) 437-029 office@mo-to95.hu

1095 Budapest, Ipar utca 2/A (20) 400-6373 info@mobilpetrol.hu

4030 Debrecen, Galamb utca 2–4. (52) 470-519 jundj@t-online.hu

4300 Nyírbátor, Szentvér utca 41. (42) 510-288 postmaster@grovi.t-online.hu

9330 Kapuvár, Ipartelepi út 8. (96) 595-250 fullsopron@t-online.hu

1225 Budapest, Nagytétényi út 221–225. (1) 391-0570 mail@envirochem-ltd.com

Universal Electricity and Gas Providers

Ranked by total net revenue in 2023

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5 MVM ÉGÁZ-DÉGÁZ FÖLDGÁZHÁLÓZATI ZRT. www.mvmhalozat.hu/

6 MVM ÜGYFÉLKAPCSOLATI KFT. https://www.mvmnext.hu/vallalatiinformaciok/leanyvallalatok/MVMugyfelkapcsolati-Kft

7 MVM FŐGÁZ FÖLDGÁZHÁLÓZATI KFT. https://www.mvmhalozat.hu/gaz

8 MVM SERVICES ZRT. https://mvm.hu/Rolunk/Tagvallalataink/ MVMServices

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KFT. www.mobiliti.hu/

Energetika Zrt. (100)

Corporate (100)

MVM Next Energiakereskedelmi Zrt. (100)

Gábor Soós

János Zsolt Pecznik

Gábor Soós

Energetika Zrt. (100) –Szvetlána Gyurity

MVM Energetika Zrt. (100)

Energetika Zrt. (100)

Energetika Zrt. (100)

MVM Energetika Zrt. (100)

Zoltán Roland Koós

Szabolcs Balogh, Ferenc Orgovány

Róbert Gábor Szőke

János Spannenberger

1081 Budapest, II. János Pál pápa tér 20. (1) 474-9999 ugyfelszolgalat@mvm.hu

1031 Budapest, Szentendrei út 207–209. (1) 304-2000 info@mvmp.hu

1138 Budapest, Váci út 144–150. (20) 597-0000 info@ceenergy.hu

6724 Szeged, Pulcz utca 44. (62) 656-600 ugyfelszolgalat@mvm.hu

6724 Szeged, Pulcz utca 44. (96) 616 316 info@mvmedgazhalozat.hu

1081 Budapest, II. János Pál pápa tér 20. (20) 778-0724. ugyfelszolgalat@mvm.hu

1081 Budapest, II. János Pál pápa tér 20. (1) 474-9911 info@mvmfogazhalozat.hu

1081 Budapest, II. János Pál pápa tér 20. (20) 614 6401 titkarsagmvmservices@mvm.hu

1023 Budapest, Árpád fejedelem útja 26–28. (20) 527-5370 napelem@mvm.hu

1037 Budapest, Montevideo út 10. (1) 999-1777 mobiliti@mobiliti.hu

1023 Budapest, Árpád fejedelem útja 26–28. (1) 465-3780 kapcsolat@mvmotthonplusz.hu

7630 Pécs, Engel János József utca 6. (72) 511-599 info@mvmwatteta.hu

5 Socialite Budapest’s Best Guidebook Back in Print Soon

A new edition of András Török’s updated cult book “Budapest. A Critical Guide” is due to be published in November of this year.

When I was first told about the book by the editor of the “Panel” literary magazine (she said it was the only guidebook I needed to read), I was delighted. Only to be thoroughly disappointed to discover it was out of print.

After I interviewed Török, he kindly sent me an electronic copy of the soonto-be-new edition of the book, and it’s exactly what I, and I’m sure any visitor to Budapest, is looking for.

Török’s book is written in a wryly amused and amusing, poetic style and illustrated with evocative black and white photographs from the city’s history.

The core of the guide is taken up with suggestions for a series of Budapest walks, each described in rich detail. Wrapped around this are chapters on subjects such as “That Awful Hungarian Language,” where to eat and stay, and so on.

Eschewing the cocky bombast of your average guidebook, Török self-deprecatingly introduces a chapter called “A Crash Course for Wannabe Insiders” by writing, “In this chapter, I try to pretend to be able to convert you from an expat or a traveler into a Budapest original.”

One of Budapest’s best vantage points is recommended for “a successful car

dealership owner (who meets for the first time in decades a childhood friend who had left for Yale University in

1978

and who gently belittled him for his mediocre high school diploma).”

But don’t be fooled by the tone, Török really knows the city and its history.

A section of the chapter on where to eat and drink headed “Frames of a Film” is a fascinating insight into Hungarian culinary history that I defy you to find in English anywhere else.

Loving Revival

Referencing Hungarian movies “Két Emelet Boldogság” (“Two Storeys of Happiness,” 1960) and “Szindbád” (1971), Török explains how Budapest went from being a pre-WWII gourmet’s paradise to a communist city where the arrival of lemons in the stores was a major event. He then lovingly describes a scene in “Szindbád” that singlehandedly revived Hungarian interest in the country’s classic cuisine.

Reading information truffles like these dotted throughout the book made me realize that it’s best read as a history of Budapest. At 400 pages long, I couldn’t imagine carrying it around. Pocket-size it ain’t.

The latest edition does include QR codes that link to movies or Török talking about places, but I’d say this a book to savor in a Budapest bar or café, or in your hotel room before setting out for the day.

Török signs off “Budapest. A Critical Guide” as “your invisible host.” Meaning, I assume, that he walks with you as you explore his city.

Born and raised in Budapest, Török is a a third generation “Budapesti” which he says is very rare. He describes himself as “Mr. Budapest. An urban patriot.” After studying history then languages, Török became a translator of literary works before switching to biographies.

In 1986, Török honeymooned in Vienna. Realizing he didn’t know the city very well, he headed for Shakespeare & Company on Sterngasse and bought a guidebook. By the time he returned to Budapest, Török had decided to write a book on the city for foreigners.

“I’ve been the observer of the urban scene since then,” he says.

“Budapest. A Critical Guide” has been published since

1989.

Now retired, Török never made enough money from the book for it to be his sole source of income. He worked for the government as a deputy minister of culture, as director of the Mai Manó house of photography, and finally as a director of a tiny non-profit philanthropy consultancy.

Dedicated Retirement

For the past 10 years, Török been the right-hand man of Miklós Tamási, helping to manage Fortepan, a communitybased photographic archive of around 200,000 photos. I would imagine that this is where the wonderful photos in his book come from. On retirement, Török decided to dedicate as much of his time as possible to the guidebook.

I explain to Török that I’ve always thought getting lost in a city is the best way to get to grips with what it’s really about. Török disagrees.

“If you’re lost in the urban jungle, you’ll never find authentic life without a guidebook. I want to pass on the way of life of a Budapest aboriginal.”

This is how Török speaks, peppering his conversation with slightly archaic words. At one point, he asks me if I know the meaning of the word “naff,” a word I haven’t heard since probably the 1980s.

Talking to Török feels like reading his book, like meeting the “invisible host.” When I say that one of the reasons I like Budapest is that it’s not beautiful, Török defends the city.

“You’re not looking at it in the right way. It’s like eating a sandwich. If you head in the right direction, it’s bread, salad, mayonnaise, meat and back to bread. Budapest is partly beautiful, partly naff.” We finish with me asking where I’d find authentic Budapest.

“Apart from being invited into a family home, I’d suggest you go to a noncentral, working-class neighborhood like the 18th or 19th districts. There’s a restaurant called Café Zila in the 18th near the tram terminus. In the 19th-century it was a shooting range. Then it became a swimming pool changing room. When they privatized the pool, the former ice-cream vendor turned it into a two-story glitzy restaurant. There are no tourists here.”

When it’s published, you’ll be able to find “Budapest. A Critical Guide” in good city bookshops. Or you can order directly from the invisible host himself at budapest-criticalguide.hu.

DAVID HOLZER

András Török

Caricature of András Török by István Orosz.

Photo by Erika Bariczki

in Brief News

Liget Acknowledged at International Travel Awards

The Liget Budapest Project, a cultural development in the capital’s City Park, was acknowledged as “Best Tourism Development Project” and “Best Familyfriendly Development in Europe” at the International Travel Awards ceremony in Dubai, according to a press release. The House of Music Hungary, one of the elements of the project, was also recognized as the “Most Attractive Tourism Destination in Europe,” Benedek Györgyevics, who heads the Liget project company, said. With foreign visitor numbers rising at the House of Music Hungary, the Museum of Ethnography and the BalloonFly hot air balloon attraction, Liget Budapest is now “on the international tourism map,” he added. In the long term, the goal is to make the project a “must-see” attraction and a reason for lengthier stays in the capital, he said.

Brussels Liszt Institute Holds 3-day Bartók Festival

The Brussels Liszt Institute held a threeday Bartók Festival from Sep. 25-27 in cooperation with the Bartók archives in Brussels and Budapest. The festival in Brussels included lectures and concerts featuring works written or inspired by Béla Bartók, organizers said. Tamás Iván Kocsis, Hungary’s Ambassador to Belgium and Luxembourg, laid a wreath at Bartók’s statue in Brussels on Sep. 26, the anniversary of the composer’s death in 1945, in New York, aged 64.

‘Outstanding’ Result in 2024 Global Innovation Index

Hungary’s result in the 2024 Global Innovation Index of the World Intellectual Property Organization (Wipo) is “outstanding,” the Ministry

of Culture and Innovation said in a statement issued on Sep. 27. Hungary maintained its rankings of 23rd among the economies of Europe and 34th among high-income group economies, the ministry said. Five of seven gauges of Hungary’s innovation improved, it added. Hungary ranks number one in FDI inflows, seventh in high-tech manufacturing, ninth in public research-industry co-publications and 11th in production and export complexity. Hungary ranks 36th among the 133 countries featured in the Global Innovation Index. It is in 25th place regarding knowledge and technology outputs and 28th in business sophistication.

‘Hugo the Hippo’ Returns to Big Screen After 50 Years

“Hugo the Hippo,” a 1975 HungarianAmerican co-production animation, returned to the big screen on Sep. 28 after 50 years, the National Film Institute (NFI) said, according to kultura.hu. The film, by the Pannonia Filmstudio, was co-produced in the United States by the multiple Emmy award-winning Hungarianborn Róbert Halmi as part of Brut Productions, a division of perfume company Faberge. The animation is a significant legacy of Hungarian animation, which is celebrating 110 years this year. Halmi had asked William Feigenbaum, Brut’s director, to engage a top animation workshop in Europe. His first trip led him to Pannonia Filmstudio, where Graham Percy’s drawings were set in motion by György Gemes, the film’s technical head. Some two years, 150 animators and 150,000 drawings later, a film emerged that was heavily influenced by the visuals of the 1968 “Yellow Submarine,” based on the songs of the Beatles,

Sulyok Honors Olympic, Paralympic Athletes

Olympic and Paralympic athletes have successfully withstood trials of strength and character and have become role models in the process, President Tamás Sulyok said on Sep. 26, handing over state awards to the athletes who participated in the 33rd Olympic and 17th Paralympic Games in Paris. According to state news agency MTI, Sulyok said pride was achieved by the human greatness coming from fight and honor, everyday effort and human self-respect. Prime Minister Viktor Orbán and Speaker of Parliament László Kövér also attended the event at Parliament.

of

a surreal, musical animation mixing traditional Disney style and the bizarre paintings of Hieronymus Bosch and African and Asian art.

Night of Researchers: 2,600 Programs, 250 Institutions

The Night of Researchers offered 2,600 programs in 250 institutions in 52 localities nationwide on Sep. 27-28, Minister of Culture and Innovation Balász Hankó told a press conference. The number of employees working

in R&D at companies in Hungary has grown to around 6,500 from 3,000 per million residents within the last decade, and the government is working to increase that ratio to 9,000 by 2030, Hankó said. “Together with young Hungarians, innovators and researchers, we have set the goal to become one of the 10 best innovators in Europe,” he said. Hankó said Europe needed a “sea-change” in competitiveness, as it lags in innovation and science. “Hungary must show that the Hungarian mind and creativity are world-class,” he said.

Main sponsor: Corporate partners:

In collaboration with MTA-ELTE Momentum Assyrian and Babylonian Divine World Research Group. Exposition realized with the exceptional collaboration of the Bibliothèque nationale de France.

Striding lion from the Processional Way of Babylon | Kunsthistorisches Museum, Vienna | © KHM-Museumsverband

President

the Republic Tamás Sulyok (front row, center), with Prime Minister Viktor Orbán (left) and Speaker of the House László Kövér (right) at the presentation of state medals to athletes and sports professionals who have achieved outstanding results at the Summer Olympic and Paralympic Games in Paris.

Photo by Szilárd Koszticsák / MTI

Chamber of Commerce Corner

This regular section of the Budapest Business Journal features news and events from various international business chambers. For further information and to register for specific events, visit the organizing chamber’s website. If you have information for inclusion on this page, send an email in English to Annamária Bálint at annamaria.balint@bbj.hu

Hungarian-French Chamber of Commerce and Industry (CCIFH)

The CCIFH invites guests to a business lunch with His Excellency Jonathan Lacôte, new Ambassador of France to Hungary, with a discussion moderated by journalist Szabolcs Dull. As places are limited, prior registration is required and will be on a first-come, first-served basis. • When: Tuesday, Oct. 15, noon-2 p.m. • Where: Mercure Budapest Castle Hill, Krisztina krt. 41-43, Budapest 1013. • Fee: TBC.

The CCIFH’s HR Club will hope to “Make (Remote) Work Healthy

Again!” Discover the Yogist, which aims to prevent and relieve the aches and pains of office and remote work. The primary guest will be founder Anne-Charlotte Vuccino. The co-presenter will be Katalin Vásárhelyi, HR manager at the National Bank of Hungary. Topics will include corporate wellbeing, CARE management and corporate culture, and a collective experience of the Yogist techniques: the exercises can be performed while seated and in ordinary clothing.

• When: Wednesday, Oct. 2, 9-11

a.m.

• Where: Europa DesignWell Point, Törökvész út 71-75, Budapest 102. • Fee: Members HUF 9,900 (+ VAT); non-members HUF 14,900 (+ VAT).

British Chamber of Commerce in Hungary (BCCH)

The sixth BCCH CEO Dinner of 2024 will be held at the W Hotel Budapest and features James Nelson, general manager and head of finance shared services at Computacenter, a leading independent technology and services provider. The firm’s center in Hungary employs 560-plus staff to manage internal business functions and provide direct customer support and services. Budapest is Computacenter’s primary global GBS location. The company is building out multiple roles as part of several functional transformations to enable Computacenter to grow internationally and serve its customers more effectively. The event lets guests enjoy a three-course dinner with wine and welcome drinks while hearing a leading professional’s views on recent developments and current industry affairs. BCCH chairman Duncan Graham will give the opening remarks.

• When: Tuesday, Oct. 15, from 5:30 p.m. • Where: W Hotel Budapest, Andrássy út 25, Budapest 1061 • Fee: Members HUF 28,000 (plus VAT); non-members HUF 38,000 (plus VAT)

German-Hungarian Chamber of Industry and Commerce (DUIHK)

Last week’s Jour Fixe event at the W Budapest Hotel provided an exclusive setting and an excellent atmosphere for new and old members to get to know each other. As with every Jour Fixe, the DUIHK’s latest members were introduced: the Hungarian branch of Carl Zeiss Industrielle Messtechnik GmbH, Dun & Bradstreet Hungary Kft., FrontX Kft., GREEN BRANDS Hungary, Kertesz Communications Consulting Kft., MHC Mobility Magyarország Zrt., OTRS Group Magyarország Kft., Tometal Kft., TOS Irodai Megoldások Kft. and Világszép Gyermekvédelmi Alapítvány. By tradition, a loyal DUIHK member was also introduced; this time, it was Pensum Group Nyrt., which joined 10 years ago. There were opportunities to tour the venue and even to see the Presidential Suite.

The CCIFH’s Hot Topic conference and round table discussion will be “Carbon Neutrality and Net Zero Cities” with Ambassador-at-large for Climate Barbara Botos of the Ministry for Energy, Márta Nagy, director of Budapest Global, representants of the Mayor of Budapest’s Office, and professional partners like Veolia and more. Topics will include Budapest’s journey towards climate neutrality, corporate carbon neutrality initiatives, local energy communities, and cooperation opportunities between municipalities and companies. • When: Wednesday, Nov. 6, 9 a.m.-noon.

• Where and Fee: TBC.

Belgian Business Club in Hungary (Belgabiz)

Belgabiz is organizing a networking event titled “TrAIn & GAIn without PAIn: The EU ArtificiaI Intelligence Act & its Application in Practice,” a practical session on the European Union’s AI Act, a new regulation shaping the future of AI in business. Richárd Schmidt, Anita Vereb and Péter Kórozs from SmartLegal Schmidt & Partners will explain the essential aspects, the challenges, and the consequences. The evening will also offer an excellent opportunity to mix and mingle and enjoy the international company around a buffet dinner. • When: Thursday, Oct. 10, 6-9 p.m. • Where: Wintergarden of Vadrózsa Restaurant, Pentelei Molnár u. 15, Budapest 1025. • Fee: Members, free; non-membres, HUF 18,000.

Italian Chamber of Commerce for Hungary (CCIU)

The CCIU holds the rotating presidency of the EU Chambers this year and recently hosted an informal meeting at its headquarters with representatives of other foreign chambers in Hungary. The meeting aimed to lay the groundwork for a joint event celebrating the 30th anniversary of the EU Chambers and Hungary’s EU presidency. One of the main goals of the meeting was to promote economic dialogue, facilitate interaction between institutions and businesses, and foster trade relations and new synergies among EU countries in the Hungarian market. Previous EU Chamber events have shown that these meetings effectively identify the best strategies for internationalization and economic cooperation. The joint anniversary event will feature the participation of significant figures from international and Italian institutions, underscoring the importance of the opportunity to advance economic partnerships and cooperation within the European Union, but above all, to provide answers to the questions of foreign companies present in Hungary.

• When: Friday, Oct. 25. • Where and Fee: TBC.

Hungarian-Norwegian Chamber of Commerce (HNCC)

The Embassy of Hungary to Norway and the HNCC organized a business trip on Sep.10-12 to Budapest and Pécs for Norwegian business people interested in Hungary’s market opportunities. This year’s tour focused on the health industry and medical tourism. The delegation met 26 Hungarian companies and visited the Hungarian Ministry of Foreign Affairs and Trade, the Hungarian Export Promotion Agency, Wáberer Medical Center, the National Human Reproduction Laboratory, the DaVinci private clinic and the Zsolnay Porcelain Manufactory. The participants gathered additional excellent experiences from Hungary during cultural and gastronomic programs.

Canadian Chamber of Commerce in Hungary (CCCH)

The CCCH is pleased to announce its upcoming business breakfast, which will examine the potential global and Hungarian economic changes and their impact on business based on this year’s U.S. elections. The event will be co-hosted by Csaba László, a former Hungarian Minister of Finance, Tamás Énekes and Máté Tóth, private bankers at Hold. The featured speaker will be Szilárd Kovács, managing director of Hold, who will provide an in-depth analysis of the economic impact of the elections. While enjoying coffee and pastries, guests will learn how the political situation on the other side of the Atlantic could affect the European Union and how Hungarian companies should shape their strategies. • When: Tuesday, Oct. 15, 8:30-11 a.m. • Where: Hold Alapkezolő, Alkotás Pont Irodaház, Alkotás u. 50, Budapest 1123

Swiss-Hungarian Chamber of Commerce (Swisscham)

On Sep. 26, Swisscham members enjoyed an adventure into the world of chocolate in the country’s largest Lindt chocolate brand store. In an exclusive bonbon-making demonstration with the store’s pastry chef, he showed how to make unique pralines from Lindt’s premium quality chocolates.

Swisscham’s next event in October is the annual HR Café on “How to Succeed in Public Speaking: Make the Most of the Success of Your Public Presence?” In this Hungarian-language event, HR, PR and marketing professionals and company leaders can exchange experiences and ideas with moderated knowledge sharing and special guests. • When: Wednesday, Oct. 16, 2-4:30 p.m. • Where: University of Hagen, Madách Imre utca 13-14, 4th floor, Budapest 1075.

• Fee: Members, HUF 5,000 / person (0% VAT); non-members HUF 12, 000 / person (0% VAT).

Opening a business doesn’t make you a businessman.