DECEMBER
Japanese-Hungarian venture fund to become active in CEE region
December 16 th 2008
The Hungarian Development Bank (MFB) and Japan's SBI Group are to set up a joint EUR 100 million venture capital fund with respective ownership stakes of of 40% and 60%. The fund is seeking to invest in the Hungarian SME sector for 3 to 4 years. MFB Invest and the SBI Group announced the launch of fund manager ELAN SBI Capital Partners today. The first fund to be managed by the new joint venture is the EUR 100 million SBI Europe Fund, set up to invest in Hungary and elsewhere in the region by MFB and SBI, 40% and 60% stakeholders respectively.The fund is looking for investment opportunities in the SME sector in the EUR 1 million-EUR 20 million range, averaging around EUR 5 million-EUR 7 million. Plans are to realize returns in 3 to 4 years. Potential investment targets include companies with a stable management and existing revenue, without a sector preference however high growth potential is a key factor.The new initiative is unique not only in that it focuses on the SME sector, but also because this is the first fund in the region jointly owned by a state-owned bank and a private investor. SBI Europe Fund is a prime example of the increasing M&A activity of Japanese investors in Hungary as well as elsewhere in the CEE region.
Local Councils to Call Tender for Pécs-Pogány Airport
December 15th 2008
The local councils of Pécs, Pogány and Baranya County (S Hungary) intend to invite open tender for loss-making Pécs-Pogány Airport in January, the business daily Világgazdaság reported on December 15, 2008.The airport, which currently handles annual traffic of 2,200 aircraft and 9,500 passengers per year, would require a 600-meter extension to its currently 1,500-meter runway and an additional layer of asphalt on the airstrip in order to accommodate aircraft of the weight that most low-cost airlines operate, the newspaper noted.CEO Gyula Acs of the company that operates the airport, Pécs-Pogányi Repülőteret Müködtető Kft (PRM), told Világgazdaság that in order to become profitable, the airport would need a contract with an airline that would connect it to a major European airport such as those in Vienna, Frankfurt, Munich or Zurich.The local councils are looking for a purchaser that would agree to invest a minimum of HUF 2.5bn (EUR 9.36m) in development of the airport.
Employers and Unions Reach 2009 Wage Agreement
December 12th 2008
Employers and unions agreed at a meeting on December 12, 2008 of the National Interest Coordination Council (OET) to a general wage increase of 3-5 pct in 2009 and to establish Hungary's monthly minimum wage at HUF 71,500 next year.Hungary's current monthly minimum wage is HUF 69,000.As a result of the agreement, the minimum monthly wage for skilled workers will be increased from the current HUF 86,500 in two phases, first to HUF 87,000 in January, then to HUF 87,500 in July. The OET asked everyone involved in local wage negotiations to make retaining jobs their highest priority. The council also urged that an agreement be reached on 2009 public-sector wages as soon as possible.
Government launches lending programmes for businesses
December 5th 2008
The government has launched three lending programmes for well functioning companies that have trouble getting bank loans, Minister of National Development and Economy Gordon Bajnai announced. The programmes, which started on December 1st, are part of the government's recently announced HUF 1,400bn economic stimulus package.
A microloan programme will allow SMEs to borrow up to HUF 6m for working capital and up to HUF 10m for investments. Another programme, called the New Hungary SME Loan Programme, will make HUF 50bn in funding from the Hungarian Development and EU sources available to SMEs through commercial banks. Under the programme, companies may take out loans of HUF 10m-100m with runs of ten years plus a two-year grace period. The third programme will provide companies with guarantees up to HUF 100m.
Mercedes To Select Suppliers This Spring for Model To Be Built in Hungary
December 5th 2008
Auto giant Daimler AG will select suppliers this spring for the new next-generation A- and B-class compact model that the company plans to build exclusively at its plant in Kecskemet (C Hungary) beginning in 2012, supply manager Eberhard Gloger announced at an ITDH-sponsored auto suppliers' conference on December 5th 2008.
Minister of National Development and Economy Gordon Bajnai said that the government will launch a program next year to help suppliers survive the rise in unemployment due to falling demand. The goal of the program is to help businesses keep their employees, along with offering new loans and setting up clusters.
Mercedes announced earlier this year that it would build its eastern European plant in Kecskemet at a cost of EUR 800m. Auto giant Daimler AG will select suppliers this spring for the new next-generation A- and B-class compact model that the company plans to build exclusively at its plant in Kecskemet (C Hungary) beginning in 2012, supply manager Eberhard Gloger announced at an ITDH-sponsored auto suppliers' conference on Friday.
Minister of National Development and Economy Gordon Bajnai said that the government will launch a program next year to help suppliers survive the rise in unemployment due to falling demand. The goal of the program is to help businesses keep their employees, along with offering new loans and setting up clusters. Mercedes announced earlier this year that it would build its eastern European plant in Kecskemet at a cost of EUR 800m.
The Hungarian automotive supplier market consists of 630 businesses that generate annual output of EUR 15.9bn and employ 110,000 workers. The market exports 90pc of its production and accounts for 20pc of Hungary's total exports. A total of 14 of the 20 major global suppliers are present in Hungary. Mercedes purchased HUF 600m in products from Hungarian suppliers last year, while BMW spent EUR 800m. Mr. Bajnai said the government focuses on money, markets and employment in the course of crisis management. Suppliers could receive subsidies covering half their costs if they need to change technology. Mr. Bajnai added that the contracts of the approximately 5,000 businesses, not all suppliers, that have received state subsidies over the last two years will be modified, allowing them to merely maintain the size of their workforce rather than to increase staff as originally stipulated. Mr. Bajnai said about 3,800 companies in Hungary export products worth more than HUF 30m per year.
ITD Hungary Business Development Director Laszló Süveges-Szabó said Hungarian suppliers were involved in 65pc of the country's car production in 2002, adding that plans call for this figure to increase to 85pc by 2015. The performance of Hungarian suppliers is double and triple that of their Czech and Slovak counterparts, respectively, Mr. Süveges-Szabó.
Minister Says Rural-Development Programs to Continue in Spite of Financial Crisis
December 4th 2008
The government intends to continue funding current rural-development programs in spite of the financial and economic crisis, Minister of Agriculture and Rural Development József Gráf said on the evening of December 4th 2008.
Mr. Gráf noted that the government finances 20-25 pct of its rural-development programs, while the EU provides funding for the remaining 75-80 pct. The government's New Hungary Rural Development program has allocated HUF 262bn (EUR 1bn) for rural-development programs between 2007-2013.
Finance Minister Says Hungary Is Ready for Introduction of the Euro
December 3rd 2008
Hungary will be able to repay its debts earlier than expected due to the effects of the global financial and economic crisis, thus moving the country closer to joining the eurozone, Finance Minister János Veres told the APA News Agency in Brussels on December 3rd 2008.
Mr. Veres said that though there is no target date for Hungary's introduction of the euro, the country will fulfill the criteria necessary to join the European Exchange Rate Mechanism (ERM II) by the end of 2009. Before joining the eurozone, Hungary will probably introduce structural reforms to the local government, the tax and the social system.
Hungarian Government Doubles the Credit Limit
December 3rd 2008
Mr. János Veres Minister of Finance and Mr. Gordon Bajnai Minister of National Development and Economy announced on a press conference on December 3rd that the Government doubles the credit limit from HUF 450 bn (EUR 1,72 bn) to HUF 900 bn (EUR 3,44 bn) supporting the local banks in their effort to create liquidity. The sum will be distributed by the Grantiqua Hitelgarancia Zrt., a 50 pct state-owned financial institute. Another HUF 50 bn (EUR 191 million) will be available for 7 banks to provide HUF 10-100 million loans. Mr. Bajnai pointed out that the sources are available only for those banks which use their resources for creating liquidity for companies.
Parliament Approves Main 2009 Budget Figures
December 2nd 2008
Parliament on November 25th 2008 approved the main figures of the 2009 central budget, posting revenues of HUF 8,270 billion, expenditures of HUF 8,933.7 billion and a deficit of HUF 663.7 billion.
MPs also voted on a government-supported amendment to place a HUF 80,000 cap on annual bonuses for pensioners and introduce a 62-years-of-age eligibility requirement for the bonus.
The government projects inflation will slow to 4.5 pct in 2009 from 6.4 pct in 2008. It sees real wages falling by 2 pct in 2009 and household consumption dropping by 3 pct.
NOVEMBER
Parliament approves main 2009 budget figures
November 25th 2008
Parliament on Tuesday approved the main figures of the 2009 central budget showing revenue of HUF 8,270bn, expenditures of HUF 8,933.7bn and a deficit of HUF 663.7bn.
The figures were approved with a vote of 211 ayes and 169 abstentions.
MPs also voted on a government-supported amendment to place a HUF 80,000 cap on annual bonuses for pensioners and introduce a 62-years-of-age eligibility requirement for the bonus. The change was passed with a roll call vote of 210 ayes and 169 nays.
The government projects inflation will slow to 4.5pc in 2009 from 6.4pc in 2008. It sees real wages falling 2pc in 2009 and household consumption dropping 3pc.
Hungary to Fulfill Criteria for Joining ERM II in November 2009
November 21st 2008
Hungary will be able to safely fulfill the criteria necessary to join the European Exchange Rate Mechanism (ERM) II by November 2009, Finance Minister János Veres said on a television program on November 21st 2008.
European Union member states that have not adopted the euro must participate in the ERM II for at least two years before joining the Eurozone.
Mr Veres noted during the television program that the government's proposed 2009 budget currently before parliament targets a general government deficit of 2.6 pct of GDP to be achieved through a sharp HUF 600 billion (EUR 2.22 billion) reduction of spending.
"Investors of the Year" Awards
November 17th 2008
The Ministry for National Development and Economy and ITD Hungary awarded investors and their partners which contributed the most to the development of the Hungarian economy and increased employment in 2007/2008. Investments of the companies awarded have totalled more than EURO 1.2 billion and created more than 5200 new jobs.
Companies awarded with “Investors Awards 2008” in different categories are the following:
‘Biggest Volume Investment of 2007/2008’and 'Company creating the most new jobs in 2007/2008’ - Mercedes Benz Hungary Kft. The company’s 800 million Euro investment in Kecskemét, Hungary will create 2500 new jobs.
‘Largest Reinvestor of 2007/2008’ - Hamburger Hungária Kft. The Austrian-based Hamburger concern is the largest packaging material manufacturer in Central Eastern Europe. The company's Hungarian subsidiary will create 300 new jobs and will produce packaging material using waste paper.
‘Company establishing the largest regional centre in 2007/2008’- IT Services Hungary Kft. The company has established the largest regional center both in terms of volume and new jobs created. IT Services Hungary Ltd. will establish SSC-s in Budapest and Debrecen and its main client will be Deutsche Telekom AG. The investment will create 1745 new jobs.
‘R&D cooperation award 2007/2008’ - Richter Gedeon Nyrt. The company created significant co-operation with Hungarian educational institutions and other organizations in the field of research and development.
‘Investment Friendly Industrial Park of the Year’ - Industrial Park of Szolnok, Local Government of Szolnok. The four companies, which moved to the industrial park in 2007/2008, have created more than 520 new jobs directly and are expected to generate several more at their suppliers indirectly. The local government had a major role in the acquisition process.
Bajnai: HUF 1,400 Billion in Subsidies Available to Hungarian Business in 2009-2010
November 13th 2008
Some HUF 1,400 billion in direct subsidies - much of it from a restructuring of EU funding - will be available to Hungarian companies in the next two years, National Development and Economy Minster Gordon Bajnai said at an economic summit in Parliament on November 13th 2008.
HUF 500 billion will be available to companies under the New Hungary Development Plan and another HUF 400 billion will be available under the New Hungary Rural Development Programme in 2009-2010. Both programs function as frameworks for paying out EU development funding.
Columbian Inaugurates HUF 7 Billion Expansion at Carbon Black Plant in Hungary
November 12th 2008
Columbian Tiszai Carbon on November 12th 2008 inaugurated a HUF 7 billion expansion at its carbon black factory in the Hungarian city of Tiszaujvaros, North-East Hungary.
The investment, which expands capacity by 50 pct to an annual 100,000 tons, has made the plant Europe's biggest and most modern carbon black production facility.
US-based Columbian expanded capacity at the plant to meet growing demand from such tyre makers in the region as Michelin, Bridgestone, Hankook, Continental, Pirelli and Brisa.
Hungary to Make 6 pct Reduction in Greenhouse-Gas Emissions by 2012
November 6th 2008
Hungary will make a 6 pct cut in the country's emissions of greenhouse gases by 2012 as compared to 1985-1987, in accordance with the stipulations of the Kyoto Protocol, State Secretary of the Environment Ministry Laszlo Diossy said at a press conference on 6th November.
The revenue from emissions trading should be used exclusively to supplement EU funding for emission-reduction investment, since Hungary's government budget will not contain sufficient resources for this purpose as a result of the global financial crisis.
After 2012, Hungary will continue to reduce its greenhouse-gas emissions in conformance with European Union inter-state agreements.
Cornerstone laid for Balatonring
November 6th 2008
Minister for National Development and Economy Gordon Bajnai was among officials present on Thursday to lay the cornerstone for the Balatonring, a EUR 80m racing circuit near Lake Balaton that will host a MotoGP motorcycling-championship race for a period of at least five years beginning in 2009.
Mr Bajnai said that the Balatonring must be completed in time for the first MotoGP race scheduled to take place at the track on September 20, 2009.
Minister of Local Government Istvan Gyenesei said that the racing facility is projected to draw 100,000 tourists and generate revenue of HUF 2bn (EUR 7.75m) during its first year of operation.
Worldwide Circuit Management and Magyar Turizmus have established a 70pc-30pc joint venture to build Balatonring.
Záhony investments could start in the spring
November 6th 2008
Investments that are part of a project to transform the area around the Hungarian city of Záhony into a major European logistics hub could start as early as the spring of 2009, Sándor Kis Kalnoki, government commissioner in charge of the project, told MTI.
The necessary permits for the planned investments are being acquired, a process which is likely to last until the beginning of next year, Mr. Kálnoki said. Subsidy contracts could be signed in March or April, after which construction could start, he added.
Decisions on HUF 1.7bn in EU development funding for investments worth almost HUR 4.4bn that are part of the project were made by the beginning of September.
The government approved HUF 32bn in state and EU development funding for the project at the end of 2007. HUF 20bn of the funding will go to improving rail links to the region and HUF 8bn for bettering roads.