From hungary-report-owner Mon Feb 5 05:22:23 1996 Received: from localhost (daemon@localhost) (fnord) by nando.yak.net (8.6.5/8.6.5) id FAA00692; Mon, 5 Feb 1996 05:22:23 -0800 Received: from localhost (daemon@localhost) (fnord) by nando.yak.net (8.6.5/8.6.5) id FAA00683; Mon, 5 Feb 1996 05:22:08 -0800 Received: from jbrown@isys.hu () via =-=-=-=-=-= for hungary-report@hungary.yak.net (681) Received: from kingzog.isys.hu (KingZog.iSYS.hu [194.24.160.4]) (fnord) by nando (8.6.5/8.6.5) with ESMTP id FAA00673 for ; Mon, 5 Feb 1996 05:21:31 -0800 Received: from [194.24.161.32] (dialup-1-032.dial.isys.hu [194.24.161.32]) by kingzog.isys.hu (8.7.Beta.11/8.7.Beta.11) with SMTP id OAA09034 for ; Mon, 5 Feb 1996 14:21:10 +0100 (MET) Date: Mon, 5 Feb 1996 14:21:10 +0100 (MET) X-Sender: jbrown@mail.isys.hu Message-Id: Mime-Version: 1.0 Content-Type: text/plain; charset="us-ascii" To: hungary-report@hungary.yak.net From: jbrown@isys.hu (Jennifer Brown) Subject: Hungary Report 1.36 Sender: owner-hungary-report@hungary.yak.net Precedence: bulk Reply-To: hungary-report@hungary.yak.net ======================== The Hungary Report Direct from Budapest, every week Also available on the World Wide Web (http://www.isys.hu/hrep/) No. 1.36, February 5, 1996 ======================== SPONSORED BY: iSYS Kft., providing full Internet solutions for companies and individuals in Hungary. For further information, send e-mail to , view our World Wide Web home page (http://www.isys.hu) or call (+36-1) 266-6090. ========= CONTENTS BRIEFS Hungarian-Romanian treaty's future looks unclear Matav plans to meet phone demands by year's end NATO opens new base for Nordic troops Privatization revenue to increase from last year's record Paprika adulterers identified Hungary's EBRD loan tops Russia's Banking and secrecy reforms planned Retirement age to be lifted Economic reforms on the legislative agenda Prostitution legalization in the works Pope plans summer visit Hungarian inventors give hope to the blind Cashier's bark sends would-be-robber running NUMBERS CRUNCHED Time allotted for debating and passing bills Schoolchildren going hungry New police salaries Expected percentage drop in domestic trade Number of cars stolen in Hungary Counterfeit bills found in post offices Troubled taxis on the streets FEATURE STORY Hungarian companies anticipate Balkan peace dividend PARLIAMENT WATCH Sorry, no Parliament Watch this week The Hungary Report is also supported in part by: MTI-Econews, a daily English-language financial news service. For online (fee-based) subscription information, contact the Internet address: . (It's not automated -- write a nice note.) ====== BRIEFS By Jennifer C. Brown Copyright (c) 1996 ------------- GENERAL NEWS Hungarian-Romanian treaty's future looks unclear The Hungarian-Romanian bilateral treaty that promises to reaffirm current borders and ensure minority rights looks unlikely this year, reports the Budapest Week. Foreign Minister Laszlo Kovacs told the paper that inflammatory campaign rhetoric of extremist parties in Romania on the topic of minorities during this spring's local elections could delay the treaty. Both the European Union and NATO are pressuring Hungary and Romania to settle their differences over the minority issue. Kovacs told the Budapest Week that he "thinks that international organizations should compare the legislation of all the countries concerned with European standards and norms." He was referring to Romanian President Ion Iliescu's call for a historic reconciliation between the two countries shortly after Romania banned foreign flags and the singing of foreign national anthems in public. Hungary signed a basic treaty with Slovakia but afterwards, Slovakia's parliament passed a law restricting the use of non-Slovak languages. Kovacs said he doesn't rule out the same thing happening in Romania. --------------------- BUSINESS & ECONOMICS Matav plans to meet telephone demand by year's end The wait for telephone lines could end by 1997 for some 390,000 people currently on the waiting list when Hungarian telecommunications giant Matav installs new lines, writes the Budapest Business Journal. Matav promised to fulfill 90% of the demand for telephone lines within the first half of 1997 when MagyarCom, a joint venture between Germany's Deutsche Bundespost Telekom and U.S. telephone company Ameritech purchased 30.3% of Matav in Dec. 1993. At that time, Matav's waiting list had 750,000 names. Matav installed 330,000 new lines last year, spending 80% of its Ft 60 billion capital. This year the company plans to spend 60% of its capital expenditure on providing new telephone services. A Matav official was quoted saying that a shortage in demand will enable the company to install the promised number of lines by the end of the year. There are currently 420,000 people on the waiting list but the company said there are people who either won't want a line or won't be able to pay for it, leaving no more than 30,000 waiting for a telephone line. ------------ SHORT TAKES NATO OPENED A NEW BASE LAST WEEK IN THE SOUTHWEST TOWN of Pecs to supply food and equipment to 2,000 Nordic soldiers in Bosnia. The base will also be used to house 200 soldiers from Poland, Denmark, Finland, Norway and Sweden. THE PRIME MINISTER'S OFFICE STATE SECRETARY ELEMER KISS said he expects privatization revenue from unsold state-owned companies to total US$ 4.5 billion, reports Vilaggazdasag, up from last year's US$ 4.2 billion. Foreign companies which purchased Hungarian companies last year will spend up to US$ 2.5 billion on development this year. SOME 180 SUSPECTS HAVE BEEN IDENTIFIED BY POLICE IN connection with adulterated paprika. Over 20 people were hospitalized beginning June 1994 after consuming ground paprika that was mixed with lead. Police discovered that the paprika originated from spice dealer, Vilmos Horvath Jr. Police couldn't prove that the dealers who purchased the low-grade spice knew the paprika was tainted but said they could have taken more precautions. THE EUROPEAN BANK FOR RECONSTRUCTION AND DEVELOPMENT (EBRD) has provided Hungary with the second largest sum of aid after Russia, according to the Budapest Week. Developers in Hungary received $145 million for the building of the M5 motorway linking Budapest and Szeged. The EBRD loaned $47.2 million to help phone company Matav build the national telephone network, $44.7 million for a 32.5% stake in the newly-privatized Budapest Bank, $36.3 million for a regional telephone network in southern Hungary and $23.6 million for a credit agreement with the Hungarian Credit Bank. MPs PLAN TO DEBATE ECONOMIC FORMS DURING THE UPCOMING legislative session. The reforms to be introduced include the reform of pension, health care and social security systems. Controversial proposals include one to reduce financial support for local governments, further education reforms and guidelines to regulate conflicts of interest among government members. Government members can currently hold any position they want outside of Parliament. HUNGARY PLANS TO RESHAPE ITS BANKING AND SECRECY LAWS TO European Union norms. The package is expected to be submitted to Parliament by June. AS A PART OF AN OVERHAUL OF THE GOVERNMENT PENSION AND social security systems, the retirement age will be raised to 62 for men and women, announced Finance Minister Lajos Bokros last week. PLANS TO LEGALIZE PROSTITUTION IN HUNGARY ARE UNDERWAY by the Interior Ministry. The plans stipulate that prostitutes must be registered as private entrepreneurs. If approved, local governments will issue the licenses and prostitutes will have to carry a valid certificate of health. POPE JOHN PAUL 11 WILL MAKE A VISIT TO HUNGARY JUNE 20 and 21, announced the chief abbot of Pannonhalma. The Pope will be staying at the 1,000-year old Pannonhalma Benedictine monastery and will hold a Mass somewhere between Pannonhalma and Gyor in western Hungary. HUNGARIAN INVENTOR JANOS FEKETE ALONG WITH FOUR SCIENTISTS have come up with a way for the blind to judge distances to large objects. The device is special attachment for eyeglass frames that works like a sonar signal by projecting ultrasound waves that bounce off large objects. The waves give off a sound that changes in pitch depending on the distance of the detected object. ---------------- NUMBERS CRUNCHED * Time legislators have to debate and pass 67 bills in the next legislative session (MP Tamas Isepy): 4.4 hours each * Children going hungry in schools in kindergartens (Foundation Providing Meals to Children): 22,000 * New average pay for members of the National Police force (National Police): Ft 40,000 (US$ 296) * Percentage drop expected in the volume of domestic trade this year (National Trade Association): 25%-30% * Number of cars stolen in Hungary last year, up 20% from 1994 (The Budapest Sun): 12,000 * Amount of counterfeit money paid to the post office last year, 40% over the year before (Magyar Posta) Ft 941,000 ($6,818) * Percentage of taxis in Budapest found to have mechanical difficulties (Consumer Protection Agency): 30% -------------- EXCHANGE RATE (National Bank of Hungary) US dollar - 146.26 (buying), 146.35(selling) Deutschemark - 97.44 (buying), 98.48 (selling) --------------- WACKY AS USUAL Cashier's bark sends would-be-robber running Cashiers in Hungary are intimidating to most customers, but to an armed robber? According to the Budapest Week, a masked man carrying a pistol entered a post office in Kalocsa and attempted to hold up a female cashier. After demanding that the woman hand over the money, she responded by telling him to leave the premises. Apparently, her scolding worked. The would-be robber turned and walked out of the post office without the loot. ============= FEATURE STORY Hungarian companies leap into the Balkans By Theresa Agovino The day after the United Nations lifted the embargo against Serbia and Montenegro Pannonplast Rt. director of foreign trade Laszlo Heczey was in Belgrade. "I was visiting import-export companies and laying the first steps necessary for us to do business there, said Mr. Heczey. Plastics manufacturer Pannonplast suffered along with the rest of the Hungarian economy as the four year war in the Balkans killed an important trading partner as well as easy access to the ocean. Hungary's Ministry of Industry and Trade estimated the embargo cost the country $2.25 billion after ramifications such as the loss of export markets, costlier transit routes, higher unemployment, lower corporate taxes and pricey import substitutions are considered. Now that a peace agreement has been signed and the embargo lifted, Hungarian companies are primed to benefit from both the massive, lengthy rebuilding effort in the former Yugoslavia and the eventual return to normalcy in the region. Hungarian firms are getting an extra peace dividend because the American troops stationed within the country's borders are purchasing substantial amounts of good and services. Some transportation firms, building suppliers, warehousing facilities and food companies have already started to see orders rise because of the troops. But experts say most Hungarian companies won't feel the full effect of the peace until the second half of 1996 or early 1997 when rebuilding starts in earnest. In the end, analysts expect companies ranging from the mighty gas company MOL Rt to small retailers on the Serbian border to benefit. "The peace process will add to Hungary's GDP in the second half of '96 and that increase will be substantial," predicted Istvan Racz, the economist at CS First Boston. The Ministry estimated by the end of this year trade with the former Yugoslavia should reach $250 to $270 million and jump to $350 million by 1997. However, the peace also presents a dilemma for Hungarian companies anxious for new customers. Some worry that despite the vast amount of aid that will pour in Bosnia and Croatia for rebuilding, some war-ravaged clients won't be able to pay their bills. Yet, if the Hungarian companies fail to extend credit they could lose the potentially good business in what is expected to be a fiercely competitive market place. "We want to get down there quickly..before the rush of companies," said Sandor Nagy, financial director of Graboplast, which makes floor and wall coverings as well as insulation. "But we're going to need pre-payment or at least partial payment." Added Pannonplast's Mr. Heczey, "Without some sort of a guarantee we won't ship anything there and that will be the main barrier to starting business relations." Still, most Hungarian businesses are upbeat about their prospects in the Balkans. Nagy was set to be one of a delegation of 100 Hungarian Chamber of Commerce members that was scheduled to visit Belgrade in early January. Belgrade officials requested representatives from about 20 companies but 100 members signed up for the trip. Mr. Nagy said he hoped to find a contract manufacturer during his visit. Ceramic tile maker Zalakeramia Rt is scouting for a factory in the former Yugoslavia, according to its chairman Gyorgy Katona. Mr. Katona said he will spend "several million deutsche marks" to refurbish a plant in the region because he believes local management and staff sales representatives are crucial to success in a new market. Previous experience with contract sales agents in other markets left a sour taste in his mouth. "I'd rather rely on my own network," said Mr. Katona. Meanwhile, Pannonplast has already re-established contact with its former sales agent in Belgrade and is seeking a representative in Macedonia. Production of plastic pipes and insulation sheets have already been increased both because of orders from the American troops and fears of not having enough inventory to meet any large, unexpected orders. Mr. Heczey said since orders from the troops are still rolling in it's not possible to value the new business. However, he said the war cost Pannonplast 100 million forints annually. Hungarocamion director of transportation Rudolf Forster refused to estimate how much the war cost his trucking concern. So far business is up about 3% because of shipping equipment for the American troops but there has also been a flurry of inquiries from various companies concerning transportation into Bosnia. Even if those inquiries don't translate into orders, Mr. Forster says Hungarocamion's outlook will improve because the end of the embargo means his trucks don't have to go across Romania and Bulgaria to get to Greece, Turkey, Syria and Iran. The longer route required three extra days and an additional 250 deutsche marks. About 15% of Hungarocamion business is derived from trips to Turkey, Syria and Iran. Mr. Forster contacted the ministry of transportation in Belgrade to introduce Hungarocamion to companies in Serbia that may need its services. All Express Shipping has taken a more aggressive approach. The company is setting up a staging area in Zagreb and has already purchased $50,000 worth of new equipment including a another truck and added five employees. "This (peace) represents a big opportunity for us," said Paul Szeman, AES country manager in Hungary. * * * Theresa Agovino <100324.1032@compuserve.com> is a freelance journalist in Budapest who writes for Business Central Europe and Business Eastern Europe, two divisions of The Economist Group. =========== FINAL BLURB The Hungary Report is free to readers. To subscribe, send an email message to the following Internet address: hungary-report-request@hungary.yak.net containing (in the body of the message, not in the headers) the single word subscribe Conversely, to stop receiving Hungary Report, simply send to the same address (in the body of the message) the single word unsubscribe Please note: all mailing lists suffer from frequent "error" addresses. If we have problems with sending to your address more than one week in a row, we will remove you from the list. If you haven't received the report for more than one week, feel free to inquire directly to Steven Carlson (but please wait for at least a week, as we're also just famously late in getting the thing out sometimes : ) * * * Back issues of The Hungary Report are available on the World-Wide Web http://www.isys.hu/hrep/ and via FTP ftp://ftp.isys.hu/pub/hrep/ * * * The entire contents of The Hungary Report are copyrighted by the authors. Permission is granted for not-for-profit, electronic redistribution and storage of the material. If readers redistribute any part of The Hungary Report by itself, PLEASE RESPECT AUTHORS' BY-LINES and copyright notices. Reprinting and resale of the material is strictly prohibited without explicit prior consent by the authors. Please contact the authors directly by email to inquire about resale rights. * * * For information on becoming a corporate sponsor of The Hungary Report, contact Steve Carlson by email. Feedback is welcome. Rick E. Bruner, Creator <74774.2442@compuserve.com> Steven Carlson, Publisher Jennifer C. Brown, Editor Tibor Vidos, Parliament Watch Attila Beno, Magyar Net Watch * * * For its briefs, The Hungary Report regularly consults the news sources listed below -- for information about subscriptions, contact them by email: The Budapest Business Journal <100263.213@compuserve.com> & Budapest Sun <100275.456@compuserve.com> Budapest Week <100324.141@compuserve.com> Central Europe Today (free online) , as well as most Hungarian-language media (e-mail addresses to come). ================= END TRANSMISSION