The Hungarian

economy
Relations with
Arab economies
Increase in
Exports

PROFILES INTERVIEWS INVESTMENTS OPPORTUNITIES MARCH | 2015

Arab Business Club 1

March 2015 Magazine
Inside
Report
04 Sound Investments in the
Heart of Europe

08 The Hungarian economy

10 On a growth path
13 European
forecast
Commission

Economy
15 Relations
economies
with Arab

16 Successful Arab-Hungarian
economic forum

Development
24 Budget Deficit Lower, GDP
Growth Higher

25 Industrial output growth

25 Increase in exports
28 New Budapest trams
Event
36 Europe’s best major fest

K&H mobile travel insurance

2 Arab Business Club for any case Arab Business Club 3
Magazine March 2015 March 2015 Magazine
 SOUND INVESTMENTS
IN THE HEART OF

EUROPE
O
ver the last fifteen years Hungary has become a popular target for foreign
direct capital investments (FDI). The country's central geographical location,
the presence of a high number of well-trained workforce and transparent
investment conditions, which are compliant with European Union regulations, are the
most important preconditions that have made it possible.

Favorable living conditions and the cultural values of Hungary are also appealing to
foreigners. The appearance of multinational companies has greatly contributed to the
modernization of the Hungarian economy, the maintenance of its dynamic growth, and
to preserving existing jobs and creating new jobs. The influx of FDI after 1995 has
significantly accelerated, facilitating the steady growth of the Hungarian economy.
Since the change of the political system the volume of foreign direct capital investments
in Hungary has reached 53 billion Euros by the end of 2005. The per capita active
capital continues to be the highest in Hungary in the East-Central European region.
The biggest part of foreign direct capital investments was made into the competitive
processing industry (automotive industry, electric machinery production, chemical
industry) and into the service industry.

4 Arab Business Club Arab Business Club 5

Magazine March 2015 March 2015 Magazine
IN THE HEART
The Republic of Hungary is a medium-sized country joining the community of Western democracies:
with ten million inhabitants, scarce resources, and NATO and the European Union in 1999 and 2004,
looking back on a thousand years of statehood. respectively.
The Hungarians—whose closest relatives in Hungarian foreign policy objectives still remain to
Europe are the Finns and the Estonians—are date: serve the peace, security and welfare of the

OF EUROPE
renowned for their resourcefulness, creativity, nation, foster the success of European integration,
and pride themselves on their hospitality and and good relations with neighboring countries.
openness—values that are also embedded in the Hungary maintains a balanced political, economic
role that Hungary plays in the international arena. and cultural relationship with its neighbors,
At the end of 1980’s the communist regime in where the bonds are partly the common goals and
Hungary collapsed swiftly and without bloodshed. interests of today and tomorrow, and partly the
At the beginning of the 1990’s the country common experience of the past as well. Hungary
successfully created a well-functioning democracy has seven neighbors among European countries.
and market economy. Hungary is committed to the development of
The change of the political regime entailed a democracy and market economy of its Southern
change of values. Hungarian foreign policy also and Eastern non-EU member neighbors, and
underwent fundamental changes, particularly in supports their Euroatlantic integration.

6 Arab Business Club Arab Business Club 7

Magazine March 2015 March 2015 Magazine
THE HUNGARIAN
ECONOMY
T he economy of Hungary is an upper-middle-income,
structurally-, politically- and institutionally-open
economy in Central Europe and is part of the EU’s
single market. The economy of Hungary experienced
common European currency, the Euro. To achieve this,
Hungary would need to fulfill the Maastricht criteria.
In foreign investments, Hungary has seen a shift from
lower-value textile and food industry to investment in
market liberalization in the early 1990s as part of the luxury vehicle production, renewable energy systems,
transition from a socialist economy to a market economy, high-end tourism, and information technology.
similarly to most countries in the former Eastern Bloc. In 2012, Hungary’s main export partners are Germany
Hungary is also a member of the Organization for (25.6%), Romania (6.2%), Slovakia (6.1%), Austria (6.0%),
Economic Cooperation and Development (OECD) since Italy (4.8%), France (4.8%), and the United Kingdom
1995, and a member of the World Trade Organization (4.2%).
(WTO) since 1996. The country hosts the first foreign Its main import partners are Germany (25.1%), Russia
office of the China Investment Promotion Agency (CIPA). (8.8%), China (7.4%), Austria (7.1%), Slovakia (5.6%),
The private sector accounts for more than 80 percent of Poland (4.8%), Italy (4.5%), and Netherlands (4.2%).
the Hungarian gross domestic product (GDP). Foreign Imported goods comprise of machinery and equipment
ownership of and investment in Hungarian firms are (45.4%), other manufactures (34.3%), fuels and electricity
widespread, with cumulative foreign direct investment (12.6%), food products (5.3%), and raw materials (2.5%).
worth more than $70 billion. The turn of the millennium saw the emergence of a new
Hungary’s main industries are mining, metallurgy, phenomenon in some of the Central and Eastern European
construction materials, processed foods, textiles, chemicals countries: besides capital import, which remained the
(especially pharmaceuticals), and motor vehicles. decisive kind of investment, capital export has also
Hungary’s main agricultural products are wheat, corn, appeared. In this respect Hungary has a leading role in
sunflower seed, potatoes, sugar beets; pigs, cattle, poultry, the region: Hungarian capital investment abroad has
and dairy products. by now exceeded 6 billion dollars, concentrated
The currency of Hungary is called “forint” ( s i g n : mainly in the East- and South-East
Ft; code: HUF) which was introduced E u r o p e a n region.
i n 1 9 4 6 . Hungary, as a
member
state of the EU
may seek to
adopt
the

8 Arab Business Club Arab Business Club 9

Magazine March 2015 March 2015 Magazine
 I
t is only the first two months of 2015 but al- medium-term economic growth.
ready there is positive news on Hungary, at least According to the analysis, results of the Government’s
according to official government sources. Fresh economic policy measures are becoming visible:
jobs data reveal “the number of people in employ- investment volume is higher, the utilization of EU

On a
ment is up by some 200,000 year-on-year,” the econo- funding has improved and consumption has also
increased. Exports continue to be competitive and
my ministry boasted. the sector has remained a major economic engine.
Meanwhile, Gyorgy Matolcsy, governor of the central The credit rating agency is prognosticating that over
bank, has been busy lobbying for an upgrade of the the next three years Hungarian GDP growth is set to
country’s credit ratings. Matolcsy said Hungary is average 2.2 percent annually.
currently on a “stable and predictable path as a result At the beginning of November 2014, Moody’s
of the changes in economic policy implemented (in upwardly revised Hungary’s rating outlook from
large part by himself as then economy minister) negative to stable as the Government had been
since 2010, the year the Fidesz government of prime

GROWTH
successful in curbing state debt and igniting economic
minister Viktor Orban regained the reins of power. growth.
The government had succeeded in putting the national The Ministry for National Economy is firmly
economy on a growth path and it was committed to convinced that credit rating agencies will in their next
maintaining this trend in 2015. rating decisions take into account the growth potential

PATH
Bence Tuzson, spokesman of ruling FIDESZ’s of the Hungarian economy. Market participants have
parliamentary group, said that a total of 12,000 billion been reacting in a positive way to the favorable trends
forints (EUR 38.5bn) in European Union funds would
regarding Hungarian economic indicators and credit
be available to Hungary in the next seven years, and rating agencies must follow suit.
those funds, together with the country’s performance,
could ensure that the economy stays on a growth path
and total employment is achieved by 2018.
Hungary’s growth last year (2014) was seen at
around 3.1 percent, the highest ratio in the past eight
years. Tuzson said that the public finance deficit
for 2014 was seen between 2.5 to 2.9 percent, which
necessitates that a strict fiscal policy is maintained
to meet the deficit target. He added that real wages
had increased by two to 2.5 percent, a trend that the
government wants to maintain through a wage hike
program.
Moody’s positive view
In its annual country report, Moody’s Investors
Service formulates a positive view on Hungary’s

10 Arab Business Club Arab Business Club 11

Magazine March 2015 March 2015 Magazine
 “in 2015-16, the Hungarian
economy will continue to
grow, and the growth figure
for 2014-15 will again be
well above the European
average.”

European
Commission
forecast
Moody’s positive view I “The greatest achievement of the Hungarian
n its winter economic forecast, the European
Commission acknowledged that the Hungarian economic policy is still the ability to keep the
economic model works, minister of state for gov- budget deficit below 3 percent. The deficit may
ernment communications András Giró-Szász said. decrease to 2.5 percent this year, which is a more
In its annual country report, Moody’s Investors At the beginning of November 2014, Moody’s He recalled that the EC had repeatedly forecasted
Service formulates a positive view on Hungary’s upwardly revised Hungary’s rating outlook from favorable forecast than that of last year,” he added.
lower growth rates for Hungary. However, this year’s
medium-term economic growth. negative to stable as the Government had been figures prove that “the Hungarian economy is on a As for the continuously decreasing ratio of foreign
According to the analysis, results of the successful in curbing state debt and igniting growth path for the long run.” exchange denominated debt, it was considered
Government’s economic policy measures are economic growth. as a positive trend by the Minister of State. This
becoming visible: investment volume is higher, The Ministry for National Economy is firmly Giró-Szász pointed out that “in 2015-16, the
the utilization of EU funding has improved and convinced that credit rating agencies will in their Hungarian economy will continue to grow, and contributes to the further reduction of sovereign
consumption has also increased. Exports continue next rating decisions take into account the growth the growth figure for 2014-15 will again be well debt and country risks related to exchange rate
to be competitive and the sector has remained a potential of the Hungarian economy. Market above the European average.” He underlined that changes, he said. According to his briefing, the
major economic engine. The credit rating agency participants have been reacting in a positive way FX-ratio of the Hungarian sovereign debt at the
is prognosticating that over the next three years to the favorable trends regarding Hungarian according to the forecast, the sovereign debt of
Hungarian GDP growth is set to average 2.2 economic indicators and credit rating agencies Hungary will be over 10 percent lower than the end of 2010 was 47 percent, at the end of 2013 42
percent annually. must follow suit. EU-average. percent and “it will decrease further” by the end
of 2015.

12 Arab Business Club Arab Business Club 13

Magazine March 2015 March 2015 Magazine
ASIA-PACIFIC RELATIONS
WITH ARAB

COOPERATION
ECONOMIES
N
ew opportunities with the Gulf countries
are opening up in the context of their
modernization efforts and in the field of
cooperation in cutting edge technology. Hungary’s

E
traditional relations with the Arabic countries of
urope is also aware of the fact that the world politically and economically. Hungary, as a party
is undergoing transformation. Part of this
the South Mediterranean region—built up in the
to EU Common Foreign and Security Policy,
transformation is the increasing importance of has been a participant of the so-called ASEM
last decades—are expanding in new fields, such
the Asia-Pacific Region in world economy and world (Asia-Europe Meeting) process from 2005. This as tourism. Hungary is an active participant of
politics. Hungary also pays ever greater attention to the Barcelona Process, the Euro-Mediterranean
process is an institutional dialogue between the
its relationships with the Asian and Pacific countries.
The aim of the Hungarian-Asia policy is to develop EU and ASEAN dealing with the comprehensive dialogue representing intercultural understanding
and expand cooperation with those Asian and issues, and economic, social, security political between the EU and the region.
Pacific countries that are open to cooperation both challenges of Asia.

asem-
asia- europe meeting to
address global challenges

14 Arab Business Club Arab Business Club 15

Magazine March 2015 March 2015 Magazine
 through which Hungary intends to strengthen its target country for Arab businessmen. Orban, on
business relations with the other hand, said there is plenty of untapped
China, India, Russia, and the Arab world. This was potential in the business relations of the two countries
the first summit of such scale with Arab investors in and that business efforts of the private sector enjoy
East-Central Europe. About 90 Hungarian projects the full support of the Saudi government. Dr. Áron
were presented to the Arab investors during the Márk Lenner, Deputy State Secretary of the Ministry
discussions that were organized around the following for National Economy provided a comprehensive
main themes: banking and finance, green energies overview of the Hungarian-Arab economic relations,
and renewable energy sources, tourism, agriculture specifically mentioning MEHIB (Hungarian Export

Successful Arab-Hungarian
and food industry, life sciences and information Credit Insurance Pte Ltd.) and EXIM Bank in addition
technology. The said projects have the potential to HITA as facilitators. He expressed during the
to attract a total investment of 1.97 billion Euros to Forum that keys are trust, finding the right business

economic forum Hungary.

Over 150 bilateral business negotiations were
partner and exploring opportunities correctly.

M Hungary’s main attractions

iddle East countries consider the EU The momentous two-day event was opened by Prime conducted by Arab and Hungarian participants during
countries their natural neighbors and Minister Viktor Orbán, State Secretary for Foreign the Forum. Erzsébet Dobos, the President of HITA
believe that tourism-related economic Affairs and Foreign Economy Péter Szijjártó and emphasized that the Agency is a business partner both for foreign investors are the
problems can be solved by cooperation and by Chairman of the General Union of Arab Chambers in the areas of business development and investment
formulating common strategies. Adnan Kassar and was attended by around 200 promotion, and offers wide-ranging, complex services highly skilled, hardworking,
to foreign and domestic companies. She underlined
The first Arab-Hungarian Economic Forum,
organized by HITA (Hungarian Investment and Trade
businessmen from 16 Arab countries and about the
same number of Hungarian businesspeople. that Hungary’s main attractions for foreign investors flexible workforce and
Agency) and the General Union of Arab Chambers
(GUCCIAAC), successfully concluded on November
The exploration of such new markets and regions is
highly important for the Hungarian economy, which
are the highly skilled, hardworking, flexible workforce
and the excellent innovation potential especially in
the excellent innovation
2012. Participating countries were Algeria, Bahrain, through closer cooperation can support Hungary’s the field of technology transfer. potential especially in the
United Arab Emirates, Egypt, Iraq, Lebanon, Libya, sustained growth of exports at a high rate and of the Dr. Abdulrahman A. Al-Turwaijri, head of the Saudi
Yemen, Jordan, Qatar, Kuwait, Palestinian National foreign trade surplus. “Opening to the East” is an delegation underlined that Hungary is a promising field of technology transfer.
Authority, Saudi Arabia, Syria, Sudan, and Tunisia. integral part of the new foreign economic strategy,

16 Arab Business Club Arab Business Club 17

Magazine March 2015 March 2015 Magazine
 On banking and
finance
Delegate officials emphasized the importance of banking relationships
citing the principal task of companies to identify concrete business
opportunities. The examples given by Arab speakers included
investment opportunities in the Hungarian processing industry and
tourism. The representatives of EximBank emphasized that their
product portfolio includes domestic and foreign investment and
export financing facilities, and how they can provide financing even
for foreign importers.

On green industries
Second and renewable
Hungarian-Arab confab energies
T
he 2nd Hungarian-Arab Business Forum was Union of Chambers of Commerce, Industry and
held in Riyadh, Kingdom of Saudi Arabia from Agriculture for Arab Countries (GUCCIAAC) and
23-25 of March 2014, in which 94 Hungarian with the Saudi partner about the establishment of the
companies were represented by 128 businessmen. Saudi-Hungarian Trading House.
Present during the significant gathering were Prime
Minister Viktor Orbán and H.E. Mokrin bin Abdel Issues on the renewable energy sector and energy security were thoroughly discussed
Aziz, Saudi prince and Second Deputy Prime Minister during the Forum. István Bakács, President of the Scientific Association of Energy
who spoke highly of the further cooperation between Management said that energy is an investment sensitive sector that is essentially
Hungary and Arab world. determined by the efforts to ensure the security of energy supply and to fight off the
Péter Szijjártó, State Secretary for Foreign Affairs negative effects of climate change.
and External Economic Relations, emphasized that
The need to find sustainable, clean and economical energy solutions is a common
in 2003 the trade volume between Hungary and the
Arab world was USD800 million, whereas it currently challenge for Hungary and the Arab countries.
exceeds USD2.5 billion. Hungary’s energy policy focuses on are the exploitation of biomass and geothermal
More than 500 businessmen, politicians, diplomats energy, reflecting local characteristics. At the same time, the potentials of solar energy
and directors of Chambers took part where Hungarian are increasingly exploited, and this is an area Hungary can exchange experience and
companies had signed several trade agreements. The cooperate with Arab countries.
HNTH Cls. signed an agreement with the General

18 Arab Business Club Arab Business Club 19

Magazine March 2015 March 2015 Magazine
On agriculture and
food industry

On Life
sciences
F
ood industry is of particular importance for
Lebanon, and the sector has long traditions
in the country, said Vrej Sabounjian,
Lebanon’s Minister of Industry. Lebanon’s thriving
Attila Csányi, CEO of the Bonafarm Group
presented his business, which is unique in Hungary
in that it is operated as a family business but uses a
professional, Western-style management system
and ict
D
food processing industry is further strengthened for production, integrating the entire agricultural r. György Kerekes, head of division at the graduation of hundreds of Arab students
by services, the scientific life and the logistics chain from grain production to manufacturing Századvég Gazdaságkutató noted HITA in Hungary. Another area of cooperation is
background. processed food. Over 200 families earn their has already organized two events in the the development of IT systems for hospitals,
Gyula Budai, State Secretary of the Ministry of living in the Group’s integration system through Arab countries in this sector (Arab Health and an activity that requires complex knowledge
Rural Development emphasized that Hungary contract production. The Group already has the Gulf Information Technology Exhibition) of the healthcare industry and ICT. Several
is open to cooperation in the areas of poultry-, working business relationships with the Middle this year which generated major interest Arab countries have expressed their interest
cattle- and sheep-farming, forestry (technologies East in Lebanon and Saudi Arabia, but they plan among Hungarian companies. in the existing Hungarian knowledge and
against desertification), water technologies and further expansions. Miklós Szócska, State Secretary of Health, professional experience in this area.
the related education and scientific fields. who recently returned from his visit in Saudi Zoubeir Chaieb, Chairman of Advanced
Dr. Haitham Al-Jaffan, President of the Arab Arabia, focused on the provision of clinical e-Technologies, Tunisia, who had also
Federation for Food Industries, a 7,500-member medical treatment as an area for potential graduated in Hungary, underlined that plenty
organization founded in 1976, emphasized that cooperation. The insertion of surgical of know-how are based on the knowledge
the sector was able to grow even during the implants, developed and manufactured in of Hungarian engineers, which could be
world economic crisis (the global growth was 5.1 Hungary, is an excellent example of cutting successfully exported to the Arab countries.
percent). The food imports of Arab countries edge technology and of establishing successful Sándor Kürti, CEO of Kürt Zrt. has his own
are forecast to rise to USD60 billion by 2020. relationships in business and healthcare company in the United Arab Emirates. Mr.
Significant increase in demand is expected, which tourism. Kürti shared his personal regional experiences
will lead to higher prices. Al-Jaffan believes that Arab-Hungarian relations can be built with Forum delegates citing the encouraging
Arab countries and Hungary have good potential on a strong foundation, particularly the developments in Hungary’s healthcare
for cooperation in the food industry, which can decades of cooperation between these two industry and ICT sector.
be greatly expanded into both directions. countries in higher education, leading to
20 Arab Business Club Arab Business Club 21
Magazine March 2015 March 2015 Magazine
 Optimistic on
economic prospects
More Hungarians believe the country’s economy has
improved, but their number is still under the average
in international comparison, a survey by Ipsos shows.
The percentage of Hungarians who believe the
economy is on the right track rose to 18 percent last
year from 11 percent in 2013 and just 5 percent in 2012.
The percentage was still the fifth lowest among the 25
countries surveyed. Only South Koreans, the French,
the Spanish and the Italians were more pessimistic.

Posting significant
On trade surplus
tourism
I EU countries as well both with respect to
n the tourism section of the Forum, Hungary was
represented by Government Commissioner Dr. incomes and employment. The Hungarian
Balázs Fürjes and Gergely Horváth, Deputy CEO party drew attention to excellent investment
of Magyar Turizmus Zrt., while the Arab partners opportunities in the hotel industry and to
were represented by Saeb Nahas, CEO of the Nahas attractions such as Budapest, its thermal
Enterprises Group, Syria, and Rajab waters, fashion, high quality services, hunting
Elloumi, co-founder of the Tunisian and conference tourism, while the Arab
African Trade Development partners emphasized the heritage of their
Association. 2000 years of history, and attractions such
Tourism represents 5 percent as sunshine and the diversified natural
of global GDP, therefore, it environment including seas and
is obviously a priority area deserts.
for the Arab world and the

Hungary posted a trade surplus in November by 5 percent, faster than in euros. The January-
2014 of 843.1 million euros, the Central Statistical November trade surplus was also revised slightly
Office (KSH) said in a second reading of data. The up to 6.177 billion euros. Exports increased by 3.5
surplus was raised from 831.8 million euros in the percent to 78.032 billion euros. Imports were up
first reading released on January 9. Exports rose 4.0 percent at 71.855 billion euros. Eleven month
by 3.1percent to 7.616 billion euros while imports exports rose by 6.7 percent in volume terms and
were up 2.1percent at 6.773 billion euros. imports rose by 8.2 percent, also at a quicker pace
In volume terms, both exports and imports rose than euro-term trade.
22 Arab Business Club Arab Business Club 23
Magazine March 2015 March 2015 Magazine
 Industrial output growth
Output of Hungary’s industrial sector grew by
a year-on-year 4.6 percent in December 2014,
according to workday-adjusted figures gathered
“This year’s budget deficit by the Central Statistics Office (KSH). Industrial
will be lower than previously output was up by 7.6 percent for the whole year.
expected, at 2.6 to 2.7 percent KSH head of department Miklós Schindele said that
vehicle manufacturing output growth was lower
of GDP,” in December than in previous months and that
the output in the sector rose by approximately 10
percent as compared to approximately 20 percent
in earlier months.
According to preliminary data also released by
KSH on January 8, industrial output in November
2014 rose a working-day adjusted 5.8percent
over the same month last year, representing an
improvement compared to the subdued 1.7 percent
increase observed in October. November was the
best reading in four months. The reading exceeded

Budget Deficit Lower, GDP Growth market expectations of a 2.5 percent increase and
marked the 18th consecutive expansion.

Higher
Moreover, forecast panelists expect industrial
production to grow 5.4 percent in 2015, which is
unchanged from last month’s projection. For 2016,
“This year’s budget deficit will be lower than approach should be avoided. “If the situation
the panel expects industrial output to expand 5.7
previously expected, at 2.6 to 2.7 percent of in financial markets is favorable and it is worth
percent.
GDP,” Economy Minister Mihály Varga said in an for Hungary to replace long-term, high-interest
interview published in daily Magyar Hírlap. As securities with the involvement of an FX bond
for the economic growth, it has been higher than
expected this year and this helped the development
of central revenues.
issue, then we will do it,” he added.
Commenting on the bank tax, Varga said “the
government is ready to develop a system in
Increase in exports Hungary’s exports increased in December,
“As a result, the central budget is expected to which current burdens are reduced in exchange growing 9.2 percent year-on-year, while
close with a surplus in December, like it did in for crediting.” Asked whether a new agreement is imports grew 7.8 percent in the same
September, October and November,” Varga said. planned between the government and banks, he period improving from the lackluster
third quarter (2014) figures, according to
He confirmed that there are no plans to issue said “it is time to think about a new framework
the Central Statistics Office (KSH).
FX bonds next year but added that a dogmatic and start the preparation of new agreements.” KSH raised December’s surplus to €322.1
mln, up €97 mln from the same month a

Investor awards
Last week Mihály Varga presented the regular has invested HUF 6bn and created 200 new jobs.
year earlier. Based on the first estimates,
exports reached €6.4 bln, while imports
were at €6.1 bln for the month of December.
KSH also revised the value of exports for
monthly awards for successful enterprises at a With awarding the “SME of the Month” title to the January-December period, raising
ceremony held in the building of the Ministry Hidrofilt Vízkezelést Tervező és Kivitelező Ltd, the figure by 3.9 percent to €84.5 billion,
for National Economy in Budapest. Winner of the jury acknowledged high quality production while imports were up 4.3 percent to €78.0
the “Investor of the Month” award was Nemak through innovative technology, the minister said billion. The balance of the trade surplus
Győr Alumíniumöntöde Ltd, a manufacturer and and added that the enterprise has become one of was €56 million less than during the period
developer of top-tech aluminum cylinder heads and the largest waste water-treatment companies in of January–December 2013
engine blocks. Over the past years, the company Central Europe.
24 Arab Business Club Arab Business Club 25
Magazine March 2015 March 2015 Magazine
CRUDE OIL
PIPELINE
L
ast February 9, the prime ministers of Slovakia
Canadian
firm expands
and Hungary inaugurated a revamped section
of the Friendship I crude oil pipeline which
will enable Hungarian oil and gas company MOL

production
to meet the oil needs of its Bratislava Refinery from
the Adriatic.
Both Robert Fico and Viktor Orbán called the
investment “extremely significant and (the pipeline)
would increase energy security.”

C
Speaking at the Slovakian Transpetrol’s pumping
station located in Tupá (Kistompa) near the Slovak- anadian-owned Linamar Corporation, a pro- if the European-Canadian economic and trade
Hungarian border, Orbán said the renewed pipeline ducer specializing in agricultural machinery agreement is ratified next year. The agreement
between Százhalombatta, just south of Budapest, and car parts, has extended its production could facilitate a 20 percent increase in bilateral
and Sahy (Ipolyság) was “exceptionally important hall in the town of Orosháza, in southeast Hungary, trade and contribute an annual growth of 11.6
not only in terms of the energy security of Hungary using a budget of 5 billion forints (EUR 16m). billion euros in the European economy.
and Slovakia but from the point of view of the whole Linamar Corporation employs more than 2,000 As far as the 2014-2020 EU fiscal period is
region.” people and through some 1,500 Hungarian concerned, the Minister pointed out that the
As part of the 80 million dollar joint investment by suppliers, it has generated several thousands of Hungarian government is determined to maintain
MOL and Transpetrol, the 128 kilometer section was other jobs. the momentum Hungary’s economy has achieved
replaced in just under a year, lifting capacity from The new facility, which will produce agricultural in 2014. Varga also said that EU funds in the
an annual 3.5 million tons to 6 million tons. Orbán “exceptionally important not machinery and car industry components, was current budgeting cycle could facilitate “the largest
added that “cheap energy” was also important. In ceremonially opened by economy minister Mihály program of all times” to boost the Hungarian
only in terms of the energy Varga and Canada’s Ambassador to Hungary Lisa economy. Varga noted that the cohesion funding,
the competition to obtain cheap energy, Europe is
“stuck at the starting line,” and in order to preserve security of Hungary and Helfand. The expansion effort is expected to together with co-financing from the central
and nurture competitiveness a quick decision at the provide 150 new jobs in the region. budget, would amount to 12,000 billion forints
Slovakia but from the point Helfand said that bilateral ties between her country (EUR 39bn).
level of the EU will be necessary, he said.
of view of the whole region.” and Hungary could even be made more closer

26 Arab Business Club Arab Business Club 27

Magazine March 2015 March 2015 Magazine
NEW
BUDAPEST
TRAMS
The first and new Spanish-made CAF even longer than the Combino trams
tram is scheduled to arrive to Budapest currently running on lines 4 and 6, will
in March 2015, according to the Centre run on route 1.
for Budapest Transport (BKK).
The shorter, 34-meter variety of the tram
will run on the redeveloped line 3 on the
outskirts of Pest and the interconnected
network of tram lines in Buda, which
will be established in several phases.
The 56-meter variety, which is to be

28 Arab Business Club Arab Business Club 29

Magazine March 2015 March 2015 Magazine
 UNRESTRICTED
USAGE OF AIR SPACE
HungaroControl, the company responsible The “free route” concept has already been
for controlling aircraft above Hungary, has introduced in several European countries such
become the first in Europe to abolish the as Portugal or Ireland, albeit with restrictions
entire network of air routes, thus enabling in time or territory, HungaroControl said. The
unrestricted and free usage of air space. concept developed by the company provides
The new air traffic control concept, which took much greater freedom of movement in the
effect on February 2015 aims to enable aircraft air space above Hungary, which will have its
to take the shortest possible route above advantages also for the air navigation system,
Hungary between entrance and exit points. thus indirectly contributing to air safety above
Experts say that this could lead to aircraft Hungarian territory.
travelling above Hungary saving a total of 1.5

A BOOST IN
million kilometers in air routes—resulting in
USD3 million less in fuel cost expenditures
for carriers and a carbon emission cut of over

THE TELECOM 16 million kilograms.

SECTOR RURAL DEVELOPMENT PROGRAM

MEETS EC STANDARDS

T
he information, media and mobile subscribers exceeded 450,000 last year
entertainment market in Hungary, as and it had more than 920,000 TV subscribers, For the period 2014-2020 and similar to other EU
well as the integration of fixed line of whom about 450,000 had interactive TV, he member states, Hungary will allocate 5 percent
and mobile networks could be the future of added. Magyar Telekom, a unit of Germany’s of the available rural development funds to its
rural development program. This is aimed to
the telecommunications business. Magyar Deutsche Telekom, supports the government’s
appropriate the largest possible proportion of
Telekom CEO Christopher Mattheisen said aim to bring broadband internet to all the EU rural development subsidies for rural job
the expansion of mobile data transfer, fuelled Hungarian households by 2018, two years before creation, rural investments and for improving the
by video and sharing could be the engine of the deadline in the Digital Agenda for Europe, competitiveness of the Hungarian rural areas.
growth for the sector. More than just handsets Mattheisen said. Magyar Telekom considers Almost 1.5 million hectares of the Hungarian
agricultural area are drought-sensitive and
will connect to mobile networks in the future, the establishment of a regulatory environment
currently approximately 250-300 thousand
he added, citing the examples of wearables and that provides incentives for investment, is hectares are suitable for irrigation. However, only
cars. predictable and ensures equitable conditions one third of this area is actually being irrigated by
Telekom’s 4G network coverage has risen to for market players of prime importance, he the farmers. In terms of size of irrigated areas,
about 80 percent of the population in Hungary said. This would support an improvement in the Hungary is second-to-last among the EU countries.
since it acquired spectrum in a frequency tender country’s competitiveness, spur investments
last year, he said. The company’s number of 4G and create jobs, he added.

30 Arab Business Club Arab Business Club 31

Magazine March 2015 March 2015 Magazine
FULFILLING
ENERGY DEMANDS
CLIMB OF CAR
ENERGIAKLUB, a Budapest-based think tank
and climate policy institute, said Hungary’s
EnergyPLAN software.
According to ENERGIAKLUB’s calculations,
MARKET SALES
electricity network will fulfill energy demands the use of renewable energy should be
in 2030 even without the planned expansion encouraged, energy consumption rationalized
of blocks at the Paks nuclear power plant. and energy-efficient development projects are
Director Ada Amon told a recent press needed instead of building new energy blocks.
conference that based on an alternative energy
model developed by the institute, the mega-
investment project need not be carried out.
As against a centralized system based on
conventional energy and large power stations,
the decentralized energy model is more
flexible and places the primary emphasis
on local, renewable energy, she added. The
decentralized model also helps employment
because it involves the creation of new jobs
throughout the country instead of specific
locations, she added. The model has been
developed with the help of the Danish

CHALLENGES OF THE
CONSTRUCTION INDUSTRY
The Hungarian Construction Industry he considered next year’s outlook far more
Association (ÉVOSZ) expects the sector’s uncertain and noted the absence of private
output to have grown an annual 15 percent investors from the building construction
in 2014, due primarily to infrastructural segment.
investments, Tibor Tolnay, head of the Citing official statistics, Tolnay said Hungary’s
association, said. At the same time, he said industry’s output rose 10 percent from a year Hungary’s car market continues to Sales of light commercial vehicles climbed
earlier to 1,774 billion forints (EUR 5.6bn) in recover as sales of new passenger vehicles 32 percent to 1,986. Sales of buses also
2013, though this still remained well behind in Hungary rose 21 percent to 6,093 in rose by 27 percent to 123 and sales of
pre-crisis levels. He attributed this year’s two- December 2014 from the same month a motorcycles were down 33 percent at
digit output growth to the acceleration of year earlier, according to the Hungarian 37, MGE said. This year, new passenger
disbursements of European Union funding Association of Vehicle Importers (MGE). car sales are expected to rise by more
with the end of the last EU budget period, which
Dynamics Skoda led sales of passenger than 15 percent to 75,000, it said. Sales
generated more construction work. Most of
cars in December, invoicing 785 models. of LCVs are set to increase 6 percent to
this is related to infrastructural investments
Runners-up were Ford, selling 728 cars, 17,000 while sales of HCVs fall 7 percent
including road and railway construction and
utilities development projects, he noted.
and Opel in third place with 637 sales. to 4,500.

32 Arab Business Club Arab Business Club 33

Magazine March 2015 March 2015 Magazine
 EUROPE’S BEST
IMPROVEMENT HOTEL IS IN
IN JOBS Budapest
GENERATION

employment age—decreased by 1.9

Concerning per cent to 6.2 per cent; in the case
employment, of people between the ages of 55 and 64, a 1.7
Bence Tuzson, spokesman of per cent decrease was observed and the jobless Budapest’s zhas been voted the world’s fourth hotel, while the title for boutique hotels went
ruling FIDESZ’s parliamentary rate is now 6 per cent. best hotel. It was also found to be the best to Baltazár, which opened in Buda’s castle
group, said that while 3.8 million people had Commenting on the figures, ING senior analyst
jobs in 2010, as many as 4.2 million people are European contender, with guests reporting district in the summer of 2013.
András Balatoni pointed out that while the
currently employed. “Unemployment in Hungary extension of the public works program continues
excellent service standards, top-notch rooms
had decreased at the fastest rate compared to to decrease unemployment, demand for workforce and an ideal location. With its impressive
other European Union members,” he added. on the primary labor market is growing and the results, the Gresham beat prestigious rivals
Meanwhile, KSH reported that in September- gradual phasing-out of the public works scheme
November 2014, the number of those out of such as the opulent Mandarin Oriental in
should therefore be begun. Shanghai and the historic The Milestone
employment fell by 83,000 to 321,000 compared The report comes after the adoption of the 2015
to the same period of the previous year. This is budget which encourages those capable of work Hotel in London on the list of TripAdvisor
equal to a decrease in the unemployment rate of to find employment instead of relying on state users’ favorite hotels in 2015.
two per cent which is now at 7.2 per cent. handouts and those genuinely unable to work
The unemployment rate among those between
Interestingly enough, the five-star Gresham
will continue to receive state support. Palace, on Széchenyi István tér opposite the
the ages of 25 and 54—the so-called best
Pest bridgehead of the Chain Bridge, only
QUALITY TRADEMARK FOR YOUTH came twenty-sixth on the list of the world’s
best hotels two years ago. And why are its
HOSTELS guests so fond of it? “This is what a magical
Hungary’s National Economy Ministry, which is in charge basic and supplemental services as well as the hostel’s hotel is supposed to be! The rooms, staff,
of tourism, is planning to introduce a quality trademark level of comfort. location…all perfection,” one satisfied visitor
system for youth hostels, the Hungarian Youth Hostel wrote on TripAdvisor’s website.
Association (MISZSZ) said on Friday. The association, Gili Lankafushi Maldives, a holiday paradise
the National Economy Ministry and state-owned tourism on pales overlooking the turqouise waters
agency Magyar Turizmus will present the advantages of of the Indian Ocean surrounding the tiny
the system during a nationwide road show to be held island nation, came first in the list, making
between February and April this year.
it the year’s finest hotel. Unsurprisingly, the
The trademarks would be awarded based on a review of
Gresham was named Hungary’s best large
34 Arab Business Club Arab Business Club 35
Magazine March 2015 March 2015 Magazine
EUROPE’S
Following its victory in 2011, Sziget Tomorrowland, Rock Werchter or
has again been voted Europe’s best Rock am Ring.
major European festival at a contest The European Festival Awards were
held by European Festival Awards. initiated in 2010 by the European
The winner was announced late on festival association Yourope and the
February 4 in Groningen, the festival website Virtual Festivals

BEST MAJOR
Netherlands. Sziget was Europe. The awards have
among the finalists in as been presented on an
many as three categories, annual basis during
finally coming first in the European Music

FEST
the category of best Conference and
major European Showcase Festival
festival, as in 2012, Eurosonic Noordeslag
overtaking festivals in the Dutch city of
such as Roskilde, Groningen ever since.

36 Arab Business Club Arab Business Club 37

Magazine March 2015 March 2015 Magazine
13th most visited
tourist destination
There is a long history of tourism in Hungary, River embankments and the whole of Andrássy
and Hungary was the world’s thirteenth Avenue have been recognized as an UNESCO
most visited tourist destination country in World Heritage Site.
2002. Tourism increased by nearly 7 percent
between 2004 and 2005. European visitors
comprise more than 98 percent of Hungary’s
tourists. Austria, Germany, and Slovakia make
the largest numbers of visitors to the country.
Most tourists arrive by car and stay for a short
period of time. Hungary’s tourist season is
from April through October. July and August
are the peak tourist months.
Budapest is the country’s most popular tourist
destination since the 1990s. Attractions in
the city include Buda Castle which houses
several museums including the Hungarian
National Gallery, the Matthias Church, the
Parliament Building and the City Park. The
city has many museums, three opera houses,
and thermal baths. Buda Castle, the Danube
38 Arab Business Club Arab Business Club 39
Magazine March 2015 March 2015 Magazine
 Budapest
caves
Thermal springs
abound
Hungary has an estimated 1,300 thermal More than 30,000 cubic meters of warm to
springs, a third of which are used at spas scalding (21° to 76°C) mineral water gushes
across the country. Hungary’s thermal waters from 118 thermal springs and supply the city’s
and spa culture are promoted to tourists. Only thermal baths. Budapest has been a popular
France, Japan, Serbia, Iceland, and Italy have spa destination since Roman times. Some of
similar thermal water capacity. Hungary’s the city’s baths date back from the Turkish
thermal baths have been used for 2,000 years times while others are now built with modern
for cleansing, relaxation and easing aches facilities which include steam rooms that There are two hundred known caves under
and pains. The Romans were the first to use utilize the healing properties of the springs. Budapest, some of which can be visited by
Hungary’s thermal waters in the first century, Most of the baths offer medical treatments,
when they built baths on the banks of the massages, and pedicures. The most famous of tourists and are a popular tourist attraction. In
Danube River. Budapest lies on a geological Budapest’s spas were built at the turn of the the Buda hills there are caves that are unique
fault that separates the Buda hills from plains. 19th century. for having been formed by thermal waters rising
up from below, rather than by rainwater. The
Pálvölgy Stalactite Cave is a large and spectacular
labyrinth. Discovered in the 1900s, it is the
largest of the cave systems in the Buda hills.
The Szemlohegy Cave has no stalactites and has
fewer convoluted and claustrophobic passages
than the Pálvölgy Cave. The walls in this cave
are encrusted with precipitates formed by warm
water dissolving mineral salts. The air in the
cave is very clean and its lowest level is used as a
respiratory sanatorium. The Matyas Cave in the
outskirts of the city has a crawling-room-only
section called the “sandwich of death.”

40 Arab Business Club Arab Business Club 41

Magazine March 2015 March 2015 Magazine
 Sound investment
liked to the world
T
he Hungarian economy is linked to the world exports can be characterized by the pre-
through foreign trade. The development of dominance of the industrial goods, particularly
the Hungarian economy, which is considered that of the machine industry.
The ratio of machines and transport vehicles
exceptionally open even by international standards, exceeds 60 percent of Hungarian exports, while
is determined to a large extent by external condi- processed goods make up a further 28 percent
tions. Global growth and the swiftly expanding of the total exports, mainly products of the
world trade provide favorable external conditions for pharmaceutical and chemical industry. The
the Hungarian economy. New reforms are underway traditional Hungarian food export amounts to
only 6 percent of the total exports, while the ratio
to further increase the dynamism and competitive- of energy resources and raw materials hardly add
ness of Hungarian economy. up to 5 percent.
As a result of the steady growth of foreign trade In 2014 Hungary’s exports to countries outside
flow since 1990 the range of goods available in the EU increased at an unusually rapid pace.
the shops has significantly expanded, while the Hungary, therefore, considers the Asian, the
dismantling of foreign trade barriers has made it Pacific, the Mediterranean, the Latin-American
possible for Hungarian goods to be increasingly countries and the Gulf States to be long-term
present on international markets. economic partners. In a restructuring world
The volume of foreign trade tripled within one economy, the companies in these countries offer
decade and its ratio to the GDP reached 150 increasing prospects for further co-operation.
percent by the turn of the millennium, which Becoming a member state of the EU also
marks the remarkable openness of the Hungarian strengthened its international trade relations.
economy. The most important economic Hungarian companies are also aided by the
partners of Hungary are the member states of extensive international trade agreement system
the European Union, where nearly 80 percent of of the EU. Hungarian firms are striving to exploit
the Hungarian export goes, and in the trade with the related advantages both on the markets within
them the Hungarian export surplus is significant. and outside the EU.
The country’s most important foreign trade With all these significant factors in place,
partners are Germany, Austria, France, Italy and Hungary proves to be a truly a sound investment
Great-Britain. The structure of the Hungarian haven.

42 Arab Business Club Arab Business Club 43

Magazine March 2015 March 2015 Magazine