Friday, 5 May 1995
Volume 2, Issue 87
REGIONAL NEWS
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**ROMANIAN CABINET REORGANIZATION**
Romanian Prime Minister Nicolae Vacaroiu plans to reshuffle his
cabinet today. The move is intended to reward small parties
in what, in effect, is a coalition government, specifically
the nationalist Romanian National Unity Party, the anti-
semitic Greater Romania Party and the neo-communist Socialist
Labor Party. Last August, Vacaroiu rewarded the National
Unity Party with two cabinet posts. Today's reshuffle should
allocate some relatively junior positions, like culture and
sports portfolios, to the other parties. Western diplomats
have said Romania's efforts to align itself with the European
Union and NATO could be jeopardized if the National Unity
Party gains any more power. The party presents itself as
moderate, but its leader, Gheorghe Funar, has been outspoken
in his attacks on Romania's large Hungarian minority.
BUSINESS NEWS
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**RUSSIA RELEASING GAS**
Russia plans to export almost 18.5 billion cubic meters of
natural gas on behalf of the state this year under
inter-governmental agreements. The exports include 3 billion
cubic meters for Turkey, 2 billion for Hungary, 3.5 billion
for Germany, 2.5 billion for Poland, 2.4 billion for the Czech
Republic and Slovakia, and 3.34 billion for Bulgaria. A
further 1.67 billion cubic meters will be delivered to the
Czech Republic, Slovakia, Bulgaria and Romania as payment for
gas transit across their territories. The export
announcement, published in the government's daily bulletin,
confirmed gas export tariffs of two ECUs a ton from January of
this year. Previous gas export tariffs were 0.5 ECUs per ton.
The state-controlled Gazprom company accounts for more than
90 percent of Russia's natural gas output, which totalled 617
billion cubic meters in 1993. It exports about 100 billion
cubic meters of gas a year, mainly to Germany, Italy, France,
the Czech Republic and Slovakia.
**HUNGARY MAKES LOAN EXCEPTION**
The head of Hungary's State Bank Supervision (SBS) has defended
a government injection of $99.17 million into Budapest Bank,
saying the move was a one-off consolidation. The government
came to power last year on a platform that promised an end to
costly bank consolidation. News of the large injection, which
is equivalent to over two-thirds of the bank's registered
capital, comes at a politically sensitive time following the
government's March announcement of a tough austerity package
that will sharply cut social spending. No other state bank
has received such a large subsidy. The aim is to return the
money to the state's coffers once the bank is privatized, but
potential buyer, Credit Suisse, said in March it wasn't
interested in taking a stake. Dutch ING Bank has said it's
still talking to Hungarian authorities about the bank, one of
Hungary's largest.
**ROMANIA GRANTS OPERATOR'S LICENSE TO HUNGARIAN BANK**
Banca de Credit Pater has become the first Hungarian-owned bank
to win an operator's license in Romania. The new bank, which
has $5 million capital and is 99.9 percent owned by Budapest
Bank, plans to operate in the Romanian inter-bank market and
help finance trade between the two countries. In the first
quarter of this year Romanian exports to Hungary amounted to
$32.7 million, while imports from Hungary stood at $55.8
million.
BUSINESS FEATURE
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**THE BUDAPEST MELTING POT**
By Liane Thompson
As foreign investment makes its way into Hungary, so too do a
variety of cultures. English, German and American natives can
be found just about everywhere. But while these nationalities
keep a high profile, others choose not to. The Chinese have
brought business and Asian culture to Hungary, but in a less
intrusive manner.
It may sound like Pavorotti, but it's not. This opera singer
isn't even Italian, he's Chinese. Min Cheng is one of almost
15,000 Chinese nationals living in Hungary. Many who come
here open restaurants. In fact, there are 50 chinese
restaurants in Budapest. Min, who used to sing opera in
China, went one step further. He and his wife Tien-you opened
a restaurant/theater in Budapest a couple of years ago. The
Artist's Restaurant offers a place for the talented, be it
Chinese or Hungarian, to perform what they know best.
According to Tien-you their unique business sets them apart
from other Chinese who come here.
"We are always pushing the arts which is quite different from
other Chinese here who are doing business. Our goal is not
the same."
Those who are more concerned about the bottom line enter the
import-export market. Some 5,000 Chinese have licenses to do
business here. Two-thirds of them sell clothing. Forty-
year-old Gao Shimei has lived in Hungary for two years. She
sells clothes, caps and handkerchiefs at Budapest's Konbanyi
market, what the Chinese call the 'Four Tigers' market.
Shimei said she can make more money selling her small items in
Budapest than in China. A package of three handkerchiefs goes
for $2, whereas in China it would cost $0.40. But Shima said
not everyone is happy about this, especially Hungarians.
"Chinese things aren't very expensive, and there are a lot,
which frightens Hungarians and they feel threatened."
That feeling is reflected in a strengthening of Hungarian
immigration laws, which has had an impact on those seeking to
set up shop here. Shimei said it's getting more difficult to
get the necessary visa to remain in Hungary. While most
Chinese here are law-abiding, international Chinese gangs have
started to arrive. Police have even begun teaching the
Chinese language to a few officers. Dr. Simon Laszlo is the
director of the Hungarian Police Academy. He said organized
crime is becoming a problem, but adds that this type of crime
is on the rise all over the world. Laszlo said Budapest is
now a battleground for revenge.
"Ukranians and Chinese are killing their enemies here, shooting
and stabbing them."
However, Chinese gang law prohibits hurting members of the host
country. If this law gets broken, death is usually the
punishment. But for the most part, Chinese people live
peacefully. There are less than three dozen crimes a year in
Hungary involving Chinese. Most who come here are not looking
to break the law, but searching for a better life in a new
land. And for them, there's always a piece of China to be
found in Budapest.
ANALYSIS
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**HUNGARY PONDERS GIVE AND TAKE OF PRIVATIZATION**
By Nancy Marshall
Hungary's languishing privatization bill would streamline the
privatization process by merging the government's two
privatization organizations, the State Property Agency (AVU)
and the State Holding Company (AV), into a new body called the
State Privatization and Holding Company (APV). The
legislation would also give Finance Minister Lajos Bokros much
more influence over the privatization process and concentrate
remaining state assets in the hands of the APV. The bill sets
out which assets should stay in government hands and what
parts of other companies, like utilities, should be sold off.
The Hungarian government is hoping the legislation would clear
the way for sales of major stakes in electricity and gas
utilities this year and more of its partially privatized
telecommunications network. But the legislation has been held
up by the opposition in Parliament and trade unions. Gustav
Bienerth is the managing partner at Price Waterhouse in
Budapest. He said union leaders are most worried about job
losses.
Bienerth: What they perceive, it might be correct or
incorrect, is that the inevitible first effect of speeded up
privatization is that the number of employees and inevitibly
unemployment will increase.
CET: What is the Socialist party and specifically the Prime
Minister Gyula Horn doing to try and get the trade unions to
cooperate and support the privatization bill?
Bienerth: That's a very substantial issue within the Socialist
Party and I don't have the information. But one thing is
clear, the coalition government and the Socialist party as the
main factor within the government crossed the Rubicon on March
12. The new Minister of Finance and the new so-called 'Bokros
package' put down specific issues. They've decided how to
decrease budget deficits, what measures to take to be able to
service the foreign debt.
CET: What is the delay in passage of the privatization bill
doing to foreign investor confidence and interest in Hungary?
Bienerth: I think the importance of bill is overestimated.
It's not the bill which will decide whether privatization will
go on or not in Hungary. The privatization will go on, the
budget includes $1.5 billion in privatization income, you have
to privatize to achieve that. Looking back to 1989 and the
privatization process in Hungary, it's clear that the world's
interest in the region is shifting away.
CET: In Hungary or Central Europe?
Bienerth: I'm talking about the region, Central Europe. Mainly
the countries in forefront, like Poland, the Czech Republic and
Hungary. It is clear that the historical opportunities aren't
there today as they were 1989 and the government realized that
the time factor has become crucial in the privatization
process. More and more delay of privatization will devalue
assets which we intend to privatize. So the overall
environment of the region and Hungary's position in it and the
global considerations of region aren't in favor of delaying
privatization process. The devaluation of assets has taken
place in past five or six years.
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A tovabbterjesztest a New York-i szekhelyu Magyar Emberi Jogok
Alapitvany tamogatja.
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