Energy Security 2011 – Challenges of the Hungarian EU Presidency

I was invited to speak in the Energy Security 2011 – Challenges of the Hungarian EU Presidency conference organized by International Centre for Democratic Transition on 7 May 2010. Although I had been involved in the international affairs of railways, I am an economist and talked in the second panel about the price of energy security.

The opening speeches and the first panel gave me a lot of new information and thoughts (scribbled down 12 pages of notes). I cannot speak for the Polish presidency, but it looks that Hungary needs to catch up very quickly in order to achieve anything at all in the energy field. There was a strong consensus to de-securitise energy security (not as financial economist would mean it but to detach it from national defense).

I have a background in economic regulation and more quantitative stuff - actuary science and operational research - so I just wanted to focus the attention of the foreign policy experts to the price of energy security with an analogy from car insurance.

Energy security in Hungary on Prezi Wait until animation is loaded and press play button. You can navigate with the arrows back and forth.

Although the prezi in itself is not so meaningful, I can tell you that there was a much bigger consensus than I expected on the price of energy security. Probably everybody agreed that energy security was given too much of a weight against competitiveness and sustainability and a rational debate should start about the different levels and prices attached to a higher level of security in terms of fuel and energy availability and price predictability.

I believe that there are a lot of instruments already available that could easily manage a large part of Central Europe's energy risk, either in the public institutions and national budgets or in private or state-owned enterprises.

Freight Transport Market in Hungary - Consequences and Indicators of Recession

The following chart will accompany my short analysis that will appear in the Railway Market magazine. Two ideas make this chart very interesting for investors. Firstly, the transport sector swallows up a great part of equity and debt available in Hungary, so the performance of the sector is also interesting. Secondly, as Hungary as an important manufacturing country, the transport figures are also important in the evaluation of the business cycle.

The upper charts who the weight lifted (tonnage put on vechicles) in Hungary (domestic and international relations). The lower charts (not so reliable because of the shortcomings of statistical data gathering) show the transport performance in Hungarian territory, also in domestic and international ordering.

The decline in transport lifted in Hungary shows decrease of Hungarian manufacturing, and also the decrease in fuel use accompanied it. Domestic recovery has not started yet in 2009Q4. However, most of the international transport performance is only transit, mainly from East (raw materials and fuels) and to West (finished goods from Balkans and beyond). The recovery in international trade and manufacturing is visible in that chart.

Poland recorded the best real GDP growth performance

The OECD Economic Survey of Poland 2010 was presented at the Ministry of Economy of Poland. The main massage of the report is the fact that Poland was the best from OECD countries tackling the economic crisis thus Poland is the only country in the European Union which produced a positive real GDP growth in 2009.
The OECD experts provision a further growth of 2.5% and 3% in 2010 and 2011 respectively. The Head of the OECD Economics Department highlighted the stable domestic demand and the solid foundations of the financial system as the best features of the Polish economy.

Mr. Waldemar Pawlak - the Deputy Prime Minister of Poland - emphasized that the country counts on the foreign investors in developing the whole country. "Polish special economic zones will be operating till 2020 - he remainded. - The SEZs offer great opportunities for the development of direct investments." (Source: Ministry of Economy of Poland)

Additional fund to the Czech Republic, Poland and Slovakia

Poland, The Czech Republic and Slovakia will share extra EUR 1 billion from Structural Funds in 2011-2013. Poland will receive an extra EUR 633 million, the Czech Republic EUR 237 million and Slovakia EUR 138 million in structural funds. The top-up is a direct consequence of stronger economic growth than forecast in these countries. The Interinstitutional Agreement on the 2007-2013 financial framework between Parliament, Council and Commission foresaw automatic adjustments for countries whose GDP had varied by more than 5% cumulatively over 2007-2009 compared to the forecasts when drawing up the framework. Economic growth in Poland during this period reached 10.8% more than expected in the EC prognosis. Slovakia and the Czech Republic experienced respectively a growth higher by 10.8 % and 7.5% than expected. (Excerpt from the European Commission’s communiqué from April 19th, 2010.)

Vth Széchenyi Race - Competition of Alternatively Driven Vehicles in Images

In the heart of Central Europe's new automotive hub, Győr, the Alliance of Alternatively Driven Vehicles and the INNO-MOBIL Sport Club with the contribution of the Széchenyi István University has presented the 5th Széchenyi Race - Competition of Alternatively Driven Vehicles. The competition not only selects the best innovators, scientists and sportsmen, but also the possible start-ups of the new electric, fuel-cell or hydrogen propelled industry. Before a more detailed analysis here are the images.



It was a great team building exercise for the Visegrad Investments team and we hope to team up with winners from both the electric and the fuel cell categories.

Polish privatization: Fabryka Łączników Radom S.A.

The Ministry of Treasury in Poland invites to participate in the negotiations to purchase the shares of Fabryka Łączników Radom S.A.The principal object of Company’s activity is cast iron founding, manufacture of cast iron tubes, manufacture of other metal products, metal processing and coating. It encompasses more than 200 assortments of fittings, heater couplings and castings made of blackhearth malleable cast iron in grade W400-5, sized from 3/8 - 4 inches, manufactured according to PN-EN 10142, ISO 49, DIN 2950 with the use of clay-bonded sands, and thermosetting core compounds and phenol-formaldehyde resin-bonded sand cores.

Fittings Factory Radom S.A. is the largest producer of cast iron fittings in the domestic market. It’s market share is estimated at the level of 4-5 thousand tonnes, which constitutes approx. 40% of the overall demand for fittings.

The deadline for submitting written Responses by the Potential Investors who have received the Memorandum shall expire 30.04.2010 at 14.00 Warsaw time.

Hungary is the biggest capital investor in Montenegro

The Hungarian Foreign Minister Mr. Péter Balázs paid an official visit to Montenegro and met his counterpart Mr. Milan Rocen. They welcomed the flourishing of economic ties between the two countries: Hungary, to date, has been the biggest foreign direct investor in Montenegro. Large Hungarian companies are present in the banking sector, telecommunications and the hotel industry. Mr Balázs emphasized that Hungary is seeking new areas of mutually advantageous cooperation, and urges Montenegro to have its legislation even more investment friendly so that it could not only attract new investors but make life easier for the ones already settled. (Source: Ministry of Foreign Affairs of the Republic of Hungary)
Examining the report of the World Bank Group about Doing Business in the different countries we can see that Hungary occupies the 47th place while Montenegro is the 71st in the ranking. In the case of some factors i.e. enforcing contracts Montenegro could really improve its capability. To enforce a contract in Montenegro costs 25.7% of the claim (it is 13% in Hungary), 49 procedures have to be completed (in the case of Hungary is 33) and it takes 545 days (395 days in Hungary). On the other hand the strength of the investor protection index is 6.3 in Montenegro and 4.3 in Hungary so Hungary could also improve its performance in creating an investor friendly environment.

Fifth Race of Zero Emission Vechicles in Győr

In one of the Central-European automotive hubs, almost equidistant from Budapest, Wien and Bratislava takes place the 5th Széchenyi Race^®, the race of alternative vehicles. The race is named after Earl Széchenyi, considered the greatest Hungarian philantropist who lay down the foundations of Hungary's scientific academy and introduced the country to steam-powered ships, horse-racing and casinos. The name of Győr's university with the most advanced automotive design faculty also bears his name.

The schedule is based on the inventions of the young designers. The best ideas share in innovation prizes that serve the basis of the further development works. The race is an acknowledged forum of the young engineers. On Saturday you can enjoy the parade of more than 60 concept vechicles in ten categories: (Motorbikes, Hobby vehicles, Solar powered vehicles, Study-vehicles, Prototype vehicles, Racing vehicles, Modified series production vehicles, Series production motorbikes, Series production vehicles, Electro-Karts).

Sunday dawn is practice time for the teams, the first speed races start on Sunday at 8:30 am, the long distance races start at 12.30.

Although most of the innovations are in an early phase, they will shape Central Europe's automotive industry very soon, so not only family-friends and fools are expected.

Different Business Headaches in V4 Countries

The World Economic Forum’s Executive Opinion Survey asked executives to name problem-areas in doing business for each country in the world. Business leaders in the Visegrad countries, residents and foreigners, selected the five biggest headaches from an 15-item list. Results were published in the Global Competitiveness Report 2009-2010.

The problems of the V4 countries are look rather different. Tax administration is on the top of the problem list in Poland and Hungary, inefficient government bureaucracy is the biggest headache in the Slovak and the Czech Republic. Infrastructure bottlenecks are seen as a problem in Poland and Slovakia, two countries that are making enormous efforts to build up a new transport and utility network.