Hungary to open trade houses in Vietnam and Canada

December 12, 2016

Hungarian Minister for Foreign Affairs and Trade Péter Szijjártó (center left) with Adnan Polat (right).

Hungary’s Ministry of Foreign Affairs and Trade plans to open two new foreign trade houses, one in Canada and one in Vietnam, despite major losses coming from trade houses opened thus far in other countries, Magyar Nemzet reports.

Most of the foreign trading houses operate on public money under Magyar Nemzeti Kereskedőház Zrt. or MNKH (Hungarian National Trading House) which, in turn, is owned by Hungary’s Ministry for Foreign Affairs and Trade. The two new offices will come at a combined cost of nearly HUF 280 million (USD 941,000) and be in Ho Chi Minh City, Vietnam, and at an undisclosed location in western Canada. HUF 143 million will go to opening the Canadian office, which will employ two people, and HUF 134.6 million will be used to employ four people in the Ho Chi Minh office. The budget does not specify for how long the offices will operate on these funds.

The MNKH aims to “support [Hungarian] enterprises that are capable of exporting in finding adequate business partners in the international markets,” and is part of the Hungarian government’s “Eastern opening” strategy of forging commercial and cultural ties with non-western countries. Since its launch in 2012, MNKH has secured HUF 2.8 billion (USD 9.4 million) worth of business for small- and medium-sized Hungarian companies involving some 200 foreign companies. However, as of spring 2015, the Hungarian National Trading House had spent HUF 5.5 billion (USD 18.6 million) on operating costs, and thus produced a total loss of some HUF 2.7 billion (USD 9.1 million.)

Irregularities in the operation of some MNKH offices has raised suspicion that the program may be funneling money to business partners and allies of Hungarian government officials. For example, a company belonging to former government minister Tamás Fellegi took over the National Trading House office in Israel, for which Fellegi’s company would reportedly receive some HUF 2.4 million (USD 8,100 per month).

The MNKH has reportedly spent HUF 1 billion on offices in Turkey, making it the most expensive trading house opened to date. The fact that it has yet to secure a single piece of business for Hungarian companies hasn’t prevented MNKH from awarding the Turkish office an additional HUF 3.3 billion with which to cover operating costs for the next four years. This is good news for Turkish businessman Adnan Polat, a personal friend of Prime Minister Viktor Orbán and business associate of Orbán’s son-in-law István Tiborcz. Polat’s company ALX Magyar-Török Kft. operates the MNKH branches in Turkey, Greece and Cyprus.