Amcham – Letter of President

Dear Members & Friends

I trust that the beginning of 2005 finds you rested and reinvigorated after an excellent holiday season. We have a most interesting and challenging new year ahead of us!

The fourth quarter of 2004 was fast-paced and successful from AmCham’s perspective: luncheons with Prime Minister Gyurcsány (December 7th) and Minister of Economy János Kóka (November 5th); the Economist Sixth Business Roundtable Discussion with half of the Hungarian Government (November 12th); a patron luncheon with National Bank Governor Zsigmond Járai; a patron dinner with SZDSZ party leader Gábor Kuncze; the AmCham Election Night party (November 2nd); and AmCham’s 15th Anniversary Gala Celebration, held in the Parliament building on December 10th, where President Mádl, Ambassador Walker, and the Chairman of the Board of the U.S. Chamber of Commerce, John W. Bachmann all spoke eloquently. I would once again like to thank all past and present Members of AmCham for your constant support and participation, as well as all past and present Board Members, Committee Members, staff and past presidents. The excellent turnout at the gala celebration expresses the importance attributed to AmCham by so many important people.

AmCham’s dialogue with the new Gyurcsány Government during the past months has generated hopes as well as concerns within the Chamber. On the one hand, many members of AmCham (myself included) have been excited by the extent of dialogue we have had with key decision-makers and elated by the public commitment of the prime minister and key ministers to the cause of Hungarian national competitiveness—to an extent perhaps never witnessed before in Hungary.

On the other hand, there is a sense that the 2006 election campaign is already unofficially under way, and that this Government may not have the time needed to initiate significant or bold reforms prior to elections. Worse yet, we may face another round of political parties outbidding each other to win votes, abandoning fiscal responsibility. Hungary has taken years to recover from the fiscal irresponsibility
during the previous election, and can ill afford to have a caretaker Government until the next election. It is simply unacceptable for the Government to promise that major reforms to spur competitiveness will be taken only after the 2006 elections. Bold steps are required now to stem the decline in national competitiveness. The Government must not stray from the road it took during this year’s budget process.

At the AmCham/Joint Venture Association lunch on December 7th, Prime Minister Gyurcsány announced that in spring 2005 the Government will unveil a new plan to bolster competitiveness. The prime minister made comments that this national competitiveness plan will focus the country on certain strategic areas, as a corporation establishes its vision statement. I would fully support a strategy and a vision. But if this is used as a palliative to avoid or postpone major, bold reform in crucial areas such as taxation and public sector reform, it will only heighten the sense that the Government is fiddling while Rome is burning. The forint is exposed to devaluation while businesses and households are on a massive foreign currency borrowing binge, the Government’s deficit remains far too high, the Ministry of Finance and the National Bank continue to work at cross purposes, the diminishing relative competitiveness of our taxation system no longer serves to attract new investment— Prime Minister Gyurcsány has his work cut out for him, and the hopes of the country are on the Government, that it rises to the occasion.

It is against this back-drop that the new AmCham Committee structure will roll into action at the beginning of 2005. During the first half of January, AmCham members will be receiving an email describing the Committees, their leadership and agenda. We urge you to become involved!

Les Nemethy

PRESIDENT OF AMCHAM