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TIMISOARA – PILLAR OF DEVELOPMENTRomania Morning Seminar
(Tailored presentation for Construction and Architecture Companies delivered to the Derbyshire and Nottinghamshire Chamber of Commerce in support
of a trade mission visiting Romania in March 2011)
_________________________________________________________________________________________________________________________________________________________________________________
10th of March 2011 Nottingham
SUMMARY
1. Introduction.2. General State of the Romanian Market.3. Timisoara.4. SWOT – Timisoara Market.5. Forecast for Medium and Long Term Investments.6. Relevant Development Areas and Market Opportunities in Timisoara – The
Historical Centre.7. Relevant Development Areas and Market Opportunities in Timisoara -
Infrastructure.8. Events to Generate Business for Construction and Architecture.9. Funding.10. Legalities and Formulas for Setting up a Business in Romania.11. How to Find a Suitable Partner and What to be Careful About.12. What do British Businesses already in Romania Say about Their Experience.13. Business Practices.14. The BRC Services to Help British Companies.15. Get in Touch.
INTRODUCTION
Lorela Broucher(Managing Director)
The British Romanian Consultancy (The BRC)
The British Romanian Consultancy (The BRC)
Is an enterpriseThat provides British businesses intending
to invest or trade in Romania with the support they need
Because it has the right network, information and skills
So that they could set up successfully in this new emerging market.
ROMANIA - OVERVIEW
Romania: • is the second largest consumer
market in Central and Eastern Europe after Poland.
• Together with its neighbouring countries, Romania is part of a 100m market.
• Important grants and incentives available.
• Tax breaks for boosting certain sectors.
“Now is the perfect time for UK businesses to consider Romania as a viable option.”
(Digby Jones)
GENERAL STATE OF THE ROMANIAN MARKET IN 2011
Economic
• Slow economic recovery that would not allow much public investment. Other funding sources and support are available.
• GDP growth forecasts for 2011: between 0.2% and 2.6%. IMF forecasts 1.5% GDP growth.
• Budget deficit for 2011: 4.4% of GDP including arrears.
Political
• Political instability generated by the severe economic crisis.
• Local and parliamentary elections are due in 2012.
• Pressures on Romanian administration for accelerating the absorption of EU funds.
• Pressure on Romanian administration for reform.
ROMANIAAdministrative Map/Historical Map
KEY ECONOMIC INDICATORS
2010 2009 2008
GDPReal Growth Rate
-1.9% -7.1% 7.1%
GDP/capitaEuro
11,200 11,000 12,000
Budget Deficit 6.5% 7.2% 5.5%
Inflation Rate 6% 5.6% 7.8%
Unemployment rate 8.2% 7.8% 4.4%
Public Debt 34.8% GDP 24% GDP 20.1% GDP
Commercial Bank Prime Lending Rate
17.28%( 31 Dec. 2009)
14.99%(31 Dec. 2008)
TIMISOARA
• Population: 317,660 (2002) and a surface area of 12,926 hectares.
• Among the most attractive towns for foreign investors together with Bucharest, Brasov, Cluj-Napoca, Constanta and Craiova.
• Easy access to Serbia (170 Km to Belgrade) and Hungary (300 km. to Budapest). 550 km. to Bucharest.
• Cosmopolitan town, with many cultural influences: Hungarian, German, Turkish.
SWOT – TIMISOARA MARKETStrengths
•One of the strongest towns in the Danube-Cris-Mures-Tisa Euro- region.•Development pillar in Romania, equal to Bucharest. •Improving infrastructure.•VAT: 5% for Construction sector.•Important historical centre.•Important tax breaks for renovating patrimony houses and historical public areas.•Permissive legislation.•Keeps the EU regulations.• Well trained work force, speaking English.
Opportunities:•Important European Funds available.•Rich offer of land.•Access to a market of about 28 mil. inhabitants.•Strong economic channels open with Hungary and Serbia.•Need for rehabilitating and modernizing parts of the town.•Important projects to be developed.•Authorities are elaborating the New General Town Plan.
Weaknesses•Construction sector severely affected by the economic crisis:- General decrease of 13.2% in 2010 due to a residential construction decrease of 35.7% in 2010 (NIS).•Low public funds available.•Authorities are elaborating the New General Town Plan – slow decisions.
Threats•Excessive politicization of administration – slow decisions.•Public investment targeted by local real estate developers with influence over the decision factors.•Foreign Real Estate developers only preferred if they bring investment or offer finance solutions.
FORECAST FOR MEDIUM AND LONG TERM INVESTMENTS
MEDIUM TERM
• Increased absorption of the EU funds expected (Euro 22bn. by 2015).
• Slow improvement in Construction sector.• Domestic public funds for big projects less probable but EU funding
still available.• Taxes likely to rise but construction sector may be exempt.• Inflation.
LONG TERM
• Romania is expected to return to the rhythm of GDP growth before the crisis.
RELEVANT DEVELOPMENT AREAS AND MARKET OPPORTUNITIES IN TIMISOARA I
The Historical Centre
Rehabilitation of historical buildings
• Cooperation between the Timisoara Town Hall, the German Company GTZ and the German Federal Ministry for Economic Cooperation and Development.
• 14,500 historical buildings – only 5 rehabilitated.
• Funds: Euro 5 mil ( 3 mil as grants) from The Institute for Credit for Reconstruction of Germany (KfW) + EU money.
• Law 422 ( Law of Historical Monuments).
• Tax Breaks.
Rehabilitation of historical public areas.
• Tax breaks.
RELEVANT DEVELOPMENT AREAS AND MARKET OPPORTUNITIES IN TIMISOARA II
Infrastructure I
Central Rail Station• Stage: Town planning study.• Possibility to be included in the
General Town Plan.• Proposed finance: state budget,
local budget, EU funds, private investor funds.
Reconstruction of the Central Industrial Area
• Hundreds of hectares available, suitable for commerce, services and private properties.
• There are available: urban development feasibility studies and new projects.
Development of Bega Channel• Development of a water network
for transportation.• Enhancing the banks and the
adjacent area – entertainment and landscape architecture.
• It is a PPP project supported, including financially, by the Timisoara Town Hall.
Central Pedestrian Area• Excluding motor traffic.• Transforming Timisoara Citadel
into a commercial pedestrian area.• Building underground and
overground parking on the traffic ring around the area.
• Project proposed and supported by Timisoara Town Hall.
RELEVANT DEVELOPMENT AREAS AND MARKET OPPORTUNITIES IN TIMISOARA III
Infrastructure
Other projects proposed by Timisoara Town Hall
• Transportation: 11 projects.• Health Institutions : 15 projects, 3 have reached the tendering stage.• Streets + Roads: 3+1 projects.• Utilities: 2 projects.• Parks: 5 projects.• Education: 4 projects.• Energy: 4 projects.• Business support: 5 projects.
• Funding: mostly EU funding.
EVENTS TO GENERATE BUSINESS FOR CONSTRUCTION AND ARHITECTURE
CAMEX Exhibition - Timisoara(5th – 8th October 2011)
B2B Event Brings together all the leaders of
Constructions Industry in Romania. Opportunity to meet specialists from
Hungary and Serbia.
Linked events:• Regional Forum in Constructions
Construct Week ( Specialised conferences on Constructions, Architecture, Town Planning, Professional Associations, Trade Unions, Central and Local Authorities.
• Evening of Excellence in Construction
RENEXPO South-East Europe(9th – 11th of November 2011, Bucharest)
Annual international trade fair and conference for renewable energy and energy efficiency in building and renovation.
Provides Know How and Networking possibility.
It is an international business gathering. 2010: 71 exhibitors ( 30% international, from
11 countries) and 3115 visitors ( 12% international).
INGLASS(12th of April 2011)
National Conference on Architecture.
FUNDING- Sources -
European Regional Development Fund ( ERDF): 2007 - 2013
Regional Operational Program: Euros 70.5 mil.
• Axis 1: Support for sustainable development of urban growth pillars.
• Axis 2: Improvement of regional and local transport infrastructure.
• Axis 3: Improvement of social infrastructure.
• Axis 4: Strengthening the regional and local business environment.
• Axis 5: Sustainable development and promotion of tourism.
• Axis 6: Technical Assistance.
Public Private Partnerships.
Local Budget.
Sponsorships.
LEGALITIES AND FORMULAS FOR SETTING UP A BUSINESS IN ROMANIA
I. Set up a new trading company, a Romanian legal entity based on collaboration, association agreements with foreign companies.
The legal status of the company may be:
• Joint-stock company: 2 associates, Euro 25,000 capital.
• Limited Partnerships: 1 associate, Euro 50 capital.
• European Company: the EC regulation no. 2157/2001, Law no. 31/1990. It can transfer ( shift) its head office to another member state.
II. Set up a subsidiary of a foreign trading company, if the statute of the foreign company allows this.
III. Set up a branch of a foreign company in Romania, if the statute of the foreign company allows this.
IV. Set up a commercial representative office of a foreign company (which is also currently referred to as an agency) in Romania, even if it is not the formula appropriate to the type of activity you intent to carry out.
Costs:• Money: between Euro 300 – 800,
excluding the lawyers fee and the share capital values.
• Time: approximately 10 days.
HOW TO FIND A SUITABLE PARTNER AND WHAT TO BE CAREFUL ABOUT
Do you need a partner?
Yes• if you want to access EU funds.• If you want to buy land in
Romania.
No• If you set up a business in
Romania as unique associate and buy land for business purpose.
• SPV (Special Vehicle Purpose) – to buy patrimony houses (historic buildings belonging to the Ministry of Culture.
Recommended:• To have a local partner.
What could help?
• Register with OAR ( Order of Architects in Romania): mandatory.
• Main ruling body of the branch
• Good legal advice: get advice about unexpected aspects you might encounter while developing a project with a Romanian partner.
WHAT DO BRITISH BUSINESSES ALREADY IN ROMANIA SAY ABOUT THEIR EXPERIENCE
PITFALLS
“Difficult business environment”.
“Corruption – cultural contract” but “you can get around it”.
“Bureaucracy – you have to understand how to work with the system”.
“Lack of transparency”.
“Cultural differences”.
REWARDS
“Many good opportunities”.
“A virgin land where many things could be done”.
“Easy communication – many Romanians speak English”.
“I intend to stay. Despite everything, I will do it again”.
“Romanians and British have similar sense of humour!!!”
Business Practices
• Initial greetings: formal and reserved.
• Title: people are addressed by their honorific title ("Domnul" for Mr. and "Doamna" for Mrs.) and their surname. Only close friends and family members use the first name without appending the honorific title.
• Start out in a formal style and become familiar once a personal relationship is developing.
• Appointments needed, be prepared to wait, meetings keep rules of formal/old fashioned courtesy.
• When doing business, Romanians value personal relationships.
• Expect your counterpart to be a good/tough negotiator!
• Romanians could be very direct as well as good diplomats.
HOW THE BRC COULD HELP YOU
• Market research.
• Selection of the local partners.
• Finding local legal representation.
• Support in getting finance.
• Advice about the cultural, political, and social particularities.
• Advice about the political and economic evolution in Romania.
• Interpretation.
Other benefits
• Access to material in Romanian and to Romanian specialists could give you hints about aspects of interest.
• Access to inside aspects of different situations and advice about how to deal with them.
• Find out the backstage political games behind decisions.
Testimonials
• “The seminar Lorela delivered was of very high quality. Lorela’s knowledge and understanding of the business environment in Romania was superb. The seminar gave many of our clients the confidence to pursue business in Romania and passed on vital knowledge to help them succeed. I would have no hesitation in recommending The British Romanian Consultancy and its services.” (Laura Howard, Manager of Midlands Enterprise Europe Network)
• “With her knowledge and experience of Romania, Lorela has been a valuable information link to the members and non-members of Derbyshire and Nottinghamshire Chamber. In addition her expertise was appreciated by those clients accessing the services of the Enterprise Europe Network in the East Midlands. Both organizations are organizing a Market Visit to Romania towards the end of March 2011 and as of mid March seventeen representatives will be participating.In the long term Lorela will be an important ally in assisting both communities in Romania and the UK develop their International Trade activities”(David Hood, Head of International Trade and Information, Derbyshire and Nottinghamshire Chamber)
GET IN TOUCH
Contact:
Lorela BroucherManaging DirectorE: [email protected]: +44(0)7920147592
The British Romanian Consultancywww.thebrc.co.ukBedworth, Logs Hill Close, Chislehurst, Kent, BR75LPM: +44(0)7920147592E: [email protected]
