Business Review Issue 34, Sept 28-Oct 4, 2009

Like the rest of the economy, Bucharest’s club scene has been shaken of late. Butdespite falling crowds and takings, club owners are still opening new units, whiletrying to offer more than just clubbing. For Dan Mason, joint owner of Coyote Cafeand Jukebox Club, the recipe was a combination of live music, restaurant and terrace

See pages 14-17

Like the rest of the economy, Bucharest’s club scene has been shaken of late. Butdespite falling crowds and takings, club owners are still opening new units, whiletrying to offer more than just clubbing. For Dan Mason, joint owner of Coyote Cafeand Jukebox Club, the recipe was a combination of live music, restaurant and terrace

See pages 14-17

M O N E YHousing banks active in Romania are

starting to turn their first profit, and can

benefit from the high potential of both

old and new homes

S e e page 10

T A L E N TThe local training market saw a 50 per-

cent drop in 2008 and this year started

to consolidate, having taken a hit from

the reduction in multinationals’ budgets

S e e pages 12-13

I N T E R V I E WRomania doesn’t rule out involvement

in the South Stream project, but Nabuc-

co is the top priority, says economy

minister Adriean Videanu

S e e page 24

ALL SHOOK UPALL SHOOK UP

UNREPORTED ECONOMY MAKES UP ONE THIRD OF LOCAL GDP, STUDY SAYS; SEE NEWS ON PAGE 8

BUSINESS REVIEWROMANIA’S PREMIERE BUSINESS WEEKLY SEPTEMBER 28 - OCTOBER 4, 2009 / VOLUME 14, NUMBER 34

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BUSINESS REVIEW / September 28 - October 4, 2009 3

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P u b l i s h e rBILL AVERY

E d i t o r - i n - C h i e fSIMONA FODOR

Deputy Editor-in-ChiefCORINA S~CEANU

Senior JournalistsDANA CIURARUANDA DRAGAN OTILIA HARAGA

Copy EditorDEBBIE STOWE

C o n t r i b u t o rMICHAEL BARCLAY

R e s e a r c hSIMONA BAZAVAN

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L a y o u tB E A T R I C E G H E O R G H I U

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SEPTEMBER 28- OCTOBER 4, 2009 / VOLUME 14, NUMBER 34

Bargain huntIt doesn’t surprise me that own-brand products are now beingpushed in Romania (Carrefour works with 40 local producerson local labels, issue 33). As your news item mentioned, inWestern Europe such goods, often cheaper products with littlediscernable difference in appearance or packaging, make up abig chunk of the market. Given that many Romanian shopperswere on tight budgets even before the crisis kicked in, thestrange thing is that the supermarkets did not make more of theeconomy section of the market earlier.

Gabriela Zicu, Bucharest

Saving the worldIt is good to read that banks are starting to focus on savingsproducts (Banks switch attention to savings products and INGbanks on customers and goes back to basics, issue 33). If onlygovernments had taken this attitude in the 1990s, rather thanlending money to anybody who asked for it, Europe and Amer-ica – and consequently the world – might have avoided someof the mess in which we now find ourselves. As BenjaminFranklin said, a penny saved is a penny earned!

Paul Rafter, Timisoara

Property problemsAnybody who has had any experience on the Romanian prop-erty market will understand why Stefan Gheorghiu becamedisillusioned (Market madness brings realtor to career cross -roads, issue 33). Greed, stubbornness, delusion, lack of profes-sionalism and often dishonesty have been all too common onthe local real estate scene. Let’s hope that the current crisis getsrid of some of the bad seeds and makes people a bit more real-istic about the business.

Claudiu Muresan, Bucharest

Making a noiseThe gentleman who contacted you last week about his noisyneighbors is by no means alone (In Touch, issue 33). After suf-fering two years of infernal noise when the building next doorto my block was fully renovated and converted into a hotel, thestore on the ground floor is now being refurbished so I willhave to suffer through further months. In other countries, peo-ple wanting to carry out major works have to advertise the factlocally, giving neighbors a chance to object. Maybe this will bethe case in Romania one day.

V. Socaci, Bucharest

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President Traian Basescu

has proposed a unicameral

Parliament which would ar-

guably be less corrupt. The

referendum on this should

take place November 22nd,

the day of the presidential

elections.

BRIEFSROMANIA TO RESUME

ECONOMIC GROWTH ONE

YEAR AFTER STRONGER

ECONOMIES

é Romania felt the economic cri-

sis later than other, more stable

economies, and will likewise

recover later, by around eight-

twelve months, according to

Lucian Croitoru, counselor to the

Romanian Central Bank (BNR)

governor. He laid the blame for

the crisis on politicians, central

banks and other market supervi-

sors. He added that he believed

free market policies to be the

proper basis for economic

growth.

INSURANCE COMPANIES

SET UP POOL AGAINST

DISASTERS

é Thirteen insurance companies

active in Romania have set up of

the Insurance Pool Against

Disasters (PAID). Its share capital

is currently only EUR 4. 5 million,

but the list is still open for new

members. From January 2010,

PAID will issue mandatory home

insurance against disasters (PAD),

which will cover catastrophes

such as earthquakes, landslides

or floods.

N E W S

BUSINESS REVIEW / September 28 - October 4, 20094

The European Bank for Recon-struction and Development (EBRD)has approved a EUR 25 million loan toR a i ffeisen Bank Romania, part of aEUR 150 million financing packagefor three subsidiaries of Raiffeisen In-ternational. Under the package, theEBRD will also provide the equivalentof EUR 100 million to Raiffeisen BankAval in Ukraine and EUR 25 million toR a i ffeisenbank in Russia. The loans tothe Ukrainian and Russian subsidiarieswill be supplied in dollars.

The move is part of the EBRD’s ef-fort to strengthen banks in Ukraine,Romania and Russia and help addressthe impact of the international financialcrisis on the real economies of thethree countries. The aim of the subor-dinated credits is to strengthen the cap-italization of Raiffeisen International’snetwork of banks in order to support

their lending to enterprises.“This transaction reinforces the

commitment of the EBRD and of Raif-feisen International to the region dur-ing this challenging period. Maintain-ing the stability of the banking sector isa crucial component of the response tothe international crisis,” said EBRDpresident, Thomas Mirow.

The funding offered by the EBRDis part of a coordinated package forR a i ffeisen International, which alongwith financing from the European In-vestment Bank and the World BankGroup, amounts to a total of EUR 1billion. The investment is part of thejoint pledge by the three internationalfinancial institutions to provide overEUR 24.5 billion in support of bankingsectors in the region and to fund lend-ing to businesses hit by the global cri-s i s .

“The decisive actions taken by theEBRD were very supportive for the re-gion. They have contributed signifi-cantly to stabilizing Central and East-ern Europe and to cushioning the im-pact of the financial crisis on the trans-formation process. In addition to ourown operational alignment, the financ-ing package will strengthen our sub-sidiaries, which is also for the benefitof the local economies,” said HerbertStepic, CEO of Raiffeisen Internation-al.

So far this year, the EBRD hascommitted over EUR 2.2 billion to thefinancial sector in the countries whereit invests. As a result of increased de-mand for the bank’s assistance, theEBRD is raising the level of its overallinvestments to up to EUR 8 billion thisy e a r.

Anda Dragan

Raiffeisen Bank Romania seesthe color of EBRD’s money

BRIEFSINTERCAPITAL INVEST BUYSFUND ADMINISTRATORINVESTICAé Brokerage firm IntercapitalInvest has bought investmentadministration firm Investica AssetManagement from the family ofsenator Verestoy Attila. Investicamanages RON 3.1 million (aboutEUR 740,000) of assets in mutualfund Altius and closed fundInfinity. Investica was 78 percentowned by Attila’ s son, whileDaniel Daianu and LeonardVisan, the current GM, were alsoamong the shareholders. Visanwill stay on as general manager.

NEW SIF THRESHOLD GETSSENATE APPROVALé The Senate judiciary commis-sion has approved an increase inthe SIF ownership threshold fromone to five percent. The move hasbeen approved by the financecommission. It should be up forSenate vote in about a month,after which it will require LowerChamber of Parliament approval.


Bookstore chain Diverta, part ofRTC Holding, expects to post EUR 35million in turnover by the end of thisy e a r, down 25 percent on 2008. “In thefirst half of the year we saw salesdown 30 percent on the same period oflast year,” said Emilia Canea, generalmanager of Diverta.

The book shop operator has beentrying to optimize its operational ex-

penses by renegotiating rents, reduc-ing stock and increasing the frequencyof getting stock in.

The retailer has shut down 11 bookshops which were not profitable, whileopening three new units. It will openanother new one, Diverta Cotroceni, inN o v e m b e r. The firm has axed 15 per-cent of its staff since the beginning ofthe year and now employs 700. Diver-

ta runs 66 stores in Romania and onein the Republic of Moldova, in Chisin-au.

RTC is owned by Romanian busi-nessman Octavian Radu. Last year,Diverta bought the Bucharest bookshop chain Noi, as well as a Cluj-Napoca bookshop called Libri. Sincethe beginning of the year, owner Raduhas invested in a number of new proj-ects, such as the Vapiano franchiserestaurant and Q-Power, which distrib-utes thermal insulation tubes.

Radu has recently announced hisintention to include employees andbusiness partners in the holding’sshareholder structure this year, andeven partner investment funds in2010. After that, RT C ’s divisions willbe sold to strategic investors or listedon the stock exchange.

“The first phase will be attractingthe top management through an op-tions and shares scheme,” said Radu.At the beginning of July, a separateboard was appointed for each divisionof the RTC holding, turning every oneinto a separate entity.

Corina Saceanu

Diverta turnover takes 25 percent dive

The bookstore operator has been trying to optimize operational expenses

The revamping will also include art galleries

N E W S

Romanian businessman OvidiuPopescu, the owner of StirbeiPalace and also CEO ofPetrolimportexport, intends to putEUR 150 million into refurbishingStirbei Palace.

The building will be trans-formed to include art galleries, lux-ury stores and coffee shops. LinksAssociates, a communication andlobby company, managed by CorinaVintan, will undertake communica-

tion campaigns for the project. The Stirbei Palace, which was

built in the 19th century, was boughtby Ovidiu Popescu in 2005, afterbeing recovered by the Stirbei fami-ly in 2004. After Popescu purchasedthe building, the media reported thathe would embark on a real estate de-velopment plan including an officebuilding, a hotel, housing and retailareas.

Corina Saceanu

Stirbei Palace gets EUR 150 mln facelift

Ars Advertising, Optimedia andMedia Consulta International arethe three companies that have ap-plied to administer the advertisingbudget of the Authority for the Re-covery of State Assets, estimated atRON 4.5 million (approximatelyEUR 1.06 million).

The agency that is selected willadminister the budget for the lastthree months of the year, but thecontract between the two entitiescould be extended until April 2010.

The bidding commission regis-tered and opened the offers in thepresence of the companies and willanalyze their content over the com-

ing period. R e c e n t l y, the government has

changed the financing regime ofseveral structures, including AVAS,compelling them to hand over un-paid taxes to the state.

Prime Minister Emil Boc saidlast week that agencies were sittingon approximately EUR 1 billion,sums that they administer at theirown will.

AVAS will only be financed bythe state, through the budget of theGeneral Secretariat of the govern-ment, and any revenues it generateswill be passed on to the state.

Otilia Haraga

Businessman Marius Ghenea, own-er of FiT Distribution, has taken over anew online store, PCGarage.ro. The ac-quisition is part of the online develop-ment strategy in multi-site format of FiTDistribution, which has included otheracquisitions in the first half of the year.

“Both PCfun.ro and PCGarage.roare among the top players on the IT&Cretail market in Romania, and togetherthey generate an entity sufficiently im-portant to be able to compete eff i c i e n t l ywith the market leader eMAG,” saidGhenea, president and sole shareholderof Fit Distribution.

PC Garage was a family business setup by Gabriel Vasile, executive managerand major shareholder of PCGarage.ro,and his wife. “The sale of the companyat this point is because we have man-aged to reach a certain level of businessfrom which, without any supplementaryinvestments, we would not have man-aged to go to the next development stageand fight for leadership on this market(…) Moreover, personally, I am interest-ed in developing certain new interestingonline projects, which have no connec-tion with the IT&C market, so the sale ofPC Garage will give me the opportunityto focus on these new projects,” saidVasile.

F i T Distribution runs the stores PC-fun.ro, ElectroFun.ro, ShopIT.ro, To y-fun.ro, and www.24pc.ro. Last year, itposted sales of EUR 15 million and hada consolidated growth of approximately35 percent year on year. PC Garage wasfounded in 2005. The company posted aturnover of approximately EUR 8 mil-lion in 2008. PC Garage also reported a20 percent growth in sales in the firsthalf of the year. In August, the combinedturnover of the two companies amount-ed to RON 7.5 million (approximatelyEUR 1.7 million).

Otilia Haraga

Marius Ghenea takesover PCGarage.ro

Online entrepreneur Marius Ghenea

Hungarian airline Malev saw itsnumber of passengers fromBucharest grow 4.3 percent in August while managing to doubleits number of corporate clients inRomania, the company has an-nounced.

Romania ranks top among thecountries to which Malev operatesflights, with five destinations in thec o u n t r y. The latest addition wasIasi.

“Since Malev considers the Ro-manian market to be of strategic im-portance, it aims to maintain itsdominant presence there and intendsto take an even larger market sharethan at present,” company represen-tatives have said.

“Once again growth trends areevident on the Romanian market,too: we registered an increase in

passenger numbers of 4.3 percenton our Bucharest service last monthand initial results for September aswell as bookings for October givegreat cause for optimism,” saidMalev's chief commercial off i c e rKarim Makhlouf.

Malev runs four flights a day be-tween Bucharest and Budapest, twoconnections a day to and from Cluj-Napoca and Timisoara, and dailyflights to and from Tirgu Mures andIasi, which comes to a total of 65flights each week.

More than 50 percent of the Ro-manian traveling public are transitpassengers, according to Malev,which hopes to become the leadinghub airline in the region. It has faresfrom Bucharest to Budapest forEUR 69 including taxes.

Corina Saceanu

Malev sees increasing Bucharesttravelers, adds new local destination

Three companies fight over AVASadvertising budget

Malev keeps its hopes high for September and October results in Romania

BRIEFSIMF MAKES EUR 1.8 BLNDISBURSEMENT TO COVERBUDGET DEFICITé The International MonetaryFund (IMF) has approved the sec-ond loan disbursement toRomania, a EUR 1.85 billion pay-ment to the state budget thatshould cover the budget deficit.The second round of paymentscomes after the country signed aEUR 12.95 billion stand-byagreement with the financial insti-tution in May this year. A secondIMF evaluation mission will soonvisit Romania to asses the coun-try’s economic policies andreform progress. The third dis-bursement, another EUR 1.5 bil-lion, is due in December.

BCR: GOV’T SHOULDENCOURAGE LARGE LANDPLOTS FOR FARMS é The government should comeup with a plan to encourage therestructuring of local agriculture,essential if it wants to become anet exporter of agricultural prod-ucts, according to a recent reportby local lender BCR. “The delaysin restructuring Romanian agricul-ture will have unwanted effects onthe national economy, includingpressure on the inflation rate. Thegovernment should draw up aplan to encourage the creation oflarge land plots to be exploited,especially for cereals. If not, wewill be facing the current prob-lems for many years to come,”warns the report.

MODERN RETAIL REACHES43 PERCENT MARKETSHARE, DISCOUNTERS ANDHYPERMARKETS THRIVEé Modern retail reached a 43percent market share of the totalconsumption of consumer goodsin H1, according to a recent studyby GfK. The market share ofhypermarkets, discount, cash &carry and supermarket stores hasincreased by three percentagepoints since the same period oflast year. Hypermarkets and dis-counters were the most dynamicstores, with their main source ofgrowth coming from a higherpurchasing frequency, up 30 per-cent for discounters, and 10 per-cent for hypermarkets.

N E W S


N E W S


The company offers tuning for high-end cars

Week i n

N U M B E R S

the National PrognosisCommission has revised its fore-cast of Romania's economicdecline from 4 percent to 7.7percent

the value of the Romanian unre-ported market, which makes upone third of the country’s GDP,an AT Kearney study has found

7.7%

EUR 46 billion

the local IT industry has droppedby 40 to 60 percent after com-panies stopped investing,according to BitDefender

60% La Mosie Orchard, a new busi-ness in the portfolio of Romanianbusinessman Nelu Iordache, who al-so owns Blue Air and Romstrade,has recently started the distributionof fruit in local hypermarkets andplans to double the amounts distrib-

uted through stores next year.Andany Trading, the company

which owns the La Mosie brand, in-tends to increase its initial EUR 7million investment with future proj-ects. Due to local market conditions,the company is considering the pos-

sibility of exporting its products. Italso plans to start growing vegeta-bles and plants which can be used inthe pharmaceutical industry.

The La Mosie farm is located inAdunatii Copaceni, 20 kilometersfrom Bucharest, on some 100hectares of land. The farm will dou-ble its size in the coming period,says Gheorghe Racaru, head ofstrategy and development at thegroup which includes Romstrade,Blue Air and Andany Trading.

Andany Trading started workingon creating the farm five years ago.It now distributes ten types of fruiton the Romanian market.

“We are now considering ex-ports, in view of the undervalued lo-cal products. Local producers canhardly manage to find room on theRomanian market, where the originof the product and not its qualitydictates the price,” says ValentinManolache, director of A n d a n yTrading.

Corina Saceanu

Car tuning company Mansory drives onto local market

Gheorghe Racaru, head of strategy and development at the group which owns Romstrade, Blue Airand Andany Trading

Romania is the new location onthe map of Europe for the MansoryCooperation, an aftermarket tuningcompany which offers accessoriesdesigned and manufactured exclusively for a limited range ofhigh-end cars including Porsche,B e n t l e y, Rolls Royce, Ferrari, Aston Martin, McLaren SLR andBugatti.

M a n s o r y ’s customization pro-

gram addresses the segment of lux-ury cars owners. Over the lastdecade, Romania has become an in-teresting market for ultra-luxury andsports cars, and is home to manyrare and expensive cars.

A market requires more than1,000 Porsches, over 200 Bentleysand many other well kept modelssuch as Rolls Royce, McLaren SLRor Aston Martin to be attractive to

the company.Mansory Romania officials said

that local drivers will most likely beinterested in the customization pro-gram for models such as the BentleyMansory Continental and PorscheCayenne.

The Mansory Cooperation,which was founded in 1989, isheadquartered in Brand, Germany.

Dana Ciuraru

Owner of Blue Air puts EUR 7 million into fruit farm

N E W S


The magistrates’ strike, lack ofgovernment transparency and Par-liament’s failure to carry out its du-ties were some of the main pointsmentioned in the annual Report onCorruption in Romania 2009 carriedout by Transparency International.

Romania is undergoing an un-precedented institutional and socialcrisis which is contributing to an in-crease in the vulnerability of thepublic sector to corruption, accord-ing to Victor Alistar, president ofTransparency International Roma-nia.

Between June 2008 and thismonth, the country has witnessed a“serious deterioration of the publictransparency climate marked by alack of strategic coordination re-garding legislative and institutional measures. This reference period

overlaps a period of parliamentaryand presidential elections and ismarked by a battle for resourcesamong the main actors on the polit-ical scene,” said Alistar.

Furthermore, Parliament failedto do its job properly, according tothe report. Over 90 percent of thedocuments adopted by Parliamentwere emergency ordinances, ac-cording to Alistar. The governmentalso became less transparent. Sincebeing subjected to the pressure ofthe financial crisis, it has reducedtransparency standards in decisionsregarding the use of public funds.

The report also flags up the stag-nation of any progress in justice andthe fight against corruption in thesecond part of 2008.

Otilia Haraga

Transparency International bemoansdeterioration in public transparency

French low-cost clothing retailerKiabi will open its first store in Roma-nia this week, inside the Grand Arenashopping center in the Berceni area ofBucharest. At the start of this year, Ki-abi began hiring for its first localstores.

“The initial investment to open anoutlet abroad is around EUR 500,000,depending on size,” said companyrepresentatives. A franchise contractwith Kiabi usually runs for six years,after which it can be extended. Low-

cost retailer Kiabi has stores inFrance, Spain, Italy and Russia. InDecember last year, the firm openedits third store in Russia, part of awider international expansion.

From 208 stores at the beginningof last year, the French company wasplanning to achieve a 400-unit net-work, cover 10 countries and reach aEUR 1.5 billion turnover worldwideby 2011, from its current EUR 800million.

Kiabi was created by the Mulliez

family in the 70s, and is part of agroup gathered under the Auchan um-brella. Sports retailer Decathlon, DIYchain Leroy Merlin, restaurant groupFlunch and electronics and home ap-pliances chain Boulanger are part ofthe same group. In Romania, thegroup is present through Auchan, andhas recently announced plans to openDecathlon and Leroy Merlin stores.Grand Arena shopping center was de-veloped by Euroinvest Intermed.

Corina Saceanu

Kiabi opens first Romanian store in Grand Arena

The Romanian unreported econo-my covers 35 percent of the country’sGDP, reaching a value of EUR 28 bil-lion, reveals a study by consultancyfirm AT Kearney. The level is close tothe figure in Hungary, which has aEUR 22 billion unreported economyout of a total EUR 89 billion GDP.

The highest share of a country’sGDP made up by the unreported econ-omy was found in Latvia, at 39 per-cent. Austria was the best performerin this category, with only a 9.3 per-cent share of the local GDP coveredby the unreported economy.

AT Kearney found there was acorrelation between the coverage ofelectronic payments in a country andits shadow economy. Countries with

high levels of electronic payment us-age, such as the UK and the Nether-lands, have smaller shadow

economies than those with a minimallevel of electronic payments, like Bul-garia and Romania, writes AT Kear-ney’s report.

Several countries have come upwith measures to increase the use ofelectronic payments, which would re-duce the underreporting, for example:providing VAT reductions for cardpayments, funding new electronic ter-minals, limiting cash payments in cer-tain sectors, or offering incentives forusing cards. The unreported economycan be divided into undeclared work,which accounts for two thirds, and un-derreporting, where companies onlyreport part of their income in order toevade tax.

Corina Saceanu

Unreported economy reaches one third of GDP on low electronic payments

Victor Alistar, president of Transparency Inter-national

BRIEFSGFK ROMANIA OPENS EUR1 MLN SUBSIDIARY IN IASIé GfK Romania has invested overEUR 1 million in the opening of asubsidiary in Iasi which will takeover all of the company’s phonedata gathering operations. AndiDumitrescu, GM of GfK Romania,believes that the investment willsave money and also improve theservices offered by GfK. The newcall center has 70 employees,140 collaborators and 72 workstations which are predicted toshorten the duration of phoneinterviews and data transmission.

IMMOEAST POSTS EUR18.9 MILLION REVENUES INFIRST QUARTERé Real estate investment fundImmoeast Romania registeredEUR 18.9 million in revenuebetween May and July, the com-pany's first fiscal quarter. Thisrepresents 11.6 percent of thetotal EUR 162.2 million revenueposted by the Austrian real estatedeveloper and is only surpassedby the turnovers the fund regis-tered in Austria (EUR 76 million)and Poland (EUR 19.3). InRomania, the company ownsproperties with a total value ofEUR 976.6 million which repre-sent 12.48 percent of its EUR7.824 billion portfolio.

LOCAL ANTI-CRISISMEASURES ‘AMONGWORST IN WORLD’é Romania's anti-crisis measuresare among the most inefficient inEurope and the world, and theeconomic crisis has madeRomanian companies reduce theirefforts to fight corruption, a studyfrom CESifo has revealed. On ascale from 1 to 9, the measuresRomania has adopted have beenranked at 1.3, based on inter-views with 12 economists inRomania. The only country inEurope ranked lower was Latvia,which received 1 point. The eco-nomic climate remained unfavor-able in Central and EasternEurope, found the analysis.

Romania and Bulgaria score low on electronicpayments

W H O ’ S N E W S / C A L E N D A R


W H O ’ S N E W SAN C A VI Z I R E A N U will take over from BartBlomme as procurement and merchan-dising director of food for METROCash & Carry Romania, in October.She joined the company as a food buy-er in December 1996 and afterwardsheld the positions of food coordinatorand fresh division manager. In Septem-ber 2005 she was appointed procure-ment and merchandising director forfood at real,- Romania and since July2007 has been food buying director atMETRO Group Buying Central.

CL A U D I U MA N O L E S C U is the new investor rela-tions director at A & DPharma Holding. Hewill also continue tohold the position ofgroup reporting & ac-counting director.

Manolescu will be in charge of manag-ing relations with the company’s in-vestors, the London Stock Exchangeand the annual investors’ report. Hejoined the team five years ago as re-porting manager after a year and a halfas budgeting and reporting manager atS t i r o m .

DR A G O S NI C O L A E S C U has stepped down fromthe position of countrymanager of NessTechnologies Roma-nia, in order to dedi-cate himself to person-al projects. He had

been the company’s country managersince April, after previously occupyingthe same position at Fujitsu SiemensComputers Romania since 2005. Nico-laescu has a Bachelor of Science fromthe Physics and Chemistry Faculty

from the University of Bucharest.

OT A K A R SM O L I K will be in charge of thetemporary manage-ment team who willlead Ness Te c h n o l o-gies, until a new coun-try manager is ap-pointed. Before join-

ing Ness Technologies he was the ex-ecutive director of Komercni Banka.He has extensive academic experienceas a lecturer.

GY U R I EP E R J E S S Y has been promoted to com-mercial director atAlexandrion Grup Ro-mania. He joined thecompany in 2006 assenior brand managerof premium brands and

has also occupied the position of mar-keting director. With experience of morethan 11 years in the FMCG industry,Eperjessy has held different positions innational trade and brand marketing.

BO G D A N CO N S T A N T I N E S C U is the new generalmanager of FrontalCommunication, hav-ing occupied the posi-tion of country manag-er at Cisco Systemsuntil July. He will be

responsible for the development andcoordination of the company’s salesstrategies and programs for Romania.Constantinescu has been working inthe IT&C industry since 1992 as partof the management of companies suchas IBM and Microsoft. He is a graduateof the Polytechnic Institute ofBucharest.

Business Review welcomes information for Who’s News from readers.Submissions will be edited for length and clarity. Feel free to contact us at [email protected]

EVENTS, BUSINESS AND POLITICAL AGENDASEPTEMBER 26é 9:30 – The Bucharest Running Club Association organizes the Celebri-

ties’ Marathon in Herastrau Park.

SEPTEMBER 28é 10:00 – The Soros Foundation Romania organizes a press conference

on the launch of two sociological studies on Roma communities at Cap-ital Plaza Hotel.

SEPTEMBER 28é 10:00 – Groupama organizes press conference at Hilton Hotel.é 19:00 – Groupama organizes launch event at the Romanian Atheneum.

SEPTEMBER 29é 11:00 – UPC organizes launch event for UPC HD at Athenee Hilton

Hotel. By invitation only.

SEPTEMBER 29é 19:00 – Kiabi Romania organizes launch event for its first store in Ro-

mania at Grand Arena Berceni.

SEPTEMBER 30 – OCTOBER 2é The Atlantic Council of the United States organizes Black Sea Energy

and Economic Forum at JW Marriott Hotel.

SEPTEMBER 30é Biris Goran organizes "IT Start-Ups: How To" Seminar at Novotel Ho-

tel.

SEPTEMBER 30é Fischer-Price organizes press conference at Caro Hotel. Attendance

must be confirmed by 28 September.

SEPTEMBER 30é 19:00 – The World Trade Center Team organizes a cocktail party for the

official opening of the convention center at Pullman Bucharest WorldTrade Center. By invitation only.

OCTOBER 1é 15:30 – SAP Romania organizes press conference at Crowne Plaza Ho-

tel.

OCTOBER 6é PARADA, Samusocial Romania and Ateliers Sans Frontieres in associ-

ation with the Embassy of France and CCIFER are organizing the firstFrench-Romanian Social Responsibility Seminar at the French Institutein Bucharest.

OCTOBER 7é Business Review organizes Austrian Business Forum at Intercontinental

Hotel.

OCTOBER 13é 9:00 – Pierre Audoin Consultants organizes conference on software

business solutions at JW Marriott Hotel.

OCTOBER 18é The Bucharest Running Club Association organizes the Bucharest City

Marathon.

OCTOBER 22é Business Review organizes Italian Business Forum at Intercontinental

Hotel.

NOVEMBER 4é Business Review organizes French Business Forum at Intercontinental

Hotel.

The average Romanian pays

three times more a year (EUR

83) than his or her Bulgarian

counterpart both for a current

account for salary payment or

pension and for a credit card. A

study conducted by the Euro-

pean Commission on the 27 EU

member states ranked Roma-

nia 12th in a cost value classifi-

cation.

Romanians pay more bank charges than Bulgarians

M O N E Y


With just two players active on the

market, Romania offers big

opportunities for housing banks,

both through new and old

residential buildings. Meanwhile, the

profits are starting to come for

Raiffeisen Banca pentru Locuinte,

while BCR Banca pentru Locuinte is

eagerly awaiting its first returns in

2011, after three years of local

o p e r a t i o n s .

Safe as houses: property has traditionally been seen as a less risky investment

Anda Dragan

Housing banks in Romania seemto be feeling the pressure of the cur-rent crisis a little bit less than otherfinancial players. Even though theseare hard times for everyone, thesebanks posted positive results in thefirst half of the year and are alsomaking promising noises for the endof 2009. Raiffeisen Banca pentruLocuinte (RBL) and BCR Bancapentru Locuinte (BCR BpL) current-ly carve up the market. Since JanuaryR B L has signed almost 20,000 sav-ing-borrowing contracts (in whichthe state provides a subsidy once theborrower saves a certain sum) w o r t hmore than EUR 50 million. And theperspectives are also optimistic.“From our previous experience wemay say that the second half of theyear will be just as good as the first,”said RBL representatives.

The other major player on thehousing bank scene is BCR BpLwhich finished its first operationalyear (July 2008-June 2009) with over91,000 contracts worth almost RON2 billion (about EUR 470 million).W h a t ’s more, the bank expects to

sign 40,000 further contracts in thesecond half of this year. This meansthat the lender will have contractsworth in excess of RON 2.8 billionon its books by the end of 2009. Ontop of that it will launch lending ac-tivity in the second half of this year,o ffering two types of loan intended toreduce the waiting period necessaryto access a savings-borrowing prod-u c t .

HO U S I N G B A N K S’ O U T L O O KF O R 2 0 0 9

Housing banks are finally startingto reap what they have sown, so atfirst glance it might look like 2009 isgoing to be a promising year forthem. “This year will be probably thefirst one when we make a profit,” saidR B L representatives. They added:

“ H o w e v e r, the authorities have in-creased the benchmark for savings-borrowing products from15 to 25percent. It’s a good sign that savingsand homes are important elements ofeconomic policy, even through the to-tal sums are not substantial.”

M o r e o v e r, the legal procedures forthe RBL-HVB Banca pentru Locuintem e rger will be completed by the endof this year, along with the NationalBank of Romania authorization. T h elender posted about RON 4.5 millionin profit in the first semester and by theend of this year will reach break-evenpoint (including the legal costs of them e rger).

Elsewhere, Carmen Schuster, ex-ecutive vice-president of BCR Bancapentru Locuinte, said recently that thebank expects to be in profit in 2011 ,

after three years of activity on themarket. According to BCR BpL r e p-resentatives, the lender is leading thenewly signed savings-borrowingcontract market. “Our financial re-sults surpassed our shareholders’ e x-pectations. We have invested sub-stantially both in IT systems and thebusiness launch – marketing, salesand human resources,” added Schus-t e r.

Housing banks in Romania off e rvery simple products, so borrowersare shielded from interest rate andcurrency risks. The investments arerelatively safe and customers have noexposure on external markets. “Sav-ings-borrowing products will becomebetter known and more popular, espe-cially now that the state has increasedthe prime from 15 to 25 percent ofsavings, up to EUR 250 a year. More-o v e r, Romanians’ consumption hasshifted from loans to savings prod-ucts lately. It is still too early to drawconclusions, but there are signs thatdemand for RBL’s longer-term prod-ucts is increasing,” reported Raif-feisen Banca pentru Locuinte repre-sentatives.

A recent study conducted by BCRB p L found that 37 percent of bankcustomers like both the fixed and re-duced interest rates for savings-bor-rowing products they access after thesaving period, and the reduced rate ofcredit payments.

As with any market, newcomerswould sharpen up competition andprovide a wide range of products topotential clients. RBL r e p r e s e n t a t i v e sagree: “An increasing number ofhousing banks would be very favor-able for the market and help to spreadword of the importance of savings-borrowing products, which are notwell known in Romania yet.”

Although these products enjoyscant awareness among Romanians,housing banks have an important ad-vantage: they can benefit from thehigh potential of both new and oldhomes. According to the official data,in the EU-25 zone the average num-ber of people in a household is 2.4,while in Romania the figure is 2.6. Toreach the EU average, Romanianeeds to build over 725,000 homes,assuming none of the current ones goout of use. ■

HOUSING BANKS TAKE HEART FROM LACKOF HOMES

L I N K S


Online is the only medium whereadvertising has not taken a nosedive.Of course, it has had a very narrowescape from the effects of therecession, but it has a great chanceof fully recovering, riding the waveof the huge potential that lies incertain under-exploited niches suchas search engine optimization andsocial media sites, as well as blogs,which have the advantage ofpolarizing a solid target community.

Search engine optimization, or SEO, is an underdeveloped niche in Romania, say online commentatorsOtilia Haraga

“When we say search engines, wemean Google. Romania is one of thecountries that generate the lowest rev-enues for Google. In more developedmarkets, expenditure on search en-gines surpass 50 percent of onlinesales, while in Romania they representaround 4 percent,” Mugur Patrascu,partner in iLeo, tells BR. By way of ex-ample: in Scandinavian countries, asmuch as EUR 5 is paid per click whilein Romania, a click does not exceedEUR 0.3. With this in mind, Patrascusays SEO is a huge opportunity whichmust not be overlooked. Shuja Shaikh,managing partner in Kubis Interactive,tells BR not much emphasis has beenplaced on SEO recently, and evidenceof this is the large number of Flash-based websites, as Flash is not searchengine friendly.

What is interesting is that smallerplayers are the vanguard of change.Many large companies still do not havea clear policy and well-defined activi-ties and budgets for the search com-mand, Adrian Stanescu, country man-ager of Thinkdigital Romania, tellsBR. “Search is still the channel ofSMEs. I think the display-search bal-ance is still in favor of search engines,with the proportion double for searchcompared to display. But clearly, thebest results come from campaigns that

s y n e rgically combine these elements,”he says.

What about social media? “It is im-portant to note that, globally speaking,social media websites are visited morethan any other websites, and they’regrowing exponentially... So it’s defi-nitely important for clients to have asocial media presence,” says Shaikh.

What this niche is lacking in mon-e y, it is making up for in the interest ithas sparked lately, but which has notmaterialized into action of late. “Manybelieve that their simple presence onthe networks will bring them success,but they are wide of the mark,” saysPatrascu. At the moment, social net-works are still far from attracting sub-stantial budgets. “Using these sitesprofessionally usually means long-term consistent investments. At themoment, no one is willing to take suchan approach,” he says.

One has only to look at the busiestsites on the internet to see which onlinemedia are attracting the bulk of adver-tising budgets. “It is easy to see thatsites specialized in information (sports,financial and social) are suff o c a t e dwith a multitude of banners that striveto come out in front, whether by legalmeans or otherwise. This happens be-cause the daily routine of the averageinternet user includes one or two such

sites,” says Petrascu. These are fol-lowed by entertainment sites and com-munities around certain topics. “At themoment investments in blogs go moreor less where there is traffic or proac-tivity from the blogger,” says Patrascu.

U n f o r t u n a t e l y, a great many adver-tisers still make decisions based onpersonal impressions and do not takeinto account one of the advantages ofthis medium, which is measurability.

“ We can track web traffic, collectdemographic information, and keeployal customers informed for repeatbusiness – so clients are able to ana-lyze marketing strategies and quanti-fy ROI for any given campaign,”says Shaikh.“I hope this year we’llsee EUR 9 million spent on onlinemedia, with another EUR 8 milliongoing on creation and implementa-tion (the latter being my estima-tion),” says Patrascu.

“I believe we can estimate EUR20 million for 2009. Given the drasticshrinkage of budgets this year, theweight of online advertising in the to-tal market may have increased(against the slowdown of the entiremarket) by around 4-5 percent,” saysStanescu, who sees 2010 as a turningpoint when there will be substantiallymore online campaigns.

Interest has shifted from volume

and visibility at all costs to eff i c i e n c y,and here online is at an advantage asit can turn measurable results. “All inall, the online media market was oneof the lucky winners, along with T V,and has evolved better than print, out-door and radio,” says Stanescu. Still,he believes, the growth of the onlinead market is not conditioned by thecrisis but by the understanding of ad-vertising and marketing professionalsthat internet consumption has certain-ly caught up with or even surpassedthe consumption of other media.

“Online was seriously catchingup. For three years in a row, expendi-ture doubled in this medium. T h e o-r e t i c a l l y, we should have evolvedfrom 2 percent of the advertisingmarket to 10 percent. There was talkin the industry about EUR 100 mil-lion which was going to be spent in2012. Obviously, the recession hasput a brake on this evolution,” saysPatrascu. He sees a comeback for themarket two years from now. “Myprediction would be 2011. 2010 ismostly gone and it will not be able toprove a trend. There will be all sortof situations, several spectacularpeaks, but overall, I would not label2010 as the year of the comeback,”he says.

o t i l i a . h a r a g a @ b u s i n e s s - re v i e w. ro

ONLINE ADVERTISING: SEO, SOCIAL MEDIAAND BLOGS HAVE GREAT POTENTIAL

T A L E N T


With a drop of 40 to 50 percent this

year on 2008, and a significant

consolidation, the Romanian training

market needs a shot in the arm.

Multinationals have reduced their

training budgets while most small

and medium Romanian companies

have eliminated training programs

from their agendas for at least two

years.

Anda Dragan

The Romanian training marketwas worth EUR 45 million last year,according to specialists, but the cur-rent crisis did not spare the industry.With a less promising outlook, 2009will clearly bring falls. Sergiu Te o d o-siu, consultant at Ascendis, expectsthe local training market to shrink by40-50 percent this year. Currently,the market provides a wide range ofcourses, from management /leader-ship and interpersonal skill develop-ment training (sales, negotiations,customer service, etc) to specializedor technical skill development (fi-nancial-banking, etc).

As for who funds it, it is some-times the state (by European grantsor governmental programs) andsometimes private companies. Vi o r e lPanaite, partner at Human Invest,does not expect the management/leadership and interpersonal skilldevelopment training market to ex-ceed EUR 10 million in 2009. “Thismarket will decrease by almost 70

percent on 2008,” said Panaite. Headded that the EUR 10 million in-cludes this year’s contracted projectsby the best-known five-six compa-nies and about which Human Investshas information, and only privatelyfinanced training programs. MBAprograms are not included.

RO C K Y R O A D A H E A DClients are focusing more on

business strategy and performancetraining this year, according toS e rgiu Teodosiu. “This year we haveimplemented timely, well targ e t e dtraining programs, while in 2008 wetook a general approach to trainingwith a very wide audience,” saysTeodosiu. He adds that A s c e n d i sposted a EUR 4.3 million turnoverlast year and expects it to shrink by20 percent this year.

The reduced budgets and smallnumber of companies interested intraining services is another obvioustrend for this year. But while con-struction and construction materials

industries have frozen some trainingprograms, industries such as pharma-ceutical, banking and telecommuni-cation have continued to solicitcourses. “Companies have begun topay more attention to the purchasedtraining programs, and chose highquality ones,” said Panaite. He addedthat training firms’ e ffort to sell theirprograms is now greater, due toslashed budgets and a smaller pool ofclients. “That’s why so many smalltraining companies have just van-ished, encouraging the appearance ofmany freelance trainers,” saysPanaite.

According to the country manag-er for Romania of the CEU BusinessSchool, Oliver Olson, the overalltrend for this year has been the dras-tic reduction in ‘trivial’ training. Inthe past, many companies purchasedtraining for their employees withoutgiving much thought to either howthe training would fit into the overallstrategy of the company or how itwould directly benefit the productiv-

ity or profitability of the employeesinvolved. “Now we’re seeing lesstraining, but of higher quality. This iswhy we think this a good opportuni-ty for us to grow in this market,” saysO l s o n .

I t ’s obvious that the impact of thecrisis has been considerable, both onexisting companies and on new en-trants. “We are a new player on thetraining market and the crisis hasmade it much more difficult for us toenter the market. However, we seethat a positive effect is that compa-nies are becoming more discerningregarding their choice of training,which we feel will be an advantageto premium training providers suchas us,” explained Olson of CEUBusiness School, which offers cus-tomized corporate training such asproject management, operationsmanagement, finance, customerservice.

Also, other visible trends are theincreased effort to gain Europeangrants and companies’ increased in-

ROMANIAN TRAINING FIRMS TRAIN THEIR EYES ON RECOVERY

From the boardroom to the classroom: training was popular with local firms but the credit crunch has since squeezed budgets

T A L E N T


Book value: some cash-poor firms are now questioning the need for training

terest in measuring the impact ofHR development program invest-ment. “The new thing is top man-agement’s interest in working withtraining and consultancy experts.Together they are identifying the re-al needs of HR development and arecreating solutions in order to opti-mize employee performances and tomaximize investment eff i c i e n c y, ”says the general manager of UnitedBusiness Development (UBD), Di-ana Rosetka.

TR A I N I N G I N A T I M E O F C R I S I SSome training companies are dis-

appearing from the market while oth-ers are struggling to survive. A l s oplayers are adopting new positions inthe crisis. “There will be two majorcategories of management /leader-ship or interpersonal skill develop-ment training companies. On onehand there will be five to six impor-tant companies with a combinedmarket share of 80 percent (almostEUR 8-10 million a year). On theother hand there will be many free-lancers that will target revenues ofabout EUR 30,000-60,000 a year, ”says Panaite. He believes that bothsmall companies with two or threetrainers and big ones are either trans-forming or disappearing. Panaite ex-pects Human Invest to post EUR600,000-800,000 in turnover thisy e a r. “We are working harder formore small projects, which means abigger sale price overall,” saysRosetka of UBD, flagging up anoth-er trend. The company estimates aEUR 1.4 million turnover for 2009.Furthermore, according to GiulianaBoicu, managing partner of People

Investment-Crestcom, companies’fall in inclination to train their em-ployees is probably the most signifi-cant trend. “The crisis will get com-panies asking: ‘Why do we needtraining?’,” says Boicu.

CO M P A N I E S S T I L L W A N TC O U R S E S

H o w e v e r, the market has not dis-appeared completely, just shrunk.“Companies are still asking fortraining, but the sales cycle is muchlonger and the chance of the trainingnot actually being purchased at theend of the process is much greater, ”said Olson.

In 2009 Ascendis has had clientsthat haven’t been as active so far butnow they are realizing the impor-tance of a training program. Leader-ship/management, sales skills devel-opment, coaching, change manage-ment, sales management, businesss t r a t e g y, project management, oper-ations management, finance andmarketing training have been among the most popular train-ing courses with companies thisy e a r.

Boicu told Business Review that90 percent of Romanian SMEs havenever shown interest in any training.N o w, small firms have completelyeliminated training from their priori-ties for at least two years. “Multina-tional companies have chosen to re-duce or to postpone training budgetsand have focused on technical train-ing,” explains Boicu. She adds thattime management and internal cus-tomer relations are among the mostsought after courses for People In-vestment-Crestcom. ■


Bucharest nightclub owners have felt the heat this year from falling crowds and takings, but it hasn’t stopped themopening new units. Hopes are high for what the fall will bring, equally for those who run clubs targetingtrendsetters, live music lovers or students. The highly segmented club market in Bucharest shows there is still roomfor new investments, provided investors put passion first and expect the money to come later. Business Reviewtalked to several club owners about their projects for this autumn.

Corina Saceanu

It is only a couple of months ayear when Bucharest clubs enjoy fullhouses and cash in enough to make upfor when terraces get most of the busi-ness, and this period is about to start.There are plenty of clubs to choosefrom in the capital, catering to alltastes, so from this point of view thereis plenty of competition. On somesegments of the Bucharest club scene,

takings are up, while on others the re-cession has hit home.

THE OFFICE PLANS BIGGER UNITIN BUCHAREST, EXPANDS RANGE

Several club owners have thoughtabout how to make this a year-roundbusiness. Ion Biris, one of the ownersof The Office chain, has expanded thefocus from clubbing only. This is thetrend on international markets, hesays, and his own target audiencewanted more than clubs. After open-

ing El Capitano restaurant in Snagovin May this year, he and his two part-ners in the business, Petre Berciu andDan Malusel, are now working on anew concept, which combines arestaurant and clubbing. The newplace, which will occupy 650 sqm onthe ground floor of the MetropolisBusiness Center office building inBucharest, should be opened towardsthe end of this year. The investment –between EUR 800,000 and EUR 1million – is by far the highest sum the

Club owners dance theirway around slowdownClub owners dance theirway around slowdown

group of investors have put into anyof their existing locations, and theyexpect to recover it in two or threeyears. Meanwhile, the original TheOffice club in Bucharest, which wasclosed in spring this year, will stayclosed for a revamp with re-openingplanned for fall next year.

This year was not as bad as ex-pected in terms of club takings. Infact, it was better than last year, saysBiris. “Our Office unit in Mamaiaposted double the results of last sum-mer, which for us was a huge suc-cess,” Biris, who is also one of theowners of beverage importer BDG,tells Business Review. But still, he hasseen some of the consumption habitsof Office customers changing. “Whilein 2007 and 2008 we saw an increaseof sales of expensive products, andchampagne was on all the tables, thisyear the consumption of expensivechampagne has decreased by 70 per-cent, while sales of premium vodkas,which are less expensive, were up 50percent,” says Biris.

He has seen the same trend in hispremium beverage importing busi-ness. “The price people paid last yearfor a premium champagne buys twobottles of vodka and customers havemade the switch,” he explains.

While the former The Office wel-comed customers three nights a week,from T h u r s d a y, the soon-to-open lo-cation should see them coming inseven days a week. “We are trying tostay in contact with the trendsetters,but they want certain things from aplace in Bucharest and other thingsfrom the club at the seaside,” saysBiris.

In the good old days of 2008, TheOffice was bringing its owners up toEUR 15,000 on a full weekend night.They expect the new location to bringaround EUR 70,000 each week, as thespace is double that of the old site anda restaurant has been added.

JUKEBOX CLUB HOPES LIVE MU-SIC WILL BE IN TUNE WITHRESTAURANT AND TERRACE

Combining a restaurant and clubseems to be the new thing. US busi-nessman Dan Mason, the major share-holder in Coyote Cafe and the newlyopened Jukebox Club, has spent nineyears looking for a site where hecould set up a terrace, add a restaurantand keep the live music club core. Hetried something similar before withthe Jukebox Club in the old part of thetown and then in Coyote Cafe, but inJune this year he found the formerBecker Brau Live Music, which heand his business partners bought. Ma-

F O C U S

F O C U S


son, who partners Wolf T h e i s s ’sBryan Jardine, Radu Florescu ofSaatchi & Saatchi and another expat,expects the Jukebox Club to bring theowners two and a half times higherrevenues than Coyote Cafe has. Thenew place is bigger than Coyote Cafe– it can seat 600 people and can holdover 1,000 compared to 420 and 700respectively at Coyote. It also in-cludes a restaurant and a terrace,which Coyote Cafe lacked.

Mason, who says none of theowners make a living out of the musicclub business, expects the investmentin the Jukebox Club to be recovered infive years, while the Coyote Cafe,which was opened five years ago, hasalready reached break-even point.This will be the last investment inclubs for Mason, he says. “For me andmy partners, this is not our living. No-body is doing this for the money. Forme, it is the love of music and watch-ing my customers enjoying them-selves. We play fun music, feel-goodmusic at our club,” says the US in-vestor.

Clubs should get busy around thistime of year, he says. “The mostcrowded period is from the beginningof October to the end of December,”says Mason. “Before that, it is almostnonexistent. The summer is dead forlive music clubs. Business comesback at this time of the year and it fillsup in October. As soon as peopleleave the terraces, the clubs do well,”he adds.

While it is still to be seen how thismusic club season will go, in 2008year-on-year revenues started to slide.“Last year we saw lower revenues. InMarch it began to slump year overyear. What this year will be like, wewon’t know until October,” says Ma-son. His venue was hit by a combina-tion of fewer customers and a drop intheir spending in the club. “There areseveral clubs in our category whichare struggling now. Some, which did-n’t have any reserves, went out ofbusiness, while others have pinnedtheir hopes on what October willbring,” said Mason. “But Coyote hasalways done well through thick andthin.” However, even at Coyote, dueto the market competition, they had todrop the entry fee from RON 20 toRON 15. “We lowered the entrancefee because many clubs have copiedus over time and they have broughtprices down. We had to match theirprices to keep our customers, so it wascompetition which forced us to do it,not the economic situation,” says Ma-son. However, what he witnessed lastspring in Romania was by far the

worst economic period during his 10-year stay in the country.

PROFIT FROM STUDENT CLUBSCOMES HARDER

While some target the high-livingtrendsetters or upscale fans of livemusic, there is an entire segment ofBucharest clubs which rely year afteryear on the steady revenues from stu-dents. For them, the start of the uni-versity year in October should be amonth to enjoy. Summer months arethe slowest for this business, which iswhy many clubs temporarily move tothe seaside and open units there.

“The general tendency of theHoreca market is downwards. Thenumbers point to a market contractionof about 25 to 30 percent compared tolast year,” Adrian Soaita, owner ofClub A, Twice and Silver Churchclubs, tells Business Review.

In both good and bad times, clubsneed to continue pouring money ei-ther into refurbishment or being cre-ative with new events. Club A, a vet-eran on the Bucharest scene, havingopened back in 1969, has livedthrough the communist era and thecapitalist market economy. Until1989, the venue, which was foundedby the dean of the Architecture Insti-tute at the time, was the only club al-lowed to stay open throughout thenight, a place where the youth of thattime could enjoy music and literaturenights. Soaita took over the manage-ment of the club in 1990 and the firmwhich now runs it was set up in 1991.“Over time, lots of money has beeninvested in the club. We’ve put cashinto the sound and lightning systemsand increasing standards, as well asinto organizing cultural events for stu-dents,” says Soaita. The club funnelsits profit into the cultural programs.“The club has hovered around break-even point for years, and everythingwe make as profit is reinvested in ourprograms,” says Soaita.

Until recently the Architecture In-stitute managed the building whosebasement houses the club. But it wasreturned to its former owners in 2007and the club signed a leasing contractfor the space. “The modest rent weused to pay became a market rent andthis has led to a dramatic decrease inthe club’s profit, which has made itd i fficult to finance cultural pro-grams,” says Soaita.

The same firm which runs Club Aalso set up Twice in 2002. RecentlySoaita managed to buy the buildingwhere the club is located fromBucharest City Hall, after havingspent three years getting it into the

F O C U S


shape he wanted. The club is not making a profit yet, because the initialinvestment was very high, says the owner. “In the next few years, the profit, if it posts any, will go towards paying off the loans which we took out to buy the space,” saysSoaita.

The latest addition to the portfolio

was Silver Church, which opened inDecember last year. “If the market re-mains at a constant level, the club willbecome profitable in two years fromnow, based on my estimations,” hepredicts.

The place was rented from theMinistry of Youth in November 2007and it took 13 months of investment to

ION BIRIS and Petru Berciu started The Office in 1997, when they found the downtown location,

which they spent a year renovating. They had taken a trip to Mexico and been inspired by a club

there. “We didn’t think of it as a business,” says Biris. The venue has had its ups and downs, which

is normal in the clubbing world, as it is hard to keep the same customers for seven-eight years with

the same recipe. “During peak times, you make money. At low times, you cover your expenses.

We’ve put in some of our own money, but we haven’t lost anything,” says Biris.

DAN MASON, majority shareholder in Coyote Cafe and the Jukebox Club, came to Romania ten years

ago, working for US telecom firm Verizon. His last assignment was in Romania, working for OTE,

where he was GM of network operations for two and a half years. At the end of that project Verizon

was downsizing and lowered its retirement age, so he decided to take his pension. Around 2001, af-

ter going to places such as the Irish Pub and English pub, he and a couple of friends decided to open

a pub of their own. He opened one in the old part of Bucharest, the Jukebox, after which he met the

Atlantic Blue band. The band soon began to play under the name Jukebox and they continued the

partnership, with the band now playing both at Coyote Cafe and the Jukebox Club. He then met busi-

nessmen Bryan Jardine and Radu Florescu and partnered them for the Coyote project. Mason has

sold the original Jukebox place in the meantime.

F O C U S


Adrian Soaita, owner of Club A, Twice and Silver Church

get it ready for opening. Ultimately, although there is still

room on the market for new entries,existing players say, money is not thecore. “To open a club, you don’t needlots of money. Many people with money have opened clubs, but

they don’t understand the business.Money is necessary, but it is not themost important thing. Now there isroom for new places, the market issettling,” concludes Ion Biris of The Office.

c o r i n a . s a c e a n u @ b u s i n e s s - re v i e w. ro

Club O w n e rCLUB A Adrian Soaita

BAMBOO Castellano family

COYOTE CAFE Bryan Jardine,

Radu Florescu,

Dan Mason

EXPIRAT Andrei Sosa

FRATELLI Mihai & Liviu Popescu

GAIA Madalina Dorobantu,

Alex Popescu,

Venera Arapu

JUKEBOX Bryan Jardine,

Radu Florescu,

Dan Mason

THE OFFICE Petru Berciu, Ion Biris,

Dan Malusel

THE ROOMS Iulian Padurariu

TWICE Adrian Soaita

Club owners in Bucharest


Austrian investment fund Immoeast,which has started to restructure its port-folio across the South Eastern Europeanregion, will continue to sell assets in Ro-mania, the fund’s biggest market in theregion. “We are over-invested in certaincountries like Romania or shopping cen-

ters in Moscow,” said chief executive of-ficer Eduard Zehetner, quoted byB l o o m b e rg newswire. “We are notforced sellers and we are going to sell torestructure our portfolio into what wewant.” Immoeast had previously an-nounced it was planning to sell some of

S-Park office center is one of Immoeast’s properties in Romania

Immoeast seeks painless exit

P R O P E R T Y

GE Real Estate and Helios Phoenix open firstphase of Olympian Logistics Park Brasov

Israeli developerbuilds EUR 8 mlnhouses in Balotesti

Real estate developer GE Real Es-tate and Helios Phoenix, the joint ven-ture between Helios Properties andPhoenix Real Estate, have started leas-ing Olympian Logistics Park Brasov, a18,100-sqm development of warehous-ing and office space. The price per sqmwill be EUR 4-5. The Brasov develop-ment will be followed by a similar one inTimisoara, which should be ready in Oc-tober 2010, and by one in Bucharest, inthe Chiajna area, later in 2010. So far,

the first phase of the Brasov project hasbeen completed.

The Olympian Logistics ParkBrasov is being developed on a 9.3-haplot of land, located just west of Brasov.Last year, GE Real Estate and HeliosPhoenix announced they would investEUR 87.5 million in six logistics parksin Romania, three of which have alreadybeen planned for Bucharest, Brasov andTimisoara. Back then, Constanta,Oradea and Cluj were also on the cards.

its assets in Romania and exit from sev-eral development partnerships. But nowit says it might offload more than initial-ly anticipated. “We may sell more thanbudgeted as we are getting offers formore than we expected,” Zehetner re-cently said. “We have certain con-straints. We don’t want to lose money interms of the initial investment.”

Immoeast owns 72 properties in Ro-mania, worth EUR 750 million, accord-ing to its most recent report. Romaniaalone covers 13 percent of the fund’s to-tal portfolio.

In Bucharest, it owns several off i c eproperties, such as Iride Business Park,Victoria Park and S-Park. The firm alsohas shopping malls across Romania: Po-lus Center in Cluj, Armonia in Arad andEuromall in Pitesti. Gold Plaza in BaiaMare, developed by Hungarian develop-er Futureal and in which the fund holdsthe majority of the shares, has recentlybeen finished. Immoeast is 55 percentowned by Immofinanz.

Corina Saceanu

September 21st, 2009, Adamaclosed the deal for the last two apartments available in the SwissCottage project from Titan. The resi-dential complex started in the firstquarter of 2007 is located on 9 Mizil Street, in Bucharest’s district 3 and it has 102 apartments in twoblocks.

EVOCASA SWISS COTTAGE has twocoquettish blocks, on 6 floors each dif-ferentiated by the other buildings inBucharest by Swiss inspired architec-ture and it’s underground parkingspaces in Klaus system. Together withthis project, Adama implemented, ex-clusively for Romania, European Stan-dardized System (ESS).

Swiss Cottage is the second projectin Titan Area , 100% developed andsold by Adama after Titanium locatedin 3 Postavarului Street.Besides these 2projects, Adama develops in Titan oth-er 3 projects: Edenia , EvoCasa Armoniaand EvoCasa Optima – being thestrongest developer in the mentionedarea. Evocasa Selecta – a luxury & ex-clusivist project - is also in constructionin the centre of the Bucharest, near thehistorical centre.

“Once with the complete sale of thesecond Adama residential project inBucharest, we consider that we suc-ceeded to add value to the Bucharest’sarchitecture and as well to the life qual-ity of the 200 families already living inour apartments. Beyond consideringthis new victory a personal one, I con-sider that it is a good moment to em-phasis the fact that all we did was to un-derstand and to adapt to the Bucharestpeople needs, starting from the premis-es that they deserve a better life”.(David Flusberg )

Bucharest, September 21st, 2009Swiss Cottage by Adama - sold out

R E G I O N A L N E W SDOWNTURN HITS THEWORLD'S MOST EXPENSIVESHOPPING STREETS

The global economic downturnhas affected more than half of thew o r l d ’s best known shopping streets,according to a report by real estate ad-viser Cushman & Wakefield. T h eprime rents on these streets haveslumped, in the biggest global fall inretail in the last 24 years. New Yo r k ’sFifth Avenue remains the world’s mostexpensive street, with a decline in rentof 8.1 percent on 2008. Rents on

B u c h a r e s t ’s Calea Victoriei haveplunged 48.1 percent.

REDEVCO OPENS ANKARAMALL

Real estate developer Redevco hasopened Gordion Shopping Center, a50,000-sqm shopping center inAnkara, Tu r k e y, and is planning toopen a second project in Erzurum.Gordion Shopping Center hosts ten-ants such as Carrefour, Electroworld,Zara, C&A, Marks & Spencer, ZaraHome and Massimo Dutti.

Israeli developer ARH Ventureswill put EUR 8 million into buildingan 82-house compound in Balotesti,close to Bucharest. The project, tobe called Maple Palace, will be de-veloped on a 36,000-sqm plot andwill feature duplex-style units. Eachhouse covers 164 sqm, while the en-tire plot for each unit covers 400sqm. The firm is developing theproject using metal structures in-stead of traditional brick and con-crete ones.

Prices start from EUR 155,000.Maple Palace is the developer’s firstreal estate project in Romania. It al-so owns a land plot in the Dascalul o c a l i t y, also close to Bucharest,which it intends to use for a residen-tial project.

Staff


Local tile producer Depaco hasseen its sales increasing by 30 per-cent in the first half of this year,compared to the same period of lastyear, reaching EUR 1.7 million. “Itwas better than expected, becauseeven though the value was 30 per-cent higher, the volumes were 45percent bigger, and the percentagegrew even more in the second quar-

Depaco sees tile sales up 30 percenton increasing market segment

Dragos Irimescu, owner of Depaco

P R O P E R T Y

ter of the year,” Dragos Irimescu,owner of Depaco, told Business Re-view.

The firm’s production capacityis 200,000 sqm of metal roofingtiles. “After finishing a new indus-trial warehouse, we will buy equip-ment for metal tiles, as well as forother products,” added Irimescu.

Most of Depaco’s sales comefrom the south east of the country.

The local metal tiles market hasbeen undervalued in the past, but itseems it will be among the few mar-ket segments which will recordgrowth in 2009, at least in terms ofsold volumes, if not by value, saidthe company owner. “We couldreach 14 to 15 million sqm of soldmetal tiles this year on the Roman-ian market, while its value will stayat some EUR 150 million for full roofing systems,” he added. Localproduction covers around 70 per-cent of the market, the rest being ac-counted for by imports.

Corina Saceanu

Real estate investment fund EquestBalkan Properties has recently sold itsretail warehouses in Ta rgoviste, whichare rented to Praktiker and Te c h n o m a r-ket, for EUR 4.3 million, according to itsmost recent financial report. The fundcashed in EUR 1.2 million from the sale.On top of that, Equest has also drawnEUR 2.2 million from a loan facilityfrom Raiffeisen Bank, following the let-ting of 9,000 sqm in Equest LogisticC e n t e r. Afurther EUR 5.7 million of thatloan will be available pending furtherleasing. Although the fund has managedto lease space in Equest Logistic Center,the pace of leasing was slower than ithad anticipated. Increasing vacancy lev-els are also a problem.

“The net rental income of EUR 4.44million is slightly below expectationsdue to increasing vacancy levels andtemporary rental concessions at Vi t a n t i sand Moldova Mall, together with slowerthan expected leasing at Equest Logistic

C e n t e r,” states the financial report. “Atthe operational level we have been inconstant dialogue with our tenants,many of whom have demanded rent re-ductions, and with our service providersto renegotiate contracts,” it goes on.

The fund’s portfolio has been hit bydecreasing market values. It currentlyowns EUR 191.6 million of assets, in-cluding its shares in properties held byassociates. The value of the propertyportfolio is less than half of the figure inJune 2008, which was EUR 402 million.Around 65 percent of its assets are inRomania. Shareholders, who have notcashed in any dividends, have also seenthe net asset value per share dropping by73 percent from June last year, to a cur-rent value of EUR 0.39, under Interna-tional Financing Reporting Standards(IFRS). Overall, the fund has posted apre-tax loss of EUR 71.2 million, muchhigher than in June last year, when theloss was EUR 9 million. “Our poor mid-

Equest sells Targoviste warehouses, draws financingbased on leases

year results reflect further reductions inthe market value of our assets. The com-mercial real estate sector continues todecline. Investor activity is scarce, themortgage markets are tight, and down-ward pressure on rents is now wide-spread. We are taking measures to im-prove our cash positions through asset

sales, several of which completed in thepost period, and will carefully use thecash to meet critical obligations in atimely manner. Negotiations continuewith Bank Austria regarding MoldovaMall and Vitantis,” write the Equestmanagers in the report.

Corina Saceanu

George Teleman is running the local operations of Equest Balkan Properties

E X E C U T I V E B E A T


Corina Saceanu

How has Gealan’s businessbeen evolving in Romania this yearcompared to 2008?

2008 was a glory year, but whilein the first half we were wonderinghow to increase our targets, in thefourth quarter things started to getworse. This year, investments in con-struction are at a low, which is re-flected in our results. Overall, giventhe market drop, we still have a goodposition compared to 2008. We haveseen a decrease of 10-15 percent interms of sold volumes so far. T h emarket has dropped by around 30percent. Probably next spring we willsee even more changes in the indus-t r y, on the PVC segment. There willbe fewer players; many have alreadystarted to move onto different marketsegments. The business is stronglyinfluenced by seasons, with winterand the first half of the year critical.

What do you expect from 2010?It will be even worse than 2009,

as next year we won’t benefit frompreviously started constructionworks, as we have done this year.But we would like to keep our busi-

ness at the same level as this year. How have you managed to off s e t

the drop on the construction mar -k e t ?

We are now partners in the statethermal rehabilitation program andwe have targeted the renovationsmarket. We have also come up withnew products to diversify our range.Products sold for new and renovatedbuildings made up half of our saleslast year. Now renovations fuel themajority of our sales. It is hard topredict how the rehabilitation pro-gram will go, but the effect will notbe very big this year, perhaps 30 per-cent of our sales. We are only pro-ducing the profiles, everything nec-essary for the final product, but wesell through partners and these firmshave the direct contact with the finalcustomers.

What is the state of the localPVC profiles market in Romania,compared to Gealan’s home countryof Germany?

The German PVC market is amature market. It sells only PVC sys-tems produced in that part of Europe

and there is a certain quality and pre-d i c t a b i l i t y. Here in Romania we canalso see Bulgarian, Chinese andTurkish PVC profiles. They comewith low prices and they unbalancethe market. Sometimes it is hard toimagine how they can offer such lowprices. Very often some companiesthat sell at low prices work for a cou-ple of months and then disappear, on-ly to re-appear later under anothername. This affects the market.

You previously said you wereplanning to relocate productionfrom the current Bucharest locationto somewhere close to the city. Towhat extent are you still pursuingthe relocation plan?

The project is still valid, but it hasbeen delayed until things settledown. The relocation was decidedupon because here we have 25,000sqm of land. In 1998, when weopened, it seemed like a big area. Wehave added bits and pieces to thecompound over time, and the pro-duction halls here are not arranged asthey should be. We also have a ware-house in Bucharest and we would

Gealan focuses on thermal rehabilitationand postpones relocation

have brought everything under oneroof. We had also planned to increaseproduction capacity, to double it. A tthe moment, we are producing18,000 tonnes of PVC profiles eachy e a r. It made sense at the time, be-cause we used to double our turnoverevery two years – until 2008. It wasnot very far from the current loca-tion. We would have had a greenfieldproject on a land plot for which wehave an agreement.

Are you planning any other in -vestments for 2010?

Now we are investing in the softissues in the business, in our staff andpartner companies, through trainingprograms.

To what extent have you seenproblems among your partner com -panies?

We are always expanding ournetwork of partners. We have seenproblems, but we haven’t had anybig losses so far from this point ofv i e w.

How big is the local PVC pro -duction market in Romania? Do you expect any new players tojoin?

There are more re-sellers than lo-cal producers in Romania. We couldsee new producers entering the mar-ket; there have been attempts in thepast. Entering this market segmentd o e s n ’t necessarily involve a large fi-nancial investment, but it needs con-tinuous investment in people. It’s nota simple technological issue and peo-ple skills cover more than half of thework.

What is the value of the Roman -ian PVC market, in your estima -tion?

During its glory period, in 2008,the local market reached EUR 800million-EUR 1 billion. But this in-cludes aluminum and PVC profiles.It has dropped by 30 percent thisy e a r. The aluminum profiles, whosesales were fueled by office buildingsand malls, were affected when theseprojects stopped.

c o r i n a . s a c e a n u @ b u s i n e s s - re v i e w. ro

PVC profiles producer Gealan has

recently come up with a thermal

rehabilitation promotion meant

to fuel sales, which dropped in

volume by 10 to 15 percent

in the first half of the year.

AUREL VLAICU, general manager

of the company, says it is no

longer the right time to relocate

and double production, as was

previously intended.

T A X E S


Dana Ciuraru

Times of crisis are challengingb oth for governments and the pri-vate sector, but eyes are focusedmore than ever on the authoritieswhich have to come up with rescuestrategies. Economists say that dur-ing turmoil the knight in shining ar-mor is “investments, investments,investments”.

R e c e n t l y, Romania’s govern-ment reintroduced into fiscal legis-lation a measure making reinvestedprofit from production or techno-logical equipment tax exempt. Ghe-o rghe Pogea, the minister of fi-nance, announced that the measurewould be included in the new FiscalCode and would come into forcenext year.

Some market players believethat the move will have a significantimpact on the level of investmentsmade by small and medium sizecompanies (SMEs).

Ovidiu Nicolescu, president of

the National Council of SMEs, saidthis measure would raise the invest-ments made by SMEs in Romaniaby approximately 30 percent andwould also compensate for the dropin lending, which decreased consid-erably in the second part of 2008.

But not everyone is so positive.Although the market has expectedsuch a measure from the Romanianauthorities for quite some time,market economists and lawyershave identified some drawbacks.

UPS AND DOWNS OF THEGOVERNMENT MEASURE

Marius Ionescu, partner atN N D K P Fiscal Consultancy, be-lieves that the decision does notconstitute a real fiscal facility in thetrue sense of the word, because itdoesn’t grant a tax exemption, just apostponement of payment.

“The measure offers an exemp-tion for reinvested profit in certainfixed assets, which later one cannotamortize. So the benefit is from anexemption at the moment at whichthe investment is made. But by notbeing able to write off that asset, thetax will be paid in the future, if thecompany is profitable,” said Iones-cu.

He added: “If the income taxrate increases, the tax to be paid willbe higher than the rate at which thedispensation was obtained and thecompany will lose out by applyingthis ‘facility’.”

Gabriel Biris, managing partnerat Biris-Goran, believes that themain advantage of this measureconsists in the possibility of full de-duction of the investments, at nohigher than the taxable income val-ue, as a super-accelerated deprecia-tion.

“The main disadvantage is,however, the possibility of applyingthe minimum tax, if the investmentis higher or equal to the profit. An-other disadvantage is that if the as-sets to which the measure is appliedare kept for at least half their lifespan, not only must the tax then bepaid, but also interest on the tax,”said Biris.

Fiscal Consultants Chamber(CCF) officials have stated that lim-

iting the application of this measureto investments made in productionand/or the purchase of technologicalequipment is selective. This selec-tivity discriminates against compa-nies whose business does not in-volve the use of equipment and maycontravene European legislation re-garding state aid. In addition, theCCF points out that the proposedmeasure is not applicable if the in-come tax due is below the minimumtax threshold. So companies withlower profits will also miss out.

MARKET EFFECTSThe NNDKP Fiscal Consultancy

partner doubts the measure will bewidely applied, as it provides only acash flow advantage, but one notwithout risk.

“The taxpayer must be verycareful in applying the measure, be-cause if applied wrongly (either onthe establishment of the eligibleprofits or the nature of eligible fixedassets, etc) it would result in future

increases of about 36 percent peryear from the amount exempted. Inaddition, the exempted income willcreate a taxable reserve, if its desti-nation changes,” said Ionescu.

Biris also believes that the gov-ernment’s measure will have few ef-fects on the market because of thelimited period of time in which thismeasure will be applied, meaningQ4-2009 and 2010, which “missesthe profits”.

“Few investments have beenmade, as firms are more focused onsurvival strategies. However, it is ameasure that may help some taxpay-ers who have development plans inthe near future,” said Biris.

Market analysts believe thatmuch more helpful for the businessenvironment is a tax system that isbased on low tax rates and a hightax base, meaning fewer exceptionsto ensure predictability and stability.Facilities, they say, do not con-tribute to any of these goals.

d a n a . c i u r a ru @ b u s i n e s s - re v i e w. ro

The recent government decision

not to tax reinvested profit only

from production and

technological equipment has been

questioned for its narrow scope.

Both tax consultants and lawyers

say that the measure is selective,

discriminatory and doesn’t

represent a real tax facility.

According to them, the

government’s move will have few

of the desired effects on the

market.

Marius Ionescu, partner at NNDKP Fiscal Consultancy

Gabriel Biris, managing partner at Biris-Goran

EXPERTS BLAST LIMITED NEW TAXEXEMPTION

B U S I N E S S R E V I E W E V E N T S


German business under the looking glass

■ 1. Sonja Kreibich, head of the economic section at the German Embassy in Bucharest, and Bill Avery, publisher of Business Re-

view ■ 2.The German Country Focus event gathered more than 50 people at the Intercontinental last week ■ 3. Mihai Rohan,

general manager of Carpatcement Holding ■ 4. Cristian Secosan, CEO of Siemens Romania ■ 5. Radu Merica, president of AKH

Romanian German Chamber of Commerce and head of ECE Projektmanagement in Romania ■ 6. The speakers talked about suc-

cess strategies for German investors in Romania ■ 7. Ben Martens, owner of the Contract Cleaning Company ■ 8. Adrian Cior-

na, president of the Habitat for Humanity ■ 9. Tomohiro Yoden (right), general manager of Jetro ■ 10. Petra Mueller Demery,

managing partner with MDI Training and Bill Avery ■ 11. Participants at the event caught a glimpse of the new-look Business

R e v i e w

1 2

3 4 5

6

8

7

B U S I N E S S R E V I E W E V E N T S


Representatives of Germancompanies, the German Embassy inBucharest and the Romanian-Ger-man Chamber of Commerce metlast week at the German BusinessForum to discuss the key issues thatthese investors are facing in Roma-nia. The level of German invest-ments on the local market, the im-pact that the crisis has had on Ro-m a n i a ’s investment environment,success strategies for German in-vestors and economic expectationsfor 2010 were the main topics dis-cussed at the event.

Dr. Sonja Kreibich (head of theeconomic section at the GermanEmbassy), Mihai Rohan (generalmanager of Carpatcement), RaduMerica (president of AHK Roman-ian-German Chamber of Com-merce), Marten Schoenrock (gener-al manager of the IntercontinentalHotel) and Cristian Secosan (CEOof Siemens) were the panelists invit-ed to talk about the current state ofGerman investments in Romania.

Construction and constructionmaterials are among the industriesworst hit by the crisis. On thistheme, Mihai Rohan of Carpatce-ment Holding said that the only wayto move the local economy forwardis to focus on infrastructure invest-ments.

The current crisis has not by-passed the hospitality industry ei-ther, with average occupancy on theBucharest five-star hotel segmentdecreasing gradually over the pastthree years. According to Schoen-rock of the Intercontinental Hotel,occupancy has slumped from 70percent in 2006-2007 to 62 percentin 2008, and he expects it will fall to58 percent in 2009.

The German Business Forum ispart of the Country Focus Series ofevents organized by Business Re-view. ■

119 10

I N T E R V I E W


Dana Ciuraru

What anti-crisis measures have youtaken since taking over at the EconomyMinistry?

It is clear that energy is one of themain engines that can ensure medium-term economic development. One meas-ure, with significant macroeconomic im-pact, taken since I have been in charge ofthe Economy Ministry was to build thenecessary framework to attract the fi-nancial resources needed to carry outmajor investment projects in the energ ys e c t o r. We signed a memorandum of un-derstanding with Banca Comerciala Ro-mana (BCR) and Erste Group Bank inMarch, one with BRD-Groupe SocieteGenerale in April and another memoran-dum with Bancpost and UniCredit Ti r i-ac Bank in June.

What project does the ministry sup -port: Nabucco or South Stream?

Ground zero priority for Romania isthe Nabucco project. This pipeline,which crosses several countries fromTurkey to Vienna, Austria, resolves twomajor issues which we are currently fac-ing: the diversification of gas supplysources and routes. Additionally to theNabucco project, Romania doesn’t rule

out any other cross-border project whichcould consolidate our energy security.Regarding the South Stream project, Ro-mania has not yet received any off i c i a linvitation to participate in it.

Will the ministry reduce its sharepackage in EnergoNuclear, the project company that will invest in the construction of nuclear units 3and 4?

There has not been any discussionon reducing the government’s participa-tion in the project company, Energ o N u-c l e a r, so far. Our financial effort to com-plete these two nuclear units is estimatedat around EUR 2 billion, but only the re-examination of the feasibility study andthe construction contracts with special-ized firms will indicate the actualamount needed to complete this project.Payments will be spread over a long pe-riod of time, so it is premature to say thatthe Romanian state will not be able tosupport its share of investment.

For years, past economy ministershave spoken about the formation of thetwo energy companies. Why has thisproject been delayed so often and whatis the current deadline?

It is true that for many years we’vetalked about restructuring the electricitys e c t o r, but the problem was that the tar-gets set were different each time. For in-stance, the Hunton & Williams studysought to create conditions for viableprivatization by grouping units into fourcompanies. There followed, in 2006 and2007, another study conducted by PBP o w e r-ISPE, which aimed to form bal-anced companies in terms of flexibilityof operation and costs, by integrating allunits in the energy sector. In 2008, theKPMG study was based on the idea ofselecting the most profitable units andcreating a national energy champion.C u r r e n t l y, the plan is to form two com-panies balanced by market share andf l e x i b i l i t y, able to compete with interna-tionally-known companies, on the re-

Romania keeps its energy options opengional energy market. Of the 21 scenar-ios for the restructuring of the local ener-gy sector, the one involving the two na-tional energy companies was chosenbased on cost, market share and struc-ture criteria.

Which state-owned firms will bepart of these national energy firms?

The first national energy firm willinclude the three energy complexes inOltenia, Turceni, Rovinari and Craiova,SNN, Societatea Nationala a LignituluiOltenia, half of the energy provider anddistributor Electrica and two Hidroelec-trica branches, the ones in Valcea andSlatina. The second will include ELCENBucuresti, Deva and Paroseni thermopower plants, the other half of Electricaassets, Portile de Fier hydro powerplants and Hidroelectrica branches fromCaransebes, Hateg, A rges, Cluj, Bistrita,Sibiu, Sebes, Buzau and Ta rgu Jiu. T h esecond energy champion will also in-clude the Iernut thermo power plant,which Romgaz, the national gas produc-e r, will take over from Termoelectrica tosettle a debt. I can say that currentlythere is political support and this divi-sion will be supported.

Will the Property Fund keep thestakes it now controls in several state-owned companies which are includedin the two national champions?

I can certainly say that the PropertyFund will continue to own shares inthem. Regarding the value of these par-ticipations, this will be estimated afterthese two entities are formed.

It is still possible for Electrica em -ployees to buy the 10 percent sharepackage at Electrica Oltenia, current -ly controlled by Czech energy firmC E Z ?

Electrica Oltenia employees, whocould have bought up to 10 percent ofthe company’s share capital, have lostthis privilege because the term pre-scribed by law for the share acquisitionended in September last year and wasnot extended. Neither the EconomyMinistry nor the government have anylegal power to give to these employeesthe right to buy shares in the company.Only the employees of the former Elec-trica Banat, Dobrogea, Muntenia Sudand Moldova subsidiaries have until De-cember 31, 2010 to buy shares in thosec o m p a n i e s .

d a n a . c i u r a ru @ b u s i n e s s - re v i e w. ro

The Nabucco project is toppriority for Romania. Buteconomy minister A D R I E A NV I D E A N U told Business Reviewthat Romania would not rule outthe idea of being part of the SouthStream project too, if invited.According to him, the stake in theEnergoNuclear, the projectcompany that will invest in theconstruction of nuclear units 3and 4, the forming of the twonational energy companies andthe Property Fund’s share in thesenational champions are the keyissues in these times of crisis.

C I T Y


Actor ETHAN HAWKE hasconfirmed his presence atthe Halloween Charity Ball,which will take place on Oc-tober 31 at the ParliamentPalace. The American actoris currently filming a MobyDick remake in Halifax, No-va Scotia, and Malta and willsqueeze in the appearancebetween shoots. This will beHawke’s second visit to theHalloween Ball, after a pre-vious appearance in 2005. “Iwas not sure at first that weshould organize such alarge-scale event, due to thefinancial crisis, but the Hal-loween Ball this year isshaping up as the most in-teresting so far,” said LeslieHawke, president of theOvidiu Rom Association,which orchestrates theevent. Also present will bethe new US ambassador toRomania, Mark Gitenstein,who will make the keynotespeech of the evening. Popicon Madonna has agreed todonate a personal item thatwill be put up for auction oroffered as a prize in the raf-fle during the event.

Jazz singer and pianist DIANA KRALL will perform for the first time in Romania at the Palace Hall inBucharest on 22 November. This concert is part of the singer’s tour for the promotion of her latestalbum Quiet Nights. Krall, whose career dates back over 20 years, is famed for her search for newways of artistic expression. Her most recent project is the creation of the new studio album of herfriend and colleague, Barbra Streisand, Love is the Answer. In this new album, Krall was in chargeof both the production and a part of the interpretation, as she played the piano on some of the songsfrom the album and also brought her own jazz quartet into the studio. Love is the Answer will be re-leased on September 29 at the Village Vanguard club in New York, the same club in which Streisandplayed 48 years ago opening a Miles Davis show. Tickets for the concert can be bought online fromwww.myticket.ro as well as from Diverta stores, and come in various price categories, RON 500, RON300, RON 220, RON 150 and RON 100.

C I T Y


The Age of Stupid, a docudrama designed to be a wake-up call about the devastating toll that glob-al warming will take if humanity fails to act upon the existing warnings, had its world premiere lastweek on September 22. In Bucharest, the film was debuted at the Students’ Culture House. The Ageof Stupid is a new movie from Director Franny Armstrong, starring Pete Postlethwaite as a man liv-ing alone in a devastated future world of 2055, looking at old footage from 2008 and asking: whydidn’t we stop climate change when we had the chance? The world premiere of the picture took placein London on September 15. Since then, the film has opened in over 550 movie theaters in more than45 countries, premiering on September 22.

Musician YANN TIERSEN, best known for the

soundtracks he composed for the movies Le

Fabuleux Destin d’Amelie Poulain and Good

Bye Lenin! will perform for the second time

in Romania. The French artist’s concert is

scheduled to take place on November 4 at

the Palace Hall. Tickets cost RON 50, RON

70, RON 125, RON 155 and RON 210 and are

on sale in Germanos and Carturesti stores,

and online from the sites www.myticket.ro

and www.eventim.ro. Tiersen will be accom-

panied by six other artists during his second

gig in Bucharest.

British writer S A L M A N

RUSHDIE, known for novels

such as The Satanic Verses

and Midnight’s Children, is

set to visit Romania, having

been invited by Polirom

publishing house. The

writer’s program during his

visit in Romania is still a

work in progress but it is to

include conferences, meet-

ings with readers, and a

short trip to Transylvania.

Singer NATALIE COLE, daughter

of the legendary Nat King Cole,

will play a concert for the first

time in Romania at the Palace

Hall in Bucharest on 27 October.

Tickets cost between EUR 100 and

500 (VIP category). Cole has had

some health problems that led

her to interrupt her tour for the

promotion of her latest album,

Still Unforgettable, but now re-

turns to the stage and has includ-

ed Bucharest on the list of venues

that she will play this year. Still

Unforgettable was released in

September last year and has al-

ready won two Grammies. It com-

bines classics such as The Best is

Yet to Come, Come Rain or Come

Shine and Nice ‘N’ Easy with less

famous songs that Cole discov-

ered over time. The album is a

sort of continuation and come-

back to her 1991debut album

which brought her into the lime-

light, Unforgettable… with Love.

The Light Cinema will host the digital film festi-val Kinofest, from October 22-24. The festival isa forum for young filmmakers who could be-come the new voice of Romanian cinema. Thefestival will feature three categories: animation,micromovie (90 seconds) and fiction (20 min-utes). Additionally, there will also a categorycalled Film for Life for short movies on socialtopics. Applicants are required to make a film ofup to seven minutes on the theme Find out thatYou are OK, which is the slogan of the Avon so-cial campaign for the early diagnosis of breastcancer. The first day of the festival will see shortfilms in this category shown to the public. Threeprizes will be awarded to the creators of thebest three short films on the topic, EUR 1,500(first place), EUR 1,000 (second place) and EUR500 (third place).

From October, the ZAMBACCIAN MUSEUM will be open from Saturday until Wednesday between 10

am and 6 pm. On Thursday and Friday it will remain closed. Master Zambacu, an endearing term re-

ferring to the owner of the building, which is today the Zambaccian Museum, and later, the muse-

um itself, received last Saturday a visit from art lovers who were given a presentation on the collec-

tion by a specialist of the National Museum of Art free of charge. The Zambaccian Museum was re-

opened last year in a new format after the building was renovated and the works were restored. The

collection now includes 19 canvases by masters of the French school such as Delacroix, Corot,

Renoir, Sisley, Pissarro, Cezanne, Picasso, Matisse, Bonnard, Utrillo, Marquet, Laprade and Campigli.

One room in the museum is reserved for graphic works by Romanian painters such as Grigorescu,

Tonitza, Iser, Ressu, Petrascu, Pallady, Stefan Dimitrescu and Magdalena Radulescu.

Documents

Business Review Issue 34, Sept 28-Oct 4, 2009