AROUND BUCHAREST: The Cantacuzino castle in Busteni joins the national tourist trail. Around 130 Km from Bucharest, the neo-Romanian edifice boasts Brancoveanu and Byzantine architectural influences »page 12
ROMANIA’S PREMIER BUSINESS WEEKLY
CONSTRUCTION THE MASONRY MARKET STABILIZED IN 2013 AND BRICK MANUFACTURER WIENERBERGER EXPECTS THE TREND TO HOLD THIS YEAR TOO. BRICK CONSUMPTION CURRENTLY STANDS AT TWO THIRDS OF LOCAL PLANTS’ PRODUCTION CAPACITY »PAGE 10
APRIL 21 - 27, 2014 / VOLUME 18, NUMBER 14
NEWS
With the country’s macroeconomic figures looking in good shape, the government has to focus on reforming state-owned companies, according to Guillermo Tolosa, International Monetary Fund resident representative in Romania and Bulgaria »page 6
NATO moves in More NATO forces will arrive in Romania amid growing tensions in neighboring Ukraine, to provide stability in the region
» page 4
GAUGING ROMANIA’S REFORMS Agerpres
NEWS 3
www.business-review.eu Business Review | April 21 - 27, 2014
NEWS in brief BANKING
profit of RON 13.3 million this year and hike the volume of insurance premiums by 9 percent to RON 599 million. Vienna Insurance Group, which in Romania also owns Omniasig VIG and BCR Asigurari de Viata, last week reported a EUR 98.7 million pre-tax loss on the local market, due to the restructuring of the business.
Raiffeisen Banca pentru Locuinte savings and loan contracts up EUR 633 mln in 2013
ENERGY Energy minister steps in to fix RAAN, fires special administrator The delegate minister for energy, Razvan Nicolescu, has sent his auditing team to investigate operations at the Romanian Authority for Nuclear Activities (RAAN) and fired the special administrator selected for the company. The moves come after RAAN employees protested last week to draw attention to the disastrous state the company finds itself in. Established by Government Decision No. 365/02.07.1998, RAAN’s main activities include the manufacturing and trading of heavy water and of deuterium depleted water; heat and electricity generation and trading; scientific research and the development and design of technologies in the nuclear power field. The company entered insolvency in September 2013 and its situation has shown no sign of improvement. In the last couple of months, employees have complained that they have received only half of their wages.
RETAIL Unirea Shopping Center owners want direct access to subway and cinema
INSURANCE
The Adamescu family, owners of Unirea Shopping Center, want to connect the downtown Bucharest facility with the adjacent subway station (Piata Unirii) this year. They are also planning to open a cinema and new stores, according to Mediafax. The owners also want to add a bowling alley and ice skating rink to both of the shopping centers they own (in Bucharest and Brasov), either within the existing facilities, or in adjoining locations, according to a report on the stock market. In the Bucharest retail center, about 1,200 sqm will be freed up after some stores relocate to the galleria, which will be connected to Piata Unirii metro station. Unirea Shopping Center ended 2013 with a turnover of EUR 17 million, down 8 percent on the year before, and a profit of EUR 637,048, down 51 percent year-on-year. The company is owned by Dan and Carmen Adamescu, through Nova Group Investments Romania which owns 74.16 percent of the shares. SIF Muntenia is another major shareholder with 10 percent, while the other 15.8 percent is split between different minority shareholders.
Asirom reports EUR 53 mln loss in 2013 on weak market
La Fantana swallows up Lavazza distributor
Romanian insurer Asirom, controlled by Austria’s Vienna Insurance Group, recorded a loss of RON 235.5 million (EUR 53 million) last year against a profit of RON 14.9 million (EUR 3.3 million) in 2012, citing poor market conditions, according to data approved last Monday by shareholders, reports Mediafax newswire. In the general insurance segment, Asirom registered a loss of RON 241.9 million (EUR 55 million) in 2013 compared to a profit of RON 14.6 million (EUR 3.3 million) the previous year, while profit on life insurance fell 57.3 percent to RON 7.5 million (EUR 1.7 million). The insurer aims to make a
La Fantana, leader of the local water cooler market, announced last Monday that it has acquired Blue Coffee Service, the authorized distributor of Lavazza products in Romania. La Fantana will provide a complete range of coffee products on top of its existing series of personalized water-based services and products. Through this transaction, La Fanatana will take over 9,500 coffee machines, on top of the 110,000 water coolers it already manages. The company posted a turnover of EUR 29 million in 2013, while Blue Coffee Service registered business of EUR 9.7 million last year with 82 employees.
Courtesy of STAVROPOLEOS
Raiffeisen Banca pentru Locuinte (RBL) announced last week that the value of savings and contracts signed by customers last year rose 9 percent against the previous year to RON 2.8 billion (EUR 633 million), underscoring the increasing popularity of this system. RBL’s deposits increased by 24 percent to RON 325 million (EUR 73.5 million), while loans gained 45 percent to RON 27 million (EUR 6.1 million). Its assets reached RON 402.6 million (EUR 91.1 million), an 18 percent increase against 2012, while profit rose three-fold to RON 1.7 million (EUR 384,702). Average financing for loans guaranteed by mortgages stood at RON 132,000 (EUR 29,871), while unsecured loans averaged at RON 26,000 (EUR 5,883). Three quarters of the loans guaranteed by mortgages were used for housing acquisition and construction, while most of the unsecured loans were for home improvements.
Orthodox Easter: Congregating at Stavropoleos monastery Romanians are getting ready for the Easter celebration, which comes with an extended weekend. The Stavropoleos church in the Old City of Bucharest is one of the oldest worshiping sites in the country, dating back to the 16th century.
FINANCE EC pays out EUR 15 bln of EU funds to Romania by 2013 The European Commission, the executive arm of the EU, granted EUR 15 billion of EU funds to Romania between 2007 and 2013. This helped create over 8,800 jobs, said Angela Filote, head of the EC Representation in Romania, according to Agerpres newswire. She said the absorption of EU funds was driven by the agricultural and rural development sectors, where Romania “fares very well”. Overall, the country had EUR 33 billion in EU money available over 2007-2013. The allocation has been hiked to EUR 39 billion for the next seven-year financing period. According to Filote, over 1,200 SMEs have used EU money and more than 1,000 km of roads were upgraded with European financing. The EC has extended the n+3 rule for Romania and Slovakia under the 2007-2013 financial framework, meaning these EU members will be able to use more EU money and reduce their risk of losing funds. The EC Repre-
sentation in Romania together with the Structural Consulting Group have launched a series of conferences designed to promote success stories in the absorption of EU funds. The events will be held across Romania this year.
4 NEWS
www.business-review.eu Business Review | April 21 - 27, 2014
DEFENSE
WEEK AHEAD April 22-May 1 Belgian Week
Basescu says more NATO troops to be deployed in Romania over Ukraine crisis
Crowne Plaza will host Belgian Week, an event that celebrates the commercial relations between Belgium and Romania, with a focus on cuisine and social networking events. The organizers have also prepared a cycling event that will take place on April 28, also at Crowne Plaza.
April 25-27 Art management courses Famous gallery manager Hans Knoll will hold a special class on art management and the Romanian art market. With 25 years of experience in the industry, Knoll has gained a reputation as a spokesperson for the Eastern European art scene. This Artmark event will be hosted at the Cesianu-Racovita Palace. For more information contact office@alegearta.ro.
Agerpres
April 25 “29+1” Energy Summit The summit is being held under the auspices of PM Victor Ponta and minister delegate for energy Razvan Nicolescu, in the presence of European commissioner for energy Günther Oettinger and chairman of the board of directors of CEEP Paweł Olechnowicz. The concept behind the Energy Summit, a CEEP annual roundtable signature series, is a meeting between 29 CEOs of the most important Central European energy companies and the EU energy commissioner. Palace of the Parliament, Bucharest
President Basescu during his visit to USS Donald Cook, docked in Constanta port
P
resident Traian Basescu said last week that more NATO troops are set to arrive in Romania as the crisis in Ukraine unfolds following the annexation of the Crimean peninsula by Russia. He made the comments after visiting the USS Donald Cook destroyer that was in Constanta port. The president stated that the increased military presence of the American and French navy in the Black Sea would signal “stability” in the region and show that NATO members stick together when there are security risks. “We all know that Ukraine has got to this point not only due to the divergent political opinions of both the politicians and the citizens (…) regarding the country’s path, but also due to the frightening level of corruption. It has been proven that this has undermined the state’s capacity to maintain the territorial integrity
of Ukraine,” said President Basescu. The USS Donald Cook is on a scheduled patrol as part of the European Phased Adaptive Approach (EPAA) to ballistic missile defense in Europe. It followed the USS Truxtun destroyer that arrived in Constanta in early March to participate in an exercise with the Romanian and Bulgarian navies in the Black Sea. An exercise between the US and Romanian air forces was taking place last week in Campia Turzii, with the US Embassy saying it was planned prior to the Ukraine crisis.
Romania holds key role in NATO’s missile defense system The EPAA is based on the Aegis missile defense system that is being deployed in three main phases from 2011 to 2018. Romania will host missile interceptors
in the Deveselu air base, with the site expected to become operational in 2015. The construction of the defense system in southern Romania started in October 2013 and a similar site should become operational in Poland by 2018. Over this period, more ships capable of intercepting missiles will be deployed in the Mediterranean region. “I call on Russia to de-escalate the crisis, to pull its troops back from Ukraine’s borders, to stop de-stabilizing the situation in Ukraine, and make clear that it doesn’t support the violent actions of pro-Russian separatists,” said NATO secretary general Anders Fogh Rasmussen. “Russia should stop being part of the problem, and start being part of the solution.” As BR was going to press, Ukraine had ordered the military to clear state buildings in the Russian-speaking east that were occupied by rebels, with Russia warning that the country was on the brink of civil war. Duane Butcher, interim chargé d'affaires at the US Embassy in Bucharest, commented in an opinion piece that Russia has “torn down and discarded the international legal order and thrown away the very notion of the rule of law” in taking over Crimea. “A forced, rushed, and illegal ‘referendum’, against the backdrop of foreign military intervention, was used to justify a blatant land grab by a neighboring country. That precedent cannot stand. Crimea is Ukraine. The border recognized in the Ukrainian constitution is the border of sovereign Ukraine. The world has not been fooled into the belief that a referendum engineered by Russia somehow justifies what is simply a land grab by force,” said Butcher. ∫ Ovidiu Posirca
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Trade with Belgium exceeds EUR 2 bln
R
omania and Belgium’s commercial relations were worth more than EUR 2 billion last year, according to Belgian ambassador HE Philippe Beke. Speaking in advance of Belgian Week, he revealed that the volume of trade had risen 13 percent in 2013. The figures made Belgium the 12th biggest foreign investor, up from 25th in 2009, ranked by Foreign Direct Investment. The diplomat added that the 250 Belgian companies with more than five workers active in Romania have created over 17,000 jobs nationwide. The local market is popular with Belgian firms for outsourcing and nearsourcing, especially Bucharest, Bihor, Banat and Iasi.
He added that this year, a major greenfield investment is expected to be completed in Ploiesti, an investment in nearsourcing near Slatina should be confirmed, while there are indications of other investments in outsourcing. Turning to Romanian exports to Belgium, Philippe Beke said they had increased last year due to auto sales, with Dacia enjoying great success in his home market. Belgian ambassador, Philippe Beke Belgian Week will take place between April 22 and May 1 at Crowne Plaza. The “None of the 250 companies owned event, which celebrates the commercial by Belgian investors have left the Ro- relations between the two countries, manian market, which means this coun- will include a Belgian Business Day Gala try is a business destination for investors,” Dinner. ∫ Oana Vasiliu said the ambassador.
NEWS 5
www.business-review.eu Business Review | April 21 - 27, 2014
WHO’S NEWS Madalina Berechet has been promoted to partner by law firm Musat & Asociatii. She has over ten years of professional experience as a litigator in civil and commercial disputes, having represented numerous multinationals both in front of Romanian and European courts. She has expertise in representing major multinational companies as well as private local companies in all types of disputes including commercial, fiscal and administrative litigation and those regarding judiciary reorganization and bankruptcy proceedings.
Alexandru Borsan is the new digital strategy director at GAV. Before joining the advertising agency he worked at Cohn&Jansen JWT as online
BR welcomes information for Who’s News. Submissions may be edited for length and clarity. Get in touch at simona.bazavan@business-review.ro strategy director. Borsan graduated from the Academy of Economic Studies in Bucharest.
Victor Ciorbea has been selected as ombudsman, after a vote in the two Chambers of Parliament. A former prime minister, he is trained as a jurist (having graduated from the University of ClujNapoca in 1979), and has worked for the municipal tribunal in Bucharest, as well as lecturing in Law at the University of Bucharest. He was awarded a doctorate in Law by the university, and later specialized in management at the Case Western Reserve University in the United States (1992).
Mircea Coman was made general manager of pharmacy chain Centrofarm. Coman previously served as head of regional operations/north at German retailer Metro Cash&Carry. He has worked for Metro for the last 14 years, holding positions in the operational and
marketing departments.
Iulia Dragomir Cojocaru has been promoted to senior associate at local law firm bpvGS. She joined the firm in 2010 and has over six years of experience providing legal assistance with respect to fiscal, commercial, public procurement and labor matters. Dragomir is also part of the firm’s competition team.
Madalin Enache has been promoted to partner at law firm Musat & Asociatii. He is a practitioner in criminal law, particularly involving white-collar crime. His background is in areas such as IT and telecom, banking and finance, pharma, capital markets, real estate and construction and energy and public utilities.
Ileana Glodeanu has been promoted to partner at the Bucharest office of law firm Wolf Theiss. She will be co-heading the firm’s corporate and M&A practice. She joined Wolf Theiss as senior lawyer in 2005. She holds a bachelor’s degree in law from the University in Bucharest and two post-graduate degrees in private and corporate law from the University of Bucharest and the Paris Sorbonne University.
Raluca Marcu has been promoted to managing associate of local law firm bpvGS. She joined the firm in 2006 and is currently part of the team coordinating the dispute resolution practice. Marcu has broad experience in litigation matters, mostly in fiscal and administrative disputes as well as in public procurement cases. She also has extensive experience in corporate law, mergers and acquisitions.
6 INTERVIEW
www.business-review.eu Business Review | April 21 - 27, 2014
IMF calls for ‘aggressive’ restructuring of state companies Guillermo Tolosa, resident representative in Romania and Bulgaria of the International Monetary Fund, says the government needs to step up its reforms of state-owned companies to reduce arrears, noting that the involvement of the private sector in the management of these firms has registered an “uneven performance” SBA includes specific indicators for these targets. After a slippage regarding the SOE arrears target for end-December, there is no more room to delay difficult choices to achieve these targets in the future.
∫ OVIDIU POSIRCA
How will Hidroelectrica’s reentry into insolvency impact the reform program in the energy sector? Aside from the energy sector, what fields are in dire need of reform? Let me step back a bit once again on the issue of the performance of SOEs. SOE reform is a crucial element of the
CV Guillermo Tolosa July 2013-present IMF resident representative for Romania and Bulgaria 2010-2013 IMF resident representative for Armenia Prior to this he worked in Washington, in the IMF’s Emerging Markets Department. He joined the organization in 2005 and has a PhD in Economic Sciences from the University of California, Los Angeles. economic program supported by this SBA (stand-by agreement). It is not an end in itself but a vital element to achieve the government’s growth ambitions. In particular, the energy and transportation sectors can become motors of growth. But for that to happen they require upgrading and investment. Funds will only be attracted when these companies are run professionally and more efficiently. Many of the firms still deliver poor quality services, far below EU standards. The slow speed of trains is just one example. That’s why the program seeks SOE reform in a number of ways. One is the involvement of the private sector in management. And here performance has been uneven. We have seen too many changes on boards that coincide with changes in political leadership in line ministries. Another area is private involvement through IPOs. Here Romgaz was a major achievement and Hidroelectrica and Oltenia are set to follow.
The decision to put Hidroelectrica back into insolvency was out of the government’s control. But we expect the IPO to happen as soon as possible after the renewed exit from insolvency. For Oltenia, we expect a potential delay for technical reasons (for assessing the coal reserves) to be strictly limited in time. In order to secure continued future successes, it is important that companies that have gone through IPOs are not engaged in new plans which can represent significant deviations from the roadmap for the companies originally presented to investors. However, there is much more to the reform program agenda of SOEs than these two companies. The government has committed to continuously reduce arrears for all SOEs. This requires tackling the companies’ underlying root problems. Many need to be restructured and made more efficient, in particular in the transport sector. Others need to receive sufficient budgetary transfers to cover their costs and avoids arrears. The
Agerpres
What are the areas in which Romania’s progress has been limited under the EUR 4 billion stand-by program with the IMF and European Commission? We should first note that major progress has been achieved. Our program with Romania is on track, and macroeconomic fundamentals strengthened further last year. Economic growth reached a post-crisis high. The current account deficit narrowed significantly in 2013. And inflation has fallen to historic lows. As a consequence, the government and private sector can now borrow at record low interest rates. It is also remarkable that for the first time Romanians now pay less for bank loans in lei than in foreign currencies. These strong macro fundamentals have also made Romania more resilient to external shocks, as proven by the country’s capacity to cope well during the recent volatilities in capital market flows. There has also been some progress in terms of structural policies, which should put such growth on a more sustainable basis. The IPOs for the two energy companies last year and the implementation of the road map for liberalizing energy prices are important accomplishments. Unfortunately, however, these achievements have not been matched in other areas. The end-December target for reducing the arrears of stateowned enterprises (SOEs) was missed by a substantial margin. While the authorities have taken some corrective actions to remedy this shortfall, a sustained effort is needed. This includes the aggressive restructuring of SOEs, in particular CFR Marfa, the attempt to privatize which has failed. Weak payment discipline or ability in the public sector needs to be overcome once and for all. Otherwise the public sector will hold back the prospects for sustainable, broad-based and shared economic growth.
What role has the IMF played in the scheme designed to cut repayment rates for close to one million Romanians? This support scheme has been proposed by the government with the objective of supporting those households that have relatively low incomes and spend a large share of it on servicing their debt. Indeed, as a consequence of the crisis, households are still highly indebted. The government proposal would give certain households some breathing space and potentially increase their spending. How large the macroeconomic impact is, will depend on how many individuals and banks decide that this is an option that makes sense to them. Also, the government has committed to design the scheme in such a way that the future fiscal costs, which would be incurred as tax credits in 2016-17, would not exceed 0.1 percent of GDP. A key positive feature of the scheme is that it is entirely voluntary. Therefore, banks do not have to make any decisions that would have a negative impact on their financial results. Against this background, and in the context of the still weak domestic demand, the scheme is not considered to go against the fundamental objectives of the IMF program. What is holding back bank lending in Romania? Our assessment is that the decline in credit in recent months is the result of tight supply and weak demand. Therefore efforts are needed in both areas to revive credit growth. On the supply side, steps to clean up banks’ balance sheets are important and we’re seeing some encouraging efforts. Some banks are in the process of putting NPLs (non-performing loans) up for sale after the tax treatment of such sales was finally clarified. Moreover, the National Bank of Romania is working on an action plan to reduce bad loans on banks’ balance sheets. This is a new structural benchmark under the program. At the same time, credit con-
INTERVIEW 7
www.business-review.ro Business Review | April 21 - 27, 2014 straints for small and medium-sized enterprises are being addressed through an improved and expanded lending guarantee scheme. Also, in support of households, the authorities are continuing the guarantee scheme for first-time home buyers. And very importantly, on the demand side credit is being supported by lending rates which are at historical lows. More generally, credit demand can be fostered by further strengthening the broad policy framework to secure a stable and predictable environment for investments. Has the lower VAT on bread and bakery products led to a reduction of the informal market in this sector? What is the IMF’s opinion on the reduction of VAT to 9 percent for other food products? Preliminary numbers do not seem to indicate a significant reduction in evasion as a result of the measure. However, it is still too early to make a more decisive assessment. As a general principle, we believe that consumption taxes should be uniform and differential rates across goods and services should be avoided. In order to reduce inequality it is generally more effective to use the proceeds from uniform taxes to spend on the most vulnerable. Is the reduction of social security contributions (CAS) for employers by 5
percentage points feasible at the moment? The overall burden on labor from social security contributions and taxation is high in Romania, in particular for those on low incomes. We therefore support any initiative that seeks to lower this burden in a fiscally neutral way. The objective of this is to make it more attractive for companies to hire more people, while at the same time making it more attractive for employees to enter the formal job market. A reduction in the social security contribution rate can be one tool to achieve this. However, it is clear that a rate cut in the order of 5 percentage points means much lower revenue for the government. So it needs to be financed in a sustainable way that does not endanger future pension and healthcare payments. One important element that should be part of any reform is base broadening. That means contributions should shouldered by more Romanians, by reducing exemptions and getting those outside the system to become part of the system. At the same time, one needs to revisit whether those on high incomes contribute sufficiently. All of these are important and difficult choices that need to be carefully discussed with all stakeholders. We strongly encourage such a comprehensive dialogue, which would be best suited to the 2015 budget discussions.
What has the government told you about the new fuel excise of EUR 0.7 that was rolled out this month? Will it be used to ďŹ nance the development of new motorways or for payments in the public sector (wages and pensions)? There is no earmarking of taxes for specific expenditure. The last budget involved certain government spending priorities, including for investment, and a package of new measures was needed to ensure such different priorities were met. That said, it is generally considered fair that in times of greater public spending on infrastructure, taxes increase for those who are most likely to use it (consumers of fuel). What is your outlook for the Romanian economy this year and what could hinder its development? We expect the economy to grow more slowly this year after the post-crisis high of 3.5 percent, but that the growth will be more broad-based and sustainable. We expect several factors to strengthen domestic demand. First, the government is committed to accelerating the absorption of EU funds. This will support public and private investment. Second, interest rates are at record lows. These are the fruits of the prudent macro policies. Together with the efforts by banks to clean up their balance sheets, this should help alleviate weaknesses in
credit demand and supply. And, finally, the economies of the eurozone are projected to grow again after last year’s recession. This should not only help exports but also help FDI and investment more generally. A key risk going forward is that monetary policy tightening in advanced economies could trigger capital outflows as investors reassess portfolio risks and returns, which would put downward pressure on the exchange rate. Capital flows could also come under pressure if confidence wanes as the situation in Ukraine unfolds. Given the large volume of foreign-currency lending, a sharp depreciation in the exchange rate could lead to a further deterioration in bank and private sector balance sheets. Furthermore, heightened political uncertainty in the run-up to elections in 2014, in particular the presidential elections, could impact the stability of policy discussions and potentially weigh on investor and consumer sentiment. However, Romania has buffers to withstand shocks: more than four months of projected fiscal financing needs, a flexible exchange rate, a broadly adequate level of international reserves and precautionary lines with the IMF and EC. ovidiu.posirca@business-review.ro
8 LINKS
BRIEFS Public broadcaster back in profit The Romanian public television service (TVR) posted a profit of RON 3.17 million in 2013, the first time since 2006 that the institution had finished the year in the black. However, its outstanding debts stood at RON 787.8 million at the end of 2013, according to the institution’s activity report, reports inCont.ro. At the end of 2013, TVR’s total revenues were approximately RON 543 million, of which RON 536 million came from the TV tax, advertising, state subsidies and RON 7.9 million of financial revenues. Its total expenses were approximately RON 540.8 million, of which operational expenses represented about RON 528.7 million and financial expenses RON 12 million.
Mercador rebrands as OLX.ro Popular classified ads website Mercador announced last Monday it would overhaul its brand image and become OLX.ro. The name OLX.ro comes from “online exchange.” For a while, the two names will run in parallel to allow users to become accustomed to the new identity. “We have been preparing for the rebranding process for several months, and the investment in rebranding is not over,” said Cristina Gheorghitoiu, business manager at Mercador.ro. She added that, at the moment, investments in Mercador.ro far outweigh the website’s revenues. Mercador.ro is owned by Allegro Group, part of South African group Naspers. According to the team, Mercador needed to change its name, since it is not only available in Romania, but in over 100 other countries.
www.business-review.eu Business Review | April 21 - 27, 2014
Chelgate CEO: ‘Romania is managing its reputation with hands over its ears’ The most important work that Chelgate does in Romania relates to the EC. Terence Fane-Saunders, CEO of Chelgate, gives BR his take on how Romania should handle some of its reputation issues
Kantar Media Spring wins tender for SATI BRAT (the Romanian Bureau for Cross-media Auditing) has announced it will continue its collaboration with Kantar Media Spring, after the latter won the public tender to carry out SATI (the Survey of Internet Audience and Traffic). Kantar Media Spring will conduct SATI for the eighth year in a row. The other participants in the tender were Gemius and GfK Nurago. Through to 2017, SATI is planning to expand the scope of the study at national level, to also include rural areas.
MEC wins Vodafone global media account MEC has won the Vodafone global media account, reports Adweek.com. “WPP Group’s MEC will take on the business, with annual media spending estimated at more than USD 900 million, according to sources. The agency’s London office will lead all efforts,” writes Adweek.com. The Vodafone global account was won in 2009 by OMD. Starting May, MEC Romania will be led by Oana Padure.
TV subscribers rise to 6.4 million last year The number of TV subscribers rose 5.7 percent last year to 6.4 million, according to a report from the national telecom watchdog ANCOM. The number of users who get their TV service via cable and IPTV is on the rise. At the end of last year, over 85 percent of Romanian households received TV broadcasts, according to ANCOM. From the 6.4 million-strong subscriber base on the Romanian market, 4.1 million accessed services via cable networks, representing an 8.7 percent rise compared to the previous year, while 2.2 million had chosen DTH services, a 0.2 percent decline compared to 2012, and 56,000 subscribers received programs via IPTV, marking 49 percent growth on 2012. The household penetration rate also increased by 4 percentage points to 85.1 percent.
DT’s GTS CE acquisition gets EC go-ahead Deutsche Telekom (DT) received on April 15 the required merger control clearance from the EC for the acquisition of GTS Central Europe, the company has announced. The acquisition was announced in November 2013 and the transaction will go through in the coming weeks. DT acquired GTS from a consortium of international private equity firms, including Columbia Capital, HarbourVest Partners, Innova Capital and M/C Partners, who have actively developed the company over the last six years.“We are pleased that we can now close the transaction and start the integration of GTS. It fits perfectly into our strategy of building a pan-European network,” commented Claudia Nemat, board member for Europe and technology at DT. In Romania, GTS Telecom, part of GTS CE, announced revenues of EUR 20 million in 2012. DT is present on the local market through operators Romtelecom, Cosmote Romania and Germanos GSM dealer.
Romania ‘25th most vulnerable country to cyber-attacks’ Romania was ranked 25th in a worldwide league table of the most exposed countries to cyber-attacks in 2013, an improvement of one position on the previous year, according to the Internet Security Threat Report carried out by Symantec. In the EMEA section, Romania was deemed the 11th most vulnerable nation to informatics attacks, behind Spain, France and Poland. Romania was ranked 14th worldwide by the origin of spam, with 2.3 percent of the total volume of spam attacks starting here, according to the report. It came 21st worldwide for the number of phishing attacks, at 1 percent.
∫ OTILIA HARAGA How is business at Chelgate Romania? We have nine people working full time and at least the same number of freelancers. The revenues we booked in Romania are about EUR 500,000, but a lot of our Romania-related activities are invoiced out of the UK, quite often to shared clients, and I can’t break that out for you. In Romania, we have international clients from finance, telecom and mainly European Union policies. Romanian companies don’t seem to have a tradition of spending money on highlevel strategic PR. The most important work that we do in Romania relates to the European Commission. We also have international clients. Even though we have a significant government relations capability, I always say we do very little lobbying, if any. Have you ever been affected by corruption in Romania? I can think of at least two contracts which were denied to Chelgate simply because we wouldn’t pay off the right people. There was one contract where we worked very hard on a pitch and found out two or three days before that the contract was going to be awarded to a joint venture between a Romanian and a foreign PR firm, and they had sorted things out with the top key person. We sent our proposal anyway, and the flight of the foreign partner who was writing the project was delayed, so they failed to deliver the proposal in time for the deadline. So we won the contract but we had that contract for about a day before the top person announced that they were not happy with the quality of
the submission and they would have a re-tender. In another case, there was one government agency that we sued successfully, and where the president of the agency was later sent to jail, but not because of our case. This was in 2008. For the contract, they had very specific requirements in terms of experience, turnover and so on. We put together a good proposal and we were told we had finished second! The winning firm had been created about two weeks earlier and was run by a lady who I believe had a relationship with a senior person in the government body. It met none of the specific requirements of the tender. The firm that finished third appealed and then we joined in. They were forced to award us the contract but then they tried not to spend any money on it and we had to sue them again. How do you think Romania should handle its image problems? You should become the primary source of trusted information about your own story. Romania has failed to tell its own story. If you don’t tell your story, then other people control the narrative. Romania has abdicated that narrative. It’s not a marketing problem that Romania has but a reputation and relationship problem. Romania needs first of all to understand properly what its key international stakeholders think about it. I think that Romania to a degree is managing its international reputation with its hands over its ears. Secondly, forget about branding, I think that Romania has not yet established its own narrative in its own mind. It should be possible to sit down and, on two sheets of paper, write what I call the core narrative, the essence of what Romania is in the world, what is special about it. I don’t think Romania strategically has really thought it through. Then you can start to think about not just messages, but relationships and alliances too, and what I call third voices, because the opinion of Romania around the world is not going be shaped by what Romania says but third voices communicating about you, making decisions about you and advising people about you. otilia.haraga@business-review.ro
10 PROPERTY
BRIEFS EUR 40 mln real estate project to be built on site of old Grivita brewery
www.business-review.eu Business Review | April 21 - 27, 2014
Auchan could open Drumul Taberei hypermarket in December
Kiseleff Development wants to build a EUR 40 million real estate project on the grounds of the former Grivita brewery in downtown Bucharest, and will begin works to clear the site over the “coming period”, the developer has announced. The project will feature office and retail space and will be built in three phases. Kiseleff Development bought the 2.7 ha plot of land near the Basarab overpass at the end of 2013 from Heineken Romania.
Commercial real estate investment volume up 256 pct in Q1 2014 Romania’s total commercial real estate investment volume reached EUR 302.7 million in Q4 of 2014, up 256 percent yo-y, according to a CBRE report. Two of the most important transactions involved the Upground mixed-use scheme (office and residential) and Charles de Gaulle Plaza (office). Improved investor confidence and lending conditions, as well as considerably more active opportunistic investors in recovering markets, were the main factors behind a strong start for the European commercial real estate market in 2014, according to CBRE.
EUR 200 now enough to rent a studio in downtown Bucharest While four years ago EUR 200 was enough only for the monthly rent of a studio apartment in Bucharest’s Rahova neighborhood, one of the capital’s workingclass areas, rents have since dropped to such an extent that the same sum is now enough to rent a studio downtown, according to online real estate platform Imobiliare.ro. Monthly rents for studios in downtown areas of Bucharest such as Magheru or Universitate are now around EUR 190-200/month while for one- and two-bedroom apartments rents start at EUR 200 and EUR 300, respectively.
H&M opens two stores in Pitesti Swedish fashion retailer H&M opened two stores in Pitesti last week. The outlets are located on the grounds of the Euromall and Jupiter shopping centers. Following these launches, the retailer now has a network of 33 branches in Romania. H&M Romania reported a EUR 101 million turnover last year, up 41 percent y-o-y.
Lidl changes location of Targu Mures store Discounter Lidl has relocated its Targu Mures store to a new address, the retailer has announced. The decision was taken in order to increase the branch’s sale surface, said company representatives. Lidl Romania operates a network of 174 outlets.
A Real change: Auchan completed the rebranding of the 20 Real hypermarkets in about six months
The investments allocated by French retailer Auchan this year to hypermarkets in Drumul Taberei in Bucharest and at the Coresi shopping center in Brasov, as well as money spent on the rebranding of the last Real hypermarkets will amount to EUR 100 million by year end, said Patrick Espasa, general director of Auchan Romania, last week. Works on Auchan Drumul Taberei, which will feature a hypermarket and office space, are in an advanced stage
and the hypermarket could be completed in December, ahead of the initial deadline which was the first half of 2015, added Espasa. Works on the EUR 60 million Coresi Brasov, the shopping center being developed by Immochan, the real estate division of Auchan, in Brasov are also underway and the hypermarket will be completed next year. The French retailer announced last week that it had completed the rebranding of the remaining Real hy-
permarkets as Auchan outlets. The rebranding cost over EUR 40 million and was completed in about six months. The company took over 20 local Real hypermarkets in September last year following a regional deal with Metro Group. It thereby increased its local network to 31 hypermarkets and more than doubled its turnover last year to RON 4.6 billion (approximately EUR 1 billion). The firm now hopes to reach breakeven over the next couple of years, after reporting a EUR 15 million loss last year, according to company representatives. Auchan employs about 11,000 people in Romania and has entirely taken over the personnel of the former Real Romania. The company has also employed an additional 1,000 people and has said that another 1,000 jobs will be created following the opening of the Drumul Taberi and Coresi stores. There is still room for expansion in Romania said Espasa, adding that the retailer was also considering the launch of an online store, albeit only in 2016. In addition to the 31 hypermarkets, Auchan Romania also operates three logistics platforms in Romania and reported some 70.5 million customers last year. ∫ Simona Bazavan
Masonry market stabilizes in 2013, trend could hold during 2014, says Wienerberger The local market for masonry products stabilized in 2013 and even posted a slight increase, a trend that could continue this year too, according to Corneliu Fecioru, member of the board of administration of brick manufacturer Wienerberger Romania. The producer posted growth of several percentage points last year, according to company representatives. “Regarding 2014, we’re seeing two elements that support the continuation of this slight recovery. First of all, consumer confidence is higher and the statistics also point to more optimism and consumption going up. The other important element is access to financing. Here too, the information we have shows that the cost of loans has gone down and it is more competitive this year than the previous one,” said Fecioru. Nevertheless, the local consumption of masonry products remains low and currently represents about 60-65 percent of the production capacity of existing plants. Moreover, “several years will probably have to pass before this reaches 80-90 percent”, added Fecioru. The
Corneliu Fecioru Wienerberger slow pick-up of the construction sector is not the only issue the masonry industry has to tackle. Building energyefficiency requirements that Romania must meet under the Directive 2010/31/EU on the energy performance of buildings and the Energy Efficiency Directive (2012/27/EU) “will profoundly affect the local construction industry over the coming years,” he added.
Wienerberger has three factories in Romania in Gura Ocnitei (Dambovita County), Sibiu and Tritenii de Jos (Cluj County). Over EUR 75 million has been invested in the production facilities over the years. The factory is Sibiu is the only brownfield investment, with the other two being greenfield projects. In early 2012 the manufacturer announced plans to build a fourth factory in the region of Moldova but for now the project is on stand-by, said the general director. The Wienerberger Group is the largest brick manufacturer in the world, according to its own data, and last year posted a EUR 2.7 billion turnover. This was up 13 percent y-o-y while EBITDA rose 9 percent to a total of EUR 266 million. The growth was posted despite unfavorable market conditions, especially in Europe, where business was impacted by bad weather in the first half of 2013 and the overall poor performance of the construction sector throughout the year, said company representatives. Wienerberger employs over 200 people in Romania. ∫ Simona Bazavan
12 AROUND BUCHAREST
www.business-review.eu Business Review | April 21 - 27, 2014
Hidden architectural gem awaits visitors in Busteni In Prahova Valley, almost 130 km from Bucharest, one of Romania’s lesser known – but no less valuable – castles still stands after nearly 100 years, when Prince Gheorghe Grigore Cantacuzino, known as “the Nabob”, inaugurated Cantacuzino Castle. ambience is kept alive by stucco marble, fireplaces fashioned from the stone of Arbesti, Mures County, festooned with polychrome mosaics, large wooden doors with panels into which the coat of arms of the Cantacuzino family has been carved, a staircase whose steps are made of Carrara marble and banisters from wood, stone and wrought iron. Only one original chandelier remains in the whole castle, hung in the lobby of honor, which hosts a unique heraldic collection in Romania. This collection includes the coats of arms of the aristocratic families who were part of the Cantacuzino clan throughout the years, as well as a gallery of large-scale pictures on Cordoba leather by Austrian painter Johan Frankerberger.
Canta Cuisine Restaurant
Cantacuzino's Castle is well preserved and tourists can see most of the original decorations and architecture
∫ OANA VASILIU Built between 1901 and 1911 at the behest of Prince Cantacuzino, and designed by architect Grigore Cerchez, the castle stands out for its large, imposing stone and brick building. The Cantacuzino compound in Busteni was nationalized in 1948, and used as hospital for Romanian military leaders of the time, and it was not until 2004 that it was given back to the Cantacuzino family. In 2008, the castle was purchased by a group of foreign investors, who decided to work to get it on the tourist map nearly 100 years after its inauguration. Currently, businessman Kurt Neuschitzer is in charge of the edifice. In December 2012, he also opened a restaurant in the castle cellar, named Canta Cuisine.
The gem behind the trees With a built area of nearly 3,200 sqm, the castle is constructed in the neo-Romanian style. Brancoveanu, Byzantine and Celtic influences can also be detected in the building. In 1948, the edifice was facing difficult times, having been almost emptied of its furniture and ornaments, and turned into a TBC sanatorium for the
The rooms are done in different styles, from a historical hunting cellar to a stylish dining area
Securitate. Most of the interior walls, and implicitly the original design, were in green. The new masters had some taste for art, so the paintings were not completely destroyed, the uppermost decorations were left on the walls and in some rooms restorers brought to light parts of the original pattern. The castle is composed of a basement, ground floor and first floor with concrete foundations and walls of carved stone. Covered with tiles, it has only five bedrooms.
The castle’s tower cannot yet be visited, but the staircase that leads to it is impressive, while the stanchion is supported only by the walls, transforming it into a true work of engineering and architecture.
Keeping the originals Tourists can admire the castle’s original stained glass windows, made by Murano specialists, as well as the original parquet and floor, comprised of Florentine ceramics. Moreover, the old-time
A visit to the castle can bring you directly to the restaurant, as Canta Cuisine is situated in the cellar of the edifice. Designed to blend upscale dining with a cozy atmosphere, it offers a culinary experience that is romantic and elegant. In summertime, one can dine on the terrace to a breathtaking landscape featuring the Bucegi mountains and Caraiman cross. Chef Romica Harabagiu has an impressive CV, with gastronomic experience in Japan and China, among other countries, and more than seven years near Marseille, France. The menu is more contemporary French and international than a Romanian one based on secret castle recipes, but has some traditional dishes. The talk of the town is the mushroom cappuccino with truffles (RON 18), a delicious soup served with toast and milk foam. Chef Harabagiu told BR that the recipe was his own, with the truffles provided by a local supplier from Sibiu. As the chef said, if you don’t find something to excite your taste on the menu, speak to him and you will receive an unexpected treat. The majority of the diners are connoisseurs, and fish and meat are popular entrees. Cantacuzino Castle Open Monday to Thursday from 10.00 to 18.00 (last entry 17.15), Friday to Sunday from 10.00 to 19.00 (last entry 18.15), with Romanian-language guided tours. Tickets cost RON 20 for adults and RON 10 for children. oana.vasiliu@business-review.ro
CITY 13
www.business-review.eu Business Review | April 21 - 27, 2014
FILM REVIEW
Jeune et Jolie
Es-cort in the act: Marine Vacth and Geraldine Pailhas play a teen prostitute and her mother in Francois Ozone’s latest film
DEBBIE STOWE Director: Francois Ozon Starring: Marine Vacth, Charlotte Rampling, Frederic Pierrot, Geraldine Pailhas, Nathalie Richard, Akela Sari, Lucas Prisor, Fantin Ravat On at: Elvire Popesco (French Institute) French director Francois Ozon must have a thing about sexually provocative teenagers. From the bed-hopping Julie in 2003’s Swimming Pool to the Kristin Scott Thomas-seducing Claude in 2012’s In the House, alluring adolescents are frequently causing trouble and upsetting the moral order in Ozon-land. His latest tempting teen is the titular young and beautiful Isabelle (Marine Vacth). On a family holiday to the South of France, the Parisian high school student loses her virginity to handsome German Felix (Lucas Prisor). Most directors would then have Isabelle pining for the boy, in testament to the triumph of young love. Not Ozon. Barely has poor Felix got his breath back after their beachbased fumblings than he’s been jettisoned, as Isabelle returns to the city without even a backward glance. As with Joe from Lars von Trier’s Nymphomaniac – with which J&J shares a lot of joyless copulation – a disappointing first time doesn’t seem to deter Isabelle, and back in Paris she starts moonlighting lucratively as a high class escort, hitting the school books by day and the sheets by night. The movie follows this lycée belle de jour through her various close encounters with much older men, some kind, others cruel. The big question is why. Withdrawn Isabelle is clearly not a happy
girl, her mother (Geraldine Pailhas) has remarried and the parenting she receives is somewhat inattentive, but there is no suggestion of anything sinister within the family. Minus the usual drivers of sexual abuse, drugs and poverty, it is baffling why this attractive teen from a respectable, bourgeois home would choose to sell her body to a series of slobbering sleazeballs. Ozon doesn’t wish to solve the puzzle. Although we spend the whole film in Isabelle’s company, her mindset and motivation remain a mystery. With its main protagonist so inscrutable, Jeune et Jolie keeps the viewer at arm’s length, and the film lacks the charm and engagingness of its playful predecessor In the House. But while most of Isabelle’s assignations are degrading and distasteful, this is not a movie about the horrors of prostitution. The teenager never comes to terrible harm – physically, at least – and her main client is a gentle, avuncular sort. Combined with the chic interiors of the hotels the young escort frequents and model Vacth’s exquisite looks, the movie risks lending her activities a veneer of glamour. This lays Ozon open to the charge – also leveled at Abdellatif Kechiche for his compelling lesbian drama Blue is the Warmest Color – that his work is a middle-aged man’s creepy and distorted view of young women’s sexuality. Whatever misgivings one might have in this regard, Jeune et Jolie is another intriguing film from an exceptional director who always poses fascinating questions – even if he then frustratingly refuses to answer them. debbie.stowe@business-review.ro
14 CITY
www.business-review.eu Business Review | April 21 - 27, 2014
DON’T MISS
The week’s cultural events
DANIEL MORDZINSKI PHOTOGRAPHY EXHIBITION
∫ OANA VASILIU April 23-24, 19.00 Metropolis Theatre
Daniel Mordzinski / Cervantes Institute
Writer Gabriel Garcia Marquez in a portrait by Daniel Mordzinski
Cervantes Institute
Daniel Mordzinski
Ink and Light. A look inside Hispano-American Literature The Cervantes Institute in Bucharest is hosting an exhibition by Daniel Mordzinski, an Argentinean-born photographer who has been taking pictures of writers, essayists
and playwrights for more than 30 years. The exhibition gathers 64 portraits of well-known Spanish-language writers, including Mario Vargas Llosa, Gabriel Garcia Marquez, Eduardo Mendoza, Enrique Vila-Matas, Ernesto Sabato, Jorge Luis Borges, Alan Pauls, Roberto Bolano and Junot Diaz. Currently residing in Paris, Mordzinski has served as official photographer at numerous literary events, including the Ibero-American Book Fair in Gijon, the Hay festival, the Lev festival in Matosinhos and Vivamerica in Madrid. His works have been exhibited in museums across Latin America and at European festivals, and are to be found among some of the most prestigious collections of contemporary photography. The exhibition is open from April 16 to May 30. Visiting hours: Monday to Saturday, from 10.00 to 19.00. Instituto Cervantes, 38 Regina Elisabeta Blv. editorial@business-review.ro FOUNDING EDITOR Bill Avery PUBLISHER Anca Ionita EDITOR-IN-CHIEF Simona Fodor JOURNALISTS Otilia Haraga - senior journalist, Simona Bazavan, Ovidiu Posirca, Oana Vasiliu COPY EDITOR Debbie Stowe PHOTO EDITOR: Mihai Constantineanu
ISSN No. 1453 - 729X
LAYOUT Beatrice Gheorghiu ART DIRECTOR Alexandru Oriean
rected by Vera Nemirova and conducted by Adrian Morar. Othello is played by Daniel Magdalv and Desdemona by Iulia Isaev. The performance is in Italian with a Romanian translation.
April 26-27, 19.00 Bucharest National Opera Gigi Caciuleanu’s latest performance, which tackles the question “are Romanians different?” is Folia, Shakespeare & Co. The choreographer and dancer presents a new vision of Romanians, with a show that puts the spotlight on national identity through the emblematic work of Shakespeare.
April 24, 19.00 Radio Hall
Le Corsaire is a ballet typically staged in three acts, with a libretto originally created by Jules-Henri Vernoy de SaintGeorges, loosely based on the poem The Corsair by Lord Byron. Under the wand of Ciprian Teodorascu, Cristina Dijmaru (Medora) and Robert Enache (Konrad) will take the main roles.
April 26-27, 21.00 CinemaPro
Trio Brancusi will take to the Radio Hall stage, in the form of Elsa Grether on the violin, Laura Buruiana playing the cello and Mara Dobrescu at the piano. The trio will perform excerpts from the works of George Enescu and César Franck.
April 25, 19.00 Bucharest National Opera
New York ShortsUP presents a selection of award-winning short films about the most cosmopolitan metropolis in the world, NYC. The film selection features recent American productions and European works that evoke the life of the iconic city.
Based on Shakespeare’s Othello, Giuseppe Verdi’s four-act opera is di-
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