Business Review Issue 1/2014 January 20 - 26, 2014

INTERVIEW: Dutch firms have invested EUR 7 bln in Romania and cite IT and agriculture among the sectors with high growth potential, says Robin van Rozen, acting president of the Netherlands Romanian Chamber of Commerce »page 10

ROMANIA’S PREMIER BUSINESS WEEKLY

JANUARY 20 - 26, 2014 / VOLUME 17, NUMBER 1

FARMLAND LIBERALIZATION NO RESTICTIONS ARE CURRENTLY IN PLACE FOR NONRESIDENT EU CITIZENS LOOKING TO BUY FARMLAND IN ROMANIA AS INDIVIDUALS, FOR AT LEAST A MONTH »PAGE 8

FACELIFTING LITTLE PARIS Courtesy of ARCUB

Bucharest could be recapturing its former glory, thanks to major architectural and infrastructural investments by the EU and the Council of Europe. BR examines the changing face of the capital » pages 12-13

NEWS

NEWS

PPP problem

Cover up

The new law on public-private partnerships remains blocked in the approval chain since being sent back to Parliament

Insurer CertAsig reported gross written premiums worth EUR 12 million in 2013, and hopes to bring the total to EUR 15-16 million this year

» page 4

» page 4

www.business-review.eu Business Review | January 20 -26, 2014

NEWS 3

NEWS in brief EUR 350-370 million this year, accounting for roughly 8.5 million transactions.

Last year, the processing company added 700 new traders from sectors such as tourism, services and utilities.

ENERGY Rompetrol investment depends on government memorandum Oil and gas group Rompetrol, controlled

by KazMunaiGas, says it is ready to invest USD 350 million in Romania based on a memorandum that will see the government receive USD 200 million for a minority stake in the company, according to Mediafax newswire. According to the memorandum, Kazakh stateowned company KazMunaiGas will repurchase a 26.69 percent stake in Rompetrol Rafinare from Romania. This deal frees the company of a USD 660 million debt to the Romanian state, according to news portal www.hotnews.ro.

The Kazakh company is aiming to set up an energy investment fund worth USD 350 million. Rompetrol plans to invest USD 150 million in building a cogeneration plant at the Petromidia refinery. The rest will be used to finance the expansion of the retail fuel station network, which currently consists of 450 units.

The prime minister, Victor Ponta, last week asked energy delegate minister Constantin Nita and justice minister Robert Cazanciuc to prepare a bill approving the memorandum. The bill approving the memorandum was rejected by the Constitutional Court last November, following a notification of President Traian Basescu. The president commented that only certain provisions had been attacked, adding that the memorandum was overall valid.

FINANCING Hidroconstructia takes out EUR 60 mln syndicated loan Romania’s Hidroconstructia, a construction firm specialized in the hydro sector, has taken out a EUR 60 million loan for working capital, allowing the issue of bank guarantee letters for the firm’s contracts. BRD-Groupe Societe Generale was mandated lead arranger in the consortium, which also included insurer Allianz-Tiriac Asigurari. BRD and Allianz-Tiriac are acting as secured creditors for the bank guarantee letters.

Law firms Clifford Chance Badea and Voicu&Filipescu advised the consortium on the loan deal.

Romania raises USD 2 bln in two bond sales The Ministry of Finance said last Wednesday that Romania had raised USD 2 billion from two oversubscribed bond sales, and that investors were

RETAIL Selgros Cash&Carry Romania launches online store

IMAGE of the week US official urges Romania to stay the course of economic and democratic reforms During a two-day visit to Romania, US Assistant Secretary Victoria Nuland met with Romania’s foreign affairs minister and its president, Traian Basescu. Nulan urged Romania to continue with its economic and democratic reforms. While the president described Nuland’s message as a “worrying” one, according to Mediafax, minister Titus Corlateanu said that the US official’s visit showed the US was interested in what is going on in Romania. starting to buy into the country’s bonds with longer maturities. Romania raised USD 1 billion from a ten-year bond issue that yielded at 5 percent and had a coupon of 4.9 percent. In addition, the country issued, for the first time, bonds with a 30-year maturity that yielded at 6.2 percent and had a coupon of 6.1 percent, raising another USD 1 billion.

The offering was oversubscribed five times.

The reference interest rate for tenyear bonds issued by the US Treasury climbed by 86 basis points from February 2013, when Romania raised USD 1.5 billion in a separate issue. Meanwhile, Romania’s risk premium fell 36 basis points on the back of positive macroeconomic results, said the ministry. The bond issue was managed

by BNP Paribas, Citibank and JP Morgan.

MEDIA British Cineworld buys Eastern Europe’s Cinema City chain British cinema chain Cineworld has acquired the Cinema City chain for EUR 600 million. With 15 cinemas and 142 screens in Romania, Cinema City is active in seven countries in Central and

Eastern Europe, where it has 99 cinemas and 966 screens. In Romania, Cinema City runs the only IMAX hall, at AFI Palace Cotroceni.

The group created after the deal will be the second largest in Europe, with a market share of some 27 percent, 201 cinemas and 1,842 digital cinema halls.

The deal, which consists of cash and shares, will most likely be completed in March. Moshe Greidinger, CEO of Cinema City International, will become CEO of Cineworld, while Israel Greidinger will serve as COO.

ONLINE Netopia mobilPay says online card payments may reach EUR 370 mln in 2014 Online payment processing company Netopia mobilPay processed more than 2.2 million online card transactions in 2013 worth EUR 76 million, accounting for one third of all transactions of this kind concluded in Romania.

The company said it had reported an increase in the number of people who paid by card online for the first time in 2013. According to company representatives, the online card payment market will grow by over 20 percent to around

Cash and carry company Selgros Romania has started selling its products online, having sealed a partnership with online platform MegaMarket.ro. The site is managed by A4K SWED Concept and sells exclusively Selgros products.

Some 11,000 food and non-food products sold by Selgros are available on MegaMarket.ro and the number will go up in the near future, said the company. For now the service is available in Bucharest, Otopeni and Corbeanca.

In the second quarter of this year, it will also be available in Cluj-Napoca, Timisoara and Brasov, and by the end of the year in all large cities throughout the country, said Pia Krauss of Selgros Cash&Carry Romania.

Selgros Cash&Carry’s announcement comes after two major local retailers – Carrefour and Cora – launched online platforms of their own in 2013. In July, Carrefour officially launched its online store, carrefour-online.ro, while in November Cora launched the first local drive-through service which for now is available in its Lujerului hypermarket in Bucharest.

STOCKEXCHANGE Property Fund 2013 profit jumps 20 percent to EUR 153 million The Property Fund (FP) saw its net profit rise 20 percent to EUR 153 million last year on the year before, boosted by the sale of its stake in state-owned Transgaz, the gas transport company.

The net asset value of FP, administered

by Franklin Templeton, stood at EUR 3.35 billion in December 2013.

The fund sold its 15 percent stake in Transgaz this December, raising RON 303 million (EUR 67 million). More than half of the fund comprises minority holdings in energy companies, such as oil major OMV Petrom and hydropower producer Hidroelectrica.

Last year, FP shares closed with a gain of 51.7 percent, while the total yield, including dividends, reached 59.1 percent, according to business daily Ziarul Financiar. The fund’s market capitalization stood at RON 11.4 billion (EUR 2.52 billion).

www.business-review.eu Business Review | January 20 -26, 2014

4 NEWS LEGISLATION

BUSINESS AGENDA January 21

11:00 Autovit.ro organizes a press conference to outline developments in the used car market at Radisson BLU Hotel. By invitation only.

14:00 Dacia organizes a press conference to announce its financial results for 2013 at Epoque Hotel.

Thomas Dubruel, commercial director of Renault Group in Romania, will attend. By invitation only.

January 22

09:30 The Property Fund and the Bucharest Stock Exchange (BSE) organize a press conference to mark the third anniversary of the fund’s listing, at the BSE HQ in Bucharest. Greg Konieczny, fund manager, will attend. By invitation only.

January 28 ∫EVENT

09:30 Business Review organizes the Access to State Aid workshop at Grand Hotel Continental. Registration is open. Find out more at www.business-review.eu/brevents

New PPP law remains stuck in approval chain

I

nvestors have shied away from Public Private Partnership (PPP) projects until now, due to contradicting provisions in the law, as the authorities seek private sector involvement for the construction of large energy and road projects.

A draft of a new PPP law was sent back to Parliament earlier in January after the Romanian president, Traian Basescu, said the bill contained some untransparent provisions that created unpredictability for investors.

“The new law has been the focus of recent debates with political stakes.

However, we must not lose sight of the fact that Romania needs a functional PPP law to be able to sustain its economic development,” Nicolae Ursu, senior associate at law firm bpv Grigorescu Stefanica, told BR. Ursu says the authorities should clarify the conditions in which investors can be unilaterally dismissed by the public partner. Another controversial provision is the re-awarding of the contract.

The senior associate says that investors can be dismissed only if they do not meet their obligations to the financier or the public authority, but this exceptional situation cannot be a reason for re-awarding the contract

INSURANCE

without observing the public procurement legislation. The new PPP law is based on the French model and has been drawn up with assistance from the European Investment Bank (EIB), European Bank for Reconstruction and Development (EBRD) and World Bank (WB).

The European Commission, the executive arm of the EU, has closely monitored the drafting of the law, which also underwent amendments from business advocacy groups and chambers of commerce.

“A solid legal framework is of course only one precondition for PPPs. Another equally important aspect is the predictability and transparency of political decisions. Here we can still see room for improvement. Ministers and political directions and strategies change too frequently and too unexpectedly,” Arnulf Gressel, commercial attache at the Austrian Embassy in Bucharest, told BR. “PPPs in infrastructure, energy or environmental technology require a stable and substantial political and legal environment for long-term. Looking at recent policies, for example renewable energy, Romania has appeared far from providing such prerequisites,” he added.

Investors opt for concessions Romania has had a PPP law (no.178/2010) for over three years now, but has failed to attract any investors.

Ursu says the current law lacks the clear delimitation from the object regulated by the legislative act of public acquisitions, concessions and public work (government emergency ordinance no.34/2006). “In simple terms, it is not clear to an investor which of the two regulations applies in the case of, for example, an infrastructure project commissioned by the public authorities. Secondly, it is not distinctly stipulated how the essential rights, such as the right of concession, are transmitted to the project company.

Then, there is a stringent need to accurately define certain rights of the project financiers,” added Ursu.

He commented that these are the main reasons why two of the largest infrastructure projects, the ComarnicBrasov motorway and the Bucharest south ring, were carried out under the provisions of public concessions.

Gressel said that aside from infrastructure, the PPP system could be an attractive option in the healthcare or environmental sectors. ∫ Ovidiu Posirca

LEASING

CertAsig gross written LeasePlan Romania to premiums at EUR 12 mln in 2013 invest EUR 35 mln this year

N

on-life insurer CertAsig said its insurance market in Romania.

“Unfortunately in the current insurgross written premiums rose to EUR 12 million last year, a 21 ance market environment, it is virtually percent year-on-year hike, despite the impossible to underwrite a technically profitable motor portfolio, especially difficult local insurance market.

The insurer, which is majority- when investment returns are too low owned by private equity fund Royalton to compensate for the claims,” said the Capital Investors II, reported a EUR CEO. He reckons the non-life/non-motor 400,000 (unaudited) profit last year.

This year, CertAsig hopes to increase market remains attractive to foreign the level of gross written premiums to players, but says few transactions inaround EUR 15 to 16 million, by pro- volving insurers will take place this viding specialized insurance services. year, because a large share of them are Its main clients come from the con- owned by larger foreign groups.

Grindley says the market should struction, transport and maritime in“take its natural course” and grow by at dustries.

“Our target is mainly the corporate least 5 percent this year.

Data from the Financial Supervision segment, and in this area – from which we have developed a balanced portfolio Authority (ASF) show the volume of of insurance products – focused on spe- gross written premiums in Romania cialized insurance classes: bonds, prop- rose by 0.1 percent to RON 6.1 billion erty & engineering, liability and marine (EUR 1.3 billion) in the first nine months insurance. Also some new event com- of 2013 against the same period of last panies have started requesting event year.

The insurer currently has 53 eminsurance, so we will continue our focus on this segment,” James Grindley, CEO ployees and offices in Bucharest, Timisoara, and Cluj, as well as a liaison CertAsig, told BR. CertAsig has excluded from its port- office in Istanbul, Turkey, and a dedifolio loss-making motor insurance class- cated contact in Sofia, Bulgaria. ∫ Ovidiu Posirca es, which account for 70 percent of the

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perational leasing firm LeasePlan Romania will invest over EUR 35 million in the acquisition of new vehicles, prompted by growing demand from the corporate sector, as more companies outsource car fleet management to cut costs. The planned investment will take the firm’s number of administered vehicles from 9,100 to over 10,000.

Bogdan Apahidean, general manager of LeasePlan Romania, estimates a 10 percent expansion of the firm’s turnover to EUR 45 million this year. He says the local operational leasing market amounts to around EUR 200 million, accounting for close to 42,000 vehicles, and should expand by a moderate 5 percent this year.

Apahidean commented that the difficult economy and legal uncertainty froze the market in the first third quarter, and a slight recovery came only in the last quarter of last year. Another challenge for the market is the extensive imports of used cars from Western Europe.

“We want to see the taxation of second hand imports (e.n. of cars) by in-

dividuals. This impacts second hand car dealers and operational leasing firms who face unfair competition,” said Apahidean.

Last year, LeasePlan increased its administered car fleet by 20 percent, after investing EUR 28 million in the acquisition of new vehicles. Some 85 percent of its fleet is in the full operational system, and the company provides fleet administration services for the rest.

According to Apahidean, LeasePlan is the leading player locally with a market share of close to 20 percent.

The firm added 40 new clients last year, taking its overall portfolio to over 200.

Its biggest client is oil major OMV Petrom, which uses a fleet of 2,300 vehicles. Demand for operational leasing services comes from multinational companies active in various sectors such as FMCG and industry.

Apahidean revealed that executives at the helm of multinationals opt for brands such as Mercedes and Range Rover, with prices hovering around EUR 70,000. ∫ Ovidiu Posirca

www.business-review.ro Business Review | January 20 -26, 2014

NEWS 5

WHO’S NEWS

Top management changes in 2013

BR welcomes information for Who’s News. Submissions may be edited for length and clarity. Get in touch at simona.bazavan@business-review.ro

Last year saw quite a number of important changes at the helm of some of the largest local firms - corporations as well as state-owned companies.

Charlie Cunningham-Reid replaced Neil Coupland as general director of cigarette manufacturer Japan Tobacco International (JTI) in Romania, Bulgaria and the Republic of Moldova in January.

He came to Romania the previous year as vice-president, head of consumer & trade marketing after having previously served as general manager JTI Bulgaria.

The following month, Hans Dewaele was appointed vice-president and general director of Procter & Gamble (P&G) in Romania. He also coordinates the activity of P&G in the Balkans region (Bulgaria, Republic of Moldova, Serbia, Bosnia and Herzegovina, Albania, Macedonia and Kosovo). The same month, Rompetrol Downstream announced Sorin Nichita will be the company’s new director and Mihail Viorelian Stanculescu took over as general director of state-owned Hidroelectrica.

One of the year’s most important management changes took place in April when the appointment of Nikolai Beckers as CEO of both Romtelecom and Cosmote Romania came into force, an important step ahead of the two companies’ merger.

Veronica Brejan

was promoted to Vodafone group head of talent and performance, according to local media reports and information on LinkedIn. Prior to being promoted, Brejan worked for Vodafone Romania as senior manager of talent, capability and culture between March 2012 and December 2013, where she led a team of 20 employees. Prior to that, she acted as interim HR manager and senior HR business partner, technology. Before joining Vodafone Romania, Brejan worked as senior advisor, people & change, at KPMG Romania between July 2009 and April 2011. She has an EMBA from the Maastricht School of Management and a master’s degree from the Academy of Economic Studies in Bucharest.

Amelia Teis

has joined D&B David si Baias, the law firm affiliated to professional services firm PwC in Romania. She is a litigation lawyer and has previously led the litigation and arbitrage division of another Romanian law firm, also coordinating the legal team spe-

cialized in public acquisitions. Teis has assisted clients in over 60 public acquisition disputes that were brought in front of the National Council for Solving Complaints and various courts of law between 2010 and 2013.

Lucian Bozian

has joined D&B David si Baias, the law firm affiliated to professional services firm PwC in Romania. He is a competition law specialist who was head inspector at the Competition Council for over six years, working in departments such as industry and energy. Bozian was involved in numerous dawn raids and acted as rapporteur in many investigations involving vertical and horizontal agreements in industries such as paints and varnishes, automotive and staples.

Rewe Romania appointed Christian Beck to run the local operations of discount chains Penny Market and XXL Mega in May. He previously worked at Auchan Hungary as customer relationship manager.

As part of the government’s objective to appoint private management for state-owned companies Virgil Metea took over as general director of Romgaz, the state-owned natural gas producer, in June. Earlier that month, Daniela Lulache, a former head of Fondul Proprietatea, became the head of state-owned nuclear power producer Nuclearelectrica.

November brought two important management appointments in the retail sector. Metro Cash& Carry Romania announced a new general manager in the person on Gilles Roudy, replacing Dusan Wilms. Also, Jean Baptiste Dernoncourt was promoted to CEO of Carrefour Romania. Dernoncourt was Carrefour Romania’s CFO. One of the last management changes in 2013 was the appointment of Igor Tikhonov at the helm of SABMiller’s local subsidiary, Ursus Breweries. Tikhonov previously served as managing director of SABMiller Slovakia.

www.business-review.eu Business Review | January 20 -26, 2014

6 LINKS

2014 heralds legal changes, potential new telecom market order The allocation of licenses for Romania’s transition to digital terrestrial television is one of the keystone events around the corner. A further cut in termination rates, the implementation of a new infrastructure law and some more radio spectrum for sale complete the line-up. However, the balance of power between the major telecom players may change in the event of a Romtelecom-Cosmote merger, which would create the largest telecom operator in the country by revenues. ∫ OTILIA HARAGA Switching to digital Romania will switch off the analog signal and switch to digital terrestrial television on June 17, 2015.

The country’s telecom watchdog is in charge of allocating five national digital multiplexes in the DVB-T2 standard: four in the UHF (ultra-high frequency) band and one in the VHF (very-high frequency) band.

All the multiplexes will be awarded for a ten-year period. The licenses will be valid from June 17, 2015.

The first UHF multiplex comes with a few conditions attached: the winner must broadcast ’free to air’, in transparent, fair and non-discriminatory conditions, the public and private TV stations currently being broadcast in the terrestrial analog system.

The multiplex must cover 90 percent of the population and 80 percent of the territory with fixed reception until December 31, 2016.

This is the only multiplex, out of the five available, that comes with such coverage obligations, according to communications industry watchdog ANCOM’s president, Catalin Marinescu.

With the other four, the operators must set up at least 36 functional transmitters for the network corresponding to each multiplex, before May 1, 2017.

The authority held a period of public consultation, which ran until January 8, on the draft and the task book.

“ANCOM proposes the five multiplexes for digital television be awarded via a competitive selection procedure,” said Marinescu.

According to the competitive selection process, each applicant submits an initial offer that specifies the number of desired multiplexes. If the demand is higher than the number of available multiplexes, there will be primary auction rounds until the demand no longer exceeds the supply. If some multiplexes remain, having not been awarded to any applicant after the end of the primary auction rounds, ANCOM may decide to hold an additional round, explained Marinescu.

The starting price for each multiplex represents the minimum license tax, which will be set by the government based on advice from ANCOM. According to the calendar an-

Romania will switch to digital terrestrial television starting June 17, 2015.

nounced by the authority last year, the selection procedures should be launched in January, and by the end of April, the procedure awarding the multiplexes should be completed.

As far as the radio spectrum goes, some remains to be awarded. The telecom watchdog will draft the documents and organize the selection process for awarding spectrum in the 3400 MHz-3800 MHz frequency. The authority will also draw up a strategy to award spectrum in the 410 MHz and 450 MHz bands.

The telecom watchdog is also in charge of the task of awarding radio spectrum in the frequencies of 800 MHz and 2600 MHz that was not allocated during the 2012 telecom tender.

New cut in termination rates Another measure with significant impact on the industry this year will be

the implementation of a new cut in mobile and fixed termination rates.

Termination rates are charged only for off-net calls, representing the price charged by one operator to take calls from another within its own network.

This sum can be found in the monthly bills paid by users.

The cut in termination rates is meant to stimulate competition on the market. ANCOM data show that even though the smartphone penetration rate in Romania is comparable to that in France or Germany, over 70 percent of local users limit their mobile national calls owing to cost consciousness.

Following the new threshold announced by ANCOM at the end of last year, fixed termination rates will be cut from 0.67 eurocents/minute to 0.14 eurocents, while mobile termination rates will be reduced from 3.07 eurocents/minute to 0.96 eurocents.

The new rates will come into force after compulsory European consultations. The authority is currently awaiting observations on this issue.

The measure is not expected to go down smoothly with telecom operators, who have repeatedly complained that these cuts will deprive them of a significant chunk of their revenue, thereby limiting their investments in 4G services.

However, the trend in Europe points towards the creation of a unified market. This year, there will be new debates on the European Commission project, The Connected Continent, the purpose of which is to create a single, integrated and inter-connected market that comprises telecom, energy and transportation.

A new infrasturcture law Another development that will con-

www.business-review.ro Business Review | January 20 -26, 2014 tinue to have an impact on the telecom market this year is the implementation of a new infrastructure law, which affects all providers of telecom networks, public authorities, owners of buildings and infrastructure.

“The authority will start making steps towards the creation of a national inventory of public communication networks and related infrastructure elements, which will span a number of years. At the same time, we will continue the campaign to raise awareness of the stipulations of the infrastructure law,” said Marinescu.

The ANCOM official warned telecom operators to expect thorough controls that will establish whether they have included the minimum clauses in the contracts they sign with end users.

“The authority is planning to make available to end users instruments to help them make informed decisions when choosing their provider or the best tariff. One such example is the Veritel.ro application,” said Marinescu.

Veritel is an interactive application that helps consumers compare offers from various telecom offers and choose the one that best fits their communication needs and budget.

LINKS 7

High-speed Internet on the wave!

A change in the market hierarchy?

Last year, telecom providers Cosmote Romania, Orange Romania, RCS&RDS, Vodafone and 2K Telecom came into the possession of the licenses that allow them to use spectrum in the frequencies of 800 MHz, 900 MHz, 1800 MHz and 2600 MHz between April 6, 2014, and April 5 2029.

“ANCOM is planning to make available to end users instruments to help them make informed decisions when choosing their provider or the best tariff. One such example is the Veritel.ro application,” Catalin Marinescu, president ANCOM. “From April 2014, the winners of the tender organized by ANCOM in 2012 will be able to use all the spectrum resources they have won, including in the frequencies of 800 MHz and 2600 MHz,” said Marinescu. “We can therefore estimate that from April, operators will grow their 4G coverage. Using the LTE/4G technology on the mobile communications market will bring new growth perspectives in future years on a stable and mature market such as the

Source: ANCOM

Romanian one,” he added.

A potential merger between mobile operator Cosmote and TV, internet and fixed telephony operator Romtelecom would shake up the hierarchy of telecom players in Romania, creating the largest telco on the market, from the revenue point of view, ahead of Orange Romania and Vodafone Romania.

At the moment, the Romanian state still has a 45.99 percent stake in Romtelecom, while Greek group OTE owns the major share package of 54.01 percent. German group Deutsche Telekom also has some control of Romtelecom as it directly or indirectly owns 40 percent of the OTE shares.

At the end of last year, the Romanian state selected the consultant to act on its behalf during the Romtelecom privatization process. The consultant will be a consortium made up of SSIF Swiss Capital SA, UBS Limited, Musat și Asociații SPARL and BT Securities SA. Law firm Bulboaca si Asociatii was chosen by the state as legal consultant in the privatization process.

Dan Nica, the Romanian minister of communications, said last year that his main option for Romtelecom’s privatization was to list the operator on the stock exchange. “We may have a dual listing, Bucharest-London and Bucharest-Frankfurt,” said the minister during a media event.

This year, the cumulated investment of Romtelecom and Cosmote Romania on the local market will reach EUR 170 million, which will be invested in both the fixed and mobile network.

Romtelecom’s main competitor, RCS&RDS, may also have a stronger word to say on the mobile market as it comes into the possession of its telecom license in the 900 MHz frequency.

The operator announced it would step up its efforts on the mobile data front. “Once we obtain the 900 MHz license in 2014, we will re-launch the mobile data and voice service. Of course 4G is the next step but we believe the potential of 3G has not been sufficiently exploited,” said Valentin Popoviciu, business development manager of the company, at a media event.

After previously stating that Vodafone would be investing around EUR 100 million this year on the Romanian market, representatives subsequently announced the operator will in fact be supplementing this sum with an additional EUR 54 million, to be used from 2014-2016 for the development of 4G, the store network and the fiber optic backbone. This added investment comes as a result of Vodafone’s sale of its 45 percent stake in Verizon Wireless.

Meanwhile, Orange Romania announced that its investment budget would be around the same sum as last year, between EUR 100 and 120 million, to be used for 4G and the upgrading of the company’s network equipment in urban areas. otilia.haraga@business-review.ro

8 PROPERTY

www.business-review.eu Business Review | January 20 -26, 2014

Farmland market liberalization kicks in with no restrictions for foreigners Average farmland prices have almost tripled in Romania since 2007, and not only is the rise showing no signs of abating, but it hasn’t sated investors’ appetite either. The January 1 liberalization will further boost demand, but how easy it will be for locals and foreigners alike to buy Romanian farmland depends on the way the future law regulating sales is implemented. ∫ SIMONA BAZAVAN No restrictions are currently in place for non-resident EU citizens looking to buy farmland in Romania as individuals, since the January 1 liberalization deadline, stipulated by Romania’s Treaty of Accession to the EU, kicked in and president Traian Basescu sent back to Parliament for reexamination a draft bill regulating the sale and purchase of farmland by individuals.

With at least one month until the modified bill could become law, during which time foreign individuals will have the same rights as locals to purchase agricultural land, the topic has reignited public debate over the acquisition of farmland by foreigners. Given that land prices continue to be much lower in Romania than throughout the rest of the EU, local farmers complain Stacking up: Farmland will cost EUR 3,500-4,000 per hectare on average by 2015 they will face unfair competition from international players who have far greater financial power. Many fear mas- should be drafted to allow foreign com- similar regulations, each member state sive land acquisitions by foreigners and panies and individuals to buy Roman- negotiating during the accession the topic has even prompted national- ian farmland under the same process specific conditions under istic concerns after news emerged that conditions that Romanians can buy which farmland can be bought and worked by foreigners. In countries Hungary is allegedly preparing a bid to farmland elsewhere in the EU. such as France, Germany and Sweden, buy land in Transylvania.

The draft bill proposed at the 11th What should the law look transactions involving farmland have to be approved by governmental instihour by the Romanian Ministry of Agri- like? culture and Rural Development to reg- “We also believe that there are aspects of tutions while in Hungary and Lithuaulate the sale and purchase of farmland the bill on farmland that must be clari- nia there are limitations on the surface by individuals from 2014 stipulates that fied before it is passed into law in order that can be bought, according to co-owners, tenants, neighbors and in- to avoid future difficulties in applying Popoviciu. Poland has negotiated an dividuals involved in farming activities it,” Larisa Popoviciu, senior associate at extension to the liberalization deadline until 2016, while neighboring Bulgaria in the locality where farmland is for Zamfirescu Racoti & Partners, told BR. sale and the state will have preemption For example, the draft bill gives tenants has taken steps to do the same to 2020 rights to purchase land that is up for a preemption right to buy land the despite the fact that it doesn’t have the sale. This was the final version of a draft owners put up for sale, but under exist- European Commission’s approval and that had initially proposed much ing regulations this already applies, re- is thereby risking sanctions.

“One can see that there is no comstricter conditions on those looking to gardless of tenants’ nationality. buy farmland in Romania, be they loIn terms of drafting the law so that it mon approach across the member cals or foreigners. Under the initial draft, affords local farmers an edge over for- states and there is more than one way the ownership of farmland was to be eign competition, giving certain indi- to tackle this. Whatever the measures limited to 100 hectares and interested viduals a preemption right is a welcome the Romanian state chooses to implebuyers had to prove they had a back- measure, thinks Popoviciu. “Given the ment – be they making it mandatory ground in farming and agricultural categories included in the bill that for transactions to be approved by the know-how. The bill was criticized by would benefit from legal preemption, authority or offering legal preemption legal experts who argued that if passed one can say that the interests of local to certain categories – these procedures into law, it would have blocked the farmers are protected by these meas- must be carried out in a transparent market. ures,” she said, calling for the proce- manner and within a reasonable timePresident Basescu objected to sev- dures pertaining to this right to be as frame so that it doesn’t unnecessarily eral unclear aspects in the last version clear and transparent as possible so that block the market,” she added.

One thing is for sure, concerns over of the draft bill as well as in the setting they don’t make transactions unnecesup of a national agency for the manage- sarily difficult to carry out. The govern- massive farmland acquisitions by forment and regulation of the land market ment could also support local farmers eigners starting this year are often exwhich would approve transactions and by coming up with state-guaranteed aggerated, say pundits. Even prior to have preemption rights to purchase loan schemes and other similar meas- this date, foreign investors were able to, and many did, circumvent the legislaland ahead of foreign individuals. Last ures. week, the president added that the law Other EU countries have imposed tive restrictions by purchasing land

through locally registered companies.

Some 8.5 percent of the country’s arable farmland is estimated to be already controlled by foreigners, according to official data.

What’s the price tag?

Local farmland has been an attractive investment for both locals and foreigners for several years now and will continue to be so despite rising prices and setbacks such as land fragmentation and the challenging acquisition process, pundits say. On the upside, prices are still well below the EU average, there are large surfaces of available land, albeit highly fragmented, and there is also the good quality of the soil to consider.

For these reasons, interest in buying local farmland remains high, regardless of the liberalization, say market representatives. Indeed, there has been no spike in demand as a direct consequence of the January 1 liberalization as many players have already invested in acquisition by setting up local companies, Razvan Iorgu, managing director at CBRE Romania, told BR. Local companies controlled by foreigners already own an estimated 1 million hectares of farmland in Romania and many of these companies have been present in Romania for more than ten years, Flavius Pop, consultant in the investments department of DTZ Echinox, told BR. “The lifting of restrictions will not trigger a price explosion or a significant increase in the number of transactions,” he said.

At present, the price per hectare varies considerably, from under EUR 1,000 to as much as EUR 6,000 – EUR 8,000, according to Iorgu. The difference is mainly attributable to soil quality, surface, geographical area and the plot’s current state, added the MD. DTZ estimates that average prices will grow by between 10 and 15 percent this year to reach about EUR 3,500EUR 4,000 per hectare by 2015.

Average farmland prices have almost tripled in Romania since 2007, according to a DTZ report. Even so, they remain well below levels reported elsewhere in the EU – about EUR 24,000 per hectare in the UK and Belgium, between EUR 15,000 and EUR 16,000 in Italy and as much as EUR 30,000 in Denmark. simona.bazavan@business-review.ro

www.business-review.ro Business Review | January 20 -26, 2014

PROPERTY 9

2014 to ring the changes on local retail market Online expansion and new formats, increased efforts to find local suppliers and a slowdown in store openings are the main developments expected on the Romanian retail scene in 2014, Michael Weiss, partner with A.T. Kearney’s Bucharest office, tells BR. ∫ SIMONA BAZAVAN There is little to indicate that 2014 will be considerably different from the previous year for the local retail industry, yet at a closer look, there are the right premises for this year to mark the beginning of more profound changes to come.

“While at first glance, the challenges look similar to last year’s – for example flat market dynamics, little prospect of improving purchasing power, retail overcapacity and discount-driven competition – most retailers reached the peak of what business as usual offers in 2012 and short-term optimization and operational tactics are no longer enough to protect current levels of operative margins,” said Weiss. Retailers’ reactions over the past year have ranged from introducing innovative formats such as new franchise concepts, changing their approach to local sourcing strategies and category management, he explained.

2014 will not bring abrupt changes, but rather the beginning of a gradual transformation over the next two or three years, where “the market and retail landscape will be shaped by players that not only have innovative approaches but are actually able to implement them,” added Weiss. This will mean introducing new formats, increased efforts to find local suppliers and changes in store operations.

Above all, retailers going digital is one of the major trends predicted for 2014. “We are expecting significant changes in digital retail. If you consider a market like Romania where a discounter such as Lidl has more than 1 million Facebook friends, you can see a clear indication of the market potential,” he said. With the right strategy in place, the shift towards online looks like the most promising game changer this year, across formats, but also for urban versus rural retail segmentation, he believes.

As for new players entering the local market, Romania will probably not see the arrival of another international player in 2014, thinks Weiss.

However, existing players will look into expanding into selected niche categories and formats, and consolidation is likely for retail formats where there is overcapacity. The growth potential of big retail formats

is limited and players will most likely slow down the opening of new stores.

2013 highlights Although consumption showed no concrete signs of recovery in 2013, several local retailers maintained a steady expansion pace throughout the year, with Mega Image, Kaufland and Profi among the most active.

With the exception of Kaufland, small stores were the option of choice when opening new outlets.

Last year’s big news was the opening of the first online grocery store operated by a large retailer. In July, Carrefour officially launched its online store – carrefour-online.ro. In November, Cora launched the first local drive-through service which for now is available in its Lujerului hypermarket in Bucharest.

Mega Image was one of the players that maintained an aggressive expansion pace by opening 104 new stores: 37 Mega Image supermarkets and 66 Shop&Go proximity stores. Meanwhile, in September, Romania became the first country where the Belgian Delhaize group launched a new retail brand, AB Cool Food, which sells exclusively frozen foods.

By the end of the year Mega Image was operating a network of 296 stores in Romania.

Other players also invested in opening new stores. Discounter Kaufland opened eight new hypermarkets in 2013, reaching a network of 89 at the end of the year. Part of the same Schwartz Group, Lidl opened 14 new outlets in 2013, giving it a total of 168 units. Profi opened 63 new stores in 2013 and launched new retail formats. By the end of the year the retailer was operating 207 stores.

By December, Carrefour Romania had grown to a network of 25 hypermarkets, 78 supermarkets, 56 Carrefour Express proximity stores and the firm’s online store.

Cora opened two new hypermarkets in 2013 and had a network of 12 hypermarkets at the end of the year.

After taking over the 20 local Real hypermarkets as part of a regional deal with Metro Group in 2012, Auchan started rebranding the first stores.

Following the takeover, Auchan Romania reached a network of 31 branches. simona.bazavan@business-review.ro

www.business-review.eu Business Review | January 20 -26, 2014

10 MONEY

Dutch local investment sentiment stabilizes Robin van Rozen, newly appointed acting president of the Netherlands Romanian Chamber of Commerce (NRCC), says that IT and agriculture are among Romania’s strong points in attracting foreign investments. He pointed out that Dutch investors’ sentiment towards Romania – which has resulted in EUR 7 billion in FDI – has stabilized. ∫ OVIDIU POSIRCA

CV Robin van Rozen

How will the liberalization of the remaining EU labor markets for Romanians impact Dutch companies employing local workers?

The NRCC is pro European Union, and free labor markets are something we really endorse. We do not see it as a threat or an issue. It is good for business. Romanians working in Holland should get the same benefits and the same kind of salaries as Dutch people get.

March 2013 - present country manager at Philips Romania and commercial leader, South East Europe, for Philips Consumer Lifestyle October 2013 - present acting president of the Netherlands Romanian Chamber of Commerce He has worked for Philips for ten years, since April 2010 as senior marketing director for Central & Eastern Europe.

His background includes marketing and finance studies at the University of Maastricht, and he is the graduate of an executive MBA at the Wharton Business School.

What is the level of Dutch investments in Romania and what is investors’ sentiment like?

There are 4,000 Dutch companies in Romania and the investment level stands EUR 7 billion. The business sentiment is stabilizing. We are slowly getting more confident. I’m hearing many more people talking about the future and opportunity in Romania than at the beginning of 2013.

The sentiment is getting more positive, though still very cautious. The tradition with the Dutch is transport and logistics, IT and agriculture.

These are the strongholds, I think, compared to other Eastern European countries.

What are Dutch investors’ main concerns surrounding Romania?

The top concern, which is not about Romania alone, is stability. Stability in policymaking and taxes is what foreign investors look for. Then, there is another discussion where Romania performs very well, which is the capabilities of the country, especially the labor force. People are quite positive in this area compared to other Eastern European countries.

Photo: Vlad Virban

What lessons can Romania learn from the Netherlands on agriculture?

In Holland we have 2 million hectares of farmland, which provide food for 100 million people. The 12 million hectares in Romania provide food for only a much smaller number of people. For me that shows opportunity.

nity. I would almost be tempted as a country to say, let’s put more people in IT because we can export more as a country. In this field, I hear people saying it is more difficult. For the rest, I’m not hearing that much, to be honest.

It is the skilled labor force that always comes up; of course the level of English is very high compared to other countries. In addition, from what I have experienced myself, there is generally a positive business attitude. Romanians are keen to work and progress, which are key ingredients when you make investments.

Do investors still perceive Romania as a country with low labor costs?

For cheaper labor, you go to different countries where there is not that much of a skilled labor force. I think here you can see how you can have almost the best of both worlds – yes, labor costs are cheaper than the rest

of Europe, that’s a fact, but you can have skilled labor, which is essential.

I think the Dutch see the Romanian market more from that perspective, considering the relatively cheap and skilled labor.

Is it easier to find skilled workers in Romania, because this is one of the core issues mentioned by foreign investors locally?

I think whether you can find skilled labor depends on the industry. One of the industries that is doing extremely well in Romania is IT. When I talk to IT companies, I do hear them say it is getting more difficult to find good workers, because the pool is only so big, so it is almost a missed opportu-

What are some of the initiatives undertaken by the NRCC to improve the local business environment?

We are bringing companies together to let them talk to each other, to see if there are mutual benefits. I have experienced this myself in Holland and you can leverage that. For example, we have a lot of different services like equipment, consultancy, and a lot of practical points like travel agents. It opens up opportunities and it is direction setting.

We have launched a nearshoring guide to give more guidance and support to what needs to be done, to set up your business in Romania, for example, but also what the government can do to make it easier first. Policymaking and giving advice is, I think, another building block of our association.

My personal interest is in IT because one thing I noticed when I came to Romania is how successful

www.business-review.ro Business Review | January 20 -26, 2014 and big this industry is in Romania, and also in Holland I see we are quite strong, so this is a win-win situation.

It feels like this is an opportunity both countries can further leverage, as some of our members are Dutch IT companies.

The NRCC currently has 120 members, coming from banking, oil, industry, art, culture and consumer goods, so it is a balanced picture.

What’s in store for Romania regarding the nearshoring initiative?

We can say we are selling Romania in terms of putting it on the investors’ map. A lot of Dutch investors are not aware of Romania. The PR engine is not so big that they can immediately say the country’s unique selling points. Some other countries are sometimes better at selling themselves and making themselves sound more attractive.

We’re trying to make Romania less of a black hole for some of our investors, and I think that is beneficial to Romania. Stability in regulation and taxes is essential, and the companies I talk to are quite positive.

“In Holland we have 2 million hectares of farmland, which provide food for 100 million people. The 12 million hectares in Romania provide food for only a much smaller number of people,” Robin van Rozen, acting president of the Netherlands Romanian Chamber of Commerce You came here from the Czech Republic. Can you compare it with the business environment in Romania?

My personal experience is that Czechs are very good engineers and you have a lot of small engineering start-up firms, linked to the car industry. In Romania I see more entrepreneurs, more people with business sense, more commercially adapted, and that is why start-up companies in the Czech Republic are in the engineering field and here more in IT – it makes perfect sense.

As Romania grapples with record low levels of FDI, do you have any recommendations on how to attract more investors to the country?

Apart from the government issues re-

MONEY 11 garding policymaking and stability, other points are EU funding. It is really useful when the government develops really long-term plans, such as five-year plans, because it will help get more EU funding realized. For me, among the points I hear some of our members make, and I think it makes sense, is that it would be good to a set up a unit within government for foreign investors. We need more communication with foreign investors about what opportunities there are in Romania.

Is the NRCC making any recommendations on how to improve Romania’s absorption of EU funds?

Yes, we are involved and the companies we represent are in some cases already involved as well, but we make clear recommendations. For instance, what I saw in Bulgaria is that along with the government, they have developed a five-year plan for healthcare, something that would be great in Romania too.

I do not think the NRCC can do that on its own; it is too ambitious.

But the NRCC together with perhaps other chambers or organizations can help there. Sometimes we can be critical of the Romanian government, but I think we should also be critical about our organizations. One thing I came to realize after discussions with a lot of people is that the Romanian business community is rather fragmented, so supposing the government wants to talk to the business community, to whom should they talk?

In Holland, there is one organization that represents the business community. It is good if we as chambers work closely together to help to build this country.

Did you first come in Romania in 2013?

No, when I was in Prague I was responsible for 18 markets, so all of Eastern Europe, and I also visited Romania.

I can still remember in 2010, when the crisis hit Romania, I was here and that was depressing. I went to Baneasa Shopping Mall and there was nobody there at a peak hour, and that was sad to see, but I think that is long past.

Do Dutch companies complain a lot about the government, politicians and policymaking in the Netherlands?

You always have people that have a different view. As a nation, we are quite balanced, so I think when it comes to Romania we have the same stance. Of course, some politicians are complaining about the opening of the labor markets, but I think that overall it is quite positive because they are pro Europe. There is not so much complaining. simona.bazavan@business-review.ro

www.business-review.eu Business Review | January 20 -26, 2014

12 CITY

Bucharest gets architectural nip/tuck The Council of Europe Development Bank, the European Union through Sectoral Operational Programs, the Romanian government and Bucharest’s City Hall have all contributed financially to a facelift for the so-called Little Paris. BR took a look at what procedures have been carried out so far and what’s due to go under the knife next.

OANA VASILIU

The Bucharest National Theatre The Bucharest National Opera has recently celebrated 60 years of existence in the same building, which has been undergoing EUR 8.8 million of renovations (excluding VAT) since August 2013. According to Razvan Dinca, director of the cultural institution, the works should be completed in March 2014 and are on schedule so far. The Council of Europe Development Bank approved the financing line for other related improvements since 2005.

is also having a major facelift, with a new façade and a more spacious interior. The total investment is almost EUR 51 million, with the money coming from the Council of Europe Development Bank and the Romanian government. According to the official documents, the renovations were originally meant to be finished by June 2013, but Ion Caramitru, director of the institution, recently announced that the 2014-2015 theatre season will take place in a complete refurbished building.

Gabroveni Inn is probably the best surprise of the city: with an investment of EUR 8.3 million (not including VAT) from both the Sectoral Operational Program and City Hall, the inn will be a cultural space with diverse performance rooms, as well as an exhibition space, offices and a tourism information center. ArCuB, the cultural division of the city hall, will move here from Batistei Street.

City Hall is also under reconstruction, as the building needed reconsolidation and renovation. The total costs of the edifice’s facelift are EUR 38.1 million, not counting the rent paid for the building currently housing city hall operations.

www.business-review.eu Business Review | January 20 -26, 2014

Coming soon

ment (excluding VAT). The project Starting this year, the town will have took so long because it has been contwo new attractions: one theatre, the tested since the beginning by many National Operetta Theatre, the first NGOs, which criticized the decision to built since the Communist period, and destroy some historical monuments a sports center, the Multifunctional in its way. In November 2010, Sorin Arena Bucharest, for sporting compe- Oprescu, the mayor of Bucharest, detitions and live performances. For the scribed the Buzesti-Berzei-Uranus theatre, the official investment is set project as “the largest urban operation to reach almost EUR 11 million, fi- in the last 20 years”. Local authorities nanced by the Ministry of Culture, estimated the value of the investment at about EUR 330 million at that time, with a deadline of March 2014.

The sports center will have 12,000 while the new deadline for the entire seats, of which 2,000 are mobile seat- construction is 2017.

The second phase of the project ing and 400 VIP seats, while the entire building will be situated on over consists of the construction of an 43,000 sqm. The estimated value of 800-meter underground pass underthe investment is EUR 60 million, and neath the Parliament hill, according the site will come into use at the end to Ion Dedu, head of the Infrastrucof 2015. It will be constructed near the ture Department within City Hall. The tunnel will be built at a depth of 10-15 National Arena.

Asked by BR about this new con- meters and will start before the interstruction, Nicusor Dan, president of section of Izvor and B.P. Hasdeu the Save Bucharest Association, said, streets.

The second segment of the new “This sports center is mandatory for a European city like Bucharest, but the Buzesti-Berzei-Uranus boulevard will location is the problem. Aside from be about 3 kilometers long and have the minimization of the park’s space, two lanes in each direction. NGOs say that neighborhood is completely par- that this second segment of new alyzed when an event takes place Uranus Boulevard in Bucharest will there. In other cities, these buildings eat into 6 percent of Izvor Park. After are situated outside town, in locations a public debate, the project will renear metro stations, to avoid traffic quire the approval of the general council of Bucharest. jams.”

Calea Victoriei is also set to unLast week, the Romanian Village Museum chose the construction com- dergo a complete transformation. Acpany that will renovate and consoli- cording to the project draft, Calea date its buildings at a cost of nearly Victoriei will have 4m sidewalks, EUR 5.2 million (excluding VAT). Ac- while the road will consist of two cording to officials, the Horia Bernea lanes for drivers and bicycle lanes. room, which currently hosts a cinema, The project is being financed through will get a new look, and a permanent City Hall’s Urban Development Inteexhibition space will be created in one grated Plan, at a total cost of EUR 8.9 million. Works should start immediof the museum’s attics.

The Arch of Triumph, a Bucharest ately, and one of the project requirelandmark, has obtained financial sup- ments was the completion of the first port for improvements from the Euro- phase of Uranus Boulevard to avoid pean Union through the Tourism traffic jams between Victoriei Square Development Sectoral Operational and the city center.

Architect Florin Balteanu, also reProgramme. This will fund the required renovations to integrate this porter for Observatorul Urban Buhistorical monument into a perma- curesti, the publication of the nent tourist circuit. The works involve Romanian Architects Order, told BR, creating several exhibition spaces and “It is not only the traffic, pedestrians pedestrian pathways inside the build- and cyclists that are important in such a project; so too are the functional asing.

According to the Ministry of pects such as street furniture and Tourism, the aim is to attract about paving types.

However, what is most important 25,000 visitors in the first year after it opens permanently. The total value is to capitalize on the great heritage of of the project is almost EUR 6.5 the area, the buildings that earned million, of which EUR 5 million is the Bucharest the nickname Little Paris. For example, if the section in grant. front of the Athenaeum could have an expanding square, the image of Bucharest builds hopes for the historic monument would be better infrastructure Bucharest infrastructure has been the perceived within the true extent of subject of significant debate for many the framework that has been develyears and the progress made towards oped.”

While celebrating the opening of improving its systemic problems conthe first phase of Uranus Boulevard, tinues to be limited.

The Buzesti-Berzei-Uranus Boule- mayor Sorin Oprescu said that at vard that links the north and south of weekends, Calea Victoriei would be the city in a 20-minute drive is coming closed to drivers and transformed into being. The first phase of the proj- into a pedestrian area, to bring back ect, between Victoriei Square and the spirit of Inter War Bucharest.

Berzei Street, has recently been completed after a EUR 29 million invest- oana.vasiliu@business-review.ro

CITY 13

www.business-review.eu Business Review | January 20 -26, 2014

14 CITY

DON’T MISS

RESTAURANT REVIEW

RE:public, the house of beer fun WOMEN

Courtesy of Republic

Bucharest National Opera January 25, 19.00 Romanian choreographer Gheorghe Iancu returns to the Bucharest National Opera stage with a performance that had its Romanian premiere in 2009, Women. The ballet is based on the work of Anton Chekhov, and depicts a complicated love story between a young woman, her husband and her lover.

The original choreography of the performance, devised in 2002 for the Maggio Musicale Fiorentino Theatre, won the Danza & Danza choreography award. The set design and costumes are the work of Luisa Spinatelli, an Italian designer familiar with Iancu’s

performances. She was also responsible for the costumes for Swan Lake, another production staged at the Bucharest National Opera by Iancu.

The show features Russian music by composers such as Serghei Rahmaninov, Dmitri Sostakovici, Igor Stravinski and Paul Hindemith, as well as traditional Russian songs.

The tale begins when a man enters an inn carrying a child in his arms. The owners, two unhappily-married couples, are curious as to why the man is traveling alone with an infant, especially one who looks so sad. The man decides to tell them his story, marking the beginning of the 90-minute performance.

The place comes alive as soon as the brass-led band appears on stage

OANA VASILIU

Address: 14 Selari Street, 0748 881 086.

Tickets are available online, at http://tickets.operanb.ro/.

oana.vasiliu@business-review.ro

oana.vasiliu@business-review.ro

FOUNDING EDITOR Bill Avery PUBLISHER Anca Ionita

EXECUTIVE DIRECTOR George Moise SALES & EVENTS DIRECTOR Oana Molodoi SALES & EVENTS Sales managers: Ana-Maria Nedelcu, Oana Albu, Raluca Comanescu Sales executives: Ana Maria Andrei MARKETING Ana-Maria Stanca, Catalina Costiuc, Iulia Mizgan PRODUCTION Dan Mitroi DISTRIBUTION Eugen Musat

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

Courtesy of Bucharest National Opera

The first surprise here is the spaciousness of place, which has up to 800 seats on two floors. Then, a welcome shock: everyone near you will be smoking, but you can actually breathe, thanks to investment in air purifiers. And the icing on the cake: the brass-led band. Probably the best music for drinking beer to, the Re:public “fanfare” brings the crowd to life.

The brass-led band is followed onto the stage by another live act. Most of the groups are not well known, but with so many TV shows looking for shining

stars, who knows what acts could be propelled into the international charts right from the Re:public basement scene?

Premium quality beer connoisseurs can find three exclusives: Jacobsen Brown Ale (5.8 percent alcohol, prices from RON 15 to RON 125), Carl’s Special (4.4 percent, RON 9.5-79) and Samuel Adams (4.8 percent, RON 15-125). For eccentrics who need flavors and are used to drinking in Belgium, I strongly recommend the seasonal guest beer, Delirium Tremens (8.5 percent, RON 16135). It is commonly thought that sufferers hallucinate, seeing pink elephants, probably those on the beer’s label, but the most common animals seen in delirium tremens hallucinations are cats, dogs, and snakes. Of course, in the United Republic of Beer one can also find upscale eateries: a visit to The Wurst Republic or The Schnitzel Republic can round the night off nicely – or prepare your stomach for the beer onslaught! Salads, soups and desserts are also available.

The only drawback of this place is the lack of seats at weekends, if you haven’t made a reservation.

Courtesy of Bucharest National Opera

The United Mug Emptying Front positions itself as a place dedicated to groups of friends, large parties and good will among men.

I agree with the description of the beer hall, with one amendment: as a regular visitor to the place, the good will is mostly among women customers, who get the party started by dancing and set the pace for their male friends to follow.

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