Business Review, Issue No 32, September 6- 12

A GROUP OF YOUNG ARTISTS ARE CHANGING THE FACE OF BUCHAREST; SEE PAGE 13 NEWS

LINKS

ENTREPRENEUR

It’s all change in the cabinet as six new

The IT industry, once Romania’s golden

Catalin Putineanu, managing partner of

faces are brought in, with outgoing fi-

goose, is now weathering tough eco-

IB Cargo, has applied some forward

nance minister Sebastian Vladescu

nomic times. BR finds out how the top

thinking to the freight forwarding busi-

among the casualties

players’ recruitment is faring this year

ness and is now reaping the results

See page 4

See pages 8-9

See page 11

BUSINESS REVIEW www.business-review.ro

ROMANIA’S PREMIERE BUSINESS WEEKLY

SEPTEMBER 6 - 12, 2010 / VOLUME 14, NUMBER 32

WEAK RON LIMPS ON Sudden tax hikes, political uncertainty and restricted financing continue to heap pressure on the currency exchange rate, which international and local dealers tell Business Review could reach RON 4.4/EUR by the end of the year LAURENTIU OBAE

see page 10

WEEK IN PICTURES

BUSINESS REVIEW EVENTS

Business community gears up for second Austrian Business Forum event

Expert panelists will share their perspective on the Romanian market’s future

This fall Business Review will resume the Business Review Country Focus series of events, starting with the second Austrian Business Forum on September 28 at Ramada Plaza Bucharest.

For many years now Romania has proved to be a favorite offshore destination

for Austrian investors. According to data from the National Bank of Romania (BNR), Austria is the top source of foreign direct investments (FDI) to the country and in 2008 alone it generated about 20 percent of Romania’s total FDI. Austrian companies have managed to fill the top positions in industries such as banking and finance, insurance and oil.

Following an established tradition this year’s event will offer a discussion and debating opportunity for the local business community by giving a perspective of the

current status of the national economy through the eyes of Austrian investors present in Romania.

Confirmed panelists so far are Rudolf Lukavsky, commercial counsellor with the Austrian Embassy to Bucharest, and Kurt Weber, managing director of Horvath & Partners Romania. The moderator of the event will be Prof. Dr. Joerg K. Menzer, managing partner of Noerr Romania.

For more information about the Austrian Business Forum and all our events, please visit www.businessreview.ro/events/.

What we are working on DANA CIURARU Senior Journalist... is working on an article about how Bucharest city town halls spend their budgets OTILIA HARAGA Senior Journalist... is researching an analysis about private language schools in Bucharest CORINA DUMITRESCU Journalist... is working on a piece about niche bars in Romania’s capital

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B USINESS R EVIEW SEPTEMBER 6 - 12, 2010 / VOLUME 14, NUMBER 32

Renault Romania has opened a new spare car parts center in Oarja, 20 km from Pitesti. The facility has a total surface area of 65,000 sqm and supplies parts to the Renault, Nissan and Dacia (above) brands for both the local and international market. The investments of the carmaker, owner of Romania’s iconic Dacia brand, are ongoing despite the difficult market conditions.

BUSINESS REVIEW / September 6 - 12, 2010

Turkish ship Medy sank last week off the Romanian Black Sea coast. The 17member crew had been rescued. The ship was carrying scrap iron. The head of the Romanian sea search and rescue agency said that by the time the rescue team arrived on board the ship was tilting dangerously after taking on water, Mediafax reported.

Founding Editor BILL AVERY Editor-in-Chief SIMONA FODOR Senior Journalists DANA CIURARU ANCA IONESCU OTILIA HARAGA Journalists SIMONA BAZAVAN CORINA DUMITRESCU Copy Editor DEBBIE STOWE Photographer LAURENTIU OBAE Layout BEATRICE GHEORGHIU

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3

NEWS

Prime Minister reshuffles Romanian government, new appointments announced

Sebastian Vladescu, former finance minister

Romanian Prime Minister Emil Boc announced last week the replacement of six key ministers in his government, amidst public discontent with the recent austerity measures which included slashing public sector salaries and a VAT hike from 19 to 24 percent.

The decision to reshuffle the cabinet was taken by the internal board of the Democrat Liberal Party (PDL).

The ministerial casualties are Adriean Videanu (economy minister), Sebastian Vladescu (finance),

Mihai Seitan (labor), Mihail Dumitru (agriculture), Gabriel Sandu (communications) and Radu Berceanu (transport). They have been replaced

by Ion Ariton (economy minister), Gheorghe Ialomiteanu (finance), Ioan-Nelu Botis (labor), Valeriu Tabara (agriculture), Valerian Vreme (communications) and Anca Boagiu (transport).

Outgoing economy minister Videanu told the PM that he wanted to relinquish his ministerial responsibilities to return to party business, while departing finance minister Vladescu denounced his dismissal as a “mistake and a political decision.”

The opposition Social Democrat Party (PSD) announced that they would file a motion of no confidence.

Boc’s PDL has the support of the minority ethnic Hungarian party, with whom it formed the current government.The previous government of current PM Emil Boc collapsed last year, which led to the temporary suspension of Romania’s agreement with the IMF. Staff

NEW FACES AT THE TABLE Gheorghe Ialomitianu – finance minister A graduate of the Babes-Bolyai University, Ialomitianu, 51, holds certificates from the Paris Institute for Public Administration, East-France Fiscal Control Division and Swedish Tax Authority.

From 1997 to 2008 he worked as deputy director and general manager of the Brasov Public Finances Authority.

He is a vice-president at the superior council of the Accounting Experts Body. Since 2008, he has been a Democrat Liberal Party PDL deputy in Brasov, and serves as the vice-president of the Budget, Finance and Banking Commission.

Ariton – economy minister Since 2008 Ariton has been president of the Budget, Finance and Banking Commission in the Romanian Senate. The 54-year-old is a graduate of the Timisoara University, the Economic Sciences Faculty.

He worked for Petrom between 1993 and 2000, where he held various positions in the Sibiu branch. Between 2005 and 2007 he was the prefect of Sibiu county.

He is taking over a ministry which oversees companies such as Hidroelectrica and Romgaz.

Valeriu Tabara – agriculture minister Valeriu Tabara previously served as agriculture minister in the Vacaroiu government between 1994 and 1996. At the time he was vice-president of nationalist party PUNR, which disappeared in the merger with the Great Romania Party, another nationalist party. In 2002 he joined the Democratic Party in the Timis county branch.

He served as deputy in the Romanian Parliament between 1992 and 2004.

He has a doctorate in Agronomy, a degree he received in 1984, after graduating from the Timisoara Agronomy faculty.

Ion

Nelu Ioan – labor minister Ioan Nelu Botis, 43, serves as Deputy for Bistrita County. In 1991 he graduated from the Polytechnics faculty in Cluj-Napoca. He holds a master’s degree in European Studies from the Babes-Bolyai University, and is currently doing his PhD in engineering. In between 2001 and 2004 he was deputy mayor of Bistrita. From 2004 to 2008 he ran the Bistrita Employment Agency.

He is a vice-president of the Labor and Social Protection Com4

mission in the Deputies Chamber.

Valerian Vreme – communications minister The 47-yearold is a PDL deputy. He is a graduate of the Electro-technical faculty at Iasi University. He had several study and training sessions abroad in London and Paris. Before he was a deputy, he served as Bacau county councilor and local councilor in Onesti.

Anca Boagiu – transport minister Boagiu, 42, returns to her role, having served as transport minister in 2000, succeeding now president Traian Basescu who quit the position to become the mayor of Bucharest. She held the job for only six months. In between 2005 and 2007 she was part of the Tariceanu government as European integration minister.

She is currently a senator and vice-president of the European Affairs Commission in the Romanian Parliament.

She graduated from the Construction faculty of the Constanta Ovidius University in 1995.

BUSINESS REVIEW / September 6 - 12, 2010

NEWS

Craiova Energy Complex gets extra EUR 4.1 million loan to finance environmental works

Romanian industry rises 5.9 percent in Q2, construction down by 8.3 percent

The Craiova Energy Complex has supplemented a bank loan taken out in 2008 with around RON 17.4 million (EUR 4.1 million), in order to pay the suppliers currently working on environmental modernization works at a company branch.

The firm extended its funding last week, following negotiations with CEC Bank and Alpha Bank Romania.

STOCKEXCHANGE

The latest figures released by the INS reveal a mixed bag of results

Romanian’s GDP rose by 0.3 percent against the first quarter of 2010 but declined by 0.5 percent against Q2 2009, according to data from the National Institute of Statistics (INS).

Industry saw the highest increase (5.9 percent) while construction declined by 8.3 percent. Other falls were registered by trade, the

BUSINESS REVIEW / September 6 - 12, 2010

hospitality industry, transport and telecommunication (-4.2 percent) and other services (-2.7 percent).

According to the same source, consumption shrank by 0.7 percent as private consumption declined by 0.4 and public administration spending by 2 percent.

Simona Bazavan

According to company information, the initial value of the loan received from the two banks was RON 121 million.

Part of this credit, some RON 95.8 million, is guaranteed by the state, through Eximbank. Craiova Energy Complex is controlled by the state through the Economy Ministry.

Dana Ciuraru

Cold wind blows into Cogealac phase of CEZ wind park in Dobrogea Czech energy company CEZ has revealed that its EUR 1.1 billion investment in the 600 MW wind farm at Fantanele and Cogealac, Constanta, has come to a halt because of disagreements between state authorities.According to company information, the Cogealac phase of the project is blocked by the Constanta Territorial State Constructions Inspectorate which is in conflict with Constanta County Council.

“In the current economic context, the EUR 1.1 billion investment is blocked without valid legal arguments and without any official notification,

thus raising significant question marks regarding the local climate for foreign investors,” said CEZ officials in a press release.Up until now, CEZ had announced that it had received all the necessary authorizations for the project from institutions like the National Energy Regulatory Authority, the Environmental Protection Agency, Constanta County Council and Transelectrica. So far, CEZ has obtained green energy from all the 0 turbines erected so far. More information on the Cogealac phase of the CEZ project is available here.

Dana Ciuraru

5

NEWS

Company bosses predict layoffs and price Copyright contributions controversy increases across all sectors by October expected to reach compromise

6

and orders (-17 percent).

Bosses in the construction industry estimate a cutback in the number of employees (-17 percent), the result of large companies with 500 employees and more.

The cost of construction works will increase (20 percent margin).In the retail sector, activity will decrease over the next three months (-24 percent).

The total volume of sales is predicted to see a moderate decrease (-5 percent margin). Meanwhile, the number of employees in this sector will also fall slightly (14 percent margin) by October while the price of retail products will surge (51 percent). Demand for services will also shrink somewhat (-10 percent). In the services sector, the workforce will decrease over the next three months (-16 percent).

Otilia Haraga

COURTESY OF GOV.RO

Bosses of companies in Romania forecast staff cuts and price rises across all sectors between August and September. Managers in the manufacturing industry, services, construction and retail answered a poll carried out by the National Institute of Statistics on how they see the next three months shaping up.

Those in the manufacturing industry forecast a moderate fall in the volume of production (-6 percent opinion margin – the difference between the percentage of those who believe the indicator will rise and those who think it will fall).

The number of employees is also tipped to moderately decrease (-13 percent opinion margin) for the entire manufacturing industry.

In the construction sector, the next three months will see a slight drop in the volume of production (margin -10 percent) and a decrease in the number of contracts

Laszlo Borbely, environment minister

Borbely Laszlo, minister of the environment and UDMR (the Democratic Union of Hungarians in Romania) executive vice-president, said last Wednesday that the government would modify the emergency ordinance on copyright contributions. As a result, the employer, and not the employee as previously stipulated, will be responsible for

making the declarations and payments.

“A normative act for the modification of the emergency ordinance and of the application norms was discussed on a first reading on Wednesday, in the government meeting. The document will enter the approval circuit shortly and next week the modifications will be adopted in a new meeting of the executive,” said Laszlo Borbely, quoted by Mediafax.

Labor minister Mihai Seitan said on Tuesday that the emergency ordinance would not undergo any modifications and that the online payment system was due to be completed by the end of September.

Last week, the Labor Ministry was criticized by professionals for instating a law by which every individual paid copyright royalties had to make personal declarations of their income at several agencies.

Read more on this story here.

Corina Dumitrescu

BUSINESS REVIEW / September 6 - 12, 2010

CALENDAR / WHOS NEWS

WHO’S MICHAL GOLEBIEWSKI will become business, marketing and operations (BMO) lead with Microsoft R o m a n i a .

Golebiewski joined the company 14 years ago and has since filled marketing positions as product manager for Microsoft Office and Microsoft Windows, communication positions as PR manager and marketing communications lead and also worked in operations. The last position he had in Microsoft Poland was business planning and operations officer.

GIANFRANCO BISAGNI, 52, has been appointed new executive vice-president of the corporate division of investment banking and private banking (CIB&PB) and member of the UniCredit Tiriac Bank management.

Previously, he served as chief manager of UniCredit Hong Kong branch & head of corporate banking Asia Pacific within the UniCredit group. Bisagni has 32 years of experience within the group, having held positions in top management in Unicredit New York branch and UniCredit Chicago representative office.

CHRISTOPHE DE KORVER is the new managing director of GEFCO Romania. He is taking over from Denis Renard who has held the position for the past six years. De Korver has professional experience of 16 years in the field of logistics, eight of which have been spent with GEFCO. He has previously worked as business unit manager for the French subsidiary of the group.

De Korver is a graduate of the Faculty of Engineering from the Central University of Marseille. Renard was appointed managing director of GEFCO Slovakia.

MARIJANA VASILESCU is the new communication and marketing director of RBS Romania. She previously held the position of deputy director for retail clients.

Vasilescu joined the bank in 2004,

NEWS when it was still ABN AMRO Romania, and since then has occupied various positions such as marketing director, royal preferred banking director and deputy retail clients director. In between 2006 and 2008 she was retail clients director for ABN AMRO Russia.

SORIN POPESCU is the new corporate affairs director of Amgen Romania. He has over 11 years of professional experience in the medical field. Popescu has worked in sales, PR and marketing for the pharmaceutical industry. Since 2008 he has also played an active role on the board of directors of the Romanian Association of International Medicine Manufacturers (ARPIM). Popescu graduated from the Faculty of Medicine and holds a master’s degree in public health and an EMBA from INDE Bucharest and CNAM Paris.

EVENTS, BUSINESS AND POLITICAL AGENDA SEPTEMBER 9 é 12:00 Biogenis organizes the opening of a bank for stem cells from the

umbilical cord blood. By invitation only.

SEPTEMBER 27 é The ICC Young Arbitrators Forum and Tuca Zbarcea & Asociatii organ-

ize the Competence – Competence Principle – Recurring Issues seminar at InterContinental Bucharest. Attendance is free of charge.

SEPTEMBER 28 é Business Review organizes the second edition of the Austrian Business

Forum at Ramada Plaza Bucharest. For more information visit www.business-review.ro/events/. é ICC and Tuca Zbarcea & Asociatii organize the Efficiency of Complex Dispute Resolution Clauses in the Current Economic Climate event at InterContinental Bucharest. For more information visit www.businessreview.ro/events/.

OCTOBER 7 é Business Review organizes the second edition of the French Business

Forum at InterContinental Bucharest. For more information visit www.business-review.ro/events/.

OCTOBER 21 é Business Review organizes the Turkish Business Forum at InterConti-

nental Bucharest. For more information visit www.businessreview.ro/events/.

MONALISA UNGUREANU has been appointed CFO of MedLife.

For the past 11 years she has gained extensive professional experience in the financial field. Ungureanu worked for Cristim Group for five years where she held the same position. Ungureanu is intern member of the Chamber of Financial Auditors of Romania (CFAR), a member of the Chamber of Financial Consultants and an ACCA student. She is a graduate of the Academy of Economic Studies in Bucharest.

LUCIA BURLACU is the new HR & quality manager at Howard Johnson Grand Plaza Hotel. Lucia has extensive experience in the hospitality industry, having worked for Athenee Palace Hilton as yield manager (1997-2004) and for Ramada Bucharest North as rooms division manager (20062009).

Business Review welcomes information for Who’s News from readers.

Submissions may be edited for length and clarity. Feel free to contact us at editorial@business-review.ro

BUSINESS REVIEW / September 6 - 12, 2010

7

LINKS

Who’s hiring in IT? This year has been particularly trying for all sectors of the economy and the IT sector has not escaped. While players face a serious decline in consumption, whether it is due to low demand from the private or public sector, recruitment has been halted and the salaries of workers in IT companies have been frozen or even cut, in some cases. Business Review talked to some players – multinationals or smaller local businesses on this market – who seem to be the exception to the rule. What these players have in common is: they have not slashed salaries and they are still recruiting to be able to fuel their expansion with new impetus.

Otilia Haraga

Microsoft Romania Total number of employees: There are around 300 employees at Microsoft Romania at the moment for all the three lines of business. By the end of the fiscal year, the company aims to have a team of 350 people, so 50 new jobs will be up for grabs.

Recruitment: Over the next period, Microsoft will employ around 50 people. “We expect a slight growth in recruitment on the market, with a peak in the technical support area, which is becoming more attractive to global IT players due to costs, but also due to the availability of resources at a level that is relatively acceptable,” Cosmin Bordea, country HR manager at Microsoft Romania, tells BR. What Microsoft is looking for: Girl power! This year the company wants to attract women among candidates, especially in the technical and support services. “We have noticed a certain reticence, often shaped by cultural and educational factors, of young women graduates and women in general to embrace a career in an IT company,” Adina Bigas, HR manager of GTSC Romania, tells BR. At Microsoft Romania, more than 60 percent of the team comes from outside Bucharest, or from abroad: Germany, France, Poland, Sweden or the Netherlands. This is why soft skills have a lot to do with recruitment. “Soft skills criteria are the ones that filter and lead to the final decision. In Microsoft we have a commitment to diversity – culture, educational, skills, sex and age related,” says Bigas. Currently, there is an entire pool of positions that are open at Microsoft, from support services, core business, technical support, sales and marketing.

Sources of recruitment: “For each of these positions we have a different sourcing process, depending on the domain and level of seniority of the position. To find the best, we are seeking to increase the diversity of the source and use as much as possible virtual relation environments,” says Bordea. Recruitment goes on throughout the year but the peak is now, the beginning of the fiscal year.

Recruitment difficulties: “Romania is definitely not an easy market. Specialization isn’t exactly a phenomenon that is as widespread as in mature economies, but there is potential in Romania. I do not believe a faculty can supply specialists directly but I think the ramp-up time is at a relatively acceptable level,” says Bordea.

How much have salaries gone down: “Salaries on the IT market have not decreased. However, I cannot say there has been a spectacular growth either. Many players have frozen salaries,” says Bordea. Microsoft is improving the salary package is gives its employees.

8

Xerox Romania Total number of employees: Xerox Romania has nearly 250 employees.

Recruitment: “As a rule, we are hiring in the operational sector, and we estimate this trend will be maintained also next year, especially since the IT market is already on the up (which is confirmed also by market studies). As a result, we estimate that the labor force has a growth potential too,” Magdalena Ispas, HR manager Xerox Romania and the Moldova Republic, tells BR. ”It is difficult to estimate by how much the number of our employees will increase next year,” she says.

Sources of recruitment: For entry-level positions, candidates are recruited from faculties. For specific positions, depending on requirements, specialists are recruited from other companies or Xerox promotes its own employees.

Recruitment difficulties: “As a rule, it is hard for us to find specialists, taking into account the profile and experience that are needed – this is because Xerox runs its business on a niche market. In spite of all this, we manage to find candidates with a sound theoretical background and the willingness to be trained within the organization. This is also the reason why we go for university graduates for entry-level positions,” says Ispas.

Training of young graduates: “Unlike previous years, more and more graduates have more extensive work experience when they graduate, which is a plus – exposure, experience, knowledge. For positions where we need specialists, we resort to the services of recruitment companies,” says Ispas.

How much have salaries gone down: “The salaries in Xerox have not decreased and, following external recruitment, we do not feel a significant decline in salaries on the market either,” says Ispas.

Power Net Consulting Total number of employees: At the moment, the team of Power Net Consulting numbers 27 people Recruitment: Three more people will be hired in the near future.

What Power Net Consulting looks for: “The greatest needs lie in the sales sector where we need people with experience and with management capabilities,” Eduard Dimitriev, managing partner and GM of Power Net Consulting, tells BR. Sources of recruitment: Recruitment is carried out through direct selection by a call for applications on the company’s site but also though specialized firms in recruitment and head-hunting, and through recommendations.

Recruitment difficulties: “Lately, it has become more and more difficult to find people with a good professional training. Most likely because of the over-inflated salary offers in the past few years and because of the massive emigration of HR,” he says.

Training of young graduates: “Young graduates generally have sound knowledge at theoretical level but we are interested in professional experience and management experience and these are hard to find in young graduates,” says Dimitriev.

How much have salaries gone down: “The salary decline on the IT market does not surpass in our view 15 percent on average. We have not cut salaries per se, we stuck to the same sums as in 2009,” says Dimitriev. However, the firm has cut back on perks such as company car or mobile phone subscription. An entry-level technician gets around EUR 500, a middle manager EUR 800 and top manager EUR 1,200-1,500.

BUSINESS REVIEW / September 6 - 12, 2010

LINKS BitDefender

TotalSoft

Total number of employees: BitDefender has over 400 specialists who work in its Romania offices but the company has teams also in the United States, Spain, Germany and Great Britain.

Recruitment: In recent years, as a result of the growth in turnover, the number of open positions with BitDefender has also increased. Since the beginning of 2010, the company has hired 100 people. Currently, there are still 10 positions open in the technical and commercial departments. “It is too early to say what plans for employment we have for next year,” Carmen Buruiana, HR manager Romania of BitDefender, tells BR. What BitDefender looks for: Recruitment has been uniformly spread among all departments – there were both technical positions and positions in sales and marketing.

Sources of recruitment: The source of recruitment depends on the project. “There are projects where we are looking for people with specific skills, but we have also recruited interns from faculties as BitDefender is one of the main partners in the project Real Internships organized by the Association of IT&C Students and Professionals in Romania,” says Buruiana. The interns who worked at BitDefender were recruited following specific tests conceived by the BitDefender specialists. Some of them will continue to work for BitDefender.

How much have salaries gone down: “Since most recruitment in our company is on a niche, we cannot talk about a decrease in salaries, as the skills we are looking for are narrow, and there are few specialists in the market with such skills at the standards that we demand,” says Buruiana.

Total number of employees: In Romania, TotalSoft has approximately 380 employees but there are also teams of specialists working in subsidiaries in Bulgaria, Greece and Serbia.

Recruitment: Over the past three years, TotalSoft has recruited approximately 100 specialists annually. “Recruitment has not ‘started’ at this moment, it is merely ‘continuing,’ because we are constantly doing it. Now, for instance, we have approximately 10 open positions,” Oana Cutui, HR manager of TotalSoft, tells BR. “At TotalSoft, we hope that over the next year our business on the long term will be within the expected parameters, in which case we will definitely keep the rate of employment of previous years.”

What TotalSoft looks for: Totalsoft is looking for specialists in the software domain. This means experts such as programmers, consultants, technical support and business analysts. In the area of development platforms, TotalSoft is looking for knowledge of .Net, Java and Embedded. This year the company had approximately 20 students who did their internship there. “We want to keep many of them to integrate them as junior developers in various development departments,” says Cutui. “The personnel we recruited proves, in 80 percent of the cases, to have good experience and be well prepared.”

Sources of recruitment: The most efficient sources of employment are recommendations from colleagues, after which come recruitment sites and companies.

Recruitment difficulties: Although we should easily find people for most positions, since all domains are going through the crisis, specialists are rather hard to come by. I suspect the main reason is that at the moment many do not find this is the right moment to leave their job to which they are accustomed to and which they think is safe,” says Cutui.

BUSINESS REVIEW / September 6 - 12, 2010

9

MONEY

More pain on foreign exchange as local currency is expected to hit RON 4.4/EUR The unstable fiscal environment, political climate and a dire need for financing continue to put pressure on the currency exchange rate.

Both international and local dealers see it reaching RON STOCKEXCHANGE

4.4/EUR by the end of the year.

Dana Ciuraru On the first day of this month the RON reached its highest level in the past five weeks, RON 4.2636/EUR – making the chance of a stable and reasonable RON/EUR rate even more remote.

Win Thin, a senior currency strategist at Brown Brothers Harriman & Co. (BBH), said on September 2 – the day of the Romanian government reshuffle – that, “Developments in Romania support our recent bearish call on the RON. The EUR/RON has risen since we went long on August 30 around 4.24. We still target the record high of 4.40 from June and expect this pair to creep upwards in the coming weeks. The 4.23 area represents the 50 percent retracement level of the big March-June rise, and is providing a strong base for the euro right now.

Intermediate targets are retracement levels around 4.29, 4.31, and 4.33 from the June-August drop.”

Local market dealers confirm BBH’s market analysis, saying that a rate of RON 4.4/EUR would correctly reflect economic fundamentals. “In this case, our predictions coincide with those made by the BBH specialists. We could 10

The RON/EUR exchange rate keeps deteriorating and is expected to reach RON 4.4/EUR by year-end

expect RON 4.4/EUR in the next period,” said a market dealer.

Meanwhile, reports from Raiffeisen Bank see the euro at a rate of RON 4.4 for September, while Unicredit specialists are talking about a level of RON 4.35/EUR for the end of the current year.

The rate is expected to strongly influence the commercial balance as over 70 percent of Romania’s trade takes place with entities on EU territory.

FX

COMES UNDER PRESSURE

According to the BBH senior currency strategist, the political instability is likely to get worse in Romania, which could influence the exchange rate. He points out that the minority government barely survived a vote of no confidence in June over plans to cut pensions and salaries, and another such motion is likely to be called by the opposition this fall, as the popularity of the government has plunged to all-time lows.

Andrei Ciubotaru, head of brokerage at Tradeville, told Business Review that the contraction of the Romanian economic environment is showing no sign of reversal. Quite the contrary, the pace of shrinkage could accelerate in response to measures to increase tax. According to him, from the several possible

explanations, the most important is that the Romanian economic environment’s solvability is insufficient to cause an increase in lending, as, for instance, there are more borrowers in the banking system than there are workers with employment contracts.

“The horizontal evolution trend of the EUR/RON may suddenly be disrupted by events such as the political crisis, an interruption of the grant agreement with the IMF or failure to achieve the macroeconomic targets agreed by the Romanian government. These events may act only in terms of currency depreciation,” said Ciubotaru.

“The RON has experienced depreciation pressures, amid concerns about the return to global growth. We believe that the BNR will not prevent the depreciation pressures, if they are not aggressive, so as not to lead to more restrictive financial conditions,” said Vlad Muscalu, ING economist, recently.

USD AND AHEAD

CHF

SEES CLOUDS

Since the beginning of year the EUR has also depreciated against the USD and Swiss Franc (CHF). The Tradeville specialist points out that the international markets have started to include in the

price of financial assets the possibility of the global economy going back into recession. The EUR will not be able to strengthen against the USD and CHF until the financial markets are convinced that there will be no double dip in the short term.

“So the Romanian currency is exposed to further depreciation against the USD and CHF in the foreseeable future.

In the event of further depreciation of the RON against the EUR because of an internal shock then depreciation in relation to the CHF and USD will be much greater. If the percentage of nonperforming loans increases, then the Romanian banking system will need to seek additional resources from outside Romania for refinancing. This will exert even greater pressure in terms of currency depreciation,” said Ciubotaru.

The pressure to seek additional resources is already showing. Recently there was yet another failed bond auction, as the Finance Ministry rejected all bids for the RON 300 million five-year paper offered. Officials continue to try and put a 7 percent ceiling on borrowing rates, but there are simply no takers in this risk-averse environment.

“The more auctions that fail now, the more trouble Romania will be in down the road. Indeed, one of the assumptions behind any debt sustainability framework centers on getting borrowing rates back to ‘normal’ levels,” said Thin.

Making matters worse, the international specialist says, the unpopular government is undertaking a cabinet reshuffle that saw the finance minister, Sebastian Vladescu, replaced. “If the new finance minister shows less commitment to the austerity plans, then the IMF package will be at risk. It did just receive approval in its fifth review under the current program, but the 24-month stand-by arrangement expires in May 2011. There is no way Romania can stand without IMF aid, and so the markets should watch closely for signals by the new minister,” said Thin.

But the RON’s rough ride will not be indefinite. Less troubled times for the exchange rate should come in 2011, said Rozalia Pal, chief economist for UniCredit. “The RON will register some appreciation in 2011, but especially in the second half of 2011.”

BUSINESS REVIEW / September 6 - 12, 2010

ENTREPRENEUR

Freight expectations

Simona Bazavan Putineanu got into the business of freight forwarding by sheer chance.

After graduating from the Academy of Economic Studies in Bucharest in the late 90s, he soon realized that locally there were few opportunities for a new graduate. “Like many of my peers at that time I decided to leave the country and so I went to the US. There I was offered by chance a job in freight forwarding. I liked it and so I decided to continue on this path,” Putineanu explains. When he decided to return to Romania five years later, he was working as operations manager for the US and Canada at American President Lines (APL), one of the major global players on the international freight forwarding market.

Back home, after working for almost a year for Cargo Partner he left the company along with Kees Cramer BUSINESS REVIEW / September 6 - 12, 2010

LAURENTIU OBAE

While recent local economic trends may be giving some companies a sinking feeling, others are finding ways to fly high and score profits in stormy times. CATALIN PUTINEANU, managing director of IB Cargo, a local freight forwarder, chose to invest in some relatively unknown services on the Romanian market in 2008. Two years later, he says the gamble has paid off and he is looking forward to future growth. and decided to start his own business.

“This was a plan that I had been considering for a long time,” Putineanu says. IB Cargo was founded in early 2008 with an initial investment of EUR 150,000. The entrepreneur was motivated by his belief that freight forwarding services had a great local growth potential in spite of the forbidding economic context. Putineanu adds that the results he has registered so far have shown he was right.

Putineanu is one of the company’s four shareholders alongside Igor Jitta through Jitta Capital and two foreign companies, German Interfracht and Dutch Beyer Logistiek. “I met these two companies, which after seeing my business plan decided to invest. They brought in the money and I started the business. What I was most interested in was the freedom to take the decisions I wanted. And I was allowed this,” he says.

The company has its headquarters in Bucharest but operates two more offices, one in Constanta and the other in Timisoara. “We started with an office in Bucharest and another one in Constanta because from the beginning we planned to focus on sea freight services. Now we are the top local provider of LCL import services through Constanta port,” he explains.

The office in Timisoara was opened later on to cover domestic road freight.

Freight forwarding is a concept to which local companies are relatively unaccustomed. IB Cargo is non-asset, which means that it doesn’t own any means of transportation of its own.

Putineanu remembers that in the beginning this was something that made some local companies regard him as some sort of a jobber.

“We offer integrated transportation solutions by road, sea and air.

This is something that a common carrier cannot supply. In addition we also have expertise in all these areas and so we can offer clients the option of choosing the best shipping option for their needs,” he adds.

The beginning of the business proved challenging. “Back then we were a no-name and this made it hard to get the business partners we wanted. Now we have contracts with all the airlines and sea shipping companies that operate in Romania.” Putineanu adds that if he were to start all over again he would only begin earlier to encourage an “out of the box” way of thinking among his employees as he believes that this is the source of future growth.

In the first year the company registered a EUR 2.3 million turnover and the next year reported a 50 percent increase. “We knew the business would grow significantly in 2009 in spite of the crisis because there is a shortage of such services on the local market. The growth would have been higher had it not been for the collapse of sea freight rates in the first months of 2009. However this had a positive effect on our profit margin,” he says.

This year the company plans to reach a EUR 5.6 million turnover. “We have the great advantage of being a flexible company and the market is also a generous one” he concludes.

Competition has become tight lately but Putineanu says that the market is still underdeveloped and the concept in itself is only beginning to be understood. “The potential for future growth is huge but there are still setbacks such as the lack of adequate infrastructure and the bureaucracy,” says the businessman.

In the future the company intends to extend by offering additional services such as storage, repackaging and labeling and by considering the possibility of partnerships with local and international companies. There have also been some takeover propositions but Putineanu said this was not an option as the company plans to remain independent.

IB Cargo é Initial investment: EUR 150.000 é Turnover (2009): EUR 3.25 mil-

lion é Turnover (2010): EUR 5.6 mil-

lion é No of employees: 18 11

PROPERTY Pajura and Parc Bazilescu subway CMU to found clinic in Sun Plaza next year stations to open in first half of 2011

Sun rising: CMU is opening an outlet at Sun Offices next year

LAURENTIU OBAE

Long train running: the subway system is being extended

Two new Bucharest subway stations – Pajura and Parc Bazilescu – will open in the first half of next year, Metrorex has announced.

The operator of the Bucharest subway system said it had closed the deal for the works to equip the stations with general installations (electricity, ventilation, sanitary) and to finalize the outstanding details on the technical spaces for the

1 Mai-Par Bazilescu and PajuraParc Bazilescu segments.

The value of the contract is RON 21.9 million, with the financing to come from the state budget.

The works are expected to last for six months.

The two new stations will lengthen the subway line on Line 4 from Gara de Nord-1 Mai to Parc Bazilescu station.

High street retail rents to sink further, Moore Real Estate Services predicts

LAURENTIU OBAE

Plenty of room at the inn: the retail vacancy rate is up on Calea Victoriei as rents fall to get takers

High street retail rents have fallen by between 30 and 60 percent since 2008, a study conducted by More Real Estate Services has found. On shopping streets Magheru Boulevard and Calea Victoriei rents are down by 60 percent while vacancy rates have grown from 5 to 25 percent. The real estate company estimates rents will slide by a further 5-15 percent this year.

The smallest drop was registered in secondary areas or where infrastruc12

ture has been improved and the status of the area has consequently changed, as in the case of Lipscani.

“There is a limited stock of excellent properties. These are the ones that have registered the smallest drop in rental value and the lowest vacancy rate. The vacancy rate grew by 5-6 percent in 2008 to 15 percent, and in some areas it even reaches 25 percent,” the report states.

According to the study, further rent adjustments of 5 to 15 percent are expected. “In previous years, retailers looking for the good traffic and exposure offered by Magheru Boulevard were accepting offers in areas surrounding Piata Romana, taking into consideration the lack of available space or the high rents demanded on the main boulevard.

Considering the general economic context and the present availability of locations that were considered out of reach during the real estate boom, potential tenants have preferred locations with similar exposure, in large commercial developments such as malls or commercial gallerias,” the study adds.

Centru Medical Unirea, the operator of private medical services, plans to open a location in Sun Offices in Bucharest in the first trimester of next year. Sun Offices is the office part of the complex developed by Euro Mediterranee Consulting EMCT and Sparkassen Immobilien, which also includes the commercial center Sun Plaza.

The new medical center will have a surface area of 1,200 sqm, and will offer a wide range of medical services (internal medicine, ORL, cardio), CMU Kids (a pediatrics clinic), physiotherapy and a diagnosis center.

“CMU Sun Plaza has three aspects: it is the 20th CMU clinic in the network, the first large-size clinic in a commercial center and the largest clinic in southern Bucharest,” said Wargha Enayati, general manager of CMU.

“This transaction confirms a new trend on the office market where new developments attract additional services,” said Victor Rachita, account manager of the office agency at CBRE Romania.

CMU owns 13 clinics in Bucharest and seven across the country (in Constanta, Cluj, Ploiesti and Bacau). It also owns the largest medical campus nationwide, which includes the Regina Maria maternity hospital, a medical clinic and a treatment and diagnosis center.

The Sun Offices building is located close to Piata Sudului, and is built on three levels, with a total rentable surface of 9,800 sqm. The project was developed above the commercial center and can host between 700 and 1,000 people, depending on the layout concept of the tenants.

BCR launches real estate portal

real,- Hypermarket Romania moves to new HQ

Banca Comerciala Romana (BCR) has launched a real estate portal, the first one of this type administered by a financial institution.

With this move, the bank says it wants to offer its customers an integrated solution for both financing and property. Besides listings of available properties, www.bcrimobiliare.ro will feature information about how to get into the market and advice on the legal aspects of buying.

The bank says the portal will be helpful for developers as well as they will be able to use it to find information on planning a project development, setting a budget or accessing financing.

The bank has established partnerships with 150 agencies and 100 developers for the site. Over 250 partnerships with real estate agencies and 150 with developers are planned for the future.

real,- Hypermarket Romania has moved its headquarters to the upper levels of the real,-Palady store. The new premises have a total surface area of 6,500 sqm, and will accommodate the 350 employees working in the retailer’s head office.

The building has three levels, with office space, conference halls, dining areas and other utilities. It also has a medical facility, and 185 parking spaces reserved for real,employees. The new HQ is also considered eco-friendly, and was designed to manage resources efficiently.

“The decision to move the HQ follows our strategic plan to bring together the divisions of Metro Group Romania into a multifunctional business center, which is also eco-friendly,” said Michel Lamoot, general manager of real,- Hypermarket Romania. real,- owns 25 stores across the country.

BUSINESS REVIEW / September 6 - 12, 2010

CITY

I Love Bucharest brings color to gray city streets

The Zebrula bench is quietly waiting for tired passers-by at Victoriei Station

At a time when more focus is being put on the notion of branding in Romania, a group of young artists is embracing the concept of urban reinvention. Finances may be tight in the current economic climate, but the initiators of the I Love Bucharest program are rich in creativity. Who’s Mitica?, Bucharest metroArt, Book Street and Red Spot are just a few of the projects aimed at giving the city a long awaited and much needed identity.

Corina Dumitrescu The I Love Bucharest program began life in 2005, since when it has concentrated on the regeneration of the capital city’s public spaces. “It was a group of artists, architects and philosophers who began this project. At the core of the program are two aspects: on one hand, there were the artists who emerge from their studios and become visible to the public (and the best place to achieve that is the public space) and, on the other hand, the fact that Bucharest, as gray as it is, really needed some form of intervention (the only colorful aspect of the city were the aggressive commercials),” says PR manager Mihaela Miron.

The Bucharest metroART project had its first outing in the Gara de Nord subway station, where the walls were painted with the theme of old and new Bucharest, previously chosen by metro passengers and approved by Metrorex, the Romanian subway company. The next stop was Victoriei station, where, so far, only a few projects have drummed up the necessary funding to be implemented. Zebrula was one such. The brainchild of artist Mara Patriche, it consisted of zebra-like benches in the metro station, indicating the proximity of the Antipa Museum, the National Museum of Natural History. Other projects presented on the program’s website, www.ilovebucharest.org, also supporting Bucharest’s cultural development, are now looking for financing. EUR BUSINESS REVIEW / September 6 - 12, 2010

350,000 is required, Miron estimates. In order to attract more money, I Love Bucharest has also put on sale a set of postcards depicting images of the capital, created by visual artists, architects, students and Bucharest inhabitants, which are also available for sale on the program’s website. Mr. Urban is one of the most recent projects in development under the I Love Bucharest umbrella. Illustrations in the form of comic strips, representing Mr. Urban, a character representative of Bucharest, have been painted on the book shelves belonging to the second-hand book sellers who ply their wares in downtown Bucharest, in the Universitate area. The adventures of Mr. Urban will be continued on the monitors in the city’s subway stations from October 15 to November 15.

The Adventures of Mr. Urban project is a sort of continuation of Book Street, a 2007 initiative in the same location, the Universitate area. In its first year the project consisted of banners bearing various quotations by Romanian and international cultural icons and popular traditional sayings from all over the world. As Miron describes it, the project was a success, making the “bouchinists” area at Universitate a point of attraction.

I Love Bucharest might help build an image for a city that has not had a strong identity since the 1940s, when it was perhaps last sincerely called “Little Paris”. Now, if such initiatives can secure the funds, Bucharest has the chance to become a town with its own tradition.

Gara de Nord subway station, a place where the old meets the new

The Adventures of Mr. Urban take shape in the bouchinists’ area at Universitate

It took a fortnight for the metroART project at Gara de Nord to be finished, well worth the wait!

13

CITY

ATP top 100 tennis players prepare to serve up 15th BCR Open

LAURENTIU OBAE

Anyone for tennis? the BCR Open is a fixture on the sporting calendar

Already a tradition on the Romanian sports calendar, the 15th BCR Open tennis tournament will take place between September 18 and 26, at Arenele BNR. With total prize money reaching EUR 370,000, the BCR Open Ro-

mania is the final major tennis tournament on a cinder court of the season, as well as the first ATP contest taking place after the US Open and Davis Cup. The favorite at this year’s event is the Spaniard Albert Montanes, number 23 in the ATP rankings and last year’s champion. German Florian Mayer, Argentinean Ignacio Chela and Romania’s own Victor Hanescu are also expected to do well.

The first two days of the BCR Open will consist of the qualifiers.

Ticket prices will range from RON 10 to RON 50, depending on the day. From Monday to Wednesday, children, students and pensioners will have free entry. More information is available on the tournament’s website, bcropenromania.ro.

Corina Dumitrescu

THE WAILERS, who performed for 12 years with reggae legend Bob Marley, will give a concert in Bucharest on September 10, marking the outfit’s 40-year career. Founded in 1969 by Marley himself, The Wailers have sold over 250 million albums worldwide. Considered the greatest living exponents of Jamaica’s reggae tradition, the band has played to an estimated 24 million people across the globe. Opening for the Wailers will be local reggae sensation, El Negro, best known for hits as Ploaia, Lasa-ma and Lumina la baie. The concert location in Bucharest has been changed to the open-air venue Arenele Romane, from the initially announced Sala Palatului. Tickets cost RON 90.

Tuesday, After Christmas premieres locally on September 16 Tuesday, After Christmas, the Radu Muntean infidelity drama nominated in the Un Certain Regard section of the Cannes film festival, will premiere locally on September 17.

Very well received by film critics worldwide, with glowing reviews in publications including Variety, LA Times and Liberation, Tuesday, After Christmas tells the story of Paul Hanganu (played by Mimi Branescu), a man involved romantically with two women, one of whom he has to split with before Christmas. The movie has enjoyed standing ovations at film festivals across Romania, such as TIFF and Anonimul.

Mirela Oprisor won Best Actress at

Dangerous liaisons: Tuesday, After Christmas

the Sarajevo Film Festival for her role of Paul Hanganu’s wife. Another big name involved in the film’s distribution is top Romanian actor Victor Rebengiuc. After its premiere on September 16, Tuesday, After Christmas will appear in cinemas across the country.

Corina Dumitrescu

THE SEX PISTOLS EXPERIENCE, the world’s only professional tribute band to the Sex Pistols, initiators of the punk movement, will hold a concert in Bucharest’s Club Mojo on November 13. The show will feature the original British group’s big hits, such as Pretty Vacant and Anarchy in the UK, as well the surprising Frank Sinatra tribute, My Way, to name just a few. Guest-starring at the event will be Ed Tudor Pole, who briefly joined the Sex Pistols in 1978 after the controversial death of Johnny Rotten. Organized by Brainovate and TentEvent, the Sex Pistols Experience show will take place at Mojo Club, Gabroveni 14, in the Lipscani area. Tickets are available at www.eventim.ro.

Jazz legend Herbie Hancock to play first concert in Romania American pianist and composer Herbie Hancock, who spent five years in the Miles Davis Quintet, has sold 20 million albums worldwide and won 12 Grammy Awards and an Oscar, will come to Romania on October 29, to give a show at Sala Palatului.

With a career spanning over five decades, Hancock is regarded as one of the biggest names in modern international jazz, and has per14

formed with the likes of Miles Davis, Joni Mitchell, Stevie Wonder, Sting, Annie Lennox, Christina Aguilera, Carlos Santana, Norah Jones and Leonard Cohen.

Tickets for Hancock’s concert in Romania are available on www.myticket.ro and from the Diverta chain, and range from RON 80 to 240.

Corina Dumitrescu

MORCHEEBA will perform in Bucharest on October 5 with Skye Edwards, the vocalist with whom the British triphop outfit gained international acclaim. Paul Godfrey (DJ), Ross Godfrey (instruments) and Edwards are on tour for the band’s seventh album Blood Like Lemonade.

The show is Morcheeba’s fourth gig in Romania.

It will take place at Sala Palatului, with ticket prices ranging from RON 90 to RON 200.

An exhibition of the work of Austrian-born photographer INGE MORATH, My Romanian Diary, will be on show at Muzeul Taranului Roman, starting on September 2. Morath (1923-2002), who worked for Magnum Photo Agency, came to Romania on various occasions.

BUSINESS REVIEW / September 6 - 12, 2010