Business Review No. 41, November 8 - 14

GOOGLE HAS OPENED A LOCAL OFFICE, HEADED BY DAN BULUCEA, P4 GAMING LEGISLATION

IMF VISIT

BALANCE

With Romanian punters having gambled EUR 500 million online last year alone, the stakes are high as betting firms face legal changes See pages 10-11

The visiting IMF delegation tells Romania it can expect more money in January – provided the country meets certain conditions See pages 14-15

Start them young: from dance and art to film and photography, BR takes a look at some of the courses on offer to creative children See pages 16-17

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ROMANIA’S PREMIERE BUSINESS WEEKLY

NOVEMBER 8 -14, 2010 / VOLUME 14, NUMBER 41

GAME PLAN

LAURENTIU OBAE

An enthusiastic fanbase of gamers, qualified and competitive work force and tax incentives for the IT industry have got the makers of computer games interested in the local market see pages 12-13

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LAURENTIU OBAE

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BUSINESS REVIEW / November 8 - 14, 2010

BUSINESS REVIEW EVENTS November 10 é Business Review organizes the

Fiscal Litigation event at Ramada Plaza Hotel.

November 17 é Business Review organizes the

Risk Management event at InterContinental Hotel.

For more information visit www.businessreview.ro/events

LAURENTIU OBAE

IMF officials announced at the end of their recent visit, which finished on November 1, that the fund might pay out the next bailout tranche in January, if the government completes the 2011 budget and proceeds with pension reform.

The Risk Management event will focus on identifying and assessing the main business risks that companies active in Romania are currently facing, as well as on mapping out potential solutions and systems to manage those risks, be they market, credit or operational. The event, which will take place at the Intercontinental hotel, on November 17, will also provide insight into ways to select cost-effective risk-management solutions and find the appropriate methods to plan and implement them.

Speaking at the event will be Iulian Patrascanu, managing partner, Fine Law, Patrascanu & Associates; Kemal Ozmen, director, forensic leader, South East Europe, PwC Romania; Alina Negrila, managing director, Mattig Management Partners; Cristina Apahideanu, managing consultant, Horvath & Partners; Mihaela Cracea, managing associate, Fine Law, Patrascanu & Associates; and Prof. Dr. Joerg K. Menzer, managing partner, Noerr Romania.

Among the topics that will be covered at the Risk Management event, the focus will be on commercial risk management in companies active in Romania, internal risk management, instruments for implementing risk management strategies from a legal and commercial perspective, fraud risk management, risk-management know-how, Romania’s country risk and ways for investors to manage it, types of risks, transferring risks to outside parties, as well as legal risk assessment.

For information about registration, please access http://business-review.ro/events.

3

NEWS

Google opens local office

COURTESY OF GOOGLE

Dan Bulucea will lead Google’s local office after over a decade at Microsoft

Google has established an official presence in Romania by opening an office with a local team headed by Dan Bulucea, formerly business and marketing director of Microsoft Romania.

“Google’s aim is to provide Romanian users, who are very active online, with more useful and innovative tools in the local language, as well as help Romanian companies get online and develop their business using the internet. Romania is a very interesting country for Google, one where we can see opportunities on both sides – consumer as well as business,” said Bulucea, country manager for Romania.

Its Bucharest office will be responsible for developing the firm’s presence and strategy in Romania, establishing business relationships with Romanian partners, educating local companies about the benefits of going online and direct advertising sales.

Google has so far been present in Romania with its consumer products for Romanian users including Google.ro Search as well as Google Maps, Google Places, Google Apps, Google Translate and many others.

Otilia Haraga CV Dan Bulucea Dan Bulucea has spent the last 12 years at Microsoft where he held various roles, most recently as business and marketing director for Microsoft Romania.

Prior to that, he worked as senior platform strategy manager at Microsoft Central & Eastern European HQ in Munich. That role followed a period when he was responsible for the overall platform adoption within the local market for Microsoft Romania.

Prior to joining Microsoft, Bulucea was the general manager of PC manufacturer Salient Romania. He has an executive MBA and a bachelor’s degree in Computer Science.

Intel opens software development center in Romania

LAURENTIU OBAE

Chip off the old block: Intel’s local software development center will be its first in Europe

Intel Romania, the local sub4

sidiary of American giant Intel, has announced it will open a software development center in Romania, its first in Europe.

The firm was not willing to provide further details prior to a press conference that will take place this week, which will be attended by Kostas Katsohirakis, vice-president of Intel Software and Services Group, and Martin Curley, manager of Intel Labs Europe.

Other companies that have opened R&D or technical support centers in Romania include Microsoft, Oracle, HP and IBM. Otilia Haraga BUSINESS REVIEW / November 8 - 14, 2010

NEWS

Romtelecom Q3 revenues fall 6.5 percent to EUR 181.5 million Romtelecom posted revenues of EUR 181.5 million in the third quarter of 2010, a 6.5 percent decline on the same period of the year before when it posted EUR 194.2 million. The operator continued to register operational losses, of EUR 13.9 million in Q3, 2010, while during the same period of 2009 it made an operational profit of EUR 8 million.

“In the third quarter, the Romanian consumer environment was once again negatively impacted by decreasing household income, higher sales tax and rising unemployment, as well as a higher than expected rate of inflation,” said the OTE report. “While certain long-term indicators are showing first signs of improvement, Romania’s economy is expected to shrink by nearly 2 percent in 2010, following a decline of more than 7 percent in 2009,” the report found.

Compared to the end of Q3, 2009, the total number of broadband customers rose by nearly 24 percent, from 764,708 to 947,379. The number of TV subscribers increased by almost 21 percent, passing the one million mark from a starting point of 831,043. Penetration of all Romtelecom voice services reached 36 percent in broadband and 38 percent in television.

As of September 30, 2010, the total number of revenue-generating units (RGUs, defined as voice, broadband and TV subscriptions) had risen by 4 percent compared to the previous year, to nearly

4.6 million. The newly deployed CDMA network reached 53,030 RGUs (voice & broadband) at the end of Q3, 2010. Romtelecom also targeted customers with basic broadband requirements through a solution under the NextGen name, which had generated approximately 79,000 RGUs by the end of Q3. As of September 30, 2010, the firm’s IPTV platform with interactive video-on-demand capability, launched in late 2009, had attracted over 20,900 triple-play subscribers (VoIP, high-speed internet and IPTV). Romtelecom also introduced a dedicated sports channel, Dolce Sport Channel.

The operator’s very-high-speed (2030 Mbps) VDSL internet service, also launched towards the end of last year, had built up nearly 34,000 customers by the end of Q3, 2010, an increase of almost 14,000 in the quarter.

According to Romtelecom’s GM, Yorgos Ioannidis, the operator is currently working on a project, still in the evaluation phase, that will help cut costs and increase efficiency.

Payroll and benefits were down 10 percent, reflecting the company’s measures to reduce personnel expenses through voluntary leave programs and improvements in network operations.

Romtelecom also expects its headcount to be reduced by more than 1,000 employees over 2010.

Otilia Haraga

Cosmote and Germanos continue growth, post revenues of EUR 117.5 million in Q3 Mobile operator Cosmote and GSM retailer Germanos, both part of OTE Group, posted local revenues of EUR 117.5 million in Q3, an 8.5 percent growth on Q3, 2009, when revenues amounted to EUR 108.3 million.

EBITDA rose to EUR 23.3 million.

“EBITDA grew by 12 percent compared to the same period last year, in contrast to the negative performance posted in the first half of the year, showing significant operating improvements following the successful integration of Zapp,” said the OTE report.

“We are pleased with our positive performance during the third quarter, despite the challenging economic environment, decreasing consumption and intense competition. We have continuously shaped the cost structure in order to improve our efficiency and adapt to the difficult environment, without affecting the quality of our services. We’ve kept enriching our product and services portBUSINESS REVIEW / November 8 - 14, 2010

folio, and we’ve gained significant market share in the corporate segment, consolidating our position in the market,” said Konstantinos Apostolou, Cosmote Romania’s CFO. At of the end of Q3, 2010, Cosmote’s total customer base in Romania reached 6.7 million (excluding Zapp), of which 20.1 percent was postpaid. The increase in the postpaid customer base, especially in the business segment, generated significant revenue growth. The number of prepaid customers also rose.

In the quarter, service revenues were up by 3.4 percent, with outgoing service revenues alone posting an increase of approximately 2 percent, according to the OTE report.

With a current market share of over 24 percent, Cosmote Romania will focus on further consolidating its position in the broadband and corporate segments.

Otilia Haraga 5

NEWS

Gabriel Pantelimon becomes country GM of Xerox...

Gabriel Pantelimon has been appointed country general manager of Xerox Romania and the Republic of Moldova. Formerly sales and marketing director at Xerox Central Eastern Europe, Israel and Turkey, Pantelimon replaces Petr Sichrovsky. He will be in charge of coordinating marketing and sales activities, global services and cus-

6

largest operator on the local market with more than 9.8 million clients on June 30, 2010, according to company data.

Otilia Haraga

COURTESY OF VODAFONE

COURTESY OF XEROX

Gabriel Pantelimon, new local GM of Xerox

tomer services operations.

“I will continue the Xerox strategy focused on services and solutions for the management of documents and along with the team I hope we will achieve performance, irrespective of the economic conditions,” he said. Pantelimon joined the Xerox team in 1997, working in the sales department.

The following year he was appointed global accounts manager at Xerox Central Eastern Europe, Israel and Turkey while in 2009 he became sales and marketing director for the same entity, achieving significant sales and boosting profit in a challenging recession period.

Pantelimon graduated from the Bucharest Politehnica University’s department of Technological Engineering and System Management.

He has an MA in European Area Studies from the University of Surrey and an MBA from the Bucharest School of Management.

Otilia Haraga

... and Inaki Berroeta becomes CEO of Vodafone Romania

Inaki Berroeta will head up Vodafone Romania

Vodafone Group has appointed Inaki Berroeta to lead Vodafone Romania starting December 1st. He served as CEO of Vodafone Malta since July 2007. The current CEO, Liliana Solomon, has been appointed manager of operations for the Europe region. She will be based in London and report directly to Michel Combe, Vodafone CEO for the Europe region.

Vodafone Romania is the second

Inaki Berroeta Spanish Inaki Berroeta has 15 years of experience in the telecommunication business, having been one of the first employees to join the company in 1995, when Vodafone Spain was still Airtel Movil, S.A. In 1997, he moved to California where he worked for AirTouch International as IT manager. In 1999 Berroeta joined Global Star USA as manager of customer care & the billing system. In 2000, he returned to Spain and until 2007 worked for Vodafone Spain as director of the Software Development Center, head of enterprise products and services, and, finally, as head of sales enterprise, business unit for the northern region. He is licensed in telecommunications and has an MBA from Henley Management College in the UK.

BUSINESS REVIEW / November 8 - 14, 2010

NEWS

UPC: Growth in CEE region in Q3 offset by decline in Romania and Hungary UPC Romania is still struggling to cope with the recession and fierce competition on the telecom market, according to the Liberty Global Inc. report, publishing the firm’s financial results for the third quarter of the year. Liberty Global posted slight growth in the Central and Eastern European region, aside from Romania and Hungary, which were the worst performing of the CEE countries. “With respect to Q3 rebased revenue growth, our European broadband operations achieved year-on-year growth of 6 percent, of which our Western Europe and Central and Eastern Europe (CEE) regions accounted for rebased revenue growth of 7 percent and 1 percent, respectively. (...) In terms of our rebased revenue growth in CEE, our top line growth in Poland was largely offset by rebased revenue declines in Romania and Hungary,” said the Liberty Global report. In Romania, television subscribers totaled 1,156,000, a 6.6 percent decrease on Q3, 2009. The sharpest fall was in the number of analog cable subscribers, which declined to 694,200. On September 30, UPC had 178,600 fewer analog cable subscribers than in the

BUSINESS REVIEW / November 8 - 14, 2010

same period of last year. “[The decline] was also caused by the migration of analog cable customers to the digital service,” said Severina Pascu, CFO of UPC Romania. The firm’s number of digital cable customers was 263,600, a 30 percent growth on Q3, 2009. UPC Romania had 198,200 DTH subscribers at the end of September, up 23 percent on Q3, 2009. In the HD television segment, where it offers 11 HD channels, the provider has attracted 16,000 customers since its launch, one year ago. The number of UPC internet subscribers was 256,000, the company having lost only 400 customers on this segment. “We are preparing to launch Internet Fiber Power at the beginning of next year (…) In November 2010 we will launch it in Cluj, and over the coming months in cities in the rest of the country,” said Pascu.

However, the decline in the telephony segment was steeper: UPC had 142,200 telephony subscribers in September, having shed 2,300. The total number of RGUs that UPC had in Romania on September 30 was 1,554,200, down 5.1 percent from Q3, 2009.

Otilia Haraga

President blocks VAT reduction

President Traian Basescu blocked the bills

As expected, President Traian Basescu announced on public television last week that he will not pass two bills reducing VAT on food staples from 24 to 5 percent and exempting pensions of below RON 2,000 from taxation. He added that he did not believe that the bills were voted for unanimously “by mistake”, as some MPs had claimed.

The President said that he had discussed the content of the two

laws with IMF representatives. “I assured them that we would not change the fiscal regime which means that I will not promulgate the laws,” declared Basescu. The two bills will now be sent back to Parliament for a new vote.

The Romanian Chamber of Deputies had unanimously passed the two bills. Although they had previously been rejected by the Senate, the lower house has the final say.

Had President Basescu passed the bills, they would have become valid after being published in the Official Journal of Romania.

The bills lacked government support, with MPs from the ruling Democratic Liberal Party (PDL) saying last week that they had voted them through by accident and would take measures to correct this “technical error”. Among those who voted in favor were the finance minister, Gheorghe Ialomitianu; the minister of labor, Ioan Botis; and the minister of regional development and tourism, Elena Udrea.

Simona Bazavan

7

NEWS

Romania’s new brand gets nod from trademark body

Brand new: Romania’s tourism logo

Romania’s much discussed new tourist brand has been declared original and unique by the International Office for Inventions and Trademarks (OHIM) and the State Office for Inventions and Trademarks (OSIM) and will be used in all international promotional campaigns, said the tourism minister, Elena Udrea, quoted by newswire Mediafax.

According to an official press issue from the Ministry of Tourism,

from spring 2011 a promotional campaign for Romania as a tourist destination will be launched on Facebook. Udrea and Blake Chandlee, Facebook vice-president and commercial director for Europe, the Middle East and Africa, presented their collaboration plans during a press conference.

The strategy for the integrated communication element of the social / new media campaign will be finalized by December. Other aspects of the collaboration will include training sessions for the ministry’s employees, as well as the stimulation of the development of Romanian tourist programs by adopting the most recent innovations in the development of the internet.

Chandlee said that while Facebook has collaborated with other national tourism authorities, involvement in the earliest stages of the campaign, starting with the strategy, is a first for the site.

Corina Dumitrescu

Romania to exit recession with 1.6 percent growth in 2011, PwC study predicts

STOCKEXCHANGE

The only way is up: PwC has spotted green shoots

Romania will emerge from recession in 2011, with a 1.6 percent economic growth, according to PricewaterhouseCoopers. The latest PwC prognosis estimates a local inflation rate of 5.4 percent in 2011.

The report states that developing economies are continuing to power the growth of the global economy, while most developed economies are struggling in the face of high unemployment and waning consumer demand.

Global GDP growth will be 3.5 percent this year and 3.1 percent in 2011, according to the forecast.

The climb out of recession in the de8

veloped economies of the Eurozone is slow and painful for many countries, with high unemployment and upcoming austerity measures likely to dampen growth prospects. Germany, however, is bucking the trend, with a forecast of at 3.3 percent GDP growth this year – more than double the forecast growth figure for Euroland as a whole. “So far this year, business confidence has been stagnant in the US, while confidence levels in Japan and the Euroland appear to be continuing a slow recovery towards pre-crisis levels,” said Yael Selfin, head of PwC’s macro consulting team.

The US economy is also slowly returning to growth, despite persistently high unemployment and continuing fears over deflation.

The report highlights the gap in performance and prospects between the developing and the developed world. China and India are tipped to continue their impressive growth in 2010 and 2011.

China is expected to post 9.6 percent this year and 9.3 percent the next. The Indian economy is set to grow by 8.6 percent this year and 8.5 percent the next.

Otilia Haraga BUSINESS REVIEW / November 8 - 14, 2010

CALENDAR / WHO’S NEWS

WHO’S EMANUELE BUTTA, 44, is the new vicepresident of the retail division of UniCredit Tiriac Bank. His appointment must be approved by the National Bank of Romania (BNR).

Butta is taking over from Zoltan Major who was appointed to a regional position within the group.

Butta previously served as head of CEE retail sales. He has been working for UniCredit since 1992 and over the years has held various retail positions in Italy and elsewhere.

SEBASTIAN GUTIU, 34, has been appointed equity partner with Schoenherr.

This is the first time that the law firm has invited lawyers from outside its Vienna headquarters into its equity. The five new partners are based in Belgrade, Bucharest and Prague.

Gutiu is managing partner of Schoenherr in Romania and head of the real estate team. He specializes in real estate law as well as in arbitration and litigation. He has been with the firm since 2001.

Gutiu has built up Schoenherr’s dispute resolution practice in Bucharest.

ALEXANDRU BADET has been appointed partner by Hammond, Bogaru and Associates after having previously served as senior associate. He will continue to develop the firm’s commercial and corporate law capability as well as advising on complex litigation matters.

PETRONELA ANA has been appointed partner by Hammond, Bogaru and Associates after having previously served as senior associate. She will continue to develop the litigation practice advising on real estate and commercial disputes.

NEWS MIHAELA GRAFU has joined Thinkdigital Romania as sales director. She has over ten years of professional experience in the fields of marketing, media and advertising. Grafu has previously worked for companies such as Edipresse AS, NetBridge Investment and Adevarul Holding.

MIHAI FETCU is the new creative director of Lowe. He joined the agency in 2009 as senior art director. Fetcu is a graduate of the Faculty of Decorative Arts and Design in the Bucharest National University of Arts. While working for Lowe he has been involved in projects such as the relaunch of Kinder Surprise in Romania, the launch of Domestos BactiStop and the corporate campaign for Labormed.

EVENTS, BUSINESS AND POLITICAL AGENDA NOVEMBER 10 é 10:00 Kiwi Finance organizes a press conference at its headquarters. By invita-

tion only. é 11:00 UNICEF and UniCredit Tiriac Bank organize an event for the launch of

the first UNICEF affinity credit card in Romania at Radisson Hotel. By invitation only.

NOVEMBER 11 é An event will take place at Novotel Hotel to celebrate World Diabetes Day. By

invitation only.

NOVEMBER 16 é The Chamber of Commerce and Trade of Romania (CCIR) together with the

Japan External Trade Organization (JETRO) to Bucharest, the Embassy of Japan in Romania and the Union of Bilateral Chambers of Commerce and Industry of Romania (UCCIBR) organize a seminar on environment related business opportunities.

NOVEMBER 21 é 17:00 AmCham Romania organizes the Thanksgiving Day Dinner Party at the

InterContinental Hotel. By invitation only.

NOVEMBER 23 é Procter & Gamble celebrates 15 years since the opening of its factory in

Timisoara.

NOVEMBER 25 é TMF Romania organizes an event dedicated to Dutch investments in Romania.

IULIANA GHIORGHITA has been appointed account manager at Thinkdigital Romania. She began her career in 2008 with the Realitatea-Catavencu group. Ghiorghita previously worked as traffic manager at F5Xmedia.

CLAUDIU CRUCERU is the new finance director of Codecs.

He has previously worked as chief accountant for Prospectiuni SA. Cruceru has over seven years of professional experience in the field.

He graduated from the Faculty of Economics in Petrosani.

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 / November 8 - 14, 2010

9

FOCUS

High stakes as betting industry gambles on law change With some half a billion euro gambled online in Romania last year alone, the Romanian authorities are attempting to get the games industry regulated. But last week, the EC criticized Romania’s draft law, saying it discourages cross-border competition between providers of online gambling, and raises concerns that the Romanian Lottery could extend its monopoly over the online segment as well.

Dana Verdes More than half a billion euro – this is how much Romanians gambled online last year alone, Ana-Maria Baciu, associate manager and gaming practice coordinator at NNDKP, told Business Review. The industry has boomed in the past few years and is enjoying bigger and bigger wins in Romania as well.

This is surprising, as Romania currently actively prohibits the provision of online gambling activities. The emergency government ordinance (EGO) 77/2009 makes the organization of gambling activities through the internet, intranet or other communication systems a criminal offence. The punishment for individuals is imprisonment for a period of one to five years or a fine, while companies face a fine of about EUR 2,500-25,000 and the dissolution of the firm.

But the law does not preclude local punters from participating in online gambling provided by companies established in other European states. Cristian Radu, managing associate at Tuca Zbarcea & Asociatii, told BR that currently online games of chance are offered in Romania by organizers based in countries with permissive regulations such as Gibraltar, the Isle of Man and Malta. “In general, players prefer the online segment because the fiscal authorities cannot tax daily gains of more than RON 600 (approximately EUR 140),”

When the chips are down: Romanians gambled more than EUR 500 million online last year alone

said Radu.

In spite of all these interdictions, many gambling firms currently provide websites in the Romanian language, directly targeting local consumers.

Examples are www.sportingbet.ro, www.bet-at-home.com, www.gamebookers.com, www.bet365.com/ro and www.bwin.com/ro.

“Also, online gambling activities are openly advertised in Romania through different means of communication, from the television to the internet, outdoor and printed advertising. Despite this, to the best of our knowledge, the Romanian authorities have not pressed any charges, so far,” said Baciu.

Romanian regulations on online gambling at a glance é The organizer must be a Romanian legal entity and all technical support

Romanian policy-makers have made a first step in regulating this area of gambling. In June this year, the budget, finance and banking parliamentary commission proposed a series of regulations regarding the authorization and running of online gambling, to be adopted by the above mentioned law.

The Tuca Zbarcea & Asociatii managing associate says that one of the reasons for the initiative is the huge popularity of online gambling among Romanian consumers. “Evasion of regulation in this area deprives the budget of sources of revenue. The draft law was also sent to the European Commission (EC) for approval,” said Radu.

VIEW

FROM

BRUSSELS

At the beginning of last year, there

é There are countries where gambling activity is considered a state monopoly,

reserved for public organizations, such as Sweden and Luxembourg (including the online segment). é In other countries, gambling offline and online is regulated and liberalized, such as Great Britain, Italy, France and Estonia. é At the opposite end is Germany which prohibits online gambling. Here, internet operators are required to block consumer access to German websites offering such services, and banks are forbidden to operate online gaming services for their customers. é In Germany’s case, the ban may be lifted and the market liberalized following recent decisions by the European Court of Justice which found that German law violates EU law, being a disguised form of protecting the interests of state monopolies in this field. é Finally, there are states where online gambling activity is not subject to regulations (similar to the situation in Romania), such as Greece.

SOURCE: TUCA ZBARCEA SI ASOCIATII

10

ROMANIA

Status of online gambling laws in EU states

SOURCE: NNDKP

equipment for organizing and transmitting online gambling activities must be located in Romania. é The draft law provides for quite burdensome financial obligations for organizing online gambling activities, namely license fees of between EUR 50,000 and EUR 200,000, the authorization fees expressed as a percentage of the sums collected by the organizer, a security fund of EUR 1 million, and share capital requirements of about EUR 125,000 to EUR 250,000, all depending on the gambling activity. é The draft law prohibits individuals from participating in Romania in online gambling activities not authorized on Romanian territory, a criminal offence punishable with imprisonment for a period of six months to two years or a fine. é However, it is unclear whether online mutual betting will be permitted under the draft law and, if so, whether it will also be part of the legal monopoly established in favor of the National Lottery Company or will be accessible to any interested person.

EC RESPONDS TO DRAFT LAW

In an official answer sent to Romania last week, the EC says that the draft law for the EGO 77/2009 discourages cross-border competition between organizers of online gambling. One of the topics on which the EC has requested additional information concerns the status of the Romanian Lottery and the possibility that its monopoly on betting on the segment could expand online.

If the EC extends its investigation of the Romanian Lottery case, the Romanian government could abandon plans to regulate online gambling, having to choose between maintaining the privileged position of the Romanian Lottery and taxing the online sector, which has an annual value of online gaming of over EUR 500 million. In general, EU member states are entitled to establish state monopolies to combat social problems related to gambling, but they cannot act solely to protect state interests in obtaining benefits from gambling.

Romania is not the only European country dipping its toe into the water.

Cristian Costea, partner at Bostina & Asociatii, told BR that for online gambling in particular most European countries have adopted or recently drawn up draft laws to allow the organization of online gambling. In fact there is a real boom in this area, with no fewer than eight European countries including Romania notifying the EC of their intention to amend national legislation in this field.

BUSINESS REVIEW / November 8 - 14, 2010

FOCUS

COURTES OF KINSTELLAR

COURTESY OF BOSTINA & ASOCIATII

COURTESY OF NNDKP

Ana-Maria Baciu, associate manager at NNDKP

Cristian Costea, partner at Bostina & Asociatii

Razvan Popa, counsel at Kinstellar

was an EC initiative to regulate gambling by rules applicable to all EU member states.

“However, no agreement has been reached, as the regulation of gambling has been deemed to come under the jurisdiction of national law. The national regulation of gambling is influenced by the position of states on various public policy issues such as combating crime and money laundering, fraud, corruption, addiction prevention and the protection of minors, and consumer protection,” said Razvan Popa, counsel at Kinstellar.

Back in 2006, Commissioner McCreevy responded to a question on gam-

bling posed by Arlene McCarthy, chair of the committee on the internal market and consumer protection, during the European Parliament’s plenary session in Strasbourg, stating that EU-wide harmonization of legislation regulating gambling at present was not likely, the NNDKP official told BR. The Bostina & Asociatii partner said that in the short run the EC has proposed solidifying the cooperation between national authorities in the member states on online gambling.

“Last but not least, it should be noted that the EC has already prepared a green paper which will contain references to issues that may arise from gambling,

figures relating to market volume, and issues related to cooperation in the field of the legal regulation of online gambling,” said Costea.

The lack of uniform regulations has led to a multitude of cases registered before the European Court of Justice and the opening of infringement procedures against countries such as Denmark, the Netherlands, Finland, Italy, Germany, Sweden and Hungary. The position of the European Court of Justice has not been uniform. Moreover, the European Parliament and the Council of Ministers have adopted a number of non-legislative initiatives in the past two years, touching on sensitive issues of taxation

BUSINESS REVIEW / November 8 - 14, 2010

and state monopolies.

In principle, it is recognized that the legislative framework regulating the conduct of online gambling in the EU depends on the political climate. Member states with a permissive legal regime (such as Britain and Malta) reject legislation in this field, claiming that gambling is a service like any other, to which the rules on free movement of services should apply.

“The hidden reason for such a position is that by regulating and taxing online gambling in each of the states which it is operated, betting firms’ host states would lose an important source of income. Currently, the companies pay taxes only in they state where they are registered, although their services are consumed in other member states,” said the managing associate of Tuca Zbarcea & Asociatii.

As the online gambling sector with a cross-border dimension is growing, it is becoming a really significant stake.

In 2008, online gambling services accounted for annual revenues in excess of EUR 6.16 billion, 7.5 percent of the overall gambling market, a segment which is expected to double in size in five years. dana.verdes@business-review.ro

11

FOCUS

Playing on through the crisis If you were ever among keen computer gamers and not an avid player yourself, their jargon must have seemed a different language. This is COURTESY OF GAMELOFT

because gamers in Romania are a close community and passionate about their hobby.

Companies noticed, and were quick to act, opening studios in Romania where many of the latest releases were developed from start to finish. For some, Romania was the first choice.

Otilia Haraga In Romania, titles with large communities of gamers include World of Warcraft, the Starcraft series, Call of Duty series, Medal of Honor, the Need for Speed series, FIFA and Sims.

“The profile of the Romanian gamer varies greatly with the various platforms and types of games.

Games are categorized by the age groups they target, as reflected in the Pan European Game Information rating, which is visible on the game box. Additionally, consoles such as the Wii and Sony PlayStation 3 Move have attracted new categories to the mix: families and occasional players. More specifically, in Romania, the percentage of players on a PC is higher than in the rest of Europe,” says Razvan UrucOlaru, head of concept management 12

All guns blazing: games companies have targeted the Romanian market

for IT & media at Diverta.

World of Warcraft – Cataclysm is one of the most eagerly awaited titles by Romanian “game-worms,” with more than 15,000 of them expected to plunge into the new Warcraft expansion adventures in the first days of its release. The clock is ticking: Cataclysm will hit the Diverta shelves on December 7, at midnight.

Other anxiously awaited titles that will be launched by the end of the year are Call of Duty Black Ops, Assassin’s Creed Brotherhood, Fable 3 and Need for Speed Hot Pursuit.

Each successful game had at least one exceptional “ingredient” when it came out, Uruc-Olaru tells BR, features like innovative interaction and control, high class artistic design, an immersing story, faithful rendition of reality or connection to a famous book or film. In general, the top of the sales chart is dominated by titles that are sequels or expansions.

A large pool of highly talented people is what major publishers such as Electronic Arts, Namco Bandai Networks, Ubisoft and Gameloft considered when deciding to open offices in Romania. Some of these companies have not stopped at just one studio and still have vacancies for specialists.

But it takes a little more than

just good workers for so many companies to open offices here. So what makes Romania such an El Dorado for game makers?

“The cause, I think, is the young generation of Romanians, who are very passionate about games and very into IT in general,” says Erdei Jacint, PR manager of Ubisoft. He adds that the PC is the most popular gaming platform in Romania but there is an increasing trend to buy console games, especially those for PlayStation 3.

Not only is there a community of gamers and tech-savvy users, but some of them enjoy very good employment prospects. “Romania is very attractive for its talented people, especially those with engineering skills,” Viorel Alex Marinescu, head of operations at Electronic Arts Romania, tells BR. Moreover, these brains can be hired at very competitive costs. Remuneration on the local market can be half the figure in more developed countries with a tradition on the market, according to Andrei Lopata, president and COO of Namco Bandai Networks Romania. “The average salary in the gaming industry in Romania is somewhere around EUR 700 but there are differences across various specializations,” he says.

This does not mean however that salaries are low – on the con-

trary, the money is very good for the local market, says Paul Friciu, studio manager of Gameloft Romania.

And the remuneration gap between Western Europe and Romania is starting to close. ”There are many positions where value is very well rewarded, and we are not talking merely salaries here, but other types of bonuses depending on the success of the project in question,” Friciu tells BR. He explains that, as a rule, salaries vary between EUR 250 and EUR 2,500 net, depending on the position and length of service within the company.

Another incentive for a large games maker to open a studio in Romania is the fact that IT specialists are offered fiscal incentives in Romania, say pundits.

The time it takes to develop a game depends on its complexity, but an AAA game (games of very high quality with a big budget, probably the equivalent of a blockbuster in the film industry) can take between one and three years to complete.

GAMES

ON MOBILE HANDSETS, ENTERTAINMENT ON THE CHEAP

“Even though the most important markets for the games industry continue to be PCs and consoles, the mobile games segment for mobile phones is very active, having grown the most in the last few years. Also, the differences are starting to be smaller and smaller as most games that appear for the PC also have mobile phone versions,” Gabriel Ionita, senior manager of products & services development at Cosmote Romania, tells BR. Currently the trend is moving towards improving the graphics and special effects with less focus on the storyline, and the consoles and smartphones market is growing – not only in terms of increased mobility, but also the touch screen function and resolution.

Innovations like wireless and voice control devices are another aspect the producers have to integrate smartly into the games they launch and it is more common for the user to have greater control over the script elements and the development of the game, including those for mobile phones, he explains.

BUSINESS REVIEW / November 8 - 14, 2010

FOCUS “Romania has proved to be a profitable market for the industry of gaming on mobile handsets, even in a time of crisis, and this is simply because it is a rather cheap form of entertainment,” says Friciu.

How cheap are we talking? For instance, the price of a game on a mobile phone in the Vodafone network varies between EUR 0.99 and EUR 4, and users can also subscribe to download two games a month for less than half this price. The most downloaded games by Vodafone customers are well established titles such as FIFA, Assassin’s Creed, WORMS, Need for Speed and Ferrari World Championship. Vodafone collaborates with producers such as Gameloft, Glu, EA, Connect2Media etc.

“Games for the mobile phone are adapted to much shorter sessions than those on the PC,” say Vodafone officials. Generally, users who access a game on their mobile phone take advantage of certain moments such as when they are on public transport, waiting in a queue or simply need to unwind for a few minutes.

Approximately 10 percent of visitors to the Orange portal download games. Orange is currently collaborating with publishers such as Electronic Arts, Gameloft, Glu, IPlay, HandyGames, AMS and Digital Chocolate. More than half of the downloads are games from the categories of sport, racing, action/shoot and adventure/RPG. Cosmote customers can pay between EUR 1 and 3, without VAT. The most popular games are EA Sports FIFA 11, Mobile GP2, Devils and Demons, Twilight New Moon Game, NitroStreet Racing 2 and the SIMS 3 World Adventures. The company collaborates with producers such as Gameloft, Electronic Arts, Digital Chocolate, Glu, Cocoasoft, Handy Games and others.

“Those who buy games are not only the very young, but also adults between 21 and 35 years,” says Ionita. He adds that there are several types of players: the occasional gamer who, out of curiosity, tries a game in their free time, the passionate gamer who tries all the new games that appear on the market from a certain category (arcade, puzzle, books, action, sport) but plays in single player mode and the ideal gamer for us and the producers, who plays certain games in multiplayer together with other gamers.

BUSINESS REVIEW / November 8 - 14, 2010

GAMELOFT ROMANIA Gameloft opened a studio in Bucharest in 1999, when it was founded, originally under the name of Ludiwap. The HQ was at that time on Expozitiei Boulevard. but recently the creation team moved to a new headquarters, just opposite the big one, in order to allow the expansion of the Bucharest studio. Since 2008, the studios in Bucharest have focused on creating advanced mobile platforms such as iPhone, iPad, Nintendo DS. A second studio was opened in Cluj in August, hosted by the City Business Center, on Cuza Voda St. Team 300 people in the Bucharest studio, and counting. Also, 35 employees are working in the Cluj studio, and more could join them.

Vacancies Gameloft has jobs in the creation department: specialist game programmers (senior videogames programmer, client/server developer), designers (game designer, menu and UI designer), 3D graphic specialists (3D modeler/environment artist) and concept artists.

It has four open positions, senior level, in its Business Intelligence department, PHP programmers and database administrators.

Employment criteria Programmers need to have experience in C++. Graphicians need to have 3D Studio Max knowledge. Game testers only need solid English knowledge and to be an aficionado of video games.

Future plans Developing existing studios Projects developed in Romania N.O.V.A. – Near Orbit Vanguard Alliance, Assassin’s Creed, Brothers in Arms I and II, Asphalt 5, Terminator: Salvation, Splinter Cell: Conviction, Shrek and Kart.

Games for mobile phones: Mission Impossible 3, Prince of Persia Warrior Within and Block Breaker.

What they are working on The Gameloft team is working on six new projects, two of which will be out on the market by Christmas time.

UBISOFT ROMANIA Ubisoft opened a studio in Bucharest in 1992 for game devel-

opment and testing. This was the first studio that the company had opened abroad. A newer and smaller studio was opened in Craiova two years ago, following a collaboration between Ubisoft Romania and the Faculty of Computers and Electronics at Craiova University, which develops applications for the iPhone and iPad, based on Ubisoft franchises.

Team There are more than 800 employees working in the Bucharest studio and around 20 in the Craiova studio.

Future plans There are plans to open other studios in the country.

Vacancies New recruitment is project dependent.

Employment criteria Game testers need to have good knowledge of English and Microsoft Office. Designers need to be passionate about games, know game culture, have analytical thinking capabilities, be creative, a good team player, and experienced in the best-known level editors.

Projects developed in Romania Tom Clancy’s H.A.W.X. (which sold over 1.3 million copies worldwide), Blazing Angels, the Silent Hunter series, Peter Jackson’s King Kong, the Chessmaster series.

What they are working on H.A.W.X 2 for PC, H.A.W.X 2 for Wii, Assassin’s Creed Brotherhood, and Michael Jackson The Experience (a special project as an homage to the King of Pop), all to be released in winter.

NAMCO BANDAI NETWORKS ROMANIA Namco Bandai Networks opened its office in Romania in 2008. The headquarters are located in SEMA Parc. Namco is developing games strictly for mobile phones and smartphones (Windows Mobile 7, Apple iOS, Android, Nokia).

Future plans No expansion in other cities is planned.

Team The local team of Namco Bandai Networks numbers 170 people.

Vacancies

The publisher is permanently hiring testers, artists, game designers and programmers.

Projects developed in Romania Final Fantasy 1, Tekken, PACMAN CE, Ridge Racer, PACMAN Kart, Wolfman, Flight Control, Brain Exercise series, Learn2Fly (for mobile phones and smartphones).

What they are working on Crystal Defenders, Puzzle Quest 2, Bukaneer Blitz, PACMAN Party (to be released by Christmas).

EA

ROMANIA

The EA office in Romania was opened on July 4, 2005, initially as the office of Jamdat Mobile, the biggest maker of mobile games at that time, which was acquired by EA in 2006. The office is currently located in Sema Park, close to the Politehnica University. On the development side, EA focuses on mobile phones/smartphone games.

On the quality assurance side, EA tests for PC, PS3, XBOX360, PSP, Nintendo DS as well as for all mobile phone and Smartphones (iPhone, iPad, Android, BlackBerry and others).

Future plans EA Romania doesn’t plan to open other locations in Romania for the moment.

Team Around 500 people in this moment.

Vacancies Looking for talented people in all areas of game development (programming, art, design, production, project management).

Now EA is specifically looking for producers and development cirectors with gaming and agile project management experience.

Projects developed in Romania FIFA 11 iPhone, C&C Red Alert iPhone/iPad, C&C 4 Mobile, Medal of Honor Mobile, Heroes Lore iPhone and many more.

13

MONEY

IMF negotiations flounder over consumer loan controversy

Simona Bazavan A mission from the International Monetary Fund (IMF) visited Bucharest between October 20 and November 1 to assess the country’s progress under the EUR 13 billion stand-by agreement signed last year.

While a schedule for the next disbursement was settled, discussions proved tense and didn’t leave much room for maneuver on the Romanian side.

The government found itself once again caught between unpopular austerity measures, which are expected to cause further social protests in the coming months, and the need to comply with IMF requirements. The main topics put on the agenda by IMF representatives included the controversial Government Emergency Ordinance 50/2010 (OUG 50/2010) on consumer loans, the 2011 budget and a clear timetable for the approval and enactment of the unitary public sector wage law and pension reform.

All of these issues should be ad14

dressed by the government in order to secure the next loan disbursement in January, but public debate over the laws has been heated.

President Traian Basescu criticized lawmakers on public television last week: “They knew well enough that we have to pass the pension bill, the unitary public sector wage bill and the state budget bill. If we don’t, Romania will have to end its agreement with the IMF and then we will be left wondering how to pay salaries and pensions.”

VENI,

VIDI, VALUED

With what has become proverbial optimism, IMF representatives announced that 2011 should see Romania register a 1.5-2 percent GDP increase. "Economic activity is now stabilizing and we expect growth of 1.5-2 percent in 2011 (compared to around minus 2 percent in 2010),” said Jeffrey Franks, IMF mission chief for Romania.

“We expect inflation to peak at slightly above 8 percent at end-2010 before returning to within the National Bank of Romania’s target range in the course of 2011. We project a current account deficit of 5-6 percent of GDP for 2010,” forecast Franks at the end of the visit.

By reducing existing fiscal imbalances, "the tough but necessary fiscal measures taken earlier this year” should ensure that the 2010 budget deficit target of 6.8 percent is reached. “We have agreed with the government on the main components of a 2011 budget which should produce a deficit of 4.4 percent of GDP (in cash terms),” added Franks.

The IMF’s mission chief for Romania admitted that the authorities are facing spending pressures, “particularly in health and social assistance programs” and the issue should be addressed along with the ceiling on general government arrears and improvements in tax collection.

Considering the government’s intentions to increase the minimum wage while reducing the flat tax and social security contributions, the IMF called for stability, as constant

LAURENTIU OBAE

If everything goes according to plan, Romania should receive its seventh disbursement from the International Monetary Fund (IMF), worth almost EUR 900 million, in January, a month later than previously agreed. However this depends entirely on the government’s commitment to make headway on reforms and meet the conditions negotiated during the sixth review of the EUR 13 billion bailout agreement that ended last week, on November 1.

Straight up: Romania must meet the IMF’s criteria if it is to qualify for further sums

changes to the national fiscal are not productive. “Our advice is to maintain the current changes for a year or two in order to support fiscal predictability,” urged the IMF.

GIVE CREDIT WHERE CREDIT IS DUE One of the main issues on the discussion agenda, also considered an obstacle to obtaining the next loan tranche, is the infamous OUG 50/2010. Adopted by the government in June, the ordinance transposes the EU 2008/EC/48 directive regarding consumer loans into local

legislation. Meant to improve transparency and to protect consumers from abusive banking practices, the ordinance is popular with the public. Bankers feel differently, calling it excessively consumer-friendly and abusive, as it applies to existing loan contracts too.

Since June, representatives of the EC and the IMF have repeatedly called upon the government to change the ordinance so that it doesn’t endanger financial stability.

“We have agreed that improvements in consumer protection are needed in the banking sector, but

“We have agreed that improvements in consumer protection are needed in the banking sector, but that actions in this area must respect EU directives and

”

not endanger the stability of banks

Jeffrey Franks, IMF mission chief for Romania BUSINESS REVIEW / November 8 - 14, 2010

MONEY that actions in this area must respect EU directives and not endanger the stability of banks,” said Franks, while admitting that he is aware of certain abusive banking practices taking place in Romania.

Banks also complain that allowing the National Authority for Consumer Protection (ANPC) to suspend their lending activities under the new ordinance exceeds the institution’s authority. In a statement made on November 1, the EC said that the government “agreed to work with Parliament to ensure that OUG 50/2010 improves transparency and protects consumer rights, while it also safeguards the stability of the financial system.” According to the same document the government must also ensure that the National Bank of Romania (BNR) remains the only agency authorized to regulate banks’ lending activity.

Romania risks more than an infringement procedure from the EC. Franks confirmed that changing the OUG 50/2010 is a condition for disbursing the January loan tranche.

“We need to reach a satisfactory form for the ordinance, otherwise we can’t continue,” he said.

Last week, after announcing that it had revised the annual inflation rate for this year from 7.8 percent to 8.2 percent, the BNR said it would intercede in the ordinance issue in order to make sure that the document complies with the European directive in the field.

“We will publically intervene (...) in this debate which has turned away from a normal framework,” governor Mugur Isarescu said at a news conference last week, adding that there is no need for excess.

The governor said that had the central bank been consulted on the matter earlier, “many of the superfluous issues would have been avoided”.

So far the Romanian authorities, including the president, have defended the ordinance, arguing that the complaint about it being applied retroactively doesn’t stand up.

Some representatives of the ruling Democrat Liberal Party (PDL) have even expressed fears that changing the ordinance in favor of the banks would be political suicide.

However, the fate of the ordinance has yet to be decided as it is currently blocked in Parliament.

Constantin Cerbulescu, president of the ANPC, is also expected to discuss its content with European authorities this week in Brussels.

BUSINESS REVIEW / November 8 - 14, 2010

PLEASE, MORE

IMF,

WE WANT SOME

In all likelihood January is also when Romania will begin negotiations for a new financial agreement with the IMF, EU and the World Bank (WB), announced the president last week, following preliminary discussions in Bucharest.

The government’s plan was made public prior to the visit.

“I am an unreserved supporter of a new agreement with the IMF and the European Union, but it should be a

precautionary agreement, not a loan agreement,” Basescu stated in October.

If a suitable accord is reached, the new agreement should come into force right after the current one ends, in April, the president explained, adding that he is confident that Romania will meet all the terms agreed upon with the IMF by that time.

No actual amount has been specified so far, but this time the Romanian authorities hope for a “precautionary” agreement that will set up an available credit line, should the international

economic environment deteriorate.

The idea is also supported by the governor of the central bank, who believes that it will send a positive message to the international business community.

Romania and the IMF signed a EUR 13 billion loan agreement last year, as part of a larger package that includes funds from the EU, the World Bank and other foreign lenders.

So far, Romania has received around EUR 11.27 billion from the IMF and another EUR 3.65 billion from the EU.

15

BALANCE

Courses for kids nurture young talent In today’s high pressured world, school is not enough for the ambitious parent seeking to develop his or her progeny’s talents. Dancing, painting, singing, acting and photography classes are all on the menu for children across Romania, and new courses COURTESY OF YOUPI

keep emerging to keep up with the ever-increasing demand.

BR talked to some of the trainers and managers to get some tips for those seeking this sort of enrichment for their offspring.

Corina Dumitrescu Children’s Film and Television School Micile Vedete (The Little Stars) aims to help children overcome their fear of being in the spotlight and appearing in front of the camera, explain the managers behind the idea, sisters Ema and Ariana Pendiuc. It all started in May this year, after the two returned from the Cannes Film Festival, where the short film Magda, directed by Ariana and produced by her sister, was selected for the Short Film Corner category.

“When we came back, we wanted to share our experience with oth16

The vocational courses that children take also help develop their social skills, professors say

ers and we immediately thought of children. If you learn the basic elements of this domain as young as possible, if you realize from an early age that you have talent and this is your path, then you have more chances for the future,” says Ema Pendiuc. What qualifies the two sisters in this area? Ariana explains, “My sister has been working in television for several years, and has even produced a children’s show (…). Meanwhile, I have been working quite a lot with casting agencies and children for commercials.”

Other teachers at the Micile Vedete School are all film professionals: directors, image directors and actors, as well as people with a background in television, says Ema. At the moment, 60 children aged between 5 and 11 take film and television classes at the two headquarters that the school has in Bucharest.

Ariana adds that, in the future, schools will be set up in other locations across Romania. In spite of the crisis, parents continue to prioritize developing their children’s talents and building their future, says Ema.

The school also offers classes for parents, aimed to help them understand their children’s needs better, but also to consolidate their relationship.

Courses take the form of weekly film and television workshops done in a simulated television studio.

Memory, stage movement, diction, improvisation, imagination stimulation exercises, professional photos and casting participation are all part of the curriculum, culminating with the making of a short film featuring the children. The next round of courses begins in January, with registration starting in December.

However, if television and film stardom are not quite what you have in mind for your little darling, art is another option. MORA Foundation courses (More Opportunities for Romanian Artists), part of the I Love Bucharest public art program, were begun in 2005, further proof of the foundation’s support for art development and one of the first such suppliers on the market. The teachers are artists involved in the ILB projects, who also hold teaching experience. Classes consist of paint-

ing, shaping and cutting exercises, all part of learning a variety of techniques.

Although the crisis has put the classes beyond the reach of some aspiring families, say the foundation’s officials, there are students who have grown with the courses, and who have brought their siblings and friends along. Adult art lessons are also available, following demand from parents. These ten-session modules are held on weekday evenings, while those for children take the form of five-session modules, organized depending on age, during weekends. No preselection is necessary for the art classes, the only conditions have to do with age, in the case of children, and interest, for adults, say officials. “Developing skills is our mission,” adds Mihaela Miron of the MORA foundation.

Painting, acting and handcrafts seem to go well together, at least in the case of Step in Art, created by Irina Tanase from a EUR 5,000 investment, which should be recouped in the first semester of 2011, she says, demonstrating that such vocational schools are an investment worth consideration nowadays.

Step in Art classes are for children and teenagers aged between 4 and 18. A maximum of seven students can attend a group course in art, aimed at teaching children basic drawing skills which may be developed more intensively. Acting classes are given by young actresses and include games, improvisation, role playing, diction, as well as scenic movement. No preselection is held for these courses and, in the case of talented children, recommendations are made for more qualified institutions, says Tanase. A new center will be opened in Bucharest in the second half of 2011, she adds.

Analia Selis, a well-known singer of Argentinean origins based in Romania, has recently started Sonidos, a center for lifestyle courses, serving both adults and children.

Children’s acting courses and fun dance exercises, physical exercises for adults, as well as specific exercises for pregnant women are all on the center’s menu. Selis says the establishment was created to “help students make music in groups,” but was extended to supply other services, which will be further developed BUSINESS REVIEW / November 8 - 14, 2010

BALANCE

COURTESY OF STEP IN ART

A wide range of activities gives children skills and confidence

in the future.

The team behind Sonidos is formed of young but experienced professionals. Although the center has just opened, it has already received much positive feedback, says Selis. Currently pregnant, she also intends to start a music class for small children, aged between 2 and 4 years old, and their parents, which will also be held in English.

BUSINESS REVIEW / November 8 - 14, 2010

Dance courses could also lure children away from their computers or game consoles. Espansivo, which offers such classes, was started in 2005, with the purpose of not only helping children develop their dance skills but also their personality, artistic side and desire to live more healthily. The center’s courses focus on modern moves, Latin-American dances (the Cha-Cha, Samba,

Merengue, Rumba, Jive and Salsa), as well as social dances (waltz, tango). They aim to “develop children’s rhythm, musicality, movement coordination, posture, attitude and expressiveness,” explains Ionut Matei, general manager at Espansivo. In spite of the crisis, 2010 continues to be a busy year for the dance school, where children’s classes are increasing. What’s more, Matei adds, an awareness campaign has been started in schools and kindergartens in order to teach children the benefits of dancing.

Photography is another means of developing a child’s artistic vision.

Atelierul de croit imagini (the Workshop for Creating Images) is photographer Alisa Tarciniu’s initiative, aimed to help foster “a balanced and rounded development for children”. A workshop consists of five two-hour sessions, with the main results the children’s photographs, which are posted on the site and on occasion displayed in various galleries. Through these classes, “children will learn to regard things differently, to see like a photographer, and to catch those fairytale gleams that are around them and

simply need to be discovered. They will learn to express themselves, know their own states of mind and transmit them… with the aid of photography,” concludes Tarciniu For more of the same in one single location, try Youpi Club, which offers music, theater and film, arts and crafts, photo, art, martial arts, dance, English, cooking and recreational courses. Adela Crisan founded the center after 10 years of experience in private schools, where many parents complained that extracurricular activities took place in separate locations or that they were not delivered in good conditions.

The club’s classes are for all children, from the youngest, who attend with their parents, to teenagers.

Two months after Youpi Club’s launch in 2010, Crisan says that it already had 90 participants, meaning the initial investment will hopefully be made back by the first trimester of 2011. As Crisan puts it, although parents are more reluctant now to spend money on themselves, they are not so thrifty when it comes to their children’s future and development.

17

PROPERTY

EBRD lends EUR 12 million to upgrade Sfantu Gheorghe infrastructure The EBRD is lending EUR 12 million to the city of Sfantu Gheorghe, as part of the bank’s Urban Road Management and Rehabilitation Framework.The loan will address the urgent infrastructure needs of Sfantu Gheorghe, capital of the county of Covasna.

The proceeds will be used to finance the modernization of streets and public lighting improvements in the city center.

Works include the upgrade of 34 kilometers of primary and secondary streets through the replacement of asphalt and pavements, plus the construction of new cycle lanes and pedestrian areas. The project also involves the replacement of existing high-pressure mercury-based lamps with energy-efficient street illumination technology, including installation

of a central lighting management system that will allow automated lighting control and energy monitoring.

This is the EBRD’s first project

developed with special consideration for gender issues in accordance with the bank’s Gender Action Plan. Particular attention has been paid to the

KPMG survey: Property financing for CEE remains unclear

Owner of City Mall Bucharest applies for insolvency

Victoria Holding, the owner of City Mall Bucharest, has applied to enter insolvency proceedings after company shareholders announced they were having difficulties in paying back EUR 40 million of credit taken out from Bank Austria, Mediafax has reported.

Victoria Holdings is the fund through which the Australian investment fund APN European Retail Trust owns City Mall. APN European Retail Trust bought the facility in 2006 for EUR 103.5 million. In the middle of this year, the mall was evaluated at EUR 35.4 million. In H1 2010, APN European Retail Trust reported revenues of EUR 308,000 from renting City Mall Bucharest, ten times less than in the same period of last year.

The financing of Central and Eastern European real estate remains unclear, due to a large reduction in transactions, as well as the variable performance of real estate according to country and asset class, a survey suggests. According to KPMG’s new CEE Property Lending Barometer 2010, banks are not positive about the potential quick recovery of the real estate market in any country. The only possible exceptions are Poland and the Czech Republic, where, comparatively, the markets have not suffered from the recession to the same extent as in other countries.

The survey was conducted among leading banks in the region to assess the prospects for bank financing in the CEE real estate sector.“Before the recession, investors viewed individual countries within CEE more as part of one region,” said Andrea Sartori, partner, and head of real estate, leisure and tourism in CEE at KPMG. “In reaction to the downturn, investors are increasingly looking at each country and its economy individually.

This divergence and a search for quality assets have produced a mixed picture in the region.”

According to Sartori, the more mature markets of Poland and the Czech

Republic have thawed out more than other countries in the region during 2010, as investors focus on better performing economies. Ori Efraim, partner of KPMG in Romania and head of real estate, added that it was “hard to talk about the CEE region as one unit. In the recession, the countries whose real estate sectors have suffered the most are those which saw a lot of speculative investment up until 2008, as was the case in Romania. But Romania has a lot of potential in the long term, and prospects are good for sustained growth in 2011.

This is bound to have a positive effect on the real estate sector as confidence returns.”

Sartori continued, “While debt financing is still problematic for many developers, the liquidation of large numbers of asset portfolios has not taken place. Although the markets and confidence have risen during 2010, the state of the economy in the USA and the Eurozone has led to a debate regarding the likelihood of a double dip recession. Before 2008, we had seen huge increases in supply to cater for high demand. Today, fewer projects are being launched mainly due to the lack of development finance.”

New Yorker adds two new outlets to local network

COURTESY OF NEW YORKER

LAURENTIU OBAE

Tough times: City Mall Bucharest

18

The EBRD funds will modernize the streets and improve the public lighting in Sfantu Gheorghe

needs and priorities of women in the community, especially with regard to the paving of pedestrian areas and the provision of public lighting, which will improve the overall levels of safety and security in Sfantu Gheorghe.

In October the EBRD provided a similar loan to the municipality of Sibiu to finance the city’s street repair program. The bank’s Urban Road Management and Rehabilitation Framework features performancebased road contracting that is intended to improve the quality of road management and maintenance.

Since the beginning of its operations in Romania the EBRD has committed over EUR 4.8 billion to various sectors of the country’s economy, mobilizing additional investment in excess of EUR 8 billion.

German retailer New Yorker has opened two more local stores in the last week

German fashion retailer New Yorker opened two new local stores last week: one in Baia Mare on November 4 and one in Bucharest on November 5.

The latter is located in Unirea Shopping Center, close to the recently opened Bershka shop, which belongs to the Iditex group. It is the fourth New Yorker outlet in Bucharest. Both the Baia Mare and Bucharest locations have around 1,000 sqm. With the new openings New Yorker has 16 outlets locally. Last week the company cut the ribbon on seven new stores, the others being in Zurich, Switzerland; Znoimo, Czech Republic; Zagreb, Croatia; Krsko, Slovenia and Riyadh, Saudi Arabia.

BUSINESS REVIEW / November 8 - 14, 2010

BR EVENTS

Shedding preconceptions brings mutual benefits Putting aside preconceptions and unimpressive statistical data, there is plenty of room for an increase in Russian FDI to Romania, argued company representatives present at the first Russian Business Forum organized by Business Review last week. The reverse is also true, as Romanian companies should try to benefit more from the business opportunities offered by Russian markets.

Simona Bazavan 1

2

3

4

5

6

7

8

9

ALL PHOTOS: LAURENTIU OBAE

20

■ 1. Alina Stancu Birsan, senior associate at PeliFilip ■ 2. Teodor Cimpoesu, managing director of Kaspersky Lab Romania ■ 3. Irina Budrina, Prof. of Cultural Psychology, Russian Business Language and Russian Business Culture ■ 4. Ionut Simion, partner at PwC ■ 5. Marijana Vasilescu, corporate director and head of communication & marketing at RBS Bank Romania ■ 6. Mihai Macsim, general manager of the RomanianRussian Chamber of Commerce and Industry ■ 7. Radu Crahmaliuc, regional director of Softline Group ■ 8. Some 70 professionals came to hear the panel of speakers (9)

Culturally speaking, everything is in place for good business and commercial bilateral relations between Russia and Romania, businesspeople present at the event said.

Nevertheless this has failed to happen so far, in spite of what many company representatives consider to be the huge economic potential for both sides. The Romanian authorities’ reluctance to promote Russia as a potential source and as a destination of FDI has also hampered progress so far.

Traditionally, Russian investments to Romania have mainly targeted local heavy industry and the energy sector, but there is still room for growth. Green may be the latest trend when it comes to energy but until grander plans become feasible, conventional energy sources remain crucial. Romania could benefit from Russian expertise and FDI in this sector, suggested many company representatives. One of the most important local assets for Russian investors remains the country’s strategic position in the region and the fact that it offers easy access to European markets for these companies.

The latest Russian newcomers on the Romanian market also proved that there is interest in new industries such as IT, tourism and agriculture.

The event, which gathered around 70 company representatives, was organized in partnership with PricewaterhouseCoopers, Softline, RBS Royal Bank of Scotland, PeliFilip and with the support of Ramada Plaza Bucharest and casadetraduceri. For more information about future BR events, please visit www.business-review.ro/events/.

BUSINESS REVIEW / November 8 - 14, 2010

RESTAURANT REVIEW

ARCADE REVISITED ION CANTACUZINO 8, TEL 0753 999 333

LAURENTIU OBAE

Arcade games: the House has added a twist to its revised menu

I

make it a policy to walk away from a restaurant after I have written it up, safe in the knowledge that after a few months everything will change, from the chef, to the waiters, to the customers. However, when a chophouse proudly announces that they have a new chef and a new menu, it is worthy of investigating. Let’s face it, with those two factors in the mix it is the same as the opening of a new place.

So, Arcade did precisely that and announced they have a new chef and a new menu. I had to take this point seriously as Arcade have proven in the past that they are willing to import fine Western chefs from either the USA or real Europe (remember, Romania will never be part of Europe). The House gets them to train up the local chefs before they return to civilization, and leave us, the customers ,with the benefit.

So let’s check out how their newest imported chef from Milan has impacted on the House.

He has wisely left the House signature dish of Pork Osso Bucco, which is of course a complete contradiction. Osso Bucco should be a gelatinous slice of beef, which I find to be loathsome and full of fat jelly. But this House laughs in the face of that absurd tradition and produces a fabulous fat free pork version which has been both marinated and slow cooked for more than 24 hours. Die for it!

So as befits an Italian chef, he has moved the menu away from its former mid-European leaning to something more Italian. I was surprised that he did not inject purely Milan dishes, Maybe he thinks that his Romanian public does not appreciate pure regional cuisine. Hey chef, we do. And we know the difference, so keep on changing the menu!

Before we get down to the dining, I must tell you about the House. Over the last nine years, Arcade has become a gastronomic institution in this town. It is best known for its fabulous location and vast summer terrace, but you really

BUSINESS REVIEW / November 8 - 14, 2010

should go there in the winter to enjoy its warm, homely villa ambiance. And on that subject, you will doubtless also enjoy the company of many unexpected friends, because it is also a doyen of society. Not trashy poseurs, but good solid burghers of Dorobanti.

So let’s get down to the grub. My adorable blondie dining companion chose the wine, which was Prince Matei at RON 125. No, House. That was far too expensive for such an average brand.

But I had no complaints about the prices of the food.

Starters, mains and sides were al priced from between RON 12 and 50.

Come on people, read that again. This is a top quality, sophisticated chophouse that can compete with the best alternative restaurants in town which could cost twice the price.

So Blondie chose a pasta (linguini) with seafood. I warmed to our honest waiter who truthfully informed me that the House did not make its own pasta, rather they imported expensive dried pasta. He could have lied, but he didn’t.

Blondie loved it as it was loaded with fresh prawns, calamari and mussels. Easy to make? Yes of course. But it was correctly packed out with garlic and fresh tomato. Bravo House.

At the suggestion of my new friend, (my trusted waiter) I rolled over to a dorada a-la-House. My fish was perfectly and moistly presented in a House style sauce, somewhat reminiscent of Blondie’s pasta sauce. I had no complaints whatsoever. Like all good chefs, he twisted the fish dishes to be either grilled or fried in either butter or olive oil. I also twisted the veggie accompaniments on the menu, by adding and omitting the House suggestions.

Away to desserts and we died in heaven with the best Tiramisu ever together with a fruit cocktail which I cannot name, but I have no doubt that the chef just made it up… and it was fabulous.

Arcade is located a hundred meters from the ludicrous Arcul Du Triump, stolen, designed and named after the equally ludicrous, cowardly, defeated Napoleon who designed the same pompous monument in his own glory in Paris. How fitting it is that Romanians built it here in Bucharest, without realizing it was the quintessential monument to defeatism, failure and corruption.

Michael Barclay mab.media@dnt.ro 21

CITY

Halloween Charity Ball raises over Concert REVIEW: Herbie Hancock in Bucharest – and then… there was jazz!

EUR 500,000 for 1,200 children

Ovidiu Rom’s Halloween Charity Ball, which took place at the People’s Palace on October 30, raised over EUR 500,000 which will be used to help 1,200 children in need. Guest of honor at the event was American actor Nicholas Cage, accompanied by his wife and child, as the star is filming his latest project, Ghost Rider 2, in Romania.

International film festival Dakino brings Goran Bregovic back to Bucharest The twentieth edition of Dakino, the first international film festival organized in Romania, will culminate in a concert held by Goran Bregovic and his orchestra, who last played Romania in May. The show will take place at Sala Palatului on November 26.

The anniversary edition of the festival will bring together the winners of the previous 19 competitions, along with guests, members of the jury, colleagues from other international film festivals and other names from the movie indus-

try. The public will make its contribution by voting for the best picture from those awarded in the last nineteen years, which will win the Dakino 20 trophy.

The festival will take place between 22 and 27 November, at Patria cinema, the Elvira Popescu cinema hall at the French Institute and Noul Cinematograf al Regizorului Roman (the New Cinema of the Romanian Director) at Muzeul Taranului Roman (the Museum of the Romanian Peasant).

Corina Dumitrescu

Save the Children helps fight school abandonment To counter school abandonment, which a 2009 report found has risen in Romania in recent years, Save the Children has launched the national program Centers for Orientation and Resources for Inclusive Education – Complex Educational Services. Cofinanced with European Funds, it aims to help disadvantaged children learn more about the need to go to school.

The project, which was started in August, with a total value of nearly RON 20 million, is not solely aimed at children at risk of dropping out of school or who have already done so, but their parents and teach22

ers as well.

In the three years of implementation, the project should help 7,680 children integrate and achieve equality in the mainstream education system through the Second Chance project, and graduate from junior high school.

It also aims to raise awareness of the issue among 24,000 people.

Some 32 centers will be established across Romania.

This year’s Christmas Trees Festival will, in line with tradition, raise funds to support the Romanian education system.

Corina Dumitrescu

ALEX BARBULESCU

COURTESY OF JOHANNES KRUSE

Cage showed his support at the charity ball

The sums donated by individuals and companies at this year’s ball varied between EUR 50 and EUR 11,000, reports newswire Mediafax. Luxury jewelry and Madonna’s shoes went under the hammer, with both being donated back to Ovidiu Rom by the purchasers, E.on and Carrefour Romania.

Leslie Hawke, president of the Ovidiu Rom Association, underlined the need for such an event, stating, “In a democracy, it is everyone’s responsibility to make sure that all children go to school – not just the government’s or the larger companies’, but civil society’s, as well – and this is who we are.” Nicholas Cage added that the issue of children with an uncertain future is not only Romanian. “It is an international problem, affecting numerous countries. I would like you to think what your beautiful country would look like if these children had the benefit of an education,” said the actor.

Corina Dumitrescu

Hancock, during his dazzling performance

October 29 was a memorable day for Romania, and not solely for jazz lovers. The last 20 years have seen the Romanian concert scene grow, little by little, with more and more artists including the country in their tours, and this day came as proof of the public’s musical evolution and genre diversification.

While other artists have been more reluctant to bring their new projects to Romania and instead focused on established hits, this was not the case with the jazz artist and his amazing band, who brought the freshly released “The Imagine Jazz Project” to an eager audience of 3,000. The title song of the project, John Lennon’s “Imagine,” set the atmosphere for the jazz reinterpretation of other well known hits that have made history in the twentieth century.

Bob Dylan’s “The Times They Are A’Changin’,” in an intricate interpretation with Irish influences, and Sam Cooke’s “A Change is Comin’” came next on the set list, both written in support of the 1960s Civil Rights Movement, Hancock told the audience, like a music teacher would to his thirsty-forknowledge pupils. Peter Gabriel and Kate Bush’s “Don’t Give Up” followed with a just as surprising approach, along with some of Hancock’s best known hits, “Watermelon Man,” “Cantalope Island,” “Chameleon” and “Rock it”.

The musicians that accompanied Hancock were all big names, each more high-profile than the last. Kristina Train’s jazzy voice lived up to the challenge of the various chords, while the second pianist, Greg Phillinganes, also demonstrated his substantial vocal abilities during his duos with Train. Bass player James Genus was the living proof of why his instrument is regarded as one of the most important in jazz, Lionel Loueke took guitar playing to a whole new “out of this world” level (in Hancock’s words), creating sounds that few others could, while drummer Trevor Lawrence Jr. brought the necessary energy without which conventionally unconventional jazz would not exist.

Corina Dumitrescu

Hurts’ long awaited local concert postponed until next year The Hurts have announced on their official site that their Romanian concert, due to take place on November 11, has been postponed. The gig has been rescheduled for 7 April 2011, with the exact location to be determined. Further information about the new performance should be released by the British duo on their website.

According to a Facebook page created by The Silver Church Club, the location that was due to host the band’s concert, tickets purchased for the November 11 gig remain valid for

April. However, ticket holders who would prefer a refund may get one from the store where they bought their tickets, or online by sending an email to contact@eventim.ro or contact@easytickets.ro. Refunds will be made between November 4 and 30.

According to feedback left by fans on various Facebook pages, the number of tickets should be increased for the new gig, since they had sold out almost two weeks before the show was due to take place.

Corina Dumitrescu

AmCham hosts Thanksgiving Day Dinner Party On Sunday, November 21, the American Chamber of Commerce in Romania will be hosting its Thanksgiving Day Dinner Party. The event will take place at the Intercontinental hotel, in the Ronda Ballroom, offering the traditional Thanksgiving Day meal, party atmosphere, music and dancing, as well

as activities for children. Contributions for the event amount to RON 250 per person for members, children up to 12 are guests, while corporate tables for 10 are available for RON 2200. Non-members will pay double. No refunds will be given after November 18.

Corina Dumitrescu BUSINESS REVIEW / November 8 - 14, 2010