business review issue 40, nov 9-15, 2009

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An economic council gathering representatives of the local business community, andstate institutions, could be created to debate legislative initiatives before theirenforcement, says presidential advisor Alexandra Gatej. She was present at the BR’sFrench Business Forum last week, where she addressed topics of interest to thebusiness community

See news on page 5

An economic council gathering representatives of the local business community andstate institutions could be created to debate legislative initiatives before theirenforcement, says presidential advisor Alexandra Gatej. She was present at the BR’sFrench Business Forum last week, where she addressed topics of interest to thebusiness community

See news on page 5

FOCUSSeveral international law firms prefer to

work on Romanian projects without the

hassle of running a local office, and oth-

ers may follow suit

See page 16

TALENTOnly a small number of companies in

Romania are employing people with

disabilities, while in Western Europe

the ratio is higher

See page 18

HALLOWEEN BALLThis year’s Halloween Charity Ball has

raised EUR 357,000 amidst the financial

crisis, says Leslie Hawke, co-founder of

Ovidiu Rom

See page 19

TALKING THE TALKTALKING THE TALK

BANKS SEE POTENTIAL OF ONLINE ADVERTISING CAMPAIGNS; SEE MONEY SECTION ON PAGES 10-11

BUSINESS REVIEWROMANIA’S PREMIERE BUSINESS WEEKLY NOVEMBER 9 - 15, 2009 / VOLUME 14, NUMBER 40

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BUSINESS REVIEW / November 9 - 15, 2009 3

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Str. Alecu Russo 13 - 19, et. 7, ap. 14, Bucharest - Romania E-mails: [email protected]; Phone: +4021 210-7734, Fax: +4021 210-7730 ISSN No. 1453 - 729XPrinted at: MASTER PRINT SUPER OFFSET

Founding EditorBILL AVERY

Editor-in-ChiefSIMONA FODOR

Deputy Editor-in-ChiefCORINA S~CEANU

Senior JournalistsDANA CIURARUANDA DRAGAN OTILIA HARAGA

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ContributorMICHAEL BARCLAY

ResearchSIMONA BAZAVAN

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NOVEMBER 9 - 15, 2009 / VOLUME 14, NUMBER 40

BUSINESS REVIEW

Week in

NUMBERS

Cosmote has reached 6.6 million

customers in Romania, out of

which 1.3 million subscribers

The Romanian central bank

keeps the key interest rate at

8 percent

6.6 million

8 %

The Ministry of Finance has

started selling bonds worth

EUR 400 million

400 million

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Liviu Negoita, the current mayor of the third district of Bucharest, is the new designated prime minister, having been nominated by president Traian Basescu after the first choice, economist LucianCroitoru and his proposed government team failed to get the majority of votes in the Parliament last week.

See news on page 4

Business Review is or-ganizing this week the firstevent in the Legal BusinessSeries. Titled “Investingduring a Downturn,” theevent is a business breakfastthat will focus on providingexperts’ opinion and adviceon investing in a period ofdownturn. Dragos Cabat,managing partner of Finan-cial View and president ofCFA Romania, is one of theconfirmed panelists. He willapproach topics such aswhere to find financing, andhow to start a company dur-ing an economic downturn.Mihai Dudoiu, managingassociate with Tuca Zbarcea&Asociatii, will speakabout project finance and

syndicated lending, whileDan Weiler, executive direc-tor Corporate Finance & In-vestment Banking withBCR, will talk about theRomanian M&A market,and how to take over dis-tressed assets. Other con-firmed panelists include Gi-js Klomp, managing partnerof ING Real Estate; AdrianBorotea, corporate affairsmanager at CEZ; RobertRosu, partner with TucaZbarcea & Asociatii, andTerry Carter, partner Re-structuring Services withErnst & Young Central andSouth East Europe.

For details about regis-tration to the event pleasesee www.brforum.ro. ■

First Legal Series event kicks off this week

BUSINESS REVIEW FORUM

BRIEFSROMANIAN LOTTERY,MOST VALUABLE LOCALBRANDé The Romanian Lottery is themost valuable brand in thecountry, having been put at EUR38 million by the EuropeanInstitute of Brands in Vienna.However, it ranks last amongbrands in 24 European statesmonitored and valued by theInstitute. The total value of the topRomanian brands is EUR 88million. Worldwide, Nokia is themost valuable brand, at EUR 35billion.

ROMTELECOM SEES 7.2PERCENT LOWER INCOME é Romanian telecom companyRomtelecom posted revenues ofEUR 609.4 million in the first ninemonths of the year, 7.2 percentdown from the same period in2008, on lower income from thevoice segment in the third quarter.Its operating profit beforedepreciation and amortization fell2.9 percent between January andSeptember, from EUR 196.3million to EUR 201.9 million. Inthe third quarter, Romtelecom sawrevenues drop to EUR 200.7million, from EUR 214 million inthe same period of 2008. OTEGroup owns 54 percent ofRomtelecom’s shares.

COSMOTE’S REVENUES RISE52.6 PERCENT IN FIRSTNINE MONTHS é Mobile operator CosmoteRomania, part of Greek OTEGroup, posted revenues of EUR310.4 million in the first ninemonths, 52.6 percent up from thesame period of the previous year.Its EBITDA was four-fold higherthan in the first nine months of2008, at EUR 54.9 million. Thecompany’s number of clients rose25.8 percent from last year, to6.6 million. The average incomeper user was EUR 5.1. At the endof October, Cosmote completedthe takeover of Telemobil (Zapp)in Romania. It now has a 23percent market share.

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BUSINESS REVIEW / November 9 - 15, 20094

Romania’s tourism brand will be de-veloped by a consortium made up ofSpanish THR-Asesores en Turismo,Hoteleria y Recreacion and Taylor Nel-son Sofres, which filed the cheapest of-fer in the bid organized by the RomanianMinistry of Tourism. The two compa-nies’ offer was EUR 895,000 withoutVAT, according to the ministry. Romaniawill cover the amount using fundingfrom the European Union. Three biddersmade it to the final stage of the bidding.A consortium made up of Saffron BrandConsultants SA, Brandient Consult andAcacia Avenue Limited placed a EUR1.6 million offer, while TBWA Bucurestiand GFK Romania submitted EUR993,000. The bid was won by the cheap-est offer, according to the regulations.

Corina Saceanu

Rompetrol Rafinare, a company ofthe Rompetrol Group, has announcedthat its nine-month losses were 44 per-cent lower than the level registered be-tween July and September 2008. Amongthe reasons for this results were a 47 per-cent decrease in the international price ofcrude oil and fuels compared to the sameperiod of 2008, the 65 percent fall in therefining margin and higher differencesin the exchange rate due to the deprecia-tion of the national currency.

Rompetrol Rafinare generated con-solidated revenues of USD 2.33 billionin the first nine months of the year andan EBITDA of approximately USD 7.2million while specific markets andmacroeconomic indicators have shrunkdramatically. The refining segment,

through Petromidia refinery and VegaPloiesti, generated revenues of approxi-mately USD 767 million and a negative

EBITDA of USD 18 million in Q3. During the first nine months of the

year, the company invested about USD56 million to continue the programmeant to increase the operational capac-ity of the Petromidia refinery.

Regarding the distribution segment,Rompetrol Downstream, Rom Oil,Rompetrol Logistics and Rompetrol Gasrecorded an operating income (EBIT-DA) of USD 17.1 million in Q3, com-pared to USD 3.1 million in the same pe-riod of 2008. The positive results on thissegment compared to 2008 were sup-ported by the 40 percent expansion ofthe fuel distribution network, optimiza-tion of the operating costs, as well as in-troduction of the new range of fuels.

Dana Ciuraru

Rompetrol Rafinare shows signs of recovery, but continues to post loss

THR-Taylor Nelson Sofres todevise Romania’s tourism brand

President Traian Basescu has desig-nated Gheorghe Liviu Negoita to be thenew prime minister, after recent consul-tations with the political parties. Negoitais a member of the Democrat LiberalParty and is second-time mayor of sectorthree in Bucharest, after winning re-election last year.

Basescu met with the democrat lib-erals, liberals, social democrats and con-servatives, the Hungarian minority par-ty, the minorities’ Parliament group andthe independents’ group in Parliament todebate new PM, after the former primeminister-designate Lucian Croitoru losta vote of confidence in Parliament lastweek.

Basescu’s announcement of the newPM comes after he said during consulta-tions with the political parties that he didnot want to put off the forming of a newgovernment until after the presidentialelections due on November 22. After theconsultations Romanian liberal leaderCrin Antonescu said his party continuedto back Sibiu’s mayor, Klaus Johannis,in the role at least until September 2010and a PDL-PNL government, as recent-ly proposed by Basescu, was out of thequestion.

“Our stance is steadfast – Klaus Jo-hannis for prime minister. From ourpoint of view, the democrat liberals wantto support Johannis, the door isn’t shut.

What is clear and unchanged is our sup-port for Johannis and refusal of a politi-cal government in favor of a governmentof technocrats backed by a majority con-sensus, who would run the ministrieswith authority and receive support fromthe political parties,” said Antonescu.

Besides the National Liberal Party,the Social Democrat Party and the Dem-ocratic Union of Magyars in Romania(UDMR) also announced that they con-tinue to support Johannis.

Negoita will have ten days to form anew cabinet after which he and his teamwill be presented and put to the vote inParliament.

Dana Ciuraru

President designates Liviu Negoita as prime minister after previous choicewas rejected by Parliament

German retail group Metro’s nine-month sales in Eastern Europe have fall-en by 13 percent to EUR 11.2 billion,mainly due to the impact of the volatili-ty of the currency exchange rates in theregion, the group has announced. Ad-justed for currency effects, sales in East-ern Europe from January to Septembergrew by 2.6 percent. “Also, given thestill difficult economic environment, es-pecially for non-food, Q3 showed aweaker development than H1 2009,”wrote Metro’s most recent financial re-port. As for Metro Cash & Carry, whichruns 24 stores in Romania, the decline insales for Eastern Europe, 14.7 percent,was the biggest one posted by the retail-er, as its sales in Germany fell by only3.8 percent, while sales in Western Eu-rope were down by 4.1 percent. Metro

Cash & Carry sold EUR 7.9 billion ofproducts in Eastern Europe during theinterval. The decline in sales for EasternEurope was steeper in the third quarterof the year, which was down 17.2 per-cent on Q3 2008.

Metro’s other brand that is present inRomania, Real, saw a drop of 8.6 per-cent in sales in the first nine months ofthe year, with a further 9.9 decline in thethird quarter of the year alone. These fol-lowed growth rates of 32 percent inEastern Europe in the first nine monthsof 2008 on the same period of the previ-ous year. Metro Cash and Carry runs206 stores in 13 countries in Eastern Eu-rope, out of which 24 are in Romania.The group also operates 21 Real storesin the country.

Corina Saceanu

Metro Group sees sales down in Eastern Europeon lower spending and exchange rate volatility

The fall in price of crude oil affected RompetrolRafinare’s sales, among others

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Ulker, the second largest playeron the market of sweet biscuits inRomania, plans to increase its ex-ports from the Romanian productionunit to compensate for the stagnationof the local market. Since 2007, thecompany’s exports increased from 5percent to 17.2 percent in 2009. Ex-ports go to eight European countriesbut also in Africa. Also, the Roman-

ian branch is working on projects toexport from Romania to new mar-kets such as USA and Saudi Arabia.

“We aim to increase our exportsso that in 2010, exports will repre-sent 22.5 percent of the total of oursales,” says Ender Bolat, generalmanager of Ulker Romania. Ulkerrepresentatives estimate the marketof sweet and salty biscuits is worthEUR 110 million.

Last year, the turnover posted byUlker in Romania amounted to RON31.4 million. In the first 10 monthsof activity of this year, the turnoverof the company amounted to RON30 million. “We believe we will endthe year with at least 9-10 percentincrease, this being also the yearwhen we estimate we will start beingprofitable,” says Bolat.

Ulker opened a production unitin Romania in Popesti Leordeni in2006 following a greenfield invest-ment of USD 23 million.

Otilia Haraga

Ulker counts on exports next year

German company Hafele, a distrib-utor of furniture and metal door fit-tings, has opened a local subsidiary bytaking over Romanian company Min-erva Com after two months of negotia-tions. The local metal fittings distribu-tor has been run by Romanian entre-preneur Ovidiu Toader for the past 12years. According to Hafele representa-tives, the German company will investabout EUR 3 million in stock and liq-uidities in order to strengthen the localsubsidiary’s operations in Romania.“The acquisition value is part of a per-sonal understanding between OvidiuToader and Hafele officials and it isn’tincluded in the EUR 3 million invest-

ments we announced. Hafele took overMinerva Com’s sales force, its know-how, company stocks, car fleet, IT in-frastructure and client database. Hafelehas signed a three-year managementcontract with Ovidiu Toader. He willmanage the German company’s opera-tions in Romania,” Alex Dozsa, mar-keting manager at Hafele Romania,told Business Review. Hafele Romaniawill have four showrooms, inTimisoara, Sibiu and Oradea and amain one in Bucharest. The companyplans to reach a EUR 5 millionturnover next year and to increase itsstaff to 80 workers.

Dana Ciuraru

Hafele puts EUR 3 mln in local subsidiary

Romanian investment fund theProperty Fund has recently sold its17.36 percent share package in pharma-cy chain Centrofarm for EUR 1.58 mil-lion (RON 6.83 million). Fund officialsannounced that the stake had been eval-uated by PricewaterhouseCoopers atabout EUR 1.07 million (RON 4.6 mil-lion) on August 31 this year. Accordingto official data, the gross earnings fromthis transaction were approximatelyEUR 948,840, taking into account theEUR 637,000 historic cost of the stake.

Officials said the fund had sold the

stake as the company was planning toincrease its share capital and, in order tokeep the stake, the fund would havehad to subscribe EUR 535,000 worth ofshares in the operation.

The fund also said the losses postedby the company in the past four yearswere an additional factor. Centrofarm,which owns 60 pharmacies, is indirect-ly held by its board president AlainBonte, through another company Gen-eralcom Bucuresti, with a 74.06 percentstake.

Dana Ciuraru

Property Fund sells Centrofarm stake

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Ender Bolat, GM of Ulker in Romania

The Central Bank (BNR) decidedto keep the key interest rate unchangedat 8 percent. It also decided to maintainthe existing level of minimum reserverequirement ratios for both RON-de-nominated and foreign currency-de-nominated liabilities of credit institu-tions. The BNR board has also set theannual inflation target for 2011 at 3 per-cent, plus or minus a 1 percentage pointvariation, down from 3.5 percent in2010. The target will be discussed withthe government.

The macroeconomic indicators re-

veal a consolidation of disinflation witha certain lag, a persistent economiccontraction and a significant ongoingadjustment of the external deficit, alongwith a worsening of foreign investors’perceptions of the Romanian economyamid heightened tensions in the domes-tic political field. In the monetary areait is worth noting the reduction in annu-al terms of credit to the private sector,especially of the RON-denominatedcomponent, as well as the fast annualdynamics of government credit.

The monetary policy continued tobe prudent, after the successive previ-ous adjustments of the monetary policyrate and the firm management of liquid-ity have tried to ensure adequate mone-tary conditions, according to BNR.

However, in the short run, inflation-ary pressures, which are due to an an-ticipated upward adjustment of exciseduties from January 1, 2010, as well asthe spread between interbank rates andthe monetary policy rate are to be ex-pected. Under these circumstances,keeping the inflation rate close to themedium-term targets and anchoring in-flation expectations require a prudentmonetary policy.

Anda Dragan

Central Bank keeps key interest rate at 8 percent

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BNR did not change the key interest rate

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The cost for organizing the referen-dum for a unicameral parliament willreach EUR 1.42 million (RON 6.107million), according to government esti-mations. The referendum to downsizeParliament, which is being held alongwith presidential elections on November22, debates the shrinking of Parliamentby making it a unicameral legislativebody and reducing the number of MPsto a maximum of 300.

President Basescu, who is up for re-election, has been widely criticized forcalling a referendum to downsize Parlia-ment on Election Day, a move that hasbeen interpreted by his political rivals asa scheme to get the electorate to go to the

polls and vote for him.The head of statedenied the charge, saying, “In the EU –and I suppose nobody suspects the EUstates of a lack of democracy – there are15 states that have a unicameral Parlia-ment and another 12 with a bicameralParliament. Therefore, both of them aredemocratic solutions.”

The Central Electoral Bureau (CEB)has ruled that voters who go to the pollson November 22, either for the presiden-tial elections or for the referendum, willbe able to vote in each case, but will notbe allowed to return to the polling stationat a later time to cast their vote on theother issue.

Dana Ciuraru

Cost of referendum for unicameral parliamentreaches EUR 1.4 million

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Romanian president Traian Basescu

The Romanian authorities shouldhave focussed on cutting costs long be-fore the recession period, while nowthey should carry on investments in in-frastructure, said Alexandra Gatej, thecurrent presidential advisor on domesticand foreign businesses, at the FrenchBusiness Forum organized by BusinessReview last week. She has found a chal-lenge in working for the administration,but says she will return to business soon-er or later. “For me it was natural to gofrom business to administration. I waseducated in the Anglo-Saxon businesstradition, where it is natural to movefrom business to public administrationand then back to business. It is interest-ing for me to understand how the admin-istration works,” Gatej tells BusinessReview.

Her main task is to ensure direct andauthentic contact with the local businesscommunity, and while doing so, she haspicked up several ideas which could im-prove the way companies do business inRomania. The most valuable one so far

was that of setting up an economic coun-cil, which should be a sounding boardfor legislative initiatives with impact onthe business community in Romaniaeven before those pieces of legislationare enforced, Gatej says. “This boardshould identify the priority economicsectors which can become growth coresfor the country, such as agriculture, ITand energy, for example, identify poli-cies, resources and come up with astrategic plan.” The council, the idea ofwhich emerged at the beginning of Oc-tober, should be made up of representa-tives of the business community in Ro-mania, representatives of the administra-tion and specialists in the economy.“The president has approved this ideaand we will work on finalizing the proj-ect. It will offer real consultancy andprovide strategic priorities,” Gatej adds.Even if the ruling parties change, theproject will become reality, she believes.Another idea is that of a one stop shopwhich would offer companies informa-tion about setting up a business in Ro-mania, as well as all the necessary infor-mation to attract European funds. Pub-lic-private project legislation is next onthe agenda, as it needs urgent and com-mitted implementation, says Gatej.Third in line come public acquisitions,which have already improved but whichstill need improvement to become moretransparent, as the business communityrequires. Alexandra Gatej took up herpresidential advisor role after havingworked for Unilever as head of the com-pany’s South East European operations.

Corina Saceanu

Gatej: Planned economic council wouldprovide real-time consultancy for businesses

The international financial insti-tutions who pledged financial aid toRomania to help the country getthrough the financial crisis have de-layed the third tranche of the EUR20 billion support package.

“Staff teams from the IMF, theEuropean Union and the WorldBank have been assessing perform-ance and prospects under the EUR20 billion multinational supportpackage for Romania. The thirdtranche for support, of about EUR1.5 billion, is contingent upon thesatisfactory completion of this re-view,” Jeffrey Franks, the IMF’schief of mission in Romania, saidrecently, after discussions with localauthorities.

According to him, despite goodprogress, in the current political en-vironment crucial components ofthe policy package cannot be imple-mented.

“Most importantly, the interimgovernment cannot legally submitthe 2010 budget to Parliament, nor can it undertake the actionsneeded to trim the 2010 deficit to5.9 percent of the gross domesticproduct deficit target,” addedFranks.

IMF officials said that discus-sions would continue in the comingweeks and another mission wouldreturn to Bucharest as soon as a newgovernment was in place.

Dana Ciuraru

International financialinstitutions delaythird loan tranche

What are your areas of activity inRomania, growth potential and expec-tations?

We now have a network of almost100 branches well distributed through-out the country. The current year wasmainly dedicated to business consoli-dation. Intesa Sanpaolo Bank hasstrong growth potential both in the re-tail and corporate segments. On the re-tail side we will continue to offer inno-vative products that we have alreadytested with good results in other coun-tries of the SEE and CEE regions. Forcorporates we will continue to consoli-date the group’s experience and know-how.

How important is Romania to Inte-sa Sanpaolo?

Romania is an interesting countryfor Intesa Sanpaolo, one of the mostpromising of the region. For this reasonwe decided to invest in the country andlaunched a branch development planthat more than doubled our physicalpresence in Romania.

What is Intesa Sanpaolo Group’sstrategy for Central and Eastern Europeand for Romania?

The international subsidiary banksdivision is responsible for activities inforeign markets where the group is op-erational through commercial bankingsubsidiaries and associates. Through itslocal subsidiary banks, the Intesa San-paolo Group ranks top in Serbia, sec-ond in Albania, Croatia and Slovakia,third in Hungary, fifth in Bosnia andHerzegovina and Egypt and sixth inSlovenia. Retail banking is the top pri-ority for Intesa Sanpaolo abroad, as weaim to be one of the leading banks inevery country where we are present.

Anda Dragan

3Q

head of businessdevelopment for thesubsidiary banks division ofthe Intesa Sanpaolo Group.

Adriana Saitta

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Presidential advisor Alexandra Gatej

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Bank of Cyprus Group posted anafter tax profit of EUR 8 million inthe first nine months in Romania,according to a financial report re-leased by the company. It also regis-tered EUR 585 million of loans andEUR 113 million of deposits in thecountry.

The group’s net interest marginin other countries (excludingCyprus and Greece) was 3.35 per-cent for the first nine months of

2009 and includes the net interestmargin for its new markets – Russia,Romania and Ukraine – which was4.57 percent.

The group currently operatesthrough a total of 588 branches, ofwhich 221 are in Russia, 164 inGreece, 143 in Cyprus, 34 inUkraine, 10 in Australia, 11 in Ro-mania, four in the United Kingdomand one in the Channel Islands.

Anda Dragan

Bank of Cyprus Group posts profits in Romania

Granini, the juice brand ownedby URBB, posted an increase of 62percent in its sales volume in Roma-nia in the first eight months on thesame period of 2008.

This evolution was reflectedboth on the still drinks segment andon the juice and nectar one, with thebrand ranked third by volume ofsales in Europe, after Germany andSpain. Shachar Shaine, president ofURBB & Carlsrom Beverage, saidthat he expected Granini to postover EUR 15 million in total sales

this year, and that the companycould have doubled Granini’s salesin Romania if it had not been for thecrisis. The company started to ex-port the Granini brand to Bulgaria atthe beginning of this year, and in-tends to extend exports to Turkeyand Republic of Moldova in the fu-ture. The firm said that it intended todouble its export volume of Graniniin the next three years and to enterthe mineral water market, probablynext year.

Anda Dragan

Granini grows by 62 percent during crisis

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Anda Dragan

How do you see the currentM&A market in Romania?

The Romanian mergers and ac-quisitions market is in an adjust-ment period, towards a balance be-tween stand-alone valuations andsellers’ expectations, which shouldmake deals possible. Moderateearn-outs and escrows will probablybe used more in the future, helpingto bridge a valuation gap.

Are there still acquisition targetsin Romania?

There are many interesting com-panies in Romania, which can beseen as potential acquisition targets.I’m especially talking about compa-nies in the EUR 20-50 million rev-enue range.

What are the reasons behind adecision to sell in a crisis situation?

The main reason for a “sell” de-cision from a certain companynowadays is a lack of financing forthe current activity of that companyand an inability to restructure itscurrent debts. Unfortunately, manyRomanian companies have fi-nanced, in the past, their long-term

growth with short-term debt. Anoth-er reason to sell a certain companyis the collapse of the real estate mar-ket.

What are potential buyers in Ro-mania looking for?

In the mid- and long-term Ro-mania remains an interesting mar-ket. Strategic acquirers are lookingfor a good fit, lower labor costs andlong-term growth. Private equityfirms are looking for a five-year sto-ry, with a happy ending at exit. Bothare desperately looking for good,talented local management. As amatter of fact, the lack thereof canbe a deal breaker.

What is the BCR’s strategy forits corporate finance and investmentbanking division?

BCR now has a very strong cor-porate finance & investment bank-ing department following severalyears of change. We would like tobecome trusted advisors to BCR’sclients and non-clients regardingtheir mergers and acquisitionsneeds. We are striving to establish aclose partnership with decision-makers, long before such an eventtakes place.

Romanian M&A market‘still has growth potential’

DAN WEILER, executive director of

the corporate finance & investment

banking division at BCR, told

Business Review about the make-up

of the local mergers and

acquisitions market, and outlined

the division’s future strategy. He is

speaking at the Business Review

event “Investing during a downturn”

this week.

C A L E N D A R / W H O ’ S N E W S


WHO’S NEWSGIUSEPPE PARMA is the new country man-

ager for Romania ofIndesit. Parma joinedthe firm in 1996, inItaly, as an employeeof the sales depart-ment. In 1999 he be-

gan his international career, holdingpositions such as mid-europe manager,country manager for Poland, regionaldirector for Central Europe, countrymanager for Spain and country manag-er for the Baltic countries.

ADRIANA ION has been appointed newbusiness manager byElevate Media. Shewill be directly in-volved in increasingthe company’s clientportfolio. She was pre-

viously account manager at BrandsTalk, sales & events manager atOmega Print, and account manager atVendor di Vision, among others. Iongraduated from law school and also

holds a master’s degree in marketingand business negotiations.

FELIX DANILIUC is the new deputy generalmanager of RaiffeisenLeasing IFN SA. With18 years of bankingexperience, Daniliuchas worked on trade fi-nance, custody, cash

management, retail banking, networkbranch management and direct sales.Daniliuc holds two bachelor’s degreesin Economic Sciences and Engineer-ing.

OANA GUIU is the new sales manager ofElevate Media. Overthe last ten years Guiuhas amassed experi-ence in sales, havingworked for companiessuch as International

Business Promotion and Elga Expo.She holds a bachelor’s degree inPhilology.

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

EVENTS, BUSINESS AND POLITICAL AGENDANOVEMBER 10é Business Review organizes the ‘Investing During a Downturn’ event in

partnership with Tuca Zbarcea & Asociatii and Ernst & Young at the In-terContinental Hotel. By invitation only. For more information seewww.brforum.ro.

NOVEMBER 10é TotalSoft organizes a press conference to mark its 15th anniversary at

Hotel Radisson SAS. By invitation only.

NOVEMBER 10é ARBOsocial and hi5.com organize a press conference at J.W. Marriott.

By invitation only.

NOVEMBER 10é Good.Bee Credit IFN SA organizes event for its official launch at

Clubul Taranului. By invitation only.

NOVEMBER 12é IBM Romania organizes the conference ‘IBM Information Day’ at Ho-

tel Radisson SAS. By invitation only.

NOVEMBER 17é The medical center HIFU Terramed Conformal organizes a press con-

ference to mark its official opening. By invitation only.

S T R A T E G Y


Ten malls are fighting for Bucharest

shoppers’ time, attention and, most

important of all, money. In this

battle they are making changes to

the mix of brands, partnering

retailers to offer unique promotions,

and rolling out marketing campaigns

boasting concerts and all sorts of

events which might attract the

crowds.

Shopping malls are organizing events and giving out prizes to keep the flow of customers

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Corina Saceanu

“The mall has survived everythreat. Occupancy might be weaker,sales might be down, but in the endshopping malls are the mainstays ofthe community. Who doesn’t like togo to the mall?” Paul Osborne, CEOof US real estate investor Cohen &Steers, says of the future of shop-ping malls. His opinion, althoughmainly pertaining to the US, seemsto be backed up by what theBucharest market has seen recently.No more than a week ago, amidst aperiod of financial difficulties, therecently opened AFI PalaceCotroceni shopping mall saw380,000 visitors in its first four daysfrom opening.

True, not all visitors buy some-thing, but attracting people to theirshopping centers seems to be one ofthe main focuses of mall ownersthese days, since the competition onthe Bucharest shopping scene hasincreased.

The opening of a new shoppingcenter, provided that it brings newor sought after brands to a more eas-ily reachable location, impacts othershopping centers in the vicinity, aswell as others throughout the city.So the situation is not rosy foreverybody.

Among the ways an existing

shopping center can survive compe-tition and falling sales is to adapt itsmarketing campaigns, and some ofthe existing ones on the Bucharestmarket have done so. Equest BalkanProperty, the owner of VitantisShopping Center, has put aside EUR500,000 for its marketing activitiesnext year, Vlad Dragoescu, managerof Equest, tells Business Review.For the last three months of thisyear, the firm has been running apromotional campaign with prizestotaling EUR 628,000, many ofwhich take the form of vouchers forstores in the shopping center. Part-nerships between shopping centerowners and retailers are frequentlyused during periods of low con-sumption.

Vitantis, located south east ofBucharest, draws on a pool of700,000 people living within a 30-minute radius of the shopping cen-ter.

The aim of the marketing cam-paign is to boost traffic in the centerby 35 percent to11,000 people a day

during the week and 16,000 each onSaturday and Sunday. The ownersalso expect an increase of 30 per-cent in the average spend for retail-ers. Organizing events allows Vitan-tis to up visitor numbers over theweekend, from 12,000 people a day,to around 16,000.

Developer Anchor Grup mustsee that its two shopping centers inBucharest, Bucuresti Mall and PlazaRomania, celebrating ten and fiveyears on the market respectively, dowell in the face of new competitionand amid declining retail sales.“Our strategy has always been aboutincreasing our customers’ loyalty.[…] Events are an important part ofour strategy,” Radu Tanasescu, chiefoperating officer of Anchor Grup,tells BR. Traffic in a shopping cen-ter is not only connected to market-ing campaigns, but also to the qual-ity of the brand itself, he goes on.“In our case, customers return notonly because of events and specialpromotions, but because both mallshave a good mix of brands, adapted

each year to the demand of the mar-ket,” Tanasescu says.

After opening a new Zara storein Bucuresti Mall earlier this yearand a Gap unit in Plaza Romania,Anchor is planning five new arrivalsin November at Plaza Romania:Jack and Jones, Sasch, Vero Moda,Sam 013 and Ruby Tuesday. Thedeveloper hopes to boost traffic by10 percent through each campaign,but “traffic increases even more dueto the environment, brands andservices,” Tanasescu concludes. An-chor Grup has a series of eventsplanned for this month, after havingorganized several others in Octoberas well.

Shopping malls have started tohost other types of events apart fromconcerts. For example, Liberty Cen-ter, which was opened in spring thisyear, will be hosting an all-night ad-vertising event called Noaptea De-voratorilor de Publicitate in Novem-ber and December.

For AFI Palace Cotroceni, theevents side is even more of a part ofthe business, as the shopping mallhas created a special space dedicat-ed to promotions and events, calledSmart Market Advertise, which cov-ers 750 sqm within the mall.

Baneasa Shopping City too isorganizing events and special pro-motions to keep its customers com-ing. One example also involves apartnership with a retailer, whichhas stores elsewhere in the city too.Mango, a brand in the portfolio ofSolmar group, offered a 20 percentdiscount and the gift of an eveningshopping spree in its store inBaneasa.

[email protected]

Newcomers to the ball step up race for shoppers’ cash

é AFI Palace Cotroceni

é Baneasa Shopping City

é Bucuresti Mall

é City Mall

é Grand Arena

é Iris Shopping Center

é Liberty Center

é Militari Shopping Center

é Plaza Romania

é Vitantis Shopping Center

Bucharestshopping centers

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With a growing number of users

from month to month, the internet is

becoming a priority in the marketing

mix of many lenders. Being more

customizable and offering specific

targeting, online advertising is also

competitive thanks to its price.

Several local lenders have recently started online advertising campaigns

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Yahoo! Messenger. Twitter.Facebook. Hi5. Dot ro. Dot com.The list goes on… But this is not anIT article. It is about the online en-vironment, as a promotional chan-nel likely to play a greater signifi-cance in the years to come. The evi-dence that supports this is that com-panies are paying more attention toit when they are budgeting market-ing spend to promote their productsand services.

But some remain cautious. Ac-cording to the Media Factbook2009, a survey conducted by Initia-tive Media Romania, “It seems thatonline is still a ‘hot potato’ that fewdare to play seriously with, espe-cially when money is scarce and TVis becoming more accessible.”However, as many companies inRomania have focused on budgetadjustment, media performance andcost deflation both in the secondhalf of 2008 and in 2009, online hasbecame a viable choice as a promo-tional channel.

The Romanian media marketgrew in net value by only 12 percentin 2008, posting the smallest in-crease since 2003, according to theMedia Factbook. The fastest growthbelonged to the internet (70 per-cent), giving it a market share of 3percent of all net media volume.

The total internet and cinema netad-spend by medium was aboutEUR 16 million last year, says thesame study.

The researchers also found that51 percent of the online budgetswere invested in banners last year,giving them the smallest growth ofall online formats.

This was a clear sign of anemerging mature market. The majorcategories that used online advertis-ing in 2008 were finance, telecom-munications and automotive, withfinance remaining in the leading po-sition from 2007. These top threecategories maintained last year al-most the same share of spend as in2007, with finance the only one in-vesting less in the second semesterof 2008.

In such a context, lenders havealso started to pay more attention tothe online environment.

For example, Citibank recentlychose to launch new online plat-forms and campaigns as part of its

future online strategy developedwith Kubis Interactive. Plus, all thenational campaigns of ING BankRomania had an online element,with the internet being a constantcommunication channel. This yearING used social networks such asFacebook, Twitter and Hi5 as com-munication channels for the firsttime. It also opened up an online di-alogue with Hotnews readers, help-ing them to better understand itsbanking products and services.Moreover, the campaign for INGCard Cont’ROL that took place thisyear used different online media,with Yahoo! being one of them. “Wenoticed that the users of these web-sites have been opened to ING’smessages. Increased sales of online-promoted products were a result ofthe response,” said Mona Tufeanu,senior PR officer at ING Bank Ro-mania.

GarantiBank is another lenderthat has included online in its mar-keting mix.

The campaign called We are Fi-nancing Every Opportunity (Finan-tam orice oportunitate), Garan-tiBank 24 debit card, and the cam-paign that promoted the interestrates for Garanti’s banking deposits,at the beginning of this year, alsohave an online component in theirstructure.

The lender launched its “three-month grace period” (“3 luni perioa-da de gratie”) at the end of Septem-ber, a campaign that is still inprogress.

Last but not least, BCR is sup-porting the Money School (“Scoalade bani”), a financial educationalprogram, launched in an integratedcommunication campaign that in-cluded both traditional and onlinePR activities, innovative media for-mats and interactive communica-tion.

The project started with thelaunch of an online manifesto calledHow to Become Bankrupt in TenSteps, that outlined both real andexaggerated attitudes that result inpoor cash management.

WHY LENDERS ARE GOINGONLINE

This is a question that has arisenfor many of us lately. One possibleanswer could be that lenders haveseen the massive potential of the on-line sphere.

“It is a natural approach to usenew communication channels withthe customers. Social networks arefeaturing more and more in our on-line existence. Social networking ismore important than reading orsending emails for many of us,” saidCristian Manafu, senior consultantat Prodigy.

He added that young people nolonger pay attention to traditionalmedia, which means that traditionaladvertising won’t have the expectedresults in many cases. Indeed, INGtargeted through its online cam-paigns for Card Cont’ROL highlyeducated urbanites aged 20-35.

“In such a context, many compa-nies are starting to take a serious ap-proach to the potential of social me-dia, and that is happening in Roma-nia, too,” said Manafu.

In his opinion, lenders’ approachto online relates to the acceptance of

Banks click on online ads

M O N E Y


new media in their marketing mixrather than being a consequence ofthe current crisis.

“As the banking system grows,its presence in social media and theimportance of online and mobile so-lutions in products and servicesportfolios will become more thannecessary,” he added.

However, Shuja Shaikh, manag-ing partner at Kubis Interactive,thinks that the current shift oflenders towards online is a result ofboth the current crisis and their in-creased interest in using a promo-tional channel with high potential inthe future.

“The internet as a new mediumfor marketing is relatively inexpen-sive compared to mainstream me-dia. It reaches a much wider marketand it's also easier to target specificmarkets. Besides, advertisers areable to analyze marketing strategiesand quantify ROI (return on invest-ment) for any given campaign,” saidShaikh.

In his opinion, the crisis hasforced advertisers to look for alter-native marketing channels that aremore effective and cheaper to im-plement at the same time.

As for the banks, Tufeanu saidthat for ING, the internet has be-come a constant communication andsales channel.

“The budgets dedicated to on-line doubled in 2009 on last year butwe are still at the beginning, still do-ing tests. We have many things tolearn about communication, PR,selling and promoting over the in-ternet,” said Tufeanu. She addedthat the main benefits of ING’s Con-t’ROL online campaign were the in-teraction with an important targetand amassing new customers. ForGarantiBank too, the online envi-ronment is a key element in its mar-keting strategy.

“We believe that it is necessaryfor our marketing campaigns be-cause any kind of audience is on theinternet. We just need to identify theway we can reach it,” said AndreeaCatuneanu, PR and advertisingmanager at GarantiBank Interna-tional NV.

Are online campaigns effectivefor banks? Do they match lenders’specific profile? According to spe-cialists, the answer is yes. “Bankshave been trying for a long time tochange their inflexible image and to

become more customer-friendly.Even traditional advertising sug-gests the same,” said Manafu. “Atthe end, the content, combined withthe form and the relevance of themessage to the online audience arethe important factors. The internet issimply a transmission channel,” headded.

“More than this, while creativityis important in attracting consumersonline, you have to consider thatthey get online in the first place tofind information. So, an efficientonline marketing campaign is onethat focuses on targeting and pro-viding information to those seekingthat type of information,” saidShaikh.

THE FUTURE IS PROMISINGAccording to Initiative’s estima-

tion, net ad spend on cinema and theinternet will drop by 19 percent thisyear, to EUR 13 million on average.But compared to the evolution ofother media, the internet is likely tocome out well, with an increasedshare of spend from 3 to 4 percent in2009. New media is the new fashionin many developed economies, butit is still a very young and experi-

mental part of digital media in Ro-mania. Nevertheless, there is a seg-ment of advertisers that use mobilemarketing as an established tactic intheir plans, such as automotive, FM-CG and finance firms.

As for the direction of lenders’online budgets, there will be a mod-erate increase, say specialists.Banks have had a good presence inthe traditional online environmentthrough banners posted on websites.“This increase could come bothfrom a natural evolution of the ad-vertising market and from the inten-tion to promote products and servic-es related to the internet on the in-ternet,” said Manafu.

“Next year our online presencewill increase for sure. We intend tobenefit from newly occurring op-portunities, according to our busi-ness objectives,” added Catuneanuof GarantiBank. She said that thebank had earmarked bigger onlinebudgets from one campaign to an-other.

“The current online budget is about 20 percent of the total mar-keting one and this percentage could certainly increase,” addedCatuneanu. ■

P O W E R


Running out of money anddependent on cash infusions frominternational financial institutions,Romania now finds itself unable toafford important projects such as itsinvestment in nuclear units 3 and 4at Cernavoda. As a possible solution,the state is flirting with the idea ofreducing its stake in the projectcompany to the benefit of otherpartners involved in the project.Also, a veil of doubt has been castover Romania’s capacity to financeits share of the Nabucco pipelineproject, as next year themanagement company will sit at thenegotiation table with internationalfinancial institution to get the moneyfor the development. For Romania,this will mean new guarantees andactual money for investments in theproject.

Romanian authorities are planning several projects in the energy field but financing is tight

Dana Ciuraru

In November last year, the economyminister at that time, Varujan Vosganian,sat at the same table as high-ranking of-ficials from six international companiesand signed a memorandum of under-standing regarding the investment in nu-clear units 3 and 4 from Cernavoda – agiant project not only size-wise, but alsoin terms of cost. By the time the agree-ment was inked, the investment cost hadhiked from EUR 2.2 billion to EUR 4billion, because of constant increases inthe prices of raw materials and the lownumber of specialized firms for theseprojects, said officials at RWE, a partnerin the project.

According to the agreement, thestate’s stake in the project company wasset at 51 percent, meaning it would havehad to come up with a bit more thanEUR 2 billion. “The government willput in about EUR 2 billion. Some of the

money will come from Nuclearelectricafunds, and some from the money madefrom state privatizations. We estimatethat the project will be completed in sixyears,” Vosganian told Business Reviewin November last year.

A year later, the state finds itself pen-niless and unable to manage such a stakein a gigantic project like nuclear units 3and 4. The state secretary with the Econ-omy Ministry, Tudor Serban, told BRthat Nuclearelectrica would not be ableto afford this ongoing investment andthat other investors might receive a larg-er stake.

“We cannot afford important proj-ects such as nuclear units 3 and 4, be-cause Romania has a problem regardingfinancing. We cannot rely only on thesupport of the state, because any moneywe give can be seen by Brussels as stateaid, including financing for this project,”said Serban. He added: “Currently, thestate can provide guarantees, when acompany wants to take out a loan fromthe bank. Our intention is to lobby Brus-sels for Romania to be able to directly al-locate money from the state budget tothe giant energy projects.”

Even if Romania does not in the endhold a majority stake in this project, thecosts will be significant as the countryfinds itself in the position of having toborrow from banks with operations onthe local market, because loans from in-ternational financial institution are being

used to patch up the budget expensesblack whole. Financial analysts say thecost of borrowing from banks is higherbecause they have limited exposure onthe local market and can impose harshconditions, taking into account as wellthe state’s weak negotiating positionduring this period. Nuclearelectrica GMPompiliu Budulan announced that threelenders have expressed their intention tofinance the project. “On the list of thebanks interested in investing in nuclearunits 3 and 4 are French group BRD-Groupe Societe Generale and its localsubsidiary, Royal Bank of Scotland, andExport Development Corporation(EDC), a development bank from Cana-da,” said Budulan.

The information was confirmed byBRD’s corporate client manager, Rib-iana Crasan, who said, “BRD-GroupeSociete Generale is interested in financ-ing this project.” The bank lent Nuclear-electrica EUR 430 million in the past forthe construction of the second nuclearunit at Cernavoda.

NABUCCO’S FINANCIAL EXPEC-TATIONS FROM ROMANIA

Another important project of whichRomania is a part through its state-owned company Transgaz is the trans-national gas pipeline, the Nabucco proj-ect. As the project advances, financialexpectations arise from this side as wellfor Romania. The project is evaluated at

approximately EUR 8 billion and Roma-nia’s stake is 16.67 percent.

“Every shareholder in the projectwill also contribute financially to it ac-cording to their stake. We expect that, asin the case of other project finance trans-actions as well, each shareholder willhave to provide certain guarantees, theextent and quality of which shall be dis-cussed with the financing banks in duecourse,” Christian Dolezal, spokesper-son for Nabucco, told Business Review.

Such guarantees are expected no lat-er than next year, when the project com-pany announced will initiate negotia-tions with the European InvestmentBank, the European Bank for Recon-struction and Development and Interna-tional Financial Corporation – the WorldBank’s financial arm – for the necessaryfinancing.

The pressure on this project is hugeas Europe is desperately trying to find al-ternative ways to ensure its gas supplyand to escape its reliance on Russia. Justrecently, officials of the Russian state-owned gas producer Gazprom an-nounced their intention to increase theprice of the gas delivered to Europeancountries by USD 30. In such an instablepolitical climate it is hard to see the lightat the end of the tunnel for such an im-portant energy project, at least as far asRomania is concerned.

[email protected]

Energy projects look shaky as well of cash runs dry

é State-owned energy company Nu-clearelectrica currently holds the ma-jority stake, 51 percent, in Ener-goNuclear, the project company forthe construction of nuclear units 3and 4 from Cernavoda along withCEZ, GdF-Suez, Enel and RWEPower (each holding 9.15 percent),while ArcelorMittal and Iberdrolaeach have a 6.2 percent stake in thisproject. The two new nuclear unitsshould become fully operational in2017. The total investment is esti-mated at approximately EUR 4 bil-lion and each unit will have an in-stalled capacity of 720 MW.

é Romania’s involvement in theNabucco pipeline project is throughthe state-owned gas transporterTransgaz. The project involves a newgas pipeline connecting the Caspianregion, Middle East and Egypt viaTurkey, Bulgaria, Romania, Hungaryand Austria with the Central andWestern European gas markets. TheNabucco project is intended to diver-sify the gas supply to Europe.

Romania’s stake in nuclearproject and Nabucco pipeline

L I N K S


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F IIRUCOtilia Haraga

At the beginning of the year, you es-timated a EUR 15 million turnover for2009. Now you have lowered the figureto EUR 10 million. Why?

In the first six months of the year,nothing happened. The market was to-tally frozen. In the public sector no fundswere invested, and in the private sectorcompanies reduced costs and did notpurchase anything new. The projectsstarted coming only in August. At themoment, in the public sector, there is animpressive number of public bids. Most,though not all, will be completed. If wewere to add up all the projects in thissector, their sum surpasses EUR 140million, which Romania has never hadin IT, not even at the best of times, not tomention during the current crisis period.

We are already involved in certainpublic bids, I cannot say which, but weare probably going to win some. The lasthalf of the year is rather effervescent.Around EUR 4 million, approximately40 percent of our EUR 10 millionturnover, will come from the public sec-tor. So we recalculated our turnover giv-en that in the first six months, there wasnothing new. But there are already signsthat we may surpass the EUR 10 millionthreshold, though not by much. We arewithin the EUR 10-11 million margin.

IIRUC Service boosted its turnoverby 84 percent in H1, 2009, due to de-

mand for outsourcing services. How doyou explain this?

IIRUC Services posted in H1, 2009,a turnover of EUR 4.5 million. Half ofthe business is represented by fiscal cashregisters and the commerce side, wherewe have around 20,000 small customers– we call it the retail side. We also havea corporate business line, which is incharge of large IT projects, whichIIRUC has been developing over thepast two years. It is in this area that wehave posted this year a significant in-crease compared to last year. This is be-cause we are on a rather specializedniche. We offer all support services forthe client’s infrastructure. For example,we go to a bank agency, an insuranceand fiscal agency, such as ANAF, whichis one of our main clients, and we pro-vide all of the IT support.

We mainly address large clients.While on the retail side, it is importanthow many customers you have, here it isenough to have just several clients, ifthey are large, important ones. In the re-tail area – commerce and fiscal cash reg-isters – we probably have around a 25-30 percent market share. In the IT area,we are at the beginning. As this year wewill have a turnover of around EUR 5million on the IT sector (with the marketof IT services being EUR 300 million),it is easy to see our market share is nottoo substantial yet.

Name some of your clients on the ITservices side…

Apart from Raiffeisen Bank, towhich we provide support for more than500 branches, we also have as a clientWiener Insurance Group, and haveworked for Asirom and Omniasig. Wealso are a subcontractor of IBM, whichhas the contract, but based on a partner-ship, IIRUC is in charge of support ac-tivities for fiscal agencies. Still throughthis partnership, we have activities onIBM technology in Ukraine as well. Last but not least, we are in charge of the infrastructure for the productionunit of PepsiAmericas Romania inDragomiresti Vale, Ilfov county (ed.note: the project will be finished by De-cember). The contract with Pepsi has avalue of up to USD 500,000.

What projects do you have outsidethe country?

At this point, we have customersonly in Ukraine, where we offer consul-tancy, software development and prod-uct implementation, in a long-term proj-ect that exceeds half a million EUR thisyear alone. Next year, it may amount toanother half a million EUR.

We are in discussions over develop-ing a working point in Bulgaria as well.There we do not have yet a specificclient. We are thinking about opening asimilar business line to the one in Ro-

IIRUC plans to enter the European training marketmania (client management field servicesupport), to cater for clients in Bulgariaor clients with HQs in Romania and ac-tivities in Bulgaria.

You have previously said you hadsome acquisitions in sight. Did thoseplans materialize?

Indeed, there have been some initia-tives and we are keeping our eyes open.But this year, we have focused on inte-grating the acquisitions made last yearby Raiffeisen Informatik, namely twolarge companies, PC-Ware and Com-parex. After Raiffeisen Informatik andPC-Ware were joined, the turnover ofRaiffeisen Informatik doubled and sur-passed EUR 1 billion. This year, it willprobably be EUR 1.2 billion, which isroughly the size of the entire IT marketin Romania, all in all, not only the sizeof the client management services mar-ket (which is probably around EUR 300million). So we have focused on inte-grating these companies, including theirservices, in our range.

How many employees do you havethroughout the company’s 60 workingpoints?

In September, we had 344 employ-ees. The number varies between 330and 350. We are not making lay-offs perse, but re-organizing our activity, adapt-ing ourselves depending on the marketneeds. I don’t think more than 10 per-cent of our personnel needed re-trainingto be assigned to other positions. Wewill probably exceed 350 people, butthis depends on the evolution of themarket and what new contracts we ob-tain.

IIRUC has applied for Europeanfunds. What was the value of the projectand its aims?

We have applied for funds of ap-proximately EUR 1 million. We hopethat at the beginning of next year, wewill have some feedback on this issue.We want to develop collateral activitiesto the IT activity, namely to enter themarket of European trainers. We want tobecome a center of competence on theRomanian market in IT, not just a sup-plier. Our training budget will exceedEUR 100,000 next year if the contractswe have in mind materialize. If we ob-tain the funds from the European Union,we will use them for regular training,but also to form certified trainers, so thatwe can become an ECDL center. At themoment, we have a training center inBrasov.

IIRUC Service, part of Austrian ITgroup Raiffeisen Informatik, will,according to estimations, end 2009with a turnover of EUR 10 million,having lowered its initialexpectations because there were noprojects in the first half of the year.CALIN RANGU, CEO of IIRUCService, says that across the bordersthe company has projects in Ukraineand is considering entering Bulgaria.IIRUC has applied for EU funds ofEUR 1 million, as it plans onentering the market of Europeantrainers.


P R O P E R T Y

The real estate market is witness-ing a slow reawakening after theglobal economic downturn, as invest-ment activity is picking up across theregion, according to Colliers. Most oftoday’s buyers looking at the marketare either high-net-worth individualsor private equity funds. The latter re-quire specific minimum return targetsfor their shareholders, which are verydifficult without leverage. These re-turn targets are forcing buyers tostand firm in terms of price.

“It will be very interesting to see,as a number of transactions get closerto this stage of the sales process,whether banks do in fact use the saleas an opportunity to recall the loan.This will, in many cases, stop salesfrom going ahead and increase pres-sure on vendors who may be thenforced to consider a lower price asbuyers have to purchase with all equi-ty,” said Blake Horsley, manager ofthe investment and office divisions atColliers International in Romania. Soit’s possible that banks may considertransferring the loan for a property ona case by case basis if the buyer isseen as being at lower risk of default-ing than the seller, as we have seen inneighboring countries, Horsleyadded.

On the other hand, some investorsare seriously questioning whether themarket will see the number of dis-tressed assets in Romania previously

thought. Their reasoning behind thisis that banks will not want to write offfurther bad debts from their books asa second recapitalization would beunlikely. “I would think a balancewill be struck from the banks. We arestarting to see some distress but cer-tainly not the levels predicted lastyear. As you look around Bucharest,most quality projects have good long-term financing to carry them throughthe crisis period,” says Horsley.

There have been very few majortransactions on the investment mar-ket in Romania over the last 18months, due to lack of pressure onboth buyers and sellers. However themarket is starting to see the price gapslowly closing in favor of buyers,says Colliers. Core funds, which havelow risk return targets and can paylower prices in a safe market, are stillnot back in Romania and won’t returnuntil at least H2, 2010.

“Nevertheless, we may soon see anew phenomenon of forced buyers assome private equity funds mustchoose whether to use their equity inthe next 18 months or face giving itback to shareholders, thus missingout on potential income and bonus-es,” said Colliers. But if vendors wantto sell, they need to forget about2007’s prices, as the market is nowback at between 2003 and 2005 lev-els, concluded Horsley.

Corina Saceanu

Atlantis Residence developernegotiates sale of block of flats

Blake Horsley, head of the investment and office division with Colliers International in Romania, saysbanks might consider transferring the loan for a property on a case by case basis

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Investment slowly picks up, banksbecome major decision factor

Real estate developer PelicanCom, which has recently finished theAtlantis Residence project, is current-ly negotiating the sale of one of theblocks of flats to a foreign investor,while discussing the hosting of a med-ical clinic in the project’s office space,the company has announced. Pelican

The latest addition to the stock ofBucharest shopping centers, AFIPalace Cotroceni, saw 380,000 visi-tors in the first four days from its softopening. The highest traffic was regis-tered on Sunday, when 103,000 peo-ple went to visit the mall. The first daybrought 82,500 visitors to the facility,according to the developer Africa-Is-rael.

By comparison, the opening of

Baneasa Shopping City in April 2008attracted 120,000 people in the firstthree days from opening, an averageof 40,000 shoppers a day.

AFI Palace Cotroceni covers76,000 sqm of GLA, with the entireinvestment to reach EUR 300 million.The second stage of the project willinclude four office buildings and a ho-tel.

Corina Saceanu

The shopping mall covers 76,000 sqm of gross lettable area

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Record numbers flock to AFIPalace Cotroceni opening

The developer sold 57 of the existing 100 flats

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Com has sold 57 of the existing 100apartments in Atlantis Residence, andsays 25 of them have already been oc-cupied by the new owners.

The developer is selling apart-ments using its own lending system,with a EUR 50,000 down paymentplus VAT and the difference in phasesrepaid over three years at five percentinterest, but is accepting market loanstoo. The average cost of an apartmentis EUR 150,000 plus VAT, says thedeveloper, adding that it can be nego-tiated depending on the paymentmethod and purchase of a parkingspace.

Pelican Com has put EUR 18 mil-lion into Atlantis Residence. The proj-ect is located in east Bucharest. Thedeveloper is planning to build anotherblock of flats on an already acquiredland plot, an investment that will startin 2010.

Corina Saceanu


P R O P E R T Y

Cathedral Plaza gets new go-aheadafter check of construction permits

Developer Willbrook and in-vestor Millennium Building Inter-national have received the go-aheadfrom the State Construction Inspec-torate to continue constructionworks on the Cathedral Plaza officebuilding in downtown Bucharest,

Carpatcement Holding wit-nessed a 16 percent drop in its nine-month sales in Romania comparedto the same period of last year, andby the end of the year the companyexpects to see a drop in sales of 20percent year on year, according toits most recent financial report.

Cement sales on the Romanian

market account for 4.3 percent ofthe company’s total sales. Carpatce-ment Holding is the local subsidiaryof Heidelberg Cement.

“The reduction in deliveries ofcement and clinker has sloweddown further during the last fewmonths, but in most countries, theoverall sales volumes fell noticeablybelow those of the previous year.The slowdown was particularly no-ticeable in some Eastern Europeancountries, such as Poland, Romaniaand Bosnia,” writes the company'sreport.

HeidelbergCement owns threecement factories in Romania, in Bi-caz, Fieni and Deva. The groupposted an EUR 8.4 billion turnoverworldwide in the first nine monthsof the year, down 22 percent on thesame period of 2008. The volume ofits sales dropped by 14 percent.

Staff

Carpatcement sees nine-month sales drop 16 percent

The company owns three local cement factories

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The project was started three years ago

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Atlas Estates sells Slovakian portfolioto finance investments elsewhere

Real estate investor Atlas Es-tates has sold its properties in Slova-kia for EUR 8 million and plans touse some of the money to fund itsremaining developments, with a fo-cus on Poland. The firm is also ac-tive in Romania, where it owns aGolden Tulip hotel and two piecesof land, one in Voluntari and theother near Obor Square. The latterwas chosen to host the Solaris proj-ect.

“The combined impact of ceas-ing to consolidate its share of debtin the Slovakia JV and the receipt ofthe cash consideration will reducethe group’s overall debt by someEUR 20.5 million pending any rein-vestment of the cash proceeds,”

wrote the investor in its most recentreport.

The assets held by the Slovakiajoint venture are located in thecountry’s capital, Bratislava, and itssecond largest city, Kosice.

The investment in Bratislavacomprises 879,000 sqm of land onthe outskirts of the city, known asNove Vajnory. The investments inthe center of Kosice consist of twosites making up a total 10,000 sqmof land.

The company is also active inHungary and Bulgaria. In Romania,the Golden Tulip Hotel, an 82-room,three-star property located in centralBucharest, was built in 2005.

Corina Saceanu

three years after the beginning ofworks. The development was thesubject of a legal wrangle betweenthe developer and the Roman-Catholic archbishopry. The compa-ny won the legal fight, having re-ceived a final favorable decisionfrom the Court of Appeal Ploiesti inJune this year. After this, the arch-bishopry contested the constructionpermits for the building, but the de-veloper says they were issued for 36months, out of which only 18 haveelapsed.

In February, the Court of Justicein Dambovita called a halt to con-struction works at the project. Theoffice building, which will be madeup of 18 levels above ground andfive underground floors, is beingbuilt near the Romanian-Catholicarchbishopry in Bucharest, on aland plot of 1,822 sqm. When com-pleted, it will deliver a total builtarea of almost 26,000 sqm.

Corina Saceanu

F O C U S


Several international law firms areworking on Romanian projectswithout the hassle of running anoffice in the country. Two MagicCircle firms are advising Romanianclients this way, sometimes inpartnership with local firms,depending on the project. Openingan office in Romania is not a priorityfor such firms: one big nameLinklaters has already closed itslocal operations. Pundits say thatsimilarly, other firms might considerpulling out of the local market andstarting to work remotely.

A local team and the expenses of an office in Bucharest are not mandatory for a law firm doingbusiness in Romania

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While the largest law firms in Ro-mania are local ones, the foreign pres-ence has been stepped up a gear in thelast couple of years. Several newcomershave joined the scene recently, such asDLA Piper, White & Case and Allen &Overy. There are still large internationallaw firms out there which haven’topened local offices, but most of themhave been involved in projects involvingRomanian companies. Some are in factvery active in the country even without alocal office.

Baker & McKenzie says it advisesclients from the Romanian market on arange of transactions in conjunction withlocal firms. “Baker & McKenzie is cur-rently active in Romania on private eq-uity transactions. For example, we haveassisted Advent, Labormed, the add-onacquisition of Oxygen, Dufa and to alesser degree GED and Global Finance,”Marcello Distaso, partner with Baker &McKenzie’s Amsterdam office, tellsBusiness Review. “We are also activelyrepresenting RED Management andtheir fund Romanian Real Estate Part-ners, in which Warburg Pincus and GEDare the key investors. We representRREP on its investments and divest-ments in Romania,” he goes on.

The firm is also active in the struc-

turing and formation of private equity,real estate and hedge funds focusing onRomania, among other areas, such as theEmerging Europe Accession Fund, a fol-low-up fund of its client Balkan Acces-sion Fund and Romanian Equity Part-ners, which is in the course of being fi-nalized.

“Everything is relatively slow thesedays but longer term we view the privateequity market, both deals and fund for-mation, the real estate market and thecombination of the SEE and Turkishmarket as attractive. We are active pri-marily in the design of tax-effective in-vestment structuring and fund structur-ing with a geographical focus on Roma-nia as well as the Balkans,” Marc vanCampen, partner with Baker & McKen-zie’s Amsterdam office, tells BR. So far,the firm hasn’t received any formal affil-iation proposals from local firms, but itoften works with them on its projects.

Setting up an office locally doesn’tseem to be necessary in order to ensurea stable work flow from the country.“Personally, I doubt that any internation-al firms will be seeking necessarily toopen up offices in Romania anytimesoon. A new office usually means heavystart-up costs and discussions regardingpartnership,” says Victor Constantines-cu, partner with local law firm BirisGoran. “What I’ve seen from talking tointernational firms with whom we workis that it is much easier for these firms tosimply work with local firms of their

choosing depending on the strength oftheir practice areas, without the hassle ofthe logistics of an office,” he goes on.

Linklaters, which withdrew from themarket earlier this year to the surprise ofmany, could be followed by others. “Iwould not be surprised if other bignames follow suit over the next year orso, as lower profit margins for law firmsmeans that the Romanian offices maybecome liabilities for New York andLondon head offices used to big profits,”Constantinescu says.

Magic Circle firm Freshfields hasbeen working in Romania without an of-fice here for many years now. SebastianLawson, senior associate with the firm,was actually based in Romania for sixyears, but has now gone back to the Lon-don offices, despite continuing to super-vise projects in the country. The firm’smost recent projects involving Roman-ian companies were the takeover ofZapp by Cosmote, with the law firmhaving advised Cosmote in the deal.Even more recently, Freshfields advised

CVC in the takeover of A-B InBev,which has operations in Romania.

“The market conditions are very dif-ficult now, but our activity here has in-creased with M&A deals. We are alsoactive in the banking sector, with syndi-cated loan projects,” Sebastian Lawsonof Freshfields told Business Review.The firm is focusing on private equityand infrastructure projects, and will fo-cus on the capital market “when it re-opens for business, which we hope tohappen sometime next year,” says Law-son.

Public infrastructure and energyprojects are attracting foreign law firms,which tend to create consortia with locallaw firms when tendering for publicprojects. For example, the bid to becomelegal counsel for EnergoNuclear’s Cer-navoda reactors 3 and 4 attracted namessuch as British firm Simons & Simons,which partnered local outfit NNDKP,while UK company Pinsent Masonsteamed up with local Pop Pepa. AnotherUK firm, Ashurst, teamed up with Grig-orescu & Asociatii. Elsewhere, MagicCircle firm Slaughter & May was re-cently chosen as legal advisor, in part-nership with local Bulboaca & Asociatii,for the planned Eurobond issue in Ro-mania, which is estimated to be worthbetween EUR 500 million and EUR 1.5billion, and the two law firms will be ad-vising the state. Slaughter & May haspreviously worked on other Romanianprojects. It advised GE on the purchaseof the Romanian-American EnterpriseFund’s majority shareholding in threenon-banking financial institutions basedin Romania, Domenia Credit SA, Lease-mart Holdings BV and Ralfi SA, for ap-proximately EUR 100 million.

[email protected]

International law firms start to think remotely

é Allen & Overy (in association withRTPR)

é Clifford Chance (Badea CliffordChance)

é CMS Cameron McKennaé DLA Piperé Garriguesé Gide Loyrette Nouelé Kinstellaré Norr Stiefenhofer Lutzé Salansé Schoenherré White & Caseé Wolf Theiss

International law firmswith local presence

é Baker & McKenzieé Freshfieldsé Herbert Smithé Lovellsé Norton Roseé Slaughter & May

International law firmswithout local offices

E N T R E P R E N E U R


With an initial investment of EUR

150,000 in Onyx Spa in 2007,

DENISA STANCIU, general manager

of the salon, intends to increase both

the company’s brand awareness and

its market share in the future.

Denisa Stanciu, general manager of Onyx Spa, has invested EUR 150,000 in this business

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Many Romanian start-ups cameabout when an entrepreneur spottedan available niche. And it is wellknown that businesspeople oftenchoose what type of business to startbased on aspects of their personallife.

The entrepreneurs whose visionled them to choose an industry withhigh potential are now reaping thefruits of their decision. Denisa Stan-ciu, general manager of Onyx Spa,decided to start her own business inthe local beauty industry in 2007.She invested EUR 150,000 in acompany that targeted a very com-petitive and crowded market. Nowshe is counting on its competitiveadvantages and expects to growboth the number of customers andthe market share in the months tocome.

“The idea to set up my companycame after extensive research ofspas and beauty salons in order tohelp me to shape my lines. I didn’tfind any salon that combined threemain aspects: highly qualified spe-cialists, the personal comfort of pri-vacy and decent prices,” remembersStanciu.

With a background in econom-ics, she faced no difficulties both inthinking up the first steps of her en-terprise and drawing up a detailedand in-depth business plan. “I hadhad some experience in the insur-ance industry and when I noticedthat no offer on the market matchedmy personal objectives regarding

my appearance, I decided to start abusiness from scratch,” Stanciusays.

The availability of financial re-sources has been one of the mostimportant elements in running theOnyx Spa project.

But the beauty industry is nocake walk, being one of the mostdifficult fields to set up in businessas an entrepreneur.

The powerful competition is oneof the reasons, with Bucharest hav-ing hundreds of spa salons at themoment.

“I think it is one of the fieldswhere the competition can’t bemeasured,” says Stanciu.

The entrepreneur believes thathigh-performing equipment, topquality and certificated products fordifferent treatments are some of theelements that make the differencebetween the players active on thismarket.

But the team of specialists thatcreates customized package servic-es for each client is one of the most

important elements in succeeding,according to Stanciu. In her opinion,Onyx Spa distinguishes itself fromthe market through some competi-tive advantages:

“All our special equipment isup-to-date one and I work withkinetoterapists (a type of comple-mentary therapist) and nutritioniststhat monitor each customer’s weightloss and maintenance program,”says Stanciu.

She adds that it is impossible forher to estimate the company’s cur-rent market share due to the increas-ing number of players active on themarket.

One thing is for sure: theproviders of spa services have feltthe current crisis.

“I believe that next year will bea better one for this industry, withchanges in customer demand,” saysStanciu.

Any entrepreneur that decides toset up a business knows all too wellthat she will face both challengesand difficulties. According to Stan-

ciu, building brand awareness forher company was one of the biggest.“You need to build a customer port-folio, to please your customers andto make your working results visi-ble,” she adds.

“When you are interacting withpeople and your services are direct-ly linked with every customer’s‘business card’ it is crucial to suc-ceed,” says Stanciu.

Her business motto is always tosucceed and to touch as many peo-ple as possible with her beauty serv-ices.

The young entrepreneur says shehas no regrets about the decisionsshe has needed to make since begin-ning her business. Moreover, shesees opportunity rather than a toughtime in the current crisis.

“Many people see the crisis as adowntime for businesses, with highlevels of unemployment. But I cansay that I have seen a different ap-proach from other players. I havechanged neither the team nor theservices, only the prices.”

She adds that she has recentlytried to pay more attention to thepromotion of her business, with theintention of boosting it over themonths to come. “I am really con-vinced that advertising will distin-guish the survivor spas and salonsfrom the others.”

If Stanciu started another busi-ness, she would probably changenothing, except the manner in whichshe promoted the salon. As for thefuture, she intends to make OnyxSpa into a brand on the crowded Ro-manian beauty market.

“My objective is to increase the number of our subscribers and to educate people that body and facial treatments need to be part ofour life,” concluded the business-woman.

Making a pretty penny from the beauty business

é 2008 turnover: EUR 100,000

é 2009 estimated turnover:

EUR 115,000

é Number of employees: 8

é Initial investment: EUR150, 000

é Total estimated investment:

EUR 220,000

Onyx Spa

T A L E N T


An alarmingly small number of

disabled people have a job in

Romania. This is partly because the

system is not interested in their

wellbeing, partly because the private

sector is not open to offering them

equal chances and because they

seldom apply for positions. In Romania, just one out of 10 disabled, but fit-for-work adults actually have a job

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“In the midst of the economic crisis,when most companies are seeking com-petitiveness, it is hard to associate thistarget with the word ‘handicap’. Thetwo terms, competition and handicap,are not a match made in heaven,” saysStephane Meuret, general manager ofHR Specialists, a recruitment companyin which 30 percent of the workforceare disabled people.

In Romania, just 1 out of 10 dis-abled but fit-for-work adults actuallyhave a job. “This is due to cultural fac-tors that are still related to mentalitiesfrom the old communist regime, as Ro-mania is still in the midst of the processof socially coming of age,” says Meuret.He explains that people with disabilitiesare seen as “listed” and keep a low pro-file “precisely because the social systemis deficient and does not engage thesepeople in its mechanisms.” In Europe,by contrast, the number of disabled peo-ple in employment varies between 20percent in Poland, to over 50 percent incountries like Germany, Austria andBelgium, Gabi Mihaela Comanescu,program coordinator at the MotivationFoundation tells BR.

Statistics from the Ministry of La-bor indicate that on June 30, 2009,27,222 people with disabilities had a jobin Romania. The National DevelopmentPlan for 2007-2013 shows that just 0.1

percent of the total number of employ-ees are people with disabilities.

It is not just a local problem. MostEastern European countries do not ac-knowledge the status of disabled peo-ple, perhaps because of their historicalpast or economic difficulties. In theWest, it is a totally different kettle offish. There, the disabled enjoy the bene-fit of all types of facilities: workplaces,special parking spaces and restaurantsare all equipped to allow the disabled tointegrate. “In Romania, a disabled per-son has the status of being assisted, be-ing looked after only by family andfriends. The system does not reallycare,” says Meuret. Consequently, nordoes the private sector offer properwork conditions for them, “becausethey do not have the culture of suchneeds.” Not having employees with acertain form of handicap in that compa-ny, it is assumed that special parkingspaces or access platforms are not nec-essary either, he explains.

But although commentators agreethat the system is wanting, it does im-pose some obligations. Lawnr.448/2006 stipulates that companieswith at least 50 employees must hirepeople with disabilities, who shouldrepresent 4 percent of their total work-force. Those who do not comply musteither pay a monthly tax to the statebudget or acquire products and servicesfrom certified protected units. If, on the

other hand, they decide to employ dis-abled people, they can benefit from cer-tain facilities. First, the deduction of thesums necessary for adapting the work-place and acquiring the equipment usedin the production process by their dis-abled employees. Second, the deductionof expenses for the transportation ofthese employees from home to theworkplace and back. Also in this cate-gory, deduction of expenses for thetransportation of the raw matter and fi-nite products to and from the dwellingof any employees who work at home.Third, the deduction of expenses fortraining, professional orientation andemployment of the physically chal-lenged.

While the business environmentproclaims itself open to such practices,there is a large gap between theory andpractice. “Most of the time the jobs of-fered by companies require a level of ed-ucation and abilities that many disabledpeople do not have, for various reasonswhich have to do with their disabilitiesand the restraints in their access to edu-cation due to their condition,” says Co-manescu.

Another possible explanation is thattheir capability to perform certain tasksmay be limited, depending on the type ofdisability they have. The MotivationFoundation has so far managed to placepeople with disabilities in two types ofpositions: jobs in multinational compa-

nies, such as call center workers, assis-tants and billing operators and low-qual-ified, low-paid jobs such as packagingoperator, goods handler. But disabledpeople could be capable of far more thanthis, says Comanescu. For instance, peo-ple with learning disabilities can placeflyers in envelopes, pack things, clean,do the laundry or work in a kitchen. Peo-ple with sight deficiencies can be callcenter operators or work with clients.People with hearing-speech disabilitiescan be cashiers in a supermarket. Thewheelchair-bound can do any job suitedto their abilities and education, either athome or in a building with wheelchairaccess.

Recruitment companies are failingto identify the opportunity to place dis-abled people in positions and thereforemissing out on potential revenue. How-ever, it is also true that disabled people’sdemand for jobs is not substantial. Andthis is the position of some large re-cruiters such as Carrefour, for instance.The French retailer currently has morethan 8,700 employees in Romania, ofwhom only 20 have disabilities. “Thedemand for employment on this seg-ment is not as high as we would like,”Ana Dumitru, HR manager, tells BR.

Carrefour is now developing a pilotprogram which addresses people withspeech and/or hearing impediments,while employing cashiers with disabili-ties. “Together with the MotivationFoundation, we have managed to em-ploy six people at Carrefour Unirii. Thisinitiative is well received both by thecompany’s employees and customers,”says Dumitru.

MOL Romania is another employersaying it does not have demand fromdisabled people. The company has ap-proximately 180 staff members, none ofwhom have disabilities. “We do not haveemployees with disabilities, but we arecontributing to a special fund for them.So far, we have not had any applicationsfor employment from disabled people,”reported the company’s HR department.

Multinationals whose mother com-panies give them an organizationalstructure which promotes diversity areone of the main job sources for peoplewith disabilities. SMEs, however, rarelyconsider employing people with disabil-ities. “Employers of this kind do nothave the necessary resources and/oropenness to make the effort and adjusttheir workplace and the requirements ofthe job to fit the restraints that peoplewith disabilities are faced with,” saysComanescu. ■

Who speaks for disabled jobseekers?

H A L L O W E E N C H A R I T Y B A L L


Bucharest’s Halloween Ball is overfor another year, but it nearly didnot take place at all in 2009. LESLIEHAWKE, co-founder of the non-governmental organization OvidiuRom, tells Business Review why. Shealso gives some backstage info aboutwhy it is strenuous work to organizea charity event, sometimes with adisheartening outcome. Last but notleast, she discloses the proceedsfollowing this edition amounted toEUR 357,000. Leslie Hawke, co-founder of Ovidiu Rom non-governmental organization

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Suffice to say that the HalloweenBall is already considered a tradition andone of the landmarks in the landscape ofcharity events in Bucharest. But LeslieHawke says she was not certain OvidiuRom would organize any ball this year.“In part it was concern about the busi-ness recession, and feeling that it mightbe inappropriate to ‘fiddle while Romeburns’.” But it was also because organiz-ing it is “very draining,” she says, addingthat the combination between givingpeople a great time, placing the focus onthe work of the organization and notspending any money while doing it is “atough combination to pull off year afteryear.”

Usually, the organization of the nextedition of the event starts right on theMonday after the event, though at a slowpace. The team meets and discusseswhat worked and what needs to be im-proved. The process of booking thespace for next Halloween also starts im-mediately. “All year we are thinkingabout the ‘theme’ and seeking corporatesponsors. But we only get truly obses-sive about it at the beginning of Septem-ber each year. For eight weeks we work10 hour days/seven days a week. Andthen everybody collapses,” Hawke says.

The most difficult thing is to book acelebrity or a well-known public figure.“We got really lucky in getting US Am-bassador Mark Gitenstein’s agreementto speak at this year’s ball. I didn’t know

for sure that Ethan [Hawke’s son, theHollywood actor] would be able to workit into his schedule until the middle ofSeptember,” says Hawke.

One of the most time-consuming ac-tivities is to obtain sponsors and organ-ize all the details. “You would think thatafter five years, it would be easy – but itnever is because there are so many as-pects that you don’t have complete con-trol over. My big worry this year wasthat Ethan might not arrive on time. Hehad to take two flights and only landedat 3 pm,” she says.

Which brings the story to the subjectof booking a celebrity, which is alwaysthe hardest task. Ovidiu Rom has alwaysleaned on the glamour of celebrities todraw attention to its work. The first ball,in 2005, featured actor Ethan Hawke,Leslie Hawke’s son. In 2006, actressVanessa Redgrave was the key figure ofthe event, while the following year Ro-manian director Cristian Mungiu, whohad just won a big trophy in Cannes,spoke about the benefits of putting poorchildren through school.

Additionally, various celebritiessuch as Uma Thurman, Gwyneth Pal-trow and Demi Moore have donated var-ious personal items to be auctioned forthe NGO’s programs. This year, pop di-va Madonna donated a pair of ChristianDior shoes with her autograph on them.

The organization of the ball alwayscosts around EUR 30,000. This year,Ovidiu Rom raised a total of EUR357,000. “We don’t know the exact net

income yet, but it will probably be aboutEUR 325,000,” says Hawke.”Last year,we raised EUR 410,000 and netted EUR372,000, so we are down about 16 per-cent.” Already a decrease in the fundsthat companies allocate to such projectshas been noticeable this year, due to theimpact of the recession.

“I find it curious that only 111 peo-ple, out of 620 guests, made any dona-tion. If you deduct the 30 people whopaid for individual tickets, that’s 590guests who did not actually pay to attend(being invited by a company or given acomplimentary ticket). So only 19 per-cent of the guests actually made a dona-tion to help a child go to school. That makes me feel like it was kind of afailure. I would like to feel that every-body would have cared to makesome donation, however small,” she ex-plains.

Another disappointment is in theway the media often places the focus noton what is at stake, but only reports howmuch money the auction items went forand what celebrities were there. Shementions Ambassador Gitenstein’s com-ment that, “Romania will not be able torealize its revolution and build the foun-dation for a strong, vibrant economywith one fifth of your future workers un-able to function in the 21st-centuryworkplace.” “But the media just wantedto take pictures of Ethan. That frustratesme. I enjoy the glitzy aspects too, but Iwish the media would pay a little moreattention to the substance,” she says.

The Halloween Ball – a tough combination to pull off every yearUltimately, since the proceeds are

lower, the foundation will be able to helpfewer children and families, because thisis the only area where savings can bemade. “We have never had a big staff,we pay no rent, our cars and petrol aredonated – so our overheads were prettylean to begin with. The only place wecan cut is in direct services to childrenand families,” she explains.

Ovidiu Rom works with a team of20 members, some full-time, some part-time. It also has three full-time and sev-eral part-time people involved in publicawareness, fundraising and administra-tion.

The NGO applied for Europeanfunds but was disappointed to hear itsapplication was rejected. The bureau-cratic hitch the project stumbled uponwas that it intended to incorporate a con-trol group into a three-year project tobetter evaluate the impact of variousmethods of increasing student atten-dance. Ironically, the grounds on whichthe project was rejected, that “it was dis-criminatory and didn’t give everyoneequal treatment,” is exactly the oppositeof the conviction Ovidiu Rom wasfounded upon: an equal chance at educa-tion for all children, no matter what theirrace or social and financial background.“So now we are not helping any of thosechildren. Nor are we gaining any evi-dence and insight into which measureswork best to keep at-risk children inschool. Their reaction was very discour-aging, to say the least. And we had towait nine months to learn we didn’tmake the first cut,” says Hawke.

For now, Hawke is hoping morecompanies will adopt a school for EUR10,000 or sponsor a summer school forEUR 5,000. It remains to be seen howmuch of this hope comes true.

é 60 companies supported OvidiuRom programs

é more than 3,000 guests have attend-ed the five editions of the ball

é 90 percent of the proceeds went intothe programs

é 10 percent of proceeds went into or-ganization

é over 500 poor children were enteredand remained in schools

é over 300 poor families receivedhelp

é over 400 teachers received moderneducational training

é over 40 schools benefitted from theprograms

Halloween Ball in figures

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


No vie en rose in Romania anymore, but investors await government measures

■ 1. Henri Paul, the French ambassador to Romania ■ 2.The six panelists at the French Business Forum discussed about the

measures the Romanian government should take to support foreign investors ■ 3. Dan Bedros, president of the French Cham-

ber of Commerce and Industry in Romania (CCIFER) ■ 4. Alexandra Gatej, presidential advisor on domestic and foreign busi-

ness affairs ■ 5. Cristian Ionescu, managing director of Coface Romania ■ 6. The event gathered an audience of 50 business

people ■ 7. Jean - Pierre Vigroux, managing partner of Mazars Romania and moderator of the event ■ 8. Dana Gruia- Dufaut,

head of DGD law firm ■ 9. L to R: Dan Bedros of CCIFER and Fede Carapuig of Graells & Llonch ■ 10. L to R: Jean - Marc Pup-

pi, head of the economic service with the French Embassy in Romania and Michel Oldenburg, commercial counselor

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French companies in Romania havebrought competitiveness to the country,and the expertise built up by these play-ers is far more valuable than the profitthey have made, said Alexandra Gatej,adviser in the presidential administra-tion, who attended the French BusinessForum last week.

The first institutions to react to therecession in Romania were companies,and not the government. Those compa-nies which managed to cut costs evenbefore the recession hit are in a betterposition now. The government shouldhave taken similar measures in advance,said Gatej. Structural cost-cutting meas-ures were needed last year and even theyear before, she added.

Henri Paul, the French ambassadorto Romania, said that investments in in-frastructure were the focus in Franceand that Romania should do somethingsimilar. “The relaunch of the economywas brought about by investments, notby consumption,” said Paul. Moreover,Romania should do much more to boostthe auto sector, which could turn thecountry in a core area for the industry.

But it is important to see how thecountry will position itself while focus-ing on a single industry, said CristianIonescu, managing director of CofaceRomania. He added that Romania wasunlikely to emerge from recessionthrough the measures the country took,but would need external support.

The main four candidates in thepresidential elections coming up laterthis month have each made proposals offiscal and anti-crisis measures, includ-ing keeping the flat tax and possibly in-creasing VAT, as opposed to a progres-sive tax and differentiated VAT on prod-ucts and services, commented DanaGruia Dufaut, lawyer at law firm GruiaDufaut.

Dan Bedros, president of the Frenchchamber of commerce and industry inRomania, also emphasized the impor-tance of infrastructure, saying the statecould find multiple solutions, includingconcessioning its highways.

Some of the economic increase inRomania was fueled by the introductionof the flat tax, which has also decreasedthe black market, said Gatej. But thereare still large companies, making profitson the market, that pay their employeescash in hand, said Jean-Pierre Vigroux,managing partner of Mazars Romaniaand moderator of the event. This makestax collection more difficult and de-creases the level of taxes collected bythe government, leaving less money forstate investments. “Let’s pay our dues!Let’s accept a slight drop in profit in thepresent so that the country wins on thelong term,” concluded Vigroux.

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Hot on the heels of Tales fromthe Golden Age Part 1 comes thiscompanion piece to CristianMungiu’s enjoyable comedy. Aquick recap in case you missed it(and if you did you’d be well ad-vised to remedy that, because themovie is still showing in cinemaslocally): it is a portmanteau filmmade up of four vignettes based onurban myths, each lampooning thepomposity/foolishness/Orwelliannature of the Communist regime ofthe 1980s to hilarious effect.Whether you lived through the period or not, the first film cannotfail to elicit belly laughs galore with its ridiculous party panjan-drums, believably ludicrous scenarios and skewering of human foibles.

Part two is a somewhat differentkettle of fish. It has stuck to theportmanteau format, this time com-prising three slightly longer stories.Stylistically it is the same, with thepared down, unembellished longshots and grimly realistic settingscommon to Romanian new wave, aswell as a couple of the clique of ac-tors who seem to crop up in everylocally made movie. But anyone go-ing along for a second helping ofuproarious Communist buffooneryshould be warned that it is not acomedy.

While part one loosely themedits stories as tales of authority, parttwo groups them under the notion oflove. But the three tales are not con-ventional love stories. Nobody kiss-es anybody, and one of the protago-nists is a turkey. In the first section,a couple of teenagers impersonateministry inspectors to perpetuate afairly harmless con and raise somecash. The second story sees a lorrydriver trapped in a loveless marriageget embroiled in another money-making scheme with an attractive

restaurateur on his route. And in thefinal part of the film, a country girltravels to Bucharest for her moth-er’s operation.

Despite a few small laughs, theoverall atmosphere is one of melan-choly. None of the stories end hap-pily (unless you count one surrealending which feels rather out of kil-ter with what has gone before). Thedivision of the seven vignettes as ithas been done for Romanian audi-ences (they were allotted differentlyelsewhere) works well: any one ofthese three stories in amongst the hi-larity of the other four would havebeen a depressing comedown.Whereas part one poked fun at theabsurdity of Communist doctrineand human failings, part two depictsthe hopelessness of the period, theeking out of hardscrabble, joylessexistences with no expectation ofthings ever changing. Though this isa valid interpretation of the time, it’sa lot less fun to watch than silly par-ty functionaries getting their come-uppance.

But although it’s not quite asagreeable an experience, Tales fromthe Golden Age Part 2 still merits aviewing for the quality of the film-making. Low-key scenes such astwo hard-up but kindly parents try-ing to find a few lei from the month-ly budget for their daughter’s sum-mer camp, and the lorry driver re-luctantly going to the dispiritingmarital bed night after night gener-ate pathos, and showcase the sameobservational and characterizationskills that won Mungiu acclaim inthe hard-hitting 4 Months, 3 Weeksand 2 Days. At Studio cinema lastweek the foyer hosted a small exhi-bition of newspapers, school booksand other items from the period, un-derlining the sobering reality thatlives were still being lived in theCommunist dystopia less than twodecades ago.

Debbie Stowe

Director: Cristian Mungiu, HannoHöfer, Razvan Marculescu,Constantin Popescu, Ioana UricaruStarring: Vlad Ivanov, DianaCavallioti, Radu IacobanOn at: : Hollywood Multiplex, Light Cinema, Movieplex

FILMREVIEW: Tales fromthe Golden Age Part 2

US Ambassador to Bucharest, MarkGitenstein, the Canadian Ambassador,Philippe Beaulne, the Austrian Ambas-sador, Martin Eichtinger, and DeputyHead of Mission for Netherlands inBucharest, Hans Sandee and 20 US Em-bassy employees participated in the Am-bassador's Build days event held on thesite of non-profit Association Habitat forHumanity in Baltesti Village, PrahovaCounty.

The diplomats together with the cen-tral and local authorities, and the repre-sentatives of the project’s sponsoringcompanies, worked on the interior site oftwo homes for underprivileged Romafamilies.

The event took place in the commu-nity development project “One home,one future” developed by Habitat forHumanity Romania and Soros Founda-tion Romania for three years in Baltesti,Prahova and Vanatori, Neamt, in orderto support and promote actions to helpthe Roma families living in unsuitableconditions in Romania. Mark Gitenstein, US Embassador to Bucharest

COU

RTESY OF H

ABITAT FOR H

UM

ANITY

Three volunteer ambassadorson Habitat for Humanity site

The film was directed by Cristian Mungiu

business review issue 40, nov 9-15, 2009

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robusiness review

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