Business Review - 05/2016 by Business Review

INTERVIEW: Vodafone Romania has announced “huge investments” on the local market. In recent times the operator has spent upwards of EUR 100 mln per year. President and CEO Ravinder Takkar told BR about the company’s strategy in Romania » page 30

ROMANIA’S PREMIER BUSINESS MAGAZINE

JULY, 2016 / VOLUME 20, ISSUE 6

Agribusiness needs tech boost Investments in technological upgrades are badly needed to take the discussion about Romania’s agriculture from potential to actual accomplishments. This would in turn increase the sector’s profitability and attractiveness to even more investors, BR heard » page 10

HR THE 60 PERCENT REDUCTION IN OIL PRICES SINCE MID-2014 HAS SEEN DEMAND FOR INDUSTRY SPECIALISTS FALL, AS COMPANIES IN ROMANIA AND ABROAD HAVE STARTED TO HALT RISKIER PROJECTS >> PAGE 24

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EDitorial anda sebesi EDITOR-IN-CHIEF

EDitorial 3 Contents 3 6

EDITORIAL REAL ESTATE

INVESTMENT

10 COVER STORY

romania’s potential On paper at least, Romania is an attractive destination for foreign investors from many sectors of the local economy. Agriculture seems to be a real Pandora’s box, with many paradoxes in the field. Despite this, for many years now the local authorities have declared it a strategic sector that needs major reforms and measures. While Romania is well known as country with huge potential in agriculture, it imports a large share of agricultural products. A classic example of such a paradox. Although in recent years we have witnessed encouraging developments on the local agribusiness sector, pundits argue that there are still many obstacles to surmount and the results are not as good as they could be. Deeprooted problems that still affect the sector’s competitiveness are the main reason for the current woes. Plus, many companies in all farming sectors still struggle to turn much of a profit. The solution, players told BR, is major investments in technologies that could help the sector to develop in a sustainable manner in the future. Investors also look for profitability, as limited investments in assets lead to low profit margins. In other words, with land priced well below the Western European average is not the only reason for Romania to attract investors in the agribusiness industry. Problems such as the ownership status of the cropland, plots being put up for both sale and lease and the fragmentation of the land are obstacles that have made investors think twice before injecting capital into the local agribusiness scene. According to World Bank data, local average farm yields for agricultural products are only a third of those in the EU15 for common wheat and oil seeds. Romania is also lagging behind on animal productivity. But there is also some good news. Farmers now have new opportunities to develop, as Romania’s National Rural Development Program (PNDR) for 2014-2020 is overall more investorfriendly than the previous one and a total of EUR 9.4 billion is available for investments in rural areas throughout this program. Nevertheless, pundits say that old problems still persist and despite improvements, application procedures remain difficult. Elsewhere, the local oil and gas recruitment market remains in freeze mode. With oil prices having collapsed by 60 percent since mid-2014, demand for industry specialists has fallen, as companies in Romania and abroad have started to close projects that are riskier and require a lot of capital. According to the latest data provided by the National Statistics Institute, the number of people working in the extraction of oil and gas has gone down by 17.4 percent between 2011 and 2014. However, wages have gone up by 14.7 percent in the past four years to over RON 5,000 in April 2016. But recruiters say the market for executives in the oil and gas sector has remained depressed, as companies are currently looking only for managers that have good restructuring skills. So the market is moving ahead through difficult times and finding new solutions to adapt to the new economic climate. anda.sebesi@business-review.ro

20 INSURANCE 24 HUMAN RESOURCES 26 INTERVIEW 28 LOCAL ELECTIONS 30 INTERVIEW 32 HEALTHCARE 34 ONLINE 35 EDUCATION 36 ADVERTISING 40 MEDIA 41 THEATER 42 PATRIMONY 45 EXPAT EYE 46 CULTURAL CALENDAR

Romania’s potential German Huf Haus lays the foundations of local business BRCC: Bright future for British investments in Romania Technology investments needed to boost agribusiness sector Insurance companies seek reassurance Oil and gas recruitment remains frozen as prices plunge New state secretary: cheap labor just part of story Two-party system consolidated by local elections Vodafone Romania announces investments spike Local patients lack access to essential drugs Uploading new growth: local online stores are optimistic about the future Testing times for the education system Future of outdoor advertising lies un digital and programmatic Pressing ahead with a new take on journalism Break a let at Sibiu International Theater Festival Electro-heritage: when music helps history To leave, or not to leave?

issn no. 1453 - 729X FounDing EDitor Bill Avery EDitor-in-chiEF Anda Sebesi DEputY EDitor-in-chiEF Simona Bazavan Journalists Otilia Haraga, Romanita Oprea, Ovidiu Posirca, Natalia Martian, Oana Vasiliu hEaD copY EDitor Debbie Stowe copY EDitor Eugenia Pupeza photo EDitor Mihai Constantineanu laYout Raluca Piscu

ExEcutivE DirEctor George Moise businEss DEvElopmEnt DirEctor Oana Molodoi salEs DirEctor Ana-Maria Nedelcu salEs consultant Valeria Cornean EvEnts DirEctor Oana Albu markEting Adina Cretu, Marius Andronic, Patricia Neamtu proDuction Dan Mitroi

publishEr Bloc Notes Media

Distribution Eugen Musat

aDDrEss No. 10 Italiana St., 2nd ﬂoor, ap. 3 Bucharest, Romania

Emails editorial@business-review.ro sales@business-review.ro events@business-review.ro

lanDlinE Oﬃce: 031.040.09.31

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4 nEws

nEwsin brief agriculturE parliament approves bill forcing retailers to source 51 pct of produce locally Romanian MPs approved in June a bill that will force large retailers to locally source 51 percent of their produce on the short supply chain. The bill, which has to be signed into law by the president, Klaus Iohannis, also allows supermarkets to operate at the weekends. Under the provisions of the bill, retailers will have to buy at least 51 percent of the produce on their shelves from local producers. The law would apply to meat, eggs, vegetables, honey, dairy and bread. The Association of Big Commercial Networks in Romania (AMRCR) had previously protested that the amendments would “undermine the modern retail sector”.

auto Drivers prefer volkswagen when buying second hand cars Some 111,000 second hand cars were registered in Romania during the first five months of the year, 28.2 percent of which (31,500) were Volkswagen models, according to the Department of Driving License and Automotive Registry (DRPCIV). In May alone, of a total of about 22,900 second hand cars, over 6,450 were Volkswagens, a 26.1 percent advance over May 2015, when about 5,100 Volkswagen vehicles were registered. The local market saw a surge in second hand registrations, both over the first five months (up 21.1 percent y-o-y) and when comparing May 2016 to the same month of last year (up 25.1 percent).

banking 18 banks get additional guarantees for prima casa mortgages The Ministry of Finance has approved additional guarantees worth RON 500 million that will be used by 18 banks providing housing loans under the Prima Casa program. The measure is a response to requests from potential beneficiaries of the program and takes into account the soaring volumes within the firsttime buyers’ scheme, said the Ministry of Finance in a statement. The lenders that got fresh guarantees are: Alpha Bank, Creditcoop, Banca Romaneasca, Banca Transilvania, Bancpost, Leumi, BCR, BRD, CEC, Credit Agricole, Garanti, ING Bank, Intesa Sanpaolo, Marfin, OTP Bank, Piraeus Bank, Raiffeisen Bank and

UniCredit Bank.

Debt discharge law could hike non-performing loan rate, bnr official warns The new debt discharge law compels banks to allocate additional capital and could lead to an increase in the rate of non-performing loans (NPL), according to the first deputy of the National Bank of Romania (BNR), Florin Georgescu. According to the BNR official, legislative instability may lead to a spike in missed repayments, delays and defaults, given that from the moment the debt discharge law is published in the Official Gazette, banks will have to increase their capital requirements. There are several factors that could see the NPL rate in the Romanian banking system spike, the main one being the unpredictability of the legal framework, stressed Georgescu.

EnErgY local gas market raises cartel suspicions The European Commission, the executive arm of the EU, has carried out unannounced inspections at the premises of several companies active in the supply and transport of natural gas in Romania. The European institution said that its oﬃcials had conducted the controls on June 6 as the EC suspects these companies “may have violated EU antitrust rules that prohibit cartels and restrictive business practices and/or the abuse of a dominant market position”. Transgaz, Romgaz and OMV Petrom were part of the investigation.

hr study: close to half of employees say they work overtime Romanian employees that have higher wages and university level education are more likely to work overtime, according to an IRES survey commissioned by Up Romania, a company providing corporate beneﬁts solutions. In the survey, which assessed quality of life at the workplace, 43 percent of Romanian employees stated that they did overtime, while 34 percent work only their contracted hours.

invEstmEnts FDi drops by 24 pct to Eur 887 mln in Jan-apr Foreign direct investment (FDI) in Romania dropped by 23.8 percent during

the ﬁrst four months of the year over the same period of 2015, according to a report by the National Bank of Romania. Non-residents’ direct investment in Romania totaled EUR 887 million, of which equity amounted to EUR 1.4 billion and inter-company lending recorded a negative net value of EUR 545 million. In April alone FDI stood at EUR 112 million. During the same period of last year FDI reached EUR 1.16 billion, the capital contributions of local companies with estimated net proﬁts were EUR 199 million, to which net lending by the parent companies of EUR 965 million was added.

it Ex-microsoft gm calin tatomir arrested over tax evasion, money laundering allegations Prosecutors from the Directorate for Investigating Organized Crime and Terrorism (DIICOT) have placed former Microsoft head Calin Tatomir under preventive arrest following tax evasion and money laundering allegations. Another six people have been arrested in the

same case, including Norbert Hauser, owner of Galeria Buhara, an oriental carpet shop in Bucharest’s Primaverii neighborhood. Together with three others, who are currently under investigation, they are suspected of being part of a group led by Valeriu Cristian Arsenie. According to prosecutors, between 2007 and 2014, Arsenie created a number of companies designed to carry out operations suspected of being tax evasion and money laundering activities.

macroEconomics romania could be facing economic crisis, imF’s Franks warns Romania must come up with a longterm, sustainable strategy that can deliver sustained economic growth over decades, the IMF‘s Jeffrey Franks has warned at a Bucharest event. “Romania must take measures to ensure economic growth over several decades, instead of only considering one year at a time,” Franks told the audience at a debate organized in Bucharest by the Ministry of Public Finance. “I would prefer to see Romania growing by 3.5 percent every year for ten years, rather than see it grow by 4.5 percent for ﬁve years and then witnessing an economic crisis,” he said. “This is the danger the country is facing right now.”

who’s nEws br welcomes information for who’s news. submissions may be edited for length and clarity. get in touch at simona.bazavan@business-review.ro

iulian alexe is the new country manager of UTA Romania, the local branch of Union Tank Eckstein. Alexe has a solid background in the field of card services, previously holding various management positions with Edenred Romania, where he worked for seven years. A graduate of the Polytechnic University of Bucharest, he began his career with Vodafone, accumulating almost 12 years of experience in managing customer relationships.

Dragos anastasiu the president of Eurolines Group, has been appointed president of the Romanian-German Trade and Industry Cham-

ber (AHK Romania). He is replacing Radu Merica, whose mandate has expired. New members on the board of directors include Iuliu Cadar of Autonet Import, Wargha Enayati of Versa Puls Media, EBS Romania’s Daniel Metz and Cristian Secosan from Romelectro.

mauricio mesa gomez has been appointed general manager of Cordia Romania, the company that develops real estate projects in Romania for Futureal Group. He is the former general manager of real estate developer Hercesa Romania and Bulgaria, a developer for which he worked between 2007 and 2016. The appointment of Gomez marks the restart of the group’s operations in Romania.

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nEws 5

media Fact book 2016: local market up 6 percent in 2015 and 2016 The Romanian media market has made its biggest jump since the economic crisis, rising 6 percent compared to 2014, a percentage increase that will likely be repeated this year as well. The figures are revealed in the Media Fact Book, a project by Initiative agency (part of IPG MediaBrands). Now on its tenth edition, the Media Fact Book is described as the only complete analysis of the Romanian media market.

∫ romanita oprEa “2015 and 2016 bring conﬁrmation that the media market in Romania has stabi-

lized. Of course, we can no longer talk about booms like the ones prior to the crisis, but the most important thing is that we are seeing constant and healthy growth that can bring more beneﬁts in the medium and long term, for this market and for the entire marketing and communication industry,” said Alexandra Olteanu, managing director at Initiative. In 2015, TV continued to be the driving engine of the media market, increasing its volume by 7 percent on 2014 to reach EUR 212 million. Other channels that grew include online (a 12 percent boost to EUR 57 million) and radio (up 5 percent to EUR 19 million). OOH (out of home) remained stable at EUR 28 million. The only channel that saw advertising revenues fall last year was print, which declined by10 percent to EUR 16 million.

Against this backdrop, Initiative estimates that, with 6 percent growth, the media market will reach EUR 351 million this year. The evolution of each channel is likely to be similar to 2015 – the TV market will grow by 6 percent, online by 12 percent, radio by 5 percent, OOH will remain the same and print will drop by another 10 percent. Moreover, the latest Media Fact Book introduces a new chapter predicting future trends in the media market. “On the occasion of this tenth anniversary edition we took on a new challenge involving a change of perspective. From this year, we will no longer focus solely on the evolution of numbers in the media market and on estimates for the current year, but will look to the future in order to identify major trends and analyze the forthcoming top areas to identify how we can better prepare for the next decades as

marketing and communication specialists,” added Olteanu. The aspects analyzed in the new chapter include the effects of TV and digital merging on consumers’ preferences, mobile expansion, the inﬂuence of multi-screening and the ever increasing importance of content quality on rising media budgets. The chapter reports that the smartphone is already embedded in consumers’ lives; accessing the internet through this medium has posted the most dynamic evolution (over 50 percent in 2015 versus 26 percent in 2011). Given that the native digital generations are growing older and the internet is their ﬁrst media of choice, Initiative representatives predict that in 2025, digital media will receive up to 3540 percent of the market advertising revenues. romanita.oprea@business-review.ro

tElus local headcount to exceed 1,000 this year The president and CEO of TELUS International, Jeff puritt, tells BR that the BPO services provider could expand its presence in Romania after Baring Private Equity Asia took over a 35 percent stake in the company, which values it at around USD 1 billion. ∫ gEorgiana bEnDrE “I think a lot of people underestimate the capital intensity that a business like ours has, whether it’s in offices like you see here, which are a source of inspiration, or an investment in our tools, which are a strong point in the balance sheet in the long term and a source of differentiation from our competitors,” said Puritt. He told BR, “I don’t know if it’s accurate to technically correlate this deal with the number of jobs being created. I think that our original investment plan from 2012 till today and the next five years anticipates many more thousands of jobs here in Romania and this transaction I believe will boost the headcount further in order to achieve our plan.” TELUS’s plan is to grow the business in Romania and reach over 1,000 employees by the end of this year, according to projections. Currently, the firm has a headcount of 900. However, the CEO says at present

TELUS International is not planning to access state aid in Romania like some other outsourcing companies intend to do. He told BR that in time this could happen, but that it would be a consequence of a number of factors, including wage inflation, tax rates and the overall cost of doing business here. Puritt said that for the moment the management wants to ensure that the company is part of the community in Romania, and making “some meaningful contribution before we start to become a recipient of program funds. I think we’re on course to support the long-term viability and sustainability of the economy here.” Asked if the company was looking to open offices in other cities aside from Bucharest and Craiova, he said: “It’s part of my local team management to continue to evaluate the viability of our growth aspirations, both where we have offices today and elsewhere in the country. Generally, I would prefer to have a bigger footprint and presence in the larger cities.” The CEO said that workers’ desire to

come to the capital was a factor. “I don’t know for sure, but the suspicion is that most Romanians looking for employment opportunities, particularly in this industry, come to Bucharest. And if they don’t come here today, the minute they can, they’ll come tomorrow. So one of the challenges in maintaining your employees in two-three cities is once they achieve a certain level of ﬁnancial stability, they’ll nevertheless come to the big city,” he added. Puritt underlined that Romanians’ foreign language skills make the country a very attractive destination for BPO. “My team members from Romania speak four languages ﬂuently. And having these multilingual skills positions Romania as a destination of choice to deliver service and customer care and technical support, competence and predisposition, in IT and engineering, for a long time to come. It’s a really unique differentiator and a potential competitive advantage for the long term,” concluded the executive. georgiana.bendre@business-review.ro

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6 rEal EstatE

german huf haus lays the foundations of local business Huf Haus, a German manufacturer of high-end prefabricated timber and glass houses, will this September open two show houses in northern Bucharest, following an investment of approximately EUR 1 million, the company has announced. This is the first step in an ambitious plan to sell between six and 10 such houses per year on the local market. added. The German company manufactures and builds over 100 houses each year, some 60 percent of which are sold in Germany. The UK is its second market with some 20-25 units sold each year and Switzerland comes a close third. Buyers include both individuals and developers who later rent the houses for between GBP 8,000 and GBP 10,000 per month in the UK, says the company. This makes the houses popular not only among homeowners but also among real estate investors, said Baumann.

a 104-year old brand

High-end living experience: Huf Haus comes with innovative building technologies in Romania

∫ simona baZavan The two show houses, presently being built in northern Bucharest, are the result of a partnership with a local investor who provided the land. In fact, the decision to come to Romania was based on this partnership, which was initiated by the Romanian investor, explained Michael Baumann, marketing and sales director with Huf Haus. Representatives of the German company have refused to disclose the identity of the Romanian partner, saying only that he lives in the UK and that he has been looking to start a business in Romania for several years. The plot of land where the two show houses are presently being built is big enough to host additional properties and the plan is to use it to develop an entire residential compound, said the investor’s representatives. Construction of the two Huf houses started earlier this year but delivery has been postponed to early

September due to difficulties in getting the properties connected to the water supply and electricity grid, added Baumann. Once completed, they should provide the starting point for the German manufacturer’s operations on the local market. While the houses come at a hefty starting price of approximately EUR 700,000, the German company is confident that it will find a niche segment on the Romanian residential market where it plans to sell between six and 10 houses each year. The sleek design, originating from the Bauhaus architectural tradition combined with innovative building technologies, promises a high-end yet eco-friendly living experience for which the company is sure to find buyers on the local market, said AnnKathrin Laskowski, marketing and PR representative for Huf Haus. “We have to find them here the same as we have to find them in Germany. We have around 10,000 leads each year out of

which around 100 end up buying. So it is a narrow target group. We know that, but it is deﬁnitely worth it because we manage to ﬁnd these individuals in Germany, the UK and Switzerland,” she

Huf Haus was set up in 1912 and over the years has managed to build a brand known for both its modern timberframe architecture and the energy-eﬃcient technologies behind its buildings. While the houses can be individually designed, the main stylistic elements have not changed much over the decades. “It is just like the Porsche 911. The 911 from 50 years ago and the one from nowadays are very similar. The brand is the same but the technology behind it is different. It is the same with a Huf house. The brand is the same as 50 years ago but all the materials have changed and every year we work on the next step,” outlined Baumann. The houses are manufactured in the company’s factory in Hartenfels, Germany, by about 170 workers. They use German technologies and materials with the exception of structural beams

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which are made out of glue-laminated, Scandinavian spruce wood due to its higher density and resistance, say company representatives. The house parts are afterwards transported and built up on site. The Huf Haus group of companies also provides financial consultancy, fit-out, furnishings and landscaping services, and can therefore provide turnkey projects. Most of those who want to purchase a Huf haus start their enquiry online, said Baumann. “The first contact we have with some 90 percent of our future clients is via an online enquiry form which they fill in. In no more than three days we contact them, send them the brochure and invite them to see the village,” he added. The village is a collection of five Huf show houses built close to the company’s factory in Hartenfels, some 80 km from Cologne. It is open all week and visitors can go there to get a better idea of the possibilities of building Huf houses. Over the years the company has invested an estimated EUR 35 million in show houses throughout the markets where it is present, arguing that this has proven the best marketing tool in convincing future clients. The next step is an appointment to discuss the potential buyer’s available budget. “We also visit the future building site in order to assess potential side costs. After that, when we have a rough budget form, we provide the client with a planning contract,” continued the

rEal EstatE 7 marketing and sales director. With this planning contract, architects from Huf start designing the house with the client, based on the latter’s wishes and available budget. After the final drawings are complete and additional costs such as those of the foundation are settled, a final budget takes shape. “When the price is fixed and the client has checked if it is possible to get a mortgage and gets the green light from the bank, then we draft the final contract. After that the client decides on fit out options,” added Baumann. Once permission to build is secured, the client will get the delivery timeline for the future house. Over the next eight weeks the house is manufactured in the Hartenfels factory and is delivered on site. “We need only eight weeks to bring all the materials there, to prepare and deliver on site. And four to five months later we hand over the keys to the new property,” he outlined. Onsite construction is done exclusively by Huf Haus employees, a way of ensuring the quality of the final product, concluded Baumann. Huf Haus was set up in 1912 and to this day it remains a family-owned company, now led by the third generation of the Huf family. Throughout the past 104 years the company has built some 10,000 houses. Last year it reported a turnover of approximately EUR 80 million. simona.bazavan@business-review.ro

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8 invEstmEnt

brcc: bright future for british investments in romania charlie crocker, CEO of the British Romanian Chamber of Commerce (BRCC), says that Romania is on the watchlist of UK investors. He predicts more British investments in the IT, agricultural, and food and drink sectors, adding that Romania is a strategically important market for the UK. ∫ anDa sEbEsi how do you see bilateral economic relations between the united kingdom and romania and have they developed over the past few years? I think there is a strong bilateral economic and cultural relationship between the UK and Romania. In the last couple of years, we have seen a significant increase in the number of Romanian businesses investing in starting their activities in the UK, particularly in the IT&C sector. At the same time, the number of UK imports to Romania was one of the fastest growing from the EU, up 17 percent from 2014-2015. how do you describe the local business environment with its strengths and weaknesses? would you say that there have been improvements, or on the contrary a worsening of market conditions over the past year? I think there is a vibrant local business environment and this is shown by a strong recent and projected growth in GDP as well as an active increase in retail sales. There have also been some significant improvements in market conditions, for example the work being done to bring about greater transparency in the public sector and the fight against corruption are helping ensure a more level playing field. The BRCC has supported these efforts by also building awareness of the Bribery Act within the local business and public environment, through projects, partnerships and an active communication strategy with multiple public and private institutions across Romania. Our expert advisor in this important activity is Neil McGregor a vice-chairman of the BRCC. Reductions in VAT and a more competitive corporate tax structure have also helped. Finally, the recent establishment of a reliable, transparent new court of arbitration, called the Bucharest International Arbitration Court, will bring certainty to the resolution of contractual disputes in Romania. how attractive is romania to british investors and why would you recommend romania as a destination for investments? Romania is a strategically important market for the UK. I would strongly recommend it as a destination for in-

vestments; it is geographically important with the largest commercial Black Sea port and access to over 120 million consumers in Central and Eastern Europe (CEE). Romania is one of the largest markets in CEE; it offers a highly skilled workforce, with a strong network of excellent universities providing a steady pool of technically qualiﬁed graduates. The ﬁrst language in Romania is English and the British brand is very strong in Romania, with a reputation for quality and reliability. In short Romania is one of THE destinations for investments and as Romania moves from frontier status to emerging market this will open up many more opportunities for institutional investments in the local capital market.

tial for institutional investments from the City of London and the capital markets. how competitive is romania (in terms of attracting foreign investments) in a regional context? is it losing ground in favor of other countries in region? and if so, what should be done in your opinion to improve its status? Romania has a strategic geographical position in the region and has been seen by many major multinationals and investors as the South Eastern European hub for cross-border trade and business. There are challenges to Romania realizing its true potential, notably lagging infrastructure. There have been notable improvements, however, in the development of regional airports.

what is the future of british foreign in- given the fiscal cuts announced/envestments in romania? what areas are forced by the government, the public of interest to potential new (british) in- sector wage increases and recent comvestors in the country and what is their ments such as that made by governor isarescu who said romania is facing a profile? We see a bright future for British invest- “severe systemic risk” for the first time ments in Romania. Romania is becom- since 2006, would you say that the local ing more visible for British business economy risks repeating a scenario siminvestments. We see potential invest- ilar to the 2008 crisis? ments from the tech sector and tech city I believe that this is heavily influenced into the Romanian IT&C market includ- by the global economic situation as it ing near-shore BPO and shared service was in 2008, and although local condicenters. We also believe that there are tions may have some influence they many opportunities for the UK food, are not as big a risk as the potential for drink and agro sectors, as well as poten- a future global economic crisis.

the brcc through its vice-chairman neil mcgregor is working with the romanian ministry of Justice on the new anti-corruption national strategy. what will brcc’s contribution to this ofﬁcial document be? Being a British solicitor and compliance expert, Neil is able to explain to the ministry the approach taken in the UK to creating corporate cultures which discourage and prevent corruption and to provide concrete examples of how this is applied in practice. We hope that other companies in Romania will operate according to the same rules as those that apply to companies with a business presence in the UK, with the widespread adoption of corporate policies and cultures which do not tolerate corruption and a proactive approach to the prevention of corruption, such as by effective training programs, due diligence on business partners and the establishment of whistleblower procedures. how would you comment on romania's economic performance over the past year and the forecast for 2016 and 2017? Romania was one of the top performing markets economically in the EU in 2015 and this is predicted to continue through 2016 and 2017 at the same if a not better rate of over 4 percent, double the growth predictions in Western Europe. anda.sebesi@business-review.ro

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10 COVER STORY

Technology investments needed to boost agribusiness sector

Photo: Mihai Constantineanu

Investments in technological upgrades are badly needed to take the discussion about Romania’s agriculture from potential to actual accomplishments. This would in turn increase the sector’s proﬁtability and attractiveness to even more investors, BR heard.

∫ SIMONA BAZAVAN On paper at least, Romania has everything it needs to attract more agribusiness investors and turn its agriculture into a booming sector. There is plenty of land priced well below the Western European average, EU farming subsidies and EU funds are available for investments, and banks have a growing appetite to finance this sector. Food products benefit from lower VAT, domestic consumption is on the rise and exports remain below the sector’s production capacity. These are the arguments that have attracted and continue to attract investors, foreigners and locals, to the Romanian market. “There are both portfolio investors as well as major companies that would like to invest in this sector in order to start production. So there is no clear pattern and the profile of the investors is constantly changing following the dynamic of the sector,” Mihai Anita, assurance

partner and private company services leader at PwC Romania, told BR. Buying plots of farmland is still very attractive to investors, he added. There is also a growing interest in taking over local food producers, such as the acquisition of Albalact by Lactalis, a trend that will continue, given that the industry is highly fragmented, added Anita. Recent years have seen encouraging developments for the local agribusiness industry, yet many pundits argue that there is still plenty of room for growth and that results are not as good as they could be. The reason for that is a number of deep-rooted problems that continue to affect the sector’s competitiveness. “Investors are more and more interested in this area, but this growing interest is confronted by practical obstacles such as the ownership status of the cropland, for plots that are put up for both sale and lease, as well as the fragmentation of this crop,” said the partner. Land fragmentation and the resulting number of small and

noncompetitive farms remain a problem, as does the lack of infrastructure such as that needed for irrigation. As for the agribusiness sectors that are most attractive to investors at present, KPMG analysis indicates that cereal farming continues to offer the biggest profit. It is also the sector that has the highest number of medium and large active companies. “Based on statistical data, it offers a profit margin over costs of between 10 and 20 percent. Nevertheless, there are at the same time many large companies cultivating cereals that post a low profitability level,” Teodora Alecu, director of tax and transfer pricing services at KPMG in Romania, told BR. Fewer large players have invested in vegetable crops, with only around 50 big or relatively big companies active in this sector. Their profitability is on average between 1 and 12 percent, and the expected profit margin is in the region of 5 to 7 percent on top of costs. “This means that an investor expecting to get

a 10-20 percent profit would not invest in vegetable crops, unless they come up with ideas for new technologies and processes which would allow a higher return on investment,” explained Alecu. For the same reason, even fewer large companies have invested in fruit or tobacco crops. In the case of fruit trees, for example, the profit margin has dropped from around 15-30 percent in 2007-2008 to 3-10 percent in 2014. Higher investments have been observed in animal rearing, but rather than being the result of higher profitability levels in this sector, this was mostly done to meet EU requirements in the field, she added. One constant is that many companies in all farming sectors struggle with low profitability, and the solution for them is investments in technology, stressed Alecu. “Technology in agriculture offers premises for its future sustainable development. Investors ultimately look to the profit margin they earn. Limited investments in as-

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sets, routine services and works done would result in low proﬁt margins. Highly intensive technology, specialized people, state-of-the-art work processes and planning of the work would result, at least according to economic theory, in higher proﬁts. New, modern technology would confer on the agricultural sector a competitive edge and compliance with the quality constraints coming from EU legislation,” she concluded.

In search of horse power With global prices of agricultural commodities languishing at low levels, ensuring high productivity becomes crucial for farmers. Yet when it comes to technology, Romania still has a lot of catching up to do, even when looking only at the acquisition of basic farming equipment such as tractors. “There is a direct link between productivity and technology. In Romania there is still a big deﬁcit of farming machines and equipment. And this deﬁcit

COVER STORY 11

inevitably affects productivity. Thirteen per hectare of Western Europe, he day,” added Stanson. In 2015, tractor sales were flat y-o-y times fewer tractors are sold in Roma- warned. Large and middle-sized farms are and there are no hopes for considerable nia than in France,” Arnaud Van Strien, the general director of IPSO Agricultura, doing better than smaller ones when it growth this year either. This means told BR. He added that he hopes this comes to investing in new farming sales volumes will remain in the range gap will be reduced and that in the next equipment. Moreover, they are looking of 1,900-2,000 modern tractors, due to five years tractor sales could double de- to buy better performing machines. factors such as the slow start of EU pending on the legal, fiscal and finan- "We have seen that farmers are increas- funding through the new rural developcial conditions. ingly interested in purchasing elec- ment program (PNDR) for 2014-2020. And that is something that is badly tronic systems for monitoring, guiding “Secondly, commodity prices are still unneeded. “For the last 15 years, farming and consulting. Software solutions will clear for 2016 and so the buying mood equipment sales in Romania have been perform even better over the coming of farmers is still not clear at this stage of the year,” he added. far from the volumes which would en- period,” added Van Strien. The full half of the glass would be able or sustain a solid increase in the But while big businesses enjoy good country’s agricultural production. records with financial institutions, that this still leaves considerable room There are still around 100,000 tractors which in turn have become more open for growth in the years to come. The in Romania whose useful life was up 20 to financing agricultural operations, empty half is that progress should hapor 30 years ago,” George Stanson, busi- small farmers have a tougher time. pen faster. “In order to have a tangible ness manager for Romania, Bulgaria, “The major concern is related to small impact on Romania’s overall agriculCroatia and Serbia at Case IH & Steyr farmers of under 50 ha/farm which tural productivity, the minimum volBalkans, told BR. Equipment bought in haven’t got a strong background with fi- ume of new tractors sales must be the 90s is also due for replacement, but nancial institutions and therefore find around 5,000 per year. This would should current sales volumes of new it more difficult to get financed. And, as mean between double and triple equipment be maintained, the local I mentioned before, all these small today’s volumes,” concluded Stanson. farming sector would need at least 50 farming operations must become the years to reach the level of horse power backbone of Romanian agriculture one simona.bazavan@business-review.ro

www.business-review.eu Business Review | July 2016

12 COVER STORY

Investors to reap more funding opportunities through new PNDR Small and medium-sized farming businesses that invest in higher value-added products stand to benefit the most from the funding opportunities brought about by Romania’s National Rural Development Program (PNDR) for 2014-2020. Moreover, consultants say that the new program is overall more investor-friendly than the previous one. ∫ SIMONA BAZAVAN A total of roughly EUR 9.4 billion is available for investments in rural areas through Romania’s PNDR for 2014-2020. Enabling sustainable growth and simplifying requirements for accessing these EU funds were the main targets in drafting the PNDR for 2014-2020, say local authorities. To some extent, this was achieved and the new PNDR offers a clear improvement on the one for the 2007-2013 period, argue consultants. “The current PNDR is about more than just modernizing farms. Overall, the whole program seems to be more dynamic and more focused on the development of rural areas, not only of agriculture. The previous program offered support to farms as input providers in the food chains, while the current PNDR increases the chances of receiving funds for farms that cover more than one – preferably all – of the segments in the food supply chain,” Johannes Becker, the owner of local consultancy BeckerConsult, told BR. Small and medium-sized farms stand to gain the most from the new PNDR, say consultants. “Mid-sized family farms, which are the majority of farms in the EU, but not yet in Romania, have the best chances of receiving funds,” stressed Becker. Those that are part of farming associations, such as cooperatives, stand even greater chances, Rodica Lupu, managing partner of Loop Operations, another local consultancy, told BR. “A good indication for this is the co-financing share required of the beneficiary. This can reach 70 percent for large farms and up to 50

Big opportunity: small and medium-sized farms stand to gain the most from the new PNDR

percent for small farms but goes as low as 30 percent or no co-ﬁnancing requirement at all for cooperatives or young farmers who either set up or take over a farm,” she explained. However, very small farms, which continue to represent the majority of local farms, as well large farms, have fewer funding options through the new PNDR. The reason for the ﬁrst is the authorities’ strategy to encourage an increase in the average local farm size in order to boost competitiveness, even though the imposed threshold for such farms is too high for the Romanian reality on the ground, argues Becker. Very

PNDR 2014-2020 – Facts and figures Total funding: EUR 9.4 bln, out of which EUR 8.1 bln is EU funds and the rest state funding Number of financing measures: 14 There are three financing areas: investments in farms and farming businesses (EUR 4.8 bln), the environment and climate (EUR 2.8 bln) and measures that have to do with know-how transfer, consultancy services, cooperation and risk management (EUR 1.2 bln). So far around 8,400 projects with a combined value of EUR 1.8 bln have been submitted. Some 4,201 projects worth EUR 835 mln have been selected for financing. Out of this, approximately 2,500 have been signed.

large farms of more than approximately 400 ha ﬁnd themselves in a similar position. While they are eligible, it has become more diﬃcult for them to get EU funding for investments, which does make sense, since they have easier access to bank loans than smaller operations, argues Becker. The advice he gives potential investors looking to secure EU funds for their projects is to “look a bit over the fence”. “Do not focus exclusively on primary agricultural production, but rather diversify. Whoever wants to transform their agricultural products into something with a higher value will have better chances – not only of receiving EU funds, but also of surviving the current crisis of extremely low prices for agricultural products,” he recommends.

A more investor-friendly PNDR There are several improvements to the new PNDR that promise to make life easier for investors. “A very important one is the elimination of the requirement for public tenders by the introduction of standard prices for equipment. In the past, public tenders were one of the main sources of mistakes made during proj-

ect implementation,” said Becker. Another significant improvement is the option to submit projects online and the reduction of the number of inspections conducted by the authorities on site. It has also become a bit easier for applicants with smaller-sized projects to reduce consultancy costs following the introduction of standardized projects, he added. Nevertheless, old problems still persist and despite improvements, application procedures remain cumbersome, points out Lupu. Even when it comes to basic aspects such as accessing relevant information, potential beneficiaries face difficulties. “We have seen an improvement in the communication between the Authority for Financing Rural Investments (AFIR) and beneficiaries and stakeholders. Despite this, the process of identifying a source, drafting the project and successfully implementing it remains an unjustifiably complicated procedure,” she added. The good news is that the authorities are taking steps to improve things even further and this should in turn make it easier for even more investors to secure EU funding for their businesses. simona.bazavan@business-review.ro

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ADVERTORIAL 13

Rural Credit Guarantee Fund (Fondul de Garantare a Creditului Rural) RCGF (FONDUL DE GARANTARE A CREDITULUI RURAL) provides financial guarantees to the funding institutions/beneficiaries of the National Programme for Rural Development (NPRD), covering: Loans approved for financing the working capital required by farmers and agricultural processors – natural and legal persons - for production purposes Loans granted to natural and legal persons for purchasing agricultural land in the circumstances defined under art. 2(b) of Government Emergency Ordinance no. 43/2013 Loans granted to farmers for financing agricultural investments other than EU co-financed investment schemes Loans approved under Framework agreements establishing a guarantee threshold, based on certificates issued by APIA to the beneficiaries of EU and national funding schemes (SAPS, grants for poultry and pig welfare, etc.) Funds granted to the beneficiaries of the 2014 - 2020 NPRD Funds granted to EAGF beneficiaries RCGF issues letters of guarantee to the public beneficiaries of EAFRD that are listed in GEO no. 79/2009, so that they can receive the advance payment under the grant contracts concluded with the Agency for Rural Investment Financing (AFIR). The following EAFRD beneficiaries can apply for letters of guarantee from the Fund: - communes, cities, intercommunity development associations and public law bodies; - local action groups; - organizations and federations of water users. The beneficiaries of the guarantees can be: SMEs, as defined in Law no. 346/2004 (as subsequently amended and supplemented), including selfemployed workers, individual and family enterprises that carry out business activities, established pursuant to GEO no. 44/2008; farming associations and companies incorporated pursuant to Law no. 36/1991 on agricultural companies and other forms of association for farming purposes, as

well as pursuant to Law no. 566/2004 on agricultural cooperatives; agricultural producers and agrifood processors seeking to invest and produce in their respective business fields; leaseholders - natural and legal persons - who purchase the leased agricultural land from its owners in order to establish agricultural holdings of up to 1,000 ha / property / holding, based on APIA certifications; natural persons registered as individual agricultural producers in the Agricultural Register and legal persons incorporated pursuant to the relevant law as self-employed workers, individual enterprises or family enterprises, who are farming agricultural land as certified by APIA and who purchase new farmland in order to expand their utilized agricultural areas and to establish/enhance the profitability of family farms ranging between 2-50 economic size units (ESU), as defined in art. 2(e) of GEO no. 43/2013. RCGF guarantee can cover: - up to 50% of the agricultural land purchases and, respectively, 80% of the loans provided by credit institutions to farmers, to agricultural processors and to the non-agricultural sector in order to implement investments declared eligible under EAFRD and other

investments in farms, and to finance the working capital required to achieve production; - up to 100% of the amount of the letters of guarantee required by the EAFRD public beneficiaries in order to receive the advance payment under the AFIR grants. The maximum amount of a guarantee issued to individual beneficiaries by RCGF for each request from the credit institution will not exceed the equivalent of Euro 2.5 million, denominated in RON at the RON/EUR exchange rate on the date of the guarantee application submitted by such credit institution. The Fund will charge the following fees for providing the guarantee: - 0.05% per month or 1% per year, as applicable, for the public beneficiaries of the NPRD, including the local action groups and the organizations of irrigation water users; -1.6% to 3.8% for private beneficiaries, according to their rating by the credit organization; - the fee charged by the Fund to natural persons who are entitled to guarantees pursuant to GEO no. 43/2013 is 3.8% per year. How can I access RCGF guarantee? You can find information on the Fund’s

website: www.fgcr.ro; contact one of the following commercial banks for a business loan and you can enrol in the RCGF (FONDUL DE GARANTARE A CREDITULUI RURAL) guarantee scheme: Banca Comercială Română SA, B.R.D.–Groupe Société Générale SA, Banca Transilvania SA, Raiffeisen Bank SA, CEC Bank SA, Credit Agricole Bank Romania SA, Banca Românească SA, Nextebank SA, Idea Bank SA, EximBank SA, Intesa Sanpaolo Bank SA, ProCredit Bank SA, OTP Bank Romania SA, Piraeus Bank SA, Alpha Bank România SA, Bancpost SA, Bank Leumi Romania SA, Patria Credit SA, Unicredit Bank, Libra Internet Bank, Banca Comerciala Feroviara SA, Credit Europe Bank SA, Agricover IFN, Banca Centrală Cooperatistă CreditCoop, Veneto Banca. The public beneﬁciaries who are seeking a letter of guarantee should contact the Fund directly.

Rural Credit Guarantee Fund 5 Occidentului Street, district 1, Bucharest; Phone.: 021/312.54.03; 021/312.54.05; 021/312.54.63; 021/312.54.64; 021/312.54.65, Fax 021/312.54.14; 021/312.54.19; e-mail: ofﬁce@fgcr.ro; www fgcr.ro

www.business-review.eu Business Review | July 2016

14 COVER STORY

Lenders beset by weather, lack of farmland registration Farmland is the most important asset for investors seeking to take out loans from banks, but the ongoing issues that Romania has with the registration of such plots makes ﬁnanciers very cautious, according to legal and banking experts.

Financing needs: Banks are working closely with farmers to develop key projects

∫ OVIDIU POSIRCA The lack of infrastructure and small number of large compacted surfaces of farmland that could be put up for sale are some of the challenges facing the local sector, according to Mihaela Hunca, industry expert agriculture at UniCredit Bank.

Production rates still tightly linked to weather “Broadly speaking, the main challenges facing the sector are: the timeconsuming red tape for getting all the documents to sell terrain outside the city, the high degree of fragmentation for farmland (we come third after Malta and Cyprus according to Eurostat) and the lack of cadaster, the full dependency on weather conditions, with immediate impact on yield per hectare, correlated with the lack of a

strong irrigation system, given the extended periods of drought in recent years,” Hunca told BR. She added that UniCredit has focused on ﬁnancing the vegetal sector, which accounted for 70 percent of the total output in the agriculture industry last year, and on the zootechnics segment. According to data from the World Bank, the average farm yields for agricultural products are only a third of those in the EU15 for common wheat and for oil seeds. Romania is also lagging behind on animal productivity. For instance, on dairy yields, Romania registered 3.0 tons/head, while the EU15 average is more than double. “Unlike the EU28, whose agriculture output feeds off animal production, Romania’s agricultural production is more vulnerable to climate change. Favorable weather conditions in 2013 and 2014 led to a

positive agricultural trade balance in Romania, but the recent severe drought in 2015 demonstrated the vulnerability of the sector and further widened the production gaps,” said the World Bank in a report published in April. Radu Ciocoiu, head of the agriculture and food industry department, large corporate directorate, corporate banking division at Raiffeisen Bank, said that farmers should make sure they have enough equity when starting negotiations over a bank loan. “Banks cannot replace the actual equity participation, own shareholder capital. The basic principle of commercial banking is based on the assumption that external ﬁnancing sources can have a positive impact upon the overall future development of a business as long as core resources are related to equity participation,” Ciocoiu told BR.

According to statistics provided by the National Bank of Romania, the total value of loans granted to companies in the agriculture, forestry and fisheries sector increased by almost 6 percent to RON 12.4 billion last year against 2014. Figuring out the legal issues before getting the money Although the loans granted to companies in the agricultural sector are growing, the structural issues in the industry give both lawyers and bankers headaches. “The potential for an increase in the financing is obvious with both bankers and farmers looking for such opportunities; however, the increase will only occur after the cadastral works are completed. Since agricultural land is the most valuable security and, given the lack of cadastral documentation and registration in the land book of the land intended to be put up as security, the banks cannot accept it as collateral,” Crina Ciobanu, managing associate at Suciu Popa Attorneys law firm, told BR. In the last decade, banks have financed mainly industrial farms, while non-banking financial institutions have leant money to small and medium sized farms and the suppliers of pesticides, drugs and crops chemicals, encouraging delivery with payment after harvesting, according to Ciobanu. Alina Solschi, senior associate at law firm Musat & Asociatii, added that

Bank loans granted in the agriculture, forestry and fisheries sector Year

Amount (RON/bln)

2011 2012 2013 2014 2015 2016*

9.1 10.4 10.7 11.7 12.4 12.5

*By April Source: BNR

www.business-review.eu Business Review | July 2016

bank ﬁnancing costs might prove much too high for smaller players in the agriculture sector looking to develop their operations. “Lending by banks remains quite low; access to credit remains limited for small and medium-sized farmers; EU funds can’t compensate for the limited access to loans; the subsidy/direct payment from the European Agricultural Guarantee Fund and the national funds granted to farmers for each hectare is half of the average amount granted in Western Europe; the interest rate of bank loans in euros offered to farmers is double that granted in the rest of Europe for similar products,” Solschi told BR. Ciobanu of Suciu Popa Attorneys said that while the law allows a French farmer to receive almost EUR 400 per hectare, a farmer in Romania can get a maximum of EUR 160 for each hectare, while the prices for the input such as diesel and chemicals are the same. “Moreover, from 2018, no subsidies will be awarded for land for which the cadastral works are not completed,” said Ciobanu. Catalina Porojan, executive director in the group large corporate division at BCR, said that the reduction of VAT and lower interest rates for loans have helped the agriculture sector, against the backdrop of the diﬃcult international economic system, which suffers from overproduction. Porojan said that 28 percent of the

COVER STORY 15

4.7 percent

13.2 percent the return on equity in agriculture in 2014

the activity of state-owned enterprises in the agricultural sector in 2014

Source: BNR

Source: IMF

World Bank projection: By 2030, some 1.5 million farms operating on 3 million hectares are expected to be transferred to the younger generations in Romania

financing granted for equipment by BCR Leasing last year went to the agricultural sector. At the end of the first quarter, this figure climbed to 44 percent. "Although the financing of agriculture equipment is growing, the volumes financed in the leasing system are still modest compared to the development potential of the sector," the director told BR.

What are banks bringing to the farmers’ table Hunca of UniCredit Bank said that the lender continues to focus on agriculture and provides a wide array of products for this segment, from the ﬁnancing of current expenses such as

the acquisition of specific stocks to the purchase of farmland, equipment and the upgrade of production halls. She added that the bank will continue to support EU-backed projects through the National Program for Rural Development (PNDR), which represented around 35 percent of total financing for EU-funded projects in the 2009-2013 period. “We cover with financing proposals the entire value chain in the sector, from farmers to food processors. The applied principles are different according to the size of each customer given the specific needs generated by the actual financial position,” said Ciocoiu of Raiffeisen Bank. In a bid to help smaller farmers get

loans, the minister of agriculture, Achim Irimescu, announced in May the creation of a special fund with an initial size of EUR 92 million. He said that it should become operational by the end of the year. “This year we will have a loan fund for agriculture, through the Ministry of Agriculture, which will be based on EU funds. It has already been structured, through the European Investment Fund, and a tender will be organized this summer so we can have four-five banks that can distribute these funds. The idea is to have normal conditions for accessing loans,” said Irimescu, according to news portal economica.net. The fund will be used to provide working capital for farmers and micro-loans. The fresh source of funding would help companies in the agriculture industry, as profits have gone down in some segments. According to Agricover Credit IFN, the production of cereals, including oilseeds, fell by 30 percent in 2015. “Taking into account the recent developments, many of the supplier credit lines that are widely used by farmers for the acquisition of inputs for production are likely to be replaced by the financial loan, which is more attractive and transparent,” said officials from Agricover this spring, when it announced its financial results for last year. ovidiu.posirca@business-review.ro

www.business-review.eu Business Review | July 2016

16 COVER STORY

Healthy produce: farmland promises profit Farmland prices are projected to continue to rise in 2016 after growth of approximately 10 percent last year. Given that they are still well below the average prices in Western Europe, the acquisition of local farmland is set to remain a lucrative opportunity for those looking to start a farming business and investors alike.

Current trend: investors show an increased interest in farmland acquisitions

material supply, as well as foreign investors coming particularly from Western Europe. Most of them are interested The price of local farmland has more in buying large plots of land, having in than tripled since 2007, but even so it view a more eﬃcient production remains an attractive investment for process and investment yields. The both locals and foreigners, say pundits. largest surface we have brokered over Moreover, this trend will most likely the past few years for such a client was continue despite the rising prices and 2,000 hectares,” added Schiopota. Some 90 percent of clients buy the setbacks such as land fragmentation and the challenging acquisition process, land because they want to use it for they predict. The reason for this is that farming activities, according to the prices remain relatively low compared agency’s data. “Investors are mainly foto Western Europe and there is a large cusing on farming businesses that use availability of farmland with a good either their own land or leased land. Other investments include cereal and quality of soil. “Over the past year we have seen in- fodder processing factories or animal vestors show an increased interest in rearing farms. There is a growing defarmland acquisitions, due to both an mand for organic products in Romania appetite for growth and investments and abroad so there is a slight orientashown by companies active in the farm- tion of investments towards this direcing and food industries, and the higher tion too,” Alina Solschi, senior associate yields foreign investors get here com- at Musat & Asociatii, told BR. Some also buy the land for investpared to other European countries,” Marius Schiopota, managing partner of ment reasons. “They are taking advanreal estate company Hitch&Mosher, tage of the fact that prices are not yet in line with Western European levels. But told BR in a previous interview. Those who are presently looking to these investors choose to lease the land, buy farmland in Romania include both which means that it will be cultivated as local and foreign companies, he said. well,” he went on. When it comes to foreign investors, “Our clients include both private Romanian companies which are interested in most of them come from Northern Euvertically integrating their agri-food rope, particularly from Denmark and business in order to secure their raw the Netherlands, but American and

∫ SIMONA BAZAVAN

Arab investors are also active, NNDKP representatives told BR. The 2014 market liberalization for EU citizens has not led to the muchfeared land grab by foreigners and there hasn’t been a noticeable change in the ratio between Romanian and foreign buyers since this date, say pundits. To some extent this is because co-owners, tenants, neighbors and individuals involved in farming activities in the area where farmland is for sale, along with the state, have preemption rights to purchase land that is up for sale outside city limits. “Having to meet these requirements can delay or even prevent in some cases the acquisition of farmland that foreign investors are interested in, Monia Dobrescu, partner with Musat & Asociatii, told BR. Locals and foreigners alike face the same challenge of land fragmentation when they are looking to buy farmland. This continues to be the main setback to the market’s further development,

pundits agree. “According to statistics, Romania ranks among the EU countries with the most fragmented farmland. In many cases this makes it impossible for owners to fully take advantage of their land’s farming potential as for eﬃciency reasons investors are mainly looking to compact plots of land,” added Dobrescu. This, combined with legal uncertainties for many plots of land, makes the acquisition process a very cumbersome one, say lawyers. “The lack of farm registries and the practice of lease ‘swap’ leads to cases where some owners don’t know who is actually working their land and who’s cashing in the subsequent subsidies,” added NNDKP representatives. Since 2015, the Ministry of Agriculture and Rural Development has tried to stimulate land mergers by giving a subsidy based on farm size, but this measure has not had a major impact, added Dobrescu. The authorities still need to come up with legal framework that would actively encourage land merging, she added.

Prices sprout Compared to previous years which were still marked by the post-crisis lack of liquidity, 2015 was far more dynamic, with prices of farmland increasing by about 10 percent on average, said Schiopota. Average prices vary between EUR 2,000 and EUR 7,000 per hectare, depending on factors such as land consolidation, the land’s cadastral status, the availability of the necessary infrastructure for eﬃcient farming and the soil’s natural qualities. The highest prices are in western Romania he added. Given that farmland investments bring a good annual yield, the number of transactions is projected to go up, which in turn will bring about higher sale prices, he concluded. simona.bazavan@business-review.ro

EUR 2,000 - EUR 7,000 The average price per hectare of farmland in Romania

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COVER STORY 17

Agriculture investors face difficult legal framework Although the local agriculture sector remains attractive to investors, there are ongoing issues with the legislation, which hampers the acquisition of farmland and the sale of crops at the best prices, according to legal experts.

Crina Ciobanu, Suciu Popa Attorneys

Adina Tataru, bpv Grigorescu Stefanica

“What hinders, however, the acquisition of land is not only the fact that communism has crumbled the land “Unfortunately, companies that are look- into plots of several acres, while big ining to invest in the agriculture sector are vestors are in search of large compacted dealing with the lack of coherent and surfaces (usually investors look at compredictable legislation, and with the ex- pact surfaces exceeding 5,000 ha – cessive bureaucratization of procedures,” which are rarely available, if at all), but Adina Tataru, senior lawyer at bpv Grig- it has also created a certain degree of orescu Stefanica, told BR. confusion in the applicable legislation,” She said the issues are most visible said the representative of Suciu Popa in the fiscal area, citing the special con- Attorneys, adding that the lack of an upstructions tax in the agriculture sector, dated cadastral documentation and regwhich was ditched shortly after it was adopted. Crina Ciobanu, managing associate at law firm Suciu Popa Attorneys, added that 26 years after market liberalization, Romania can be considered to have reached a certain maturity in the agricultural business, which could also apply to the acquisition of land and agribusiness. “However, in both sectors, there is still room for development and massive investment, with Romania becoming increasingly interesting as a market for agricultural production (agribusiness, agri-industrial),” Ciobanu told BR. istration in the land book is another obstacle to transactions. “What we found was very difficult for Farmland remains key sector foreign investors to understand, espeasset Although the low price of farmland still cially as they come from countries lures investors, there are only a few where mere proof of registration in the large compacted surfaces of thousands land book stands as proof of ownership, of hectares and there are still historic is- is the fact that certainty around title of sues with the registration of these ownership is sometimes very difficult to achieve. This is the reason why thorpieces of land. Ciobanu said that prices of agricul- ough due diligence of the ownership tural land in Romania are still “at about chain is always a must and sometimes 10 percent of the transactional level in reveals gaps and risks which are better the mature economies in Western Eu- known from the outset,” she added. Tataru of bpv Grigorescu Stefanica rope, which leaves room for price insaid that the liberalization of the land creases in the future”.

∫ OVIDIU POSIRCA

Monia Dobrescu, Musat & Asociatii

market has allowed foreigners to make acquisitions, but procedures are still cumbersome and there are certain preemption rights, which could see the state itself step in to make a purchase.

Crop management challenges Monia Dobrescu, partner at law ﬁrm Musat & Asociatii, says that the sale of crops does not raise any serious challenges from a legal perspective, but there are certain provisions that should be taken into account.

“What we found was very difﬁcult for foreign investors to understand, especially as they come from countries where mere proof of registration in the land book stands as proof of ownership, is the fact that certainty around the title of ownership is sometimes very difﬁcult to achieve” says Crina Ciobanu, Suciu Popa Attorneys “Practical issues with the sale of crops include the constant inability of farmers to negotiate contracts and/or the constant pressure on farmers due to perishable crops. This often leads to the negotiation and signing of contracts with food suppliers at the expense of farmers, at derisory prices, which unfortunately don’t cover the required capital to continue production to certain standards, and in some cases it could even lead to a complete halt in the process,” Dobrescu told BR. In addition, the lack of a dedicated stock exchange for agricultural products is also generating additional risks

for investors looking to sell their crops. “For instance, 2015 proved to be a very atypical year. All prices for crops decreased significantly, due to a fall in exports (with Egypt encouraging internal production), and farmers therefore experienced difficulties,” said Ciobanu of Suciu Popa Attorneys. She added that the law regarding deposit certificates, which would help players in this sector, has been blocked for more than two years. These certificates would allow farmers to get bank financing if they deposit their crops in licensed silos. At the moment they are forced to sell their crops right after harvesting in order to secure liquidities. The legal experts agreed that the financing and insurance of agricultural land and crops remain difficult. Some progress will be made after the cadastral works are finished. The authorities have tried to convince insurers to work with farmers by creating mutual funds, giving the investors some compensation if their crops are destroyed by extreme weather. However, the legal provisions were not that clear and some new measures are now under debate, according to Tataru of bpv Grigorescu Stefanica.

Players burdened by outdated tax provisions The agricultural sector is still subject to certain old tax provisions which in fact hinder companies doing business in this sector. “For example, investors organized as ‘owner’s associations’ (in Romanian ‘asociatii de proprietari’) pursuant to Law. no 36/1991 are subject to double taxation, as they must pay the income tax due by any company organized as a commercial company, following which the ‘shareholders’ of this association pay 16 percent income tax again, should they choose to receive the actual crops at the end of the year, or 5 percent dividend tax, should they opt for the cash equivalent. Moreover, VAT is applicable and payable, leading to the farmers paying almost 30 percent in tax. Additionally, because of the Fiscal Code, subsidies are taxed in Romania, as opposed to the rest of Europe, where they are tax-free,” said Ciobanu of Suciu Popa Attorneys. ovidiu.posirca@business-review.ro

www.business-review.eu Business Review | July 2016

Realty 2016: office leads the charge as property recovers Office remains the star of the local real estate market in 2016, but close behind the other segments are maintaining growth momentum as well. The industrial sector could see further consolidation, the increase in consumption is boosting retail sales and more new apartments should be delivered this year, heard attendees at the 15th annual Realty event organized by BR.

From left to right: Sorin Visoianu, Immoﬁnanz; Geo Margescu, Forte Partners; Antoniu Panait, Vastint Romania; Andreea Patrascu, Orange Romania; Florin Furdui, Portland Trust; Aurelia Luca, Skanska Property Romania; Mihai Paduroiu, CBRE Romania

∫ SIMONA BAZAVAN Office shows solid growth Whether the Bucharest office market will be able to absorb the high level of new office stock being delivered this year was at the forefront during the debates. But the fact that there is a larger office stock being delivered this year should not be a reason for concern, stressed Sorin Visoianu, country manager operations Romania at Immofinanz. There is demand coming from existing tenants as well as potential newcomers on the local market and the overall evolution of the economy is encouraging, he told participants. “Since the start of the year, we have had 37,000 sqm freshly leased, out of which 20,000 sqm is for new companies,” said Visoianu. A look at the regional context shows that the market has the capacity to absorb this year’s deliveries, added Mihai Paduroiu, head of the office agency at CBRE Romania. Romania is currently the most attractive business destination in Central and Eastern Europe and the class A office stock per capita is well below the region’s average, he outlined. Moreover, prime rents in Bucharest are the lowest in Eastern Europe. All this means that there is still plenty of room for growth, he stressed. “We have a

very dynamic market in terms of demand and new business. Last year, we had 70,000 sqm leased by new companies coming to Romania or by companies that are already present and had decided to expand their operations. This was the highest level in the region except for Warsaw,” said Paduroiu. A similar trend can be observed outside the capital in regional cities such as Cluj-Napoca, Iasi and Timisoara, where demand has grown tremendously in the past three years, he added. Back in Bucharest, demand for new office space is coming from a large variety of companies, said Geo Margescu, founder & CEO, Forte Partners. While it is hard to outline a profile of the most active companies in terms of new leases, one thing they have in common is their focus on streamlining costs and getting the best value for their money, he added. Indeed, while there is room for new office projects in the market, developers need to meet the requirements of more demanding tenants, argued participants. Nowadays a developer needs to offer services, not just space, and to have a flexible policy towards its clients, said Visoianu. Flexibility and consolidation are indeed the key words, agreed Aurelia Luca, country director, Skanska Property Romania. Many companies that have had several offices throughout the city are now

looking to consolidate them in single office project for efficiency reasons, she told the event. Once such company is Orange Romania, which has relocated employees from four different offices in Bucharest to Skanska’s Green Court Bucharest project. All in all Orange Romania relocated 1,600 employees to the new address, moving them to a space which has been customized to reflect the employees’ activity, said Andreea Patrascu, program management office manager, Orange Romania. “We have registered an increase in the productivity of employees since the relocation,” she added. More demanding tenants are also driving developers to look to new areas of Bucharest for office developments that are closer to residential neighborhoods and offer good connections to public transport, said Antoniu Panait, managing director, Vastint Romania. Another developing aspect is the growing demand for green buildings. Green certifications are a must-have for today’s office buildings and for many tenants it is a CSR requirement that needs to be ticked, said Florin Furdui, country manager, Portland Trust.

Retail builds on rising consumption There are positive expectations for the retail market following last year’s good

results, said Liana Dumitru, associate director of the retail agency at Colliers Romania. Fashion retailers saw their sales go up by between 10 and 20 percent in 2015 while the same year they opened on average up to two new stores. This year they are boasting more ambitious plans of between three and ﬁve new openings, she said. There are also retailers who aren’t yet present locally, but who plan to enter the local market in the near future. Many of them are regional players but there are also retailers from Western Europe and the US that are looking at the Romanian market, she added. Recent new entrants include COS, which opened a high-street store on Calea Victoriei, and Forever 21, which will open a store in the future ParkLake mall developed by Sonae Sierra. Developers too have taken notice of the higher sales reported by fashion retailers in particular and there is a tendency to increase rents as result, said Dumitru. This year two major shopping malls are scheduled for delivery in Bucharest, ParkLake and Veranda, while outside the capital Timisoara and Brasov will be two of the most active regional markets. Asked about what will follow beyond 2016, Dumitru predicted that developers will start turning their attention to smaller regional cities of below 200,000 inhabitants, where they will

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not necessarily focus on shopping malls but rather retail parks. Overall, competition is becoming ﬁercer on the retail market, thereby forcing developers to innovate, argued industry representatives. This becomes even more necessary with the rise of online fashion stores. Nevertheless, the online segment doesn’t pose a threat to local bricks-and-mortar stores, they added. It continues to be very important for consumers to have the full shopping experience when they visit a store, be it because they want to try clothing on or to get advice from shop assistants, said Iuliana Ghimpu, leasing manager at Anchor Group. This is why physical shops are relevant and will remain relevant despite the rise of online stores, she stressed. Retailers know that and that is why many choose to invest in upgrading their stores, said Oana Vijiala, general manager of AFI Palace Ploiesti owned by AFI Europe. Such facelifts make sense given that they can boost store sales by 20 percent after renovation, she added. If anything, online and oﬄine stores can be complementary, especially as there are still many areas when shoppers simply don’t have access to shopping malls, added Paul Copil, COO, Fashion Days Shopping.

Industrial is on the rise For the past two years the local industrial and logistics market has been witnessing something of a revival. For years after the crisis there was very little activity on this segment with few new projects being started and most transactions being either relocations or downsizings, said Cristina Pop, head of the industrial agency, JLL. In the last year and a half, however, there has been a continuous growth trend fueled by both manufacturers and logistics players. The growth of online retail is also having a strong say in the market’s advancement, she added. This growth can also be observed in the low vacancy rate which in Bucharest is presently around 5 percent, she added. While this level is the result of increasing demand, the fact that few developers have ventured to invest in new projects in recent years has also made its contribution. Demand for industrial space remains on the rise as Romania continues to be on the map for players looking to invest both in manufacturing and logistics. And this despite the long lingering impediment of its poor road and railway infrastructure, added Pop. Factors such as the available labor force, its qualiﬁcations, and logistics and labor costs make Romania an attractive destination and a leading competitor in the region alongside Poland and the Czech Republic, she set out. Yet precisely such selling points as the local labor force are now becoming an issue, stressed Marian Orzu, head of leasing and business development at CTP. “When it comes to infrastructure, things are moving, maybe not as fast as we would like them to, but there are

19 some improvements. However, it is becoming diﬃcult to ﬁnd trained workforce in industrially developed areas and this is something that should be tackled,” he argued. Asked about CTP’s plans for Romania after a 2015 that saw the company complete several takeovers on the market, Orzu said further expansion is in the cards. “Our target is to reach 1 million sqm of space in Romania by 2018. Right now we have around 370,000 sqm and by the end of the year we will reach approximately 500,000 sqm. We Iuliana Ghimpu, Anchor Group will do that by organic growth as well as further takeovers, although there aren’t many more products left in the market,” he told participants.

Oana Vijiala, AFI Europe

Residential hopes for the best Asking prices for residential properties have remained on an upward trend in the first five months of the year, posting growth of 6.6 percent in Bucharest over this period y-o-y, said Dorel Nita, head of the real estate analysis division at Imobiliare.ro. The number of transactions involving homes has also been on the rise over the five months, growing by almost 20 percent in the capital, he added. While the indicators show a positive trend, the actual growth of the market is distorted by the existence of the state-guaranteed loan program Prima Casa, said Andreea Comsa, managing director of Premier Estate Management. “The number of transaction is fully dependent on a program that is backed by the state and doesn't necessarily represent a healthy trend that we could rely on. One should also consider what will happen once this program ceases to exist,” she said, adding that this would almost surely lead to a drop of the number of transactions. Nevertheless, developers are going ahead with expansion plans and their interest is shifting from southern Bucharest to the northern part of the city, said Gabriel Voicu, director of the new homes division at Coldwell Banker. Banks are helping this by showing more openness to financing residential developments, although they are vetting projects more thoroughly now, he added. For now, the coming into force of the debt discharge bill has somewhat dampened investors’ enthusiasm, but all players will have to eventually get used to the new requirement and there should not be a major impact on the market, suggested panelists. One segment of the market that promises more growth is the premium segment, added Comsa. This is understandable as this niche has seen fewer new developments in recent years compared to the mid market, she commented. One encouraging trend that highlights the confidence buyers have is the off-plan acquisition of such premium properties which Comsa says is something that hasn’t happened for years. simona.bazavan@business-review.ro

Liana Dumitru, Colliers Romania

Cristina Pop, JLL

Marian Orzu, CTP

Paul Copil, Fashion Days Shopping

Dorel Nita, Imobiliare.ro

Gabriel Voicu, Coldwell Banker

Andreea Comsa, Premier Estate Management

Ovidiu Posirca, Business Review

www.business-review.eu Business Review | July 2016

20 INSURANCE

Insurance companies seek reassurance Astra Asigurari, an insurer controlled by Dan Adamescu, is now bankrupt; Carpatica Asig, run by businessman Ilie Carabulea, is on the brink of collapse as the sole investor interested in the company has recently withdrawn; and City Insurance is going through a recovery process. The Romanian insurance market is struggling to find its way to stability.

Marius Popescu, NN

market was also up 10.8 percent, reaching RON 1.8 billion. The development of the general insurance segment was unAs Misu Negritoiu, the president of the derpinned by the MTPL (motor third Financial Supervisory Authority (ASF), party liability), which recorded a market share of 47.4 percent. The volume of commented earlier this year, the Rogross written premiums in this line of manian insurance market is now a normal, attractive one. “We have taken business advanced by 17.4 percent to notice of the reverse of the trend on the RON 3.3 billion. The CASCO segment insurance market. But we need to avoid maintained the same value as in 2014, namely RON 1.7 billion, while property artificial or manipulated increases. Stainsurance stagnated as well, amounting bility, competitiveness and a well-functioning market have been our number to RON 1.1 billion. Health insurance sales increased by one objective and we have reached it,” 31 percent, while the volume of optional said Negritoiu, speaking at the International Insurance and Reinsurance home insurance declined by 4 percent, Forum (FIAR) earlier this year, quoted to RON 336 million. “2015 came with many changes and insurers banked by profit.ro. The local insurance market is back more and more on quality and financial on the growth track, having reached a stability,” say representatives of Asirom. six-year peak in 2015. According to the They add that, overall, the local market most recent market data, the volume of is expanding despite still being domigross written premiums was RON 8.75 nated by car insurance. Additionally, billion, an increase of 8.2 percent on Romanians are becoming more aware 2014. The general insurance market of the importance of guarding against amounted to RON 7 billion, up by 7.6 risk. According to Allianz-Tiriac represenpercent against 2014. The life insurance

∫ ANDA SEBESI

tatives, the growth of the local insurance market is the result of an increase in both the general and life insurance segments. “The life insurance segment recovered to a level similar to that posted in 2012. By contrast, on the general insurance segment, having stagnated between 2012 and 2014 at a level of RON 6.4-6.5 billion, 2015 brought an increase in insurers incomes of about RON 500 million, to RON 6.9 billion of policies,” they say. Compulsory insurance propped up the local general insurance market in 2015. “If we exclude the

inﬂuence of compulsory insurance types like RCA (for cars) and PAD (for houses) we can see that the optional general insurance market posted its third year of consecutive decline in 2015,” add the Allianz-Tiriac representatives. They note that the local insurance market is still very dependent on car insurance. This segment posted about RON 5 billion in policies in 2o15 and represents over 70 percent of total gross written premiums on the general insurance segment and about 58 percent of total general and life insurance incomes. In addition, RCA dominates the car insurance branch. “This segment reaches about 50 percent of total annual general insurance policies. If we compare the local market with the European one we see a completely different situation, as the data show that life insurance dominates the European market,” add the Allianz-Tiriac representatives. As for trends, Calin Matei, deputy CEO at Groupama Asigurari, says that forecasts indicate a 10 percent growth in the insurance industry. He quotes ASF data which show that the health insurance business line will fare well and is likely to register a steady growth rate. “The MTPL segment is expected to stabilize, while companies will diversify their portfolios. The intermediation growth pace will slow and small insurers might leave the market or certain sectors. On the other hand, the ratio of GDP to the volume of gross written premiums is signiﬁcantly beneath the European average and there are certain image problems that affect players on the insurance market. These issues do not help accelerate its growth,” says Matei. He adds that the market context provides opportunities for insurers if

Who is the typical Romanian nonlife insurance customer? According to Groupama Asigurari, citing last year’s IRSOP survey, the typical Romanian non-life insurance policy holder is over 30, with a higher education and above average income. The product is most popular among two-person households, such as couples without children, who focus on the better quality of life that such products and services can provide.

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they are ﬂexible and willing to innovate in regards to their products and services. “The main areas in which we foresee growth opportunities for the Romanian market are insurance products against natural disasters, agricultural products, as well as health and life insurance,” adds the Groupama representative.

What is the most dynamic segment? In Matei’s opinion, at present the most dynamic segment in Romania is health insurance and, generally speaking, employee benefit packages. “This is a consequence of companies’ focus on their employees’ well-being, which has made this one of the most important ways to attract and retain professionals at their workplace,” adds the deputy CEO. Allianz-Tiriac representatives say the life insurance market grew by about 11 percent in 2015, which is good news as it shows increasing interest in these products. “But we shouldn’t forget that this increase comes after 2013 and 2014, two years when it posted a significant decrease compared to 2012,” they say. In their opinion, the local general insurance market trend was evident in the RCA policies, which posted an increase in 2015, for the fourth year in a row. “2015 also saw the highest RCA increase, of over 17 percent or about RON 500 billion in absolute value. The other types of insurance with relatively significant weights, like CASCO and goods and property ones, registered rather stable

INSURANCE 21 performances,” they say. Health insurance is another segment posting relatively rapid growth.

How are insurers faring? Matei of Groupama Asigurari says that 2015 was a very good year for the insurer on the Romanian market, as it posted growth on almost all of its major lines of business. “Our turnover amounted to RON 805 million and proﬁt reached RON 23 million, allowing us to keep our position as one of the market leaders. The most active business lines for our company in 2015 were agro, life and health, mainly as a result of our focus on these areas. We man-

Who is the typical Romanian life insurance customer? Because the Romanian life insurance market is still young, it is hard to draw up a representative customer profile. Customers in this industry mainly go for traditional products, which represented about 60 percent of the total volume of gross written premiums last year and posted an increase of 10 percent on 2014. Popescu says that lately NN customers have shown increasing interest in financial plans for protection, with the number of policy-holders almost doubling last year versus 2014. “For life insurance products, our customers paid an average gross premium of RON 1,744 while the average sum insured was RON 56,311, some 13 percent up on the value posted in 2014,” adds Popescu.

Top 10 insurers ranked by gross written premiums (GWP) for life insurance in 2015 Rank

Company

GWP (million RON)

Market share (%)

1 2 3 4 5 6 7 8 9 10

NN Asigurari de Viata BCR Asigurari de Viata VIG Metropolitan Life Asigurari Asirom VIG Allianz-Tiriac Asigurari BRD Asigurari de Viata Eurolife ERB Asigurari de Viata Generali Romania Ergo Asigurari de Viata Groupama Asigurari

628.73 262.45 235.29 102.95 100.79 90.52 73.19 70.37 46.19 46.18

34.66 14.47 12.97 5.68 5.56 4.99 4.04 3.88 2.55 2.54

Source: www.1asig.ro

www.business-review.eu Business Review | July 2016

22 INSURANCE aged to create products based on our customers’ insights.” He adds that, according to a study conducted by IRSOP, a market research company, in September 2015, 77 percent of the company’s customers were more than satisfied with their experience with the firm. At Allianz-Tiriac, meanwhile, most insurance categories posted a positive performance, and customers are also looking at other types apart from car insurance. “The earnings from our noncar general insurance segment posted an increase of over 8 percent in 2015 compared to the first quarter of last year. This growth was generated by all of our business lines. Within the general insurance segment, third party liability and individual insurance (for accidents, travel and health) posted an increase of two digits. From our perspective, this is additional proof that there is significant potential in the non-car segment,” say representatives. According to them, the Best Doctors’ Clause, a product the insurer launched last fall, did well, with over 1,250 customers having taken out policies at the end of the first quarter of the year.

What’s next for the market? “On the short and medium term, we expect the Romanian insurance market to continue its growth, although the increase will be slight, a single-digit one, in line with the Romanian economy,” says Matei of Groupama. Meanwhile, Allianz-Tiriac representatives expect 2016 to be a year of transition, as 2015 was an extremely volatile one for the Romanian insurance market. “The RCA segment will continue to gain ground and we expect 2016 to be the ﬁrst year when the compulsory car insurance generates more than half of the total general insurance policies,” they say, adding that the majority of other types of general insurance (non-RCA) will register variations of one digit. “Health insurance will continue to post a rapid increase of minimum 20 to 25 percent.”

Life insurance market 2015 marked the recovery of the life insurance industry, which was back on its growth track, posting solid growth of

Calin Matei, Groupama Asigurari

about 11 percent, to reach RON 1.8 billion in gross written premiums. “The evolution of the economy made a signiﬁcant contribution to the development of the local insurance market last year. Given that the World Bank forecasts economic growth of 4 percent this year and 3.7 percent in 2017, the life insurance market could expand more

quickly than it has until now,” says Marius Popescu, general manager at NN Asigurari de Viata. The local life insurance market has been propelled both by measures like the alignment to the Solvency II European directive as of this year and a change in Romanians’ attitude towards individual responsibility for ﬁnancial

Top 10 insurers ranked by gross written premiums (GWP) for general insurance in 2015 Rank

Company

GWP (million RON)

Market share (%)

1 2 3 4 5 6 7 8 9 10

Omniasig VIG Allianz-Tiriac Asigurari Groupama Asigurari Euroins Romania Asigurare Reasigurare Asirom VIG Carpatica Asig City Insurance Astra SA* Generali Romania Uniqua Asigurari

976.68 953.66 758.68 718.40 637.64 583.73 502.15 435.70 414.10 363.90

14.08 13.75 10.94 10.36 9.19 8.41 7.24 6.28 5.97 5.25

*Data on June 30th 2015 Source: www.1asig.ro

planning and their future. “Initiatives like the diversification of solutions for savings and protection that address the more diversified needs of Romanians, the development of strategies for insurers’ long-term growth, better financial education and the definition of legal measures to support this industry will play a significant role in the evolution of the market,” says Popescu. The Romanian life insurance market is still an emerging one, less developed than those in other European countries. Both the penetration level and density of insurance in Romania continue to be among the lowest in Europe. According to a report by Insurance Europe, life insurance penetration was 0.3 percent at the end of 2014, while the European average is 4.6 percent and the highest levels are found in Finland (9.2 percent), Great Britain (8.9 percent) and Denmark (6.8 percent). As for the the density of life insurance, Europeans annually allot an average of EUR 1,124 to such products, while Romanians spend on average about EUR 18, according to Insurance Europe. “So there is real potential and opportunities for the industry to grow, as the need for insurance and protection for the future and the number of potential customers are high on the local market,” adds the NN Asigurari de Viata representative. According to him, the diversification of insurers’ portfolios and the increase of the bancassurance segment, as a result of Romania’s economic growth, were the main trends on the local market last year. “In addition, there is also a digitalization and automatization trend in certain processes, in order to offer customers an experience that meets their expectations, both when they buy insurance and during the whole contractual period,” adds the general manager. He says that in 2015 the increase in the financial protection level was a priority, and it continues to be this year too, both for NN Asigurari de Viata’s strategy and its customers. “The number of individuals who chose financial plans for protection increased by 90 percent last year on 2014 and by 85 percent in the first part of this year compared with the same period last year,” says Popescu. “We expect the health insurance product launched by NN in the first quarter of this year to continue to grow in the near future, while the business development initiatives in the coming period will be focused on health insurance.” So how will life insurance fare? “We expect the life insurance market to do well and the conditions are in place for the development of health insurance, propelled by the increase of tax deductibility for these types of products and customers’ great interest in protecting their health in unpredictable situations. Overall, the life insurance market will reach its real development potential within five to seven years, in a stable economic context,” predicts Popescu. anda.sebesi@business-review.ro

www.business-review.eu Business Review | July 2016

24 HUMAN RESOURCES

Oil and gas recruitment remains frozen as prices plunge The 60 percent reduction in oil prices since mid-2014 has seen demand for industry specialists fall, as companies in Romania and abroad have started to halt riskier, capital-intensive projects. Recruiters say the market for executives in the oil and gas sector has remained depressed as firms are currently looking only for managers with good restructuring skills. engineers. Grajdeanu said that oil and gas employees receive some of the highest wages in the workforce, alongside those in the IT and tobacco sectors.

Local specialists might venture into more dangerous areas

Employment prospects: The depressed oil market has hit the recruitment activity

now looking for specialized engineers in various areas such as drilling and welding, but they need at least five According to the latest data provided years’ experience, which means midby the National Statistics Institute, weight positions. The price of oil has more than the number of people working in the extraction of oil and gas fell by 17.4 halved from a peak of USD 114 per percent between 2011 and 2014. Close barrel in June 2014, eroding demand to 20,000 people were working in this for fresh employees in the exploitafield. However, wages have gone up tion sector as well as at firms providby 14.7 percent in the past four years ing services for large petroleum players. to over RON 5,000 in April 2016. “There are cases in which compaElena Popa, professional & executive search senior consultant at re- nies have fully withdrawn from Rocruitment consultancy Adecco mania, such as Petrofac, precisely due Romania, says that companies have to the lack of profitability in continureduced their recruitment activity by ing their operations. In practice, in around 30 percent compared to the this field we are currently talking 2013-2014 period and some employ- more about restructuring than employment,” Alexandru Talmazan, ees have been let go. “Wages haven’t been cut but managing partner at executive search bonuses were reduced or scrapped,” firm Wrightson Romania, told BR. The number of job openings adPopa told BR. She explained that companies are vertised by companies on the online

∫ OVIDIU POSIRCA

recruitment platform eJobs has remained stable over the past two years, according to Stefania Grajdeanu, the ﬁrm’s PR manager. She said that around 500 announcements in the oil and gas sector are posted each year on eJobs. More than half of the openings are for laborers and technicians, while 11 percent of the vacancies were for

As the demand for specialists in Romania remains subdued, more workers might look for jobs in more dangerous parts of the world, where the industry hasn’t been hit by cost-cutting measures. Talmazan of Wrightson Romania said that the demand for specialists has remained pretty much unchanged in regions that are riskier from a political and social perspective. He cited Libya, Egypt, Iraq and Iran as some of the markets looking for specialists. “Recruitment in this segment will remain in waiting mode. On the global market the prices of oil and gas are still volatile and while consumption is not forecast to increase, the new developments are not justified. This is why I am expecting recruitment in this segment to consist of only natural replacements to teams and not to increase significantly in the next year. Romanian specialists will look for relocations to areas with higher risk, if there are no major alternatives in Europe,” said Talmazan. Executive search consultant George Butunoiu adds that recruitment activity in the oil and gas sector remains low in Romania and will continue in this vein this year as there are few new businesses. “There is a pool of specialists in this field, from all around the world, moving from one project to another in various countries. Once you get on this list, you

Number of employees in oil and gas extraction sector

Net medium wage in oil and gas extraction sector

Year 2014 2013 2012 2011

Year April 2016 April 2015 April 2014 April 2013

Headcount 19,610 22,126 23,295 23,750

Source: INS

Amount (RON) 5,096 5,031 4,279 4,441

www.business-review.eu Business Review | July 2016

HUMAN RESOURCES 25

Alexandru Talmazan, Wrightson Romania

Elena Popa, Adecco Romania

George Butunoiu, executive search

are very likely to stay there for years, until you get tired or want to do something else. From the input I’ve had from foreign managers, Romanians don’t have a special status on this list; I don’t think there are a lot [of companies] looking especially for Romanians when they want to hire people,” Butunoiu told BR. He added that there is a limited number of Romanians working in areas with greater risks, where the pay is higher. Butunoiu said that most local specialists abroad are involved in administration operations.

“At present, there is a pressing need for another kind of manager, who does restructuring and consolidation, and in contrast to the manager from the growth period has to focus on analyzing costs and also on organizational reengineering projects. But he or she also needs to find new niches that generate revenue, which haven’t traditionally been explored,” said Talmazan of Wrightson Romania. He added that from his firm’s perspective, the demand for such services has remained flat. According to Popa of Adecco Romania, the recruitment of specialists outstrips that of executives by a long margin. Trying your luck in a new industry BR asked the recruitment experts for some alternative job prospects for a specialist who might have lost his or

her position in the oil and gas sector, or for one trying to do something else until demand in the market picks up again. Raluca Penes, HR coordinator at recruitment consultancy Smartreee, says that specialists in the oil and gas industry have limited options to work in other ﬁelds, because the industry is much too niche and has very speciﬁc requirements regarding skills and training. However, Popa of Adecco Romania says that such specialists could look for new jobs in production, the naval sector, the chemical industry or could work in consultancy.

Companies looking more for executives who can cut costs The fact that companies have been cutting costs ever since the price of oil collapsed has also translated into the recruitment patterns of executives.

Companies shed jobs in 2014-2015 Taking a look at the biggest employers in the energy sector, which are prima-

Top 20 employers in the oil and gas sector in 2015* Name

Headcount/Change vs 2014

Turnover (RON)/Change vs 2014

OMV Petrom Romgaz Transgaz Lukoil Romania Distrigaz Sud Retele E.On Distributie Romania Conpet Rompetrol Downstream OMV Petrom Global Solutions Rompetrol Rafinare Engie Romania Foraj Sonde (Craiova) Expert Petroleum Foraj Sonde (Ernei) Petrotel - Lukoil Socar Petroleum Rafo Oscar Downstream Karom Servicii Profesionale in Industrie Amromco Energy

15,581 (-12.7%) 6,191 (-0.6%) 4,769 (-1.7%) 2,986 (-0.9) 2,520 (-1.5%) 1,866 (21.3%) 1,704 (-0.2%) 1,577 (-11.1%) 1,204 (2.5%) 1,173 (-7.7%) 553 (-0.1%) 530 (-16.5%) 468 (-4.4%) 429 (-26.6%) 428 (-3.6%) 408 (-4.4%) 398 (-4%) 372 (21.5%) 359 (3.1%) 330 (-3.5%)

13.6 bln (-17.5%) 4 bln (-11.1%) 1.5 bln (-1.2%) 5.4 bln (-6.9%) 1.2 bln (-8%) 1.6 bln (108.6%) 381.3 mln (1.6%) 8.2 bln (-13,6%) 544.6 mln (78.9%) 9.8 bln (27.4%) 4.5 bln (0%) 124 mln (-39.5%) 111.9 mln (-2%) 52.6 mln (-47.3%) 4.3 bln (-32.8%) 616.2 mln (-17.4%) 9.7 mln (-75.6%) 1.7 bln (-10.5%) 17.4 mln (728.5%) 272.3 mln (14.2%)

*includes oil and gas producers, retailers and distributors Source: National Trade Registry Office (ONRC)

rily the oil majors, a large share of them have reduced their headcount in the face of shrinking business. This is also the case in the refining segment, but even the distribution arms of utilities have taken some cost-cutting measures, albeit to a lesser extent. For instance, Austrian oil major OMV Petrom fired 12.7 percent of its workforce last year, while stateowned gas producer Romgaz trimmed its headcount by close to 1 percent, as its turnover fell by 11 percent to RON 4 billion, according to the National Trade Registry Office (ONRC). Companies working with oil majors and which provide a wide array of services such as drilling and exploration of fields seem to have been worst hit. This was for instance the case with Prospectiuni, the Romanian firm providing exploration services for the oil and gas sector, which filed for insolvency in April. The company had been struggling with falling oil prices, posting losses in the past two years. Founded in 1950, it has carried out 2D and 3D acquisition surveys on close to half a million square meters. Since 1970, Prospectiuni had worked on projects in the Middle East and Africa. Another company in the energy sector struggling to exit insolvency is Vulcan SA. The firm was founded in 1904 and manufactures industrial equipment. Recently, Vulcan started providing pumping units for a project in Kuwait and is looking for new contracts in the Middle East. According to experts, oil-producing companies in Romania are struggling to find resources in fields that are both mature and fragmented. Based on the current known deposits and consumption rates, the country might run out of oil and gas in little over a decade. Companies are pinning their hopes on massive gas deposits in the Black Sea, but development in this area is still in the early stages. Several oil majors, including USbased ExxonMobil, Austrian OMV Petrom and Russian Lukoil, are seeking deposits that could prove to be profitable. ovidiu.posirca@business-review.ro

Firms’ costs per employee in the oil and gas extraction sector* Year 2014 2013 2012 2011

Amount (RON) 8,951 7,916 7,263 6,347

*includes wage and other expenditures made by the employer Source: INS

www.business-review.eu Business Review | July 2016

26 INTERVIEW

New state secretary: cheap labor just part of story Although he worked abroad as an investment banker until a few months ago, state secretary Manuel Costescu has taken up the challenge of making Romania more attractive to foreign investors. In an interview with Business Review, the head of InvestRomania detailed the reasons investors are choosing the country for new projects. One of the conclusions is that Romania still has one of the most price-competitive workforces in Europe, but companies are now looking to develop more complex projects, which demand R&D expertise. should limit the discussion to automotive. I think the engineers, software developers and overall innovators have reached a maturity through which they are able to attain even 0 percent error rates in manufacturing. This can only happen through dedication and talent, and I believe we have plenty of both. This is not wishful thinking, as I am not the only one seeing this potential. Signiﬁcant automotive manufacturers have started the development of R&D operations locally. InvestRomania is currently working with several foreign investors interested in opening R&D facilities here. Clearly the trend is upwards.

∫ OVIDIU POSIRCA What’s the investment story of Romania? Are we still talking about a country that can attract companies based on lower wages than the EU average? Romania today has a very different narrative from 15 years ago. Indeed, Romania has, on average, one of the most price-competitive workforces in Europe. However, this is only part of the story. We hear investors who come and stay in Romania mention several attributes which make our country their destination of choice: the high quality of products and services, an educated and large workforce (100,000 IT specialists by 2018) who are very willing to work hard, language skills (numerous service firms see this as highly valuable), great IT infrastructure (top three in Europe), very appealing and increasingly hip lifestyle, low crime rate, political stability in an unstable region (we do not have any nationalist parties in power or representing large parts of the population), connectivity to Europe, cultural affinity, to name but a few. Romania is now a country of quality. We talk to investors who tell us that the error rates on their shop floors are lower than in the countries of origin – and on a recent visit, I confirmed the statement with the headquarters of the company. More and more investors come to Romania because you can produce high-quality products and deliver high-quality services at a competitive price. How did this evolution unfold? While investors came to Romania 15 years ago because of cheap labor, the workforce has developed with the industries and allowed entrepreneurs to branch out into areas with higher value added. So even as the costs of production have risen (which is undoubtedly good for the workers), so have the quality and the value added. We see now that investors who used to manufacture products are also expanding into R&D. We also see investors who started manufacturing low complexity products grow in complexity, as they discover that the workforce is able to develop alongside and deliver a very high level of performance.

CV: February 2016-present: state secretary at Invest Romania 2010-2016: investment banker at JP Morgan – public sector coverage 2009-2010: owner of Kugi-Costescu Consultants 2005-2009: engagement manager at McKinsey&Company for multinational companies in the US and Canada Costescu holds an MBA from MIT – Sloan School of Management. He has a master’s in Public Administration/International Development from Harvard University – Kennedy School of Government and a bachelor of Economics from Brandeis University.

Can Romania attract major investments without offering state aid? You must take into account that there are large investments that did not benefit from state aid at all, and yet they were executed. The total CAPEX in state aid for example was EUR 100 million for 2015, while investments were somewhere in the range of EUR 3 billion. That being said, state aid is a mutually beneficial instrument making the investment case better for foreign investors and returning to Romanian taxpayers EUR 2.28 for every EUR 1 invested in the 2007-2014 interval. Also, state aid is offered by our neighbors, so to stay competitive it is important to understand what our competition does. What are the sectors with significant investment potential that haven’t been ex-

plored enough in Romania? In terms of sectors with high investment potential, the government has identiﬁed six priority sectors that we promote within our "Industry of the Month" project. We launched this in early May, with the key objective to improve the visibility of the most important industries. The sectors I mentioned are IT, automotive, aerospace, bio-economy, creative industries and agriculture. What you must remember is that these sectors (where InvestRomania aims to encourage investment, both foreign and domestic) are not the only ones we are working on, but they have the potential to drive outstanding economic growth. Do you think Romania could attract companies making innovative products, such as electric carmakers Tesla or Ford? Of course it can. And I do not think we

You used to work as an investment banker in London. How is Romania perceived in the City? Why did you take this job in the public sector? Foreigners’ (and Romanians’) perception of Romania lags far behind today’s realities, at least as far as investment opportunities are concerned. It is our responsibility to use every channel to close this gap Why did I accept this job... A number of us who came back thought about it a fair bit when we arrived. And we all came to the conclusion that the reason was very simple: we believe in Romania. (We even named our internal mail group 'Cred in Romania'.) I am not the only one, however. I am part of that critical mass of individuals who attracted me through their integrity, the most important attribute when representing your fellow citizens, starting at the very top with Dacian Ciolos, Dragos Pislaru, Dragos Tudorache, Vlad Voiculescu, Oana Bizgan, Ramona Ianus, Calin Ungur and Dan Suciu, to name but a few. We are now in the middle of an electoral campaign, so it is hard to distinguish signal from noise. However, I have no doubt that everybody who has served in this government because they believe in Romania will remember this experience. My personal view is that, for that part of society of successful but politically inactive individuals, this could be an Apollo moment, which could gradually change our society. ovidiu.posirca@business-review.ro

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28 LOCAL ELECTIONS

Two-party system consolidated by local elections The left-wing PSD and liberal PNL mayoral and local council candidates got more than half of the votes across the country in May’s elections. In Bucharest, the Social Democrats won the all the city halls – even though some of the winners are the subject of prosecution proceedings. Mihai Toader (PSD) – mayor of District 2 Toader was elected mayor despite having been practically invisible before the start of the electoral campaign. He is replacing Neculai Ontanu, who was suspended from the position after being accused of corruption. The Social Democrat was a deputy mayor during Ontanu’s reign over District 2. Toader saw off a challenge from Liberal candidate Dan Cristian Popescu. Pundits reckon that Toader was elected simply because he represented the PSD, which is one of the two parties with the biggest political capital, alongside the PNL.

Robert Negoita (PSD) – mayor of District 3

∫ OVIDIU POSIRCA Gabriela Firea (PSD) – mayor of Bucharest The Social Democrat senator is the first woman to be elected mayor of Bucharest. She won the election by a comfortable margin, with 42.9 percent of the vote, with her main rival, the leader of the Union to Save Bucharest, Nicusor Dan, claiming 30.5 percent. Firea is a former talk-show host and media manager who has worked for the media conglomerate Intact, founded by controversial businessman Dan Voiculescu. He has been in jail since the summer of 2014, serving a ten-year sentence for an illegal privatization. When the results were in, Firea vowed to make the surface transit system free for all passengers. However, she eventually rowed back from her initial pledge, saying that Bucharest needs to create more bus lanes first. She added that the state-owned public transit operator RATB needs a complete overhaul to attract fresh funding. Only after these targets are met, might we hope to ride the bus for free.

Firea is also looking to bring the City Hall offices back to their flagship home in central Bucharest. The building has been undergoing consolidation works for the past six years. The new mayor said that her office would first of all be sanctified and she would have at least one icon on the wall.

Daniel Tudorache (PSD) – mayor of District 1 Tudorache has been a low-key figure on the political scene, but he has been propelled to attention since defeating French expat Clotilde Armand in the electoral race for mayor of District 1. Armand, who is a member of the USB, asked for a recount, as the Social Democrat had won by a margin of just over 2 percent, but her request was turned down. Hundreds of people staged a protest in Bucharest to support her, but eventually she decided to accept the position of local counselor in District 1.

Despite having been prosecuted for tax evasion, Negoita was awarded a second mandate as mayor of District 3. The local press had also reported that the Social Democrat might have cheated on his doctoral thesis. The National Anticorruption Directorate said that the politician owed VAT of EUR 17 million for apartments he had sold in several complexes in and around the capital. Before starting his political career, the mayor was a real estate developer. He got 60.2 percent of the vote.

Daniel Baluta (PSD) – mayor of District 4 After former mayor Cristian Popescu Piedone went on trial over the fire at Colectiv Club, new candidates emerged in this district. However, the Social Democrat was able

to get almost 39 percent of the vote, while his competitor, the Liberal Razvan Sava, got 21.9 percent. Sava, who also served as interim mayor of Bucharest, after Sorin Oprescu was suspended, appeared in the electoral campaign alongside Piedone. Baluta was deputy mayor during Piedone’s tenure. The former mayor had attempted to run for a new mandate, despite having previously promised to retire from politics.

Daniel Florea (PSD) – mayor of District 5 The former judge won the race in Bucharest’s poorest district. Florea saw off the former District 5 mayor Marian Vanghelie, who had run despite being on trial for corruption. Despite boasting that he was still popular, Vanghelie got only 20.8 percent of the vote, while Florea received 36.6 percent. Liberal candidate Ovidiu Raetchi was runner up, with 26.3 percent. Vanghelie is accused of getting kickbacks from contracts awarded by the Town Hall to private firms. He inked those deals when he was mayor.

Gabriel Mutu (PSD) – mayor of District 6 Mutu won despite being prosecuted for tax evasion and money laundering. In his defense, the new mayor said that the prosecutor that had worked on the case had been detained by the National Anticorruption Directorate. The Social Democrat is replacing the Liberal Rares Manescu, who was practically the least visible mayor in the 2012 legislation. However, Manescu was the only mayor in Bucharest out of seven who had not been prosecuted. ovidiu.posirca@business-review.ro

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LOCAL ELECTIONS 29

Mayors of key cities across Romania ∫ OVIDIU POSIRCA George Scripcaru (independent) – mayor of Brasov Although he is on trial for corruption, Scripcaru secured his fourth mandate at the helm of the mountain city. He ran as an independent this time and prosecutors have put him on trial for the illegal financing of his 2012 campaign. After getting 52.5 percent of the vote, Scripcaru was asked how he felt after winning. He just said: “You have to ask the citizens.”

Emil Boc (PNL) – mayor of Cluj-Napoca The Liberal politician won his fourth mandate with a landslide victory: 69.1 percent of the vote. Boc interrupted his mayoral stint during the economic crisis, when he led the government that implemented austerity measures. At that time, he was part of the PD, the party that was closely linked to Traian Basescu. Although it was rumored that Boc would join Basescu’s new party, the PMP, this hasn’t happened.

Decebal Fagadau (PSD) – mayor of Constanta The Social Democrat prevailed despite the Liberals’ hope that the electorate would reject the PSD after the former mayor, Radu Mazare, was accused of corruption. However, Fagadau got 42 percent of the vote, with former admiral Vergil Chitac on 34.6 percent. The PNL’s Chitac was supposed to put an end to Mazare’s “hegemony” of 16 years at the helm of the city. Fagadau was already interim mayor after Mazare retired from his public roles.

Mihai Chirica (PSD) – mayor of Iasi Although the former Social Democrat mayor Gheorghe Nichita was suspended after being put on trial for corruption, another PSD candidate triumphed, with 46.63 percent of the vote. He said that after four years at the helm of the city he did not want “to be ashamed to look into the eyes of the people”. Chirica was deputy mayor during Nichita’s tenure.

Astrid Fodor (FDGR) – mayor of Sibiu Fodor served as interim mayor of the city after Klaus Iohannis was elected president of Romania. Iohannis led the Transylvanian city for four consecutive mandates. Fodor is part of the Democrat Forum of Germans in Romania, which launched Iohannis’s political career in 2000. The new mayor attributed her victory to a series on factors, including her experience in the administration sector and the fact that she had worked with Iohannis in the past.

Nicolae Robu (PNL) – mayor of Timisoara The Liberal politician got a second mandate as mayor of Timisoara after securing more than half of the vote. In his first four years, Robu made several controversial statements, for instance, that the problem of crows creating havoc in the city could be solved if the birds went on birth control pills. The mayor has also set up his own “TV channel” on Facebook, where he defends himself against his political rivals. After learning that he would remain at the helm of the city for another four years, Robu said he was a “labor fanatic” who is fighting mafia interests, although he did not elaborate on this statement. ovidiu.posirca@business-review.ro

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30 INTERVIEW

Vodafone Romania announces investments spike Vodafone Romania announced recently that it will be making “huge investments” in Romania, on a par with those when the mobile operator started business here. The exact value of the investments has not been disclosed. Annual investments made by Vodafone in Romania in recent years have been north of EUR 100 million. President and CEO Ravinder Takkar told BR about Vodafone’s strategy on the local market. You previously said that Vodafone had blocked countless security attacks. How do you ensure network security? As part of our Supernet 4G experience, we provide our users, both consumers and businesses, with a security solution embedded at the network level, which protects them from malware, viruses and phishing attempts. Our users are protected without having to install any app or change any settings on their smartphones and tablets, as the security component is network-based and the number of sites that we monitor on a day-to-day basis is continuously growing.

∫ OTILIA HARAGA Vodafone has announced “huge investments” in Romania. Could you provide a percentage split? The network has always attracted the highest share of our capital expenditure. I would say that most of our investments go into our network while the rest are focused on providing a superior customer experience, through systems, processing, IT and applications, as well as our store network. Do you see the Romanian market as very sensitive to pricing, or is the customer ready to pay more for a better experience? In terms of telecommunications, Romania is a country that quickly adopts international trends and we see our users becoming more focused on quality, services and content than on the pricing aspect. Of the European markets where Vodafone is present, our financial results for 2015-2016 show that Vodafone Romania has had the fastest growth, after four consecutive quarters of rising service revenues. A trend that we see in our usage is that Romania continues to grow on voice, with a 10 percent increase over the last two years, while the growth in data and smartphone penetration is also among the top in Europe. What is your position on the issue of prepay card registration? Clearly, from the security perspective, the Romanian government and security services feel like registration is important – and we understand that. They have a law, we are working with them on some of the details and I hope there will be a good collaboration to find the right ways, because we believe there are good ways to do prepay registration and there are not so good ways. We hope that we’ll find a mutually good way to do that. There are multiple angles: one concerns what the customer must do to register, what information they need to provide, and how they get that done, which I think is very important because when you have millions of prepay customers, finding a nice manner to do this work is very important. Concerning the timeframe, there were earlier discussions about six months which seemed quite fast and then there were discus-

How much do online sales amount to, out of total devices and accessories sales? How are you developing the online channel? The digital channels are posting a continuous growing trend in terms of handsets and accessories transactions, with speciﬁc annual peaks, such as Easter, Black Friday and Christmas. Also, from a bill payment and top-up perspective, we have experienced growth, with the fastest rate coming for transactions made through the MyVodafone mobile app. Romanians like to browse online and still go to stores to get help from our specialized staff and look at the devices.

CV: • May 2014 – appointed CEO of Vodafone Romania • January 2012 – appointed CEO of Vodafone Partner Markets • 1994 – joined Vodafone working as EBU director and strategy director of Vodafone India, group product development manager for Vodafone Live, chief technology officer for Vizzavi and other operating roles at Vodafone Spain and Vodafone Portugal • Served as board member of Vodafone India and Indus Towers • Before Vodafone, he was management consultant at DMR Group • Holds a bachelor’s degree in Computer Science from Loyola Marymount University, Los Angeles sions about 18 months. I think that somewhere in between 9 months to one year, we should be able to ﬁnd a mechanism. It still means a lot of work and a lot of customers, and there will always be special circumstances, but I think we can make it work. Have you done this on other markets where you have operations? We have done this in other countries

in Europe; it was a highly designed process. In many countries, like England and Italy, where they have prepaid registration, it happened many years ago. In India, we have 180 million customers and it is full prepay registration there. And then there is the ‘what is it you want registered’ question, to which I am hoping we will ﬁnd a good solution for all of us.

How many stores does Vodafone run, both its own outlets and through franchise? What changes will you make in this area? Vodafone Romania has a network of hundreds of stores – own stores, franchises and dealer stores. We continuously grow our franchise store network and, as an overall retail presence, we want to be where our customers need us. Our coverage is constantly evolving. We have roughly 150 franchises today. How many employees does Vodafone have in its different business areas? Vodafone Romania employs roughly 3,000 people, out of whom 1,000 work in the customer operations area. Our excellence centers in Romania are also growing, in terms of number of employees. Nowadays, in addition, we employ 800 people in Vodafone Shared Services Romania and 600 in the Network Operations Center. otilia.haraga@business-review.ro

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32 HEALTHCARE

Local patients lack access to essential drugs Romanian patients are finding it more and more difficult to get access to much-needed medication due to drug shortages on the market. Pharma companies and patient associations are warning that the situation is serious. The Health Ministry has not yet taken concrete action to ensure the constant supply of drugs to patients.

Big problems: the main cause of patients’ diﬃcult access to medicines is the drug policy in Romania

∫ OTILIA HARAGA More than 2,000 drugs have been difficult to get hold of on the Romanian market over the past two years, according to APMGR data, most of these being drugs for treating cancer and hospital infections. “Romanian patients’ difficult access to pharma treatments is caused by the unsustainable fiscal regime and the discriminatory price policy for the generic pharma industry, which eliminates cheap generic drugs from the market and encourages the export of expensive ones. The clawback tax which is applied in a non-differentiated manner to generic drugs, in spite of the price conditions (i.e. the price of this category of drugs must be 65 percent of the price of the corresponding innovative drug), as well as the double differentiation (i.e. by reporting to 12 EU benchmark countries and to 65 percent of the innovative drug price) have a disastrous impact on the price of generic drugs, especially those drugs at accessible prices that ensure basic treatments, notably for chronic patients. Most affected are drugs under RON 50, because their price is below production price, and producers are

forced to close down entire production president of the Federation of Associalines,” Laurentiu Mihai, executive direc- tions of Cancer Patients (FABC), said: tor of the Association of Generic Drug “We have been suffering for years from Producers in Romania (APMGR), tells the disappearance of drugs from the Romanian market, for various reasons: BR. The APMGR representative com- parallel exports, the low price of the plains, “The relevant Romanian health drugs (hence no proﬁt for producers), authorities have not yet adopted any of and lack of responsibility from the Minthe concrete measures proposed by the istry of Health, which should have clear APMGR to halt the disappearance of strategies so that we no longer face cheap drugs from the market and take these problems. Maybe they are workthe local pharma industry, which is ex- ing hand-in-hand with those doing the clusively made of producers of generic parallel exports and that is why they are not taking the necessary measures,” Irdrugs, out of crisis.” The association is calling for a differ- imia suggested. “The main cause of patients’ diﬃcult entiated calculation of the clawback tax, and consultations with the entire access to medicines is the drug policy in pharma industry to ensure patients’ ac- Romania. The political populism of precess to treatments under conditions vious governments led to measures such as repeatedly cutting the price of that are fair to all actors on the market. Patient associations are also complain- drugs in Romania, which are basically ing about drug shortages for various the lowest among 12 comparable councategories of illnesses. “We have signals tries in the EU,” says Petre, of COPAC. He complains that the low price of that drugs for diabetes, Parkinson’s disease and rheumatic diseases are miss- drugs has made them very attractive for ing,” Iulian Petre, communication chief parallel exportation, where medicines of the Coalition of the Organizations of are taken from Romania and sold in other countries for much more money Chronic Patients (COPAC), tells BR. Cancer patients in particular have and with immediate down payment. “At the same time, the very low prices been systematically confronted with drug shortages for quite a long time. In imposed on producers, which are also a previous statement to BR, Cezar Irimia, benchmarks for other markets that are

more important to these producers; supplementary taxation through the clawback tax; and parallel exports have made many producers withdraw their products from Romania or not even attempt to enter the Romanian market,” says Petre. He warns that the situation will become even worse from July 1, when, under Health Ministry Order 75/2009, article 8₁ will come into force, which cuts the price of original drugs that are out of patent by 35 percent, far below the European minimum, affecting the price of drugs also in countries that are comparable to Romania. This is why many producers are threatening to withdraw from the Romanian market, Petre tells BR. The Romanian Association of International Drug Producers (ARPIM) previously warned that 800,000 patients may not be able to beneﬁt from innovative treatments from July, following the disappearance of 123 drugs from the market. According to ARPIM, this situation is attributable to article 8₁, which lowers the price of original drugs in line with the value of generics. “This stipulation will have extremely serious consequences for Romanian patients – not just immediate, by limiting their access to treatment, but also long term. The price of drugs will decrease by 35 percent, falling below the European minimum threshold, which is totally unsustainable, and compels drug producers not only to reconsider their product portfolio but also to reassess the opportunity of bringing new drugs to Romania,” said Dan Zaharescu, executive director of ARPIM. “Even though all the experts say that the pricing policy in Romania must be rethought, and that the adoption of article 8₁ must be stopped, the Health Ministry is not taking any action. They will probably let the drugs be withdrawn from Romania and then blame the producers. They should at least for now stop article 8₁ from coming into force, then implement a new drug policy ensuring patients’ access to drugs,” says Petre. However, APMGR members argue that article 8₁ is beneﬁcial, because it will encourage competition onto the market. “In the case of the highly publicized measure introduced in June 2015

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[…] we wish to mention that it was introduced at the recommendation of the Competition Council, which found, following an investigation into the pharma market, a discriminatory price treatment between generic and out-ofpatent drugs. The measure rectifies the severe discrimination against generic drugs and it will increase patients’ access to treatment, because it encourages true competition on the drug market,” Laurentiu Mihai, executive director of the APMGR, told BR. BR asked the Ministry of Health for its position on the issue, but had received no answer by the time the edition went to press. However, according to media reports, the health minister, Vlad Voiculescu, is aware of the drug shortages faced by patients. In fact, he even made it a priority of his term to ensure that essential drugs are no longer missing. “The first thing would be essential drugs. ‘Essential drugs’ is a term from the World Health Organization that covers cheap drugs that have existed on the market over the last 10, 20, 30, even 40 years. (…) There is no doubt regarding their efficiency and the cost for their efficiency,” said Voiculescu, quoted by Agerpres newswire. He went on, “Over the coming weeks, I hope we make significant progress in this direction. I am not the first minister to be confronted with the lack of some cheap drugs in hospitals, but I definitely want to be the last. I

HEALTHCARE 33 would like the solution not to come from a single person or a group of people, but to be a systemic solution. It must be a solution based on clear rules and procedures, and – this is extremely important – it should be transparent, so that doctors, patients, hospital managers and the media can follow these issues, see where the problem is and ask for its urgent resolution, because these things are extremely urgent.” Patients’ restricted access to drugs is not a uniquely Romanian problem: other countries in the Central Eastern European (CEE) bloc face such challenges too. Recently, Voiculescu participated in a regional meeting in neighboring Bulgaria to come up with solutions to the crisis. “CEE is seeking unity to ensure access to drugs for 124 million citizens. While drug expenses in CEE reach between 14 and 24 percent of total expenses in the healthcare system, health ministers from ten states met in Sofia to look for cross-border cooperation solutions to surpass the challenges posed by access to drugs,” reported Agerpres newswire. The final aim is the devising of an international agreement to allow firmer negotiation terms with the pharma industry, to the benefit of the patient. The next meeting between the ministries will take place in Bucharest at the beginning of July, and Romania will take over the coordination of the project. otilia.haraga@business-review.ro

Drug shortages on the Romanian market Ceftriaxonum (severe hospital infections) 2014: 6 producers 2015: 1 producer Docetaxelum (cancer) 2014: 7 producers 2015: 3 producers Oxaliplatinum (cancer) 2014: 7 producers 2015: 2 producers Meropenem (severe hospital infections) 2014: 6 producers 2015: 1-2 producers Gemcitabinum (cancer) 2014: 6 producers 2015: 2-3 producers Levocetirizinum (central nervous system) 2014: 5 producers 2015: 2 producers Vancomycinum (severe hospital infections) 2014: 3 producers 2015: 1 producer Levodopum +Benserazidum (central nervous system) 2014: 3 producers 2015: None left Piperacillinum+Tazobactanum (severe hospital infections) 2014: 4 producers 2015: 1 producer Valsartanum (cardiovascular disease) 2014: 9 producers 2015: 2 producers Midazolam (ICU) No producer Digoxin (cardiac seizures) No producer

*Source: APMGR

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34 ONLINE

Uploading new growth: local online stores are optimistic about the future The Romanian e-commerce market hiked by nearly one third last year, which can also be traced in the rising average shopping cart value. Online store pundits are optimistic but the sector still must overcome obstacles like low public digital literacy, online stores’ slow upload speeds and a still high purchase abandon rate.

Adelina Oprea, FashionUp

Antonio Eram, Netopia

more than EUR 200 million of this sum will be on the fashion niche. At the moment, 10 percent of RomaLast year alone, Romanian e-commerce nians pay by card – both standard paysoared in value by 31 percent to RON 8.4 ments and payments in installments – billion. “The online payments market and 1 percent use other online payment significantly hiked over the course of methods such as wire or iTransfer. last year. The average value of Romani- However, the majority (89 percent) still ans’ online shopping carts jumped by choose to pay cash upon delivery. “Cards with installments continue to approximately one third, to over RON 260. The largest online transaction was top the preferences of those who pay registered in e-tail and exceeded RON online. The value of an average transac140,000,” said Marius Costin, country tion carried out with this type of card is three times higher than an average card manager at PayU Romania. Between April 2015 and March 2016, transaction,” said Costin. Payment from mobile devices is still PayU Romania processed online transactions worth over RON 1.2 billion, 44 in an early stage: only three out of ten percent up on the previous tax year, ac- Romanians paying by card choose to make their order from a mobile device. cording to company officials. NETOPIA mobilPay processed over “An overall analysis of online payments in Romania shows us an unpre- 2.6 million online and mobile transacdictable, sometimes spectacular tions in 2015, 25 percent up on the preevolution for this year. The main engine vious year. The overall value of the will be the fact that traders are promot- sums paid digitally increased by over 60 ing online payment means to the detri- percent on the previous year, reaching ment of cash, against the backdrop of a more than EUR 135 million, Antonio decrease in interchange commissions. I Eram, CEO and founder of the company, estimate that the volume of payments told BR. “Of the total transactions we intermeprocessed by PayU will increase by 40 percent versus the previous fiscal year,” diated, more than 45 percent were carried out from mobile devices. These predicted Costin. IT&C is the trail-blazing category of were both online payments carried out the online domain, with over 40 per- from smartphones and SMS payments cent of the total number of orders. The processed by NETOPIA mobilPay,” IT&C shopping cart is three times more Eram added. In spite of these encourexpensive than average, reaching over aging statistics, the e-commerce market RON 700. Fashion and beauty products faces some serious obstacles. Firstly, Romania ranks very low on are in second place, followed by home the digital literacy scale, which is keep& deco, children’s products and books. “I estimate that in 2016, online sales ing the adoption rate down. In the Digital Economy and Society in Romania will surge to EUR 2 billion,” Adelina Oprea, FashionUp marketing Index 2016, Romania came last out of director, tells BR. She forecasts that the 28 European Union member states.

∫ OTILIA HARAGA

Marian Alecsiu, F64

In terms of the propensity of people to use internet services, Romania scores 0.34 (up from 0.31), putting it second to last among EU countries. For the integration of digital technology by businesses, Romania scored 0.2, its lowest score, landing last in the EU. “It is true that we have the lowest percentage of consumers who have bought online, only 11 percent. I see this as an opportunity, since the market has a high growth potential and online stores have the chance to educate consumers,” Razvan Pop, marketing director at PC Garage, tells BR. Another potential impediment to online shopping is the fact that the upload speed of Romanian online shops is below the European average, according to research by online marketing agency Today’s. The company analyzed 556 local shops to see how many of them offer optimized platforms for mobile devices and the average time web pages take to upload. The analysis found that the average upload speed of the scrutinized stores was 8.4 seconds. Even the biggest and best-known online stores in Romania have an upload speed between 3 and 6.5 seconds, while Google recommends a maximum of 2 seconds. The analysis also revealed that 38 percent of online stores were not mobile responsive, which poses a problem because, globally, there are more mobile users than desktop users. The main reasons for abandoning a purchase are that the order flow was ambiguous and untrustworthy and the check-out page had many fields to fill in and required too much information (some stores still ask for a personal

identification code), says Oprea of FashionUp. She cites secondary reasons such as that customers fear products will not meet their expectations or that they will be delivered too late. Also, the customer may have added the products to the purchase basket on instinct, but keep them in the basket until they can afford to buy them, adds Oprea. The lines between the respective advantages of online shopping and traditional shopping are starting to blur in people’s minds, according to a GfK FutureBuy survey. Traditionally, online shopping was known to have certain perks such as the best price, time savings and a wide choice. Shopping in bricks-and-mortar stores comes with advantages such as a better interactive experience and immediate product receipt. Marian Alecsiu, co-founder and GM of F64, tells BR that price is an important factor which can influence the decision to buy. “If the payment process is hard or difficult, there are high chances of losing the customer to the competition. If the buyer is just undecided, it is recommended the retailer offer him/her the possibility to return to the decision or persuade him/her to finish the order.” “Many people use the shopping cart as a wish list. They are ‘hunting prices’, evaluating other offers or delivery conditions and only decide later, after they have probably added the same products to the baskets of several other online retailers. We have noticed that users are willing to pay more if they know they will benefit from a complete, safe and fast service,” Marius Panait, managing partner at Entelion Software, which develops the Teamshare platform, tells BR. Some Romanians prefer to go shopping the traditional way, for advantages such as being able to try before they buy (56 percent). Secondly, they like that they can get their hands on the product immediately (51 percent) and thirdly, they are in the habit of it (30 percent). In the case of online shopping, it also depends very much on the profile of the consumer, Pop tells BR. “In Romania, definitely fewer online orders are being carried out than in other states, but we have noticed a continuous increase in online transactions and even the migration of some clients from offline to our websites,” Ioana Molnar, GM of Magnolia, tells BR. otilia.haraga@business-review.ro

www.business-review.eu Business Review | July 2016

EDUCATION 35

Testing times for the education system Dragos Iliescu, CEO and chief scientist at Brio, tells Business Review about the recent launch of Brio, the first standardized testing system in Romania, and the impact this platform will have on the local education system. ∫ ANDA SEBESI What is Brio and what are its main advantages? Brio is the first standardized testing system in Romania. www.brio.ro, the platform on which this system runs, facilitates the evaluation of Romanian students from the 1st to the 12th grade through objective, valid and errorless tests. These standardized tests are normalized, meaning that answers given by the participants are related to those given previously by a comparable group of similar individuals (students of the same age). Thus, the score can be understood fairly and is not dependent on the generosity or strictness of the assessor or the easiness or difficulty of the questions. In addition, the results of each Brio test are actionable. Each report shows exactly what a student does or does not know so that it is clear what they should work on to increase their performance. How does the Brio system work? Brio is a useful tool for parents, teachers and students. A parent or student can create an account on the site and buy testing credits, based on which they can assess their knowledge and skills as many times as they want – before major exams, each week or month, or when a topic is completed. The system allows users to configure the test that meets their needs – they can select a specific grade and even chapters from that specific grade. Each registered user has a dashboard where he or she manages his or her account easily. What was the reason behind this initiative on the local market? Some members of the project team were and still are involved in different international testing programs like PISA, developed by the OECD. PISA is the most extensive international evaluation in the education sector, conducted in 62 countries every year. It shows us annually the lack of measures taken to improve the local education system, proving to us how poorly Romanian students fare in reality. According to the latest data, Montenegro and Albania are the only European countries with lower scores than Romania. But this is just one of the many

other international classifications that show this truth. Brio is a private initiative that aims to change this situation by offering an assessment tool of international size to those players interested directly in education: parents and students. We believe that we need to stop waiting for the miracle worker who will solve all the problems in the Romanian education system. It is time for education to be managed also by its direct beneficiaries. All the countries that obtain higher scores at PISA have in common the existence of standardized evaluation systems like Brio. The performance of students can be managed only if it is first evaluated properly. How do you think that Brio will improve the level of education? Brio offers students the answer to two essential questions: what is their level of knowledge and skills and what can they do to get better results. The Brio score – a centile one, which gives each tested student his or her position at national level compared with all the other students of the same grade, is the answer to the first question. The report’s detailed results, which indicate exactly the chapters and sub-chapters on which the student needs to work more, are the answer to the second question.

this method available now and for what subjects can it be used? For now, just math tests are available. The system will offer Romanian language tests by the end of 2016, while chemistry and physics tests will be available at the beginning of 2017. We had over 3,000 sign ups in the ﬁrst week from launch. Brands that believe and want to invest in the future of Romania can be helpful. Through CSR projects they can promote access to the platform for students from some regions or specialized schools/high schools.

Are there any rivals on the Romanian market? If so, what differentiates you from them? There are some websites with scholastic tests in the Romanian online environment but definitely we cannot speak about competition. Brio opens a new category on the local market. First it is about the specific methodology of standardized testing, where tests are based on a psychometric model called Item Response Theory. It is the same methodology that underlies international tests like GMAT, GRE and SAT. All the questions have been experienced and adjusted carefully on representative samples of students from 1st to 12th grade. Some 60,000 children have been tested and 200,000 hours of tests have been run to calibrate the items in the four years of preparation. The math tests alone comprise over 20,000 items. This huge bank of questions allows the same student to test his or her knowledge repeatedly for the same grade, without answering a repeated question. In addition, the score shows the position of the student at national level, so it is the only method through which Romanian parents can find the real level of their kids beyond the class boundaries.

How do you think the Romanian education system will look in the future? As health is an individual’s most important property, it remains the ﬁrst condition of a functioning system. A healthy education system has the capacity to educate not just a few geniuses, but to make hundreds of thousands of students perfectly functional as adults in the current society. An objective and anticipative evaluation, like a medical one for an individual, is a vital factor here. Brio intends to support this process, with the ambition of proving that changing the educational system is achievable.

For how many students and teachers is

anda.sebesi@business-review.ro

36 ADVERTISING

www.business-review.eu Business Review | July 2016

Future of outdoor advertising lies in digital and programmatic An increase in the number of digital screens and real-time trading, new developments in hyper-targeting, and a growing beacon adoption focused on analytics – out-of-home advertising (OOH) will be a core part of social and mobile strategies and will start being recognized as a direct response medium. These are the main trends across the OOH advertising industry in 2016, industry players told BR.

Dan Balotescu, Media Investment

target for the SETI launch. We announced it on the market when we finished its development. We started In the context of constant industry to work on this customized outdoor change and evolution, Phoenix Media, targeting a year and a half ago” said the leader of the outdoor digital mar- Dio Boaca, general director of ket, has continually sought to inno- Phoenix Media. The company’s 30 screens have vate in terms of out-of-home advertising (OOH) and launched the two or three cameras that record and first planning programmatic applica- count in real time. The SETI application, called SETI (Integrated Traffic tion counts only the people who have Extended System). This instrument is a high probability of seeing the the result of a wide-ranging study screened spot on the TV screen, 90conducted along with D&D Research 100 percent; only those heading toand has as its goal to identify the de- wards the screen are counted. At the mographic profile of people passing same time, for every place in through 43 transit locations in Bucharest, Phoenix Media knows exactly which type of target the firm is Bucharest. “For the first time in Romania, we addressing and what the chances are have an instrument that can offer us of the target audience seeing the ads. a demographic profile, by the hour, Parameters such as sex, age and infor OOH (out-of-home advertising). come were taken into account for the We have installed cameras on all our research. “This is the most complex traffic screens and, with the help of perimeter measurement software, we quan- study in the history of Bucharest. We tify the registered traffic in the covered three different times of day locations where we are present with and we interviewed both pedestrians TV screens. We didn’t have a specific and drivers, with a total of 30,000

∫ ROMANITA OPREA

questionnaire responses. The gath- new type of support for our locations ered data managed, among other in the Old City. We have made major things, to negate some false percep- investments in this regard: the latest tions. For example, the biggest traffic investments are a 103 sqm location in in Bucharest is recorded at the Tinere- AFI Palace Cotroceni and the SETI tului intersection (3.3 million general launch, the first tool for digital OOH impression in December 2015); Piata measuring and planning. In a market Universitatii (University Square) is where everything is calculated by ‘I’ll one of the busiest locations because see what I’ll do next month’, we have people mainly use the pedestrian pas- chosen a long-term strategy, which sage and are not counted by the cam- culminates now with the launch of eras; the Pipera area has the following SETI, the first programmatic planning profile: 70 percent men, aged be- application,” said Boaca. Since the March launch event, the tween 20 and 49, of socio-economic level ABC; and Piata Domenii Phoenix Media representative be(Domenii Market) and Mircea Voda lieves that the firm has reached beare transited mainly by people with yond trendsetters at country level. medium to high incomes,” outlined “Also, I think that we have given an exDan Petre, managing partner at D&D ample to other players from traditional outdoor advertising, Research. The SETI application is described demonstrating that if you have a longas user-friendly and gives clients real- term vision, it can turn you into a time access to the status of their cam- leader,” added the director. With a market worth EUR 30-33 paign. How did clients and the competi- million this year, investments made tion react to SETI’s launch? According in this field are still very small, agree to Boaca, customers have given excel- specialists. Besides Phoenix Media, lent feedback. Phoenix Media has had only two other companies on the over 100 individual presentations market have sought to reinvest to (agencies/clients) so far and all con- change the old structures and provide gratulated them for the development a suitable OOH service for the 21st of SETI, he said. This positive re- century. “In 2015 we estimate an investment sponse to the existence of a programmatic planning application on the in OOH of close to EUR 25 million, market is already reflected in the sales representing 7 percent of the total results. “From September to Decem- media investment. Taking into conber we can revert with an answer sideration the new OOH regulations, based on numbers. Obviously, there the market might decrease. Neverthewere positive reviews from the com- less, due to election campaigns, we petition too, and I think that, ulti- estimate a similar investment in 2016 mately, this will pique the whole as in 2015, followed by a small deindustry in a positive way,” said Boaca. crease in 2017. The new measurement Phoenix Media was founded in study which should be available on 2003. Since 2005, the company has the market in 2017 indicates a good brought many firsts to the market, step towards a healthier OOH indussaid the general director, and is cur- try in Romania, stimulating growth rently the only one that offers person- from 2018,” said Dan Balotescu, manalized targeting. At the same time, the aging partner at Media Investment. The same decrease was noted in firm introduced to Romania the first outdoor promotional system on time- the Media Fact Book 2015 released by frames, as well as real-time transmis- the media agency Initiative. Accordsion of messages from mobile phone ing to the analysis, the Digital OOH market is mainly represented by to digital screens. “In the past five years we have man- Phoenix Media, Media Advertising aged to extend the network from 13/15 and Vision Media Plus, with Phoenix to 32 billboards. Besides TV screens, Media the only supplier to sell adverwe have launched LCD for OOH, a tising space on four time slots: prime,

www.business-review.eu Business Review | July 2016

ADVERTISING 37 look solid, according to Initiative agency specialists, and the net market is expected to reach a stable EUR 28 million at the end of the year. “Targeting and target definition are the biggest trends. The main purpose of programmatic media is targeting. If we can define the right target and use it right in campaigns, we can guarantee clients the optimum yield: inventory efficiency, communication efficiency, cost efficiency, user experience improvements etc. This is also why we are using the Quantum Data Management Platform (DMP) for all our programmatic digital campaigns,” said Balotescu.

basic, inter and nighttime. However, according to the recently released 2016 edition, major categories such as telecommunications, FMCG, retailers and automotive continued to allocate signiﬁcant sums to OOH advertising, constantly expanding and improving the visibility of their networks. In 2015, the advertising industry, through BRAT (Romanian Transmedia Audit Agency), took an important step towards the development of a frequency study on outdoor advertising, which will join its existing OOH monitoring system.

Digital and programmatic take control Several major industry specialists agree that the main international trends are around digital OOH media. “More and more of the OOH trades will go programmatic, following the development of more advanced markets where programmatic OOH is already a norm. Moreover, it’s very likely that the virtual and hologram revolution which began this year, fueled by large international technology players like Google, Facebook and other mobile technology firms, will be the beginning of a significant new trend in OOH reality, overlapping with a virtual reality experience,” predicted Balotescu. “Absolutely all media will be linked to digital, but it doesn’t mean that offline media will completely disappear. No way. The best example can be seen in the retail area, where all players are also present offline. We are talking about consumer electronics and home appliance retail, an area which has demonstrated that online must be linked to offline to be successful,” said the Phoenix Media representative. Furthermore, Balotescu believes that digital OOH will be the first candidate for programmatic. “There are players, such as Phoenix Media, that are already investing in research and technology in order to get into the programmatic OOH market. It is a really good sign for an industry that is insufficiently measured at the moment. Programmatic OOH is a route for pioneers. There will be players with vision that will invest in that, but there’s still a long way to go. A first investment is not a guarantee of success. It will be an ongoing process, requiring players in this field to continue to measure, adapt and be mindful of clients and agencies in order to understand their needs and expectations,” added Balotescu. Moreover, he says that the advantage that digital OOH has over traditional OOH is that one can better control the programmatic process, granting more flexibility in everything, from planning to the display of ads at a specific moment, in a desired context, to a desired audience. The other big trend in the OOH industry nowadays cited by the Phoenix Media representative is that OOH programming will help DOOH to grow faster than expected. “With all

The future is digital

Dio Boaca, Phoenix Media

the innovations we make, we will also be present in digital budgets, which is a huge advantage for us. Even if at ﬁrst this initiative will mean a small contribution, it will constantly grow,” added Boaca. Moreover, according to Balotescu, programmatic advertising doesn’t belong to only one media channel; it can be extended from online and mobile to other media, like TV, radio and OOH. And all media must be very well measured in order to be traded in a programmatic way. “For programmatic OOH to be done in Romania, the industry requires data on traﬃc and audience for the outdoor displays, which would be used in programmatic platforms for planning and targeting. Currently, agencies and

advertisers can access monitoring data on the Romanian OOH sector. The main OOH players are planning on providing the market with an audience study under BRAT authority in the near future, in 2017,” commented Balotescu. The news is good, according to the Media Fact Book too, as the market is becoming more and more educated and aware of the main strengths of programmatic; therefore overcoming the most important barrier and understanding the technical implications is just the ﬁrst step. The word of 2016, remains as in 2015, “data”, as the main platforms show many similarities in terms of buying, so “custom targeting” is what makes the difference. For 2016, advertising budgets

When he looks at the future of the OOH industry, Boaca strongly believes that DOOH is the future and the DOOH-OOH ratio will reverse in the next ten years. As for the market regulations, those for which industry representatives have been waiting for such a long time, he thinks that Romania will have an industry covered by the rules in the next three to five years, and that indolence is what prevents this point being reached sooner. “The advertising industry will be totally changed in the near future. Technology will make the difference in all media, including OOH. For example, Virtual Reality glasses can be an individual OOH support with direct targeting of consumers. Even though the old paper billboards are not all monitored today, in the future, OOH companies will measure very accurately all the new programmatic trade holograms overlapped with surrounding reality,” predicted Balotescu. So where does creativity fit in amongst all these techniques? Industry operators believe that new technologies are the best incubator for creativity, making the sky the limit of where a good advertising campaign can go. Therefore, as for every media outlet or campaign, players say the quality of the ads plays a critical role. Along with creativity itself, the measurement of the results of a campaign is very important, with immediate impact for the creative strategy. “Only by looking at actual KPIs (key performance indicators) can you judge how effective the creative process is for a particular medium and target audience. In digital programmatic OOH, you can also modify the creative aspect, in real time, in order to deliver the next right message to the consumer. Story-telling planning has a specific timing, in relation to other messages and interactions. And of course, even the creative design can to some extent be automated to generate messages based on consumers’ interactions and previous message sequences, the weather, context etc.,” concluded the Media Investment representative. romanita.oprea@business-review.ro

www.business-review.eu Business Review | July 2016

38 ADVERTISING

Blue skies ahead for advertising market

Photo: Mihai Constantineanu

As one of the few countries in which trust in the advertising industry is growing, Romania seems to be moving against the tide. While the local trend is more encouraging, the European advertising industry’s expectations for market advancement are only moderately positive, and the confidence of marketing and advertising professionals fell slightly in the first quarter of 2016.

Loredana Saru, Jazz

∫ ROMANITA OPREA These are the Union of Romanian Advertising Agencies’ (UAPR’s) and the European Association of Communication Agencies’ (EACA’s) conclusions in a report on Romania. The European index indicates the average trust coefficient at European level has fallen from +11 to +8 (from January to April 2016). This makes Romania one of a few markets with a high level of trust in the advertising industry. Why is this so? Carmen Capitaneanu, marketing manager of Media Galaxy, points out that the country is going through an optimistic period with economic growth, fiscal relaxation and a sensible rise in investments. In response, consumption has increased and all the financial figures are encouraging for the moment. “But this optimistic environment is very sensitive to a series of factors like political challenges and social struggles. From another perspective, I feel that marketers’ influence within organizations is growing and the power and influence of the marketing function will increase

Carmen Capitaneanu, Media Galaxy

over the coming years. This is a shift fueled by the increasing use of technology innovations in marketing that enable closer customer relationships, microtargeting and improved measurement capabilities,” said Capitaneanu. In turn, Dana Bursuc, business consultant at Best Minds Design, is confident that the recent positive business development signs that the Romanian market has shown have boosted confidence. “While the extent to which the tentative recovery of economic indicators may be the subject of significant debate, recent fiscal relaxation measures and improvements in the labor market have certainly fueled positive perceptions, even if these positive signs have yet to become visible at the consumer level. In fact, consumer confidence is currently negative and is down from the previous year. This has, in turn, raised questions about the sustainability of the Advertising Business Confidence Index (ABCI). This index has exhibited strong signs of volatility and any positive opinions are fragile, at best, in Romania,” said Bursuc. The evolution of the ABCI is often

sensitive to political shifts, cultural specifics and other factors. Measuring people’s perceptions involves the use of qualitative data, which can be subjective. As such, the ABCI may not always be reflective of business realities. “The Romanian political scene was stable throughout the study fieldwork period, with the usual ‘controversial’ flavor, and no significant positive change was observed. It seems that Romanians have grown accustomed to daily political disputes and scandals; in fact, the meaning of political crisis has most certainly been redefined in recent years. Culturally, it is well known that Romanians tend to voice positive opinions when questioned during research studies and, overall, they lean toward answers that are perceived to be ‘politically correct’, unless a strongly opposed view is justified,” added Bursuc. Still, the Best Minds Design representative underlines that this snapshot reveals a positive moment, an optimistic view of business development and the evolution of advertising demand in the first quarter. “This encouraging attitude may be predictive of

future recovery signs in consumer confidence, even if this recovery is limited to specific clusters. However, it is important to note that this is not necessarily the case. There is no predictable statistical correlation between the ABCI and the specific drivers that underpin it. It is widely accepted that positive thinking tends to have a positive impact; as such, optimistic perspectives are healthier,” concluded Bursuc.

Looking for conﬁrmation Where does all this conﬁdence come from in Romania’s case? “I think it is fueled by new and evolving opportunities to leverage insights across marketing investments to drive ROI. Advances in data and analytics are creating new grounds for our industry. Thanks to the new and more sophisticated analysis systems, both big and small brands can access information that allow them to connect the data to the consumers and create truly interesting and relevant services for them,” commented Capitaneanu. More than that, she also cites the new wave of information that brings

www.business-review.eu Business Review | July 2016 confirmation. “Big data can support us ers still watch every step and every de- Creativity steers the ship In this context, one wonders why marin quantifying the speculation and en- cision they take more carefully. So are we finally out of the crisis and keters see the market so positively. The sure an overall perspective of the way rise of creativity and the awards reconsumers think, act and behave. Now moving on? According to Capitaneanu, most seg- ceived by Romanian agencies at major marketers have the opportunity to understand the way shoppers buy and ments have posted a revival in the last international festivals may indicate that how the price and the value act versus two years. “But we must remain alert “creativity sells”. “When it comes to creativity, the crithe brand. However, data is not relevant and pay attention to what will happen unless interpreted carefully and com- next. The 2008 crisis surprised us all sis was a good moment to take marprehensively. It only tells part of the and only the strong and prepared ones keters out of their comfort zone and story; the rest is for marketers to dis- stood their ground. As always, you must start building value to increase brand cover and interpret based on experience adapt or die. I do believe this will be a sales, especially when competitors reand the knowledge they have of the good year – the next months hold prom- lied on old templates for fear of failure. consumer.” added the Media Galaxy ise for growth and we are optimistic For Romanians, failure is still perceived about customer spending and the as a sign of bad management or a bad representative. The positive trend may also have to growth of marketing budgets over the decision, and not as an experience, a step towards something better or a new do with the argument that all perspec- next period,” said Capitaneanu. However, on the agency side, beginning. Companies are reluctant to tives and 2016 market projections look positive, judging by Initiative’s Media Loredana Saru, client service director at pay for a great idea, as it would require Fact Book report on major players’ fore- the independent agency Jazz, believes a financial investment. And, unless you casts. There is also the matter of com- that the crisis is still here and is not come with a clear and measurable solupetition: when it is high, the impact on going anywhere yet. It changed mar- tion for the results (sales or brand), advertising investment is positive. Ad- keters’ perspectives and made them re- many ideas are left in the drawer, waitvertisers will fight for visibility, pay for think their strategies – from a survival ing for better financial times,” said the differentiation, and invest to attract mindset (reactive and less focused on Jazz client service director. She also points out that marketers consumers. “Furthermore, the vertical creating real value in their business) to integration approaches that many ad- becoming more optimistic in taking tend to use advertising patterns and vertisers have adopted allow valuable new steps, but more cautious in calcu- creativity, which is measurable; howfinancial resources to be partially di- lating the risks and making plans. ever, differentiation and innovation in rected to sustain competitive fights, “Today, they are aware that with every communication should be embraced as provided that advertising professionals increase, there is a price to pay, and they well. “This is somehow our task, as adand marketers demonstrate their added make decisions based on the desired re- vertising and brand specialists – to open value and positive impact,” commented sults as well as the costs. They no longer their minds and give them new perdream or throw themselves into things spectives. In this interaction between Bursuc. As with all other industries, the crisis like before, they are more focused on agency and client, there are perspecchanged the media landscape and it still organic growth, on building real added- tives that meet and influence each other. has a mark on the industry. Even value for the consumers, which ensures We always try to make our clients unthough the market is recovering, play- the stability of their business,” said Saru. derstand that the power of communica-

ADVERTISING 39

Dana Bursuc, Best Minds Design

tion does not only mean a PR or sales stunt, but one which can inspire, educate and transmit values to the consumers,” added Saru. romanita.oprea@business-review.ro

www.business-review.eu Business Review | July 2016

40 MEDIA

Pressing ahead with a new take on journalism Newcomer online publication PressOne has sought to gain an advantage over traditional media by not trying to cover the full range of events and instead focusing on relevant issues that matter to the audience. Editor in chief Mihnea Maruta told Business Review about the palpable sense of opportunity within the PressOne newsroom.

Photo: Dan Bodea

ternational press, they read international investigations and know how new technologies can be integrated within a text in order to make it more appealing, they even expect a new angle or perspective on a subject. I believe that journalism is now going into a very personal zone, owing to blogs, and I try to motivate my team to come up with stories that matter at a personal level.

refer to newspapers – online and those which are still in print. True journalism is still done on paper or at websites When did you start your journalistic ca- where former print journalists work. I reer and where? What kind of subjects say this because the lessons offered by a print magazine or newspaper are the did you cover? I started working at the well-known best journalism school that can exist. weekly investigative magazine NU (No), When it comes to TV, TV news, the sitwhich was founded in February 1990 in uation is different, due to the ownership Cluj-Napoca, with the former team of – some have political support, while Napoca Universitara students’ maga- others are owned by former Romanian zine. I worked there from autumn of secret service oﬃcers, and are used as 1990 until the last edition of the maga- political instruments to further political zine, in December 1993. At its peak the or business ends, according to the circulation was over 97,000 copies – owner’s will. Unfortunately, this also which nowadays is history – nationwide, happens in most print media teams. particularly in the big cities. It wasn’t anything like today; we didn’t have par- What do you read from the Romanian ticular domains assigned. It was more press? like this: you took the train to Bucharest I can’t name an entire publication, aland you had to return to Cluj with with though I open the news portals daily, a good story, because back then people but I prefer several journalists who consumed print media, they waited in write on these portals – it’s more about line to buy magazines, so all you had to the person than about the news itself. do was to write a story. My biggest Also, besides news, I read those doing achievement was an interview with another kind of journalism, like Casa JuCorneliu Coposu, the founding leader of rnalistului, Dilema Veche and Decat o the Christian Democratic National Peas- Revista. But again, I skim them; I don’t ants' Party after the Romanian revolu- read them in their entirety. tion, which is still a reference for me How would you describe investigative today. journalism in Romania today? Is it still How is Romanian journalism nowadays? practiced? To simplify the discussion, I will only Yes, but again, it’s done only in some

∫ OANA VASILIU

oases. Emilia Sercan, Catalin Tolontan (Gazeta Sporturilor), Vlad Ursulean (Casa Jurnalistului), Ovidiu Vanghelie (Euractiv), Liviu Avram (Adevarul), George Lacatus (Digi 24) – again, individuals, not publications or editorial teams, who work in various places. How about the investigative journalism you do at www.pressone.ro? Thanks to our status and the freedom we have as journalists, we try to produce an investigative article at least once a week. If the subject is worth it, I can wait two weeks until the journalist finishes his/her article, and he/she can work only on that subject – a “luxury” that not many journalists have right now. This is why the team presents a good piece, worth reading, from both perspectives: quality investigative journalism and the impact the article has for the domain. Plagiarism by public figures, the misuse of public funds, the cartel who bought thousands of hectares from Piatra Craiului National Park and the story behind the Untold music festival are just some investigations we have conducted. We really try to innovate in this domain. It isn’t sufficient enough to come up with a sheet of 30,000 characters and publish it, because the readers want something else – they read the in-

How did you come up with the idea of PressOne? This is an old idea of mine, which I had had in mind for some time. Our website is being financed by Don Lothrop, an American who has been coming to Romania for more than ten years now, as he has several businesses and investments here, as well as philanthropic activity. At the beginning, we met for another online project, and I told him that I was interested in founding a high-profile national online publication. Then I wrote the actual concept of PressOne, which is about relevance, not breaking news, he liked it and this is how we created it. Currently, we are in an ideal situation in which I can read and edit all the texts and talk with the entire team about their subjects – and the feedback is very much appreciated, taking into consideration the fact that at a newspaper, you don’t have much time to explain or even teach some journalistic lessons. Currently, PressOne is fully funded by Don Lothrop. What will happen when the financing is cut or reduced? I don’t know and I don’t want to think about it in these terms. The investor is someone with great experience in business, particularly in financing Silicon Valley startups, and PressOne is considered another startup. Furthermore, we want to build a community and, at some point, this community will be “in charge” of this media product. Or he might sell the portal. Until then, I prefer to truly enjoy the freedom we have now and the fact that you can choose your own subjects, your own itinerary and write about unusual, tender subjects. What can I confirm is that we don’t know in which direction journalism is going nowadays or which is a business model to follow in this area – internationally speaking. editorial@business-review.ro

www.business-review.eu Business Review | July 2016

THEATER 41

Photo: Paul Baila

“#fomo” show, an Austrian urba n dance theater piece about how we deal with virtual worlds

Photo: Adi Bulboaca

Photo: Calin Muresan

Break a leg at Sibiu International Theater Festival

Majorettes Parade, goo d music and a great orchestra entertained various neighbourhoo ds of Sibiu

streets of Defying gravity on the Sibiu

rtiﬁed church, In Cisnadioara fo tic as nt fa ds un fado so

Wild Duck Addiction, an Asian collaboration between Ma gosaburo Yuki XII and the YOUKIZA ma rionettes and Vietnam Youth The ater actors

resan Photo: Calin Mu

Photo: Catalin Muresan

Some like it hot: dancers and acrobats, on foot and on stilts, play with ﬁre and original music

us getarian Circ Fruitopia: Ve s-by er ss pa e th juices up

Goldberg V ariations, a Jewish morality pl ay, at the Si biu National Thea ter

Photo: Paul Baila

Photo: Miha ela Marin

Photo: Paul Baila

n performing Maia Morgenster Cuckoo-Clock e The Boy with th Heart

Photo: Mihaela Marin

Marcovici Photo: Sebastian

Dead good: Moroi, another Romanian performance in Sibiu

Photo: Maria Stefanescu

Ofelia Popii stars Getting a-head: in Sibiu g in in Lulu, show

ing actor Academy Award-winn his theater Tim Robbins brought company to Romania

www.business-review.eu Business Review | July 2016

42 PATRIMONY

Electro-heritage: when music helps history Formerly known as the Transylvanian Versailles, Banffy Castle in Bontida is considered one of the most beautiful historical buildings in the Carpathian basin. For four years now, electronic beats have put the castle on the international music festival calendar – both for fun and to help save its heritage. The full restoration of the building will cost around EUR 7-10 million, money that the Transylvania Trust Foundation is trying to raise from festivals, international funding, projects and the authorities. They hope that within ten years, Banffy Castle will have had a complete facelift. How are they doing so far? concepts in combining the teaching process with physical restoration through practical workshops, and with the drive of public expectation and approval.

Electro Beats

Photo: courtesy of Electric Castle

In four years of the festival, Electric Castle has brought over 200,000 people to the Banffy Castle. Some of the money from tickets and subscriptions goes to the Transylvania Trust. This year, the event will be held from July 14-17, and a four-day pass costs RON 399. In a bid to help “electrify” festival fans, the organizers have launched the Unoﬃcial Partners campaign to con-

Meet the “electrify” festival fans

∫ OANA VASILIU Twenty-four acres and six buildings, including the castle itself, stables, chapel, and ﬂour mill. In its hundreds of years of history, it has gone from former aristocratic residence to military hospital, drivers’ school, children’s hospital and historical monument under the auspices of the Royal House. The complex had reached an extremely precarious condition by the end of the 90s. The owner of the castle is the daughter of Count Miklos Banffy, Countess Katalin Banffy, who lives in Morocco. The Countess and the Transylvania Trust signed a concession agreement for 49 years, under which the trust will be responsible for the maintenance and upkeep of the castle and will develop it as a built heritage conservation training center and cultural center. In 1999, the site was included on the

100 Most Endangered Monuments List published by the World Monuments Watch. Conservation works started thanks to the agreement signed in 1999 by the Ministry of Culture of Romania and the Ministry of National Cultural Heritage of Hungary. The Transylvania Trust launched the built heritage conservation training program for the castle in 2001, since when students have carried out conservation works on the buildings. In 2003, the structural consolidation of the Miklós building was completed along with the roof, with the support of the World Monuments Fund. The overall aim of the project is the complete restoration of the site, carried out using traditional methods and materials, through international collaboration and an exemplary cooperation between designers and executors. Through this, they would like to set an example of sustainable development of the built heritage, and of professional conservation, which incorporates new

vince managers to make the Monday after a day off for employees who attend the event. Electric Castle offers a dedicated platform, www.unoﬃcialpartners.com, where companies can be promoted, regardless of size or the number of employees going to the festival. Andi Vanca, head of communications at Electric Castle, said, “We have counted on managers’ humor and empathy and invited them to become unoﬃcial partners of Electric Castle. They will enjoy exposure on our dedicated platform and, more importantly, their employees’ gratitude.” editorial@business-review.ro

www.business-review.eu Business Review | July 2016

CULTURAL MANAGEMENT 43

Northern exposure: Baia Mare prepares for the limelight

Photo: Matei Budes

In Baia Mare, northern Romania, appearances can be deceiving – starting from a landslide victory in the recent local elections although the mayor is behind bars, continuing with the never-ending debate about the wall which separates the Roma people from the rest of the town and moving to the finals for European Capital of Culture 2021, a title that one of four Romanian cities, Bucharest, Timisoara, Cluj-Napoca and Baia Mare, will be awarded this September. Prominent independent consultant Vlad Tausance, currently the artistic director of Baia Mare Cultural Capital 2021, told Business Review about these contrasts.

logue created be-tween all entities, this produces change every day. Sometimes, this change may seem discouraging or Your proposal for the European Capital too slow, but when you actually feel it, of Culture is entitled “Culture of Hosting”. it catches on on both levels, personal and professional. It’s pure joy when, for Can you explain the concept? We started from the idea that every city example, a photo studio hires our volhas to choose something that deﬁnes it unteers after they got in contact during and which can be summed up in a few a project of ours. Or that the independwords. Being in Baia Mare and actually ent theater has moved to the city center living there, I believe that the hospital- and its audience is blossoming. Also, ity of the people there, the Maramures new horeca businesses are opening, we area included, is the town’s biggest asset. are hosting nationwide cultural projects, At the same time, this hospitality can something that didn’t happen before, mislead you: yes, you expect to be well- and now we have started to be on the treated, but sometimes it can be over- same cultural page as Iasi, Cluj and whelming, in a good way. This is why Timisoara. we chose “Culture of Hosting” – it’s something that every tourist can relate If someone is going to Baia Mare for one to. At the same time the idea dates back day only, what would you recommend in time, to 120 years ago and Baia Mare's they do? Artist Colony, which encapsulates a rec- First and foremost, a tourist needs at ognizable style of painting from this least three hours to see something outEastern European region and was a side Baia Mare, to understand better place where rebels came to make art, as what’s happening in the town. Baia well as a spot where women were al- Mare itself offers you a good experience lowed to join in and create – something of the standard of living here, in northquite unusual back then. All in all, the ern Romania: low prices, many green concept means gathering together the spaces, human behavior, the proximity of the city. What you should see is the idea of hosting – ideas, artists, culture. History Museum and the Ethnography Museum – just to have an oﬃcial tour of When is Baia Mare’s tipping point? I believe we are currently living it. In the Maramures, and also because these past year, our presence there, the dia- buildings have their own stories and can

∫ OANA VASILIU

town, and the constant conflicts that this situation generates. How did you integrate this minority community into the European Cultural Capital 2021? I won’t call it a constant conflict; I prefer to say that what happens there is a communication problem, which is also exaggerated by the media. Yes, we have a problem with integrating Roma people, particularly those living in the mentioned location, but it’s a nationwide problem. And it’s not really about the Roma; it’s more about poverty. There are other cities in Romania facing the same problems. What we should point out is that Maramures County is having a period of economic expansion and businesses have started to grow. (…) When it comes to the European Capital of Culture program, we have several projects to integrate them – some are ongoing, namely a closer look from the local authorities be discovered along with their inform- and social services; some will be impleative part. Also, a must-see is the Art mented with NGOs that have already Museum, just to have a brief under- dealt with this kind of situation and through a social economy cluster which standing of Baia Mare's Artist Colony. What I also recommend is seeing one of we want to further develop in Baia Mare, the 60 wooden churches in Maramures as we already have and it’s functional. County, some of them are on the UN- Also, we plan to have cultural intervenESCO list. Moreover, I suggest a visit to tions there through social theater. There the city center’s antiques store, a magi- is a constant effort to try to help these cal place with stories and details of the people, but we still haven’t found the city owned by some “living library” perfect recipe to do so. people. Last but not least, a coffee stop at Origo and a meal at any traditional Currently, almost 18 percent of the active restaurant in the town should complete population from Baia Mare work in the creative sector, meaning 10,000 people. a one-day Baia Mare experience. Out of this number, 80 percent work in One major contrast when you talk about the wood industry, which is considered Baia Mare is the wall which separates the part of the creative sector. Do you plan to Roma population from the rest of the create more jobs in this creative sector? One of the initiatives in this area is educational: we plan to host some City council offers workshops, master-classes, a summer school, technical schools and study proEUR 2 million for grams to keep the specifics of this reculture in 2016 gion alive – traditions and preservation of crafts and handicrafts. Also, the focus EUR 40 million to imwill be on textiles, fashion and woodplement Baia Mare 2021 work. I particularly support entrepreneurship and as the city’s economy project blooms, through this project we try to encourage them to open their busiover 20 active cultural nesses here, in Baia Mare.

institutions

editorial@business-review.ro

www.business-review.eu Business Review | July 2016

44 CITY FILM REVIEW

Money Monster

DEBBIE STOWE Director: Jodie Foster Starring: George Clooney, Julia Roberts, Jack O'Connell On at: Movieplex Cinema Plaza, Grand Cinema & More, Grand VIP Studios, Cine Globe Titan, Hollywood Multiplex, Cinema City Cotroceni, Cinema City Cotroceni VIP, Cinema City Mega Mall Bankers – aren’t they horrible? Enriching themselves through their deviousness at the cost of everyone else. Wouldn’t it be good if we could stick it

to them? Jodie Foster seems to think so: she’s directed a ﬁlm about it, a postcrisis thriller in which the little guy tries to give a Wall Street swindler what he’s got coming. Money Monster is one of a surprisingly limited genre: considering its huge impact, there haven’t been too many movies made about the ﬁnancial crisis. This is probably because its actual mechanics mostly meant men in suits sitting at computer screens, which doesn’t make for riveting viewing. Also, credit default swaps and the other ludicrous sleights of hand that crooked bankers used to bring the

world economy to the brink are fairly incomprehensible to the average person (as we later discovered was kind of the point) and therefore, rather dull. Of course, financial stuff does become less dull if it’s George Clooney talking about it. The Money Monster of the title is a ghastly financial TV show presented by flippant Wall Street guru Lee Gates (Clooney as the classic smug, shallow wise-cracker that he’s played in everything from the Ocean’s trilogy to Up in the Air and most of his other output). One of Lee’s recent stock tips, a trading fund called IBIS, has bombed, costing shareholders USD 800 million, and he’s about to interview the company’s CEO, Walt Camby (Dominic West), live on air to find out what went wrong. Among the disgruntled minor investors is Kyle Budwell (Jack O'Connell), a young blue-collar worker who had staked his modest inheritance on IBIS and has subsequently been wiped out. Armed and dangerous, Kyle slips into the studio to demand some answers from Lee and Walt. Watching anxiously from the control booth is Lee’s director Patty (Julia Roberts,

adding further star power to the mix). Foster’s film proceeds to alternate between the tense developing situation on set and the true story behind the stock price plunge at IBIS. The narrative rests on several improbable developments and coincidences, but overlook them and, as a thriller, it works well. Money Monster does its best to put the financial chicanery in audience-friendly terms, even if the ultimate explanation is patchy and doesn’t quite seem to add up. The rather simplistic characterization serves the genre well enough. Sure, we’ve seen Clooney play this kind of dapper but glib man about town over and over, but that’s because he’s very watchable doing it. The easy charm and banter he enjoys with Roberts, honed over two Ocean’s outings, helps offset the tension of the gun-toting. Despite its flaws, Money Monster is an enjoyable Wall Street take down, a worthy attempt to connect the dodgy dealings of jet-setting financiers with the chaos that their cavalier doings cause in the lives of the average Joe. debbie.stowe@business-review.ro

www.business-review.eu Business Review | July 2016

EXPAT EYE 45

To leave, or not to leave? In the return of BR’s regular look at life in Bucharest and Romania through the eyes of an outsider, we ponder Brexit blues, political positioning and the Hexi scandal. ∫ DEBBIE STOWE This week, the UK will vote on whether to remain in or leave the European Union, and I’m nervous. As an expat, it’s always interesting to juxtapose apparent attitudes to things in your home and adopted countries. Take privatization: in Romania, a desirable means to take companies out of inept/corrupt state hands and turn them into thriving entities. In the UK, a loathed way of selling off prized public services to profiteers who’ll strip them back and hike the prices. EU membership is another one: in Romania, a glittering achievement that boosted the economy and wages and allowed people to travel freely for the first time. In the UK, an undemocratic and faceless bureaucracy that flooded the country with immigrants and let Brussels dictate what shape our fruit must be. We don’t all see the EU like that, of course, and I’m hoping that at least 51 percent of my compatriots will be joining me in ticking the Remain box. If not, it could be back to the bad old days of queuing at the embassy for visas and minibus roundtrips to Ruse. Those of us Brits with Romanian partners have often been teased that they’re only with us for our passports. If Brexit happens, the joke could be turned on its head.

The hors d'oeuvre to the UK’s EU referendum vote was local and mayoral elections in May, when the big news was that Labour’s Sadiq Khan was elected London’s ﬁrst Muslim mayor. Whatever your political colors, it was a great story: the son of a bus driver beats the son of a billionaire (Zac Goldsmith, whose father was ﬁnancier Sir James Goldsmith). Bucharest nearly had its own mayoral turn-up, in the form of long-term French expat Clotilde Armand, a candidate in Sector 1. An engineering company manager, Armand was running for Nicusor Dan’s USB, whose monitors were out in force to try and guard against the usual attempts at fraud. Alas, some of them reportedly knocked off early to go to that evening’s Maroon 5 concert – with the predictable result that in the unguarded polling stations the results suspiciously diverged from the exit polls that had forecast a win for the Frenchwoman, handing victory to her PSD rival. What a shame that a promising candidate who differed from the “male, pale and stale” formula that has a stranglehold on politics (not just in Romania) may have been robbed of victory by the same old skullduggery. It prompted an internet meme featuring Armand with the caption, “You’re not a true Romanian until the PSD has stolen from you.”

Firea alarm

Night-mayor

Another female did triumph in the Bucharest mayoral elections – unfortunately it was Gabriela Firea, the TV presenter who notoriously commented that President Klaus Iohannis did not have a proper family because he doesn’t have children. Sadly, it’s easy to see how someone with such abhorrent views can reach high oﬃce in Romania. Firea probably enjoys high approval ratings among the 3 million signatories to a recent letter seeking to change the Romanian constitution to explicitly ban same-sex marriage.

She joins a list of shame of public figures and officials that have revealed their bigotry, misogyny or homophobia, such as the Education Ministry guy who said schools should be teaching girls to wear high heels and walk with their chests out to make boys faint (I’m not joking) and the TV talent show judge who compared being gay to being a terrorist. Sitting in Bucharest’s hipster cafes sipping a high-end Ethiopian cappuccino among the well educated, fluent English-speaking clientele, the Romanian capital might be mistaken for any other progressive, modern metropolis. But Firea’s election and the hateful letter from the 3 million are a sobering reminder that attitudes elsewhere have a long way to go until the country can be considered to have embraced European values of equality and tolerance.

A sickening story of the health system Also falling a long way below European standards is the Romanian medical system – or at least some of the products used within in. The recent diluted disinfectant scandal reached some sort of horrible conclusion with the presumed suicide of the businessman most implicated. In a story right out of classic noir film The Third Man, Dan Condrea’s company Hexi Pharma had been buying disinfectant at market rates from Germany, selling it on at hugely inflated prices via a Cypriot firm (no whiff of dodgy dealings there, then), diluting it so it was near useless and then supplying it to Romania hospitals. The fraud came to light after the devastating fire in Colectiv, when the high number of deaths in the days and weeks after the tragedy prompted investigations into hospital infections. For a young Westerner, traveling and

living in less developed countries can be great fun. It’s only when incident or accident throws you into contact with the emergency services, that you might stop to wonder about the unseen infrastructure – medical facilities, health and safety regulations and law enforcement – that you can generally assume are functional back home. For expats and Romanians alike, these are the wards where we and our children go when we’re most vulnerable. It’s stomach-turning to think how many patients’ safety was compromised – and how many lost their lives needlessly – because of greed. And this was one case discovered by chance. How many more have yet to be unearthed? One rare positive to emerge from the Hexi scandal was the investigative journalism in evidence. The Romanian media is much maligned: it’s low-brow; the outlets are owned by crooks who use them to further their own nefarious ends; there’s more PR than journalism… Some of this is fair, but there are bright spots: long-standing satirical titles like Academia Catavencu and quality magazines like Decat o Revista. The Hexi report came from an unexpected source (to me), Gazeta Sporturilor. I last cast my eye over this paper years ago, an edition which had a frontpage story about a football manager buying a camcorder (yes, a camcorder – it was that long ago). I drew my own conclusions about the caliber of the publication from that and have never looked at it again since. So hats off to the newsroom, whose old-school investigative journalism would make Woodward and Bernstein proud, and shows that even on a poorly resourced media market, the profession can still thrive. debbie.stowe@business-review.ro

www.business-review.eu Business Review | July 2016

46 CITY

Cultural calendar ∫ OANA VASILIU Jazz in the Park June 27-July 3, Cluj Napoca Music lovers will ﬂock to Cluj’s Central Park for a jazz extravaganza. The organizers have yet to announce the lineup, but previous years have seen top jazz singers perform in the western city.

Airﬁeld Festival June 30-July 3, Cisnadie (Sibiu county) The eclectic menu runs from jazz to funk, via ska, techno, indie rock and hip-hop. Six different stages will host performances by Jamie Woon, Robag Wruhme, BlabberMouf, Portable, Gorje Hewek & Izhesvki, Subcarpați, Golan, CTC, Lucia, Byron and many others.

JazzTM July 1-3, Timisoara ets cost from RON 145 to RON 270.

SoNoRo Conac Until September 15, several locations nationwide

Timisoara’s Victoriei Square, Justice Park and Civic Park are poised to be jazzed up. So far only two artists have been announced: BadBadNotGood, a young band from Toronto, and Dhafer Youssef, a Tunisian artist known for his unique combination of Suﬁ traditions, mystical and jazz inﬂuences and Arabic lyricism.

Garana Jazz Festival July 7-11, Garana (Caras Severin county) Yuri Honing Acoustic Quartet, Enrico Rava, the Kari Ikonen Trio, Magnus Öström Band and another 80 jazz artists will perform in one of the most special green spaces in Romania, at the 20th edition of the well-known jazz festival.

Scorpions July 16, Romexpo Iconic band the Scorpions (in picture) will return to Bucharest, as part of the band’s 50th Anniversary Tour. Besides music, the German rockers promise spectacular effects and sets created especially for this Romanian event. Tick-

SoNoRo Conac will bring to public attention mansions and patrimonial buildings from all over the country, with the help of music. Concerts will take place at: Kraus House and Fortiﬁed Church in Crit, Brasov county (July 23), Casa cu Blazoane, Chioidu, Buzau county (July 24), Domnita Ralu House, Chitorani, Prahova county (July 25), the Fortiﬁed Church in Ilieni, Covasna county (July 29), the Guest House of Prince Charles in Valea Zalanului, Covasna County (August 6), the Evangelical Church of Augustan Confession in Cisnadioara, Sibu county (September 14), and Fagaras fortress, Fagaras county (September 15).

The Night of Cultural Institutes June 24, several locations across Bucharest A total of 15 cultural institutes in Bucharest will take part in the tenth Night of Cultural Institutes, including the British Council, the Czech Center, the Goethe Institute, the Hungarian Institute in Bucharest, Cervantes Institute, the Romanian Cultural Institute, the French Institute, the Italian Culture Institute, and the Polish Institute. The program includes more than 50 events, such as Shakespeare plays, concerts, a Portuguese party, a silent disco, a grafﬁti performance, exhibitions, movie screenings, foreign language classes, culinary surprises, workshops, and games. The events will take place between midnight and 02:30am in 12 cultural spaces in Bucharest, namely ArCuB – Gabroveni Inn, British Council,

the Czech Center, Yunus Emre Turkish Cultural Center, Green Hours, Goethe Institute, Balassi Institute – the Hungarian Institute in Bucharest, Cervantes Institute, the Romanian

Cultural Institute, the French Institute, the Italian Institute, and the European Public Space. editorial@business-review.ro