Moldova Country Focus: Ion Sturza, president of GreenLight Invest private equity fund and former prime minister of the Republic of Moldova, is confident the country is an attractive destination for investments, especially for SMEs »page 12
ROMANIA’S PREMIERE BUSINESS WEEKLY
October 3 - 9, 2011 / VOLUME 16, NUMBER 34
TELECOM REPORT: NEAR FIELD COMMUNICATIONS BR BRINGS YOU UP TO SPEED ON THE HOT NEW TECHNOLOGY IN TELECOM WITH A REPORT FROM THE WORLD CONGRESS IN NICE, FRANCE »PAGE 8-10
REAL GOES GREEN Willbrook Platinum Center, which officially opens this week, is one of a new breed of ‘green buildings’, constructed to meet energy-efficient criteria. Daiana Voicu, managing partner of the developer responsible, tells BR about the trend »page 13
Courtesy of Willbrook
RESTAURANT Turkish delight or just a Turkey? BR’s restaurant critic revisits Divan to see how the authentic purveyor of Turkish cuisine is doing one year since his last visit » page 14
NEWS Austrian company Imtech has entered the local market via the acquisition of Sapphir IT & Management Consulting, and is looking at further acquisitions » page 7
LINKS Hanging up: Finnish mobile phone giant Nokia is closing down its factory in Jucu, Cluj, later this year, with the loss of 2,200 Romanian jobs » page 11
www.business-review.ro Business Review | October 3 - 9, 2011
BUSINESS AGENDA October 3 11:00 Champions in Business 2011, a project intended to promote entrepreneurship, will be launched at Radisson Blu. The project is the result of a partnership between Enterprise Investors, BCR and Triple Helix Association. By invitation only. October 4 09:00 Business Review is organizing the second edition of Focus on Power, an event dedicated to the energy domain in Romania, at Howard Johnson Hotel. By invitation only. October 4 11:00 Accace Europe organizes a press brunch to present its strategy for Romania and the rest of Europe at Van Gogh Cafe. By invitation only. October 4-5 Mediafax in partnership with the Romanian National Bank (BNR) is organizing Romania Financial Forum, gathering finance, political and business representatives at BNR. By invitation only. October 4-5 The Association of Digital Communications (ACD) organizes International Digital Forum 2011, debating the digital television industry, at Hilton Hotel. Romanian and European officials, along with equipment manufacturers and retailers, will attend. Participation is free of charge. October 5 13:30 Elo Digital Office Romania organizes EOLD DMS Congress 2011, presenting the latest IT solutions and enterprise content management at Novotel City Centre. By invitation only. October 11 09:00 Business Review organizes the Austrian Business Forum, where Austrian investors will share their impressions of the Romanian economic environment at Ramada Plaza Hotel. By invitation only. October 28-29 Catalyst Solutions organizes the jobs fair Angajatori de Top at Sala Palatului. FMCG, IT&C and outsourcing companies will attend. Participation is free of charge.
NEWS 3
NEWS in brief INVESTMENTS Medicover puts EUR 500,000 into new diagnosis center Medicover, the medical group and insurer, has inaugurated its first Advanced Diagnosis Center in Bucharest. The investment in the project amounted to EUR 500,000, with EUR 350,000 spent solely on the high-tech medical equipment, Catalina Balan, CEO of Medicover Romania, told BR. The new center will provide ultrasound and medical imaging services, in cardiology, dermatology, nutrition, obstetrics and gynecology. Balan said that the first Medicover hospital, offering medical and surgery services at European standards, will open later this year, with an investment totaling EUR 20 million.
Cargill Romania opens grain silo in Drobeta Turnu Severin Cargill Romania has officially opened a grain silo in Drobeta Turnu Severin with a capacity of 44,000 tons. The silo was bought previously and has undergone a modernizing process. The new facility gives Cargill Romania an additional 8 percent silo capacity and allows it to buy cereals from Mehedinti and other neighboring counties. Martin Schuldt, general manager of Cargill Romania, said that the new facility was an important step for the company to further develop its relations with local farmers.
Continental and Draxlmaier looking to invest EUR 169 mln in Romania through 2013 Ion Ariton, the minister of the Economy, Commerce and the Business Environment, met last week with representatives of two German companies that want to extend their investments in Romania. The meeting took place during the Romanian-German Conference for SMEs. German car parts makers Continental and Draxlmaier want to invest up to EUR 169 million in Romania through 2013, according to Bloomberg newswire, which quotes the minister. Continental is planning a EUR 15.7 million expansion of the Contitech Fluid Automotive plant. Another EUR 71 million will be put aside for expansion works in the western city of Timisoara. And a new unit will be opened in Sibiu, at a cost of EUR 35 million, while a EUR 20 million fuel-pump plant will be opened in Brasov. Draxlmaier is looking to invest EUR 26.8 million in Romania, according to Ariton, who met with the management of the German company.
RON 33 mln tourist mini-port opens in Danube Delta A new mini-port for tourists has been inaugurated in Sfantu Gheorghe, in the Danube Delta. The RON 33 million project included the construction of four quays that can receive 108 small and 15 large boats, a docking space for vessels and a small repair shop. Administrative and security buildings have also been constructed at the site. The Ministry of Tourism and Development allocated RON 32 million to the project, which is ex-
pected to create new jobs and better standards for the mooring of passenger vessels, improving the tourism industry in the area.
POWER EBRD launches EUR 60 million energy efficiency facility for SMEs The EBRD has launched a EUR 60 million program for small and medium-sized enterprises (SMEs) in Romania to improve their energy efficiency. The program will fund sustainable energy investments. The funds will be channeled to Romania’s real economy, through local financial intermediaries, including banks and leasing companies. The EBRD is extending the first loan in the program, worth EUR 20 million, to Banca Comerciala Romana (BCR), Romania’s largest commercial bank and part of the Austrian Erste Group. The Romanian SME Sustainable Energy Financial Facility (RoSEFF) will help local companies maximize energy savings and improve their overall competitiveness, while contributing to a reduction in the country’s high energy intensity, say officials. The proceeds of the loan will be used to finance SME investments in improving industrial operations and premises, replacing equipment, software, and general upgrading aimed at reducing final energy consumption or producing renewable energy on a small scale. Individual sub-loans are limited to EUR 1 million putting the focus on smaller-scale investments.
Hidroelectrica IPO put on hold The Ministry of Economy, which holds an 80 percent stake in Hidroelectrica, has voted against the listing of the company on the Bucharest Stock Exchange (BSE). The decision was made during Hidroelectrica’s Extraordinary General Shareholders Meeting on 20 September, called by the Property Fund which holds a 20 percent stake in the company. The state also opposed the appointment of an intermediary to organize the listing of Hidroelectrica on the BSE. It voted against the IPO as the government ordinance regarding the setting up of the two energy companies, Electra and Hidroenergetica, is still valid. Secondly, Hidroelectrica is involved in litigation brought by the Property Fund and the unions over the establishment of the two firms. Lastly, the government has to approve the privatization strategy, as Hidroelectrica has a strategic position in the economy.
FINANCING USTDA grants USD 400,000 for emergency response technology study The US Trade and Development Agency (USTDA) has awarded a USD 400,000
WEEK in numbers
5 percent is the average salary increase in the private sector according to a survey by PwC
724 million euros is the financing granted by the EC for building the Nadlac-Arad and Orastie-Sibiu highways, part of the pan-European Corridor IV grant to Romania’s General Inspectorate for Emergency Situations (GIES) for a study to evaluate technologies deployed during field emergency response operations. Romania, one of the most earthquakeprone countries in Europe, has suffered serious damage resulting from flooding and earthquakes in recent times. As a result, the government of Romania has made improvements to the country’s emergency management and response system a national priority. The objective of the study is to demonstrate the feasibility of the following three core technologies through portable deployment: critical information management systems, geographical information systems, and interoperable communications. The feasibility study will be carried out by ESi Acquisition, Inc., based in Augusta, Georgia. Other US companies participating in the study include ATG Communications LLC, Cisco Systems, Inc., Esri and Tucuxi LLC.
MACRO Unemployment rate falls by 0.4 percent in second quarter, says INS Romania’s unemployment rate, calculated using International Labor Organization criteria, fell to 7.2 percent in the second quarter of 2011 against 7.6 percent in the first quarter, according to the National Statistics Institute (INS). The indicator is, however, 0.4 percent higher than in the same period of last year. Young people aged between 15 and 24 are the most likely to be out of work, with their jobless rate reaching 21.8 percent, according to the same source. The labor force participation rate was 58.8 percent in Q2 2011 – 65.1 percent for men and 52.5 percent for women. Overall, the indicator was 1.3 percent below the level recorded in Q2 2010 and 0.8 percent up against the previous quarter.
www.business-review.ro Business Review | October 3 - 9, 2011
4 NEWS BANKING
Raiffeisen Bank strengthens client base, extends branch network despite slowdown
Photo: Laurentiu Obae
Branching out: Raiffeisen is defying the crisis to expand its network
R
aiffeisen Bank has seen an increase of 10 percent in its active client base who use two or more banking products, despite the difficult economic environment, according to the vice-president for the lender’s retail division, Vladimir Kalinov. Kalinov said the bank's volume of loans had remained stable, with a significant portion of customers looking for refinancing schemes in order to consolidate their debt. However, Raiffeisen’s portion of debtors is 8 percent versus the total customer base. Romania’s economic growth will pass the 1 percent threshold next year, according to Kalinov. This represents a downgrade in the economic forecast for 2012, as a report issued by Raiffeisen this August predicted that the economy would grow by 2.7 percent. Last week, President Traian Basescu said that GDP should increase by 2-2.5 percent on a strong investment base, while the IMF has forecasted 3.5 percent growth. This year, the Romanian government is expecting GDP to hike 1.5 percent. In a research paper on the economic outlook in Europe, Valentin Hofstätter of Raiffeisen stated that the extreme unrest in the banking sector, the falls on financial markets and the escalation of the debt issue are awakening associations with autumn 2008 and the fall of Lehman brothers. Greece will remain a driving element in the coming months and the euro zone should expect temporary falls in GDP. This will also impact Romania’s export-based economy, which depends on the financial wellbeing of Western economies.
Last week, the National Bank of Romania decided to maintain the monetary policy rate at 6.25 percent, although it should go down on the medium and long term according to the Raiffeisen representative. A new regulation package for retail lending will come into effect on October 1, seriously denting lending in foreign currency. However, Kalinov said this step was inevitable and that Raiffeisen would not post a decrease in its lending business, as 99 percent of its loans were taken out in the local currency (RON). Raiffeisen Bank is constantly trying to reposition its branch network and is currently pursuing a policy of relocations for its units in large cities. The bank has already relocated branches in Constanta, Iasi, and Timisoara. The latest investment involved opening a new branch in Bucharest, at Unirii Square, totaling EUR 400,000. Kalinov said that on the short term, the bank was considering further expansion in Iasi, Arad and Constanta, as rents have decreased by an average of 20 to 30 percent in recent years, from the 2008 peak. In one particular case, the bank was able to negotiate a 50 percent rent reduction. The lender will continue to establish its physical network of branches as Romanians are not mainstream users of internet banking. In fact, according to Kalinov, customers still prefer to meet bank staff face-to-face, meaning that branches will have to be located in areas with high pedestrian traffic. ∫ Ovidiu Posirca
www.business-review.ro Business Review | October 3 - 9, 2011
6 NEWS
OPINION Romanian power sector awaiting strategy
Photo: Laurentiu Obae
As usual, private investors are waiting for the Romanian policy making institutions to outline the options clearly: What path for nuclear technology in Romania? While European countries reconsider their position on nuclear energy, some of them closing operational plants and abandoning advanced new developments, others restating public acceptance of the nuclear option and planning new investments, it is time for Romania to make a decision on its second nuclear power plant. The first one seems on the right track, with an excellent operational track record, high level of public acceptance and units 3&4 seeing the prospect of some Asian funds. But the second one needs a serious locational study, an early decision and the securing of land. The future power generation mix will be heavily influenced by such a decision; The future of lignite and hard coal exploitation. As we write, coal makes up over 40 percent of the country’s electricity, and lignite clearly has the potential to be a sustainable primary energy source for Romania. As lignite-fired power generation could be cheaper than hydrocarbon-based generation, the intended volume of the lignite industry on the long term in Romania will guide developers of CCGTs in assessing their market share; How will “overcompensation” for electricity from renewable energy sources be assessed? After the good news of the European Commission’s clearance for the Romanian support scheme for electricity from renewable energy sources, a cold shower has generated nervousness among private investors – the message that the ANRE will monitor the IRRs and apply correction mechanisms in the event of excessive values for such benchmarks has again persuaded strategic investors to withhold their investments until the regulatory framework is clear. What type of reporting and monitoring will be used, how will projects’ IRR be calculated, and what will the real cor-
rection mechanism be? Such questions divide investors into “bullish”, those will be ready when the scheme is really applied, and “bearish”, those who will wait until the regulation texts are on paper under ANRE President order seals; How will Transelectrica cope with the need for investment in the transmission network development generated by the penetration of the new generators? The Dobrogea region might be threatened by network congestion as all power generated there should be transmitted to the rest of the country via the Cernavoda and Isaccea nodes. The 400 kV Suceava-Gadalin line has been proven necessary for the reinforcement of the National Power System given the penetration of the wind power generators. The new Tarnita-Lapustesti pumped storage hydro power plant will need new connections to the transmission grid. The changing landscape invites the question whether the speed of investment of Transelectrica is adapted to the speed of investment in new (especially renewable energy) power generators, and whether its financing model is adapted to the current economic climate. The whole European Union has acknowledged the need for and is preparing for increased investment in Trans-European Networks in order to cope with new challenges to the security of the energy supply, and is analyzing the financing resources and mechanisms available; The heat supply to households both in urban and rural areas has remained an unsolved problem, with enormous problems not sufficiently tackled and coming to the attention of the public only when the heating season starts or a municipal heating plant is unable to provide service due to interruption of the fuel supply for non-payment of bills. Local energy concepts are not yet developed and not subject to local political consensus before asking for centralized support in the form of know-how and guarantees; These are just a few of the discussion topics for a coherent energy strategy that is expected to trigger/guide private investment in the Romanian power sector over the next decade. Valeriu Binig, director of financial advisory services/energy & resources/corporate finance at Deloitte
More on the local power sector at the Business Review event on October 4 at the Howard Johnson Grand Plaza.
www.business-review.ro Business Review | October 3 - 9, 2011
NEWS 7
TECHNOLOGY
WINE
Imtech NV enters local market via acquisition, eyes takeovers
Murfatlar to uncork premium potential at new winery unit
I
urfatlar Romania has opened a new wine production unit dedicated to premium varieties. The new winery, located inside the company’s existing production facility near Constanta, required a EUR 550,000 investment. As part of its strategy to grow its premium segment wines, Murfatlar has hired Razvan Macici as consulting enologist. Macici is famous for being the cellar master of the Nederburg winery in South Africa, a position he has held since 2001. Over the years he has won a large number of industry awards for wines across the range. In 2010 Macici was behind the official wine of the FIFA World Cup, developing a special edition collector’s trio of South African wines. Macici comes from a family with a tradition in winemaking. He was born in Romania and grew up in the vineyards of Dealu Mare where his father, Professor Mihai Macici, a prominent Romanian enologist, worked. He graduated from the Horticulture Faculty in Iasi. “Everybody knows that Murfatlar produces large volumes of wine but now we will also focus on producing premium wines, and our ambition is to make the best varieties in the country,” said Macici, adding that his activity will not be limited to this segment alone but that he will be involved in the production process of all the Murfatlar wines.
mtech, the global independent supplier of electrical engineering, IT&C and mechanical engineering services, has entered the Romanian market via the acquisition of the company Sapphir IT & Management Consulting GmbH, including its office in Bucharest. The value of the transaction is being kept confidential. The acquisition was made through one of the companies owned by Imtech, ILS ICT Group, which was renamed Imtech ICT Austria at the beginning of the year. Sapphir Romania, which opened in 2006, was also renamed Imtech ICT Romania. The local firm will be led by Petre Pupaza, former CEO of Sapphir. “The company in Austria now holds the majority stake in the Romanian company. The remaining shares represent local capital. The shareholding structure is still the same as when the company was called Sapphir,” said Pupaza. Sapphir Romania was founded as a mixed company between Sapphir IT & Management Consulting GmbH and local consultancy firm Accent Business Consulting. “Accent Business Consulting, represented by me and my son, kept the rights and obligations after this takeover. We did not sell our stake, but we will probably have to sell in four-five years. All I can say is that we still have the veto right,” Pupaza told BR. The strategy also includes the acquisi-
tion of another firm that should have complementary capabilities to those of Imtech. ”The company we are looking for can be very large compared to us because we have the resources. It is not a matter of money but of complementarity. We are not looking only in Bucharest; distance is not an issue. The company needs to have been profitable and to have been sufficiently honest with the state, meaning this profitability must have been reflected in the official figures published in the last two-three years,” Pupaza told BR. By 2015, Imtech plans to increase its turnover threefold to EUR 1.5 million. A potential acquisition is not included in the takeover prediction. At the moment, Imtech ICT Romania has 30 clients including General Fluid, Uniqa Asigurari, VES, Fast Eco, Pifati, Romfluid, the Romanian Space Agency and Emon Electric. Its clients come mainly from the private sector. “We were too small to approach projects in the public sector, in turnover, size, certain criteria that you have to meet when you are applying for a state project. We broke our wings in 2009 when the crisis started. We were planning to double our turnover and number of employees in 2009 compared to 2008. All our plans had to be resized. We had to adjust,” said Pupaza. Imtech NV posted a global turnover of EUR 4.5 billion last year. ∫ Otilia Haraga
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The opening of the new winery comes approximately a year after the company set up a division dedicated to premium varieties. It will produce between 150,000 and 180,000 bottles of high quality wine per year with prices varying from EUR 10-25. Cosmin Popescu, managing director of Murfatlar Romania, said that despite the general dip in consumption the market for premium varieties was a growing and dynamic one that is attracting many producers, especially smaller ones. In the first phase Murfatlar will focus on the domestic market and distribution will be done through specialized wine shops and horeca. Referring to grape production this year, Popescu said 2011 had been an excellent year both in terms of quantity and quality. Murfatlar estimates a production of 18,000 tons of grapes, 30 percent up on the previous year. The company owns approximately 3,000 ha of vineyard – the largest surface owned by a single winemaker in Romania – 30 of which will be exclusively used for premium wines. Murfatlar has a 25 percent market share for 750ml bottled wine. Last year the company reported a RON 140 million turnover (approximately EUR 33 million) and hopes to post RON 185 million (about EUR 43 million) this year with RON 45 million being generated by the company’s own network of wine shops. ∫ Simona Bazavan
www.business-review.ro Business Review | October 3 - 9, 2011
8 LINKS
NFC telecom’s next big thing? As the worldwide telecommunication industry rapidly comes closer to the tipping point of unstoppable commoditization of its current core business – voice and SMS – the leaders of innovation are looking into new ways to boost value and bring telecom once again to the forefront of the hottest industries. The users There are currently 500,000 users of Cityzi, the window case NFC service in Nice, France. Users can flash their NFC phone to get on all buses, trains, amass loyalty points in a centralized consumer reward program and retrieve information from all NFC-embedded info points. Marseille and Tulon are tipped to follow suit by the end of 2011. Local governments and city halls have a rather pivotal role in deploying NFC for the masses as they open huge systems such as public transportation to NFC deployments. The top down approach seems to be working better than the American initiative. Orange, SFR (a subsidiary of Vodafone) and Bouygues are all involved in the NFC movement and are pursuing programs to push the services to the market.
NFC beyond mobile telecom
Oddpattern.com
Swipe and go: NFC technology offers an alternative to the payment card, the voucher, the travel pass – even the front door key
∫ NICU PANA Near Field Communication (NFC) is an emerging technology that brings new business possibilities to mobile operators and others. It all comes down to a chip that is mounted on the back of the phone, onto a MicroSD or the SIM card, allowing the mobile phone to send information to an NFC-enabled reader. The main current use of NFC chips has been micropayments via mobile phone, such as paying for subway ticket by just waiving your handset in front of a terminal at the tailgate. Obviously the sky is the limit as long as the integration between the phone operator, bank and service provider is seamless and really customer oriented. The NFC World Congress in Nice between September 19 and 21 is the premier event for the industry as it gathers all the captains of industry, movers and shakers. Your correspondent has followed closely all the recent developments in this area and included some of the highlights in this report. The 1,300-strong audience of the congress seemed to point to a movement that is about to get closer to the mainstream rather than just the experimental, geeky fringe of a few years before. NFC holds the promise that everyone’s
smartphone can actually become the personal gateway to a highly complex, multilayered digital life that includes personal finance, wellness, household administration and so on. As Ann Bouverot, chairman of the GSMA (GSM Association, the worldwide lobbying body for mobile operators), neatly sums up: “We now know that 75 percent of the people who own a mobile phone simply won’t leave home without their handset or if they do, they come back to get it. That might mean the mobile phone is the most important thing a person owns.” Most European countries boast mobile penetration levels of well over 100 percent and, worldwide, mobile penetration is currently at a staggering 50 percent if you consider the most generous recent figures. There is simply no other category of end user products, except probably light bulbs and electrical sockets, that can beat the reach of mobile phones. Once you have such infrastructure that is by and large globally interoperable, the next logical step is to cram other services into the worldwide web of mobile phones. ISIS, the American association of all major mobile carriers, set out with a clear mission to provide Americans with a parallel financial system for payments. The initiative set them on a collision
course with the banks and the likes of Mastercard and Visa. Meanwhile, the European and Asian side of the industry quickly came to the obvious conclusion that working with banks and Mastercard/Visa was the only way to advance the new industry and not risk transforming it from a shiny future promise to a “legacy technology overnight” in the words of Jorn lambert, head of group at Mastercard Europe.
The hard facts: the phones There are currently just two NFC-enabled handsets on the market: the Nexus S and Samsung galaxy SII. All other smartphones can be retrofitted with NFC. There’s even a hard case add-on for iPhones but that tends to make the phone a bit clunky and pocket bulging. Granted, more than 10 million Samsung Galaxy S2s have been shipped already but the current limited choice of handsets makes life a bit more difficult for marketers. Luckily, in Nice manufacturers announced more than 15 NFCready models by the end of 2011. Samsung’s VP, Hankil Yoon, said: “In the future all Samsung mobile phones will be NFC-ready regardless of the operating system, android, bada or windows.” Coming from one of the behemoths of the industry that definitely sounds like a commitment to NFC.
There’s life for NFC beyond the apparent dependency on mobile operators. The system started off as a way to secure access to homes. It is nothing more than a clever replacement of metal keys. In fact, the access cards currently used to gain entry to buildings already contain an NFC chip. However, you can easily take it one step further. Using rather plain vanilla software you can program your key, for example, to work only between certain hours. You can program yours as a year-round key and only give access to the maid on Tuesdays from 10.00-14.00 for example. Most of the Korean Universities in Seoul give their students NFC tokens that in effect work as a student ID and pass to clear access to dorms, cafeterias, classrooms etc. There is currently a project that will incorporate NFC into your car locks and make them smart. For the ever annoying problem of parking meters and highway tolls, NFC promises hassle-free no-stop passage (as long as your credit card is good to pay for it).
Back to business However when the floodgates are up, you may be sure the mobile operators will be at the helm of the NFC ships, but it will take a lot of work to provide a fool-proof global standard to ensure interoperability. Currently the NFC forum is writing down the specs in an attempt to even out diverging developments. At the moment deployments in the US, Europe and Japan do not work well together and that is a real killjoy for all the technology enthusiasts. There also seems to be a certain degree of confusion in terms of the business model per se. The small transaction fee (smaller than the typical banking transaction commission) works just fine for large systems such as public transportation, but that requires hundreds of thousands of customers who make recurrent transactions to add up to an interesting grand total.
continued on page 10
10 LINKS
www.business-review.ro Business Review | October 3 - 9, 2011
Smartphone: mobile operators are key to NFC security measures
continued from page 9 For the other obvious main use of NFC, couponing and vouchers, the story is not written. For one thing, the granularity of the retail universe is such that, no entity can possibly sign up and maintain a roster of relevant and up-todate networks of vendors to run NFC-enabled POSs. The obvious candidates though in retail are the large clothing, fast food, electronics chains and so on. McDonalds currently has a pilot project through which you can order fast and pay with an NFC phone. Your correspondent gave the system a shot and even though he was not successful himself, many others seemed to have no problem in getting it done and cutting their waiting in line time. Yes, people on the Cote d’Azur do eat out at McDonalds, the Ferrari-driving types included, as eye-witnessed!
What’s in it for us? Luckily for this country we are in a position to be able to take immediate advantage of any global development in telecom. The premier data connectivity infrastructure and access here make it even more likely that initiatives like NFC will quickly be integrated into product line-ups. Romania is a very coupon and voucher happy country, even by the standard of highly developed economies. We could imagine hypermarkets implementing NFC programs with mobile phone operators and banks. At the cashier just flash your NFC phone and forget all the plastic that turns your wallet into a messy lump of nonsensical rubbish. QR codes, currently all the rage in advertising, are a rather roundabout geeky way to link technology to traditional advertising support. NFC has a rare capacity to be a natural gesture-based technology. Waving a badge or a card feels natural, just like waving your hand at someone. That’s key to understanding consumer behavior. Similarly, the single biggest advancement for iPhone to take the handset market by storm was how easy you could do things with your phone by just dragging your fingers across the screen. Ges-
ture beats typing just as talking beats miming. The subway season ticket can actually reside in your phone along with the key to your home. That obviously invites the single most important question that has not yet been addressed here: how safe is this? And can you make sure no one steals your phone-wallet to abuse your identity or funds? It’s as simple as when you misplace your phone. Just get another one, call your operator, answer the security checks and get the NFC blocked. That will automatically block out all transactions on your credit card or access to any other NFC-enabled property. This is actually the very reason why mobile operators insist that any deployments other than straight on the SIM card are less secure, as one cannot get in touch with any personnel for the handset or MicroSD manufacturer. Or in that case, when you call the bank, customer service can handle the security concerns but will not be able to restore good working order if the NFC device has a hardware problem. Still not convinced on just how secure NFC can be? The simple fact that the mobile operator is the middleman should be the guarantee you need. Just one last quick example: M-Pesa, a money transfer service offered by Safaricom in Kenya has already signed up 40 percent of all Kenyans. The next best thing to a bank account is a SIM card and a phone. Since high-net worth AT&T customers on Wall Street and USD 1-a-day povertyridden Kenyans both use a mobile phonemediated expeditious and secure financial service, this is hard proof all major tests for security have been cleared. Near Field Communication has the potential to position the mobile phone industry at the very center of end users’ digital universe and we happen to be right now on the cusp of making that happen, or not. Nicu Pana, Telecom Consultant Strategy & Sales Management Nicu.pana@telsign.ro
LINKS 11
www.business-review.ro Business Review | October 3 - 9, 2011
Nokia to close Jucu plant, sack 2,200 people Finnish mobile phone manufacturer Nokia announced last week that it will close down its production unit in Jucu, Cluj county, by the end of the year. In total, 2,200 employees in Romania will be made redundant. ∫ OTILIA HARAGA
Photo: Daniel Mihailescu
The firm broke the news to its work force via an internal letter which said the measure was “painful but necessary.” “We plan to ramp down our manufacturing facility in Cluj by the end of 2011. We are aligning our manufacturing in Europe with consumer behavior in Europe. Specifically, smartphone sales in Europe have increased while feature phones sales in Europe have decreased, and the majority of our work in Cluj has been around feature phone manufacturing,” said the company. Last year Nokia was the second largest local exporter after Dacia. Its revenues amounted to RON 7 billion with a net profit of RON 181 million. The Finnish telecom giant will be looking for potential investors interested in buying the Jucu plant, said group president Stephen Elop. During this time, the company will retain only the employees of the sales department. The rest of the staff will be made redundant. Nokia staff members were informed that they will remain in the employ of the company until the end of the year and will be paid until the end of March 2012. The workers will also receive a compensation package that will be finalized after consultations with the union.
Sign of the times: mobile firm Nokia is pulling out of Cluj with the loss of 2,200 jobs After the closure of the factory in Cluj, Nokia plans to “shift gradually the focus in the Salo, Komarom and Reynosa factories from device assembly to customer and market-specific software and sales package customization. These factories are expected to continue to play a key role in serving smartphone customers in Europe, Eurasia and the Americas,” according to its statement. A delegation from Nokia had a meeting with Prime Minister Emil Boc on Thursday. The delegation was led by the
general manager of Nokia Romania, Risto Meskus, accompanied by other managers from the Finnish company. "The government could not have prevented the closure of the Jucu plant,” said the prime minister’s counselor on economic issues, Andreea Paul Vass. The measure was taken by Nokia purely on economic grounds and the government was not to blame, she said. “We have six months at our disposal to make up for the lost business following the closure of the
Jucu plant,” Vass added. The government is in advanced talks with ten other companies to attract investments to the Cluj region, said the advisor. Nokia reportedly invested EUR 60 million in the plant, starting production in 2008, after moving the unit from Bochum, Germany. Cluj county council approved on Thursday the founding of a commission to analyze the contract with Nokia. “We decided to form a commission to see to what extent Nokia fulfilled its obligations under the contract and analyze the contract. We must see to what extent some of the money invested by the county council and the Romanian government in the utilities at Jucu can be recouped. Here we have as a precedent the situation in Bochum because there [the firm] paid the local community a large portion of the money when they left. We are talking about EUR 20 million,” said Valentin Cuibus, a member of Cluj county council. In April, Nokia announced it would close its R&D center in Cluj and axe 120 positions, in line with its global strategy to reduce its labor force and consolidate its operations. However, at that point, Nokia officials said no changes were planned for the Jucu plant.
otilia.haraga@business-review.ro
www.business-review.ro Business Review | October 3 - 9, 2011
12 MOLDOVA COUNTRY FOCUS
Moldova flags up EU aspirations to attract foreign investors The Republic of Moldova’s economy grew by 6.9 percent last year and another 7.5 percent in the first semester of this year, convincing an increasing number of European companies to place the country on their investment map. Participants in the first Moldova Business Forum organized last week by BR discussed opportunities in Moldova and ways to increase investment flows between the two countries. ∫ SIMONA BAZAVAN
All photos: Laurentiu Obae
“The Republic of Moldova is definitely a destination for investments. Not for those looking to invest hundreds of millions or billions of euros but for those with small and medium sized companies,” said Ion Sturza, president of GreenLight Invest private equity fund and former prime minister of the Republic of Moldova. Among the reasons to invest on the right bank of the Prut river, he mentioned the fact that Moldova is a developing and fast growing economy, strategically positioned between the European Union and Community of Independent States. In the present economic crisis, Moldova has become an even more attractive destination alternative for foreign investors in their search for cost optimization, Sturza argued. Present at the event, Iurie Renita, the Ambassador of the Republic of Moldova to Bucharest, said that now was a good moment to invest in the state, stressing the country has a clear EU agenda. Addressing some companies’ concerns over the political stability in Moldova, Renita said that the business environment there was safe and there were plenty of guarantees. Progress has been made in the last two and a half years since the Alliance for European Integration came to power and bilateral relations between the two countries have become normal, said Renita. Economic relations, however, are lagging behind, with the volume of bilateral investment flows reaching similar levels. While agreeing that the Republic of Moldova is not lacking in business opportunities and adding that he himself has invested there, Mihai Ionescu, general secretary of the national association of exporters and importers (ANEIR), said that there is still progress to be made. “This is not a reproach for the authorities in Chisinau. Trust is essential to encourage business and trust is presently being undermined by some actions and behaviors by public workers and the Moldovan authorities. Certain development phases have to be reached. This is a long-term process and the same has happened in Romania,” he said. One of the most notable Romanian investors in the Republic of Moldova is Banca Comerciala Romana (BCR), which opened a subsidiary there in 1998. Vitalie Arvinte, head of marketing, communication and the community department with BCR Moldova, said that there are several sectors that attract foreign investments to the Republic of Moldova. Industries that fuel foreign trade as well as
Speakers at the Business Review event debated the opportunities and challenges of doing business in Moldova those producing for the internal market are especially attractive, Arvinte added. Moldova’s exports increased by about 64 Iurie Renita, Ambassador of the Republic of Moldova “I would like it very much if Romanian companies were more active in investing in the Republic of Moldova” Gabriela Ciumac , head of the City Hall's foreign relations, and EU integration, Chisinau “Next year we hope to set up a trolleybus assembly factory in Chisinau, the first of its kind, which will create additional jobs”
percent in the first semester and imports went up by 40 percent, he noted. There are also industries where inMihai Ionescu, secretary of ANEIR “Bilateral agreements are a positive political message but this has to be reinforced by more business partnerships” Ion Sturza, president of GreenLight Invest “Moldovan companies have invested more in Romania than Romanian ones in Moldova and the latter continue to be reluctant about investing here”
vestors encounter difficulties, such as in developing new real estate projects. Obtaining all the necessary building permits takes a very long time and is also costly, explained Arvinte. While it is easy to set up a new business in the Republic of Moldova, closing a company can also be time consuming, he added. Most of the economic activity in Moldova, about 70 percent, is centered around its capital, Chisinau. Present at the event, Gabriela Ciumac, head of Chisinau City Hall’s foreign relations, regional cooperation and European integration division, outlined several projects where the local authorities hope to attract investments through PPPs or concessions. These focus on providing public services such as sewage, public lighting and solutions for the arrangement of the city’s many parks and lakes. Investors were also encouraged to consider the private medical services industry – about 80 percent of the medical services in Chisinau are provided by the state – and social residential projects. The Moldova Business Forum was organized last week at the Capital Plaza Hotel in Bucharest and attended by about 50 participants. The event was sponsored by BCR and organized with the support of the Embassy of the Republic of Moldova to Romania and the Chamber of Commerce and Industry of the Republic of Moldova.
simona.bazavan@business-review.ro Vitalie Arvinte, head of marketing, communication and community, BCR Moldova “It is quite easy to set up a new company in the Republic of Moldova and the related costs are low” Lilia Russu, Counsellor of economic affairs with Embassy of the Republic of Moldova “Moldova is presently undergoing a full process of reconstructing and modernizing its transport infrastructure”
www.business-review.ro Business Review | October 3 - 9, 2011
INTERVIEW 13
Local real estate market looks to green future Works on the Willbrook Platinum Business and Convention Center – an award-winning project developed by Willbrook International in northern Bucharest – have been completed and the venue will be officially opened this week. Daiana Voicu, the company’s managing partner, talked to BR about the project and the future of environmentally friendly buildings on the local market. ∫ SIMONA BAZAVAN
Courtesy of Willbrook
What can you tell us about the Willbrook Platinum Business and Convention Center – why is it a green office building and what exactly makes it green? Green technology implementation is based on two important aspects in the life of the building: water and energy efficiency. This improves the quality of life for people working in the building while saving operational costs by as much as 35 percent. The water efficiency program endorses smarter use of water, inside and out. For the energy efficiency program we have implemented different technologies such as free cooling chillers that utilize the low outside air temperature for chilling the water in the process of air conditioning as well as solar panels for naturally producing hot water and smart lighting fixtures with natural light sensors and dimmers. The terraces of the building are covered with high SRI gravel which acts as a direct sunlight barrier reducing the heat waves penetrating the building. The optimized curtain wall façade improves the working environment by allowing maximum natural light penetration with minimum heating factor. The building is at present undergoing the certification of a Gold rated Green Building by LEED (Leadership in Energy and Environmental Design), an internationally recognized green building certification system, providing third-party verification. Willbrook Platinum Business and Convention is located in the north of Bucharest and combines a triple A quality office building with a state of the art convention center. It required an investment of around EUR 100 million and will provide a high-end facility for office space, the organization of events as well as business meetings. There are 2,400 seats available in 12 conference rooms, with two large halls that have a capacity of approximately 300 seats and the Mahogany Court which will be able to host up to 1,000 guests. We can host almost every type of event, from business to personal. The project has won two awards at the International Property Awards in the UK. These are the Best Architecture (Office) for Willbrook Platinum Business and Convention Center and Best Property Website in Romania for www.willbrookplatinum.ro. We have also developed an AAA office building that offers the largest rentable area per floor in two buildings connected by a large pedestrian bridge – 8,000 sqm of open space planning. We have a total of 44,000 sqm of rentable office space, which can be customized to meet our clients’ demands in terms of space and rental period. At the moment, the leased area is 10,000 sqm. The target is to have the building occupied by the end of this year. The average rent is between EUR 14 and 16/sqm.
How do you see the future of green buildings in Bucharest over the coming years? Is there demand in the market for such projects? We expect sustainability issues to become "unavoidable" for the real estate sector. Green buildings currently comprise just two per cent of the market, but we anticipate that such projects will become increasingly sought after as tenants look to cut operating costs and back up corporate environmental and social responsibility goals. Green buildings have environmental, economic and social elements that benefit all building stakeholders, including owners, occupants and the general public. This is why potential investors are interested in green buildings – this will be the future. From our point of view it is mandatory for new office buildings to have some of the green criteria implemented and for this we need the government to be much more concerned about the sustainability issue. Green buildings can reduce energy use by 24 to 50 percent, cut CO2 emissions by 30 percent and water use by 40 percent. Besides that, the business benefits for green are measured in 8-9 percent operating cost decreases, 7.5 percent building value increases, and a 3 percent rent ratio increase. How has the local office building market evolved since the beginning of the year compared to the same period last year? Even though no significant economic recovery is being felt and the construction market is still flat, the office market is not saturated and we estimate that next year will bring the need for new office space. In the office sector, rents have bottomed out, after decreasing in some areas late in 2010. This follows a period of very high vacancy rates and reduced take-up. However, these are beginning to improve and rents are expected to enter a period of relative stability. In Q2 of 2011, prime rent was unchanged for the past several quarters, at EUR 19.5/sqm/month, as
Willbrook International Willbrook International comprises four divisions: Willbrook Real Estate which develops a portfolio of real estate projects across Europe, Willbrook Property Management, Willbrook Hospitality which provides services to residential and office clients and Willbrook Medical Center. In Bucharest, in addition to the Willbrook Platinum Business and Convention Center, the company has also developed the Cathedral Plaza office building. the number of incentives continues to be high. The tenants are looking for good locations, large surfaces and facilities. Central locations continue to be preferred by most companies as a consequence of the proximity to other business elements, improved accessibility as well as for the company's image, while northern areas are generally preferred by large surface occupiers and back-office facilities. Regarding the vacancy and occupancy, the city average of vacant space in Bucharest is 16 percent, down from last quarter, while the take-up in Q2 2011 registered a substantial increase of almost 50 percent y-o-y. You also have projects that target high-end customers. Has this market segment evolved differently? The residential market was quite badly affected by the crisis, and rental rates declined substantially in 2010 compared to 2008. Our client segment was not significantly affected and we believe that with a proper marketing strategy we will be able to cover the spaces that we have in the portfolio. Romania remains an attractive market and many international companies will open their branches or expand their business in our country. But it is important to have an
ongoing dialogue between investors and the government environment, so that together they can find appropriate solutions. Furthermore, the entire region suffers as a result of the economic crisis. Our main high-end residential project is Oxford Gardens. Its luxury dimension resides in combining a special location with high-class architecture and design, as well as private exclusive services with a total investment amounting to EUR 165 million. It is a gated diplomatic community complex, comprising 204 villas with a total 95,220 sqm in built up area. Each property is developed on a private plot of land of 400 to 1300 sqm, with large gardens and terraces and with a swimming pool. Residents have access to a 6,000-sqm five-star club equipped with indoor and outdoor swimming pools, fitness and spa facilities, tennis court, restaurant and lobby bar. The success of a luxury property development is to know the needs of your future clients. Is Romania still an attractive market for Willbrook? Has the economic downturn in the past years changed your approach? At the beginning of July, the Fitch agency improved the credit rating granted to Romania, bringing it back into the category of countries recommended for investments. Although the investment activity in the first half of 2011 was reduced, it is expected that investors’ interest will grow. From our point of view, it is unclear when the interest will be crystallized in effective finalized trading. Willbrook is still in the “waiting” stage, even if the situation of the economy has removed the short-term investors whose sole aim was immediate profit and the speculators. If we look from this perspective, we can say that this is the best thing that the crisis has done for the real estate market. From now on, we are expecting the market to stabilize, and we want to see development with a higher focus on quality. What are your development directions for the local market now and for the future? This year will not be the turnaround year the Romanian real estate industry had hoped for, but it could be a year that could change the shape of the industry for a while to come. In 2011 hope has been replaced with acceptance and the new slogan for all the investors and developers is to adapt or die. We have analyzed the investments made in Romania by all investors and developers and the outcome is staggering: a huge proportion of losses came from buildings in inferior locations or of inferior quality. This is why developers should understand that quality and facilities are the key. Willbrook has expanded its scope of activity, being truthful to its vision: to become a leading European developer creating high-end lifestyles for demanding clients through integrated services. simona.bazavan@business-review.ro
www.business-review.ro Business Review | October 3 - 9, 2011
14 CITY/IN TOUCH RESTAURANT REVIEW
WHO’S NEWS
It’s not a Turkish delight
BR welcomes information for Who’s News from readers. Submissions may be edited for length and clarity. Get in touch at simona.bazavan@business-review.ro
Andrew Highcock is the new president of Ursus Breweries. He has previously worked for Pivovary Topvar, a company in Slovakia owned by SABMiller PLC. Before joining the global brewer, he worked for Maxxium Worldwide as president of the company’s operations in Canada and managing director for South-Eastern Europe. Highcock has also worked for Diageo in France, UK and Central Europe. Photo: Laurentiu Obae
What a Turkey: though Divan serves authentic cuisine its high standards have slipped
Divan, Franceza 46, Lipscani, tel 021 312 3034 MICHAEL BARCLAY There is a somewhat ambivalent expression in the English language: “he was a victim of his own success”. This applies perfectly to Divan, and the customers are the victims. For 16 months ago it was the most dynamic and successful new restaurant of the year, but alas no more! As with virtually every good restaurant in town, the predictable “Bucharest madness” kicks in and the result is that the quality goes down and the prices go up. Although the décor, location and staff are all charming, our expectations of a good value meal were spoiled by the prices of ordinary Romanian wine which started at RON 60 and went upwards. I am not mean, but in low priced Lipscani this seems incongruous with the budget conscious clientele of the area. But off to the menu. It is huge and broken down into sections such as kebabs, appetizers, roasts… and so on. Each section is headed by a general description in tacky tourist-speech. For instance, kebabs have “…spices kept a secret for generations”, appetizers “when our [waiter] brings the plate you will visit the times of the Ottoman Empire”,
ISSN No. 1453 - 729X
myself if the House even cared. Next was a kebab. There was a choice of meats, including “veal shish kebab” for RON 72, minced beef and lamb with eggplant for RON 38, minced beef and lamb with yoghurt for RON 46 and the same with tomato at RON 32. I chose the cheapest option – minced beef and lamb at RON 29. It arrived inexplicably warm rather than hot, with the minced meat roll undercooked and far too pink. In keeping with Turkish tradition, their kebabs are grilled over coals together with tomato and peppers. They also include sliced red cabbage, onion and bulgur. The latter needs explaining. It is a portion of durum wheat cooked with tomato and onion. It looks like couscous, but it clearly is not. As I recall from eating it at Divan last year it was fabulous. But now it is bland and lacking in flavor. Given the popularity of fish in Turkey, there was not much on offer here. You could have grilled sea bass or baked dorada, both priced RON 42. But when you take off the head, bones and tail, you don’t get much for your money. Grilled octopus came at RON 57. To be fair to the House, I have only listed a fraction of their extensive menu, and it really is representative of Turkish cuisine. But it is a shadow of its former self and that is a shame.
roasts “the good old taste of a home meal… will conduct you to childhood”. Oh cut it out House, this is so patronizing. Of the ingredients, virtually every one can be found in a local Romanian market, all of them emerging over and over with eggplant, onion, tomato and peppers predominating. So away to their “appetizer” section of small mezzas. You can of course dine exclusively on mezzas, but they are so small you would have to order a hell of a lot of them. There was eggplant with tomato sauce and pepper for RON 14, eggplant with grilled tomato for RON 19, roast eggplant, garlic, yoghurt and tahina for RON 14, fried potato for RON 12, hummus for RON 10… and much more. There was even a dish of the day, which was roast eggplant with chicken at a too high price of RON 52. Blondie ordered a chicken salad (roast chicken, cucumber, parsley and tomato) which was extremely good value as it was gigantic and only cost RON 18. But it was spoiled by the inclusion of one long black human hair, which came free of charge. We were horrified and sent the salad back. Our charming waitress made all the correct apologetic noises, but would you not think that if the House were truly penitent they would send over the manager to apologize together with a complimentary wine? But no, and I had to ask
michaelbarclay32@gmail.com
FOUNDING EDITOR Bill Avery EDITOR-IN-CHIEF Simona Fodor SENIOR JOURNALIST Otilia Haraga JOURNALISTS Simona Bazavan, Ovidiu Posirca COPY EDITOR Debbie Stowe COLLABORATORS Anda Sebesi, Michael Barclay ART DIRECTOR Alexandru Oriean PHOTOGRAPHER Laurentiu Obae LAYOUT Beatrice Gheorghiu
PUBLISHER Anca Ionita EXECUTIVE DIRECTOR George Moise SALES & EVENTS DIRECTOR Oana Molodoi MARKETING MANAGER Adina Milea SALES & EVENTS Ana-Maria Nedelcu, Claudia Munteanu RESEARCH & SUBSCRIPTION Lili Voineag PRODUCTION Dan Mitroi DISTRIBUTION Eugen Musat
Cristian Damoc has become partner of EMCT Romania. He is a graduate of the Commerce Faculty of the Academy of Economic Studies. Damoc has over ten years of professional experience in real estate.
Jerome Mouillet has been appointed general manager of the Michelin tire factory in Floresti. He has been working for the French manufacturer for the past 16 years. Between 2009 he 2011 he held the same position at the company’s production unit in Budapest. He also managed operations in Germany after Michelin Group bought Viborg.
Jacques Nathan has been appointed country manager of Sanofi Romania and president of the administration board of Zentiva, starting October 1. He will also continue as general manager of MCO (Multi-Country Organization) Danube, an entity that also includes Bulgaria, Moldova, Romania and Hungary. Nathan has so far managed the operations of Sanofi Bulgaria. He will take the place of Dan Ivan, who has decided to temporarily halt his professional activity for personal reasons and has consequently stepped down from Sanofi. In 2008, Nathan was appointed general manager of Sanofi Bulgaria and in February this year he took over the helm of MCO Danube.
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