INTERVIEW: Franklin Templeton’s chairman Mark Mobius says red tape is preventing Romania from receiving further foreign investments and sees the country’s future Euro zone accession as an opportunity for clear fiscal discipline »page 7
ROMANIA’S PREMIER BUSINESS WEEKLY
NOVEMBER 5 - 11 / VOLUME 16, NUMBER 36
ORGANIC FARMING THE NUMBER OF ORGANIC FARMERS AND THE SURFACE OF CERTIFIED ORGANIC FARM LAND HAS GONE UP AFTER THE STATE STARTED DIRECTING FINANCIAL SUPPORT TO THE SEGMENT »PAGE 6
SOLAR POWERS INTO LOCAL HOME
Courtesy of PRISPA
Romanian energy-efficient house PRISPA is looking to turn sustainability into an industrialized series »page 12 NEWS
NEWS
LINKS
PLUS
LTE launch
Ready for takeoff
Size matters?
Vodafone has launched its LTE/4G network in ten cities across Romania, after rolling the service out in Germany, Portugal and Italy
In a move to reduce congestion, Bucharest’s Otopeni airport is opening a new terminal extension following a EUR 52 million investment
What factors come into play in the evaluation of a media brand? BR looks at what’s at stake for media companies in troubled economic times
Film review: Bond goes back to basics » page 14
» page 5
» page 10
» page 10
The work of architect Pascal Delmotte is on display in a new concept store » page 14
www.business-review.ro Business Review | November 5 - 11, 2012
NEWS 3
NEWS in brief BANKING
MACRO
Banca Transilvania Q3 net profit up 30 percent to RON 265 mln on growing trading income
EBRD cuts Romania’s 2012 GDP growth prediction to 0.5 percent
BCR posts 9-month loss of EUR 172 mln on higher provisioning, weak economy Romanian lender BCR, controlled by Austrian Erste Bank, registered a loss of RON 762 million (EUR 172 million) in the first three quarters of the year from a profit of RON 67.6 million (EUR 16 million) in the same period of last year, as it increased provisioning in response to the weak domestic economy. BCR’s operating income decreased by 4.5 percent year-on-year to RON 4 billion (EUR 679 million) in Q3, as consumer credit demand remained weak. The lender said the ongoing formation of non-performing loans (NPLs), which represent 25.8 percent of the total loan book, had reduced in Q3 for the large corporate and real estate segments. The bank had reduced operating expenses by 6.1 percent to RON 1.1 billion (EUR 267.4 million) by September, and aims to return to profit in the coming years. It lowered the cost/income ratio to 39.4 percent in September, which is a 0.6 decrease from last year. The return on equity (ROE) fell sharply from 1.3 percent to negative 14.1 percent.
Erste Group 9-month profit at EUR 597 mln on lower risk cost The net profit of Austrian Erste Group amounted to EUR 597 million on
Courtesy of Patriarhia.ro
The net profit of Banca Transilvania (BT) soared 30 percent in the first three quarters to RON 265 million (EUR 59 million), sustained by higher income from financial operations and increased lending activities. The bank remained prudent and decided to increase provisioning of the loan book although it has a low volume of bad loans, said officials. The net operating income grew 13 percent to RON 1.1 billion (EUR 244 million), while expenses rose by 13 percent to RON 616 million (EUR 137 million). The lender increased its personnel expenditure to extend the bank’s activity. BT registered a 38 percent increase in trading income to RON 100 million (EUR 22 million). The net interest income gained 9 percent to RON 708 million (EUR 157 million), while the net commission income rose by 11 percent to RON 358 million (EUR 80 million). Lending moved up by 12 percent to RON 17.1 billion (EUR 3.8 billion), while deposits registered a 13 percent hike to RON 22.6 billion (EUR 5 billion). The corporate sector accounted for 64 percent of BT’s loan book.
IMAGE of the week When the saints go on display… Over 140,000 people gathered at the Patriarchal Cathedral in Bucharest last week to celebrate Saint Dimitrie the New, the patron saint of Bucharest, based on estimates by the Romanian Patriarchy. The relics of Saint Dimitrie and those of Saints Constantine and Elena were on view to the faithful from October 24 -30. A delegation of the Church of Greece, led by metropolitan parent Efrem de Ydra, also brought the relics of Saint Nectarie of Eghina to Bucharest for the occasion. nine months from a loss of EUR 973 million in the same period of last year, sustained by a stable operating result and lower risk costs, according to Andreas Treichl, CEO of Erste Group Bank. Erste’s operating result fell slightly by 0.5 percent to EUR 2.6 billion due to lower operating income and a reduction of operating expenses. The operating income dropped 1.4 percent to EUR 5.4 billion by September due to lower interest margins. Net interest income decreased by 4 percent to EUR 3.9 billion on reduced credit demand. The weak securities business in Austria and the Czech Republic sent the net fee and commission income down 5 percent to EUR 1.2 billion. At the same time, the trading income soared four fold to EUR 191.4 million. Subsidiaries in Hungary, Romania and Ukraine went through reorganizations that led to a 2.1 percent decrease in headcount to 49,380 employees. Erste was able to lower the cost-income ratio to 51.9 percent. Lending to customers fell 0.9 percent to EUR 133 billion by September while deposits grew 2.8 percent to EUR 122 billion, due to gains in Austria, the Czech Republic and Slovakia.
IT Association of Business Service Leaders sets up local branch The Association of Business Service Leaders (ABSL) is starting its activities in Romania, gathering companies in business process outsourcing, shared service centers, information technology outsourcing and research and development such as Genpact, HP, Microsoft, Office Depot, Oracle, Wipro and WNS. Romania was ranked ninth in a Jones Lang LaSalle global classification of preferred locations for outsourcing, with 40 new projects for centers of shared service centers, business process outsourcing and research & development. Over 11,000 new jobs were created on this market between 2008 and 2012. Most major players have opened at least one center in Romania. Local centers generally have in the range of 100-500 specialists. The association’s main goals are to improve the dialog between the actors in this industry by exchanging experience and best practices, recommend legislative improvements and put forward changes to the education system to fit the requirements of the labor market.
The EBRD has slashed this year’s economic growth estimate for Romania to 0.5 percent in its latest Regional Economic Prospects report, warning that no real recovery is underway as yet in Emerging Europe. The forecast was revised down from an initial 0.8 percent due to the slowdown in the euro zone, the drought-stricken agricultural output, and the political uncertainties that have engulfed Romania over recent months. The EBRD estimates the domestic economy will expand by 1.9 percent next year. Romania recorded the fourth largest economic growth in the EU, gaining 0.5 percent in the second quarter. However, EBRD economists warn that this is not enough and that yearly growth will be of 0.5 percent. The EBRD noted that the financial agreements with international lenders were acting as an important buffer, especially due to Romania’s economic ties with the euro zone. The forecasts for Slovenia, Hungary, Croatia and Serbia, all of which are still in recession, have also been slashed.
Romanian budget deficit falls to 1.18 percent of GDP in Q3 The country registered a budget deficit of RON 7.17 billion (EUR 1.5 billion) in the first three quarters, down from RON 13.8 billion (EUR 3 billion) in the same period of last year, supported by higher budget revenues. Revenue to the consolidated budget grew by 7.2 percent to RON 141 billion (EUR 30.1 billion), which was 23.2 percent of GDP in Q3. Fiscal revenue rose by 9.5 percent due to improved collection in VAT and excises, up by 6.2 percent and 8.4 percent respectively. Income and profit tax generated 12.3 percent and 6.3 percent in extra revenue. Non-fiscal revenue added close to 30 percent. Property tax and non-fiscal revenue expanded by 0.3 percent and 12.4 percent for local administrations. Budget expenditure grew by 1.9 percent to RON 148.3 billion (EUR 32.5 billion), which was 24.4 percent of GDP. Expenses on EU-funded projects increased by 30.5 percent while interest costs rose by 25.6 percent. A 7.3 percent increase was registered in goods and services, due to additional payments for medical services and pharmaceuticals. The partial recovery of wages in the public sector increased personnel expenditure by 4.3 percent.
www.business-review.ro Business Review | November 5 - 11, 2012
4 NEWS ENTREPRENEURS
BUSINESS AGENDA November 7
November 12 ∫EVENT
13:30 PwC Romania organizes a press conference to mark the launch of the PayWell and Saratoga studies at its headquarters in Bucharest. By invitation only.
08:30 Business Review organizes a workshop on transfer pricing and tax audits, covering the legal aspects and solutions for companies within the same group. By invitation only. Find out more at www.business-review.ro/brevents
18:00 Evernote organizes the Evernote Meetup, an event focusing on the local community of entrepreneurs and developers, at the HUB Bucharest. Phil Libin, CEO Evernote, will attend. By invitation only.
November 7 - 8 How to Web, the international conference on innovation and technology entrepreneurship, is organized at the Crystal Palace Ballrooms. By invitation only.
November 8 11:00 Austrian Post Group, which is active in Romania through Post Master, organizes a press conference to present its development plans for 2013 at Radisson Blu Hotel. By invitation only.
Radu Georgescu seeks CEOs for three of his firms
November 15 ∫EVENT 09:00 Business Review organizes the second edition of Focus on Agriculture, an event that will discuss the latest developments in the Romanian agricultural sector, at Ramada Plaza Bucharest. By invitation only.
November 21 ∫EVENT 08.:30 Business Review organizes the twelfth edition of Focus on the Real Estate Market, an event that gauges trends in the real estate business. By invitation only. Find out more at www.businessreview.ro/br-events
Radu Georgescu
R
omanian serial entrepreneur Radu Georgescu is currently scouring for CEOs for three of his companies, according to an announcement he placed on his blog. Georgescu did not specify which companies he has in mind. He confirmed this to Business Review. “I am looking for three leaders, three partners who will hold the position of CEO in companies in which I am a shareholder or at new projects/companies,” Georgescu told BR. The leaders must build from scratch or reinvent a company, or to take it to a new stage of development, and be able to build and manage teams of smart
and open people, he added. The entrepreneur had received 100 CVs between October 18 when he placed the announcement and October 29, and interviews will follow, he told BR. “I am looking for people to treat these companies as if they were theirs. To receive an employee share option plan – meaning shares in a company – and act like an entrepreneur, growing the company with all their energy. I have never got involved in the daily activity of companies, only on the board of directors, and under these conditions, all the general managers of the companies I was a shareholder in were partners with me,” he wrote on his blog. Georgescu outlined the qualities he was seeking in the candidates, who should “understand what is happening in various parts of the world, in various cultures.” They should also have thorough knowledge of the internet, cloud, SaaS, software and e-commerce. According to sources on the market, Georgescu has purchased a stake in Elefant.ro, an online bookstore established in 2010 by Ion Sturza, former deputy GM of Rompetrol Group and former prime minister of the Republic of Moldova. However, Georgescu said he would not comment on this issue. “After the sale of ePayment (currently PayU) I announced I wanted to invest in innovating companies with talented teams that wish to change the way we work and live, but so far I cannot confirm whether I have found those companies I want to invest in or not,” Georgescutold BR. ∫ Otilia Haraga
INFRASTRUCTURE
Otopeni airport opens EUR 52 mln terminal
T
he new departure terminal at Henri Coanda International Airport (Otopeni) in Bucharest will be officially opened on November 6 following a EUR 52 million investment, Valentin Iordache, the communication director of the Bucharest Airports National Company, announced last week. The extension project is part of the airport’s development and modernization program and the money came from the state company’s own funds. Construction of the new terminal, which has a surface of about 20,000 sqm, started last July. It has doubled the previous 52 check-in desks and features eight new boarding gates, ac-
cording to Agerpress. The extension will enable the airport to process twice as many flights and reduce congestion, said Iordache. In the first phase the new terminal will be mainly used for domestic flights but later on it will also process international ones. In 2011 Otopeni saw some 5 million passengers. This is expected to go up in 2012 after low-cost flights were transferred from Baneasa to Otopeni this March. Since then, traffic at Romania’s largest and busiest airport has increased by 30 percent for outgoing flights and 45 percent for incoming ones. ∫ Simona Bazavan
www.business-review.ro Business Review | November 5 - 11, 2012
NEWS 5
TELECOM
Vodafone launches 4G network in ten cities, will invest EUR 100 mln next year
Courtesy of Vodafone
Inaki Berroeta, CEO of Vodafone Romania, announces the 4G roll-out
T
en local cities are to get LTE, making Romania one of the first European markets where Vodafone has launched its LTE/4G network, after Germany, Portugal and Italy. “We are happy to announce that the Vodafone 4G network is being implemented in ten large towns around the country, where we post the highest mobile internet traffic,” said Inaki Berroeta, CEO of Vodafone Romania. The LTE network, which operates in the frequency of 1800 MHz, is now available in 10 major towns: Arad, Bacau,
Brasov, Bucharest, Cluj, Constanta, Craiova, Iasi, Galati and Timisoara. Over the coming months, Vodafone will give its customers the chance to test 4G technology at speeds of up to 75 Mbps in 17 Vodafone stores on a series of compatible devices: the USB Huawei K5005 modem that connects from a PC or laptop, the Asus 700 KL tablet and the mobile hotspot Huawei R210, which can provide connection for five smartphones, laptops, tablets or PCs, or a combination, at the same time. Vodafone will spend EUR 228.5 mil-
lion on spectrum resources it acquired this fall during the telecom tender. In addition, the operator will invest approximately EUR 100 million over the next year, including into LTE deployment, said Berroeta. However, the CEO did not mention what type of commercial offers will accompany the LTE launch. ”We will start commercial operations in January and we will announce the offers at that time,” he said. Among the 4G compatible handsets in the Vodafone range, the iPhone 5 can be used for 4G services in Romania, Berroeta added. The launch of the operator’s LTE network took place in the presence of Vittorio Colao, CEO of the Vodafone Group. “Romania is not one of our biggest markets but it has two good characteristics: firstly, it is a market where we are joint leader, because we are very close to the leader, and secondly, it is healthy and profitable, which is why today we are launching LTE. We are investing in the country because where markets grow and have good management – it doesn’t really matter their size – we basically invest in technology and invest in the future,” Colao told Business Review.
Vodafone’s main competitors, Orange and Cosmote, also announced they would launch 4G services by the end of the year and next year, respectively.
Vodafone bases network operations center in Romania At the moment, Vodafone’s network operation center for Europe is located in Romania. “We manage a number of countries from here which means that 24/7 management of our networks is now done in Romania for most of Europe. This is a place where we can base our activities for the rest of Europe because we find good quality people, and we have good conditions for staying here,” Colao told BR. He added that Romania was a telecom market with very competitive prices. “Romania is a market where we have seen a lot of price decline so now the market can grow back to being more profitable and with more profits we can make more investments in broadband. As I said, we can possibly use Romania for more international activity. LTE is one of our engines of growth but there will be others as well,” said Colao. ∫ Otilia Haraga
www.business-review.ro Business Review | November 5 - 11, 2012
6 NEWS /OPINION AGRICULTURE
OPINION Erik Aerts MENAC
Innovative ideas in times of crisis
These are equally difficult and interesting times for young people with new ideas. There are fewer jobs and they are less well paid, but at the same time there is a lot more freedom. That freedom in turn opens up a lot of opportunities for new kinds of businesses. It is, admittedly, an optimistic take on the current situation, and one not shared by many. Mainstream media in particular often seem to find delight in featuring articles on a crisis of apocalyptic proportions. In such an adverse climate, problems often become insurmountable obstacles instead of challenges, and the only logical conclusion would then be just to wait until the bad weather has blown over, instead of trying something new. Failure seems final, instead of an incentive in a learning process. Nevertheless, young entrepreneurs are still taking fresh ideas to the market, and new businesses are still being set up. In Italy, for example, two friends running an Italian icecream shop were faced with supply problems when their ice-cream provider had an accident. Driven by an idea, they decided to go back to basics and offer the Italian gelato experience “the way it used to be”. By banking on the success of artisanal products without additives and by reimagining their own gelateria to the tune of the nostalgic feel of old Italian ice-cream shops with their traditional circular stainless steel tubs, they turned the Grom brand into a successful business that has since expanded worldwide. But not all ideas are destined to thrive, however. While concepts of success and failure are contingent on many complexities, and statistics vary accordingly, it is safe to say many are destined to fail. What
makes some ideas successful, then, and what breaks them? What allows some businesses to surf the wave of the economic crisis where others tread water or go under? Do entrepreneurs who decide to launch a new business despite an economic crisis have a magic success potion stored away in their cupboards? “There is no certain formula to success,” explains Kris Aerts, an expert on innovation. “There are some factors that can be controlled, such as having a sound business plan and a team with complementary knowledge, but pure luck does play an important role as well.” Additionally, failure could also be a factor in new businesses and innovative ideas. While the f-word remains taboo throughout most of the entrepreneurial world, its value should not be underestimated: by studying failure young entrepreneurs can take the experience and learn from their own and others’ mistakes. Ernesto Izquierdo, a Mexican entrepreneur, had been involved in a French start-up for ecofriendly notebooks for a few months when he found out the company was greenwashing its product. “Their business plan did not hold up,” Izquierdo says, “and I’d be surprised if they’re still in business.” He quit the firm and went on to co-found Project 668, an organization that connects companies with appropriate young professionals through targeted recruitment events and informal networking. The quest for the holy grail of entrepreneurship is, in other words, probably a quixotic one. And while the science of success and failure might provide young entrepreneurs with useful insights, the core of their success is linked to the very characteristic that makes them entrepreneurs: the drive and enthusiasm to try out new ideas and see problems as challenges instead of obstacles. ∫
PROFILE Erik Aerts is a journalist and researcher focusing on Middle Eastern affairs and the future of journalism. He currently volunteers with MENAC, a journalism NGO working to establish sustainable networks between young Arab and European media makers.
Number of local organic farmers up 2.4 times in 2012
Marian Cioceanu, Bio Romania Association
A
fter Romanian farmers started receiving financial support to convert from conventional to organic farming in 2010, their number has gone up significantly, from about 3,100 that year, to 10,000 in 2011 and more than 24,000 this year, said Marian Cioceanu, president of the Bio Romania Association, which is dedicated to organic farming, last week. But as their ranks have swollen, the financial support received from the state has decreased, as last year’s budget for organic farming support was fixed. “Local farmers should have received EUR 1,500 per farm in 2011 but instead they were given EUR 213. The certification alone costs more than EUR 250 per year. We hope the ministry will consider the situation and give additional money for
2011 and that next year it will increase the total budget, given that the number of organically certified farmers has increased significantly,” he told BR. The surface of certified organic farmland, too, has grown from about 17,000 hectares in 2000 to more than 350,000 ha this year, he said. In the absence of any official data, Cioceanu estimates that Romanians will spend between EUR 50 million and EUR 80 million on organic products this year, with demand continuing to rise. However, most of the local consumption is covered from imports. Romania remains a net exporter of organic raw materials such as cereals and fruit, only to later import processed organic goods, said Cioceanu. But as demand is on the rise both on the local market and abroad, Bio Romania’s president is confident the sector will attract more local and foreign investors. In 2011 Romania exported organic raw materials worth EUR 150-200 million, estimates Cioceanu. Following the recent drought, volumes are expected to go down this year but the value of exports will remain similar to last year due to higher prices. Romanian organic products and the local organic industry will be in the international spotlight next year after Romania was selected country of the year at the 2013 Biofach World Organic Trade Fair in Nuremberg – the largest event of this kind in the world. “In this industry, it is the equivalent of organizing the Olympics in your home country,” said Cioceanu. ∫ Simona Bazavan
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
Valentin Tuca is the new CEO of AON for SouthEastern Europe. He is currently CEO of the company’s local branch. In addition to Romania and Bulgaria he will also be responsible for operations in Serbia, Macedonia, Kosovo, Albania and the Republic of Moldova. Tuca joined the team in 2011. He has more than 15 years of professional experience in the insurance industry and he has also set up his own management advisory firm. He previously served as CEO of CLAL Insurance Company Romania.
Liviu Bocsaru has been appointed financial and
administrative executive director at Renault Group Romania, becoming the eighth Romanian executive on the group’s management committee. He previously worked as CFO of Renault Commercial Roumanie for two years. He joined Renault in 1996, working in the acquisitions department. He is a graduate of the Faculty of Economic Sciences in Craiova. He is replacing Jean-Paul Franco who had held the position since 2010.
Heinrich Vystoupil has stepped down as CEO of Tarom shortly after being appointed to the role, following contractual disagreements. He has also quit the airline’s board of administration. Vystoupil is a former head of the Austrian Airlines representative office for Romania and the Republic of Moldova.
www.business-review.ro Business Review | November 5 - 11, 2012
INTERVIEW 7
Rid Romania of red tape and regulation, bring on the Euro located appropriate pieces of land that met their requirements from which to choose. The amount of bureaucracy was at a minimum. They have decided, therefore, to invest in Hungary. This will mean millions of dollars going into Hungary and the plant will probably employ 5,000 workers. Romania therefore missed out on a great opportunity.
Photo: Laurentiu Obae
Mark Mobius, emerging markets guru at Franklin Templeton, says controversial appointments at state-owned firms hurt their listing perspectives on the local stock exchange. ∫ OVIDIU POSIRCA
Why do you think listings of companies on the Bucharest Stock Exchange are prone to failure? Because they are led by managers who are not capable of building and growing their companies. At private companies shareholders do not have the power to replace the management so nothing changes. At government-controlled companies the appointments have been made on political and not professional criteria. How can you appoint a person to head an electric power company who has absolutely no experience in electric power? Of course, the company is likely to fail. Has the US exited recession? What about Europe? The US has not been in a recession so there is nothing to exit. The US is still growing. Some countries in Europe are in a recession but not all. Greece has been in a recession for a number of years while Germany has been growing. The problems in Europe will be worked out but it will take time since it involves substantial changes in government structures and the structure of the EU itself.
What legislation does Romania need to put in place in order to increase the yield of the Property Fund? Actually Romania needs less legislation and fewer laws. What is needed is more Is the current stance of the US on China implementation based on a clear set of fair? goals to increase investments and em- China/US relations are varied and wide ployment with aggressive leadership ranging. In most cases the relationship determined to reach those goals. I’m has been positive. In some cases, the writing this in India where I am visiting Chinese feel that the US is trying to recompanies. At one company I visited strict them and hem them in. I would officials told us about their plans to not say the attitudes on both sides are build a plant in Eastern Europe. Trying “fair” in many cases since nationalist to promote Romania I asked them if tendencies are at play. they had considered Romania as a plant Should Romania join the Euro zone in site. They said, yes, they had visited a 2015? number of countries including Roma- If they qualify then definitely yes. Joinnia. In Romania they said they had ing the Euro zone will be positive for found a lot of bureaucracy and in their Romania’s economy and will impose words, “It was a lot like India!” Various clear discipline on government spendgovernment departments suggested ing. land sites for their plant but none met their simple requirement of a rectangu- Do you think we are seeing a bubble in lar piece of land. The number of li- the bond market? censes required and government Not yet. Although interest rates have departments they had to obtain per- come down there are lots of doubters so the market is not moving in one dimissions from was overwhelming. In contrast, when they visited Hun- rection. gary, they were able to deal with one government department which quickly ovidiu.posirca@business-review.ro
www.business-review.ro Business Review | November 5 - 11, 2012
8
Companies reach for state aid to support local investments Romania has this year approved a new state aid scheme that focuses on innovative investments, in a move to boost job creation and develop the domestic R&D scene. Although companies looking to apply for state aid may perceive the process as bureaucratic, it is more streamlined than accessing EU funds, said some of the specialists that attended last week’s Access to Finance Workshop on State Aid, organized by Business Review. 1
2
1. Participants assessed the state aid options 2. Manuela Furdui (left), managing partner at Finxepert and Oana Soviani, head of the grants and incentives practice at Salans
∫ OVIDIU POSIRCA The state aid schemes in place support regional development and stimulate investments, which allow companies to gain a competitive advantage, according to Oana Soviani, head of the grants and incentives practice at law firm Salans.
Aid options There are three state aid schemes running at the moment, with one expected to close this year. Four years ago the government approved HG 1680/2008, with a total budget of EUR 1 billion. The scheme runs between 2009 and 2013 and EUR 600 million of financing is still available. It covers up to 50 percent of eligible costs and has a financing limit of EUR 28.1 million for all regions, except Bucharest and Ilfov County, where it is EUR 22.5 million. A second scheme, HG 753/2008, had a total budget of EUR 575 million and will conclude this year. The latest one, HG 797/2012, becomes operational in November and will run for two years. It has a maximum budget of around EUR 100 million and should finance ten projects. This one covers up to 40 percent of the costs with a financing limit of EUR 22.5 million in Bucharest and Ilfov County, and 50 percent with a limit of EUR 28.1 million for other regions. The manufacturers of components for the automotive sector represent the largest share of recipients through the
state aid scheme SAS 1680. German firm Bosch secured EUR 39 million in state aid to develop car electrical systems and speed sensors. Draxlmaier got EUR 10 million to diversify the production of electrical cables for car manufacturers Daimler and Porsche. Meanwhile Romanian carmaker Dacia received EUR 15.4 million to develop its first SUV, the Dacia Duster, which has enjoyed lively sales. Other companies that have secured funds are active in the medical, energy and tourism sectors. Companies wishing to get state aid need to have a solid investment plan and a good application file. Shortsighted firms may end up eventually returning the aid. “In Romania not many applicants have flocked to get state aid, maybe due to the bureaucracy and the detailed applications that have to be made,” said Soviani of Salans. She added that EUR 600 million was still available in June as the money accessed so far has been below the initial estimates. An investment partially funded by state aid has to be maintained for five years, which is the monitoring period. The two ongoing schemes differ in terms of investment eligibility. For SAS 1680 the value of the project and the initial investment is taken into account, while for SAS 797 innovation is paramount, according to Soviani. SAS 1680 has three thresholds including initial investment volumes from EUR 5 million to over EUR 30 million. Investments should create from 50 to over 300 jobs accordingly.
For SAS 797, the initial investment needs to be innovative or have an IT&C component of at least 20 percent of the investment plan. In addition it should create at least 200 jobs in the next three years following the completion of the investment. Activities in the telecom, IT&C, informatics, R&D and manufacturing sectors would qualify automatically for this scheme, stated the Salans associate.
Eligibility costs Companies looking to develop new units, extend existing ones or diversify production can apply for state aid, explained Soviani. “The SAS 797 scheme focuses on innovation, while the SAS 1680 scheme covers investments that involve the asset purchasing of a closed unit, or one which would close without this acquisition,” said Soviani. In terms of eligible costs, HG 1680 covers manufacturing units, medical and tourism buildings, as well as patents or licenses, and the full personnel expenditure for two years in the case of newly created jobs, according to Manuela Furdui, managing partner at Finexpert, a financial consultancy. The firm currently has 18 files in the approval or analysis stages for state aid. Its clients include Pirelli Tyres Romania and Lufkin Industries. SAS 797 covers only the wage expenditure for two consecutive years of the newly created jobs. Equipment has to be new and cannot be acquired from companies within the same group,
EUR 600mln the amount available in state aid under SAS 1680
EUR 100mln total budget to boost innovative investments under SAS 797
although exceptions have been made in the automotive industry, said Furdui. The eligible costs for a production unit stand at EUR 370-EUR 425 per square meter, excluding VAT. For a tourism structure they are EUR 750, and for medical care units EUR 850. “The land value is not included in the investment in SAS 1680, and in SAS 797 neither the building nor the land can be covered, as it is about equipment and software,” said Furdui. Companies requesting aid under SAS 1680 need to present an investment plan and a techno-economical study. Aside from the investment plan, SAS 797 requires a job creation plan and a business plan. The investment kicks off four months after the Ministry of Finance grants the state aid for SAS 1680, and in three months for SAS 797. ovidiu.posirca@business-review.ro
www.business-review.ro Business Review | November 5 - 11, 2012
HUMAN RESOURCES 9
OPINION Rupert Wolfe Murray Castle Craig Hospital, UK
Addiction: Not My Problem! I recently met the director of one of Romania's big private health companies and he told me, “I don't like drug addiction and I don't want to deal with it.” This view had trickled down into his company, which offers various psychiatric services – but not addiction treatment. All of the big private health companies in Romania provide the same combination of psychiatric services but without addiction treatment. Considering that Romania's health service only offers the first step of addiction treatment (detox, the process of getting the drugs or alcohol out of the bloodstream) and there are fewer than 100 beds in small rehab centers around the country, this means that there is a critical shortage of treatment services in Romania. I suspect that Romania's new generation of young, highly trained managers also ignores addiction. An American therapist working in Cluj told me that he had approached some companies where he knew alcoholics worked, offering to train HR staff in how to recognize and deal with the disease of addiction (a disease that has an effective treatment).
He was met with a wall of denial and was told, “There are no addicts in our company.” The real situation in Romanian companies where there are cases of addiction is one of “cover ups” by colleagues, eventually resulting in dismissal. This can go on for years and the effects on morale, stress and productivity are corrosive. I wonder how many Romanian HR managers know that two to four months of residential rehab treatment can turn an addict from a liability into an asset. Addiction is present in all societies, and most organizations, and it doesn't take much effort to recognize the signs. One of the most common signs of alcoholism is frequent absences from work, usually on spurious medical grounds, and millions of workdays are lost in the EU every year as a result of alcohol-induced illnesses. But firing someone for addiction can be costly. The US aviation estimates it costs USD 3 million to replace a 747 pilot. Managers need to be aware that an alternative exists: residential rehab. In the US it is routine to give an addicted employee the choice between rehab or dismissal.
It is a mistake to think that addiction doesn't affect your company or your country. It has a massive impact on the budgets of the health, police and social services – in all developed countries. We can go to the US election to get an illustration of this. In a letter to the US presidential candidates, Susan E. Foster, VP and director of policy research and analysis at the Center on Addiction and Substance Abuse at Columbia University, wrote, “Treating addiction as a disease is America’s greatest single opportunity to reduce costs to taxpayers, improve health and reduce crime... This relatively simple policy change also would improve the health and productivity of Americans across the country. It's a no-brainer.” Foster explains that addiction to drugs, alcohol and tobacco damages 40 million Americans, more than the number affected by diabetes and heart disease. According to a 2009 study, American government agencies spent at least USD 467 billion each year on dealing with the consequences of addiction (10 percent of the federal budget), but only 2 percent of this money is spent on prevention and treatment. Studies like this have never been car-
PROFILE Rupert Wolfe Murray represents Castle Craig Hospital, a Scottish rehab clinic that recently sponsored a new website aimed at providing business and HR managers with information about addiction (www.castlecraig.ro). ried out in Romania (to my knowledge) and I was told by a Ministry of Health psychiatrist that addiction is not even on the agenda in terms of strategy or funding. But Romanian company managers and HR professionals should inform themselves about residential rehab as a viable alternative for dealing with alcoholic or addicted employees. ∫
www.business-review.ro Business Review | November 5 - 11, 2012
10 LINKS
What’s in media br
The credibility of a publication on the market and the degree of in that come into play in the process of brand evaluation. Equally, s the particular publication also have a bearing, media pundits tell ∫ OTILIA HARAGA When establishing the price of a massmedia brand, “we start with the value of the brand, the costs of production and distribution (subscriptions plus the number of copies) and the internal resources (the editorial team, marketing support and readers),” Gabriela Lupsa, senior buyer at Zenith Romania, tells Business Review. They also mention another detail: unlike the national media, the distribution of the local press is not such a sensitive issue. Many local editors have their own distribution companies or teams, and distribution mostly refers to subscriptions. In theory, the process of evaluating a press brand is similar to that of any other brand. However, certain elements must be taken into account, given that press products are not easily quantifiable. “In the case of the press, a specific element, but one which is difficult to quantify, is the power of influence, which can be very closely connected to the performance of the brand over time, but also to its future potential,” Lupsa tells BR. For potential investors in a publication, the key element is the market value of a publication, which results
Pundits say print media should focus on differentiat
ects are other media-specific elements. “Worth mentioning too is another extremely important factor in local communities: the title’s power of influence in the city and county, from the political, electoral and social point of view,” says Lupsa. Meanwhile, Andreea Dinescu, client service director at Initiative, tells BR she would rank the credibility
“A specific element, which is difficult to quantify, is the power of influence, which can be very closely connected to the performance of the brand over time, but also to its future potential,” Gabriela Lupsa, senior buyer at Zenith Romania from revenues that come from the sale of the publication both to the readership and advertising clients. The quality of the print, layout, flexibility of formats and degree of creativity in carrying out media proj-
of each title as paramount. “We are talking about a media vehicle which serves to inform readers, so the quality of the content and the elements connected to the image weigh a great deal in the balance,” she says.
www.business-review.ro Business Review | November 5 - 11, 2012
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n a print rand?
e of influence it can exercise on its readership are key elements ally, size matters, and the readership, print run and coverage of ts tell Business Review.
“The quality of the content and the elements connected to the image weigh a great deal in the balance,” Andreea Dinescu, client service director at Initiative
erentiation from the online environment
Other considerations include the print quality, the extensiveness of the readership, the quality of its demographic profile, the print run, the area of coverage, the distribution and the rural-urban split, say pundits. Such features are often inter-connected: a good title is often long established on the market, and has built up a loyal readership. On the other hand, the number of readers is closely connected to public awareness of the title, therefore also to the name of the publication, says Lupsa. “We must also add the ‘weight of the pen’: the name of the editor-inchief or writer of an editorial column can be reasons for readers to pick up one publication to the detriment of another. We do not believe any of these factors are less relevant in these times when the print press is fighting to remain on the market. Every element is important in the mix,” Lupsa adds. Over the past few years, the local mass-media market has been reeling from various blows, from the general downward trend seen in the interna-
tional media to the specifics of the local market. “Worst affected seem to be the independent publications, irrespective of their frequency and profile. Though they may have quality content, the are reeling from the lack of support of a group or an investor,” says Lupsa. According to Dinescu, the main casualties are the segments that “needed most corrections” anyway, such as glossy magazines for women of which “there were very many and not well differentiated from the point of view of the reader.” Also suffering are fortnightly and weekly publications where information can appear obsolete due to the frequency at which they appear, because they are competing with a large quantity of information available for free on the internet. “Again, the quality of the content should be a major focus for publishers in order to justify the value attributed to print,” says Dinescu. To fight the trend, the written press should focus on being different from the online environment, by delivering content analysis, investigations, points of view of opinion leaders, all under the mark of exclusivity and added-value to the user, says Dinescu. “However, this does not exclude integration with the online domain, as the two mediums are complementary,” she adds. otilia.haraga@business-review.ro
www.business-review.ro Business Review | November 5 - 11, 2012
12 FOCUS
Solar energy shines on bespoke Romanian home More than 50 people spent almost two years working to find efficient solutions for modern day lifestyle issues and transform a building into the home of the future. The Romanian architectural project PRISPA is the first attempt to transform sustainability into an industrialized series of houses. Pierre Bortnowski told BR how a Romanian project has impressed internationally and is now being readied for mass production. ∫ OANA VASILIU
How did you come up with the idea of this modular house ? The house was designed by the students on the team over the two years of the project. It took us some time to clarify what our goal was with PRISPA. We finally managed to summarize it during a five-day intense brainstorming work-
PRISPA in numbers Prototype cost: EUR 120,000 Industrialized cost: EUR 90,000 Energy output: 9,501 kWh/year Energy consumption: 7,508 kWh/year Extra energy output: 1,993 kWh/year
All photos courtesy of PRISA
Development of efficient houses that consume as few natural resources as possible and produce minimum waste products during their life cycle is a niche that visionary architects are increasingly exploring. Among them are Pierre Bortnowski and his team, students and professionals from the Bucharest Technical University of Civil Engineering, Ion Mincu University of Architecture and Urbanism in Bucharest and the Polytechnic University of Bucharest. PRISPA was made public when the team decided to participate in the 2012 Solar Decathlon Europe, an international competition which promotes sustainability through efficient homes. PRISPA was second for Energy Efficiency, fourth for Electrical Energy Balance and second for Public Choice. PRISPA refers to porch (for which “prispa” is the Romanian word), a typical element of traditional local architecture. This house was designed so that in the summer, when the sun is up, it shades the interior, whereas in winter, when the sun is lower in the sky, the porch allows the rays to enter through the window and heat the stone paving. Other traditional elements, such as a north roof, works like a wind shield, protecting the house, and a special organization of space.
Part of the team that worked on the PRISPA project on site at the 2012 Solar Decathlon Europe competition
shop in October 2011. PRISPA is a new example for rural areas in Romania. It offers people an alternative way of building that respects the characteristics and the common sense of traditional villages (in the orientation, size and appropriate use of materials). It brings technology to another level of efficiency through clever design, which involves a very good collaboration between the different departments of the design team: architects, engineers and designers. And most importantly, it is an affordable solution: we reflected Prima Casa as a price limit for the industrialization version of PRISPA (EUR 70,000). Did you receive other sales offers at the competition or in Romania besides from the family from Bacau who bought a house? In Romania, we had over 8,000 visitors during July and August. We have had over 20 enquiries from interested people and a few companies interested in the industrialization of the house. In Madrid, at the Solar Decathlon Europe
Competition, we had 25,000 visitors during the 15 days of the competition. And again, the house was a hit, with more than 25 interested buyers, and also interested retailers (in France, Spain and Africa). What does mass production of the house entail? We are currently discussing the best way to begin industrialization of PRISPA, with the team members and various other partners. It is important that we move fast to ensure continuity and to benefit from the publicity created by our participation in SDE2012 in Madrid. There are different options for us: from selling the whole business to doing it all by ourselves. Of course, the best solution is somewhere in the middle. The best outcome would be to have a small group of students from the team bringing the project to the industrialization process. This would ensure continuity and efficiency, and this way the message of PRISPA remains strong, as an example for rural life in Romania.
Which type of person would buy this house? We have seen that in Romania, EUR 70,000 is still quite a large sum of money and only people earning above the average salary can afford it. Up to now, those interested have been either people looking to build a second home for weekends or vacations, or those tired of city living who are thinking of moving to a village close by. We have also had a few people who where thinking of integrating PRISPA in bigger cities, in less dense neighborhoods. It is important to note that PRISPA is a house that produces more energy than it uses. The balance at the end of the year is positive which means no energy bills! Theoretically, you can even make money from the extra energy produced. The integrated technology makes it difficult to reach lower prices than that proposed but it is already a very interesting investment on a tenyear basis (a minimum for a house). What is the efficiency of the house when it is not connected to a smart grid?
www.business-review.ro Business Review | November 5 - 11, 2012
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CV Pierre Bortnowski A graduate from the Saint Luc Institute of Architecture in Brussels and also studied on the Erasmus program in the Polytechnic University of Timisoara.
There is no difference in energy production whether the grid is a smart grid or not. A smart grid allows better use of the energy produced and reduces losses by shortening the distance between production and usage, and by optimizing the different sources according to their capacity of production. PRISPA was designed (under competition rules) to be connected to the grid. Of course, we can also think of a version of PRISPA made for zones that don't have access to the grid. This would mean including batteries and recalculating production and usage of energy on this basis. The price of such a house would be a bit higher (for extra batteries and PV), but still much more attractive than having to pay for connection to the grid. A lot of people in this situation have shown great interest in our project because they cannot afford the huge expenses of grid connection. How do you plan to further market the project and attract more buyers? The publicity around PRISPA is already quite good. Our best market argument is to show it works! That’s why we are
Why was the team that worked on the project so large? How did you find them all? Fifty people is a big number to coordinate! At the same time, it often seemed that we were still lacking people for all the different activities required by the project. We didn't just build a house: we created a product with a very strong industrialization potential, we have done a one and a half year communication campaign around this project, we have had to find sponsorship for this project (EUR 250,000 of services, materials and cash over the two years). The hardest thing was having to fight against a very strong inertia that exists in Romania to bring this project to reality. We had to convince universities, sponsors and the general public that PRISPA was doable and worth the effort. This was by far the biggest time- and energy-consuming process. Do you have in mind other projects for the 2013 Solar Decathlon competition? In 2013, the competition will take place in the United States but the teams have already been selected because it’s a twoyear project. In 2014, the competition will be in Versailles, in France. Interested universities should send a file by mid November to have a chance of
The assembled prototype welcomes visitors at the Madrid competition
very happy to have found a buyer for the prototype. The house that came back from Madrid is now nearly ready for its new life. We are finishing the work and collaborating with the owner and our partners to successfully connect PRISPA to the grid. This would be a wonderful example for Romania and a big step towards a more sustainable energy production.
being selected as one of the 20 teams for SDE2014. At the moment, two institutions are interested in participating in the next European edition 2014: UTCB would like to continue the experiment started with PRISPA and the University of Cluj is also putting together a team. oana.vasiliu@business-review.ro
www.business-review.ro Business Review | November 5 - 11, 2012
14 CITY FILM REVIEW
Skyfall DEBBIE STOWE
“Do you expect me to talk?” “No, Mr Bond. I expect you to die!” But, ignoring your track record of bringing down about a dozen mega-villains despite being captured first by all of them, I’m still going to leave you in a preposterous killing contraption of my own devising under the sole supervision of my most inept and inattentive henchman and go off and continue with my plans for world domination, rather than just putting a bullet in you now… The era of laser death machines, big spaceships eating little spaceships and Roger Moore running over the alligators in a safari suit while quipping is over. Bond is dead, long live Bond. Blond Bond Daniel Craig, all sinews and post-Bourne seriousness. Casino Royale was great, Quantum of Solace was forgettable, so would Skyfall have the drama of a Felix Baumgartner
Riding high: 007 is back on top form
ISSN No. 1453 - 729X
FOUNDING EDITOR Bill Avery EDITOR-IN-CHIEF Simona Fodor SENIOR JOURNALIST Otilia Haraga JOURNALISTS Simona Bazavan, Ovidiu Posirca, Oana Vasiliu COPY EDITOR Debbie Stowe COLLABORATORS Anda Sebesi ART DIRECTOR Alexandru Oriean PHOTO EDITOR: Mihai Constantineanu PHOTOGRAPHER Laurentiu Obae LAYOUT Beatrice Gheorghiu
La Bastide storms interior design market
Courtesy of La Bastide
Director: Sam Mendes Starring: Daniel Craig, Judi Dench, Javier Bardem, Albert Finney, Ralph Fiennes, Naomie Harris, Bérénice Marlohel On at: Movieplex, Grand Cinema Digiplex, Samsung IMAX, Hollywood Multiplex. The Light Cinema, Cinema City, Glendale
plunge or would it flop? MI6 has messed up big time, and a list of undercover agents operating around the world has fallen into enemy hands, in what looks like an inside job. But after a few months of being AWOL following a botched assignment, has 007 still got it in his locker? The plot makes its way around various glamorous locations and women. Judi Dench’s M has more of an integral role than her usual desk jockeying and her home is still so poorly secured that Bond is able to break in undetected at will. Ralph Fiennes makes an entrance as a government bigwig with a past and we also learn a little about James’s childhood in Scotland, with Albert Finney putting in a nice cameo as a Groundskeeper Willie type. Javier Bardem is the creepily camp villain. Twenty first-century Bond manages to be both modern and back to basics. But Craig has really fleshed out this Cold War relic of a character – both literally and figuratively – and his Bond is more human than his forerunners. Skyfall is fast, furious and fun. There is real tension in many of the action sequences – difficult for a filmmaker to produce when we know that 007 and MI6 will ultimately prevail. Of course, there is also a fair dollop of preposterousness. When M is brought before a livid ministerial committee to defend her organization’s cock-ups, she’s allowed to hold forth on the dangers of the modern enemy before launching into a lengthy Tennyson quotation. But then plausibility was never part of the Bond deal. ∫
Delmotte gave a facelift to the Diplomat restaurant in Bucharest
Belgian architect Pascal Delmotte enlivens the spaces he delivers for his clients with a mixture of classic and contemporary interior design notes. The concept is the work of Delmotte and his young team, through a business that is developing via word of mouth. ∫ OANA VASILIU
Bucharest before deciding in 2010 to set up his own studio, La Bastide, with a stronger emphasis on his personal style of mixing up the classic and modern. His interior designs can be seen in apartments, houses, clubs, offices, restaurants and holiday cottages in Romania, France and Switzerland. Most of the objects are unique and the venues can be personalized to suit the owner’s taste. The furniture, lighting, rugs, pictures and artwork are designed by Pascal and his team, with the final products made exclusively in dedicated factories in Romania, by specialized carpenters and blacksmiths.
In a capital city that is considered by the interior designer Pascal Delmotte “a place with beautiful artifacts”, a new concept store opens on November 8 and will be adorned with unique pieces of fabric, curtains and wallpaper, as well as ironmongery, decorative objects, light fixtures and tables, everything designed by the artist and his team. The boutique also offers a premiere in Romania, an exclusive Hermes Interior collection, which includes haut de gamme wallpapers and fabrics. Architect Pascal Delmotte first came to Romania in 1994 with a one-year contract to help a textile design business and settled down in Bucharest, after exploring other Eastern European markets. “Romania was the best market for developing a textile business back then,” said Delmotte. The transition from textile design to interior design was made when seven years ago he finished the renovation and interior design of his first house in Bucharest, a high-end 1930s villa. After that, Pascal worked for one of the first major interior design studios in
Delmotte set up his own studio in 2010
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PUBLISHER Bloc Notes Media ADDRESS No. 10 Italiana St., 2nd floor, ap. 3 Bucharest, Romania LANDLINE Editorial: 031.040.09.32 Office: 031.040.09.31 EMAILS Editorial: editorial@business-review.ro Sales: sales@business-review.ro Events: events@business-review.ro
Cafe Athenaeum Showroom, 6 Episcopiei St., opened November 8 - December 16, 2012