Business Review Issue 8/2012 March 12 - 18

Interview: Jean-Pierre and Luc Dardenne, the Belgian filmmaking brothers, praised the talents of local directors and urged the government to support Romanian cinema while in town to promote their latest movie »page 13

POWER LISTINGS

THE GOVERNMENT IS PREPARING TO SELL MINORITY SHARE PACKAGES IN STATEOWNED ENERGY COMPANIES ON THE BUCHAREST STOCK EXCHANGE

ROMANIA’S PREMIERE BUSINESS WEEKLY

March 12 - 18, 2012 / VOLUME 16, NUMBER 8

»PAGE 8

EXECUTIVES FOR EXPORT Expat managers at the helm of multinationals’ Romanian operations is nothing new. But what of the elite breed of local executive going the other way? BR finds out more about Romania’s foreign legion »page 8 NEWS

FOCUS

PROPERTY

LINKS

FILM REVIEW

Middle Eastern expansion

Cereal port

Flat market

Shot in the arm

Silence is golden

A booming grain market has led traders to consider acquiring or expanding cereal terminals along the Black Sea coast » page 6

Residential developers have a battle on their hands to survive and sell their projects on a declining property market » page 10

Informatization is required to revitalize Romania’s health system and close the gap with Europe. BR takes the market pulse » page 12

It is the silent, black and white film that cleaned up at the Oscars. BR’s movie critic is similarly charmed

by The Artist » page 14

Syscom 18 is providing equipment for oil companies in Iraq and Bahrain in a EUR 3 million deal » page 4

www.business-review.ro Business Review | March 12 - 18, 2012

3Q Cosmin Mihaiu

NEWS 3

NEWS in brief FMCG Number of smokers falls to 4.85 million, says survey

member of the Simplex team How does the medical program developed by Simplex work?

The program we are developing is called MIRA, which stands for Medical Interactive Recovery Assistant. It is an application designed for people who are suffering from a temporary reduction in mobility and must undergo physiotherapy to regain their movement.

With the help of a special camera, called Microsoft Kinect, the program offers applications which take the form of video games, for recovery purposes.

Each move made by the user – meaning the patient – is recorded and monitored, which will give the doctor or physiotherapist overseeing the treatment more information about the patient’s progress back to health.

How did you come up with the idea for MIRA? We wanted to participate in the Imagine Cup competition. The topic of this contest was “Imagine a World Where Technology Helps Solve the Hardest Issues.” To participate, we needed an idea and this came to us right away when one of us was telling the others how, when he was a child, he broke his arm and had to go through a series of boring recovery exercises.

We decided to find a way to make the recovery period shorter, easier and more interactive. The development of the application started in the spring of 2011.

Currently, we continue to develop the application and we will complete a Beta version over the coming months with which we will start clinical testing and prove that the program helps people recover.

What feedback have you received on MIRA, both in Romania and abroad?

We have had the opportunity to present the project to several hospitals in Romania and abroad, in Germany and the United States. We received positive feedback and this is also why we are continuing to develop the program to reach a product that we are trying to launch on the market.

At the moment, the application is undergoing testing at a hospital in Bucharest to observe the results and see what improvements need to be made. otilia.haraga@business-review.ro

Smoking is declining in Romania, with only 26.7 percent of the population still lighting up, compared to 35.5 percent in 2003. According to the Global Adult Tobacco Survey (GATS), there are now 4.85 million smokers in Romania. Some 24.3 percent of adults above 15 years of age smoke daily while 2.4 percent are occasional smokers. Men are more prone to smoking than women, at 37.4 percent versus 16.7 percent. The average number of cigarettes smoked a day is 16.6. Men get through on average 17.7 cigarettes a day while women smoke 14.1.

HUMAN RESOURCES 82 percent of Romanians ‘in favor of Rosia Montana project’, finds survey An IRES survey conducted in February at national level found that 82 percent of the Romanians interviewed were in favor of the Rosia Montana mining project, as it will create jobs in an area severely affected by unemployment. Almost 90 percent of the respondents said that reopening mines could be a solution for the mining areas affected by unemployment. Meanwhile, the financial discipline imposed by the Treaty on Stability, signed recently by Romania, is seen as an instrument to generate sustainable economic growth, employment, competitiveness and social cohesion in the EU. Financial consultant Bogdan Baltazar says that since investments are no longer a priority for the Romanian state, it is even more important that the authorities make more sustained efforts to attract private investments, especially foreign ones, in order to generate more money for the budget and create jobs.

IT Zitec doubles investment in Silicon Valley health tech start-up Zipongo Zitec, a Romanian producer of online applications, will double its investments in American start-up Zipongo in the first few months of 2012, announced CEO Alexandru Lapusan. Last year local the firm invested EUR 50,000 in the US start-up, producer of applications for discount prepurchase deals. Other Zitec projects include Hotea lPeeps.com and Zidox, which it will continue to develop this year as well. Zitec officials forecast the company’s business will hike by a quarter in 2012 y-o-y, to EUR 1.4 million.

MONEY Citigroup to handle potential FP asset sales over EUR 500 mln Franklin Templeton, sole manager of the Property Fund (FP), has appointed US in-

vestment bank Citigroup as intermediary for a possible sale, transfer or disposal of stakes in Romanian power and gas companies that are not listed on the stock exchange. The FP has minority stakes in these companies (E.ON, Enel, Electrica, GDF Suez), which are distributors and suppliers of power and gas, representing 15 percent of its net asset value, totaling EUR 527.6 million. Citigroup is also part of the intermediary consortium that bid for the IPO of state-owned Hidroelectrica, Romania’s largest power generator.

Garanti Bank reaches 200 smart ATMs locally Turkish lender Garanti Bank now operates 200 smart ATMs across Romania following a strong push in the retail segment and the adoption of new technologies, a process started two years ago. Since then, the number of ATMs has doubled. The lender says the most frequent ATM transactions include cash withdrawals, bill payments without card, credit card payments and bank deposits. Payments using cash deposits and foreign exchange operations are also becoming popular. Garanti Bank has 77 branches across Romania, 200 ATMs and 7,340 POS terminals.

Euro zone economy grew by 1.4 percent y-o-y in 2011 Economies in the Euro zone and EU 27 grew by 1.4 percent and 1.5 percent in 2011, compared with 1.9 percent and 2 percent registered in 2010, according to Eurostat, the EU’s statistical office. Romania’s GDP rose 2.5 y-o-y to RON 578.5 billion (around EUR 136 billion) in 2011, according to the National Statistics Institute (INS). The European Commission projects in its latest economic forecast that stagnation will engulf the EU this year, while Euro zone GDP will contract by 0.3 percent. Romania’s economy is estimated to grow by 1.6 percent.

REAL ESTATE SAP Romania leases office space in Bucharest and Timisoara SAP Romania is expanding its operations by leasing 800 sqm in City Business Centre (CBC), a class A office complex in Timisoara, Jones Lang LaSalle has announced. The company has also leased another 1,850 sqm of office space in Bucharest in the S-Park project (representing the renewal of its current leasing contract covering 1,400 sqm and a 450-sqm extension). The local subsidiary of German group SAP AG is targeting other major cities such as Cluj-Napoca and Iasi to continue its expansion on the local market.

RETAIL Romanian retail trade growth outpaces EU 27 in January The volume of retail trade grew by 3 percent in Romania this January, compared to the previous month, according to Eurostat, against a 0.4 percent rise in the EU 27. Other countries that reported increases were

WEEK in numbers

473k people were unemployed in Romania at the end of February

4 million RON is the cost of the new artificial turf to be laid at the National Arena for the UEFA Europe League final on May 9 Latvia (+6.4 percent) and Slovenia (+5.5 percent), while the biggest decreases were posted in Portugal (-2.7 percent), Denmark (-2.1 percent) and Germany (-1.6 percent). Compared to January 2011, total retail trade rose in eleven and fell in seven of the EU member states. The highest increases were observed in Lithuania (+17.0 percent), Latvia (+16.6 percent) and Romania (+10.2 percent), and the largest decreases in Portugal (-8.7 percent), Malta (-5.7 percent) and Bulgaria (-2.6 percent).

TELECOM Romtelecom launches videoconference solution Telecom operator Romtelecom has launched, via its business solutions division, a Video Collaboration Network (VCN) in collaboration with Polycom, following a joint investment of EUR 1 million from the two companies. The VCN can be used on mobile platforms – smartphones and tablets using Android or iOS operating system – as well as desktops with a dedicated screen, at HD standards. At the moment, the system is in the pilot stage and can be used for free, having been installed so far in four hotels: Ramada Nord in Bucharest, City Plaza Hotel in Cluj, Hotel Timisoara and Ramada Hotel in Sibiu.

MEDIA Sundance TV Channel to air in Romania Sundance Channel, initially launched by Hollywood actor Robert Redford, founder of the Sundance independent film festival, and currently owned by AMC/ Sundance Channel Global, will be launched in Romania, and made available by telecom provider UPC on the platform DTH Focus Sat. The launch in Romania is part of a number of new deals between AMC/Sundance Channel Global and Liberty Global, as announced by the website broadbandtvnews.com.

www.business-review.ro Business Review | March 12 - 18, 2012

4 NEWS POWER

BUSINESS AGENDA March 12 10:00 Visa Europe organizes a press conference to mark the launch of its tax payments report with GfK Romania at Athenee Palace Hilton. Razvan Mustea, minister of Communications, will attend. By invitation only.

12:00 Medicover organizes an event to mark the launch of a new hospital in Bucharest. By invitation only.

March 13 The Association of Mobile Operators in Romania organizes a conference on the outlook of mobile communications.

Representatives from ANCOM, the Ministry of Communications and companies will attend. By invitation only.

March 14 11:00 Black Sea Trade and Development organizes a press conference to mark the signing of a loan agreement with Olympus Dairy Industry Romania at Radisson Blu Hotel. By invitation only.

12:00 Efin launches RisCo, an online verification system of companies, at IMM Forum, at Romexpo Exhibition Center.

March 15 10:00 The Ministry of Agriculture and Rural Development and the Rural Support Unit organize a press conference to mark the launch of a rural development project at the Central Universitary Library in Bucharest. Agriculture minister Stelian Fuia will attend. By invitation only.

March 14-15 PR Forum, a two-day conference analyzing trends in the PR business, is organized at JW Marriott Bucharest Grand Hotel. By invitation only.

March 17-18 Educativa Group organizes the Romanian International University Fair (RIUF) at Palace Hall in Bucharest. By invitation only.

March 29 ∫EVENT BR organizes Tax, Law & Lobby, an event that addresses the latest legal and financial provisions that impact the business environment, at Willbrook Platinum. More at http://business-review.ro/br-events March 29 - April 1 Construct Expo, an international fair for construction technologies, equipment and materials, is organized at Romexpo Exhibition Center. By invitation only.

Syscom 18 looks to Iraq and Bahrain for investment

R

omanian firm Syscom 18, which is specialized in the field of industrial automation equipment and measuring systems for the oil and gas industry, will provide equipment for oil companies in Iraq and Bahrain in a deal worth EUR 3 million struck this February.

The company has been active in the Middle East and Central Asia for the last six years and is currently negotiating three more projects in Iraq and the United Arab Emirates, and one in Jordan.

Ion Andronache, president of Syscom 18, says Romania will have oil and gas projects for the next decade, but this process will gradually reduce so companies will look abroad for projects.

Andronache estimates the local process control and automatization market totals between EUR 400 and 500 million.

The largest players are multinationals such as Honeywell, Emerson and Siemens, but Syscom 18 has had over 800 customers in the last 20 years and human capital plays a crucial role in this.

“Romanians are better technologically skilled and the country has an industrial tradition, but they need to promote themselves better,” said Andronache. The company has ongoing projects and has been looking to hire young engineers in the last six months. “We can't find any as most want to work abroad,” he added. At present the company employs around 140 people, mostly senior specialists with a technical background.

“In practice we are a system integrator,

Syscom 18 is active in the Middle East when we make a fiscal metering skid; all the components are from Western Europe or America. We do the project management, assembly and testing, providing quality similar to Western countries,” said Andronache.

A company originating from Eastern Europe can tap markets in the Middle East only after developing significant local projects which Syscom did by working with the largest energy producers, Romgaz and Petrom.

For Romgaz, a natural gas supplier, majority-owned by the state, Syscom 18 designed and manufactured four large natural gas metering stations for underground storage facilities at EUR 1 million

each, also providing automatization solutions for five compression stations at around EUR 1 million each. For oil and gas company OMV Petrom, the company designed a vapor recovery system, costing EUR 6 million, in two years.

In the Middle East the company has supplied a SCADA system for a refinery in Syria, metering skids in Iran and a control and metering system for a tank farm in Jordan. It has also had projects in Kazakhstan, where it was responsible for process control systems for two large gas treatment stations in the Caspian area.

Andronache hopes the company he manages will reach EUR 4 million in exports this year, against the company’s total annual sales of EUR 15-20 million. “We would like to increase the export rate to 40 percent as projects are starting to fade out in Romania,” said Andronache. The company had a turnover of around EUR 10 million last year and this year’s figure will be similar, down 50 percent from 2007.

Although ExxonMobil and OMV Petrom recently discovered an offshore gas deposit in the Black Sea area of Romania, estimated to contain around 100 billion cubic meters, Andronache says the country is no longer prominent worldwide in oil and gas extraction projects.

This is why Syscom 18 is focusing on countries in the Middle East and more recently in South East Asia, in Singapore, Malaysia and Vietnam, although work here is still in the early stages. ∫ Ovidiu Posirca

TELECOM

China Mobile, AT&T, M3 Group and Telenor interested in Romanian market, says state secretary

G

lobal telecom players such as China Mobile, AT&T, M3 Group and Telenor have expressed interest in the spectrum that will be auctioned in Romania, most likely in the first half of this year.

Romania was represented at the Mobile World Congress in Barcelona by Catalin Marinescu, president of the telecom regulator, and Marius Fecioru, state secretary in the Ministry of Communications, who lobbied to spark the interest of global telecom players in the auction.

“China Mobile, AT&T, M3 Group and Telenor have shown interest in entering on the market,” Fecioru told local news channel Pro TV. “The state wants to heighten competition on the market since the large players have already grown accustomed to each other. Bringing in a new operator would result in lower costs from the mobile telephony bill and higher cash-ins for the government from the licenses for the spectrum.”

The auction for the spectrum is the most important event in this sector organized by the Romanian authorities so far.

“It is the largest amount of spectrum that has ever been allocated in one single session in Romania,” Marinescu told Business Review.

The auction could be an open door for other global telecom companies to penetrate the local market. “The auction will be open to any operator showing interest in it, from Romania and abroad, and the spectrum that is put up for auction will allow

Sending a signal: global firms are interested in the local spectrum more operators than those on the market right now to supply mobile communication services,” said Marinescu.

“It would not come as a big surprise to hear of the takeover of Vodafone Romania or Orange Romania by another large European operator. Such rumors were flying about last year as well, but so far it seems the interested parties have not taken the plunge,” Adrian Ciobanu, managing director of Reimens Group, told Business Review.

The authority is putting on the market

the radio spectrum in the bandwidth of 900 MHz and 1800 MHz, currently being used

by Orange, Vodafone and Cosmote.

The licenses awarded to Orange and Vodafone expired at the end of last year but, in order to ensure continuity, ANCOM decided to extend them until December 31, 2012. The new licenses, obtained after the auction, will come into force on January 1, 2013.

In the case of Cosmote, the new license obtained after the auction will enter into force on April 6, 2014.

“The amount of spectrum that must be cleared will depend on the result of the auction. The actual price of the licenses will also be established after that,” said Marinescu.

Also going under the hammer on the same date will be spectrum in the frequencies 800 MHz and 2600 MHz that the winners can use for 4G services. “The 4G wireless communication frequencies for LTE or WiMAX technologies have not yet been allocated,” said Marinescu. The reason is that they are being used by the Ministry of National Defense (MAPN), which has stated that it needs EUR 234 million in order to clear the bandwidth.

“We have reason to believe that in the first months of the year the necessary legal framework will be in place for MAPN to make the spectrum available,” added Marinescu. ∫ Otilia Haraga

www.business-review.ro Business Review | March 12 - 18, 2012

NEWS 5

EU

Romania to receive EUR 10 mln from EU for School Fruit Scheme

Dreams

How do you like them apples: Romanian schoolchildren will be given free fruit

R

omanian pupils aged between six and ten will continue to be provided with apples in the 2012/2013 school year as part of the European Union’s School Fruit Scheme. The program aims to encourage good eating habits in young people, and in addition to offering financial aid to supply fruit and vegetables to children, also requires participating member states to establish strategies including educational and awareness-raising initiatives.

Romania’s fund allocation will be EUR 9.8 million, the third largest in the

EU after Italy and Germany. However, EU funds need to be co-financed at rates between 50 and 75 percent and must be matched by national and/or private contributions.

During the 2011/2012 school year Romania will be spending about EUR 12.6 million on providing children with apples.

The allocation per child is no more than RON 0.315 each day. EUR 8.48 million of the money comes from the EU while the rest is provided by the Romanian state from the budget of the Ministry of Agriculture and Rural Development.

The entire EU allocation for the 2012/2013 school year amounts to EUR 90 million, which will be divided between the 24 participating member states based on the population of children in the sixten age group and the needs expressed by each participating member state, announced the European Commission (EC) The main beneficiaries of the scheme in 2012/2013 will be Italy, which is set to receive over EUR 20.5 million, followed

by Germany (EUR 11.6 million), Romania (EUR 9.8 million), Poland (EUR 9.2 million), France (EUR 5.6 million) and Spain (EUR 4.8 million). Sweden, Finland and the UK have opted not to seek funding.

The allocation of EU aid under the School Fruit Scheme for the 2012/2013 school year was backed by member states in the Management Committee last week and will be formally adopted by the EC in the coming weeks. ∫ Simona Bazavan

WHO’S NEWS Business Review 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

Valentin Achimoiu has joined Hammond Bogaru & Associates as senior lawyer in the firm’s litigation department. Achimoiu has previously worked for law firms Bostina & Associates and Zamfirescu Racoti Predoiu and has also managed his own individual practice. His recent activity includes representing the Romanian authorities in real estate litigation and acting in a human rights litigation case. He is fluent in English and French.

Marian Petre has been elected president of the National Association of Romanian Valuers (ANEVAR). He is replacing Filip Stoica, who held the position between 2010 and 2011.

Petre is presently serving as coordinator of the guarantee management department of BCR. He is an accredited member of ANEVAR, the Royal Chartered Surveyors (RICS) and is a Recognized European Valuer (REV).

Over the years Petre has conducted over 1,500 evaluation studies on real estate and industrial assets and over 200 evaluations for companies. He is

also co-author of several industry-related textbooks and teaches on various qualification programs for expert evaluators.

Radu Vintila has joined Plaut Consulting as consulting director. Before joining the company he held management positions at several IT and advisory companies. Vintila graduated from the Electro-mechanics Faculty of the University of Craoiva. He holds MBA and PMP certifications.

Emil Bivolaru has been promoted to equity partner in the litigation department of NNDKP. He has 12 years of legal experience, specializing in civil, intellectual property, commercial, criminal and administrative-fiscal law. After graduating from the University of Nicolae Titulescu Law School, he joined the Ana Diculescu Law Office. Bivolaru has been part of NNDKP’s dispute resolution team since 2001 and currently coordinates the firm’s Craiova office at partnership level.

www.business-review.ro Business Review | March 12 - 18, 2012

6 FOCUS

Grain traders harbor thoughts of Black Sea expansion Grain production went up last year, and so did traders’ interest in acquiring or developing cereal terminals in Romania’s Black Sea ports. Alfred Toepfer, Ameropa and CHS were the main players that invested in better access to local maritime hubs.

Happy harvest: grain production rose in 2011

∫ SIMONA BAZAVAN After announcing last year that it had plans to invest in a terminal in a Romanian port, grain trader Alfred Toepfer started operating the 260,000-ton export terminal owned by Minmetal in the port of Constanta two weeks ago, Minmetal manager Teodor Bolocan told media representatives.

Building the terminal required a EUR 35 million investment and Alfred Toepfer is one of Minmetal’s shareholders. However, Alfred Toepfer will not be the only company operating from the terminal.

Other Minmetal clients include North Star Shipping and Ameropa.

Alfred Toepfer is just one of the latest grain traders to invest in expanding their

Top five companies that own grain silos in Constanta Port Company

Storage capacity (tons)

Minmetal United Shipping Agency Silotrans Niva Prodcom Chimpex (Azomures)

260,000 228,000

Source: MADR

100,000 66,000 64,000

local footprint on the Romanian Black Sea coast and on the Danube.

Last year’s record harvest and the benefits brought by direct access to the Black Sea and the region have led several players to invest in the Constanta area.

One of the main transactions in this sector last year was American giant Cenex Harvest States’ (CHS) acquisition of AgriPoint, a local company that operates the Silotrans grain terminal in Constanta, from Serbian East Point Holdings. The price tag for AgriPoint was EUR 45 million.

The company also has operations in neighboring Hungary but its greatest asset was the Silotrans grain silo in Constanta.

CHS is one of the largest grain, food and energy producers in the world.

Through the acquisition of AgriPoint, the company is looking to develop its global presence in regions with a high growth rate such as Romania, Bulgaria, Hungary and Serbia, announced the company at that time.

Also last year, Ameropa Holding AG, a leading Swiss fertilizer and grain trader, acquired Romanian fertilizer producer Azomures and Chimpex, a harbor operator in Constanta, both listed on the Bucharest Stock Exchange.

Exports reaped from record harvests 2011 has been described as one of the best years for Romanian agriculture in the past decade. The corn harvest amounted to 11.4 million tons compared to 9 million tons in 2010, while wheat production was approximately 7.4 million tons, up 25 percent y-o-y.

Higher harvests also meant better business for grain traders present in Romania. These companies exported cereals and oil seeds worth EUR 1.6 billion in the first 11 months of last year, up 28 percent y-o-y, according to data from the Ministry of Agriculture and Rural Development (MADR). This represented half of Romania’s total food product exports for the same period.

Traders such as Cargill, Alfred Toepfer, Nidera, Glencore, Ameropa and Agricover control the bulk of Romania’s grain exports.

Agriculture was the sector of the Romanian economy that reported the highest growth rate last year – 11.3 percent. It was followed by industry on 5 percent and services which rose by 4 percent.

2011’s agricultural performance was mainly generated by good weather, whereas poor weather conditions last autumn and so far this year are threatening this year’s crops.

simona.bazavan@business-review.ro

www.business-review.ro Business Review | March 12 - 18, 2012

FOCUS 7

Romania’s foreign legion They’re highly skilled, valuable and hard working. They have made a name for themselves on the local market, which was their passport to a top management position abroad. Romanian executives who have bagged high-status roles abroad tell BR how they did it and the ups and downs of their relocations. ∫ ANDA SEBESI Being an executive at a multinational company was and still is a huge challenge, especially during the current economic crisis which has hit the entire international scene.

To make the company you work for more prosperous and to ensure it posts increasing results from one year to another in hard economic times is a big responsibility that any CEO or top manager carries on his or her shoulders. But to be an expat executive is even more challenging, as the company you run may have a different organizational culture than you are used to. Plus, the country you have moved to has its specifics, from potential for growth to consumption behavior and purchasing power, as well as the individual business environment and political conditions.

Many of the multinational companies that entered the local market years ago preferred to have expats run their businesses in Romania. But as the business environment developed and Romanian executives proved to be highly skilled and valuable, they too started to snap up such roles abroad. And Madalina Uceanu, senior HR advisor at Career Advisor, says that companies in Romania are now replacing their foreign managers with homegrown talent.

Many Romanian executives are running multinational companies or have reached senior roles abroad. Marius Persinaru, formerly Xerox’s vice-president of DMO channel operations, was recently appointed chief commercial officer and general manager for technology and services for Central and Eastern Europe, Israel and Turkey (CIT). He joined Xerox Romania 15 years ago, going on to hold various management positions in logistics, tech support and operations. Persinaru led Xerox Romania and the Republic of Moldova between 2004 and 2009.

Also, in June last year, Calin Dragan, general manager of the operations of CocaCola Hellenic Bottling Company at that time, was promoted to operations manager, corporate officer and executive director of operations and business transformation at Coca-Cola Japan. Company representatives said at the time that the move was part of the practice of developing talent in the Coca-Cola HBC system. And last fall, Nicolae Chidesciuc, the chief economist at ING Bank Romania, told local newspaper ZF that he was moving to JP Morgan London.

He had spent about four years at ING and another five at the National Bank of Romania (BNR) and was one of the most prominent financial analysts on the local market.

These are just a few examples of Romanian professionals who have gained their “expat status” through their local track records. But how has the current downturn influenced the trend of appointing Romanians to top management positions? The most recent data available on the market found that at the end of 2010 about 2,000 out of over 2 million Romanians working abroad were running compa-

Maybe we should accept that the concepts of ‘expat’ and ‘local’ are no longer as important as in the past.” Kamenitzer has held his current position since August 2011 and runs a team in charge of credit risk management analysis of the projects the lender develops, especially in structured finance.

Climbing the ladder

The A team: local high-flyers have managed to bag top jobs abroad nies or divisions of large international groups, reported Business Magazine. The same publication said that while Europe was the usual destination of managers in FMCG, the pharmaceutical industry and financial services, it was mainly professionals from the IT industry who were working in the US at that time.

Some specialists say that fewer Romanian executives are working abroad compared with 2007-2008. But according to Adriana Dutescu, director of the Bucharest School of Management’s Romanian-Canadian MBA program, things are looking up. “There is a pronounced trend of Romanians reaching top management positions in other countries in the last few years as a result of the particular experience they gained on an emerging market with a high risk and their individual performances. And we expect this trend to continue in the near future,” she says.

Uceanu says that the field depends more on the company and less on the industry. “IT is the only industry that exports many Romanians, but not necessarily managers. I think that the local outsourcing industry has contributed a lot to the retention of specialists while many of them worked on foreign projects,” says Uceanu.

Financial motivation Generally, higher pay, the desirability of an international career and promotion prospects are the main reasons Romanians choose to relocate. But the remuneration depends on each multinational. “Often the salary is between the level in Romania and the money that an equivalent local candidate in a similar position would command. But exposure to another market, both from a personal and professional perspective, is also important,” says Uceanu.

In addition, an MBA can increase the salary that a graduate can earn if he or she relocates to a foreign country. “Based on information from our graduates, there were salary increases of a minimum 30 percent on average in the first five months after graduation. But there were also cases when

the salary increased by 50 percent,” says Dutescu. She adds that according to their statistics about 30 percent of graduates reach top management positions abroad six months after their graduation. “The percentage increases to about 35-40 percent one year since completion of the MBA program,” she says.

Expat hurdles Loredana Butnaru, current executive director at Marelvi Impex, was offered the role of sales and marketing director at the Gorenje office in London in 2006, just before she graduated from the RomanianCanadian MBA program. In that position she was in charge of implementing the sales and marketing strategy, which included launching new products, establishing the product range, promotional, media and PR activities, events, catalogues, flyers and concept stores. She also coordinated two of the most important clients.

“I decided to go to London for two years and then come back to Romania in order to use here what I had learned there,” remembers Butnaru. “My first challenge was to go to another country. I was 31 and a young Romanian woman who had come to teach English people how to do business.

I was respected but they didn’t want to change anything and whenever I suggested something the answer was negative. I had to work for 10-12 hours a day and weekends to learn the market, the customers and the way of doing business in order to find arguments to prove I was right,” says Butnaru.

Adrian Kamenitzer, head of project and structured finance, credit risk and policies department, at European Investment Bank, has a different concept of the expat. “In my team there are members from six different countries. So who is actually an expat? In a way it is easier for me because perhaps I have the capacity to appreciate an international environment more than my colleagues,” he says. “My wife is from Finland, my daughter was born in England and we live in Luxembourg.

Generally the call offering promotion and relocation to another country comes from the company headquarters. While for some the move abroad will be permanent, others plan to come home once their tenure is over. Butnaru of Marelvi Impex was one of the latter.

“My initial plan was to stay for two years. I stayed two and a half years in London and then I decided to come back to Romania but not necessarily because I had planned to do so. My job wasn’t challenging me, there was no prospect of promotion and I knew that I had more chance of using my knowledge and experience in Romania,” says Butnaru.

Others found a foreign career path more rewarding. “For me it was a combination of work and good luck. Although it wasn’t easy and I had to work very hard, I was lucky to benefit from some opportunities over time. The MBA program that I followed opened a new career for me,” says Kamenitzer, who graduated from the Romanian Canadian MBA program. He worked for the European Bank for Reconstruction and Development (EBRD) and then had the chance to relocate to London, before continuing his journey. “From the EBRD I moved to the European Investment Bank (EIB) in Luxembourg, joining a new team where I could use extensively all that I had learned before, possibly enjoying an advantage over other colleagues,” says Kamenitzer.

Generally promotion to a top management position abroad comes as a result of the need to offer additional motivation and to develop a professional who could return to his or her country in a higher position than the one they left. “The level of performance is the first criteria considered when it comes to an international career. This is closely followed by the stability of that employee inside the company that will give her or him the international position,” says Uceanu of Career Advisor.

Butnaru says that the biggest factor in her employer’s decision to transfer her to London was that she had made a name for herself at international level through her successful marketing strategy and actions implemented in Romania. Meanwhile, Kamenitzer believes that it is important to know your precise goals. “I knew pretty clearly what I wanted and I refused several offers that didn’t suit my way of being or passion, even though they were very generous financial offers. I agreed to start something with less generous financial conditions when I felt that it was what I wanted to do,” he says.

anda.sebesi@business-review.ro

www.business-review.ro Business Review | March 12 - 18, 2012

8 FOCUS

Energy companies prepare for stock exchange test Romania will try to sell minority share packages in state-owned energy companies on the Bucharest Stock Exchange this year, a move that should generate around EUR 1 billion for the public coffers, according to a state secretary in the Ministry of Economy. ∫ OVIDIU POSIRCA The government and the IMF have also agreed to appoint public managers to lead state-owned enterprises(SOEs), which should attract investments to a sector that needs upgrades of up to EUR 10 billion in the next decade according to experts, who say the price and right timing are crucial in these transactions.

Lucian Anghel, president of the Bucharest Stock Exchange (BSE), recently told a conference on the stock exchange as a growth opportunity for the economy that public offerings are crucial alternatives for financing Romania’s economy, as it currently relies solely on credit. “The last IPO of an SOE on the BSE took place in 2007 and now we have a window of opportunity; this year is of colossal importance as we aim to successfully finalize public offers,” said Anghel.

Transelectrica, the grid operator, obtained around EUR 34 million from the IPO launched in 2006, while Transgaz, the operator of the natural gas transportation system, got around EUR 63 million from an IPO in 2007.

What do SOEs gain from being listed?

Privatizing minority stakes in companies majority-owned by the state should put Romania back on the radar of foreign investments, and the government will also benefit from increased revenue to the budget.

Alexandra Paun, junior analyst at Candole consultancy, says privatizing companies through the stock exchange reduces the opportunity for bribery and secret agreements, by bringing more transparency to the decision-making process. In addition, listed companies can have access to additional financing sources, against bank loans.

Diana Ispas, senior lawyer at law firm NNDKP, adds that SOEs can improve their rating, which will pull financing costs down, and also increase the quality of services provided to household consumers at lower prices. Ispas provided legal support to Raiffeisen Capital & Investment, the intermediary of the Transgaz IPO. She says privatization through a stock exchange is faster, as it takes around six months to carry out an IPO under normal market conditions.

“The listing of these companies will increase their visibility, allowing them to ease the initiation of partnerships with large international energy companies,” says Alexandru Lupea, partner, audit services, and leader of the group for industry of energy, mining and utilities, at consultancy firm PwC Romania.

Taking stock: state-owned energy firms are preparing to be listed on the BSE

Countdown to the big day

which failed last summer due to an inIn preparation for the listing seasons, sufficient subscription level.

The state has already selected inthe Romanian government approved vestment consortiums for Translectrica, last November an emergency ordinance Transgaz and Romgaz, and investment for the implementation of corporate banking giants Goldman Sachs and Erste governance in SOEs. Under this piece of are among them. legislation, the board of directors will be A banking source, close to the public independent and allow only two state offerings, told BR that most companies employees as members, after a rigorous scheduled for listing this year are well selection procedure. prepared and have a sufficient level of In addition, the position of chairprofitability. In addition they have the reman of the board of directors needs to be separated from the general manager role. quested structures and the IFRS numbers in place.

At the same time, financial statements and annual audit reports should be made public.

Right price In January, a new law came into force Balancing the transaction price makes stipulating that the listing procedures for the difference between success and failSOEs in the Property Fund (FP) be initiure in a public offering and the state ated by the end of this year. The FP has should be aware of this, experts advise. minority stakes in the companies that “A high price will discourage investors have planned IPOs for this year. It has a and could lead to the failure of the share high exposure to the energy sector as 86 offer, while a low price means the state percent of the fund’s net asset value will not maximize revenue from the pri(NAV), EUR 3.48 billion, is included here. vatization,” says Lupea at PwC. The IPOs of Hidroelectrica, Romania’s Ispas says the right price needs to be largest energy generator, and Nuclear- “discovered” in order to safeguard the lectrica, the nuclear energy generator, shares, at the same time being a price recscheduled for October, will involve share ognized by the market in the medium capital increases, after 10 percent stakes term in order to avoid significant differwere listed on the BSE. ences in the trading share value after the The Ministry of Economy will oroffer is finalized. ganize secondary public offerings (SPOs) Paul Mihailovitch, head of ECM for Transelectrica, the grid operator, and Emerging Europe at JP Morgan, recentTransgaz, the natural gas transportaly told a conference on the upcoming prition company, each with a 15 percent vatizations in Romania that establishing stake, this April. The government will the right price is not a magic tool that alalso retry to sell a 9.8 percent stake in oil lows any company to sell shares on the and gas producer OMV Petrom, a deal stock exchange.

“In general I think it is better if you don’t have high expectations of the offer price and consider instead the long-term importance of a successful IPO,” said Mihailovitch.

Laurent Cassin, head of CEEMEA equity capital markets at Societe Generale, told the same conference that completing the transaction is paramount, because the government will attract FDI and generate both liquidity on the domestic stock exchange and investment opportunities for ordinary Romanian citizens.

“Selling minority stakes in the companies can potentially weigh down the price as strategic investors might not be attracted to invest,” warns Paun of Candole.

A 9.84 percent stake in Petrom failed to sell last summer, although the government set a minimum price below the average trading price of Petrom’s shares at that time. The consortium that carried out the SPO blamed worsening conditions on the international markets and cautious investors as the root cause of the unsuccessful public offering.

“The failure of the Petrom SPO last year will have no direct negative impact on the government’s plan to tap the equity market in 2012. Investors are not looking for opportunities in the past,” said Mihai Caruntu, equity analyst at BCR. The bank is part of the investment consortiums selected for the Transelectrica and Romgaz public offerings.

Lupea says the share price can in-

www.business-review.ro Business Review | March 12 - 18, 2012

SOEs’ financial results in 2011 Romgaz – IPO/SPO (15 percent stake) – turnover EUR 922 million; net profit EUR 179.8 million Transelectrica – SPO (15 percent stake) – EUR 684 million; EUR 21.2 million Transgaz - SPO (15 percent stake) – EUR 306 million, EUR 92.4 million OMV Petrom – SPO (9.8 percent stake) – EUR 5.3 billion; EUR 873 million – state has minority stake Hidroelectrica: IPO/SPO (10 percent stake) – EUR 705 million; EUR 3.7 million Nuclearlectrica (budget values) IPO/SPO (10 percent stake) – EUR 386 million; EUR 3.2 million Source: companies Results converted to EUR using the average RON/EUR exchange rate in 2011 of 4.2379

crease if the government decides on a timetable to deregulate energy prices, in electricity and gas.

“This calendar will allow investors to estimate with greater accuracy the future gains in these companies, increasing the market value of the shares,” says Lupea.

Caruntu says the listing of Romgaz this year is realistic, although import prices for non-residential consumers are 2.5 times as much as domestic gas prices.

The BCR analyst says market prices for Transelectrica and Transgaz look attractive and the two regulated utilities could be success stories in the long term if the Romanian energy authority applies the methodology for calculating transmission tariffs.

Listings attract presidential support

month should set out a deregulation calendar in this area.

Time is of the essence Experts say the most important success factors for an IPO or SPO are the timing of the transaction and the right services from an investment bank, which has to make the companies as appealing as it can.

“2011 was excellent for peripheral markets and then we had the collapse in the second half of 2011, and Romania fell off the investment radar again,” said Tom Attenborough, managing director of capital markets origination at Citigroup, during a conference organized on privatizations on the BSE. He added that energy stakes could be of interest to general European funds, which look at utilities.

According to Lupea, the current international context is the most favorable since the crisis started. “Indices of the main stock exchanges are at the maximum level of the last three years and have been growing since the start of this year,” says the PwC partner.

A banking source involved in one of the public offerings told BR that the conditions are not the best at this time due to the turmoil on the stock exchange last year and the ongoing sovereign debt crisis. However, the markets stabilized in Q1 2012 and transactions have resumed so the right investment perception and price for SOEs could make them attractive to investors.

The Candole analyst says international sentiment towards Romania is improving and the country’s macroeconomic figures are encouraging, so the time is right for privatizations.

Aiming for Pole position The Warsaw Stock Exchange (WSE) is certainly a success story and could represent a source of inspiration for the BSE. Around 38 successful IPOs were carried out on the WSE last year, while the last significant privatization on the BSE was in 2007.

The WSE had a market capitalization of USD 162 billion in February, while the BSE registered around USD 31 billion earlier this March.

The PwC partner says Romania should follow the Polish model in terms of privatizations and development of the domestic capital markets.

“Stock exchange privatizations were the main factor that made the WSE the most attractive in CEE for liquidity and market capitalization,” says Lupea. He adds that this developed the Polish financial system, also attracting foreign issuers and investors.

“Romania is a growing economy with potential, but it’s more complicated to invest on the BSE than in Hungary or Warsaw,” said Richard Cormack, head of growth markets including CEE, CIS, Turkey and MENA at Goldman Sachs, at a recent conference.

BR has learned from a banking source close to the ongoing public offerings that foreign investors looking to invest on the BSE are still confronted with rather complicated and unusual paperwork, and additional alignments to international standards could certainly make the domestic market more attractive in the region.

ovidiu.posirca@business-review.ro

PARTNER CONTENT

Benefits and challenges in public offerings What are the main challenges of a public offering?

It would be erroneous to assume that the public offering implementation process is a C`t`lin Micu c h a l le n g e - f re e Managing Associate undertaking.

The Zamfirescu Raco]i Predoiu decision to go Attorneys at Law public is a critical one in the life of a company, and one that must be considered carefully.

The promised rewards come with high risks, and it is essential that the factors underlying the decision, including a thorough analysis of the economic climate, the preparation required prior to going public, are understood before the first step is taken.

Becoming a public entity involves significant changes for businesses, including the loss of confidentiality, flexibility and control for management. A company and its shareholders have to be able to meet certain challenges in the process of going public, one of them being the selection of the stock exchange. The following needs to be taken into consideration: the liquidity of the stock exchange, namely the capacity to absorb the offered shares, the characteristics of the active players, including the sector of activity, the managerial system applied, the dimension of the business, and the presence of the strategic/institutional investors who provide capital of trust to the respective stock exchange.

What benefits does a public offering (IPO/SPO) bring to a company, which is either private or state-owned?

The primary advantage a business stands to gain through a public stock offering is access to capital. The public offer is much more feasible than the classical financing mechanism there is no interest added and no repayment obligation.

Besides the immediate infusion of capital, a business that goes public may also find it easier to obtain capital for future needs through the capital of trust gained due to transparency.

It can carry out a new public offer in case additional financing is necessary for sustaining the current business (i.e. increasing the capacity/performance of the equipment) or for developing new projects.

Another advantage involves the flexibility in selling. By obtaining finance out of additional charges the issuer may keep or improve its selling mechanism without limiting the profit margins. Per a contrario, a company that obtained finance using the classical way, needs - for covering the interest rate - to raise prices or to maintain them at the same value

but to limit the profit margins.

As a conclusion, the following factors are cited as the key benefits of admission to a public market: l providing access to capital for growth, both at the time of admission and through further capital raisings; l creating a market for the company’s shares and placing an objective market value on the company’s business; l increasing the company’s ability to make acquisitions, using quoted shares as currency; l enhancing the company’s status with customers and suppliers; l raising the company’s profile through increased media coverage.

How can a company become eligible for an IPO/SPO and what is the timing on these transactions (how long it takes to carry out these transactions)?

For the admission to trading on a regulated market of the shares of an undertaking, a company must meet the following main eligibility criteria: a) the company must be established and carry out its activity in accordance with the legal provisions in force; b) the company must have a foreseeable capitalization of at least the RON equivalent of one million euro or, to the extent to which its capitalization cannot be anticipated, the company’s capital and reserves, including profit or loss from the last financial year, must be at least the RON equivalent of one million euro; c) the company must have functioned within the last 3 years prior to its request for admission for trading on a regulated market and must have drawn up and communicated its financial statements for the said period in accordance with the legal provisions.

A company also needs to bear in mind, and ensure that it is able to comply with the continuing obligations to which it will be subject following listing and admission.

A public offering can generally be completed within 4 to 7 months. The exact timetable will vary depending on market conditions, the scope and complexity of the deal and a range of other factors.

ADVERTORIAL

Romanian President Traian Basescu addressed Parliament last week, telling MPs that selling minority stakes in Transgaz, Romgaz and Hidroelectrica will allow these companies to invest in modernizing their capacities.

The president said gas prices for companies should be deregulated in order to support the costs of extracting this resource, citing the gas discovery made by ExxonMobil and OMV Petrom in the Black Sea this February.

Exploration works revealed between 100 and 110 billion cubic meters of natural gas that will guarantee Romania’s supply on the medium term. The president says another five deposits with the same characteristics have also been revealed during the ongoing exploration works.

“We can maintain lower prices for household consumers, but the economy needs to receive the right input on gas and electricity consumption,” said President Basescu.

The deregulation of electricity prices for companies will start in the coming months and end next year, while household consumers will pay cheaper bills by 2017. On the gas market, the situation remains unclear, as the government needs to define the vulnerable consumer that will be protected from higher gas bills.

The next review mission of the troika (IMF, EC, and WB) scheduled for next

FOCUS 9

www.business-review.ro Business Review | March 12 - 18, 2012

10 PROPERTY

Residential m up to flat futu

The First Home Program is the main client of residential projects, but en of newly delivered units. With predictable results, say players. ∫ ANDREEA CEASAR The much discussed slowdown in the global economy and the Euro zone debt crisis has affected mortgage markets and house building across Europe, although property prices were weathering the storm at the end of 2011, according to the latest RICS European Housing Review, released this month. In addition, the deep economic downturn and especially the sovereign debt crisis were forcing banks to ration their mortgage lending.

With weak economic growth and cutbacks in state expenditure, con-

fidence in Europe’s residential markets was low. “The future of the housing market in Europe will clearly depend on a good supply of mortgage credit and the ability to cope with the economic and financial crisis in the Euro zone. But ongoing austerity measures are not helping to ease the situation. Public intervention today is more likely to undermine, rather than stimulate, the residential market,” said Michael Ball, the report’s author.

The only thing currently given any impetus to the residential property market in Romania is the state program called First Home, established to give first-time buyers a foothold on the property ladder. By the start of this year the four phases of the scheme had awarded 53,000 loans with a total value of over EUR 2 billion. The fourth phase of the program began in the middle of 2011, and by the end of the year 14,000 loans with a total value of EUR 600 million had been awarded to first-time buyers. According to statistics from FNGCIMM (the National Credit Guarantee Fund for SMEs), two-room flats account for 53 percent of the total homes acquired through this scheme, three-room apartments 29 percent and studios 12 percent. Recently there has been increasing interest in three-rooms units.

But the scheme has some restrictions. The maximum loan value that can be granted under the program is EUR 57,000 for an old unit, EUR 66,500 for a new one and EUR 71,250 to build your own property. The first two figures have a big impact on the market and affect which types of projects will succeed, say industry insiders. Figures show that so far, the program has favored old communist-era apartments, the so-called matchbox flats. Their prices were sup-

ported as they were in line with the upper limits of the program, despite the often poor quality of the stock. Meanwhile, developers of new build apartments cannot lower their prices because of the fatal mistakes they made in the past, such as buying a plot a land and paying over the odds to build oversized units. Only those firms that realized that they had to redesign their projects, made them smaller, and brought the sales prices closer to the First Home program limit have done well out of the scheme.

At the end of 2010 Conarg, a residential developer, finished building the first stage of Quadra 2. The project was

initially conceived to have 850 flats, but was soon redesigned in light of the new market realities. The first stage involved 242 studio apartments and only 16 two-rooms units, designed for students and teenagers. The decision made Conarg one of the most important sources of new build homes that could be bought through the First Home Program.

Company representatives say that the majority of the units they sold last year were through the program.

Construction stalls

According to the National Institute of Statistics (INS), in 2011 approximately 40,000 building permits for residential buildings were awarded, down 6.6 percent on 2010. The highest decreases were felt in north-eastern and southern Romania. Building permits also include extensions of existing homes, not just new units, which suggests that the decrease will be even more significant.

Moreover, two thirds of the building permits were given for rural units, which means that these homes will mainly be built by the occupiers. As for finished homes, last year approximately 45,000 units were delivered, 9 percent fewer than the previous year.

According to research by residential consultancy firm REAS, 63 projects with a total of some 3,600 residential units were for sale within Bucharest’s city limits in Q3 2011. Less than half of these properties were part of completed residential projects rather than schemes that were under construction, planned or on-hold. But who can afford them? According to INS data, the Romanian gross

www.business-review.ro Business Review | March 12 - 18, 2012

PROPERTY 11

market faces ure

but encourages the sale of old housing stock, rather than the thousands

monthly average income was EUR 464 in January, down 9 percent since December 2011, a period when an employee’s general revenue increases due to Christmas bonuses. In 2011 the average gross salary was EUR 460, a figure that is more compatible with buying an old flat, rather than a new one.

One of the main problems for local employees is that their official salaries are less than their real earnings. Many companies, including multinationals, prefer to avoid paying taxes to the state by giving the money directly to their employees through the well-known bonus scheme. As a result, would-be home

buyers find it difficult to secure credit.

“The major problem on the residential segment was demand, which was restricted for several reasons, including the impact of macroeconomic weaknesses on purchasing power and investment sentiment among prospective homebuyers. Also, buyers have an apparent lack of trust in developers in particular, due to various unfinished and frozen projects,” agreed the authors of the report, Residential Markets in Central European Capitals, referring to residential demand in Bucharest and Romania in general.

Demise of the developers

Because of this low demand and lack of confidence, residential developers have started one by one to collapse, declaring insolvency and heading for bankruptcy.

In the last two years 12 such projects have met this fate, meaning no fewer than 4,000 flats. The biggest recent casualties Asmita Gardens, Alia Apartments, Laguna Residence and Ibiza Sol. Asmita Gardens had bankruptcy written all over it when finished its 800-unit project in 2010, where a 54-sqm studio was on sale at EUR 124,000 and an 88-sqm two-room flat at a hefty EUR 137,000. What is shocking, said players, was not that half of it was not sold, but that half of it was, despite the substantial prices. Alia Apartments also sold its luxurious flats for EUR 2,000-2,500 per sqm.

Visitors to the Ibiza Sol website are welcomed with the phrase: “Ibiza Sol is a safe investment in the future of your family”. But it seems that potential buy-

ers were not so sure: of the project’s over 300 flats finished in 2008, 250 have no owners, and insolvency followed. Meanwhile, Laguna Residence is for sale for the third time and still there are no takers, even though the price has been cut by 25 percent from EUR 24.6 million.

Aside from these examples, there are others that have been hushed up by banks that have no wish to lose more money, even though this may happen if they keep these unprofitable projects.

While in the case of Asmita Gardens, Ibiza Sol and Alia Apartments, lenders can hope to recuperate up to 70 percent of total debt as they are fin-

ished products, for uncompleted projects the bank can expect to claw back only 20-30 percent of what they are owed, according to Casa de Insolventa Transilvania.

Taking everything into consideration, pundits predict the price of apartments will decrease further, continuing the trend from 2011, despite developers and real estate agency hopes. According to the yearly Residential Market Index for the Romanian market, published by EFG Eurobank Property Services Romania, residential property prices fell 4.3 percent in 2011 compared with previous year, following on from a 0.3 percent dip the year before. The biggest decrease was felt in Bucharest, both in the center and peripheral areas (a 9.9 percent and 11.3 percent fall respectively), followed by the Danube area with a 5.2 percent drop, Muntenia with 5.1 percent, the south on 5 percent and the west on 3.7 percent.

“The correct price of a built square meter without finishes in 2012 should be around EUR 550,” says Claudiu Georgescu, president of APMCR (the Association of the Constructions Materials Producers from Romania), adding that this value is for buildings with low energy consumption. This cost factors in the drop in prices of some building materials, such as cement and bricks, while steel costs posted a slight increase.

In this context, prices like EUR 2,000 per sqm could seem excessive, even taking into consideration the high prices paid for plots of land, finishes and so on.

The only chance for such projects may be redesigning or selling everything, and accepting the losses.

andreea.ceasar@business-review.ro

www.business-review.ro Business Review | March 12 - 18, 2012

12 LINKS

Informatization gaps still show up in X-ray of health system The informatization of the Romanian medical system is like a patient on the mend: emerging from a long and scarring disease into a strenuous convalescence. While the European Union is injecting doses of funds to push the development forward, Romania is still limping through deadlines and implementation hiccups on a road where going forward is the only remedy. ∫ OTILIA HARAGA “The informatization of the Romanian health system in general, as well as, more specifically, clinics – both private and state owned – is an absolute must without which it cannot develop efficiently or yield results,” Mihai Ciochinaru, medical director of Medlife, tells BR. From a chronological perspective, “the informatization of health units in the public system began in an extremely shy manner, especially via local initiatives in departments, then hospital units or individual medical practices, through the efforts or personal enthusiasm of doctors, hospital managers, family doctors or specialists with individual practices,” says Ciochinaru.

But what does the data look like? Unfortunately, not very flattering for Romania. “Romania is lagging about ten years behind the Western European average as far as the informatization of hospitals in the state sector is concerned,” Radu Bengulescu, IT director of Regina Maria private health network, tells BR. Significantly, Romania is also at the lowest end of the European Union ranking for fixed broadband internet access.

The most recent EC report described Romania as being one of the last in the race, with a 13 percent penetration rate of fixed broadband internet.

The survey shows that approximately 92 percent of European hospitals have broadband internet access, while 80 percent of them have already implemented electronic patient files.

The data found that 71 percent of European hospitals use eReservation systems for making patient appointments, 65 percent have a common system for registering patients, while 61 percent have a common archive system for patients’ files. Only 39 percent of hospitals use video-conferencing for consultations while 54 percent have Wi-Fi internet access.

The system of electronic prescriptions (ePrescription) has already been implemented in countries such as Sweden (100 percent of units), Estonia (80 percent) and Spain (40 percent) and even in Bulgaria, though on a lower scale.

The implementation of ePrescription by 2015 is one of the targets set out by the European Union, which also requires that patients have online access to their medical files.

However, the report by the European Commission shows that only 30 percent of European hospitals use the ePrescription system and only 4 percent offer patients online access to their electronic medical records.

Lifeline: informatization is crucial to improve Romania’s medical system, say experts In the first half of last year, the Romanian authorities signed off two major projects for the health system – electronic patient files and ePrescription, for which EUR 40 million in non-reimbursable EU funds are available. The implementation of the two projects should have been kick-started beginning with last year but the process tarried.

The electronic patient file project has a total value of EUR 46 million (VAT included), and an implementation period of 24 months. It will outline the entire disease and treatment history of the patient.

In Romania, ePrescription should have been on the cards since 2011 but the company that will implement the system was elected only this year: HP Romania will supply the IT solution to the National Health Insurance House, under an approximately EUR 10 million contract (VAT included). The EU-funded project should be finished within six months.

The ePrescription system will allow the real-time monitoring of drug consumption in Romania, and eradicate medication errors and fraud from the system.

The beneficiaries of the project will be insurance companies, doctors, pharmacies and insured patients.

Also this year it was announced that HP and Novensys form the consortium that will supply the CNAS with an IT solution for the introduction of the electronic health insurance card (which should also have been introduced in 2011), under a contract worth in excess of EUR 25 million (VAT included). The contract must be implemented in nine months since signing and will be fi-

nanced from CNAS funds.

The cost of a card is EUR 2.25 (without VAT) and they will be distributed to all the insured patients by post.

The health card, ePrescription and the electronic patient files are part of an informatization process for the health system, the first seeds of which were sown ten years ago.

The first stage of the informatization system – the unique integrated informatics system (SIUI), developed by HP Romania, Siveco Romania and the Romanian Service of Special Telecommunications (STS), which connects doctors with the CNAS database – has been completed following investments of approximately EUR 45 million; however, teething problems appeared.

“The quality of the supplied (imposed) software by the CNAS such as SIUI and the system for reporting oncological cases to the National Cancer Registry is sometimes cumbersome and has elements that could be perfected, but most medical professionals realize the need for an IT system that keeps track of medical activity,” says Ciochinaru.

Public and private needs When talking about the informatization of the public health system, “special attention is given to ERP (enterprise resource planning) systems that ensure a transparent control of resources and costs,” Daniel Prisacariu, sales manager for key projects at TotalSoft, tells BR. Ciochinaru’s view is that “many health units have still not entirely solved the informatization issues concerning the inter-connection of the various depart-

ments, pharmacies, imaging and laboratories, because everything involves budget expenses for which the current resources allocated by the authorities are insufficient.”

“Informatization needs in the state sector are approximately 75 percent the same as those in the private sector in order to ensure quality medical services, that are economically efficient and allow at some point the creation of the patient’s national unique medical file,” Bengulescu tells BR. In the private sector, the target of clinics is to unify the entire critical information into one single IT system. “Private units wish to have a unitary administration of health contracts, subscriptions, labor medicine activities, lab analysis, compulsory reports to the state, the electronic patient files – everything integrated and reflected in the financial-accounting activity,” says Prisacariu of TotalSoft.

Thus, informatization needs in private health networks stretch across all verticals, according to the Regina Maria official. He gives a detailed X-ray of the situation – in the operational department (for inputting patients and doctors into the system, allocating resources, making appointments, introducing requests for services), in the medical department (storing data on the patient’s electronic chart), in the financial-accounting department (managing costs and revenues), in the management department (control and forecasting, optimization processes, business intelligence, statistics) and in lab services (receiving requests and distributing results in electronic format).

There are also needs in the commercial and client service department (for managing client accounts, subscription and insurance plans, customer relationship management, profitability analysis, the interface for reporting to the state regarding health insurance), in the marketing department (interacting via electronic means with individual patients and corporate clients) and in the acquisitions department (managing stocks), according to Bengulescu.

“New medical services and compartments that bring with them new IT needs that we must face keep on appearing.

Though we are better and better off, I think we are still some way behind systems abroad,” says Ciochinaru. “We will most certainly be able to ‘burn stages’, but only following solid and efficient investments in this field will we achieve performance,” he concludes.

otilia.haraga@business-review.ro

www.business-review.ro Business Review | March 12 - 18, 2012

CITY 13

Belgian filmmaking brothers laud local cinema Jean-Pierre and Luc Dardenne, the Belgian filmmaking brothers, were in Bucharest last week to promote their latest film, The Kid with a Bike (Le Gamin au Vélo). In between the press screening and official premiere of the movie, they sat down with BR to discuss their work.

Photo: Alexandru Damian

The Dardennes see a likeness between their work and the Romanian New Wave

∫ DEBBIE STOWE Directing duo Jean-Pierre and Luc Dardenne used their appearance in Bucharest, organized by the WalloniaBrussels Delegation to mark a decade of activity in Romania, to call on the government to support the local film industry, as filmmaking talent alone is not enough to ensure success. “A country’s cinema is built through the state’s cultural policy. I would like the Romanian state to do something for Romanian cinema,” Luc Dardenne told a press conference.

The brothers, who also write and produce their films, spoke highly of the efforts of local filmmakers. They were on the Cannes jury that awarded Corneliu Porumboiu the Camera d’Or prize in 2006 for the film 12:08 East of Bucharest (A fost sau n-a fost). And their production house, Les Films Du Fleuve, co-produced Cristian Mungiu’s latest feature.

“I watched, of course, closely the films of Mungiu, Porumboiu and [Cristi] Puiu – three directors whose works we know – and I must say that for us it was a revelation. From my point of view, 432 is one of the greatest films in cinema history,” said Luc. The naturalistic, pared down style of cinematography that characterizes Romanian New Wave seems a good fit for the brothers, who started out making documentaries in the late 1970s, before moving into feature films. “We do recognize our type of movies in Mungiu’s movies; there is a familiarity. Mungiu and Porumboiu both have a special style,” Jean-Pierre told BR. Usually focusing on Belgium’s lowerclasses and outsiders, the duo’s films have enjoyed repeated success at Cannes.

When they scooped their second Palme

d’Or in 2005 for The Child (L’Enfant) – they won their first in 1999 for Rosetta – they equaled a feat that only a handful of directors had previously managed, one being Francis Ford Coppola.

The Dardennes’ latest work, The Kid with a Bike, tells the story of Cyril, a young boy abandoned by his father who is taken in by a kindly local hairdresser.

But the effects of his upbringing have left their mark on Cyril and he comes under the influence of a local gang. A full review will appear a forthcoming edition of Business Review.

In conversation with BR, the brothers explained their choice of protagonists, saying that it was not a conscious decision, but that “these are the people we wish to film. We like these kinds of people, to tell their stories and how they make ends meet, to show that they are able to do more than fight.”

The filmmakers said that while they hoped their movies would make viewers see the world differently and ponder upon what they saw, and that they ultimately hoped that their pictures might change things, they did not see the social and aesthetic as separate elements, but intermingling.

While some critics have drawn parallels between The Kid with a Bike and the 1948 Italian neorealist film Bicycle Thieves, among others, Jean-Pierre told BR that these were not deliberate. “For me there is no reference to these movies.

The topic and story are different. We thought of Cyril and how we could save him. I do agree that when critics see it they’ll make such connections. But we don’t work like this.”

The Kid with a Bike is now on general release.

editorial@business-review.ro

www.business-review.ro Business Review | March 12 - 18, 2012

14 IN TOUCH FILM REVIEW

CULTURAL EVENTS AGENDA Ballet Romeo and Juliet March 22 21.30, National Opera House (Live in HD from Covent Garden) Lauren Cuthbertson and Federico Bonelli meet on stage to dance the exquisite choreography of Kenneth MacMillan and bring fresh nuances to the characters of young lovers Juliet and Romeo in a great performance by the Royal Ballet. The pleasure of watching the dancers is complemented by Nicholas Georgiadis’s earthy Renaissance designs. Music: Sergey Prokofiev.

Conductor: Barry Wordsworth.

Todes April 6 Palace Hall A stunning show that is a remarkable mixture of ballet, modern dance and hip hop from the prestigious choreographer Alla Duhova will come to Bucharest for the first time. Todes was named after one of the most dangerous moves in skating. The troupe has enjoyed international acclaim and has worked with some of the biggest names in showbiz, including Michael Jackson, Mariah Carey, Ricky Martin, Boys II Men and Lady Gaga.

Tickets, prices of which range from RON 50 to 300, are available from www.biletoo.ro, myticket.ro, www.blt.ro and the Palace Hall box office.

Opera La Boheme March 13 19.00, National Opera House One of Puccini’s most popular operas and also one of the best loved in the Italian repertoire, La Boheme, commedia lirica in four acts, will be broadcast live in HD from Gran Teatre del Liceu, Barcelona, under the stage direction of Giancarlo del Monaco joined by Victor Pablo Perez as conductor. An exceptional international cast brings to life the opera‘s theme: the fragile nature of happiness in a world of poverty, cold and disease. Cast: Mimi (Fiorenza Cedolins), Rodolfo (Ramón Vargas), Marcello (Christopher Maltman), Musetta (Ainhoa Arteta).

comic songs. Tickets at RON 55.

Exhibitions Plato’s Mirror by Mischa Kuball March 7 to 25 National Museum of Contemporary Art (MNAC) Mischa Kuball (b. 1959) lives and works in Düsseldorf and holds the chair of media art, holography and light art at the Kunsthochschule für Medien, Cologne.

As an artist, Kuball engages with the phenomenon of light, making Plato’s allegory a good fit to become a major theme in his work. In Plato’s Mirror, Kuball creates spaces that allude to Plato’s text about the cave, using projectors, silver foil, photographs and videos in very simple and highly effective installations. This exhibition is organized by the Goethe Institut and MNAC Bucharest. Curator: Andreas F. Beitin.

Concerts Flamenco, classical and new genres festival, March 3 to 26 David Palomar March 15, 16, ArCuB Hall Surrounded by great flamenco musicians such as Ricky Rivera (guitar), Ale Benitez (bass), Javier Katumba (percussion) and Anabel Rivera (vocal accompaniment), David Palomar, who creates flamenco in the most spectacular fashion, will give two concerts featuring a selection of songs from his shows La Dada del Poncho Rojo and Homenaje Flamenco a Chavela Vargas. Tickets can be purchased from ArCub (14 Strada Batistei) for RON 26.5 and 35.

Jorge Federico Osorio piano concert March 24, Romanian Atheneum Hall Born in Ciudad de Mexico, Joge Federico Osorio is acclaimed internationally as one of the most eminent pianists of our time, and has been invited to perform with the great orchestras of the world.

His program will include a selection of the most popular Spanish tracks by composers such as Manuel De Falla, Francisco Tarrega, Isaac Albeniz and Jorge Federico.

Stand-up Comedy March 19 20.30, Grand Cinema Digiplex For the first time at Grand Cinema Digiplex a stand up comedy show brings together three of the most famous British comedians: Geoff Whiting (compere), Jeff Leach (opening), Christian Reilly (closing). A live interpretation of the real British humor for the fans of satire and

Jazz flamingo concert, Jorge Pardo/Isaac Turienzo March 25, 26, Radio Hall The third run of the Classic Flamenco and new Genre Festival will complete the series of events dedicated to this artistic genre with jazz flamenco concerts supported by one of the most influential and original Spanish musical duos: saxophonist Jorge Pardo and pianist Isaac Turienzo.

ISSN No. 1453 - 729X

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 ART DIRECTOR Alexandru Oriean PHOTO EDITOR: Mihai Constantineanu PHOTOGRAPHER Laurentiu Obae LAYOUT Beatrice Gheorghiu

The Artist

Work of art: Michel Hazanavicius’s picture is a charming love letter to silent film

DEBBIE STOWE

A photo currently doing the rounds on Facebook shows a sign, presumably on display in a local cinema, “warning” audiences that The Artist is a silent, black and white film. Presumably some viewers had been storming out aghast and seeking refunds.

Let us leave aside the question of how, after all the Oscars buzz, some cinema-goers remain unaware of this, and acknowledge that in these high-tech, over-stimulated times, viewers could worry that a silent film might test their patience.

And so let’s be thankful that director Michel Hazanavicius’s producers dismissed this fear, because The Artist is a rare gem of a film – quirky, warm, charming and playful. It’s not perfect, but it is so delightful and sincere that it doesn’t matter.

You have probably heard the plot by now, but here it is just in case you’re one of the people who need a warning sign at the cinema. It’s 1927, and silent film star George Valentin (Jean Dujardin) is at the very top of his game. Loved by his public, he rides the wave of adulation with brio, milking his popularity for all it is worth, along with his performing pet dog. He’s a shameless ham, narcissistic and a bit silly, but George is so jolly and amiable we forgive him.

At a public appearance promoting his new film, he bumps into aspiring actress

Peppy Miller (Bérénice Bejo), a chance encounter that leads to her getting work as an extra at George’s employer, Kinograph Studios. The two have zinging chemistry, and Peppy’s career blooms.

But the times they are a-changing, with the advent of sound films. George dismisses the new talkies as a gimmick, and is dismayed to see silent films wither and die, taking his own popularity and livelihood with them, as Peppy’s star continues to rise.

The picture adheres almost entirely to the conventions of silent film. Emotions and plot are conveyed by facial expressions, body language and visual pointers, with the odd intertitle. Ludovic Bource’s glorious soundtrack is played by the Brussels Philharmonic and reflects the jazz and plinkyplonky piano music of the genre. The only aural misstep is the use of Bernard Herrmann’s iconic Vertigo composition, a distracting and unnecessary anachronism.

There are clichés aplenty and the plot is predictable. At times I found it slow, probably owing to a diet of fast-paced Hollywood flicks. But I relate these observations only in the interests of balance, not as complaints.

The Artist is a joy, a love letter to silent film that never becomes contrived or knowing. Dujardin is sensational, Bejo is enchanting, and their canine co-star almost steals the show. There are pitch perfect, beautifully conceived scenes – one where George and Peppy’s blossoming attraction keeps ruining a take is particularly enjoyable and the last few minutes are an uplifting pleasure. This is an exceptional film with a big heart and if you have one too you will relish it.

PUBLISHER Anca Ionita EXECUTIVE DIRECTOR George Moise SALES & EVENTS DIRECTOR Oana Molodoi MARKETING MANAGER Ana-Maria Stanca SALES & EVENTS Ana-Maria Nedelcu RESEARCH & SUBSCRIPTION Lili Voineag PRODUCTION Dan Mitroi DISTRIBUTION Eugen Musat

ADDRESS No. 10 Italiana St., 2nd floor, ap. 3 Bucharest, Romania LANDLINE Editorial: 031.040.09.32 Office: 031.040.09.31 Fax: 031.040.09.34 EMAILS Editorial: editorial@business-review.ro Sales: sales@business-review.ro Events: events@business-review.ro

Director: Michel Hazanavicius Starring: Jean Dujardin, Bérénice Bejo On: Cinema City Cotroceni, Cinema City Sun Plaza, Cityplex, Grand Cinema Digiplex Baneasa, Hollywood Multiplex, Movieplex Cinema