Business Review, Issue 26, July 14-July21

INTERVIEW: KMG International will make a single bid of USD 200 million to buy back a 26.69 percent stake in Rompetrol Rafinare from the state, with the deal expected to be concluded by year-end, says senior VP Azamat Zhangulov »page 8

ROMANIA’S PREMIER BUSINESS WEEKLY

JULY 14 - 20, 2014 / VOLUME 18, NUMBER 26

H C N E FR T N E M T S E INV W E I V RE French firms plan to increase their investments in IT, agriculture and industry, say representatives of the French business community. Get an Eiffel inside! » page 15

OFFICES GET TECH BOOST ROMANIA’S OFFICE MARKET HAS BEEN BUOYED BY DEMAND FROM IT & TELECOM COMPANIES, WHOSE INNOVATIVE AND DEMANDING APPROACH HAS SHAPED THE LOCAL SECTOR » PAGE 10 CITY

Something for the summer From food and folk to film festivals, races to raves, and concerts to casinos, a summer of fun awaits. Plan your holiday schedule here

» page 28

www.business-review.eu Business Review | July 14 - 20, 2014

NEWS 3

NEWS in brief CONSTRUCTION Bilka Steel turnover up 43 percent Metallic tile producer Bilka Steel inaugurated a new production line in Brasov last week. The facility, which will increase production capacity by 30 percent, according to company officials, is part of Bilka’s EUR 6 million investment plan.

The company registered a turnover of approximately RON 45 million in Q1 2013, up 43 percent year-on year. The Bilka Steel factory in Brasov recorded a turnover of RON 103 million in 2014 and currently covers an area of 45,000 sqm.

Some 3.2 million sqm of metallic tiles were produced there last year.

French Adeo buys bauMax’s 15 local stores Austrian DIY retailer bauMax has sold its 15 stores in Romania to French group Adeo, the company has announced. The branches will be acquired through a share swap between the two firms. The transaction value has not been made public and is now pending regulatory approval from the Romanian authorities.

Adeo owns the Leroy Merlin, KoziKaza, Brico Center, Weldom, Bricoman and Bricomart retail brands and is already present locally with a Leroy Merlin store in Bucharest. According to the most recent available data, bauMax’s losses doubled y-o-y in 2012, from EUR 47.2 million to EUR 126 million. The loss was generated mainly by its Romanian (EUR 26 million) and Turkish subsidiaries (EUR 14 million). According to WallStreet.ro, Leroy Merlin was assisted in the transaction by Popovici Nitu & Asociatii, while bauMax was assisted by Noerr.

ENERGY Chevron concludes first shale gas exploration in Romania US oil major Chevron has concluded shale gas exploration in the SilisteaPungesti perimeter in eastern Romania and will start assessing data collected in the last two months from this location, reports Mediafax newswire. The drilling was handled by Dafora, which signed a four-year contract with the oil company for the operations. Chevron is the first company to start seeking shale gas in Romania. The sector has come under heavy criticism, both locally and internationally, from environmentalists, who warn that hydraulic fracturing (fracking), the process of pumping water, sand and chemicals to break shale rock, runs a high risk of polluting the groundwater.

Pungesti came under siege by police earlier this year following protests and Chevron had to temporarily withdraw its workers from the site.

INVESTMENT Romania riskier to invest in than Bulgaria, Hungary and Malaysia Romania is a riskier destination for business than countries including Bulgaria, Hungary, China, Chile and Malaysia, according to Bloomberg’s ranking of emerging economies. Romania comes 26th out of 43 in the ranking, with riskier countries including Thailand and Peru.

The riskiest countries for business are Venezuela, Nigeria, Egypt, Pakistan and Argentina.

In Europe, Ukraine is the most unsafe, followed by Russia, Turkey, Croatia, Romania, Bulgaria, Hungary, Slovakia, Slovenia, Latvia, Czech Republic and Lithuania.

The safest places for businesspeople to invest in are Taiwan, followed by Qatar, the UAE and Chile.

LEGAL Coface expands in Timisoara Credit insurer Coface Romania has opened an office in Timisoara in a bid to tap into the high business potential it sees in western Romania. The firm said it had identified a segment of 1,500 companies as potential business for its credit risk management services in the region.

Analysis by Coface found that there are around 68,000 active firms with registered offices in this region, out of which 1,800 generate over 80 percent of the consolidated turnover. “Coface Romania continues its accelerated growth and as part of our strategy, in addition to the office in Cluj-Napoca, we have opened a second regional branch in Timisoara,” said the insurer’s country manager, Constantin Coman.

PROPERTY Kellogg’s rents 2,500 sqm in Floreasca Park Kellogg’s has announced it has rented office space of 2,500 sqm in Floreasca Park, where it is set to open a service center. “We recently finalized the transaction leasing 2,500 sqm in Floreasca Park, developed by Robert Neale (founder of Portland Trust). We represented the American group,” said Razvan

Gheorghe, managing partner at Activ Property Services. The US firm has already started recruiting for its Bucharest center, which will provide support for the cereal giant’s European divisions.

Eighty jobs will transferred from the UK to Romania as a result. Kellogg’s president and chief executive John Bryant said he wanted to implement “a global business services (GBS) model to streamline business support processes in finance, IT, supply chain and HR”.

Tibbett Logistics opens tenth warehouse in Romania Keswick Enterprises Group member company, Tibbett Logistics, has announced that it has extended its logistics business in Romania with an unnamed leading European multi-national retailer to include the storage and distribution of non-food imports from Asia Pacific and European suppliers. As a result, the company has opened a dedicated 8,500 sqm (91,500 sq ft) warehouse in Europolis Park on the western edge of Bucharest, its tenth distribution center in the country.

Tibbett Logistics already handles the storage and domestic distribution of the retailer’s imported dry food products, plus merchandise from Romanian suppliers, at a neighboring 22,000 sqm (237,000 sq ft) dedicated distribution center in Europolis Park. The company’s warehousing portfolio in Romania now exceeds 80,000 sqm (860,000 sq ft), making it the country’s largest thirdparty provider of warehousing solutions, said officials.

STOCK EXCHANGE Property Fund sells Transelectrica stake for EUR 48.4 mln The Property Fund (FP) has exited grid operator Transelectrica, following the sale of its 13.5 percent stake in the stateowned company. The FP said it had raised RON 212.6 million (EUR 48.4) from selling 9.89 million shares through a private placement on the Bucharest Stock Exchange (BVB). The price per share was RON 21.5. Shares in Transelectrica closed at RON 22 on Tuesday, after losing 5.9 percent. They were up 0.82 percent to RON 22.18 on Wednesday by lunch trading on the BVB. Raiffeisen Bank and UniCredit acted as joint global coordinators and joint bookrunners for the transaction. SSIF Broker was the joint lead manager. The transaction comes less than a month after the FP, which is managed by Franklin Templeton, sold a 4.9 percent stake in state gas producer Romgaz for EUR 147 million. Following the sale the FP still holds a 10 percent stake in the energy company.

WEEK AHEAD July 15 Juncker vote European Union lawmakers are to vote a day earlier than scheduled on Jean-Claude Juncker's controversial nomination to take the helm of the powerful European Commission.

Juncker needs to muster an absolute majority of 376 votes in the 751-seat Parliament to officially win the job, and British Labour MEPs and lawmakers from Hungary may join the Tories in opposing the former Luxembourg PM. Business Review’s Health&Beauty Every summer, the Business Review team meets with its business partners from the health and beauty domain in one of Bucharest’s most exclusive locations to enjoy an informal cocktail party. Our special guest is Rucsandra Hurezeanu, founder and general director of Ivatherm. Camelia Sucu, owner of Iconic Health Concept, will act as host.

July 16 EU Summit EU heads of government will regroup for a fresh summit for three days to appoint candidates for several senior EU jobs, including a replacement for the bloc's foreign policy chief Catherine Ashton. Another topic that could be broached is wider penalties on Russian industry, investment or trade, in light of the continuing Ukraine crisis.

July 18 - 20 Last edition of Summer Bazaar Romexpo’s Summer Bazaar seeks to bring together retailers and consumers in a holiday atmosphere peppered with discounts. Traditional goods, commercial exhibits and fun family activities await participants.

Free entrance.

MOST READ www.business-review.eu 1 Wimbledon 2014: Simona Halep loses semi-final after match injury

2 bauMax sells its 15 Romanian stores to French Adeo

3 Kellogg’s rents 2,500 sqm in Flo-

reasca Park for its service center

4 Travel agencies threaten to sue MAE over rumors about the Hepatitis A virus in Bulgaria

5 Facebook pays USD 500 mln for

company founded by Romanians

www.business-review.eu Business Review | July 14 - 20, 2014

4 NEWS ONLINE

3Q Peter Wells

director of the Bucharest Professional Training College (BPTC)

eMag receives state aid, sets up software development center in Bucharest Online retailer eMag, part of Naspers Group, has announced a new investment project, the eMag IT research software development center. Located in north Bucharest, it will create 203 jobs. ∫ OTILIA HARAGA

Why did the BPTC decide to partner with Pitman Training UK? I wanted to bring in some practical, vocational training at operational level – and why reinvent the wheel? Pitman has been delivering training programs and qualifications around the world for over 175 years. Pitman-BPTC offers more than 200 certificate and diploma programs in 20 fields of study, many of which can be studied at a distance.

Are Pitman qualifications recognized here?

Pitman training programs and qualifications are recognized by employers – which is the most important thing – and individual diplomas are recognized by individual associations. But that doesn’t necessarily mean they are recognized here. My argument is that as an EU country Romania is required to recognize qualifications from other member states. But we are working with the Ministry of Labor to get them recognized locally. It is legally not necessary, but we’re doing it for marketing purposes – so the next time a journalist asks me that question I can say yes! debbie.stowe@business-review.ro

Courtesy of eMAG

How does this fit into the local market?

In Romania, the attitude is “university or die” – you have to be a barman or a barrister. This means that organizations must hire graduates to be the office manager, admin manager, PA or secretary. Candidates either have master’s degrees or they are high school leavers.

Consequently, employers are paying a master’s level salary for operational level positions – not professionals or specialists – that don’t require that level of qualification. And the employee is overqualified and becomes despondent because they are not trained for the role and can’t do it. So everybody loses. We’re trying to fill that skills gap.

“We will need employees of all ages and all training levels. We are prepared to welcome approximately 30 percent entry-level employees, and we have over 50 open positions for senior employees,” Tudor Manea, vice-president, HR and technology director at eMag, told BR. At the end of June, the company received state financing of EUR 6.65 million, which was approved by the Ministry of Public Finance. Deloitte Romania was a consultant in the process.

The retailer estimates that over 2014-2021, the center will contribute EUR 25.8 million to regional development. The first application developed at the facility will be launched in October. The project is part of the online retailer’s strategy to expand in Europe.

The eMag platform generated sales of EUR 188 million in 2013 and company officials estimate the figure will total EUR 260 million this year. “The growth in sales is the result of substantial investments which eMag will also continue this year. We have an investment budget of EUR 11.5 million, of which EUR 3 million will go into the development and implementation of new technologies,” Manea told BR. eMag has already expanded on two European regional markets, Hungary and Bulgaria “The expansion abroad will continue. We are developing fast and we will help turn Romania into a regional internet and technology center. We will also have new project proposals that will bring value to the social and economic environment in Romania,” said Manea.

“On certain markets we are looking at, we intend to establish a local presence on the medium term by opening local offices.”

Investments will also target international expansion. “We will be investing EUR 4.5 million this year into international expansion. Regional development, and, implicitly, the expansion of the customer base, will be an important part of reaching the proposed target. Regional development

Tudor Manea, vice-president, HR and technology director at eMag

will be doubled by the launch of more product ranges, such as sports items, home & deco, auto, food and fashion.

The diversification of the offer is already reality at eMag. We are already offering various ranges, from gadgets and home appliances to insurance policies, books, children’s products, and pet shop products,” Manea told BR. In line with the development strategy, Dante International, the company that runs eMag, has decided to set up several companies specialized in acquisitions, online marketing and software development. In May, Dante founded eMag IT Research, under which the new software development center, specialized in e-commerce, will be created.

According to Manea, apart from the 200 jobs that will be created,

eMag’s impact on the economy can be seen in the 500 Romanian providers the firm is working with, 10 training companies, media businesses and real estate developers for office and logistics spaces.

Apart from the headquarters in the north of the city, which hosts employees in the IT, HR, development and call-center departments, eMag also has a showroom and two delivery points in Bucharest and nine showrooms across the country in Brasov, Cluj, Constanta, Craiova, Galati, Iasi, Oradea, Ploiesti and Timisoara.

Orders are delivered from its 15,000 sqm warehouse located on the Bucharest-Pitesti highway. In 2013, the firm also opened an IT programming center in Craiova. otilia.haraga@business-review.ro

www.business-review.eu Business Review | July 14 - 20, 2014

SPORT

NEWS 5 INTERVIEW

Finding the new Simona Links Associates Halep – the net value of affiliates to Edelman in Romania and Serbia the next tennis champ Corina Vintan, founder and CEO of Links Associates, month, putting training costs beyond the reach of many families.

The necessary equipment, meaning sportswear, racquets and shoes, are only 20 percent less expensive for children than for adult players.

“And the strings, again, are very important. It comes down to about EUR 4,000 per year, just for the equipment,” Wilson’s brand manager estimates.

But the biggest expense by far, Gheorghe tells BR, will be the cost of actually sending young tennis players to international competitions to test their performance and gauge their real value as athletes.

Players have to bear all the auxiliary costs of competing on their own: regSmash hit: local idol Simona Halep istrations fees, equipment, plus room and board for underage players and accompanying adults.

“It takes an investment of EUR he “Simona Halep effect” is taking the country by storm ac- 20,000 per year to support a young cording to Bogdan Gheorghe, tennis player of only 13. Once he or brand manager and tour manager for she turns professional, we are talking Wilson Romania. Inspired by the suc- EUR 30,000-40,000 per year,” says cess of the Constanta-born player, Gheorghe.

The Romanian Tennis Federation more and more local parents are signing their children up for tennis courses, facilitates the players’ training, in the hoping that their progeny will be the sense of providing access to sports facilities and courses, but they have no “next Simona Halep”.

At just 22, Halep is ready to join budget for supporting the act of comthe Romanian Tennis Pantheon along- peting itself.

Sponsors are also reluctant to help side the likes of Ion Tiriac and Ilie Nastase. She has reached the highest out young players with anything other position ever obtained by a Romanian than special discounts, given the high player in the WTA ranking (third) and dropout rate.

“Most kids abandon the game by currently has seven singles titles under her belt, with high hopes for a Grand the time they’re 16-17 years old. You Slam title, after a Roland Garros final can’t let your child go off to another and a Wimbledon semi-final this year. country to compete by themselves.

Consequently, tennis has been You have to pay for travel expenses, thrust into the spotlight. Adrian Szabo, for yourself and for the coach you are director of the Winners Tennis School taking with you. It can take a huge in Cluj-Napoca, told hotnews.ro that toll on the family, financially and emoenrollments are up 30 percent com- tionally. Then you add the stress of competing itself… Most do abandon pared to spring of 2013.

“Just like with Nadia Comaneci, just the game,” Gheorghe says.

Halep has been on Wilson’s radar like with Gica Hagi, we’re getting reports from sports clubs around the since she was 13-14 years old, but officountry that more parents are signing cial endorsements only come when their children up for tennis courses,” you’ve made it into the professionals and are in the top 100 in the world. In Gheorghe tells BR. However, he warns, most people smaller markets such as Romania, you are unaware what a huge investment need to be in the national top three to they will be required to make, in terms receive an official endorsement.

“Make no mistake, it is the hardest of time, energy and especially money, to give their child a fighting chance of sport in the world,” Gheorghe warns.

Last week Halep stated at a cerea sporting career. Starting with the basics, tennis courses for children of mony in Victoria Palace that as a tennis five or six will cost parents between player, she is 100 percent made in RoRON 300 and 700 per month, depend- mania. It’s clear that to make a chaming on the sports club, the size of the pion, family contribution is also a magroup and the level of training. A pri- jor factor. ∫ Diana Petrescu vate coach earns from EUR 300 per

talks to Business Review about the recently signed affiliation contract with Edelman for Romania and Serbia and the mutual benefits this association will bring.

T

Why did Edelman choose to work with Links and how will the partnership change your agency’s activity?

Edelman chose us because we met on a mutual ground of values and principles. Links is an independent company which has built its whole identity around entrepreneurship, like Edelman did. Edelman looks everywhere for partners capable of bringing added value to its operations and regional clients. On the other side, Links Associates has been a top player in the Romanian market on all criteria: weight of portfolio, visibility of issues in the public domain, dealing with profit and non-profit activities, developing our own tools through fine tuning of public affairs and public relations tactics.

Our “recipes” for solving issues are considered very successful, not only in Romania. The most important argument is the alchemy of ingredients that make us look a lot like Edelman in its early stage, but still very different, in order to be complementary.

What does Edelman mean globally?

The figures are impressive and say a lot about the largest PR firm in the world. Edelman has more than 5,000 employees in 65 countries and affiliates in 35 countries. Recently, the company won the Grand Prix and a Gold Lion at Cannes Lions, the most recent awards in a series of no fewer than seven Lions. In 2013, Edelman was awarded the Global PR Agency of the Year by the Holmes Report and in

2014 it was one of the Ten Best Places to Work, according to Glassdoor.

Edelman’s famous Trust Barometer gives companies important insight into the necessary attributes to build trust in their brands, products and services. It is remarkable that over recent years this extraordinary tool has outlined the beginning of a new era where companies have to design communication strategies for a new type of citizen – “the empowered citizen”.

Beyond that, Edelman has written history by pioneering services and instruments that became iconic for an entire industry, such as the story-telling concept.

What does affiliation to Edelman mean for Links Associates?

I must say that my whole education in PR has been based on Edelman’s model. It is the network that I admired most in my career as a communicator, Edelman being the author of the Bible for public relations. Now, I take it as a recognition of the efforts that we’ve made in six years to reach the professional and ethical standards that bring us into this league. We see the affiliation to Edelman as a fulfilled dream since we set, from the very launch of the agency in 2007, the target to close a partnership with an international network. It also means that we will import a lot of Edelman’s know-how into the company and we will raise operational standards in Romania and Serbia even further.

www.business-review.eu Business Review | July 14 - 20, 2014

6 NEWS / WHO’S

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

Ioana Moga

is the new sales and marketing director for Southern Europe at Rovese Romania, the company that manages the distribution of the Cersanit and Opoczno brands on the local market. She will be responsible for activities in Romania, Hungary, Bulgaria and the Balkans. Her previous position was marketing director for Southern Europe. Moga has over 14 years of professional experience in management. Before joining Rovese Romania, she worked as marketing director for LaDorna and Orkla and marketing manager of Kandia.

Andrei Pantelimon

has been appointed general manager of the Cluj-Napoca office of Thomsons Online Benefits.

He has been working in IT for the past 15 years, the past 10 of which he spent at Endava where he set up the company’s CEE managed services division. While there, he coordinated the activity of over 150 employees from eight centers in Romania, the Republic of Moldova, Macedonia and the UK. Pantelimon will lead a team of 99 people.

Jan Ptacek

will become the new general manager of Renault Commercial Roumanie, which handles the local sales of the Dacia, Renault and Nissan brands, on September 1. He is replacing Thomas Dubruel, who will become deputy general manager of Renault MAIS, the distribution subsidiary of Renault Group in Turkey. Ptacek, 44, has worked for Renault Group for two decades, initially in the marketing department and commercial network management of the carmaker in the Czech Republic and France. In 2003 he became marketing director of the Dacia brand, coordinating the launch of the Logan model. In 2004 he returned to Paris, to work in the group’s strategy and marketing department. He was director of the entry commercial range, and handled marketing strategy for the entry range and the Dacia brand for four years. Ptacek was named marketing director of Renault for

Russia and the Eurasia region in 2008 and became general manager of the Renault commercial subsidiary in Ukraine at the end of 2012.

Arina Udup

has joined ad agency GAV as digital strategist. She has six years of experience in digital advertising, having previously worked for Webstyler and Hyperactive. As part of the GAV online team, Udup will coordinate online communication strategies for clients in the agency’s business development portfolio. She graduated from the College of Political, Administrative and Communication Sciences (FSPAC) at Babes-Bolyai University in Cluj-Napoca and has been behind projects developed for companies in fields such as oil & gas, telecom, the car industry, healthcare and CSR.

Raluca Iacob

is the new strategy director at Publicis. She started her career in advertising 13 years ago in client service and later moved on to strategy. Iacob has worked on communication strategies for various local and international brands.

During her seven years in strategy, she has led several important pitches at McCann Erickson and Cohn&Jansen in Romania as well as in agencies abroad. In Kazakhstan she coordinated the largest strategy department, developing the strategy for the main commercial bank in the country. She joins a strategy department at Publicis Romania that currently numbers six specialists from various backgrounds, including media and digital.

Dragos Cabat

has been appointed member of the administration board at Certinvest, as part of a management reshuffle at the firm approved by the Financial Supervision Authority (FSA). He has worked in the financial sector for close to 20 years and is specialized in brokerage and capital market transactions, as well as in risk management and macroeconomic research. In the last decade he was part of the local branch of the Institute of Chartered Financial Analysts (CFA). He held various positions in the institute including that of president and vice-president.

www.business-review.eu Business Review | July 14 - 20, 2014

8 INTERVIEW

KMG International aims to conclude share buyback in Rompetrol Rafinare by year-end Azamat Zhangulov, senior vice-president of KMG International (formerly known as Rompetrol Group), owned by Kazakhstan's state oil group KazMunaiGas, says the company will make a single bid of USD 200 million to buy back a 26.69 percent stake in Rompetrol Rafinare. He tells BR that the government is set to tender this stake in the next two-three months and the deal should be concluded by year-end, adding that he is “doubtful” there will be any rival bids.

CV Azamat Zhangulov July 2012 – present senior vice-president, KMG International May 2012 – July 2012 CFO, KMG International 2009 – 2012 director, overseas investments management department at KazMunaiGas He graduated from the Kazakh State Academy of Management in international economics, oil business.

Photo: Mihai Constantineanu

∫ OVIDIU POSIRCA Has the Romanian government ended all litigation with KMG International regarding the USD 600 million debt?

Yes, this is true. The government, as of March 24, closed all litigation processes. It means there is no threat to our investment activity here. We feel recomforted and thankful to the government for its very constructive position on this issue. We have finished the litigation so it is absolutely closed, withdrawn – there will be no future issues related to this topic. We are in the process of taking the next steps in implementing the memorandum (e.n. which was passed by the government in January and includes the terms of the deal).

Is the company’s intention to make the USD 1 billion investment program legally binding provided that it buys back the 26.69 percent stake in Rompetrol Rafinare?

We are in the process of completing the procedures for the transaction, because(…) it has to take place in accordance to the privatization law. It means that the government should announce an open bidding procedure and we will come to this with the already announced bid of USD 200 million. It is going to be one bid only and there is no chance to change it. Following this – and even now we are trying to move faster than the privatization schedule – we would like to start working on the investment fund.

It is stated in the memorandum that the investment value in this fund can

go up to USD 1 billion in seven years.

Do you know when the government will organize the tender to sell its stake in Rompetrol?

The government has a very tight schedule for different privatization issues, and the team working on this is pretty small because of the reduction of staff in recent years. We fully understand their schedule and we expect this to happen in the next two-three months, which means that the deal should finally be closed by the end of this year. We expect the active steps (e.n. of the privatization) to start at the end of summer, beginning of autumn.

Will you invest up to USD 1 billion in Romania only if you buy back the 26.69

percent stake in Rompetrol Rafinare?

When we had the idea to set up this fund, it was a package deal, so under this deal everything is set to happen based on one condition after another and so on. That is why we think that nothing will destroy this construction.

Are you going to invest this money in Romania or in the region?

The destination of these funds is Romania.

Do you have investment projects in mind already?

Yes, we have a few projects that have been identified and are being widely discussed and they are already initially financed for the feasibility studies – meaning the technical studies and preliminary phase of financing –

www.business-review.eu Business Review | July 14 - 20, 2014

so stage zero for these projects has already passed. As we start up the fund with the government, these projects are ready to be implemented. The initial projects that will be started have a value of roughly USD 350 million and we think we can easily operate other projects for the value of the total investment fund.

What specific types of investment projects do you plan to do in Romania?

It is specified in the fund’s documentation and in the memorandum that we have to apply our rules for investment planning procedures. That means there is already a preset of criteria there, so we think that the fund has to be around our activities. So it is an energy fund and has nothing to do with building hotels or other infrastructure. Also, the fund is made not for KMG itself to make the investment, but to attract investments from other investment institutions. This means that all investment projects inside the fund have to be profitable and interesting to the investors. We have our criteria on the internal capital rate we use and others. Of course these projects have to fit with these criteria. Security and environment issues are very important, so all these projects have to meet the best security and environmental criteria, which is standard in our organization.

Are you considering investing in local production in the oil and gas sector?

There are possibilities to invest in the exploration field.

The authorities are planning to hold a new licensing round for the onshore and offshore field soon. Are you interested in this?

We currently have a few concessions, which need to be further investigated so that we can see whether we agree with the government to put these projects under the umbrella of the fund. Also, if there are very interesting projects – mostly onshore because we do not think that we can bid for offshore in Romania – we can also bring them under the fund’s umbrella, not alone but in cooperation with other investors here.

Is KMG doing any offshore developments at group level?

At the moment we’re concentrating all of our offshore activities in the area of the Caspian Sea. The proven resources in the Caspian Sea are much higher than in the Black Sea.

INTERVIEW 9

Transaction timeline February 2013 – Rompetrol Group and the Office for State Ownership and Privatization in Industry (OPSPI) ink the memorandum of understanding closing the dispute over the 2010 conversion into shares of bonds in Rompetrol Rafinare issued in 2003. This share conversion aimed to partially cover a historic Rompetrol Group debt to the state budget of around USD 600 million and saw the Romanian state end up with a 44.69 percent stake in Rompetrol Rafinare, the operator of the Petromidia Navodari and Vega Ploiesti refineries May 2013 – The government passes a bill approving the memorandum of understanding concluded with Rompetrol Group; in the same month the bill is approved by the Chamber of Deputies and the Senate June 2013 – The Constitutional Court rejects the appeal of right-wing party PDL, which says the bill is unconstitutional July 2013 – Romanian President Traian Basescu asks the Senate to reexamine the bill, but his request is rejected by MPs October 2013 – President Basescu asks the Constitutional Court to analyze the bill, stating it applies solely to one company, after it was readopted by Parliament November 2013 – The Constitutional Court throws out the bill, declaring the memorandum unconstitutional January 2014 – The Government Emergency Ordinance approving the memorandum is published in the Official Gazette

This means, for us not to lose concentration on our core market and activities, we will not site activities here in the Black Sea. But who knows? Maybe if there are some interesting projects and we can bring them under the umbrella of the fund… In my view, offshore projects are more expensive than the fund itself so it can be done with what is in the fund and with other business arrangements.

How is the fund structured and who are its backers?

The fund is set up like this: you have initial equity capital funded by KazMunaiGas, and is stated that it will be USD 150 million. Based on this initial capital, we will raise financing, which means bank loans, (e.n. investment) institutions, equity investors and some other types of investors, which will help us to build the fund up to USD 1 billion.

Have you drawn up a scenario in case KMG International fails to buy back the 26.69 percent stake in Rompetrol Rafinare?

In our opinion, it will not be our failure, so if the government can raise

“The initial projects that will be started have a value of roughly USD 350 million and we think we can easily operate other projects for the value of the total investment fund” Azamat Zhangulov, senior vice-president of KMG International

more money why not sell for a better price? But it is really doubtful that somebody could bid and execute the bid, because we cannot understand the business reasons of a company that could come and bid for the 26.69 stake.

But if the deal collapses, you are not going to invest up to USD 1 billion in Romania?

Frankly speaking, the investment projects are our idea so we can do them depending on the business stats.

Today we have elaborated a very good mechanism to implement this type of investment for the benefit of the Romanian state, which gets 20 percent of this project.

Of course, everything, as in every investment, depends on the investment plan, on the ease of doing business, and so on and so forth. These are issues that we cannot control. We hope and believe that Romania is a good place to make investments because it is rich, has good people, good resources, is situated very well near the Black Sea, and so it is full of opportunities.

We cannot say that it is the only set-up to do something. The set-up we have identified here is, we believe, the best one in favor of both parties, and we do not think it is beneficial to anyone to destroy this set-up.

But we also have to keep in mind that our life is not just Romania or Kazakhstan.

The world is big enough for other investment opportunities and we, as an international company, are not focused just here – the horizon is much wider.

Currently, the best investment projects in KazMunayGas’s portfolio are in Kazakhstan. They are the most efficient, with better yields, let’s say, so you can easily get through the approvals process. Kazakhstan ranks well for doing business and in other indexes. There are other countries in these indexes which are also attractive for investments, so we are always looking for different countries for opportunities. We would like to put this here.

How much has KazMunaiGas invested in Romania?

Up until now, the total value of investment in the infrastructure, meaning physical assets upgrades, buildings, and so on and so forth, is USD 1.2 billion.

How has the new fuel excise of EUR 0.7 percent liter that was rolled out this April impacted your sales?

Fuel sales in Romania have been affected to a certain degree. In April alone, the local market dropped 11 percent (e.n. against the same period of last year for KMG International sales), and compared to May it is down 4 percent, but that is still a big drop, which affects not only the sales but also the margins.

USD 200 mln the amount KMG International is ready to bid to buy back the 26.69 percent stake in Rompetrol Rafinare from the government

USD 1.2 bln the amount KazMunaiGas has put into local infrastructure

It is just our assumption but we do not think that this is different from the other companies because in the first five to seven days of April there was almost nothing (e.n. in sales) because everybody had bought their fuel on the last day of March.

How do you expect your sales to do by the end of this year?

Our sales plan is higher than last year and we think that we will execute it.

We have high hopes for the agricultural campaign, summer and other seasonal improvements. We believe that the 3.9 percent GDP growth in the first quarter is going to generate more business activity. ovidiu.posirca@business-review.ro

www.business-review.eu Business Review | July 14 - 20, 2014

10 PROPERTY

How IT is driving up the local office market More than half of the demand for office space in the first semester came from IT and telecom companies. The skilled labor force, lower operating costs, state aid and tax exemptions available to them are expected to further fuel this trend, according to real estate pundits.

Courtesy of Genesis Development

Gateway from the West: Bucharest’s West Gate office complex has seen interest from foreign IT firms from the very beginning

∫ SIMONA BAZAVAN, OTILIA HARAGA Outsourcing company Luatel announced last week that it had signed a leasing contract for 860 sqm in the Cubic Center office project in Bucharest.

This is only the latest such office transaction since the beginning of the year in Romania and more should follow, judging from what market representatives say.

The entire CEE region has been benefitting from a wave of outsourcing and IT companies arriving over the past few years, attracted by lower costs, a versatile labor force and overall improving economic performances. Of these, Romania can offer at least the first two

and at more competitive costs than the region’s leaders, Poland and the Czech Republic. With a growing sense that these two markets are heading towards saturation and becoming too expensive, the local market emerges as an increasingly attractive destination.

Office market pins hopes on IT Approximately 130,000 -135,000 sqm of new office space should be delivered this year in Bucharest. This is below the average volume over the last decade, Razvan Iorgu, managing director of the local CBRE office, told BR. “Given the solid and stable growth of demand over the last six-eight quarters, there is reason enough for there not to be a surplus in the market,” he added.

And IT companies are the main Indeed, some 60 percent of the new stock was already leased at the end of players fueling this new demand. Over the first semester, Mihaela Galatanu, one third of last year’s office transacresearch specialist at DTZ Echinox, told tions involved IT firms, as did about half of those closed this year, said Iorgu.

BR. Compared to the first semester of “These companies represent an essential last year, demand for new office space factor in the increasing interest in – renegotiation transactions not in- the local office market. What’s most cluded – was up by 25 percent in the important is that they have very thorfirst half of 2014, she added. “We’re ough plans and are looking to expand seeing two new trends this year. First, their offices over the next three to five relocations from class C office space to years.”

A good indicator that there is growclass A and B were up by 35 percent, and secondly, new demand, coming ing interest coming from such players from new entrants on the market and is the fact that the office stock is going expansions, reached a record level in up not only in the capital, but in the H1. It represented about 30 percent of other main cities too. “Bucharest, in the total demand so far,” Galatanu said, particular, but more recently the main stressing that the trend is expected to secondary cities as well, offer efficient office spaces, located in easily accessicontinue.

www.business-review.eu Business Review | July 14 - 20, 2014

PROPERTY 11

International players home in on local market Bucharest comes right behind leaders such as Prague, Budapest, Warsaw or Krakow in the preferences of intrnational IT and outsourcing players, offering obvious cost advantages.

According to a 2013 McKinsey report entitled A New Dawn: Reigniting Growth in Central and Eastern Europe, the average hourly wage of core-CEE markets is 75 percent less than in the EU-15. In Bulgaria and Romania it is 90 percent lower, undercutting even China.

However, the expansion of the industry within the region is not entirely cost-driven.

Romania stands to gain a large slice of the O&O (outsourcing & offshoring) industry in the future, predicts the Colliers International report Outsourcing and Offshoring in CEE: A Rapidly Changing Landscape. “In time, we believe it is inevitable that certain lowercost functions will either be made obsolete through new technology and automation or move to other emerging O&O lower-cost locations such as Romania, Bulgaria, Serbia and Ukraine.

All these locations offer large technical and language-skilled labor pools and attractive modern office space at much lower wages and overall costs than their more experienced peers,” states the Colliers report.

Bucharest office rents range from EUR 16-18/sqm/month for class A+ office space located downtown to EUR 811 /sqm/month in office parks on the city’s outskirts, according to CBRE data.

A regional comparison found that in Warsaw a company pays EUR 1415/sqm/month in a peripheral area, while in Bucharest it would only have to shell out around EUR 9-12/sqm/month, said Galatanu.

Outside the capital costs are even more competitive and the supply of class A office space is on the rise.

“The many support businesses that are now entering Romania, as well as the growing operations of companies that already have a local presence, indicate a net growth in demand for the next half year. The bulk of transactions in the first half of 2014 were pre-leases, which are going up,” said Laura Berezitchei, associate in office & commercial

Photo: Mihai Constantineanu

ble areas and at a good quality/price ratio,” Liviu Tudor, president of Genesis Development, which owns the 150,000 sqm Novo Park and West Gate office projects in Bucharest, told BR. Even if Bucharest continues to take the lion’s share of new companies entering the market and new office developments, things are moving in the rest of the country as well. For example, Cluj-Napoca, the second most dynamic office market after the capital, will see its stock of modern office space grow by half again this year and the next to a total of more than 150,000 sqm. And this is mirroring the growing demand, developers say.

School of thought: IT firms mine universities for talent

at Crosspoint Real Estate.

Measures taken by the state to encourage the development of the IT and outsourcing sector will also fuel this development. Romania is the only country in which IT employees’ salaries qualify for income tax and social contribution exemptions, found Accace.

Also, the government has recently approved state aid of EUR 67 million for 11 large firms in telecom, IT, customer relations and software production, which will create 3,000 jobs over the next three years.

Firms disclose their office preferences A discussion with the companies that have recently taken up new space in Bucharest’s modern office buildings reveals that cost is not the only factor in the equation.

Vodafone, for instance, needed to start activity quickly, and planned its search accordingly. “We selected this location because it offered all conditions to begin activity at the center in record time of approximately three months, for the customer relations part.

One key condition for us was that the building had connectivity to the Vodafone internal network,” operator officials told BR. For the design of the new Vodafone Shared Services (VSS) center hosted in the Avrig Business Center in Bucharest, the company collaborated with various local partners, architects and designers.

Game developer King paid more attention to the size of the space. “We were first of all looking for a generous space, and the surface we occupy in Opera Center is 1,700 sqm. Second, we wanted an office located in Bucharest’s city center that was easily accessible, irrespective of the means of transportation preferred by our employees,” Mihai Sfrijan, head of studio at King Bucharest, told BR. Designed by architect Ana-Maria Voinescu, the office provides communal interaction spaces, relaxation spaces, which include a green area with hammocks, swings and beanbags, gaming spaces including a ping-pong

tion. Orange, for instance, will move into an upgraded space in Green Court Bucharest which will also include dedicated spaces for individual calls, meeting rooms with audio-video systems as well as an informal communication area, on top of what the firm already had – the training center, meal hall and parking.

“Apart from the newly available technologies that ensure natural light for a longer time, the recirculation of water, air freshening and keeping an optimum temperature, other important factors were the proximity to a subway station, the space where the teams are hosted, as well as the additional space that serves their various needs,” Orange officials told BR. “The market has developed a great deal over recent years and employers understand that, in order to be successful, the team needs to be satisfied and motivated, and new real estate projects include more and more benefits for employees,” they conclude.

table, game consoles, a spacious kitchen, discussion spaces, personalized meeting rooms and a library. “We recreated the atmosphere specific to the King games,” said Sfrijan.

What sort of offices do develXerox, which has relocated to the opers say IT players want?

Hermes Business Campus, was looking Location, easy access to public transfor well-partitioned spaces that could portation – the metro in particular – host all the departments in the HQ, a monthly costs, available surfaces, ennew modern building, parking places, ergy efficiency and the developer’s and more showroom space and archive property management supplier’s backspace. ground are and will continue to be imAccessibility was also an issue. The portant factors for any company company wanted a location that of- looking to rent office space. In order to fered easy access for customers and increase employee productivity, firms employees, either using personal or are also paying increasing attention to public transportation, especially imme- factors such as the availability of natudiate access to the subway, Gabriel Pan- ral light, noise levels and air quality, telimon, country GM of Xerox Romania, Sheila Giafer, commercial director of told BR. the recently delivered Green Gate office Deutsche Bank also wanted a site for project in Bucharest, told BR. its technology center in Upground But when it comes to firms active in Business Center, that was easily acces- outsourcing, telecom and IT in particusible, located in Bucharest’s IT hub, lar, their list of requirements is more close to metro and bus stations, and specific, say developers and real estate with sufficient parking space, DB offi- agencies. “Their demands have always cials told BR. been high and have somehow set a “The work rooms are designed to fa- standard for the market,” David Hay, cilitate teamwork and collaboration be- CEO of AFI Europe Romania, told BR, tween all employees, 400 sqm of scrum stressing that in general, companies area offers creative possibilities every- now have great expectations from the where, the media centers are a perfect offices they work in. place for sharing ideas, and the SmartGood technical infrastructure is Boards – among the few in the country vital, meaning that secure and high – allow for local and international de- performing electrical and internet netsign and knowledge sharing,” say DB works above everything else are a must. officials.

“Some mandatory requirements include Upgraded facilities are a way for a high capacity generator able to back companies to increase team satisfac- up operations, high electrical capacity

www.business-review.eu Business Review | July 14 - 20, 2014

12 PROPERTY

Courtesy of Green Gate

Bright spark: tech firms stand out for their innovative and original spaces

(50 watts/sqm, against usual consump- cient buildings with BREEAM or LEED tion in an office building of approxi- certifications, added Tudor.

But even when leaving aside spemately 30 watts/sqm) and new generation BMS (building management cific requirements, and looking at facservice) able to monitor and control the tors such as location, an important functionality of the building,” said Gi- factor for any potential tenant, the deafer. Another technical specification, mands of companies active in IT go begiven the high number of employees yond the standard easy accessibility. such offices usually accommodate, is “There is fierce competition in this inthe availability of the latest HVAC sys- dustry to attract skilled people and this tem technologies in order to provide makes IT companies very sensitive to proper ventilation and fresh air in the projects that let them offer their employees the best available working conspace, she added.

The surface of the space for rent and ditions in terms of location, access to its flexibility are other specific require- sports facilities and restaurants and ments. “Multinational companies ac- even the office building’s prestige tive in these industries are looking for which is given by location, size or degenerous and efficient spaces, of over sign,” said Sandor.

The proximity to university centers 1,000/sqm per floor, which allow easy customization, including the creation is another advantage, according to Hay. of special areas for socializing (…). Be- “Accessibility on public transportation is cause they expand rapidly, such com- very important. But these companies panies prefer office parks where they have something in common – they recan rent additional space as they grow cruit massively from the Polytechnic University; therefore they prefer a locatheir business,” added Tudor.

In addition to large surfaces which tion that is close to it,” he outlined.

As demand from companies active enable companies to bring all their employees under the same roof, flexibility in IT, outsourcing and telecom has a in using the available space is impor- major share in the overall leasing activtant, other market representatives ity both in Bucharest and outside the agree. Here, floor layout becomes cru- capital, their requirements are shaping cial for space efficiency. “Usually these the office market in more ways than the companies are looking for areas/floor of new stock volume.

Developers are customizing new ofover 1,500 sqm. The floors should be designed in order to accommodate one fice buildings to fit these requirements, person per 10 sqm, or even lower, one but owners of older projects are investperson per 8 sqm in some cases,” said ing in modernization as well. This trend developed especially after pre-leasing Giafer.

And it is not all about partitions. activity began to pick up in 2011-2012, “The space should be original, and according to Galatanu.

“In general tenants are more and its layout must reflect as well as possible the ‘agile’ working concept IT more informed when it comes to office companies have,” Romanian business- buildings’ quality because they have man and real estate developer Ovidiu started to understand the impact this Sandor told BR, adding that one ele- has on occupancy cost efficiency,” she ment that differentiates IT companies concluded. from the rest is the original, creative and playful dimension their offices Moves reflect company have. strategy In addition to all this, IT firms are Relocation or the lease of additional also more likely to opt for energy-effi- space is a consequence of careful excient buildings. As the office market is pansion plans that are delineated in the maturing, increasing importance is strategy of these companies. being given to developing energy-effiOnline retailer eMag, part of Naspers

Group, announced a new investment project, the eMag IT research software development center, which will be located in north Bucharest. The project, set to create 203 jobs, is part of the retailer’s strategy to expand in Europe. eMag estimates that over 2014-2021, the center will contribute EUR 25.8 million to its regional development.

At the end of June, the company received state financing of EUR 6.65 million for the project.

“At the moment, we have approximately 800 employees, of whom 150 work in the IT department. By the end of the year, we aim to exceed 1,000 employees,” Tudor Manea, VP, HR and technology director at eMag, told BR. Apart from its headquarters in the north of the city, which hosts employees in the IT, HR, development and callcenter departments, eMag also has a showroom and two delivery points in Bucharest and nine showrooms across the country in Brasov, Cluj, Constanta, Craiova, Galati, Iasi, Oradea, Ploiesti and Timisoara, added Manea.

Just two weeks ago, telecom operator Vodafone Romania inaugurated its new shared services (VSS) center in the Avrig Business Center in Bucharest, which will cater for Vodafone operations in five countries, as well as for the group.

“The VSS covers two floors. As the company headcount grows, we will extend the space we occupy. Of course, we are considering a second location for the center, if and when need be,” company officials told BR. For the VSS center, Vodafone received EUR 8.2 million of state aid.

“The design of the two floors and equipping them up with computers up to a 30 percent capacity, which corresponds to the current number of employees, has so far cost EUR 1 million.

The total investment in the center will exceed EUR 6 million for the first three years for all 2,000 employees,” said Vodafone officials.

When it moves into a new HQ next year (ed. note: Bucharest One Office Tower, according to Ziarul Financiar), Vodafone intends to gather its Bucharest operations in one space, company officials said.

In May, Deutsche Bank officially inaugurated the DB Global Technology (DBGT) center in Bucharest, the bank’s first such center in South-Eastern Europe. The DBGT, which has been operational since January, develops software for the bank’s global operations. Its headcount is expected to reach 200 by the end of the year, and it will create an estimated 500 IT&C jobs by the end of 2016, DB representatives told BR. DBGT is located in Upground Business Center in Pipera, occupying 6,000 sqm on two floors.

“Choosing Bucharest as the location for the DB Global Technology represents recognition of the significant talent resources our country has,” Marian V. Popa, head of DB Global Technology, told BR.

Also in May, technology company Oracle inaugurated its new green headquarters in Floreasca Park in Bucharest, which have the capacity to accommodate 2,500 employees. “Our expansion in Bucharest signals our success in the region,” said Safra Catz, president of Oracle Corporation, during the inauguration event.

The new headquarters consolidate two other Oracle locations in the area.

The company also has offices in Nusco Tower.

Other players in the industry are relocating their headquarters to make room for larger teams or for efficiency purposes. Outsourcing company Luatel announced last week it was relocating its HQ to Bucharest. Via Crosspoint Real Estate the firm has rented 860 sqm in the Cubic Center building in Pipera, owned by Liberty Management.

The outsourcer has leased the space for five years and has the possibility to expand onto the second floor of the building.

“Luatel’s development plan over the next five years is to expand operations in Romania. The inauguration of a new headquarters in Cubic Center is the first step. Luatel also aims to expand its operational team from 500 employees globally to 3,000 over the next two years,” said Swen Philippe Moritz, CEO of Luatel.

Elsewhere, Xerox Romania announced it would be moving into a new headquarters close to Pipera subway station, in the Hermes Business Campus, developed by Properties Investment, on June 30. The company has rented the second floor of the building for the next seven years.

“The new headquarters will host a team of 100 employees across all departments, from sales and customer relations to support operations,” Gabriel Pantelimon, country general manager at Xerox Romania, told BR. Also in June, telecom operator Orange Romania announced that it would be relocating its Bucharest teams, numbering 1,500 employees, to a new HQ this fall. The operator has rented eight floors in the first building of Green Court Bucharest, the class A office project developed by Skanska.

“The new headquarters will host teams that until now were working in four different facilities,” Orange representatives told BR, adding that the new HQ will highlight the Orange organization culture.

Electronic games developer King also announced in June it had relocated its Bucharest headquarters to Opera Center.

“The relocation of the headquarters came as part of the strategy to expand the local headcount. At the moment, the King Studio in Bucharest numbers over 100 employees, and the old space was too small. We plan to grow the team to 130 employees in the coming years,” Mihai Sfrijan, head of studio at King Bucharest, told BR. The lease contract was signed for five years, and can be prolonged.

www.business-review.eu Business Review | July 14 - 20, 2014

PROPERTY 13

PARTNER CONTENT

Office Building AFI Park 4&5 Commenced Construction, to be delivered Q4, 2015

AFI Park 4&5, the 4th phase of the award winning office project AFI Park, has commenced construction, targeted to be finalized in Q4 2015.

AFI Park, linked to AFI Palace Cotroceni shopping mall, features the biggest complex of retail and business in Romania and one of the largest in the CEE. The complex, consisting of 5 Class A office buildings totaling 65,000 sqm GLA and the shopping mall of 81,000 sqm GLA, enables the perfect combination between business and personal lifestyle, a work environment which meets the modern lifestyle sought after by the IT generation (“Generation Y”); an all in one efficient, time saving, immediate location.

The first office building, AFI Park 1, with 12,250 sqm of leasable area, is 100% leased to top multinational corporations. During April 2014 AFI Europe handed over AFI Park 2 with 12,200 sqm of GLA

(99,5% occupancy) to Electronic Arts.

AFI Park 3, which is due to be delivered in December 2014, is already 40% pre-leased to UK held IT company Endava Romania.

AFI Park 4&5 shall be constructed as one building served by two lobbies. The building has a total of 32,000 sqm leasable area spread over 11 floors of offices served by 2 underground parking levels and a ground floor providing retail space. The building will offer a floor plate of 3,000 sqm.

Current leasing negotiations have commenced.

AFI Park 4&5 will offer the same superior technical specifications as the other three buildings of the project which includes, amongst others, an electricity supply line that is powered by 2 high voltage sub stations which assures double backup if needed and in addition, a backup generator of 2,000 KWH, thus ensuring uninterrupted business operations to the tenants.

AFI Park 4&5 has been conceived and developed to the highest standards demanded by multinational corporate occupiers, including technical

specifications such as: 4-pipe HVAC, suspended ceilings, raised floor, 2.75m finished clear height, curtain glass façade and open able windows.

The floor layout ensures full flexibility to multinational occupiers while maintaining efficiency and low operating costs.

True to its commitment for respecting the environment by increasing the energy efficiency, the building shall be LEED Gold certified for Green Building.

AFI Park manages to answer the expanding requirements of IT&C companies in Romania by offering the suitable space in terms of technical specifications and expansion needs within the expected timeframe, consequently positioning the office complex as the major IT&C HUB in Bucharest.

AFI Park enjoys excellent accessibility, visibility and unrivalled public transport access, which is key for occupiers in traffic congested Bucharest, with two metro stations (two lines, of which one is under construction) within walking distance as well as 12

different tram and bus lines with stations in front of the Project. Furthermore, the well-developed infrastructure ensures excellent multimodal connectivity with all parts of the city.

AFI Park enjoys very high occupier demand as tenants, especially those with engineering or IT profile, increasingly target the Center-West office market because of the presence of the Technical University, which is a key recruiting pool.

Being regarded as one of the leading office projects in Bucharest and the anchoring project for the market, AFI Park has secured a highly prestigious occupier lineup including Cameron (US, oil services), Electronic Arts (US, video gaming), Endava (UK, IT) and Microchip Technologies (US, IT).

AFI Park is Developed and managed by AFI Europe, an experienced and stable international firm operating across the CEE/SEE with the necessary track record in Serbia, Czech Republic, Bulgaria, Poland and Romania.

www.business-review.eu Business Review | July 14 - 20, 2014

14 PROPERTY

Courtesy of Genesis Development

“The costs are in the range of hundreds of thousands of EUR, but we believe it is a long-term investment that is justified first of all by the positive feedback from employees and the working atmosphere,” Sfrijan added.

Other companies are sticking to their current workplace, but taking up additional space. Romanian app developer Zitec announced in June it was expanding its headquarters to the sixth floor in the Phoenix Tower office building, on top of the 920 sqm that it had had on the fifth floor since summer 2012. In total, the two floors will cover over 1,750 sqm. The working space per employee is above 10 sqm.

This fits Zitec’s plans to expand its team. The new space will also allow the company to take another 150 people onboard. “In 2013, the team grew by over 50 percent, to a total of over 90 software specialists, and this year we will continue recruitment to reach 120 people,” said Florentina Greger, HR manager at Zitec.

2014 office roundup Some 95,000 sqm of office space was delivered in Bucharest in the first half of this year, approximately 15,000 sqm more than the figure reported in the same period of 2013.

The biggest office scheme to be delivered so far in Bucharest this year was the 31,000 sqm Green Gate project by Czech real estate developer S Group, following a EUR 57.5 million investment. It was delivered in May with an occupancy rate of about 60 percent.

The project’s main tenant is local IT company Teamnet, which has leased around 10,000 sqm for its 600 employees for a seven-year period. Other tenants include Mapei Romania, Teaha

Partition preferences: companies like flexible spaces that they can arrange to suit their individual needs

Management Consulting and Fujitsu Siemens. The developer estimates that the building will be fully leased in about a year, but in the meantime it is looking to buy more land in Bucharest for another office project, said Vladimira Novakova, managing director of Green Gate Development. She is confident that Bucharest’s office market will further expand, with demand being mostly fueled by outsourcing, call center and IT companies.

And S Group is not the only developer to pin its hope on a growing wave

of players from these industries entering the local market or expanding their local operations. AFI Europe completed the second building of its AFI Park office project in April after having pre-leased almost the entire 12,200 sqm GLA to American IT player Electronic Arts. The office scheme is located near the AFI Palace Cotroceni shopping mall and when completed it will feature five buildings totaling approximately 60,000 sqm. The third building, which will be delivered in December, will add another 12,200 sqm

2014 OFFICE DEVELOPMENTS Project name

Developer

Surface

Location

Occupancy Main tenants rate

Completion date

Green Gate

S Group Holding

31,000 sqm

Chirigiu Square

60%

May

City Offices

Globalworth

27,000 sqm

NA

Green Court Bucharest

Skanska

19,500 sqm

The Office

NEPI/Ovidiu Sandor

19,000 sqm

Eroii Revolutiei Square Barbu Vacarescu Floreasca Cluj-Napoca

Hermes Business Campus AFI Park 2

Atenor

18,000 sqm

Pipera

85%

AFI Europe

12,200 sqm

AFI Park 3

AFI Europe

12,200 sqm

United Business Center Tower Metropolis Center

Iulius Group

10,000 sqm

Polytechnic University Polytechnic University Cluj-Napoca

Soravia

5,500 sqm

Center

Source: BR data

90%

Teamnet Group, Versa Puls Media, Mapei Romania, Fujitsu Siemens NA

Q1

Orange Romania, Schneider Electric Romania Yardi, Three Pillar, Deloitte Idea Bank, Xerox

Q4

100%

Electronic Arts

April

40%

Endava

December

NA

NA

H2

35%

NA

May

50%

May April

GLA out of which 40 percent has been pre-leased to British IT company Endava. Construction of the last two buildings, which will total 32,000 sqm of GLA, started in April.

Another office scheme to be delivered later this year is the first phase of Skanska’s Green Court Bucharest project. It has a leasable areas of some 19,500 sqm, of which 13,700 sqm have recently been pre-leased by Orange Romania. Schneider Electric Romania is the second tenant, having pre-leased another 3,100 sqm. Another two similar buildings will be raised as part of the same project and will add to total leasable are of 52,000 sqm.

The developer has invested EUR 46 million in the construction of the first building and the foundation of the second one, which should be completed

by May next year. Confident in the growth potential of the local market, Skanska is also looking to buy more land for a new office project and “is likely” to close a land transaction by year-end, company representatives have previously stated.

Whether the developers’ optimism is justified and recently delivered office projects do indeed get fully leased within a reasonable period of time remains to be seen. Around 15,000 people can work in the 130,000 sqm of office space expected to be delivered this year in Bucharest, estimates Tudor. However, fully leasing this entire surface remains a challenging endeavor in the present climate, he warns.

If it does happen, it will spell good news not only for the local real estate and IT industries, but for the entire economy. simona.bazavan@business-review.ro otilia.haraga@business-review.ro

www.business-review.eu Business Review | July 14 - 20, 2014

H C N FRE T N E M T S INVE W E I V RE 2014

Companies from France, Romania’s main trading parter, have put over EUR 7 billion into the local economy and are looking to increase it  overleaf

www.business-review.eu Business Review | July 14 - 20, 2014

16 FRENCH INVESTMENT

French companies grappling with ingrained local issues Unpredictable regulation and poor infrastructure are among the key issues faced by French companies in Romania, whose direct investments in the country reach roughly EUR 7 billion. French investments span the sectors and have registered an uneven performance in the aftermath of the financial crisis, but investors are pinning their hopes on the gradual recovery of the local economy. ∫ OVIDIU POSIRCA According to the French Chamber of Commerce and Industry in Romania (CCIFER), there were over 3,500 companies with French capital that were active locally last year. The French presence in Romania is prominent in the banking, automotive, telecom, retail and energy sectors.

Manuela Furdui, managing partner of Finexpert, a tax consultancy firm, says that French firms have to deal with a lack of predictability and instability of decisions with a fiscal impact.

Finexpert has been working with French companies for over 10 years, providing services in the tax field, ranging from accounting to consultancy on accessing state aid.

She told BR that some of the French clients in the firm’s portfolio said they faced a rigid administrative system and lengthy decision making in important processes that impact businesses.

“One such example is the reimbursement of VAT where months or even years are required for a solution, with the process being blocked largely due to issues related to the form and not the background (e.n. of regulation),” Furdui told BR. She added that French companies are still attracted by the flat corporate tax rate of 16 percent, which is a competitive advantage for Romania against other EU member states.

At present, 35 percent of Finexpert’s portfolio of clients are French companies that are mainly active in the automotive, IT and agriculture sectors.

Financial sector seeks growth BRD Groupe Societe Generale, the second biggest lender in Romania by assets, returned to the black in the first quarter of this year, reporting a net profit of RON 37 million, mainly due to lower risk costs. The bank said, however, that demand for new loans in the corporate segment remained subdued.

The lender registered a slight increase of 1.3 percent in gross loans to individuals, while mortgages rose 16.5 percent on the back of the Prima Casa program (the government-backed mortgage scheme for first-time buyers).

BRD’s level of non-performing loans (NPLs) amounted to 21.8 percent, which

1

2

3

4

5

6

1. Anca Roscaneanu, general manager of Gras Savoye Romania 2. Jean-Francois Fallacher CEO of Orange Romania 3. Andreea Mihai, marketing director of Carrefour Romania 4. Nicolas Maure, president and general manager of Dacia and general manager of Renault Romania 5. Manuela Furdui, managing partner, Finexpert 6. Philippe Lhotte, chairman and CEO of BRD Groupe Societe Generale was in line with the banking system average.

Philippe Lhotte, chairman and CEO of BRD Groupe Societe Generale, said the lender was ready to assist all companies investing in Romania, including French ones, no matter what economic sector they belong to. Lhotte said that the economic framework in Romania was improving, mentioning the good macroeconomic indicators, low interest rates and stable currency. “What the economy needs now is sustainable and significant growth, on one hand, and more confidence, on the other. I think the banking system is continuing to recover from the very difficult period it has experienced over the last few years and that it is well prepared to resume financing the economy better,” Lhotte told BR. He added that BRD aimed to grant more loans, noting that the lender was seeing “slightly growing demand” in both the retail and corporate segments. The banker said that SMEs remain a priority for financing.

Meanwhile, Cetelem, the consumer loan provider that is part of BNP Paribas Personal Finance, announced last month that it had granted over 1 million loans in Romania. The company said that its clients used the loans primarily to upgrade their homes, purchase a car or pay for a vacation.

Elsewhere, the insurance market will post slight growth this year, sustained primarily by the increase of motor vehicle liability insurance (MTPL) premiums, according to Anca Roscaneanu, general manager of insurance broker Gras Savoye Romania.

“At the same time the mediation insurance market will maintain the growing trend, coming mostly from the retail business,” she told BR. The company mediated around RON

35.7 million worth of premiums in the first half of last year and this year has reported a 6 percent gain in income. Gras Savoye aims to increase its turnover by 15 percent this year against 2013.

The insurance broker is currently working for about 300 large and medium-sized enterprises, with less than half of them having French ownership.

Roscaneanu said the company has registered increased demand from the industrial extraction sector, as well as from production and services, software development, transport, trade and postal services.

French insurer Groupama reported a reduction of 11 percent in gross written premiums last year to RON 718 million against 2012. The company said the drop was triggered by the voluntary decrease of its exposure in the segment of mandatory car insurance, RCA. Francois Coste, general manager of Groupama Romania, said in a statement that the insurer was looking to return to the black this year, pointing out that it reported a profit in the first quarter.

In the past year, the market for valoric vouchers has remained flat, but it should expand at an annual rate of 2.5 percent in the years to come, close to Romania’s GDP growth, said Jean Istasse, CEO of Sodexo Benefits & Rewards, a provider of this type of services.

“Meal vouchers are one of most popular fringe benefits with employers due to the direct impact on employees’ motivation and performance. This benefit is used in all sectors of activity by all categories of employers: from small ones to the biggest ones,” Istasse told BR. He added that gift vouchers are offered by companies that have over 250 employees and are active in the chemicals and metallurgy sectors, alongside

services and home & consumer goods industry. Istasse said that nursery vouchers are given to employees working in the insurance distribution, electronics and construction sectors, but the use of this benefit is still small in Romania.

“This is due to the small number of places in nurseries compared with demand. This situation would change if the usage of nursery vouchers were extended to other categories of childcare services (like child minding) needed by employees for their work-life balance,” said the CEO. He added that the company grew by 2.5 percent last year, in line with the market, but did not mention to what level.

Automotive drives Romanian exports Carmaker Dacia, controlled by France’s Renault, last year remained the biggest exporter in Romania. The company reported a 19.3 percent increase in sales to 429,540, out of which 24,890 were registered locally.

Renault took over the beleaguered Dacia plant in Mioveni back in 1999 and has turned the local company into a global car brand. Dacias are currently exported to 42 countries on four continents.

“Renault is continuing its investment projects in Romania both on the side of vehicles and mechanics. In 15 years we have invested over EUR 2.2 billion. At present, our main challenge is to improve (e.n. our) competitiveness and to do our best to satisfy our customers from the point of view of quality and delivery terms,” Nicolas Maure, president and general manager of Dacia and general manager of Renault Romania, told BR.

continued on page 20

www.business-review.eu Business Review | July 14 - 20, 2014

FRENCH INVESTMENT 17

PARTNER CONTENT

Orange leads the way in French investments in Romania Telecom company Orange was part of the first wave of French investors to come to Romania and has been growing its local presence continuously ever since.

Investments focus on network upgrade and expansion

The company has invested approximately EUR 250 million since the end of 2012, including over EUR 130 million in 2013 alone. Massive investments were made in the 4G network, in clearing the 900 MHz spectrum (reframing), as well as in the modernization of the rural and urban network.

The company focused on upgrading its entire network, with 3G+ coverage at a national level and 4G covering all large cities and surrounding towns.

Orange currently offers 4G in all county capitals of Romania. The company’s 4G network is the most extensive and fastest in Romania, being available in over 1,000 localities nationally. It already serves over 47 percent of the total population and 75 percent of the country’s urban population.

4G network backs innovation and array of digital services

The company plans to further expand its 4G footprint in the coming period.

Since the beginning of April, when the dedicated spectrum became available and Orange launched 4G services all over Romania, the company has taken another step and expanded its coverage along the entire Romanian seaside, in all resorts, from Navodari to Vama Veche.

Mobile internet consumption is continuously growing in this area, especially during peak summer season. As a result of all these actions, within a few months, the number of 4G devices in the network grew by 45 percent, reaching over 290,000.

As of May 2014, Orange customers can use 4G internet services when they are abroad. 4G roaming is currently available in four countries (Moldova, Spain, Poland and the Netherlands) and the company plans to expand it each month throughout the year.

In March 2014 the company

incorporated mobile data in all of its packages and increased the available traffic included in the subscriptions that already had Internet included.

The 4G service was recently included in all subscriptions without additional taxes, while Orange is the only provider offering 4G internet for PrePay users as well. Most Orange customers use on average monthly traffic of up to 500 MB. 4G+ is the next step after 4G, meaning mobile internet download speeds of up to 300 Mbps. 4G+ is already available in the Orange network in six cities: Bucharest, Brasov, Cluj-Napoca, Galati, Iasi and Timisoara. The technology combines two spectrum frequencies to boost the speed offered to 300 Mbps at download. Until producers introduce commercial devices on 1800MHz and 2600MHz spectrum on the global market, customers can test the 4G+ network in eight of the company’s shops in the above mentioned cities.

Convergence is the strategic direction

The company offers several applications, such as My Account, Cloud, Deezer and TV Go, accessible via all types of screen – smartphone, tablet and PC – and office solutions, and in the first half of 2014 Orange mobile app downloads significantly increased compared to the second half of 2013.

The Orange TV service

The innovative Orange TV service has been well received on the market. The highest rate of TV services usage in the Orange network is on smartphones, followed by tablets and TV sets, and 4G allows very fast access to data connections. The company expects multiscreen TV adoption to grow in the future.

How does the Orange TV service look: • Live TV & video on demand content • Access to other platforms: Antena Play & Voyo • Any connection: home, mobile, Wi-Fi • 111 channels, out of which currently 45 are HD • 26 new HD channels and 16 new channels brought to Romania • Integrated offer, one subscription for multi-screen use (TV, laptop, desktop, smartphone and tablet), anywhere, anytime • A special price for Orange clients • Subscriptions: Local HD, World HD and Universe HD Orange TV Go: three times more Orange TV Go users in May 2014 compared to September 2013.

Orange TV Go: the number of sessions tripled in May 2014 compared to September 2013.

An increase due to the availability of richer content, such as Discovery,

Disney and Filmbox channels (promotions with awards), allowing clients to enjoy these channels when they are on the go, and the dedicated Orange TV Go options.

The mobile data network allows easy access to content, regardless of the device used.

Investments bring commercial benefits

The importance of customer experience when using Orange services has been translated in the last two years into massive investments in order to offer customers a reliable and performant network. Orange 3G+ network has been extended to national coverage, while Orange 4G network has now the widest coverage in Romania. So as to help customers benefit of high speed broadband, Orange offers the widest portfolio of 4G smartphones, including 31 models for all needs and budgets, with prices starting from EUR 0.

Services and applications such as Orange Antivirus, Orange Cloud, My Account, Orange Film and Orange TV Go help clients surf the internet safely, easily manage their Orange account and access information on-line. Dedicated services, such as Orange Expert, provide the necessary customer assistance and support.

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18 FRENCH INVESTMENT

French firms relocating from Far East consider Romania Philippe Garcia, director of the economic mission at Ubifrance Romania, says that a growing number of French companies seeking to relocate their businesses from countries such as China back into Europe see Romania as a top destination. ∫ OVIDIU POSIRCA He adds that French investors looking to tap the local market see high potential in a wide array of sectors including automotive, infrastructure and agribusiness.

Garcia points out that trade between France and Romania exceeded EUR 7 billion last year and is set to grow further this year, already expanding by 9 percent in the first half of 2014.

What is your forecast for trade between Romania and France this year?

Our bilateral trade has been growing continually for a few years now, surpassing EUR 7 billion in 2013. In 2014, with the strong recovery of the Romanian economy, we expect to reach a higher level of exchanged goods. In the first six months of this year, our bilateral trade kept going up, with a rise of more than 9 percent against the first half of 2013.

How is the economic situation in France impacting French companies’ plans to venture into Romania?

As far as Ubifrance is concerned, we have one main mission: lead French companies towards fast-growing countries, as Romania has been for two years now.

What are the local sectors with high potential from the vantage point of French investors?| Automotive, infrastructure, agribusiness, luxury & FMCG, health and professional training.

2011 – present commercial counselor and director of the Ubifrance office in Bucharest 2006 – 2011 head of the ITI pole at Ubifrance in Milan 2004 – 2006 deputy head of the economic mission in Luxembourg He graduated from the Superior School of Commerce in Paris (ESCP Europe)

Photo: Mihai Constantineanu

What was the feedback from French companies following the regional economic forum organized by Ubifrance in February?

The feedback from the Business Forum is very positive. First of all, almost 80 French businesspeople coming from France had the opportunity to discover an unexpected Romania, completely distinct from the counterfeit image that usually pervades their mind: Bucharest showed itself to be a premium huge regional business hub!

Furthermore, many of them had the opportunity to start doing business with partners from Romania and 12 other countries from South-Eastern Europe.

CV Philippe Garcia

What are the challenging areas in Romania’s business environment?

Infrastructure and professional training. Their development represents the two main pillars of growth of any other activity in the country.

Have you had signals from French companies looking to further develop their operations in Romania?

A lot! In the automotive industry, agribusiness and many other sectors.

One interesting statement: more and more French companies are looking to relocate their activities from countries such as China to Europe, and Romania is one of their top destinations!

How is Ubifrance getting involved in attracting French investments to Romania?

First of all, our team is constantly in touch with the Romanian administra-

tion and institutions and obviously with the private sector, in order to follow the reality, evolution and demand on the local economy. Then we are very reactive and proactive, as Romania is a competitive market and we know very well that it is a priority in the region for our main competitors.

One of the assets of our bilateral relationship is a fine-tuned harmony between Romanian demand and French supply, in the country’s strategic economic activities: industry, banking, retail, energy & the environment, and telecommunications. In 2013, we individually coached more than 250 French companies to succeed in this market, providing them with a full range of consultancy services, in partnership with a group of the top French and Romanian experts (human resources, banks, insurers, lawyers, fiscal advisory, logistics, ad-

vertising agencies and real estate advisory). Among those 250 companies, more than 80 have already started to do business in Romania. In 2014 and 2015, we will increase the perimeter of our consultancy services to increase the penetration of French companies in the Romanian market.

Moreover, we’ll have organized nine collective events by the end of this year in order to consolidate the Franco-Romanian partnership in areas such as luxury & FMCG and in the beef sector, by transferring French know-how in livestock and supply chain structuring. This event is meant to develop the local production of premium beef for local consumption.

In brief, we are permanently connected to the market needs and always try to anticipate them! ovidiu.posirca@business-review.ro

www.business-review.eu Business Review | July 14 - 20, 2014

FRENCH INVESTMENT 19

PARTNER CONTENT

Jean Istasse CEO at Sodexo Benefits & Rewards

Electronic meal vouchers let companies and employees choose the solution best suited to their needs Over the last 16 years, Sodexo has been delivering a wide range of services in Romania, from Benefits and Rewards to, more recently, On-site Services. Through the extensive development of meal and gift vouchers and covering incentive and recognition programs, Sodexo has built its leadership in offering a unique array of Quality of Life Services.

Nowadays the meal vouchers market, on which Sodexo is a top player, is joining a global trend, by modernizing to keep up with the latest technology: electronic meal vouchers. Jean Istasse, CEO of Sodexo Benefits and Rewards, explains the main benefits of electronic meal vouchers.

Business Review: What is an electronic meal voucher?

Jean Istasse: The concept of electronic meal vouchers was introduced in Romania in November 2013. This is a non-salary card with no account attached through which companies offer their employees the individual food allowance, the most well-known fringe benefit in Romania.That technology is well known to us as we have been administrating cards in other countries for more than 15 years.

BR: Specifically, what are the main benefits of electronic meal vouchers?

JI: The vouchers will impact employers, employees and the merchants involved in the process.

Employers will get additional support on which to offer meal vouchers, and according to employees’ needs, they will choose the one that suits them best. If an employer moves to electronic meal vouchers, there is no more monthly physical distribution of vouchers to employees. On the other hand, there are new processes that will need to be managed, such as damaged or lost cards in the middle of the month. For employees, meal cards will remain easy to use.There will be a PIN code for security reasons, as the card will be used at the existing POS terminal in food shops. For merchants, the electronic meal vouchers will reduce their

logistic costs compared to paper.

BR: What will the nominal value of electronic meal vouchers be?

JI: The nominal given value of meal vouchers per day/employee remains RON 9.35, regardless of the support on which they are issued. This value is indexed regularly by the Ministry of Labor, Family, Social Protection and the Elderly.

BR: Do you think that the Romanian market is ready for electronic vouchers?

JI: The electronic meal voucher will exist in parallel with paper vouchers and will let companies and employees choose the solution that is most suited to their needs. We anticipate that electronic meal vouchers will gradually replace paper vouchers, closely following the same evolution of electronic payments in Romania. It is a pattern that we have already observed in other countries undergoing this kind of transition.

BR: What expertise does Sodexo have in this field?

JI: Sodexo has extensive expertise in this field, accounting for over 60 percent of global card volumes, and this percentage is growing every day. This will enable us to improve the service that we offer our clients and partners alike and to establish ourselves as the benchmark specialist in all matters relating to electronic meal vouchers.

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20 FRENCH INVESTMENT PARTNER CONTENT

continued from page 16

The important contribution of French companies to Romanian modernization and development

Maure said that Romania has a “big potential for investors”, adding that the issues of infrastructure and red tape need to be improved in order to convince investors to come into the country.

He said that Romanian authorities are open and have supported the company’s investments in Romania, both at a national and local level.

Renault has developed in Romania a complete production system. It includes a design center in Bucharest, the engineering hub Renault Technologie Roumanie that operates in the capital, Titu and Mioveni and two production plants (vehicles and mechanical) on the Mioveni industrial platform, as well as a trading network.

Renault Romania has 17,000 staff and reported a turnover of EUR 4.48 billion last year, accounting for 2.9 percent of Romania’s GDP. The company has generated more than 130,000 jobs in the car industry, as it works with over 1,500 suppliers locally.

Maure said that Dacia has gained 5 percent market share in Romania last year, and expressed his hopes that this year the results will be better. “The economic context should improve and create conditions for the growth of the overall market,” said Maure.

Dana Gruia Dufaut, Managing Partner at the GRUIA DUFAUT Law Office How profitable is the Romanian market and what are its most attractive sectors?

French investments are present in almost all sectors of the Romanian economy, having an important market position. 90% of the major French companies listed on the Paris stock exchange are present on this market.

I am referring namely to French big players in sectors such as banking, insurance, automotive etc. These companies enrol their investments towards sustainable profitability, on the long run, according to the French model.

Consequently, French investments in Romania have had an important role in the Romanian economy; many French companies have trusted the Romanian market since the beginning of the 90s. The attractiveness of the Romanian market was preserved during the 25 years that have passed since the revolution: a continuous potential of economic development, well oriented macro-economic indicators, qualified labour force.

How can French companies contribute to Romania’s economic growth and success?

Judging by the nature of the files handled by the law office founded by me in the early 90s, French companies’ contribution to the modernization and development of the Romanian business environment - and of the country in general, is considerable. At this point I am referring namely to the dynamic investment policies that these companies have followed, which have led them to a very good profitability, newly created jobs, professional training for Romanian employees and, in general, their contribution to the stabilization of the trade balance for export companies etc.

Moreover, French investments equally play a role in sponsoring social, cultural or sports activities, as French companies support a series of events in these areas. One must not neglect the activities of French Cultural Institutes, both the one in Bucharest and the ones in the country.

Negative aspects also exist: if some are related to business risks, others have nothing in common with business. Here I am referring to the delays in infrastructure modernization, especially with respect to roads,

railways etc. Then, Romania has to deal with many challenges, among which the most pressing seems the modernization of the administration and the credibility of the judiciary system, the agricultural reform… and I might also add a less invoked challenge: to inspire trust to its own citizens.

What type of challenges can French investors in Romania expect?

I consider that opportunities have not been exhausted in neither one of the French areas of expertise and I have in mind sectors such as services, agriculture and food or tourism. From the investors’ perspective, the existing challenges are related to the continuously changing Romanian legislation and to the perpetuation of a suffocating bureaucracy. Strategically speaking, investors, including French ones, see Romania as a profitable destination on the long run and still fiscally and operationally attractive.

You have recently been chosen as consular advisor for Romania and Moldova. Specifically, what does this position involve?

The consular advisor position was created during the reform initiated, in France, in 2013, regarding the representation of French citizens residing outside the country. Thus, according to the French law, Romania and Moldova dispose of three elected consular advisors, whose main responsibilities are to provide counselling to French citizens residing in these countries in relation to the French Embassy or consulates. These three consular advisors shall take part to the election of French senators for the diaspora.

Energy outlook disrupted by changes to regulation The government’s decision to change the incentives mechanism for renewable producers last summer has unnerved foreign investors, which have put over EUR 6 billion into this sector.

With the issue of some green certificates – the main revenue source for producers – put on hold through to 2017, investors fear they will not be able to recover their investments, according to experts.

French utility group GDF Suez has an exposure in the local renewable sector, with a portfolio of 98MW in wind capacities. Last year, the company completed a 48MW wind farm in southeastern Romania followed by a 50MW wind farm in the same area.

Experts say that wind producers are currently in the red as their revenues from the sale of one certificate and electricity are insufficient to cover their investments.

GDF Suez Energy Romania, whose main business is the supply and distribution of natural gas, last year reported a 24 percent increase in its net profit to RON 447.1 million, while turnover remained fairly flat. The company invested RON 490 million last year, out of which RON 132 million went into the modernization of the distribution network.

Alstom, the French engineering group that will be taken over by US-based General Electric, earlier this year announced plans to turn Romania into a specialized center for power and transport markets in Eastern Europe. The company aims to hire up to 50 IT specialists in the next three

years. It operates in Romania through four entities active in transport, infrastructure, grids and the manufacturing of energy equipment.

Challenging environment for dairy market French dairy group Danone, which is the biggest yoghurt maker in Romania, reported last year a net loss of RON 5 million, its first loss in the last six years.

The company’s turnover fell 5 percent to RON 481 million in 2013 against the previous year, according to business daily Ziarul Financial, quoting data from the Ministry of Public Finance.

Last year, the company was hit by flat consumption and lower consumer spending, according to Dieter Schulz, Danone’s general manager for SouthEast Europe. He attributed the results partially to the pricing of raw materials and financial hedging. The GM added that this year the dairy market will remain challenging, as consumers are still cautious, while production costs could further rise.

Meanwhile, French dairy group Lactalis closed three production units and two milk processing facilities in Romania last year, according to Ziarul Financiar. Locally, the company controls the dairy group LaDorna. It is still producing milk and cheese in Romania.

Players ring the changes in telecom The main focus on the telecom market in the past year has been the roll out of the 4G high-speed data network.

French telecom operator Orange announced this spring that it would be expanding its 4G network in 90 cities and testing 4G+ networks in six.

Orange Romania saw revenues go up by 4.9 percent to EUR 230 million in the first quarter of this year, on the back of the growing number of mobile internet users. The telecom operator had close to 10.4 million clients at the end of the first quarter.

Orange has invested around EUR 250 million in Romanian since the end of 2012, including EUR 130 million in 2013.

The operator has put money into clearing the 900MHz spectrum, developing its 4G network and upgrading the rural and urban network.

Meanwhile, telecom equipment maker Alcatel-Lucent plans to expand its headcount in Romania, although globally it will cut 10,000 jobs. The company is doing research and development (R&D) in Bucharest and Timisoara sand plans to reach 1,600 employees at the end of 2015. At present it has around 1,500 staff, half of whom are working in R&D, according to Michael Combes, CEO of the group.

He said the company has invested over EUR 100 million in Romania. The French firm reported a turnover of RON 324.8 million last year, up 27 percent against the previous year, according to data published by the Ministry of Public Finance.

www.business-review.eu Business Review | July 14 - 20, 2014

French FDI stock in Romania (billion EUR) 2007

3.75

2008

4.29

2009

4.26

2010

4.38

2011

5

2012

5.27

Source: National Bank of Romania (BNR)

Retail in expansion mode French companies maintain a strong presence on the Romanian retail scene, and judging from recent news, this presence should expand even further.

Only last week it was announced that French DIY group Adeo had bought bauMax’s 15 local stores. Adeo, which already owns a Leroy Merlin DIY outlet in Bucharest, will thereby further increase its local footprint.

Older players present on the local market, such as Carrefour and Auchan, have also continued to invest locally, despite the fact that in general sales have stagnated or even dropped.

Carrefour’s sales inched up last year to a level similar to the one posted in 2008, although the retailer has ex-

FRENCH INVESTMENT 21 panded its network in the meantime. It opened 52 stores in 2013, out of which only one outlet was a large-scale hypermarket, and focused instead on opening smaller supermarkets and proximity stores.

In addition to the traditional expansion, last year Carrefour also became the first local large FMCG retailer to venture online. It opened its online store last July, confident that although online grocery sales are still subdued in Romania, the local market will “burn phases” over the next year and their share of total grocery sales will surpass the average on Western European markets.

At present the retailer runs a network of 150 stores in Romania: 25 hypermarkets, 80 supermarkets, 44 proximity stores and one online store.

But the French firm wants to further expand its local presence. In April it posted a recruitment ad for the new Supeco stores it plans to open in Romania.

Supeco is a retail brand present so far only in Spain where it was launched last year. Four stores have opened since.

The concept is a mix between a discounter and cash&carry store.

The Carrefour Group reported a turnover of RON 5.1 billion in Romania last year, while its net profit reached close to RON 140 million. Company representatives said the estimates for this year were confidential.

“The retail market showed signs of recovery in the first half of 2014, which

makes us optimistic regarding the next semester,” Andreea Mihai, the retailer’s marketing director, told BR. She said that Carrefour plans to open two new hypermarkets this autumn, one in Bucharest, on the Vulcan platform, and the other in Targu-Jiu. “Domestic demand is growing, most probably as a result of the slight increase in the minimum wage and low inflation. The labor market has also registered an improvement – the unemployment rate has gone down and the number of advertized jobs has gone up,” said Mihai.

But it was Auchan that was the most active French retailer in Romania by far last year. After officially taking over the 20 Real hypermarkets it bought from the German Metro group as part of a regional deal, it increased its local network to 31 outlets.

The company thereby more than doubled its turnover last year to RON 4.6 billion (approximately EUR 1 billion), but also reported a EUR 15 million loss.

It now hopes to reach breakeven this year or the next, according to company representatives.

And Auchan has more investment plans for the local market. It has allocated an investment budget of some EUR 100 million this year, which, in addition to the money used for the rebranding of the remaining Real hypermarkets, will go into Auchan Drumul Taberei, a project that will feature a

hypermarket and office space in Bucharest, and works on the EUR 60 million Coresi Brasov, the shopping center being developed by Immochan, the real estate division of Auchan, in Brasov.

Besides all this, Auchan has also recently reached an agreement to buy the space that formerly hosted 12 Real hypermarkets and shopping gallerias, according to media reports.

Merger cements market The proposed merger of cement giants Lafarge and Holcim will also require divestitures as the companies seek to receive anti-trust approval to seal the deal.

According to business daily Wall Street Journal, the firms plan to shed plants and businesses that generate more than USD 4 billion in revenue.

Most of the proposed divestitures will be made in Europe. Under this plan, France’s Lafarge is set to sell its assets in Romania, according to the WSJ. Lafarge Romania has two cement factories in Medgidia and Hoghiz. It also owns a division for aggregates, concrete and additional services.

The firm holds a 30 percent market share in Romania, similar to Swiss Holcim and Carpatcement, which is part of German HeidelbergCement.

The Romanian cement market is estimated to be worth around EUR 600 to 700 million (7 million tons). ovidiu.posirca@business-review.ro

22 FRENCH INVESTMENT

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www.business-review.eu Business Review | July 14 - 20, 2014

FRENCH INVESTMENT 23

Romania’s economic growth to woo more French investors Eric Faidy, president of the administration council of the French Chamber of Commerce and Industry in Romania (CCIFER), whose members have a combined turnover of EUR 19 billion, says that Romania is on the watchlist of French investors, given the 3.9 percent expansion of its economy in the first quarter of this year. ∫ OVIDIU POSIRCA

CV Eric Faidy

He predicts more French investments in IT, agriculture and industry, adding that the country needs enhanced infrastructure and stable regulation to remain attractive for French capital.

What are the main challenges for French investors that have businesses in Romania?

They are interested in the enhancement of Romania’s competitiveness from the point of view of the quality of human capital, the innovation level in productive sectors and the diversification of services.

Romania will continue to be attractive for investments provided that it develops an economy that generates added value while being innovative and durable.

In this context, fiscal and legal predictability, investments in education, the improvement of infrastructure and a strategic approach to economic growth are all essential factors in maintaining Romania’s attractiveness.

He graduated from the Faculty of Commerce. crease in the number of French investments in Romania, in various sectors, mainly industry, agriculture and IT.

Courtesy of CCIFER

How has the business environment evolved in the last year from CCIFER’s perspective?

The CCIFER produces an analysis of the economic situation on a quarterly basis – the Barometer of Economic Conjuncture. It is carried out among managers of companies that are CCIFER members and aims to gauge the sentiment and confidence of member companies, indicating at the same time the short-term perception of the Romanian-French (e.n. investment) community of the local business environment.

The barometer from November 2013, which involved 150 managers of CCIFER member companies, was a retrospective of the whole year and showed a generally positive trend, indicating the most optimistic value since the start of the survey last year.

This result was especially determined by the economic performance of the analyzed companies and gave an optimistic view of the economic perspectives, capturing the positive perception of Romania’s attractiveness.

The barometer confirmed that the energy and IT (new technologies) sectors hold the most development opportunities.

March 2014 - date president of the administration council at the CCIFER January 2014 - date president of the new Michelin region, Central and Southern Europe 2011 – 2013 president, general director, for Michelin Romania and Balkans 2007 – 2010 general director of Michelin for the Russia area and former Soviet countries

What are some of the initiatives undertaken by the CCIFER aimed at improving the local business climate?

By adopting a proactive attitude, the CCIFER has constantly undertaken initiatives to improve the business climate in Romania through a close dialogue with public partners and constant feedback from companies. This is done through various work groups that represent synergies between member companies: agriculture and agri-business, EU funds, human resources and IT (new technologies).

The CCIFER encourages competitiveness through education and professional training programs. Since 2008, over 1,000 people have been trained using 25 programs within the CCIFER’s training center.

In addition, since 2013, the CCIFER has been helping high-potential managers to become leaders through an EMBA – an Executive Management Programme (ExMP), which is carried out in partnership with a prestigious school in France, ESCP Europe.

The CCIFER also organizes various

events to attract new investments on the local market and consolidate the existing ones, by constantly identifying business opportunities.

CCIFER events generated 2,000 business interactions in 2013 and 5,000 business cards were exchanged within the community. In addition, in the last two years, over 30 French companies have been assisted with the process of prospecting the local market. The CCIFER also supplies a business incubator service (providing residence for the headquarters and collaborators in a professional environment with logistics infrastructure provided) for 10 companies looking to develop on the local market.

What are your expectations for Romania’s economic growth in 2014?

The revision of Romania’s economic growth to 3.9 percent in the first quarter places us on the list of countries of interest to French investors. The French state has taken a series of measures to support French companies aiming to go international. This makes us confident that we will continue to register an in-

From which sectors have you had signals that French investors would like to consolidate their presence?

We can certainly say that the most dynamic sectors are retail, IT & telecom, agriculture, automotive, transport and logistics.

What are the attractive sectors for a French company that would like to set up shop in Romania now?

The economic sectors that are on a growth trend, and still attractive to investors, are industry – especially service providers in the automotive sector, agrifood and textiles – plus the IT sector – software development and apps for companies – agriculture, construction, transport and logistics.

How many members does the CCIFER have and how much have they invested in Romania?

The CCIFER currently has over 400 member companies, whose combined turnover amounts to EUR 19 billion, or 14 percent of GDP. The member companies have 125,000 employees in total and are active in a wide array of sectors that compose the local business environment: industry, agriculture, IT & telecom, energy, retail, construction, tourism, real estate, banks, outsourcing, law firms and others. ovidiu.posirca@business-review.ro

www.business-review.eu Business Review | July 14 - 20, 2014

24 FRENCH INVESTMENT PARTNER CONTENT

PITECH+PLUS, the path of a winner: From a small team to experiential innovation work and best practices from the French IT industry market. This year, we are launching in Cluj-Napoca, Romania, the same format as Ecole 42 has in France:

Cluj-Napoca is one of the biggest towns in Romania, and if you are an investor looking for opportunities here, during your research, it would be on the list for a variety of industries, in particular the IT industry.

Cluj-Napoca began to build a reputation in IT and software in 2005, when two main transactions planted the flag on this territory: UPC Europe buying Astra, and RTC buying Sistec, a Romanian company. If you ask Bogdan Herea, a Franco-Romanian entrepreneur with a solid French background, why he decided to start his business, PITECH+PLUS company, there, he will tell you that back then, after a solid analysis, he found some strengths that over the years favored the growth of his business After 13 years of studying and working in France, he understood the dynamic of this industry, and assumed that in the next years the technology would play a big role in our lives. That is why, instead of what could have been a great international career, he decided to become an entrepreneur and investor in Romania.

The most important argument for coming back was the human resource.

“I wanted to build a solid company that one day would have all the capabilities to sell its own products.”, Bogdan Herea “In terms of IT specialists our country has a special image abroad.

Why not create a context for those “gifted” people in order to motivate them enough to remain in Romania?

Another argument was the position of our country on the world map. You can access any business destination.

And in the end, Romania is a big market and I wanted to build a solid company that one day would have all the capabilities to sell its own products. You can test here, and scale abroad.” says Bogdan Herea.

The story of PITECH+PLUS group started in 2005 with a small team of ten engineers working on PHP technology. The company founded

by Herea rapidly grew due to the global dynamic of the IT industry.

Since 2005, new business lines have been created: Rodeapps, producing mobile applications, and PITECH+CONCEPT in charge of our clients’ digital marketing strategy.

Due to our range of projects, we added to our operational offices in

ACADEMY+PLUS.

Bogdan Herea, CEO & Founder

Cluj-Napoca and Targu Mures, another office in Bucharest, and four more commercial offices abroad.

Our primary goals in opening commercial offices were to be close to our clients, to increase the quality of our services, and to expand in areas where there is a need of such kind of competences.

As the industry has its own dynamism, and sometimes profit margins shrink, in recent years we have felt the pressure to create value based on more than the traditional prescriptions such as cost reduction, competence acquisition or outsourcing, and focus on the innovation, early experimentation and forecast “new practices” into our operational, business and positioning strategy. Our evolution was linked to the idea that one can do this by understanding more than a single market, industry or category.

Today, PITECH+PLUS group has a range of services that allows it to offer consultancy and outsourcing.

Due to our current positioning we aim to become the most supportive IT company for our clients, employees and suppliers who want to express their inner innovation.

Because every day we see new products and services brought to fruition, it’s not so hard to speak about innovation in this field. But effective products and services require a good understanding of the way people interact.

In our sense, innovation is about

thinking beyond the technology, it’s about understanding that new behaviors require new ways of thinking and planning a project.

The vast majority of our clients are international, moreover from France, and Francophone countries. With great business relations abroad, we have managed to develop effective software technologies and applications for sectors such as: advertising agencies, governmental institutions, corporations, and also for start-ups.

With this panel of clients, we have managed to infuse our employees with the rigor of an institution along with the enthusiasm and energy of a young team launching a start-up.

By having common goals, a partnership with Ecole 42 came along naturally.

In 2014 we considered that our team has acquired the competences to support another type of growth: from services to services and products.

We are currently working on two products, and one of them is about the education in computer programming.

The opportunity of implementing such an educational programme started when we’ve meet the “geeks” from Ecole 42, a private university of computer programming in Paris, France.

By having common goals, a partnership came along naturally. With their support we have managed to bring in Romania a history of 15 years of hard

Their partnership and content sharing was with a Romanian company and we are proud to be that one, but seeing this event macro, maybe their choice was based on strong arguments: almost every year Romania has a great team representing it at international informatics contests. For instance, this year we won four medals at the Central European Olympiad for Informatics. And if we look back over the generations, in almost each of them we can find a star in programming, who either built a start-up and sold it to Facebook, or invented something new for Instagram, or is having a great career in Silicon Valley.

ACADEMY+PLUS, a school that promotes mastery in computer programming education.

Our purpose with ACADEMY+PLUS is to promote mastery in education through a program that is specially designed for the new generations of young people highly exposed to different kinds of media, always on the go, always connected – but also designed to address the IT & software industry requirements. Today almost every IT company knows the value of a welltrained human resource, but also the difficulty and the cost of finding one.

That is why we aim through this great project to change two conversations: competition into collaboration, and mediocrity into mastery in education.

The other product that we’re working on is designated to be a game changer in the field of invoicing and payments. Aiming to make all of our lives easier, it has the sense of innovation that impacted our way of thinking. It will be launched at the end of this year.

These are the first steps in the product arena for PITECH+PLUS and the demonstration of its ability to constantly reinvent itself and progress in the value chain, from a Business Process Outsourcing partner to a Product Offering Company while remaining absolutely loyal to the values that shaped its success: Innovation, Investing on People and Profound Respect for its Customers.

www.business-review.eu Business Review | July 14 - 20, 2014

FRENCH INVESTMENT 25

RANK

Top 20 French companies in Romania COMPANY

1

AUTOMOBILE-DACIA SA

1 Uzinei St., Mioveni, Arges Tel: 0248 500 000 www.dacia.ro

Manufacturing of transport vehicles

12,742,145,319

2

BRD - GROUPE SOCIETE GENERALE SA

1-7 Ion Mihalache Blvd., Bucharest Tel: 021 302 6163 www.brd.ro

Other financial transaction activities

2,973,504,550

3

RENAULT COMMERCIAL ROUMANIE SRL

24 Preciziei Blvd., West Gate Business Center, Bucharest Tel: 021 203 88 58 www.renault.ro

Cars and light vehicles trade

1,392,502,732

4

GROUPAMA ASIGURARI SA

45 Mihai Eminescu St., Bucharest Tel: 021 305 80 00 www.groupama.ro

Other insurance activities (not including life insurance)

1,162,843,251

5

SANOFI-AVENTIS ROMANIA SRL

80 Izvor St., Bucharest Tel: 021 317 3136 www.sanofipasteur.ro

Wholesale of pharmaceutical products

952,969,626

6

LAFARGE CIMENT (ROMANIA) SA

15 Charles de Gaulle Sq., Bucharest Tel: 021 30 75 200 www.lafarge.ro

Cement manufacturing

853,878,685

7

ZAHARUL ORADEA SA

3 Borsului Road, Bihor Tel: 0259 307000 www.diamant.ro

Sugar production

667,115,486

8

APA NOVA BUCURESTI SA

2 Aristide Demetriad St., Ilfov Tel: 021 207 77 77 www.apanovabucuresti.ro

Water intake, treatment and distribution

666,912,331

9

RENAULT TECHNOLOGIE ROUMANIE SRL

2/III Pipera Blvd., North Gate Business Center, Bucharest ww.renault-technologie-roumanie.com

Engineering and related technical consultancy activities

583,158,869

10

RENAULT MECANIQUE ROUMANIE SRL

1 Uzinei St., Arges, Tel: 021 203 86 52 www.dacagroup.com

Manufacturing of other car and engine parts and accessories

512,983,227

11

DANONE - PRODUCTIE SI DISTRIBUTIE DE PRODUSE ALIMENTARE SRL

96 Nicolae Canea St., Bucharest Tel: 021 204 62 04 www.danone.ro

Dairy production

506,400,194

12

SERMEDIC SRL

11-15 Tipografilor St., Bucharest Tel: 021 528 52 80 www.servier.ro

Wholesale of pharmaceutical products

487,585,725

13

IPSO SRL

174D Bucuresti-Targoviste Road, Ilfov Tel: 021 207 20 70 www.ipso.ro

Wholesale of other cars and equipment

383,143,665

14

LS TRAVEL RETAIL ROMANIA SRL

9-9A Dimitrie Pompei Boulevard, Bucharest Tel:031 407 82 50 www.lsromania.ro

Wholesale of other household goods

309,553,149

15

LEONI WIRING SYSTEMS PITESTI SRL

19 Serelor St., Pitesti, Arges Tel: 0248 208 403

Manufacturing of electrical and electronic equipment for car and car engines

301,600,992

16

SAINT-GOBAIN CONSTRUCTION PRODUCTS ROMANIA SRL

43 Pipera Road, Floreasca Park, Bucharest Tel: 21 207 57 00 www.saint-gobain.ro

Manufacturing of plaster products for the construction industry

284,056,188

17

VIAROM CONSTRUCT SA

37-39 Intrarea Glucozei Bucharest Tel: 021 242 06 90 www.viarom.ro

Roads and highways construction works

274,419,717

18

SAINT-GOBAIN GLASS ROMANIA SRL

61 Varianta Nord St., Calarasi, Calarasi Tel: 0242 305 164 www.saint-gobain-glass.com/ro

Manufacturing of flat glass

265,725,552

19

CETELEM IFN SA

78-80 Clucerului St., Bucharest Tel: 021 312 0220 www.cetelem.ro

Other crediting activities

265,354,536

20

ALCATEL - LUCENT ROMĂ‚NIA SRL

9 Gheorghe Lazar St., Timisoara, Timis, Tel: 0256 303100 www.alcatel-lucent.com

Cable network telecommunication activities (exclusively satellite)

255,144,070

CONTACT

ACTIVITY AREA

2012 RON TURNOVER

Companies are listed according to their 2012 turnover. The financial information is provided by the National Trade Register Office (ONRC)

www.business-review.eu Business Review | July 14 - 20, 2014

26 CITY

MNAC: Where to now?

After almost one year with a provisional director, the National Museum of Contemporary Art (MNAC) now officially has a new incumbent. Calin Dan, who won the management contest organized by the Culture Ministry, tells BR about some of the museum’s priorities for the coming period.

CV Calin Dan A graduate of the N. Grigorescu Fine Arts Institute in Bucharest, the Art History and Theory Department, he is an artist, art critic and curator.

He was the chief editor of ARTa magazine between 1990 and 1994, artistic director of the Soros Center for Contemporary Arts in Bucharest between 1992 and 1995 and lecturer at the Art Academy in Bucharest, the PhotoVideo Department, between 1991 and 1995.

In 1990, along with Josif Kiraly and Dan Mihaltianu he founded the subREAL art group. In 1996 he moved to Amsterdam. Besides holding various teaching positions, he also worked as a consultant for the Dutch Fund for Visual Arts, Design and Architecture.

Photo: Mihai Constantineanu

Another level: Calin Dan pictured on the MNAC terrace, one of Bucharest’s highest hangouts

SIMONA FODOR After MNAC’s former director, art historian and curator Mihai Oroveanu, passed away at the end of August 2013, the museum hired Raluca Velisar as provisional director. Oroveanu had been the museum’s director since its establishment in 2001.

“I can say I’m taking over a very interesting institution, both for its geographical location, in a country whose visual culture is in full development, and also for its architectural position, in a complex building, with a heavy history but which has now become a landmark of Bucharest and of our Romanian identity, with the good and the bad of this history,” Dan says.

MNAC was established in 2001,

through the merger of the National Bureau for Research and Art Exhibitions (Oficiul National pentru Documentare si Expozitii de Arta, ODEA) and the Contemporary Art Department of the National Art Museum of Romania. Its headquarters, in the E4 wing of the Parliament Palace, opened in 2004.

Besides the Parliament Palace headquarters, the MNAC has under its administration two other sites: one at Sala Dalles and other at the Anexa MNAC on Calea Mosilor. “This creates some expectations for these facilities to be dynamic, alive. They need to be populated by an as loyal as possible a public. But at the same time, we have the opportunity to craft various types of programs, in various other places in Bucharest,” Dan says.

What’s on display?

The new director sees a permanent display as key to the relationship with

MNAC and its money According to the objectives task book, published by the Culture Ministry for the management contest at MNAC, the museum had an approved budget of RON 4.9 million last year, and RON 5.3 million in 2012. It is funded by the Culture Ministry under whose auspices it operates. The museum can also attract private sponsorship.

The last artwork acquisition budget was granted in 2007.

the museum’s visitors. Although the museum has a permanent collection, he says a permanent display is what’s missing. “We need a permanent display, which doesn’t necessarily need to be the collection. Because if the museum’s collection, for one reason or another, is not sufficiently representative, this display, of course, needs to look at the collection, it should look at the history of living art in Romania and bring to the public what we think is significant for the culture of Romania, not necessarily from our deposits but in general,” Dan says.

The collection will have to undergo a historical and theoretical analysis and will be part of MNAC’s exhibitions in or around the permanent display, but it will be underlined by a thematic or an analytical purpose, the director says, adding that contextualization and critical discourse will be the basis of these permanent displays.

“We will not simply hang on the walls or put up in the halls works by artists who are consensually regarded as important for Romania. We will exhibit works in such a way as to notice some iconographic dynamics, certain social and historical contexts in which they were produced, some harmonious or conflictual meeting points with the art in the region or in Europe,” he says, adding that generally no display could

www.business-review.eu Business Review | July 14 - 20, 2014

Getting to the museum Izvor 2-4 (Palace of Parliament building – E4 Wing, entrance from Calea 13 Septembrie) Metro: Izvor station Overground transport: Buses 136, 385 Ticket price: RON 10 for adults, RON 5 for concessions; students and children enter free

last for more than two years.

There are also plans to give Sala Dalles more prominence. “We would like to make Sala Dalles the meeting place between art in Romania and art in the region, first of all, and then art in Europe in general. As you can see, I always say art in Romania because we cannot speak of Romanian art only. [...] There are many minority artists who are extremely important for our recent history, for the present and for

What’s on at MNAC

SARKIS – A l’autre bout de l’arc en ciel June 15-September 07 A reference artist of conceptual art, Sarkis presents in Bucharest a filter of images and concepts meant to offer a different perspective on the perception of the everyday, uncovering hidden aspects and new emotions.

Europe. South East – Recorded Memories June 22-August 10 A Goethe Institute project, in partnership with the Museum fur Photographie Braunschweig, the exhibition gathers works by 23 artists from South East European countries, exploring topics such as collective memory, the culture of remembering, and the role of the image in these projects.

Shape. Noise April 25-September 15 The exhibition included works by the following artists: Apparatus 22, Monotremu, Sillyconductor, Sergiu Doroftei, Bogdan Susma and Ion Cotenescu.

our identity,” he explains.

A regional identity When speaking about the role of the museum, Dan uses the metaphor of a stone in water. “The museum is the rock we throw in water and around it circularities are born.” The connections to be made are firstly regional, the new director outlines, placing Romania among the diverse group of other Central and South East European countries, with which it shares a history and with which it needs to strengthen the artistic dialogue. “We are interested in the similarities and the differences, at the levels of artistic production, social-historical context, the artist’s psychology and cultural psychology,” he says. Regional identity would be the starting point for growing organically towards the recognition of visual arts in Romania.

“We want to bring from here the priorities, to present things in a more contextual manner and to succeed where our colleagues in Poland and Hungary have, for instance, meaning to make the phenomenon of visual arts in Romania known, not just the stars of it,” Dan explains.

He thinks the moment is right for the industry to come together and work on legislative proposals defining the statute of the artist, creating fiscal frameworks that are favorable to sponsorships and granting patrimonial value to contemporary productions. “A patrimony law was adopted, 10-15 years ago, which arbitrarily ruled that post-war art is not patrimonial.

This is a formidable contradiction with the fact that young artists in Romania sell works worth hundreds of euros. This is very good for them but it would be very good for us as museums to be able to have a relationship with these works but within a patrimony framework,” Dan explains.

The MNAC visitor One focus of the museum is attracting more visitors, along with getting to know its audience better – something that has yet to happen in the absence of appropriate analysis tools – attracting new public segments and devising various loyalty strategies to keep them coming back. The new director says that MNAC will have to hold exhibitions that are interesting enough to attract people, regardless of logistical hindrances such as the Parliament Palace location or being part of a high-security building.

“Judging from some general information we have […] what we found significant was that young professionals are the keenest visitors. They are people aged 28 to 37, with average or above average income, working in creative professions. They are the cohort that comes here the most. The young follow, but at a worryingly lower percentage. People over 40, with a different family and economic dynamic, do not come as much.

With a little help from MNAC’s friends The Amicii MNAC (Friends of MNAC) association was set up in 2008 with the stated objective to support MNAC in its mission and activities while promoting a better understanding and broader visibility for contemporary art to the general Romanian public.

Its activities include fundraising events and providing financial and logistic support for MNAC’s exhibitions and acquisition campaigns. Projects it has helped fund include the SenzArt Call for Applications, the Children’s Christmas at MNAC, Q.E.D. by Mircea Cantor, Printshop@MNAC for Children, and fully supporting the costs of the gallery’s direct mailing services and social media marketing in 2013.

Photo: Mihai Constantineanu

SenzArt June 5-November 30 The SenzArt project is dedicated to people with sight and hearing disabilities and aims to popularize the opportunities contemporary art offers to communicate at various levels of perception, with the help of a varied sensorial vocabulary.

CITY 27

Helping hand: the museum wants to get to know more about its visitors

Educational programs Collection Sampling This educational program presents works from the MNAC collection along with artistic techniques that can be adapted to working with children. A series of workshops for children aged six to fourteen accompanies the program.

SenzArt Within the SenzArt exhibition, a series of free workshops for children aged five to sixteen is running until November.

Find out more about the current MNAC exhibitions and schedule at www.mnac.ro.

And I think this creates a double problem: we don’t have a young audience to make loyal, and, on the other hand, people of greater means come less often to the museum,” Dan says.

Still, efforts are being made in this respect, and the museum already offers several educational programs encouraging children to explore the museum, one audience segment that could be grown in time. Another is groups coming from arts high schools and universities and a generally more studious public. A 12- to 16-month exhibition plan would also help with mapping potential new audiences.

Part of the task is convincing people in the private sector that contemporary art is the future of the cultural sector and that it plays a more significant, growing role all over the world, Dan explains. simona.fodor@business-review.ro

www.business-review.eu Business Review | July 14 - 20, 2014

28 CITY

DON’T MISS / SUMMER EVENTS Magic Summer July 9-27 Romanian Athenaeum, Bucharest Magic Summer, now on its third run, started with one of the best known local violinists, Alexandru Tomescu, and continues with: July 16: Moldavian Youth Orchestra and violinist Dumitru Pocitari July 23: pianists Valentin Gheorghiu and Roxana Gheorghiu, violinist Mihaela Martin and cellist Marin Cazacu July 30: Transylvanian Quartet – violinists Gabriel Croitoru, Nicusor Silaghi, fiddler Marius Suarasan and cellist Vasile Jucan August 6: Spain Youth Orchestra under the wand of Lutz Kohler August 12: Romanian Sinfonietta Orchestra conducted by Horia Andreescu August 13: violinists Liviu Prunaru and Valentina Sviatlovskaia, fiddlers Cristian Ifrim and Andra Schlutter and cellists Marin Cazacu and Stefan Cazacu August 20: Romanian Youth Orchestra under the wand of Cristian Mandeal with pianist Maruxa Llorente August 27: France Youth Orchestra Tickets cost RON 50 per performance, RON 160 for a July subscription or RON 350 for a full subscription, which can be bought online from www.bilete.ro or from the box office of the Athenaeum.

Julio Iglesias concerts July 19, Summerland Mamaia, Constanta; July 20, Stadionul Siderurgistul, Galati; July 22, Sala Palatului, Bucharest

Legendary crooner Julio Iglesias will come to Romania for the 15th time to perform three concerts. Classic hits Baila Morena, Guantanamera, La Carretara, El Amor and Aqua Dulce, Aqua Sala are sure to go down well with the iconic Spaniard’s legions of local fans.

In his 40-year career, the singer has sold over 300 million records around the world in 14 languages and released 77 albums.

For the Mamaia show, tickets cost from RON 115 to RON 285, in Galati prices run from RON 125 to RON 225, while Bucharest tickets range from RON 180 to RON 450. All tickets can be bought online from www.vreaubilet.ro.

Padina Fest July 23-27, Bucegi MountainsIf you are tired of the noise and the bustle of the city, head up to 1,500 feet, to the Padina

James LaBrie, guitarist John Petrucci, co-founder John Myung on bass, keyboard player Jordan Rudess and drummer Mike Mangini.

The concert is part of the An Evening with Dream Theater – Along for the Ride Tour 2014, showcasing the band’s bestknown songs. Tickets can be bought online from www.eventim.ro at prices ranging from RON 140 to RON 460.

Betting on regeneration: the iconic casino in Constanta

Fest, for camping and forest fun. Adrenaline junkies can take part in rock-climbing, rappelling, a Tyrolean traverse, weapons history workshops and competitions with prizes. If your goal is to relax, you can find Zen terraces with hammocks, jute bags and shade. In the evening culture vultures can enjoy theater. On top of that there is a program of concerts by Romanian and international artists such as Lola Marsh, Tapinarii, Implant Pentru Refuz, Wordly Savages, The Case, Vrelo, Suie Paparude and Grimus.

A full subscription cost RON 50, while the first and the last day of the festival are free of charge. Some of the proceeds will be donated to the Lindenfeld Association for its program Ajungem Mari (We Grow Up), which aims to help children growing up in care.

Sighisoara Medieval Festival July 25-27 Sighisoara, Mures County Sighisoara Medieval Festival will give history lovers a complete medieval experience, through costumes, medieval dances, jousting, art, folk, medieval music, carnival masks, theater and many other surprises. Every night the festivities will end with a torchlight parade and traditional fireworks.

Liberty Parade July 26, Venus-Saturn, Black Sea Shore Electro and dance fans will come together for the 12th Liberty Parade, more than 12 hours of continuous music, dancing, partying and drinks. Revelers flock to Romania’s biggest dance event in stylish costumes, funky haircuts and impressive makeup, ready to hold their hands in the air for extended periods.

Full Moon Film Festival July 13-27 Biertan, Sibiu County Six feature-length movies will compete The Color Run for the festival trophy in Biertan, one of July 26, Mamaia, Constanta Romania’s most famous villages owing The Color Run, also known as the Hapto its amazing fortified church, where piest 5k on the Planet, is a unique paint the projections will take place. The films race that celebrates healthiness, happito be screened in competition were cho- ness, individuality and giving back to the sen by the festival’s artistic director An- community. The event had already taken drei Crețulescu for exclusive national place in Bucharest, on April 26, and Cluj Napoca, on July 12. The 5 kilometer, unpremieres.

This year’s jury, composed of Artur timed race sees thousands of particiBrzozowski (Fantasy FilmFest program- pants doused from head to toe in differmer – Germany), Tom Lukaszewicz ent colors every kilometer. The fun (Black Bear Filmfest co-director – continues at the finish line with a gigantic Poland) and Mihai Chirilov (TIFF artistic “Finish Festival,” using more colored director), will choose from the following powder to create happiness and lasting titles: Coherence (USA, 2013), In Fear memories, not to mention millions of (UK, 2013), It Follows (USA, 2013), Sonno vivid color combinations. With only two profondo (Argentina, 2013), Summer of rules, the idea is easy to follow: wear Blood (USA, 2014) and What We Do in white at the starting line and finish plastered in color. the Shadows (New Zealand, 2014).

This year’s special guests, Taika Waititi, who was Oscar-nominated in Dream Theater concert 2005 for his short film, Two Cars, One July 28, Romexpo, Bucharest Night and wrote the cult comedy Eagle Considered one of the best progressivevs Shark, and Jemaine Clement, who rock bands in the world, the Dream Theappeared in Men in Black 3 and voiced a ater will return to the Romanian stage character in Rio, will be in Biertan 12 years since their last performance here. The line-up features vocalist throughout the festival.

The Cat Empire concert July 31, Arenele Romane, Bucharest The Australian ska and jazz band, formed in 1999, are performing on the Romanian stage for the first time. Core members are Felix Riebl on percussion and vocals, Harry James Angus on trumpet and vocals, drummer Will HullBrown, Jamshid “Jumps” Khadiwhala on decks and percussion, Ollie McGill on keyboard and backing vocals, and Ryan Monro on bass and backing vocals.

Their sound is a fusion of jazz, ska, funk and rock with heavy Latin influences. The band has so far released six albums, The Cat Empire (2003), Two Shoes (2005), Cities: The Cat Empire Project (2006), So Many Nights (2007), Cinema (2010) and Steal the Light (2013).

Ticket prices are RON 80 or RON 130 and are available online at www.myticket.ro.

Folk You Florian Pitis Festival July 31-August 3, Vama Veche, Constanta Ten years ago, folk artist Florian Pitis launched the festival Folk You, with a manifesto of “the resistance movement against poured stupidity”, in Vama Veche.

During this tenth edition, the organizers want to promote folk music to youngsters, who can apply to perform.

Rasnov Historical Film Festival August 1-10, Rasnov Citadel, Brasov County The themes of this sixth run are the Great War, 1989 – was it or wasn’t it? and Los Angeles 1984. Over 40 documentaries and fiction films, historical debates and witness testimonies, interviews with actors and directors, concerts and book presentations will take place.

Through discussions and screenings, Rasnov Historical Film Festival will analyze the causes and consequences of World War I and the fall of the Iron Curtain in 1989. Moreover, a series of meetings with local athletes will bring into the spotlight the Los Angeles Olympics in 1984, when a boycott by the USSR and the socialist bloc countries cleared the path for Romania’s greatest performance.

CaziNOU August 1-10, Casino, Constanta For ten days, activists from Calup NGO will put the building back on the cultural map, where it was until the Second World War. During the day, the casino will open its doors to the public, providing the setting for workshops and other ac-

www.business-review.eu Business Review | July 14 - 20, 2014

CITY 29

tivities for visitors of all ages. In the evening there will be jazz concerts, film screenings, theater and ballet shows, classical and electronic music, all accompanied by projections on the casino façade. Visitors will be able to enter the casino, where they will be given information about its history and learn the hidden stories of this symbolic building, which will be told in an alternative manner through artistic installations and interactive educational material.

ARTmania Festival August 7-9, Sibiu The ninth ARTmania is showcasing a mix of live acts and alternative events around the medieval fortress of Sibiu. The main stage will be erected in the Balanţa Halls Facility, dubbed “Vampires’ Den”. Metal concerts by well known local and regional bands will take place here on Friday and Saturday. A wide range of activities and interactive areas, including video projections, reading spots, board games, tarot, make-up and tattoos, will be on offer. Every night the Vampires’ Den will host a monster after-party. A bicycle parking area, lockers, a “lost & found” container and all the necessary festival facilities will be on hand.

Festival passes are available from the Diverta, Germanos, MyTicket.ro and Eventim.ro networks, at the ARTmania Bucharest office or online at shop.artmania.ro for RON 180. Day tickets will only be available on the door.

housed the visiting film-lovers is rebuilt.

The festival keeps its structure, featuring the international film chapter, showcasing garlanded movies from other festivals, retrospectives, the Romanian OFF section and the competition – for longfeature movies, short movies and animations. The film selection was made by the Romanian critic Irina-Margareta Nistor.

Country music: Romania’s rural areas are hosting a range of summer concerts

SummerWell August 9-10, Buftea, Ilfov County Newcomers to Romania will join longtime favorites at this event, with Bastille, Placebo, The National, Tom Odell, John Newman, Miles Kane, The 1975, Chloe Howl, Reptile Youths and Prides all confirmed. The Stirbey Domein event is a weekend of music, art performances and new technologies. Two-day passes will be available on www.easytickets.ro and in Orange shops (Eventim network), priced at RON 199.

FanFest, Rosia Montana, Alba County August 11-17 The biggest multi-art activist festival in Romania stemmed from the mass protests against the controversial gold

mine project in the village of Rosia Montana. FanFest will feature music, exhibitions, theater, dance, workshops and debates and is intended express solidarity with the campaign to save Rosia Montana. The festival is organized entirely by volunteers: organizers, artists and guests give their services pro bono.

Participants enjoy free access to all the FanFest events, but may give a donation towards the organization.

Anonimul Film Festival August 12-17, Verde Stop, Bucharest Anonimul International Film Festival which was hosted in Sfantu Gheorghe, the Danube Delta town, for ten years, has temporarily relocated to Bucharest, while the accommodation park that

Rockstandt Extreme August 14-16, Rasnov, Brasov County Head bangers are getting ready to rock out to Obituary, Rotting Christ and The Agonist, due to head a line-up that includes Arsonists Get All The Girls, Behemoth, Belphegor, Born From Pain, Dagoba, Dordeduh, Eryn Non Dae, Fleshgod Apocalypse, GrandExit, Katatonia, Misery Index, Mors Principium Est, Skeletonwitch, Sodom and The Exploited.

Tickets cost RON 150, with VIP tickets having sold out.

Divan Film Festival August 26 – 31, Cetate, Dolj County Now on its fifth run, this film and culinary art festival brings to an old Danube grain-shipping port major figures from the Balkans, presenting movies, documentaries, debates and workshops. Romanian poet Mircea Dinescu, who owns the site, will take guests on a gastronomic journey. oana.vasiliu@business-review.ro

www.business-review.eu Business Review | July 14 - 20, 2014

30 FILM FILM REVIEW

Meaty part: Romanian actress Olimpia Melinte plays sisters stalked by Antonio de la Torre’s inscrutable psychopath in Cannibal

Cannibal DEBBIE STOWE Director: Manuel Martín Cuenca Starring: Antonio de la Torre, Olimpia Melinte, Maraa Alfonsa Rosso, Joaquín Núñez, Gregory Brossard On at: Grand Cinema & More, Hollywood Multiplex, Corso, Elvira Popescu (French Institute), Europa, Noul Cinematograf al Regizorului Roman (NCRR), Studio As every connoisseur knows, the best serving suggestion for human meat is with some fava beans and a nice Chianti. The tip comes, of course, courtesy of Hannibal Lecter, the movie cannibal against whom all subsequent flesh eaters have been measured. The bad doctor’s heinous crimes are in stark juxtaposition to the civilized veneer the tasteful suitwearing, classical music lover presents to the world, creating a fascinating mix of the barbaric and the bourgeois and making an indelible impression on popular culture.

It’s difficult to watch Cannibal without The Silence of the Lambs, the 1991 Jonathan Demme thriller that implanted Hannibal Lecter in the public consciousness, coming to mind. It may be set in charming Andalucia instead of bleak Baltimore, but Carlos (Antonio de la Torre), the people-devouring antagonist of Manuel Martín Cuenca’s Spanish-Ro-

manian co-production, is very much in the Dr Lecter mould, cracking open a good bottle of red to wash down his unorthodox viands. He’s your professional, softly spoken type of serial killer. Like all self-respecting middleclass murderers, he says good morning to his neighbors, keeps noise levels to a minimum and generally avoids causing any inconvenience – unless he’s killing and eating you, of course, which could be rather bothersome.

When he’s not minding his own business and exchanging pleasantries with pillars of the local community, Carlos is a crazed predator, running innocent couples off the road in his car so that he can take the women’s bodies back to his mountain retreat for slicing and dicing, before transporting the cuts to his well stocked freezer ready for his dinnertime delectation.

Despite focusing his film on the last taboo, Cuenca does not sensationalize proceedings. The really gory parts take place off camera, with just a trickle of blood or a shaking leg conveying the repugnant action. Though technically a thriller, the style of the film is slow and ponderous, with long, static takes and majestic mountain shots that are at odds with the abhorrent events. It’s the psychology, more than the mechanics, of Carlos’s cannibalism that drives the movie.

Not that the filmmaker gives too much away on that score. Without a

Dr Lecter style elucidation (“He covets. That’s his nature. And how do we begin to covet, Clarice?...”) the roots of Carlos’s serial killing tendencies are not made explicit, aside from being vaguely blamed on women trouble (might have known it would be our fault). We learn from Carlos’s awkward conversations with his seamstress Aurora (Maria Alfonsa Rossos) that he is a bit of a loner and never seems to have a girlfriend – not surprising given that most of the attractive young women that cross his path end up on his plate.

After a startling opening sequence that sets out Carlos’s modus operandi, the story shifts to the arrival of new neighbor Alexandra (Olimpia Melinte), a flighty young immigrant with a dodgy past, followed by her more sensible sister Nina (also Melinte – the Romanian does such a fine job of distinguishing her roles that I did not initially realize it was the same actress).

Herein lies the story’s main tension: are the women for the chop?

Cuenca’s somber cinematography and de la Torre’s understated portrayal of a madman add to the fraught atmosphere in scenes where one or other of the hapless women finds themselves alone with the killer. The Spanish actor’s total stillness is as ominous as Anthony Hopkins’s teeth sucking.

Carlos is a multi-tasker, and while building relationships with the sisters he manages to keep up his campaign

Cold cuts: tailor by day, killer by night

of terror against random women, in some of the movie’s most chillingly effective scenes. He also fits in a successful career as a tailor for Granada’s high society. His latest prestigious commission is to make a copy of a sacred fabric for the Catholic Church, and the marked use of religious imagery hints at the psychopath’s complex mental processes: despite his depraved crimes and composed exterior he is clearly wrestling with inner demons.

Cannibal is a curious work that eschews the gimmicks of its genre and takes a mature, assured approach to depicting a modern monster of urban legend – giving audiences something to really get their teeth into. debbie.stowe@business-review.ro