GAP OPENS ITS SECOND STORE IN ROMANIA IN PLAZA SHOPPING MALL; SEE PAGE 6 NEWS
Online game eRepublik, created by Romanian George Lemnaru and French Alexis Bonte, has received a EUR 2 million financing See page 4
ITALIAN INVESTMENT REVIEW
Despite financial pressure, Italian firms plan to maintain their presence in Romania, taking advantage of the fiscal relaxation and new labor costs See pages 12-16
Local cinema operators could get additional revenues from renting their theater halls for corporate events See page 20
BUSINESS REVIEW ROMANIAâ€™S PREMIERE BUSINESS WEEKLY
JUNE 22 - 28, 2009 / VOLUME 14, NUMBER 23
THE BLACK SEA RACE
Romgaz and Marine Resources Exploration International have started screening the Black Sea for mineral resources, joining Petrom and Sterling Resources in the race for deep water resources Register at:
See pages 10-11
BUSINESS REVIEW ROMANIA’S PREMIERE BUSINESS WEEKLY
JUNE 22 - 28, 2009 / VOLUME 14, NUMBER 23
Sales & Events Director
Subscription & Research
ALEXANDRA TOADER Audited 1H 2007
Str. Alecu Russo 13 - 19, et. 7, ap. 14, Bucharest - Romania Phone: +4021 210-7734, Fax: +4021 210-7730 E-mails: email@example.com ISSN No. 1453 - 729X Tiparit la: MASTER PRINT SUPER OFFSET
BUSINESS REVIEW / June 22 - 28, 2009
BMG is a founding member of the Romanian Audit Bureau for Circulation (BRAT)
BRIEFS BNR MIGHT LICENSE A BANK WITH 100 PERCENT BY ROMANIAN CAPITAL é Romania's National Central Bank (BNR) will most likely license a bank set up by Romanian capital only, said Nicolae Cinteza, a BNR rep. He explained that BNR's Administration Council is currently tackling this issue. There are currently 43 banks on the Romanian market, including foreign banks and Creditcoop. Among those, six have a majority of Romanian capital - CEC Bank, Transilvania, EximBank, Banca Comerciala Carpatica, Libra Bank and Credicoop. ROMANIA'S FINANCE MINISTRY SELLS 3-YEAR STATE BONDS é The Finance Ministry (MFP) sold benchmark bonds maturing in three years and four months for a total of RON 570.2 million (EUR 134.7 million), at an average annual yield of 11.18 percent, higher than the one accepted in the previous bid. In the fifth state securities bid this month, MFP collected one fourth less than the RON 750 million initially announced, and the maximum accepted yield was 11.25 percent per year. The Finance Ministry plans to collect a total of RON 7.5 billion this month after cashing in RON 32.8 billion in the first five months of the year to finance and refinance the public debt. After the first four bids in June, MFP collected RON 6.1 billion. AVIOANE CRAIOVA COULD BE BOUGHT BY AN ITALIAN COMPANY é Romanian plane company Avioane Craiova could be bought by Italian company Alenia Aeronautics Italia, according to Mircea Ursache, president of the Authority for State Assets Recovery (AVAS). The Italian offer expires June 30. The legendary debt Avioane Craiova has can no longer be erased or assumed by AVAS. Alenia Aeronautics announced they were continuing the negotiations with AVAS during the second half of June, after the completion of a new analysis regarding the necessary investments. The privatization of Avioane Craiova was resumed in October 2008. The Italian company is the only one to have made AVAS an offer on Avioane Craiova. 4
Online game eRepublik gets EUR 2 million financing from French fund Online strategy gaming platform eRepublik, created by Romanian George Lemnaru and financially supported by French – born businessmen Alexis Bonte has recently agreed for a EUR 2 million financing from French investment fund AGF Private Equity, which will be used for further developing the game. “We had a first round of meetings in the Silicon Valley and Europe in April right after we announced our angel round. This was just to get some feedback, make some contacts and see if there was some appetite for a project such as ours with investors. The good news is that there was, the bad news is that in the case of American Venture capitalists, the condition was always that we move the all company to San Francisco,” Alexis Bonte, the executive manager of eRepublik Labs told Business Review. “We then accelerated things in
The online game already has 120,000 users
October last year as we felt that things were going to be a lot more difficult with the crisis and had a few term sheets (non binding offers) from several investors but it was very hard since some then backed out because of the crisis,” Bonte goes on.
In total, the two have seen close to 40 venture capital firms in the Silicon Valley, France, the UK, Switzerland, Northern Europe and Spain and managed to get new offers of investments among which the one from AGF Private Equity was our favorite in particular because we knew them well by then and were happy with our existing experience with them,” Bonte also said. As for possibility of future investments, the French says he's probably going to pause his personal investments for a while now so he can concentrate more on developing eRepublik. “I truly believe it has the potential to become a major company and this demands a lot of attention,” he concludes. The online game eRepublik has 120,000 users. So far, the investors in the project have put around EUR 2.7 million in it, according to its representatives. Corina Saceanu
RBS manages EUR 100 million from wealthy individuals The private banking division of RBS Romania is currently managing assets of EUR 100 million from around 1,100 clients with high revenues, according to the bank's representatives. The service offered by RBS on this segment, called preferred banking, targets individuals with at least EUR 50,000 in liquidities or constant monthly revenues of over EUR 5,000. The bank is also looking at those customers with increasing revenues, who now either have EUR 35,000 in liquidities or monthly revenues of EUR 3,500. RBS estimates that this market segment of personalized banking services is made of 100,000 such clients in Romania, according to RBS, which has tapped into this market by opening the bank's first unit for preferred banking within RBS' headquarters in Bucharest.
RBS has 1,100 customers for prefered banking services
Marijana Vasilescu, head of the preferred banking division with RBS says she expects the number of clients on this segment, as well as their managed assets with the bank to grow this year but not to a significant level, as the Romanian clients'
profile is rather conservative. Over 60 percent of the bank's wealthy customers come from Bucharest, the rest being from Brasov, Cluj and Constanta. The bank is offering these personalized services in Timisoara, Arad and Sibiu as well. The preferred banking services include a savings component, as well as an investment one, based on the risk profile of each customer. Wealthy customers also have a personal banker. Due to the current financial crisis, customers are currently mainly targeting the savings services, rather than investments. British bank RBS, which has been recently re-capitalized by the British state, is now looking to sell some of its subsidiaries in various countries in the world,including the one in Romania, in an attempt to give up on its non-core assets. Corina Saceanu BUSINESS REVIEW / June 22 - 28, 2009
Verbund announces a wind farm investment in Romania
The firm has part of the needed authorisations
The Austrian utilities group Verbund will develop a 200 MW wind farm in Casimcea, Tulcea county, through the local subsidiary Austrian Renewable Power (ARP). According to Birgit Cserny, ARP GM the wind power plant will be fully operational by 2011.
BUSINESS REVIEW / June 22 - 28, 2009
“The project is in the developing stage. We have part of the necessary authorizations. According to the initial plans, the wind farm would have had a capacity of 150 MW, but we have extended it to 200 MW. The project is developed together with a Romanian partner,” said Birg i t Cserny. The ARP GM declared that the total investment will not overpass with much EUR 300 million, because the investment per 1 MW of wind energy has decreased, compared with last year’s tariffs when 1 MW of wind energy was about EUR 1.7 million. Verbund is the leasing energy producer in Austria, one of the most important energy producers from hydro sources in Europe and counts 2,500 employees. Verbund generates annually more than EUR 3 billion sales. Dana Ciuraru
ArcelorMittal Galati finalizes EUR 8 million investments
This is the largest factory for plates in the group
ArcelorMittal Galati has recently commissioned new equipments, following a EUR 8 million investment. According to company data, with this new technology in place, the plate mill will achieve a thickness quality two times better than the current European norm, while
the metal consumption is expected to decrease. “This investment demonstrates our commitment to continue producing high quality plates in Galati and to growing our business in Romania. This investment brings us one step closer to our goal of becoming a center of excellence for plates,” said Thierry Le Gall, ArcelorMittal Galati GM. The heavy plates mill capacity in Galati is the largest production facility for plates at the group level, followed by Burns Harbor from the United States, and in Europe by Gijon, Spain. This year, ArcelorMittal Galati also commissioned the dedusting installations for steel sop no. 1. As a result of this investment, the general dust emissions of this unit decreased by about 95 percent. ArcelorMittal is the world’s leading steel company, with operations in more than 60 countries. Dana Ciuraru
BRIEFS ROMANIAN CAR MAKER DACIA INVESTS EUR 2.5 MILLION IN THE NEW MODEL LAUNCHED é Romanian car maker Dacia launched the sixth model of the Logan range, Stepway, having invested EUR 2.5 million in its production. About EUR 1.5 million were used for pre-production studies and the rest went into adapting the line. The producer plans to turn the new model into the leader of the citydedicated cars segment. Dacia Stepway will cost EUR 9,200 or EUR 10,400, depending on the desired configuration. CARREFOUR TO OPEN 2-3 HYPERMARKETS THIS YEAR é French hypermarket retailer Carrefour will reach 25-26 operating stores by the end of the year, in the wake of overall investments put at EUR 60-80 million, half the value of expansion projects completed last year. The cities which could see Carrefour hypermarkets inaugurated in 2009 include Satu Mare and Deva, according to market information. The French company currently operates 23 hypermarkets on the Romanian market, with the only opening this year taking place in Bucharest, in the Grand Arena shopping centre. The retailer has also announced it had rented three spaces in Winmarkt shopping centres, for expanding the Carrefour Express supermarket network. ROMANIA SEES FDI DECREASE BY 44.4 PERCENT IN THE FIRST FOUR MONTHS é Foreign direct investments (FDI) in Romania dropped by 44.4 percent from January to April versus the same period in 2008, to EUR 2.055 billion, almost doubling the current account deficit, shows the Central Bank (BNR) data. Of the investments registered in the first four months, capital participations accounted for 51.2 percent, the reinvested profit for 8.8 percent and intra-group credits for 40 percent. The loans granted by mother-companies to their local branches can widen the current account deficit as they will be returned at maturity. Romania's balance of payments gap dropped by 78.9 percent, to EUR 1.18 billion. 6
Romanian president warns about recession blaming BNR for over-optimism
Romanian president Traian Basescu has warned about Romania’s imminent recession
Several months after both international and local financial bodies have warned about the recession, the Romanian president Traian Basescu has recently said that the Romanian economy will soon enter recession, and that the optimism displayed by the Romanian Central Bank in the previous months was not based on actual data from the market. “In my opinion, although I don't have final data, the optimism displayed by the BNR in April this
year is not based on data connected to future economic evolutions and we will have economic decreases in the second quarter as well, which means we will go into recession based on all standards,” said the president at a recent Government meeting. The Central Bank has replied saying it included an economic drop for the first quarter of the year when it made its forecast, and its hopes were for the last part of the year,
with estimations to reach a 0.1 to 0.2 percent economic growth by the end of the year. On the other hand, Romania's current account deficit will reach 5 percent this year and not 8 percent as initial estimates has pointed out, according to an official forecast published by the Merrill Lynch Bank of America Securities report. For 2010 analysts expect a current account deficit of 4.1 percent of the GDP, a 6.5 percent drop compared to initial forecasts. However, the Romanian economy will drop significantly this year and next year, by 6.4 percent and 2.5 percent due to fiscal adjustments in the IMF agreement, the report goes on. Merrill Lynch analysts believe that inflation rates will exceed the Romanian Central Bank's 3.5 percent estimation this year, due to external pressures and the depreciation of the national currency. The inflation could reach 5.2 percent this year and 4 percent in 2010 compared to 6.3 percent at the end of last year. The Romanian currency will depreciate to 4.5 RON/EUR by the end of the year and afterwards will register a slight comeback to reach 4 RON/EUR in 2010. Staff
Gap opens second store in Romania in Plaza shopping center
Gap has recenlty opened its first store in Romania within Baneasa Shopping City
Greek group Marinopoulos, which runs the Gap franchise in Romania, has stepped to a second unit in Romania, due for opening in Plaza shopping center in Bucharest, the
company has announced. The store in Plaza covers 800 sqm. The first Gap store was opened in Baneasa Shopping City earlier this year, when the retailer also announced this sec-
ond opening in 2009. Besides Gap, the Marinopoulos Group also operates the Romanian franchises of Beauty Shop / Sephora, Starbucks and Marks & Spencer. The group has signed a franchise agreement with Gap Inc for introducing the brand in Greece, Bulgaria, Cyprus and Croatia too. Gap Inc. is an international clothing retailer running stores under the Gap, Banana Republic, Old Navy and Piperlime brands. Greek Marinopoulos group has previously expressed its plans to bring Banana republic brand to Romania, as part of its expansion plan in the region. American retailer Gap runs a network of 3,100 stores in the US, UK, Canada, France, Japan and Ireland, as well as units run under franchise. Staff BUSINESS REVIEW / June 22 - 28, 2009
AB InBev beer producer to sell factories, Romania included, media says
The company has sold several units so far
Several investment funds such as US â€“ based Kohlberg Kravis Roberts and TPG, as well as Capital Partners in Europe are interested in buying the Central and Eastern European operations of beer producer AB InBev, according to market sources quoted by the Wall Street Journal. The publication evaluates a possible deal at some $2.5 billion. Several beer producers, among which SABMiller, have also shown interest in AB InBev's opera-
tions. International media has recently announced AB InBev's intention to sell 11 factories in Romania, Bulgaria, Hungary, Croatia, the Czech Republic, Serbia and Muntenegro. The first rounds of the bid for the factories on sale will be held in around two weeks, according to sources quoted by Reuters. AB InBev sold its Oriental division in South Korea to investment fund Kohlberg Kravis Roberts for $
1.8 billion. It has also sold its 20 percent participation in Chinese beer producer Tsingtao, for $700 million, to Asahi firm. In Romania, InBev produces beer brands Stella Artois, Beckâ€™s, Bergenbier, Lowenbrau and Noroc and it imports beer brands Leffe and Hoegaarden. InBev Romania was created in 2007 through the merger of Interbrew Romania to Interbrew Efes Brewery. Staff
WBS puts on sale some of its BVB shares
WBS offers BVB shares at RON 27 per share
Stock market brokerage firm WBS Romania is planning to sell its 10,000 ordinary shares in the Bucharest Stock Exchange (BVB), targeting revenues of RON 270,000 (the equivalent of some EUR 58,000), according to information from the company. The offer comes with a low pricing offer, of around RON 27 per share, while other sales offers for BVB shares from other brokerage companies are priced between RON 45 and RON 52, according to the media. WBS's shares in the BVB make 0.71 percent of its capital, and the current share offer covers 0.13 percents of its stake in the local stock exchange operator. WBS Romania is headed and majority owned by Romanian businessmen Cristian Sima, who has 36.1 of the company's share capital, while WBS Holding holds 18.1 percent of the shares. Private individuals Lionello Codognotto and Georges Robert Madevat each own 14.3 percent of the company's share, along with Robciuc Orest, with 10 percent. Staff BUSINESS REVIEW / June 22 - 28, 2009
BRIEFS ECONOMY MINISTRY OKS EUR 100 MLN FOR INVESTMENTS é The Economy Ministry approved more than EUR 100 million from the privatization of some units belonging to state-owned electricity supplier Electrica for making investments in the power network, said Adriean Videanu, the Economy Minister. He added that the ministry targets to consolidate the energy infrastructure. Electrica SA recorded a gross profit of RON 1.5 billion last year, over seven times higher than the one reached in 2007, on funds cashed in through the privatizing of the Muntenia Sud unit. ENEL TO PUMP EUR 300 MLN IN INFRASTRUCTURE é The Italian power group Enel will invest EUR 300 million in Romania's power distribution infrastructure by next year. According to Fulvio Conti, the company's CEO, the money will be used to revamp the electric wires and the network control system and to buy new equipment. Enel plans to keep the investments at EUR 150 million a year for the next five years. The group had previously announced that it would invest about EUR 700 million by 2014. PROPRIETATEA FUND OFFICIALS DO NOT APPROVE NEW ADMINISTRATOR é The head of the surveillance board of the Proprietatea Fund, Mircea Ursache, will ask the government to refuse to ink a contract with Franklin Templeton, as expenses would jump from EUR 1.5 million last year to EUR 19.6 million per year. The head of the commission for the selection of an administrator, Enache Jiru declared on June 9 that Franklin Templeton Investment Management Ltd won the race for administering the assets of the Proprietatea Fund, saying the company had presented the cheapest offer. Eight candidates initially filed offers for the administration of the Proprietatea Fund and five of them qualified for a second round. Out of these, only two offers were kept, those of Franklin Templeton and of Morgan Stanley. Ursache said that the Proprietatea Fund will be listed by the end of the year, as the single step left to take is to select an intermediary. 8
Gabriel Resources raises more money for Rosia Montana, awaits environment approval Canadian firm Gabriel Resources, the main shareholder in Rosia Montana Gold Corporation (RMCG) mining project in Romania, has recently finalized its private placement and public offering which resulted in gross funds of around 117 million Canadian dollars, the company has announced. The company plans to use the net proceeds of the public offering and the private placement towards developing the Company’s 80 percent owned Rosia Montana gold project. The money will be mainly used to buy properties in Rosia Montana village, which need to be relocated in order to start the project. The company has sold 29.7 million shares of $2.25 each. Two of Gabriel Resources major shareholders, Electrum Strategies and Paulson have acquired shares with some 50 million Canadian dollars.
The Rosia Montana project has been stalled since 2007 awaiting environmental approval
Gabriel is a Canadian-based resource company currently engaged in the exploration and development of mineral properties in Romania, specifi-
cally in the development of the Rosia Montana gold project. RMCG was set up in 1999 in Alba county, with main shareholders Gabriel Resources, with 80 percent of the shares, the state mining company Minvest Deva, with 19.3 percent, and other minority shareholders with the rest. The company is currently awaiting the evaluation procedure for the environment approval to be re-started by the Romanian ministry of environment. The project has been stalled since September 2007. RMCG has recently reshuffled its local management, bringing Dragos Tanase, formerly of UPC, to be its general manager. RMCG says the Romanian state could cash in $4 billion in taxes from the project. Staff
FDI investments in Romania slowed down by recession Romania ranks sixth place considering the number of foreign direct investments (FDI) projects and new workplaces create last year, shows the most recent annual study of investment attractiveness conducted by Ernst & Young. According to the study, the FDI projects on the local market haven’t had a spectacular evolution, their number falling from 150 projects in 2007 to 145 last year. This represents a 3 percent decrease. A negative evolution was registered in Hungary with a 26 percent decrease of FDI projects. Belgium saw a 19 percent cut, while at the opposite pole stood Italy, which recorded an increase of 39 percent of FDI projects, Ireland with a 35 percent hike and Germany with a 28 percent increase. The number of new workplaces created decreased with 9 percent last
Romania was the sixth most attractive country for FDI, the study found
year from 12,464 in 2007 to 11,403 last year. Bulgaria had a positive evolution, with an increase of 117 percent of new workplaces and Germany with a 91 percent hike. According to the study, the FDI investments across Europe have stagnated last year, when there were announced 3,718 investment projects,
six projects more than the previous year. The FDI trends were relatively stable in Germany, Switzerland, Sweden, Italy and Ireland, the study shows. The 28 percent increase in Germany was fuelled by the new regional headquarters of different companies and also by the increase in the software and business services in the industrial sector. On the other hand, the recession impact on the number of new workplaces created was a major one, the number of workplaces dropping by 16 percent, to 148,333 units. Regarding this year’s forecast the study shows that the recession will have a greater impact on Europe this year. The first preliminary data reveals the fact that the number of projects has decreased by 8 percent y-o-y. Dana Ciuraru
Mark Henry Gitenstein appointed new US ambassador The United States president, Barack Obama, has nominated Mark Henry Gitenstein as ambassador of the USA in Romania, the Romanian Foreign Affairs Ministry has announced. He was part of the staff which oversaw the transition of presidential duties from George W. Bush to Obama. Gitenstein, a lawyer, has worked
for Mayer Brown law firm since 1989. He has represented corporations and associations before the US Congress and federal agencies, prepared legislative strategies and analyses of pending and potential legislation and monitored and drafted legislation on behalf of corporate clients. According to company informa-
tion, prior to joining Mayer Brown, Gitenstein was the executive director for the Foundation for Change, Inc., in Washington, DC. Previously, he served in several senior-level government positions, including chief counsel to the US Senate’s Judiciary Committee, from 1987-1989. Dana Ciuraru BUSINESS REVIEW / June 22 - 28, 2009
CALENDAR / WHO’S NEWS
EVENTS, BUSINESS AND POLITICAL AGENDA JUNE 22 é 10.30 OTP Asset Management Romania, Intercapital Invest and OTP
Bank Romania, together with the Bucharest Stock Exchange organize press conference on the launch of a new investment fund; at the Bucharest Stock Exchange HQ, Millenium hall.
JUNE 24 é 9.00 Business Review organizes American Business forum at the Inter-
continental Hotel Bucharest. For more details please visit www.brforum.ro
JUNE 25 é 11.00 World Class Romania organizes press conference on the launch
of the competition “World’s Strongest Man Super Series Bucharest 2009” at the Radisson.
JUNE 29 é 18.30 BPP Professional Education organizes cocktail at BPP Premises.
By invitation only.
JULY 8 é 9.00 Business Review organizes French Business Forum at the Inter-
continental Hotel Bucharest. For more details please visit www.brforum.ro.
BUSINESS REPORTER Requirements: • At least one year of relevant experience in journalism (news reporting and editorial features) • Journalism or business degree, good knowledge of the business/economic environment • Strong English-language skills (speaking and writing) • Strong ability to analyse and communicate • Personal integrity • Good PC use Job description: • Prepares editorial coverage of foreign investments, covers events and press conferences, conducts interviews. Please send your CV together with a letter of intent to firstname.lastname@example.org.
BUSINESS REVIEW / June 22 - 28, 2009
WHO’S CRISTIAN SECOSAN is the new CEO of Siemens SRL. He led the company’s Power GenerationPower Transmission and Distribution division from 2005-2007. He has been working in the energy sector for the past 20 years for various multinational companies in Romania. JAMES GRAY-CHEAPE has been appointed general advisor to the Board of DPD (Pegasus) Romania. He has over 15 years experience in the Courier Express Parcel and Logistics sectors in Romania, Great Britain and Czech Republic. He founded Pegasus Courier in 1997, which was acquired by La Poste (DPD - GeoPost Yurtici Kargo) in 2008. Previously he served as an Officer in the British Army and as Operations Director of a Precious Minerals Company in West Africa. LUCIAN ALDESCU has been appointed Chief Executive Officer of DPD (Pegasus) Romania. He has extensive experience in the Courier Express Parcel industry having previously been Chief Operations Officer of Pegasus. In March 2009, he was appointed President of A.O.C.R. (The Romanian Association of Courier Operators). Aldescu has a MBA degree from Tiffin University at Bucharest and is fluent in English. CATALIN DICU has been appointed Operations Director of DPD (Pegasus) Romania. Previously he was Executive Director of the Postal Service Division of TCE. Prior to this he held various management positions, including Commodities and Relief Manager at World Vision In-
NEWS ternational Romania. Dicu studied Engineering and Management of Technological Systems at the Polytechnic University in Bucharest and has a MBA from Tiffin University at Bucharest. He is fluent in English and French.
ALIN - VALENTIN GHERMAN has been appointed Commercial Director of DPD (Pegasus) Romania. Previously he was General Manager of Babel Communications and Sales & Purchasing Coordinator of Holdmann. Prior to this he held management positions in Procter & Gamble. He started his commercial career at DHL. Gherman graduated from Doctoral School of Finance & Banking post university studies at ASE and has an EMBA from Asebuss & Kenessaw State University. He is fluent in English and Hungarian. GIORGIO MODESTI, 43, is the new CEO of Teleperformance Romania. Before joining Teleperformance, he co-founded ON Telecoms, the first triple-play provider on the Greek market. He also worked for five years for Vodafone Italy, and has held various management positions in top companies in telecommunications and CRM. SHACHAR SHAINE, president of the United Romanian Breweries-Tuborg Romania, has been elected president of the Foreign Investors Council (FIC). Shaine has suggested the FIC board focus, among other issues, on immediate measures to get through the economic crisis, consolidating and expanding the FIC membership and advocating specific legislation to increase labor market flexibility.
Business Review welcomes information for Who’s News from readers. Feel free to contact us on 206 0680 (10 lines), by fax at 335 3474 or e-mail: email@example.com
ANALYSIS By Dana Ciuraru
Interest in Black Sea exploration rose after the International Court of Justice established the boundaries of Romania’s continental plateau
New names enter chase for Black Sea deep water resources Joining Petrom and Sterling Resources, two other companies have linked their names to the exploration activity in the Black Sea continental plateau. Romgaz and Marine Resources Exploration International, controlled by Romanian businessman Dinu Patriciu, have started screening the Black Sea's deep waters for natural resources. Interest rose after the International Court of Justice established once and for all the boundaries of Romania’s continental plateau. New names are also likely to enter the fray, as British Petroleum told Business Review that the company was keeping an eye on the potential of any new area for exploration. 10
The International Court of Justice (ICJ) decision at the beginning of this year made crystal clear the status of the Black Sea continental plateau. The ICJ judges ruled that Romania should receive 9,700 sqkm of the offshore surface area disputed with Ukraine, 79.3 percent of what Romania was claiming. Experts estimate that this area conceals 70 billion cubic meters of natural gas, equal to Romania’s gas consumption for four years and about 12 million tons of crude oil, the country's annual consumption. So, at stake are lasting resources, which has not escaped the notice of the companies which have jumped at the opportunity to put their name on a slice of the Black Sea continental plateau. One of them is the stateowned natural gas producer Romgaz. The company received from the National Agency for Mineral resources (ANRM) a prospecting permit for the Black Sea continental shelf, at Muridava Est, Adjud, Rimnicu Sarat and Mizil. Romgaz also signed an agreement for oil exploration and development in the E VII-8 Depresiunea Panonica perimeter, giving it the chance of discovering new oil deposits in the Black Sea. “Romgaz has received the ANRM’s permission to prospect 5,850 sqkm of the Black Sea plateau for three years, with no possibility of extension. After the prospecting data is collected, Romgaz will analyze the information obtained and will conduct a study of the Black Sea basin. Depending on the results, we will decide if Romgaz will participate or not in the bid which will be organized by the ANRM for those perimeters,” Romgaz officials told Business Review. Another name linked to the continental plateau resources is that of businessman Dinu Patriciu. His company, Marine Resources Exploration International SRL, a subsidiary of the Marine Resources Exploration International BV, a company in which Rompetrol Holding contolls a 95 percent stake, has obtained an exploration license for sapropel in a 9,000-sqkm area of the Delta block in the Black Sea. According to company information, the license was granted in July last year, under a public tender procedure organized by the ANRM. The media reported that 3,800 sqkm of this area was in the zone disputed BUSINESS REVIEW / June 22 - 28, 2009
ANALYSIS with Ukraine. The Delta block is located in the deep-sea waters of the exclusive economic zone, which comes under Romanian jurisdiction. “This project presents a potential new opportunity to access natural marine resources on the seabed in a deep sea environment. At this stage, the project requires the deployment of leading edge exploration technology to obtain accurate data that will allow further analysis to be conducted. All projects of this kind require a comprehensive program of exploration and analysis to be concluded before any estimate of the quantity of resources can be determined and the viability of the project established,” said Peter Hamilton, Marine Resources Exploration International SRL CEO. According to him, the exploration activities are still in progress and no conclusions can be made at this stage. “The target of our exploration as defined by the license is a substance known as sapropel, a dark-colored sediment rich in organic matter, which has the potential to produce a variety of useful products, including but not limited to a form of alternative energy. To be clear, we are not exploring for oil, gas, hydrogen sulphide, methane hydrates or other
BUSINESS REVIEW / June 22 - 28, 2009
forms of hydrocarbon,” said Hamilton. Marine Resources Exploration International SRL data show that explorations have already been conducted and will continue in order to complete the planned program. “Deepwater exploration of the seabed is a time-consuming and demanding activity and as such we have allotted a substantial part of the total USD 20 million investment to date to this task. We are using best-in-class international companies in the overall project development, including technology studies. It is too early to say whether the project will be developed alone or in partnership,” said Hamilton. He added that the company’s immediate focus is the project in Romania and it was dedicating its full capacities to its development. For this license the company pays an exploration tax set by the legislation in force. The company has a team of around 40 people. Media reports stated that international names like Total, Royal Dutch Shell and British Petroleum (BP) could be or become connected to the Black Sea continental plateau explorations. BP officials told BR, “In gen-
eral, BP keeps a watch on the potential of any new area for exploration or for new markets, and makes decisions based on many factors including geology, commercial terms and proximity to existing markets or infrastructure.”
Currently, Petrom manages two offshore perimeters on the Black Sea continental platform, Istria XVIII and Neptun XIX, representing an area of 13,880 sqkm. In the Istria perimeter, Petrom operates four commercial deposits (Lebada Est, Lebada Vest, Sinoe and Pescarus) while the fifth deposit (Delta) is in the development stage. The annual production in this perimeter reaches about 31,000 barrels of oil equivalent/day, which represents approximately 16 percent of Petrom's oil and gas production in Romania. In the Neptun zone, Petrom currently has exploration operations. “Last year, Petrom inked a partnership with ExxonMobil for the exploration of this block. We believe that the region is very promising regarding the natural resources we can find here, but we also have to take into consideration the very high costs
of deep water exploration,” Petrom officials told BR. “These reserves will not be of any use if hundreds of millions of euros are not invested in exploration and production. For instance, for E&P activities alone, Petrom has invested some EUR 2.5 billion in the past four years.” Another company which has inked its name on a slice of the Black Sea continental plateau is Sterling Resources. An ANRM document gives Sterling the right to exploit XIII Pelican and XV Midia perimeters. Romanian officials have questioned the conditions in which Sterling Resources received the license for these areas. Moreover, ANRM officials have declared that there are no documents attesting to the hundreds of millions of dollars which Stephen Birrell, Sterling Resources vice-president, said the company had invested in those perimeters since 1992, when first obtained documents for these areas. The list of companies interested in the deep waters resources is not likely to stop here. In times of crisis investment opportunities such as these, although expensive, are popular because of their long term benefits. firstname.lastname@example.org
ITALIAN INVESTMENT REVIEW By Corina Saceanu
Italian firms employ around 800,000 workers in Romania
Italian firms plan to increase Romanian presence despite crisis There are 28,000 Italian firms in Romania which employ 800,000 local workers, and their contribution to the local GDP is 10 percent. Adding the money sent home by Romanian workers in Italy, the percentage doubles. There are almost 700,000 Romanians working legally in Italy, around 20,000 of whom have started their own small and medium companies there. 12
Italian companies are now looking at the infrastructure segment for business opportunities and at the production and distribution of energy, with some already working on this segment in Romania and more interested in doing so, according to Adolfo Urso, the Italian ministry of foreign affairs. “We hope that the large Italian firms present in Romania will increase their presence here and we would like to start joint ventures with Romanian firms and together expand in the region,” said Adolfo Urso. “In the last couple of months I have met many Italians who want to invest in the energy sector here in Romania, mainly in renewable energy, but also in infrastructure and the food sector,” he added. Italian firms are also interested in participating in projects financed by EU funds. Despite 2009 being a difficult year for firms irrespective of their ownership, in the first three months the level of investments coming from Italian companies in Romania hasn't diminished, said the Italian minister. The level of Italian investments in Romania was EUR 140 million in the first quarter of the year, according to Urso. “The level of investments will depend on the projects Italian firms will take part in,” said the minister. He cited a few projects involving Italian firms, like Ansaldi Energia in the project for the 3 and 4 Cernavoda reactors, the involvement of Finmecanica in the modernization of the Romanian defense system, and the interest of Italian firms in building the Bucharest metro. “Our 7.8 percent contribution to the Romanian GDP may increase by enforcing the strategic partnership, despite critics and the recession. At this point we need an instrument to bring value, stabilize, monitor and guide the experience of bilateral relations,” said Stefano Albarosa, head of Unimpresa and also of Cefin Romania, at a seminar held in Rome.
ITALIAN FIRMS HANDLE LOCAL FINANCING BUSINESSES The local subsidiary of Italian Intesa Sanpaolo Bank contributes around EUR 5 million in taxes to the Romanian state each year, having been in the top three foreign investors in Romania last year by the amount invested in the social capital of all the local companies, according
to Nicola Calabro, CEO of Intesa Sanpaolo Bank. “Only last year Intesa Sanpaolo Bank received a significant investment of EUR 100 million from the mother bank to sustain the organic development strategy of our bank,” Calabro told BR. The rebranding and the first image campaigns, development of commercial business structure and products and services portfolio, network doubling and tripling the capital are just some of the bank's achievements in 2008, he added. Following the significant growth in 2008, this year it will about consolidation for the bank. “Our business priorities are to extend our portfolio of products and services and to position our bank as a leader in terms of the quality of service,” says Calabro. The bank was established in 1996 as a regional lender in the west of the country, and it spread to national coverage after the merger between two of the top three banks in Italy. The bank's representative says its objective is to challenge top 10 local banks in the near future. The bank has 900 employees, having grown its staff by 40 percent last year. As for the future, “It’s rather hard to make estimations and predictions in the current situation of the international markets and global economy, but we are convinced that our evolution will be a positive one and once again we intend to further grow above the average trend of the market,” Calabro concluded. In the first quarter of this year, the bank posted an 84 percent growth in operational profit compared to the same period of last year, reaching RON 12.5 million. Banca Italo Romena, a subsidiary of Banca Italo Romena Spa Italia Treviso, plans to develop its territorial coverage, open new agencies in Timisoara and Bucharest and also open new headquarters in Bucharest. “2009 will be a challenge for most companies, for the economy as a whole and for the Romanian banking system,” said Antonio Bianchin, general manager of Banca Italo Romena. Last year, the bank doubled its profit to EUR 20.4 million versus 2007. In the first three months of this year the bank posted a EUR 7.7 million profit, up almost 30 percent on the same period of last year. Its portfolio of granted loans increased by 25 percent during this period. Also in 2008 the bank increased its staff from 196 to 280 people. The bank was set up in 1980 as a joint BUSINESS REVIEW / June 22 - 28, 2009
ITALIAN INVESTMENT REVIEW
Alenia Aeronautica has signed a EUR 219 million contract to deliver aircraft in Romania
venture between Italy and Romania in the banking sector, and it was acquired by Veneto Banca in 2000. In Romania, it runs 19 branches and has total assets of EUR 1.2 billion. Italian UniCredit is present in Romania through UniCredit Tiriac Bank, along with several other firms such as UniCredit Leasing, UniCredit CAIB Securities, UniCredit Insurance Broker, Pioneer Asset Manage-
BUSINESS REVIEW / June 22 - 28, 2009
ment, UniCredit Consumer Finance and UniCredit Processes and A d m i nistration. The bank opened 101 new branches in Romania last year, over 30 units above the initial plans. The total investment in 2008 reached some EUR 32.2 million, most of which went on increasing the network. The bank has also put EUR 1 million into sponsoring and starting up several corporate social responsibility projects, such as environment
Pirelli has so far invested EUR 250 million in its industrial hub in Romania
protection, support for disabled people and cultural projects. â€œWe have the strong support of the UniCredit Group, we have the resources, the required knowledge and an operational platform for our clients during this difficult financial time. We will explore any profitable growth opportunity once the situation stabilizes,â€? said Rasvan Radu, executive president of UniCredit Tiriac Bank. The bank's net profit last year
was around EUR 97.2 million last year, up 37 percent on 2007. Its operational profit grew by 48 percent compared to the end of 2007, reaching EUR 163.5 million at the end of last year. At the end of 2008, the bank had assets of EUR 4.75 billion, while the consolidated assets in the group where the bank holds participations locally were of EUR 5.5 billion. continued on page 15
ITALIAN INVESTMENT REVIEW/INTERVIEW pean funds available for this country. How has the crisis affected Ro manian workers in Italy? Many have returned home â€“ how many Romanians have returned from Italy since the beginning of the year? We have no evidence of a sizeable migration of Romanian citizens coming back home from our country due to the economic crisis or for other reasons. Actually, as they have been in Italy for years and they are very well integrated in our country, Iâ€™m confident that they will continue to work and live there. A signal that supports this view is the increasing number of Romanian firms working in Italy, around 20,000.
Italian investors take advantage of relaxed fiscal measures and cheaper labor costs The Italian business presence in Romania will not shrink due to the crisis; on the contrary, Italian companies doing business here will take advantage of the new fiscal measures and competitive labor costs, while asking for further relaxation of fiscal and commercial rules, the Italian ambassador to Romania, MARIO COSPITO, tells Business Review. By Corina Saceanu
ence in Romania for many years there are strong signals that our firms will not leave the country. In line How has the level of Italian in - with this view, it should be noted that vestments in Romania evolved in in this country there are around the first half of the year, and what 28,000 small, medium and big enterare the signals you are getting from prises that have been making strateItalian companies? gic investments here in the medium In line with a more general inter- and long term. national trend, even Italian companies are expected to be affected by What measures has the Italian the recent economic crisis, facing a government taken to fight the finan consequent but limited downsize of cial crisis that would be advisable their activities. However, having had for Romania too? a well-structured and strategic presThe global economic crisis had a 14
serious impact on all the European Union member states. There is anyway a huge structural difference between the different economies and between Italy and Romania as well. Some general suggestion to deal, in the best possible way, with the current market downturn would be: to keep under control the public deficit, to adopt fiscal policies to avoid severe currency depreciation, to maintain and increase the initiatives to attract foreign investors, to improve the infrastructure network and finally to enhance the absorption of Euro-
From your contact with Italian firms, what do they believe the gov ernment should do to help foreign investors in Romania? The Romanian economic context is a fertile background for Italian investments. This is due to several factors, such as the low taxation, competitive labor costs and the great opportunities offered by the Romanian domestic market, which has been growing fast in the last few years. In order to further improve the economic activity in Romania, it would be good to have not only a further simplification of the fiscal and commercial rules but also an additional effort aimed at keeping a business-friendly environment in the Romanian market, especially in the current economic situation. To what extent do you think the Romanians' image problem in Italy is still an issue, and has it been ad dressed? For sure the bilateral perception has been improving in the last months thanks to the various efforts and initiatives undertaken by the two countries on the institutional side and in the media, in order to avoid some misunderstandings that belong to the past. In that context, I would argue that the large Romanian community in Italy, which numbers about one million people and is the biggest in our country, is particularly appreciated by Italian institutions and citizens, who welcome warmly Romanian citizens and make a sharp distinction between the vast majority of serious and friendly Romanian workers and the few individuals that have been perpetrating criminal offenses. email@example.com BUSINESS REVIEW / June 22 - 28, 2009
ITALIAN INVESTMENT REVIEW
Enrico Malerbo, chief executive officer of Pirelli in Romania
Nicola Calabro, CEO of Intesa Sanpaolo Bank in Romania
continued from page 13
project at Cernavoda, being part of the winning EnergoNuclear consortium which will build the units. Enel has a 9.15 percent stake in the project company which will build the estimated EUR 4 billion project. The project should be completed in six years, according to previous data. The project agreement was signed in autumn last year, and is currently in the investment assessment phase. In 2007, Alenia Aeronautica signed a EUR 219 million contract with Romtechnica, the National Company for Foreign Trade of the Romanian Ministry of Defense. The contract covered the delivery of seven air planes, with the first plane to be delivered at the end of 2008. However, the delivery has been delayed several times, with the latest deadline set for July this year. The Italian firm also signed a more recent deal, a $37 million contract sealed last year for the delivery of aircrafts to Romanian airline operator Tarom. ATR aircraft manufacturer is an equal partnership between Alenia Aeronautica and EADS. The local division of Italian holding Cefin, Cefin Romania, started in 1995 as a dealer of Iveco trucks, and has expanded meanwhile both on other market segments and regionally, in Hungary and Bulgaria. Now the holding includes the Iveco franchise, Cefin Automotive, Eurobody, 4Bus and Cefin Real Estate Asset management. In 2007, the group posted a total turnover of EUR 270 million and a 3 percent pre-tax profit. The firm has been running real estate projects in Romania since 2001, with total value of managed projects reaching EUR 800 million, according to previous data from Cefin. The holding employs 1,400 staff in Romania.
Italian financial group Generali has a longer history in Romania than one would expect – the first unit here was opened 1835 in Braila. In the mid 1900s, the group withdrew from the market only to make a comeback in 1993. Now Generali PPF Holding is present in the country with Generali Asigurari, Ardaf, RAI and Generali Pension Funds. Generali Asigurari, the insurance company, grew its gross subscribed premiums of BY? TO? around EUR 5.6 million, up 17.5 percent on the same period in 2007. “This year we will focus on life insurance and non-auto insurance segments, on general retail and corporate insurances. […],” said Marie Kovarova, general manager of Generali Asigurari and coordinator of Generali PPF group in Romania.
PIRELLI MAKES IN ROMANIA
Italian group Pirelli has invested around EUR 250 million to create an industrial hub in Romania, which now includes a tire factory in Slatina, a metallic cord factory, and an antipollution filters factory for diesel cars in Bumbesti Gorj. The entire Pirellli production in Romania employs 2,000 people, with 95 percent of the production going to export, the rest being sold on the domestic market. “So far Pirelli has invested in the tire factory in Slatina alone around EUR 170 million. The financial crisis is extremely powerful and it continues to a ffect the car industry,” Enrico Malerba, CEO of Pirelli in Romania, tells BR. “According to our previsions, the tire factory in Slatina will achieve an annual production capacity of 4 million tires this year, taking BUSINESS REVIEW / June 22 - 28, 2009
into account the market demand throughout the year,” he adds. “For the second half of the year our estimations are optimistic. The crisis will continue but we have to underline we have seen the first optimistic signs,” says Malerba. The factory in Slatina has completed the start-up phase and now efforts are focused on consolidating the production and continuing to increase the efficiency indexes. “To date our factory in Slatina is one of the most efficient in the Pirelli group,” said the company's representative. The core of the Pirelli presence in Romania is the Slatina factory which produces tires for cars and SUVs. The factory was opened in 2006 and in the first year of production made 2 million tires, which increased to 3 million in 2008. “The crisis is felt in the Pirelli group too, but not so badly as to hinder our investment plans,” said Malerba. Italian energy group Enel runs businesses in the energy supply and distribution in Romania, through Enel Energie and Enel Energie Muntenia for the energy supply side and through Enel Distributie Banat, Dobrogea and Muntenia, the three companies which distribute energy in these areas of Romania. The firm employs 5,500 people in total in Romania and has 2.5 million clients. Enel said it would invest EUR 700 million in the next five years in revamping the Romanian energy network in Muntenia, Banat and Dobrogea regions. The firm has 30 percent of the Romanian-based energy market and the investment sum is part of the operator’s investments strategy already announced in 2008. The Italian company is also involved in the nuclear units 3 and 4
Recently, the firm's representatives estimated a decreasing turnover for this year, down almost 20 percent on the previous, when it made around EUR 300 million. The Cefin Holding is controlled by the Albarosa and Orecchia families.
GEOX SELLS FACTORY IN ROMANIA BUT KEEPS RETAIL
Italian footwear producer Geox, which used to run a factory in Romania in Timisoara but has recently sold it, is planning to increase its Romanian presence after this sale by opening new stores through franchise. For this year another store opening is planned, adding to the existing five. Prior to the sale, Geox had invested around $70 million in the Timisoara factory, which was sold to VT Manufacturing after Geox decided to amend its production strategy. The factory in Timisoara was only meeting 5 percent of the group's production, the rest being covered through outsourcing. The new owners of the Timisoara factory will work with Geox and continue producing for the firm. Real Estate Advisory Group REAG, member of American Appraisal, entered the Romanian market in 2006 by opening an office in Bucharest. The American group is involved in real estate transactions, acquisitions, sales, fusions and feasibility studies, along with real estate management and technical consultancy. REAG was created in 1992, to offer independent specialized consultancy services in real estate. Locally, REAG has evaluated together with Regatta, the properties on investment fund Lewis Charles Romania. firstname.lastname@example.org 15
ITALIAN COMPANIES ACTIVE IN ROMANIA
*Agip Romania SRL is affiliated to Italian Eni Group; **Zoppas Industries Romania SRL is part of the concern Zoppas International
Companies are listed in alphabetical order. The information in the list was provided by companies. Only those companies answering our questionnaire were included. ÂŠ 2009 Business Review. The list may not be reprinted or reproduced in whole or in part without permission from the publishers. Corrections or additions to the list should be send to email@example.com or by fax 021-335-3474. 16
BUSINESS REVIEW / June 22 - 28, 2009
JUNE 22 - 28, 2009 / VOLUME 14, NUMBER 23
BUSINESS REVIEW FORUM
Manage your business environment !
Intesa Sanpaolo Bank pre-leases office space in Brasov Business Park
The office compound, some 28,000 sqm in total, was developed by Ravensdale Investments
Italian bank Intesa SanPaolo has pre-leased 9,500 sqm of office space in Brasov Business Park compound, according to CBRE Eurisko, the company which intermediated the lease. The office building in Brasov offers 28,000 sqm of offices in a total in four office buildings. The project, de-
veloped by Ravensdale Investments, also includes a 3,600-sqm conference center and 5,600 sqm of retail spaces. The first phase of the project will be delivered in autumn this year, some 14,000 sqm of space. The local real estate market has seen fewer office leases this year, due
to the financial uncertainties. However, several leasing deals have been sealed this year, although for decreasing office areas and at slightly lower rents. The Intesa SanPaolo pre-lease is one of the biggest such deals signed in 2009 so far. Corina Saceanu
ESTATES & CONSTRUCTION MARKET
Demand for offices shrinks, rents drop by 10 to 25 percent, Esop finds
Rents were also down by 10 to 25 percent during the first part of this year compared to 2008
The office segment of the local real estate market has seen a drop in demand for spaces of 10 to 15 percent from small and medium companies and of 25 to 30 percent from the corporate segment in the first half of the year, information from real estate brokerage company Esop shows. Relocation budgets have shrunk in line with turnover, which have fallen by around 20 to 50 percent during this period. Rents are also down by 10 to 25 percent compared to 2008. “The companies' relocation budgets have shrunk proportionally with their profits during this period. For small and medium enterprises, but also for medium corporations, budgets have shrunk by around 30 percent. For 100 to 150 sqm most budgets don't exceed EUR 1,800 to EUR 2,000,” said Esop representatives. Larger companies are looking for B and C office buildings and villas, of 200 to 300 sqm, with average
budgets between EUR 8 and EUR 12 per sqm. For larger corporates, B and C buildings are preferred, with asking areas between 800 and 1,200 sqm and average budgets between EUR 10 and EUR 12 per sqm, according to Esop's study. Owners of empty buildings saw a slight movement on the market in the first part of the year, but it soon turned out that those who were asking for new offices were testing the market to find better leases and were ultimately sticking with their old landlords. Besides the pre-leasing difficulties, 2009 also came with a surplus of offices on all segments. Another new trend on the market was sub-letting, as many companies had pre-leased more space than needed, hoping to expand next year, but have delayed expansion in the meantime. Corina Saceanu
Shapir freezes apartment projects in Bucharest and Sibiu Israeli real estate developer Shapir Project Europe has stalled two real estate projects in Bucharest and Sibiu, which would have totaled 2,400 apartments, because of lack of buyers, according to a local newswire. “We have the construction permits for both of the projects and we should have started developments this year. The market is unstable, there is no demand, there are no buyers and these are not circumstances to start developing projects, so work on both compounds have been stopped until the situation will improve,” said Avi Morgenstern, head of international operations with Shapir. He added that when the market conditions will be favorable, the company will have no problem in fiBUSINESS REVIEW / June 22 - 28, 2009
nancing construction works from its own resources and from banking loans. One of the developer's project in Bucharest was supposed to deliver 1,600 apartments in a Pipera location, while the Sibiu project was in plan with 800 apartments. Several other residential developments in Bucharest and in other Romanian countries have been stalled since the beginning of the year, either due to the lack of buyers or the developers' cashflow problems. Most of the developers in this situation said they would re-start projects when the real estate market conditions improve, which some real estate professionals believe to happen next year. Staff
Cafe Cafe Constanta: a good reason to visit the city, even during the holiday
Mediterranean restaurant with terrace, coffee-shop and lounge bar right in the center of Contanta city Positioned into a historical building from the center of Constanta, Café Café Restaurant became, for a while, the place of meeting for decorous persons; spectacular architecture, bio-food, traditional recipes, exotic spices transform it in a perfect place, whether we talk about holiday or business meeting. Why we shouldn’t miss the restaurant? Not because the VIPs meet often here or because the lovely atmosphere, but first of all for the healthy food, Mediterranean specialties, unusual recipes, particular for the area. In the Menu you can find seasonal food, the fresh smell of a real garden, Black Sea fish relished with the chef’s
inspiration. Also you can find the wellknown Dobrogean sheep with rosemary, Mediterranean Dorada with pimiento, goose roast with strawberries, ice cream with fresh cherry or Madagascar vanilla baton, marinated bell-pepper or apple. The Mediterranean specific fill the beauty of the location by the variety and freshness of the menu. It is wanted to resuscitate the tastes of grandma` cooks by virtue of fresh ingredients and the perfect recipes. The Bar Menu and the Wine Book complete the offer with coffee recipes from all the Mediterranean Coast, with a spectacular list of cocktails and wines. Details: www.cafecafe.ro; telephone: 0732 190 991
renting a movie theater can be a less expensive option for corporate events
Cinemas make profit from more than just movies Some of the companies that run cinema halls, either because they own them or they have administration rights over them, can make a pretty profit from renting their movie theaters for various events, other than film screenings attended by the general public. Given that the cost of renting a hall in a highly reputed hotel can be anything between EUR 2,500 and 5,000, renting a movie theater can be a less expensive option for corporations that wish to organize events without being left with a considerable hole in their budget. By Otilia Haraga Most movie theaters that can be rented fall under the authority of the autonomous self-financed entity RADEF RomaniaFilm, which in turn comes under the authority of the Ministry of Culture. Half of the total profit of this entity comes from renting the halls for events other 20
than movie projections. Last year, RADEF posted revenues in excess of RON 11 million. “The sums which are raised are used for current expenses such as salaries, utilities and maintenance, says Elena Incrosnatu, manager of the entity. Currently, RADEF is in the process of applying new legislation which stipulates that it should trans-
fer movie theaters under its administration to the administration of the local councils. At the moment when these stipulations appeared, RADEF RomaniaFilm was in charge of 279 rooms and open - air cinemas , of which 48 were turned over to the local authorities. Therefore, in the administration of RADEF Romaniafilm there are 231 halls and cinema gardens. The entity started renting the cinema halls in 1992 when cinema going was in decline and it had to support itself financially. Therefore, some of the movie theaters were rented to host other activities such as discos, gaming rooms and other commercial activities. Up to now, 96 of these movie theaters were rented for other purposes. In Bucharest, the cinemas that are rented are Patria, Scala, Corso, Europa and Gloria. The renting proposals that RADEF RomaniaFilm has received up to the moment concern events, concerts, generally activities that do not interfere with movie projections. Prices are established depending on several criteria such as the type of event, duration, and the hours at which it is programmed to take place. So far, RADEF RomaniaFilm cinemas have hosted high school and faculty graduation events, theater plays, concerts, religious and electoral meetings. Peak times of demand are electoral campaigns and when the school semester ends. However, given the fact that it is subject to surrendering cinema theaters to local authorities, the direction is not making any investments in restoration or modernization, which may cause clients to opt for the services of private chains which run multiplex cinemas. The British company The Light, which has seven screens at Liberty Center in Bucharest and will open eight screens in Tiago Malls in Oradea in October this year, is another competitor on this market. The price of renting its theaters depends on the event and time of day but starts from EUR 200. “We have hosted several launch presentations, premieres, private screenings, live opera from New York and live sports,” says Keith Pullinger, owner of the cinema. The revenues from these activities represent 5 percent of total revenues of the company, with three-four events hosted per month. Pullinger says the company
will post a turnover in excess of EUR 1 million this year on the local market. “Our all digital facilities allow us to show anything on screen (DVDs, Powerpoint presentations etc) and our luxury bar is very popular for hosting pre and post catering activity,” says the owner. “This kind of activity takes place only where it does not interfere with the smooth running of the cinema, namely movie watching, and has as its main purpose a significant growth in the public’s interest in cinema going,” says Raluca Moroianu, marketing director of the entertainment division of Media Pro, owner of Hollywood Multiplex. The events that have taken place in the movie theaters at the Hollywood Multiplex include children’s parties, surprise anniversary parties, private screenings, meetings on various topics and events that companies organize for their employees. Another competitor on this market is Movieplex Cinema SRL. Prices for renting a cinema hall vary depending on the event (more exactly on the support offered by Movieplex besides placing the hall at one’s disposal), the capacity of the theater (the firm has 11 theaters with different capacities, from 44 to 503 seats) and the length of the event. “As a rule, the standard offer is to rent a theater for two and a half hours and the price varies depending on the capacity and the equipment,” said Movieplex representatives. Movieplex has hosted birthday parties, private screenings, conferences, company meetings, product launches and exclusive movie launches. There are times when there are 10-15 such events per month, but other periods with only 6-9. “There has not been any decrease in the demand for renting the movie theaters in this period. Demand is not constant but summer time sees the lowest demand,” say company representatives. In 2008, the turnover posted by Movieplex amounted to above EUR 5.7 million (RON 24 million) and the profit was approximately EUR 714,000 (RON 3 million). “The value of our main activities such as cinema ticket sales and the sale of advertising space is very high in comparison with revenues from renting the movie theaters,” say company representatives. firstname.lastname@example.org BUSINESS REVIEW / June 22 - 28, 2009
China Crisis NAN JING AT THE MINERVA HOTEL AND OBA KITCHEN AT CASA VERNESCU
ix weeks ago I wrote in this newspaper that the Chinese Garden in Pipera was the best Chinese chophouse in town. But I included the caveat that this accolade means little as they had no real competition. So let’s add a mix of new competition with two significant Chinese restaurants. First, lets look at Nan Jing. Its décor is modern and comfortable, but why, oh why did they have to do it in red and black? When will restaurateurs outside the Orient realize that it is not necessary to remind the customer that they are eating Chinese by having red, black and gold décor? That said, they have omitted the paper lanterns (thank God) and the overall effect is pleasing. A vast menu arrived listing well over 100 dishes. This did not impress me one bit, as it is an old trick to take the same dish, and then add one extra vegetable, or omit a few vegetables, or add a bit of soy, or not… and so on. That is how you make up a vast menu. I find it irritating. But what was more irritating was the House’s practice of listing everything by weight. If ever you need proof that Romania is not really in Europe (and culturally and gastronomically it is not), it is the Third World practice of weight listing the food in the menu. Can you imagine anything more absurd than their listing the weight of each soup at 200 grams? Who the hell gives a flying toss about the weight of the water in my soup? Stupid or what? A further perusal of the menu revealed that there is nothing authentically Chinese about it whatsoever. Paradoxically, this fact alone may well make it successful, for unless the local clientele have eaten Chinese in Asia or Europe, they know nothing, absolutely nothing, about Chinese cuisine. So it is dumbed down to suit Romanian tastes. This means that there is no attempt to supply the authentic reBUSINESS REVIEW / June 22 - 28, 2009
or similar ingredients (onion, garlic, soy cabbage, celery, ginger, oyster sauce and so on) all in differing amounts. Cook it yourself at home, but not at the House prices ranging between RON 26-35! We went through a selection of pork and chicken dishes, all of which were also acceptable. We could not find one dish which we considered to be bad. Everything was OK, but bland and expensive.
The Nan Jing restaurant is located within the Minerva restaurant
gional cuisines of Cantonese, Szechuan, Huaiyang and Peking. Nope – this is tourist tat made for Romania! It is also expensive. The cheapest bottle of wine cost RON 50, a greedy mark up of 500 percent. We passed on their seafood section, because at a price of around RON 8090 for simple prawn and octopus dishes, we considered it a greedy insult. I defy you to reverse engineer the low cost price of the ingredients bought from your local supermarket, and then try to justify the House prices. Each dish was comprised of a variation of: tinned bamboo shoots, spring onions, ginger, garlic, rice wine, sesame oil… and everything else you can buy off the shelf
in Mega Image. Shame on them for charging more than RON 80 for their humble 160 gram dishes! So we ordered a sliced duck with a sauce made from tinned bamboo slices, spring onions, pepper, soy sauce and rice wine. Simple but perfectly acceptable. But like everything else we tried, it was so bland and lacking in flavor. All the House dishes cried out for MSG (Monosodium Glutomate) – a nonchemical, harmless, natural substance used as seasoning in Asian cooking worldwide. I shall refrain from listing the huge menu which was sectioned off into beef, duck, pork and chicken dishes. There were no great gastronomic surprises as it was all the same dishes prepared with the same
Now this is Chinese with a difference. The difference is that it is not really Chinese. The House experimented with their Chinese chefs, and came up with a selection of dishes which were borrowed from Asia, rather than trying to replicate pure Chinese dishes. It works very well. It is also charmingly eccentric, for there is no menu. The waiter will tell you what the dishes of the day are. I shall not dwell for too long on the food I had, as there is no reason to expect it to be on the list when you go there. It changes all the time. But I will tease you by stating that I had a traditional sliced duck with pancakes, onions and hoi sin sauce, but with the welcome European addition of a slab of foie gras. Clever trick, Chef. Familiar Cantonese stir-fried dishes were enhanced with help from Thailand with the addition of coconut and Thai spices such as fresh coriander and hot chillies. Unlike the overpriced Nan Jing, the prices here are a bargain. How could they not be, because it is all free. That’s right – gratis. However the proviso is that you should play at their gaming tables upstairs, either as a “high-roller” or as a regular gamer playing for “reasonable” stakes. So the moral is that if you are a casino gambler, consider changing your venue to Casa Vernescu and cry all night at your losses with the comfort of fabulous Chinese/Asian cuisine. Michael Barclay michael..email@example.com 21
Massive campaign for right to education kicks off
Andreea Marin Banica, Damian Draghici and Dana Deac took part in the official launch of campaign
Ovidiu Rom and Asociatia Telefonul Copilului officially launched last week the Scoala te face mare (School helps you to grow up) campaigned aimed at increasing the school attendance of impoverished children and making education a top priority on the public agenda. The campaign, developed by Saatchi & Saatchi, is endorsed by the Ministry of Education, the National Authority for Child Protection, and is supported by UNICEF and Salvati Copiii. The campaign is a collaboration between public figures, ad agencies, media networks and Romania’s leading production companies. TV adverts with hosts Andreea Marin, Cabral, musicians Damian Draghici, and Dan Bittman and the public broadcaster’s first channel TVR director Dana Deac started airing on June 6 on the major
TV channels. Award-winning filmmakers Cristian Mungiu and Radu Muntean directed the ads. The campaign offers citizens and parents a way to request information and report problems they face in sending their children to school through the child helpline 116 111. Data collected through the child helpline 116 111, may also be used to influence public policy to make it easier for poor children to graduate from school. As school drop-out rates continue to rise, the campaign aims to spread the message that all children in Romania have the right to education, and that all parents have the obligation to keep their children in school for at least 10 years of study. Between 2001 and 2008 the school abandonment rate almost tripled for primary school, and quadrupled for grades five to eight. This alarming trend is not well known by the general public and has been getting little attention in the press. The main reasons for school drop-outs are severe poverty, parents’ low levels of schooling, lack of information regarding their legal rights and obligations, and lack of teacher training. This campaign was conceived as the beginning of a long-term initiative to draw the attention of both the public and the government to the increasing education gap between the ultra-poor and the middle class – and to provide assistance to poor people for whom the school system often presents daunting financial and social challenges. ■
The Release the Trees campaign, aimed at removing illegal adverts from Bucharest’s trees, has ended in the city’s sixth district. Around 141 ads posted illegally were removed by the 18 volunteers of Agent Green. Most of the ads were for candidates for the June 7 elections for the European Parliament.
Cinema City to open in Bucharest
The cinema will open in AFI Palace Cotroceni
Bucharest will add a megaplex to its existing cinema network with the opening of operator Cinema City Romania, the local branch of Cinema City International. The
opening is scheduled for October this year in AFI Palace Cotroceni mall. The complex will have 21 screens and around 4,300 seats, and will also host an IMAX hall. Cinema City Cotroceni is the sixth project inaugurated by the company in Romania, after openings in Iasi, Timisoara, Cluj and Bacau between 2007 and 2009 and the upcoming one in July, in Pitesti. A second location is planned for Bucharest in Sun Plaza Mall, due to open shortly after the Cotroceni one. With this, the company will consolidate its position as the largest cinema operator active locally with 72 halls. For the next three to five years the company plans to add 20-25 further projects all over Romania. ■
On Carbon Neutral Day, employees of TBWA/Merlin cleaned parts of the Baneasea woods, one the main green areas of Bucharest. The activity was entirely eco-friendly, starting with the bags used, which were made of re-used outdoor materials, to the wooden signage of a cleaned area. According
Novotel Bucarest City Centre has recently opened Terrace 37. The terrace has 54 seats and aims to
to representatives of the Bucharest Woods Authority, who coordinated the volunteers, around 2 ha
recreate the French terrace experience. The venue is an extension of Bar 37 which is located on the
was cleaned up and the waste that was removed weighed around one ton.
hotel’s ground floor.
BUSINESS REVIEW / June 22 - 28, 2009