The Diplomat no 3 2018

Vol. 14, Q3, 2018

Crypto currency exchanges The new outsourcing El Dorado? >> page 20

politics

economics

business

events

Romanian President Klaus Iohannis hosted the third Three Seas Initiative Summit on 17-18 September 2018, at the Cotroceni Palace. The Bucharest Summit represented the political opportunity to validate the strategic guidelines founding the Three Seas Initiative’s future development.

Consequently, one of the objectives of this flexible political platform was the economic development of the Central and Eastern Europe countries, through increasing interconnectivity, especially on the North-South Axis but not only, in three main fields – transport, energy, digital – and boosting competitiveness of the participant states’ economies.

contents Q3, 2018 4. POLITICS

17. BLOCKCHAIN

Romanian Senate adopts referendum for traditional family

How it’s made and what can we do with it

5. ECONOMICS

26. SMART ROMANIA

Romanian entrepreneurs to expand abroad

6. ENERGY

Testing the challenging “Smart City” and “Internet of Things” concepts.

OMV optimistic on approving billion euro investment in Romania soon

34. NEW REAL ESTATE BUBBLE? It depends on who you ask

7. REAL ESTATE Developers to deliver 380,000 sqm of new offices in Bucharest next year

8. INFRASTRUCTURE Romanian Government signs 600 million euro contract for water infrastructure

Publisher Mirela Gavra Marketing Manager Nicolae Popoviciu Business Development Manager Cristina Millio

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38. OPERATIONAL LEASING Confidence rising

45. EURO 2020 Romania struggles to finish its stadiums by kick-off time

Copy-Editor Ken Huegel Editors Petre Barac Alexandra Cioboata DTP Ocean 2000 Event photos by Septimiu Slicaru

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Copyright 2018 - Diplomat Media Events SRL

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politics

ROMANIAN SENATE ADOPTS REFERENDUM FOR TRADITIONAL FAMILY On Tuesday, September 11, Romania’s Senate adopted the draft law for changing the definition of family in the Constitution, I reported. The new article should state that family is based on the marriage between a man and a woman, thus making samesex marriages illegal in Romania. The Senate’s vote was the last step before organizing the referendum, which will take place on October 7, according to Liviu Dragnea, the leader of the ruling Social Democratic Party (PSD).

The referendum will be “a crucial moment for the fundamental values of the Romanian society”, Dragnea said, adding that he would vote for family in its traditional sense.

A total of 107 senators from PSD and junior coalition partner ALDE, as well as from the National Liberal Party (PNL) and Hungarian Union (UDMR) voted in favour of this initiative, while Save Romania Union (USR) voted against.

EUROPEAN PARLIAMENT DISCUSSES ROMANIA’S SITUATION IN PLENARY SESSION The European Parliament has decided to organize a debate on the situation in Romania in a plenary session at the beginning of October. The debate will focus on the legislation changes targeting the justice system and the violent incidents during the August 10 protest, Digi24 reported.

The decision was made during the meeting of the party leaders in the European Parliament at the proposal of the Greens.

Romanian prime minister Viorica Dancila may also participate to this session to present the Romanian Government’s position.

The European Parliament also had a plenary session dedicated to Romania in February this year, when the MEPs discussed the reform of the Romanian justice system and the threat it may pose to the rule of law in the country.

The Romanian PM didn’t attend that session in which several MEPs criticized Romania’s proposed justice reform.

Romanian president Klaus Iohannis will address the European Parliament at the end of October with a speech about the state of the Union, which all EU leaders hold by rotation.

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NEW GOVERNMENT RESHUFFLE IN ROMANIA TO TAKE PLACE IN OCTOBER A new reshuffle of the Government is supposed to take place in early October, according to the Socialist-Democrat Party (PSD) Liviu Dragnea. He said that, together with the Prime Minister Viorica Dancila, he will make an evaluation of all ministers until then and the PSD leadership will decide which ministers will be replaced.

"Madam Prime Minister and I, we talked with Mr. Tariceanu, he must present his own ministers' assessment, and we in the PSD, within a reasonable time - not too long - must have a discussion about the Government and I believe that by the end of this month or the beginning of October this

must end with a reshuffle," Dragnea said.

He refused to make public the names of the ministers who might be changed, but he said that was satisfied with the prime minister.

"I am very pleased with the Prime Minister, I and many of my colleagues know that she is a good Prime Minister.

I know she sets things up every day, she starts and approves projects every day, but unfortunately in some ministries, some colleagues, some members of the Government have failed to have the decision of opportunity which is theirs," said Dragnea.

ROMANIA’S FORMER PM STARTS GATHERING SIGNATURES FOR ELECTORAL LAW REFORM The Romania Together Movement, led by former technocrat PM Dacian Ciolos, and Save Romania Union (USR), one of the biggest opposition parties in the Parliament, started a campaign to gather signatures for an electoral legislation reform.

The two parties want mayors to be elected after two election rounds, not one, and ask for the elimination of electoral thresholds in local elections and in the elections for the European Parliament.

Another goal is to allow Romanians abroad to vote more easily and to increase the number of MPs representing them in Romania’s Parliament. The initiative aims to create a legislative framework that would allow the renewal of the political class in Romania, Ciolos said on Tuesday, September 11.

“In the last year and a half, many Romanians convinced themselves that Romania needs a viable, positive and constructive alternative, which can only be

achieved with honest and competent people in politics and with good laws,” Ciolos said, according to Agerpres.

USR president Dan Barna also said that Romania will have a chance when new people will join local politics as the country’s main problem is the corrupt and incompetent political class. USR also managed to gather one million signatures this year for changing the Constitution and banning convicted people from official positions.

The Diplomat – Bucharest

economics

OTP ASSET MANAGEMENT ROMANIA LAUNCHES OPEN-END INVESTMENT FUND WITH EXPOSURE TO THE GLOBAL REAL ESTATE MARKET

STARTUP CO-FOUNDED BY ROMANIAN TO TURN UNICORN Branch, a deep linking startup in the U.S. co-founded by Romanian Madalina Seghete, will reach a valuation of one billion USD after a 129 million USD financing round, according to techcrunch.com.

Deep links take users to a specific piece of web content, instead of a website's homepage. Branch helps brands create links between websites and mobile apps, helping them increase conversions, user engagement, and retention.

The company, which was launched four years ago, supports 40,000 apps with roughly three billion monthly users, including Airbnb, Amazon, Bing, Pinterest, Reddit, Slack, Tinder and others.

Madalina Seghete, a Romanian who has been living in the U.S. for 17 years, is Branch's co-founder and marketing director. She has a BS in Computer Engineering from Cornell and a masters in design from Stanford. The other cofounders are Alex Austin, who is also the company's CEO, Mike Molinet, who is in charge of operations, and Dmitri Gaskin, in charge with engineering.

OTP Asset Management Romania launched the OTP Real Estate & Construction (OTP REC) fund to offer international exposure on the real estate and construction market. OTP Real Estate & Construction aims at a strategic allocation where at least 75 per cent of the assets are invested in shares and bonds issued by companies active in real estate and construction. OTP Real Estate & Construction is addressed to retail clients and institutional clients who are willing to accept a medium-risk degree and who want a liquid investment with exposure to the real estate market. The recommended investment period is one to three years.

By launching OTP Real Estate & Construction, the company wants to offer an alternative solution for the Romanians‘ appetite to invest in properties.

The fund is focused on generating and distributing a high revenue, which makes it a passive income instrument. Just as a person purchases a studio or apartment in order to get a certain amount of rent money, an investor in OTP Real Estate & Construction can receive a quarterly income generated by dividends and coupons.

The Fund will invest in real estate and construction companies, such as REITs (Real Estate Investment Trusts) in Western Europe and the USA, run by professionals with decades of experience at an international level.

BLACK SEA TRADE AND DEVELOPMENT BANK GIVES 40 MILLION EURO LOAN TO ALPHA BANK ROMANIA

INTERNATIONAL BUSINESS FORUM STIMULATES ROMANIAN ENTREPRENEURS TO EXPAND ABROAD The Ministry of Business, Commerce and Entrepreneurship organized an International Business Forum on August 30 and 31 at the Parliament Palace, with over 800 participants. The aim of the action was to stimulate successful Romanian entrepreneurs in the direction of opening up to new export markets and opportunities to invest in other markets.

At the plenary session on 30 August, more than 50 embassies accredited in Bucharest sent their representatives at ambassadors level, business, trade counsellors, or diplomatic mission heads.

The "Business Romania" Platform, an instrument that will support foreign investors and local companies in identifying potential partners for creating new businesses or developing existing ones, was presented at the forum.

This platform will include information on funding options for Romanian companies, the presentation of the fiscal and legal framework for commercial companies and details of the promotion of greenfield and brownfield projects - projects that can be developed in a public-private partnership with local public authorities.

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The Black Sea Trade and Development Bank (BSTDB) is increasing the availability of financing to small and medium enterprises (SMEs) in Romania with a 40 million Euro SME Facility to Alpha Bank Romania. The facility will be used to finance investment and working capital needs of industrial, production, agricultural or service-related SMEs in the country.

"Assisting the SME sector development in the Black Sea region is one of BSTDB's strategic priorities as a regional development bank. We are happy to start cooperation with Alpha Bank Romania to jointly improve access to capital for Romanian small businesses and help generate employment, increase export capacity and competitiveness and otherwise support economic growth.", said Dmitry Pankin, BSTDB President.

"Alpha Bank is committed to financing SMEs, which offer significant support to economic growth and contribute to the creation of new jobs in the country. The partnership with BSTDB is in line with the Bank's ongoing support to the development of the SME market segment", said Periklis Voulgaris, Executive Vice President of Alpha Bank Romania. "This arrangement will also provide the Bank with a more diversified source of funding from international lenders."

This operation will bring the total BSTDB financing provided in support of Romanian SMEs to more than 100 million Euro.

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energy

E-DISTRIBUTIE BANAT TO AWARD 23 MILLION EURO CONTRACT FOR GRID WORKS E-Distributie Banat will award, by public tender, a multi-services contract for works on the medium voltage and low voltage lines of the electricity distribution grids, and back-office operations, in the counties Arad, Timis, Caras Severin and Hunedoara, with a total value of up to 110 million RON (approx. 23.7 million Euro).

The participation announcement for the three-year contract has been published on the platform of the electronic system for public procurement and the participants are invited to file their offers by October 4, 2018.

The contract is divided into four parts, for each of the four counties. Thus, the contract for works on grids, measurement and back-office operationws in Timis County will be up to 37.29 million RON, in Hunedoara County up to 28.62 million RON, in Arad County up to 24.54 million RON and in Caras Severin County up to 19.53 million RON. The works are part of the investment program carried out by Enel's distribution companies in Romania, aimed at securing a proper service for end users and improving the quality and security of the network, while also complying with Enel's environmental standards.

MET GROUP COMPLETES RWE ENERGIE ROMANIA TAKEOVER MET Group is now the official owner of RWE Energie Romania after the successful completion of the company's share purchase transactions. This new acquisition strengthens the group's position on the non-residential energy market and places the company among the top energy suppliers in Romania.

MET and Innogy groups signed an agreement in May on the acquisition by the MET of RWE Energie (RWEE) Romania, owned by Innogy.

MET Group is present in Romania through its subsidiary MET Romania Energy SA. "The acquisition of RWEE represents an excellent opportunity to integrate

a considerable portfolio of electricity supply into the Romanian market with the potential to achieve synergies and to extend MET operations in Romania", the company says, adding that "by combining the two portfolios, MET will reach a market share of almost 10 per cent, occupying the third position on the competitive energy market in Romania, with a total of about 5,000 consumption points".

The main activity of RWEE is the supply of electricity and natural gas to business customers in Romania, with an emphasis on SME customers, especially energy intensive industries and chains of stores.

OIL TERMINAL CUTS WAGES BY 25 PER CENT FOR TEN DAYS Oil Terminal will suspend full wage payment for ten days in order to reduce expenses. Almost a thousand employees will be affected by the measure decided after the company concluded the first semester of the year with a loss of one million RON. Oil Terminal employees will receive 75 per cent of their salary under Article 53 of the Labour Code. The management of the port operator and trade union representatives have decided that this year they will not grant primes for the Petrolist's Day, celebrated on September 8th.

Oil Terminal, the operator of the Black Sea oil terminal, posted net losses of 1.07 million RON for the first six months of the year, compared to a net profit of 11.4 million RON in the same period last year, according to the report submitted to the Bucharest Stock Exchange.

In 2017, the company made a profit of about five million RON, after the record profit of 15.4 million RON in profit in 2016. The company's officials explained the situation as a result of market conditions this year.

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OMV OPTIMISTIC ON APPROVING BILLIONEURO INVESTMENT IN ROMANIA SOON Austria's OMV is confident Romania will establish an acceptable framework for its Black Sea exploration project this autumn and that it will be able to give the green light for a billion-Euro investment soon after, its upstream chief said, according to Reuters.

The exploration of the Black Sea Neptun block is a joint venture between OMV's Romanian subsidiary Petrom and U.S. major ExxonMobil, and includes the first deep-water exploration well in Romanian waters. In 2012, the firms said they had discovered 1.5 to three trillion cubic feet (42-84 billion cubic meters (bcm) of gas reserves at the ExxonMobil operated Domino-1 well, located around 170 km offshore.

OMV needs reliable framework conditions regarding taxes and royalties before it can give the final nod on such

a major investment, Johann Pleininger told Reuters in an interview. "It would be a billion-Euro investment."

OMV also needs the guarantee that it can export surplus gas, he said. Unlike other countries in the region, Romania is almost entirely energy independent.

The state imports less than ten percent of its gas needs from Russia, with the rest produced locally, largely by Petrom and state producer Romgaz.

"I trust the Romanian government to make a sensible proposal that will be accepted by the industry," he said, adding he expected a decision in the autumn. The investment decision could follow "either this year or in the first quarter next year," he said.

OMV owns a 51 per cent stake in OMV Petrom and the Romanian state holds 20.6 percent.

The Diplomat – Bucharest

real estate

TELEKOM ROMANIA SELLS 18 MILLION EURO OF LAND IN FLOREASCA AREA TO ONE UNITED PROPERTIES Telekom Romania announ­ ces the sale of land located in Floreasca area in Bucharest to One United Properties. The transaction was concluded for a price of over 18 million Euro, thus becoming the major land transaction on the real estate market in Bucharest this year. The urban land with an area of 25,839 sqm consists of two lots, of 24,786 sqm and 1,053 sqm respectively, and it has an opening of about 120 meters at Lake Floreasca.

One United Properties was represented in the transaction by Alexander Boff, an experienced broker with over 12 years in the high-end residential segment. The land was put up for sale earlier this year and announced on the Telekom Romania website dedicated to the real estate properties available for sale and rent. The auction was launched in February 2018, with a starting price of 13.9 million Euro excluding VAT.

ATRIA URBAN RESORT, NEW RESIDENTIAL PROJECT WITH 1,400 APARTMENTS NEAR STRAULESTI LAKE IN BUCHAREST Straulesti Lac Alfa SA, a company owned by SIF Moldova and Cityring Property announces the development of a large-scale residential village with 1,400 apartments set in four phases up to 2023, following an investment of over 100 million Euro.

The new project is being built in Bucharest's Sector 1, near Straulesti Lake, adjacent to the Colosseum Retail Park, and spans across nine hectares

of land. The first phase comprising 160 apartments (studios, one and two bedrooms), a private park and a pool dedicated to residents is already under construction and is to be delivered in Q3 2019.

Along with facilities such as playgrounds, pools, pedestrian paths and dedicated areas where children can interact directly with nature, the community will benefit from its Community Manager whose role will be to organize events for residents from parenting and educational programs to parties, free-time activities, art shows and exhibitions.

The first phase includes the sale of studios with net areas of 40 sqm., one-bedroom apartments (with net areas between 50-60 square meters) and two-bedroom apartments (with net areas in the 65-85 sqm range). The average sale price is 1,150 Euro net per sqm + VAT, so that most of the units satisfy requirements for the legal five per cent VAT.

DEVELOPERS TO DELIVER 380,000 SQM OF NEW OFFICES IN BUCHAREST NEXT YEAR Real estate developers will deliver 224,000 sqm of new office space in Bucharest this year, 84 per cent of these spaces being scheduled to open in the second half.

Next year, announced deliveries total 380,000 sqm, according to real estate consultancy firm ESOP Consulting | CORFAC International. The deliveries are expected to decline in 2020, to about 242,000 sqm, according to available data reported by Romania Insider.

The new office buildings that are set to open this year include Campus 6.1, the first building of

the Campus 6 project developed by Swedish group Skanska near the Bucharest Polytechnic University; the first building of AFI Europe's AFI Tech Park project, as well as Day Tower and Unirii View, in the central area. Next year, the first new office buildings will also be completed in the Expozitiei area, close to the Romexpo exhibition complex. According to ESOP, some 94,000 sqm of office space will be delivered in the Expozitiei area in 2018-2020, making this area of Bucharest third in terms of deliveries, after the Orhideea-Politehnica area, with 296,000 sqm and Barbu Vacarescu - Floreasca, with 137,000 sqm.

EUROPEAN SHOPPING CENTRE COMPLETIONS FALL 23 PER CENT AS FOCUS SHIFTS TO QUALITY OF SPACE, SAYS C&W ECHINOX The rate of shopping centre development in Europe is slowing, with completions down 23 per cent year-on-year at 3.8 million sqm 2017, according to Cushman & Wakefield's latest European Shopping Centres report.

The total stock of shopping centre space in Europe stood at 166.5 million sqm at the start of 2018, a year-on-year increase of 2.3 per cent during 2017. Western Europe accounts for 109.7 million sqm while 56.8 million sqm is in Central and Eastern Europe (CEE). During 2017, Turkey replaced Russia as Europe's most active development market, adding 495,000 sqm in the second half of the year, ahead of Russia (330,000 sqm) and third-placed Poland

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(298,000 sqm).

"The rise of e-commerce, changing consumer behaviour and expectations, development of the technology and stillgrowing supply have conspired to impact the European shopping centre development and have led to reduced quantity of new floorspace being created. This is particularly the case in Western Europe's more developed market, but also in the CEE region," said Silvia Jodlowski, Senior Research Analyst, Cushman & Wakefield.

"The focus for developers now is on quality of space and placemaking. Developers now consider placemaking a critical component of a successful shopping centre, as a combination of

retail, leisure and entertainment still provides a destination which is not replicated online. Welldesigned, dynamic and high-quality spaces are crucial to enable owners to attract shoppers and increase customer footfall and dwell time."

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infrastructure

ROMANIAN GOVERNMENT SIGNS 600 MILLION EURO CONTRACT FOR WATER INFRASTRUCTURE IN SIX COUNTIES Romania’s EU funds minister Rovan Plumb signed a contract worth almost 600 million Euro for developing drinking water infrastructure in six counties.

The contract will finance works for the rehabilitation and extension of water networks in Constanta, Ialomita, Calarasi, Dambovita, Brasov and Ilfov.

The program will be implemented through 50 work contracts and four services contracts, local News.ro reported.

The EU funds minister and prime minister Viorica Dancila also participated at the inauguration of a water treatment plant in Constanta, also made with EU funds. Dancila said on this occasion that her cabinet aimed to reach a EU funds absorption rate of 25 per cent by the end of this year. The absorption rate was 19 per cent in June.

ROMANIAN TRANSPORT MINISTER AIMS TO BRING RAILWAY INFRASTRUCTURE AT LEAST TO 1989 LEVELS Romanian transport minister Lucian Sova says trains in Romania sometimes travel at the same speed they were travelling in the 19th century as there are over 500 speed restrictions in the local railway network.

“There’s almost more railway with restrictions than without restrictions,” he said, local News.ro reported.

He added that his goal is to bring the local railways at least to the 1989 standards, using EU funds and the budget of the state company CFR

Infrastructura.

Sova said that all civilized countries invest in railway infrastructure and don’t rely exclusively on EU funds for this as Romania has done in recent years. He added that he was the first transport minister in recent years to allot budget funds for railway infrastructure work.

The transport minister also spoke about the much-awaited Pitesti-Sibiu highway. He said this highway could be finalized in 2023, in a moderately optimistic scenario.

ORIENT EXPRESS’ JOURNEY IN ROMANIA DELAYED BY POOR RAILWAY INFRASTRUCTURE The famous luxury train Orient Express also crosses Romania during its journey from Paris to Istanbul, offering passengers unique experiences. However, the train’s journey in Romania also puts a spotlight on the bad shape of the local railway infrastructure.

This year, the luxury train’s locomotive, provided by the Romanian railways company CFR, broke while it was crossing the country, and the many speed restrictions due to work on the railway further delayed it.

The luxury train entered Romania in the last minutes of August 26, only several minutes behind schedule, but reached Bucharest two and a half hours later than its official arrival time. The train left the country on Tuesday, August 28, continuing its route to Istanbul. It crosses Romania once again when it will return from Istanbul, on September 1-2.

Although the Orient Express is not a high-speed train, so that the passengers can enjoy the scenery of the countries they are passing through, in Romania the train experienced average speeds close to those the train reached during its first journey 135

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years ago, as well as long, unscheduled stops, local Hotnews.ro reported.

The 650-km trip between Curtici and Bucharest lasted 20 hours, including the

traditional stop of two hours and a half in Sinaia, where the tourists usually go to see the Peles Castle. However, there were also many unscheduled stops, such as the one of nearly one hour and a half in Teius, and the

one of almost one hour in Vanatori, where the locomotive was changed.

Moreover, the train had to travel at very low speeds due to the ongoing work on Corridor IV, with average hourly speeds of less than 50 km per hour. The numerous speed restrictions between Brasov and Sighisoara also forced the train to run at an average speed of 40 km per hour.

On Tuesday morning, the Orient Express left the Baneasa station with a small delay, and travelled the 51 km to Videle in 85 minutes, according to Hotnews.ro. This day’s trip also meant passing through the Bucharest-Giurgiu section, where the infrastructure has also been neglected. For example, the Gradistea bridge, which collapsed in 2005, was never rebuilt and trains have to take a 50-km detour.

The once-a-year, week-long luxury journey aboard the Venice Simplon-OrientExpress allows passengers to experience several countries in the same elegant style as during the golden years of European railway travel.

The Diplomat – Bucharest

appointments

JEROME OLIVE Starting September 2018, Jerome Olive becomes the new general manager of Automobile Dacia and Groupe Renault Romania, af ter Antoine Doucerain, installed into office in May this year resigned for personal reasons.

Olive, who led Dacia in 2010-2013 occupies an interim mandate until the Renault group makes a new nomination. After leaving Dacia’s leadership in 2013, Olive also served as Industrial Manager for the Euromed Africa, Industrial Manager for Europe and then Alliance Regional SVP - Manufacturing, Supply Chain & Process Engineering for the Eurasian region.

ANCA FOTACHE Anca Fotache is the new director of the Service Deliver y division for the EMEA region within IT solutions company Stefanini, replacing Andreea Stanescu,

Q3, 2018

who has held this position for seven years.

Fotache joined Stefanini Romania more than four years ago, first as Service Desk Manager, then as Senior Operations Delivery Manager.

Seven months ago, Anca was promoted to a regional position, the ITO Delivery Director for Stefanini EMEA. From this position, she will be responsible for the delivery of IT support services and infrastructure in Europe, through the service centres of the company in Romania, Poland, Belgium, and the Republic of Moldova.

CODRIN SCUTARU McGuireWoods Con­ sulting announced the promotion of Codrin Scutaru to managing director of the firm's Romania office. Scutaru joined McGuireWoods in 2015, after serving in the Romanian government for almost eight years as state secretary of the Ministry of Labour, advisor for European affairs at the same ministry, advisor for social policy at the Prime Minister's Office, as well as advisor to the State Secretary for Education. He has extensive experience in developing public

affairs strategies for clients from various industries, as well as providing strategic counsel on political and business risk assessment. In his new role, Scutaru will assume responsibility for the company's local business and operations, ensuring that clients continue to receive exceptional client service and results.

ANDREI FRUNZA Mihai Rotaru has decided to quit the Clever Taxi CEO position and will be replaced by Andrei Frunza, the former CEO of eJobs. In recent years, Rotaru has managed to turn Clever Taxi into the largest taxi service in Romania, with over 20,000 drivers and more than one million users, built exclusively with Romanian resources. Mihai Rotaru will remain in the company until September 2018 to ensure an easy transition to the new CEO. Previously, Frunza was the CEO of the eJobs Group, the leader of the online recruitment services market, and recorded the best results in the history of the company. Frunza will officially take over at Clever Taxi in September 2018.

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investments

BRASOV COUNTY COUNCIL TO INVEST 22 MILLION EURO IN NEW AIRPORT TERMINAL The Brasov County Council will invest 22 million Euro in building the passenger terminal of the future Brasov-Ghimbav international airport.

The terminal will have a total surface of 11,000 sqm on three levels. Its structure will be made of reinforced concrete with glass facades.

The ground floor will host the check-in desks while the upper level will include security, passport control, and the boarding gates.

The technical project will be laid out in about three months and the construction work will take about one and a half years. The construction costs are estimated at 2,000 Euro per sqm.

The local authorities estimate that the

ROMANIAN BIKE PRODUCER PEGAS STARTS SELLING ON INTERNATIONAL MARKETS

contract will be awarded this fall and that construction work will start next year. The airport's runway, which is 2,850 meters long, was finalized in 2014.

Romanian bicycle producer Pegas has made its first step into European markets by listing its products on five Amazon marketplaces in Spain, France, Germany, Italy and UK, from where it can deliver throughout the EU, the company announced.

The brand also aims to expand to the US market via Amazon, according to Romania Insider. Pegas also wants to increase its national store network, after also launching a franchise, and to expand its domestic and international network of resellers. By end2020, the company will open at least ten new stores and its products will be sold through over 400 partner-stores and five retail chains.

The company will also implement a three-million Euro project financed with EU funds focused on product research and development and on opening a production line in Romania.

The bike producer sold over 25,000 units and reached a turnover of over 1.7 million Euro in 2017.

BUCHAREST CITY HALL TO IMPLEMENT INFORMATICS SYSTEM FOR PUBLIC TRANSPORT PASSENGERS Bucharest City Hall will implement an informatics system that will allow passengers using public transport to choose the optimum

route between two places in the city.

The new system will also inform the passengers on the estimated arrival time of the public transport vehicle they need to take.

The system costs almost 200,000 Euro.

The passengers will get this information through a mobile app, which will be available both on Android and iOS devices. The app will become available by the end of this year and will be free of charge, according to the municipality.

The system will include information about all public transport vehicles circulating in the city, which will also be visible in the app. next year. The airport's runway, which is 2,850 meters long, was finalized in 2014.

U.S. AIR FORCE TO INVEST 40 MILLION USD IN ROMANIAN AIR BASE The U.S. Air Force (USAF) plans to spend about 40 million USD on new construction and base improvements at the 71st Air Base in Campia Turzii, in Romania's Cluj county, Defensenews. com reported.

The U.S. and Romanian air forces train together at the base in Campia Turzii, with USAF temporarily stationing F-15 and A-10 aircraft here to increase training and cooperation with the Romanians, according to Romania Insider.

However, the Defence Department doesn't maintain a permanent base at Campia Turzii.

The 40 million USD construction bill includes items from fiscal years 2015-2019 and would be paid with Defence Department funds specially designated to deter Russian aggression,

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according to Defensenews.com. Most of the money, namely 25 million USD, will be spent on infrastructure to directly enable mission planning and flight operations.

Meanwhile, the U.S. Air Force has already spent almost six million USD to repaint, repair and reseal one runway, as well as to build a new hangar that could be used to house drones like the MQ-9 Reaper.

However, USAF is planning more changes.

For example, a section of the Campia Turzii air base currently housing a number of aircraft shelters and a maintenance apron will be massively expanded by the end of next summer.

A hangar capable of fitting an F-15 or A-10 and an extended aircraft ramp that can enable 12

F-15s to be parked outside are to be added to the site. Also, USAF plans to build a new squadron operation facility for 3.4 million USD with briefing rooms and offices for medical and life-support personnel.

The Diplomat – Bucharest

agribusiness

ROMANIA POSTS RECORD WHEAT HARVEST OF 10.2 MILLION TONNES IN 2018 For the first time in recent history, Romania had a harvest of wheat amounting to over 10.2 million tonnes, according to the Prime Minister Viorica Dancila. She mentioned this at the beginning of the Government meeting on Wednesday and said that it is due to the measures of support for farmers.

“Support measures granted to farmers in good times have produced the expected effects. In the first seven months of the year, Romanian farmers benefited from 2.29 billion Euro from European funds, amounts actually invested in agriculture and rural development.

By the end of the year, an additional one billion Euro will be available in Romanian agriculture, and this year we will reach 3.29 billion Euro of European funds for agriculture. The results of good measures in this sector are already visible.

As for the summer harvest, Romania obtained for the first time more than 10.2 million tons of wheat, even though, as we know, it was not a

good year for agriculture from a meteorological point of view,” said Dancila.

The prime minister added that Romania had a trade surplus of 150 million Euro in the activity of foreign trade with agricultural products.

“Estimates of the results of autumn crops are encouraging, with a beneficial impact on food security of the population, but also from the perspective of the weight of this sector and of the food industry in GDP. Last year, for example, agriculture contributed 0.7 per cent to Romania’s economic growth of 6.9 percent.

We expect that this year, and in 2019, this sector will continue to contribute to GDP growth.

In addition, during the first five months of this year we recorded a trade surplus of 150 million Euro in the activity of foreign trade with agricultural products, agriculture contributing 8.2 per cent to Romania’s total exports,” said Dancila.

MEAT TRACKING KEY TO FIGHTING AFRICAN SWINE FEVER AS IT SPREADS RAPIDLY IN ROMANIA AND OTHER EASTERN EUROPEAN COUNTRIES Tracking meat and meat products from pigs infected with African swine fever is key to fighting the spread of the highly viral disease, as it can survive in processed food, Matthew Stone, Deputy head of the World Organisation for Animal Health (OIE), told Reuters in an interview.

In Romania, farms in 11 counties – a quarter of the country’s territory – are affected by African swine fever, according to the latest official data. African swine fever (ASF) has spread rapidly in Romania, other eastern European countries and China – the world’s largest pork producer.

“The scenario in China is very challenging because of the amount of spread that has already occurred and the significant degree of contamination of various meat products,” Stone said.

Considerable numbers of pigs could have been reared at times when farms were not aware of the virus, he said.

Pigs were then sent to slaughter, sending the virus into the meat supply chain and creating an ongoing risk of further exposure.

African swine fever, which does not affect humans, is characterized by high fever, loss of appetite, haemorrhages and death in two to ten days. Mortality rates may be as high as 100 percent. There is no vaccine nor treatment for it. Romania, Poland, Hungary, and recently Bulgaria were among the most hit, alarming governments and pig farmers due to the pace at which it has spread. In Romania, authorities reported that food transported by people was very likely to be the source of contamination in the country, Stone said, stressing the risk of migrating populations in the spread of the disease.

African swine fever has led to the culling of around 250,000 animals in Romania.

Q3, 2018

STUDY: MORE THAN A THIRD OF FARMED FRUIT AND VEGGIES ARE THROWN AWAY BEFORE REACHING SUPERMARKETS In Europe, more than a third of farmed fruit and vegetables are thrown away before hitting the shops because they are the wrong size or shape. According to research conducted by the University of Edinburgh, more than 50 million tonnes of fruit and vegetables grown across Europe were discarded each year.

The study, published in the Journal of Cleaner Production, examined food loss and waste within the European Economic Area and examined how much food was discarded before it reached the market.

The interesting fact is that researchers attributed losses to strict government

regulations, as well as to supermarkets’ high standards and the customers’ expectations of how the produce should look. The study also found that farmers grew more food than they had to in order to allow for a proportion that would not be deemed fit for sale.

“Encouraging people to be less picky about how their fruit and vegetables look could go a long way to cutting waste, reducing the impact of food production on the climate, and easing the food supply chain,” said Stephen Porter of the University of Edinburgh’s School of GeoSciences, cited by the BBC.

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green

MUNICIPALITY IN ROMANIA CUTS TAXES FOR GREEN BUILDINGS

ROMANIA’S ENVIRONMENT MINISTRY ALLOTS 100 MILLION EURO TO RELAUNCH GREEN HOUSE PROGRAM Romania’s Environment Ministry will allot 100 million Euro from the Environment Fund to relaunch the Green House program this fall, minister Gratiela Gavrilescu revealed.

Some 26,000 households will benefit from this program, which offers grants of up to 4,600 Euro for installing photovoltaic panels, local Agerpres reported. The households will be able to use the panels to cover their electricity and heating needs and to deliver the surplus to the power grid. The guide for the new program will be available around October 15, the minister said.

She added that the Environment Ministry and Energy Ministry will also launch a joint program to power up some 9,000 households that are not currently connected to the power grid, by covering their costs for installing photovoltaic panels.

The Iasi Local Council adopted a support scheme at the end of August that grants tax reliefs of up to 50 per cent for green buildings.

Investors who develop green buildings or refurbish existing buildings to increase their energy efficiency will benefit from the tax cuts.

Tax reliefs will apply between January 1, 2019 and December 30, 2021 and the percentage will vary based on each building’s sustainability level.

The measure is part of a wider plan through which the municipality in Iasi is looking to improve the quality of life in the city. The local authorities also invest in rehabilitating and modernizing the city’s heating system,

in increasing the green areas in the city, and in acquiring less polluting public transport vehicles, according to mayor Mihai Chirica.

TOP CITIES IN ROMANIA FOR GREEN SPACE PER INHABITANT The area of green spaces in Romania’s cities totalled 26,639 hectares at the end of last year, slightly lower than in 2016, and the average green space area per inhabitant was 21.3 sqm, according to data from the National Statistics Institute (INS). Green spaces, which include parks, public gardens, children’s playgrounds and outdoor sports facilities, represented 5.7 per cent of the total area of cities in Romania, which reached over 465,000 hectares at the end of 2017.

The city with the highest green space area per inhabitant was Cavnic, in the northern Romania area of Maramures, with 674 sqm.

It was followed by other mountain and spa resorts, such as Borsec (166.7 sqm), Slanic (160.4 sqm), Sovata (154.4 sqm), Baile Olanesti (140.9 sqm), Sarmasu (124.2 sqm) and Lipova (122.7 sqm).

Of the bigger cities, Baia Mare, the regional capital of Maramures county, had the biggest green space area per inhabitant, of 119.2 sqm.

OTP BANK HAS FINANCED THE ACQUISITION OF GREEN PARK IASI OTP Bank Romania has financed the acquisition of Green Park Iasi by the Interdoga Group GMBH and Interdoga SRL with five million Euro. Green Park is the first large-scale residential project in Iasi.

The Interdoga Group GMBH and Interdoga SRL announced in April 2018 the reopening of the Green Park Iasi project with the support of a German investment fund. The financing provided by OTP Bank Romania is part of a project aimed only at the acquisition of 181 existing apartments, with the rest of the works related

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to the renovation of the facades of the existing blocks, the restoration of the green spaces and the construction of new blocks in the extension of the neighbourhood, supported by their own sources.

“We are honoured to support the development of the largest residential complex in an area with development prospects such as Iasi. Funding for the Green Park Iasi project agrees with our strategy of engaging in real estate projects that can help boost the local economy,” said Bogdan Teodorescu, Corporate

Network director, OTP Bank Romania.

“Green Park Iasi is the most ambitious project started in Iasi, a modern and accessible residential centre. Our efforts have been supported by a strong and trustworthy partner, such as OTP Bank Romania, which has given us the financial support we needed,” said Yusuf Capan, Interdoga SRL. The Green Park Iasi project is located on Fantanilor Street and covers an area of 40,000 sqm, including more than 750 apartments and other blocks to be built.

The Diplomat – Bucharest

TELUS International

Customer experience has become the new competitive battleground for crypto exchanges.

Cryptocurrency exchanges seeking to maintain or gain an advantage in this highly competitive market need to consider the tremendous value of partnering with a customer service delivery expert. Read on to find out how a trusted partner can help companies meet the growing customer service demands of cyrptocurrency users.

GRÉGOIRE VIGROUX, VICE-PRESIDENT EUROPE, MARKETING AND CORPORATE COMMUNICATIONS AT TELUS INTERNATIONAL

Cryptocurrency exchanges The new outsourcing El Dorado?

“T

he end of money as we know it.” “Why big banks are nervous.”

“The new digital gold.” – these are just a few of the sensationalized headlines about cryptocurrencies in recent months. It’s becoming harder to ignore this financial industry disruptor as well as more challenging for cryptocurrency companies to meet the growing demands of new and existing users.

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What is cryptocurrency and how does it work?

Cryptocurrencies are a peer-to-peer version of electronic cash that rely on blockchain technology. They allow online payments to be sent directly from one party to another using complex encryption techniques to regulate the generation of units of currency and verify the transfer of funds, operating entirely independent of a central bank.

Crypto exchanges are the businesses that actually allow customers to trade digital currencies, putting global buyers and sellers in contact so they can perform transactions.

The Diplomat – Bucharest

TELUS International

Why do cryptocurrency exchanges need an expert customer service partner?

As the number of crypto exchange users continues to grow, the number of support questions has increased exponentially. This rapid growth, combined with the 24/7 nature of customer service requirements and multilingual needs of global users, can be challenging for even the most established organizations to effectively serve, let alone cryptocurrency start-ups that may not prioritize customer service while focusing on their core business.

As a consequence, most exchanges are using chatbots as a stopgap solution.

But, a robust customer service strategy is particularly critical for exchanges as many users are looking for guidance in a market perceived as both complex and risky. Professional human interaction offered alongside chatbots can serve as a competitive differentiator and help users feel more at ease. The right customer experience partner can help crypto exchanges achieve scalability, deliver localized support, and meet the growing service expectations of users, allowing crypto exchange businesses to focus on their core offering of greater innovation.

Why is a focus on customer experience so critical for crypto exchanges today and in the future?

Rarely have companies seen the amount of growth that cryptocurrency and crypto exchanges have enjoyed in the last 12 months.

But with rapid growth, comes the potential for reputational damage if companies are unprepared to scale their customer service operations to meet heightened consumer demand. Widely cited market surveys, such as Oracle’s suite of customer experience (CX) studies, indicate that consumers are likely to abandon a business because of a poor experience. In fact, a majority of customers are even willing to pay more for a similar product to get the service they want.

With the rise of new exchanges, as well as new digital currencies to compete with Bitcoin, cryptocurrency investors have more choice than ever before to get the customer experience they want.

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How can customer service help when rapidly-scaling your business?

When it comes to fast-growing tech markets, having customers discover and cope with service problems on social media can breed company distrust and potentially damage a business’s reputation.

The risks are even greater for cryptocurrency-related companies, as many individuals have large sums of money wrapped up in the market, making customers exceptionally sensitive to bad service.

Scaling is crucial to protect your market presence; however, taking an expert-led, data-driven approach from the start can help enormously when it comes time for cryptocurrency exchanges to scale.

TELUS International is a global While growth may come quickly for crypto customer experience, digital exchanges, selecting a customer experience transformation and business delivery partner shouldn’t be as rapid. Some services solutions innovator companies choose to outsource their entire with over 30,000 team members customer service operation, while others opt for across the globe, including in a blended approach. Regardless, there are certain Canada, the United States, Europe, qualities that crypto organizations should look Central America, the Philippines for in order to ensure the delivery of high-quality and the United Kingdom. With customer service: over 200 million customer • Financial service experience – An interactions supported annually experienced partner can help you navigate via voice, email, chat and social the different regulatory environments and media, across fast-growing tech, ensure robust data-protection policies and financial services and fintech, technologies are in place. gaming, travel and hospitality, • Multi-language capabilities – Crypto and healthcare industries, currency is a global phenomenon. With TELUS International enables customers located in countries all over the customer experience innovation world, it’s critical that service is offered in through spirited teamwork, agile multiple languages in order to meet worldwide thinking, and a caring culture demand. that puts customers first. The • A follow-the-sun service model – Similar to company serves clients in over with languages, customers looking to trade 35 languages. TELUS holds a 65% cryptocurrency will vary in terms of their interest in TELUS International region and time zone. A customer experience with Baring Private Equity Asia partner operating around the clock, across holding the remaining 35%. multiple geographies, not only serves to appease customers, but can also generate more business. Multiple locations also ensure system continuity in the event of a major disruption.

• Universal agents – Highly-skilled and engaged customer service agents are critical, as many crypto exchange users are looking for knowledgeable guidance. Professional human interaction can serve as a competitive differentiator and help customers feel more at ease when buying, selling or exchanging cryptocurrency.

• Next-gen technology – The right partner will be able to provide the ideal combination of human and technology resources to reduce cost, increase efficiencies and enhance the overall customer experience. Look for omnichannel service delivery, artificial intelligence capabilities and advanced analytics.

Crypto firms that can deliver on key aspects of the customer experience — such as user-friendliness, accessibility and transparency, while managing the delicate art of scaling in the fast-paced, uncharted territory of cryptocurrency — will have the competitive advantage.

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TELUS International

The Crypto Customer Experience Gap

How will they help you scale?

They say that it’s the best problem to have: too many customers. It’s one of the great ironies of success. Early stage companies can be so focused on building a product or service that they may become easily overwhelmed when the customers actually show up.

Judging by the phenomenal global demand for digital currencies like Bitcoin, Litecoin and Ethereum, we are witnessing a paradigm shift in the way the world wants to use money. Exchanges like Coinbase, Binance, Bittrex, Bitstamp and Kraken have been adding upwards of 100,000 new users each per day. Incredibly, just four days after Robinhood announced its move into the trading market, over one million people had signed up for “early access” to the service.

However, as demand soars, the industry has also seen the number of customer complaints increase. In January this year, the Consumer Financial Protection Bureau experienced a 100 percent jump in complaints directed towards some of the largest exchanges.

Typical grievances cited were delays in receiving funds from sales, overcharging, consumers being locked out of their accounts, and accounts being closed, leaving customers with no access to their funds. Additionally, typical response times to address these customer complaints have ranged from several hours to in some cases, several months.

These digital currency exchanges have incredibly ambitious visions for how they can change the way the world sees money. These companies fundamentally believe that we’re on the verge of an unprecedented financial revolution. But if they cannot provide their customers with the kind of experience they expect or deserve, those customers will leave them for a competitor that can.

In today’s economy, customer experience is one of very few differentiators between a company and its competitors and where the ‘battles’ for customers between exchanges will be won or lost. A dissatisfied customer will not just leave, they’ll tell their friends and entire social networks about it too – especially when it involves companies entrusted with their money.

To delight customers, digital currency exchanges need to be easy to use, and deeply trustworthy. Neither of these is easy to achieve during a period of hypergrowth. As a result, many exchanges are forging partnerships with trusted customer experience experts. The right partner can provide the knowledgeable, empathetic and highly-trained customer experience (CX) agents and cutting-edge digital solutions needed to consistently deliver top-tier customer experiences so that companies have the time and white space to focus on their core competencies and mission.

Companies that grow as quickly as some of the digital currency platforms we mentioned, with 100,000 plus new customers signing up daily, require a tremendous amount of flexibility and agility from their customer experience partner. Vendors must have multilingual and 24/7 support capabilities; they also must be able to pilot small teams to start out and ramp up rapidly to support the operation’s grows. The right partner should be able to grow alongside the exchange.

Finding the right CX partner For companies considering this route, here are some questions to ask prospective partners, based on TELUS International’s experience working with some of the world’s fastest-growing technology companies, including several crypto exchanges.

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Do they employ next-gen CX solutions?

Customer experience continues to undergo a deep digital transformation. New technologies are driving a dramatic reduction in customer effort and an increase in customization. In today’s digital landscape, customers want more ways to contact a company, faster resolutions, and more personal interactions if they are going to stay loyal and spend more money.

Automation is a central component of scaling, but the ‘human touch’ remains critical. The right partner will be able to provide the right mix of people and technology to help reduce customer effort and cost, and increase KPIs, such as resolution times, NPS and CSAT scores. Here are three digital solutions to discuss with a prospective vendor: • Chatbots: Bots can handle basic and repetitive CX tasks at a volume and speed never seen before, thereby freeing up customer service agents to solve more complex problems and build deeper relationships.

• Omnichannel: Today’s average consumer uses an estimated five connected devices to access voice, email, chat, social media and self-service options to research and make purchases.

An omnichannel strategy ensures that they have a seamless experience across all of these channels, throughout their entire customer journey.

• AI analytics: This technology converts terabytes of customer data aggregated from various channels into intelligent patterns to help detect issues that need rapid escalation, recommend solutions to agents in real-time, uncover potential up-sell and cross-sell opportunities, and even provide input into the development of future products and services..

Looking ahead, we know that the current customer interest in and usage of digital currency exchanges is just the tip of the iceberg.

With global demand projected to continue increasing exponentially in the months and years ahead, now’s the time for exchanges to develop a long-term customer service delivery strategy that will build trust to retain existing customers and further develop their brand reputation to attract future customers.

Our TELUS International team continues to work with some of the world’s fastest-growing Fintech companies, and we have seen firsthand the many advantages of bringing a CX delivery partner on board. From helping companies develop, execute and evolve their customer service delivery to developing customized digital solutions like bots and analytics platforms to implementing omnichannel strategies to providing the most knowledgeable brand ambassadors who put customers first - we are helping our clients gain a critical competitive advantage in this exciting and rapidly evolving industry.

We know that those who invest in customer experience today will rule tomorrow.

The Diplomat – Bucharest

blockchain

blockchain

Blockchain how it’s made and what can we do with it

I

n the context of the "fourth industrial revolution" that everyone is talking about these days, The Diplomat - Bucharest analyses how an emerging technology like blockchain can be used for improving our lives, when we actually need it and when it is better to stay away from it.

For those who don’t know, “blockchain” is the technology which allowed Bitcoin to perform money transfers without banks. It is, in fact, the technology behind all the popular electronic currencies, but blockchain has been developed for greater purposes, experts say.

Some say blockchain is a vast, globally-distributed ledger or database running on millions of devices and open to anyone, where not just information but anything of value - money, but also titles bonds, deeds, identities, even votes - can be moved, stored and managed securely and privately. Trust is established through mass collaboration and clever code rather than by powerful intermediaries such as governments and banks.

Blockchain is said to be a transparent and verifiable

Q3, 2018

system that changes the way we perceive transactions of goods and values and data exchanges in general, says Eduard Bisceanu, national technology officer at Microsoft Romania.

“The technology implies the existence of an electronic registry that keeps track of all transactions and is shared with all participants, eliminating the need for a unique trustworthy provider and adding a high degree of security to blockchain-based systems,” he tells The Diplomat-Bucharest. “Thus, new business and data processes can be shared across multiple organizations, eliminating losses and reducing the costs of classical technology models, while also significantly reducing the risk of fraud and generating new business opportunities.”

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Eduard Bisceanu, Microsoft: Romania can generate economic growth and prosperity in this field with much greater efficiency than in any other field

favourable position for the future,” Bisceanu says.

The emergence and development of new blockchainbased trading systems has already produced changes in the financial and banking industries, allowing new players such as “fintechs” to appear on the financial market.

Adapting to the obvious change generated by the When talking about blockchain’s target audience, rapid pace of technology evolution not only involves Bisceanu would split the beneficiaries into two categories: the implementation of blockchain-based solutions but private sector, and Government organizations that could also the permanent adaptation to new technological design blockchain-based systems to optimize their trends, changing organizational patterns and adapting internal processes or facilitate the provision of services business processes as a whole, and last but not least, that so far could not be delivered at reasonable and safe changing mentalities.

Bisceanu goes on to say that in order to understand costs, as well as citizens who can benefit from blockchainbased services that would ease their lives. the most relevant trends in the market, the developments He says there are around 1.1 billion people in the world in the portfolio of products and services provided by who are not registered in an official identification system. relevant players, whose language is not lacking in cloud “On this background, the ID2020 Alliance emerged as a computing, artificial intelligence, and blockchain-based public-private partnership initiative technologies, must be tracked. that aims to build a blockchain “Governments of the states that technology system that allows the have understood the digital revolution quickly adapt their provision of identification systems for all categories of disadvantaged national legislation to respond to people,” Bisceanu explains. these trends and benefit from the Technology and service latest technological innovations. providers from the National The United Kingdom, Australia, Association for Information New Zealand, and Canada are Systems Security (ANSSI) offer countries with national IT strategies solutions based on blockchain that are easy to access online and technology that address multiple are a source of inspiration for the private environment, being economic sectors in Romania, created by people who are such as the financial and banking currently anchored and with a sector, the insurance sector, the medical field, public institutions, clear vision of the future.” the distribution of goods, and One of the main advantages supply chains. of blockchain is the increased Technology companies trust between the participants are currently conducting in transactions, which builds promotional activities security in general as an and popularizing new attribute via the transparency “The use of blockchain technologies that allow for generated by the ease with technologies contributes digital transformation of which it can respond to businesses and government transaction logging/ audit significantly to increasing institutions, but the final requirements. “We can also the security of transactions decision to deploy new talk about relatively low and resilience of systems,” technologies on a large transaction costs compared scale still belongs to the to traditional centralized EDUARD BISCEANU, latter. The banking industry systems, and - last but not MICROSOFT is investing significantly least - resilience to potential in projects that are still cyberattacks,” Bisceanu says. exploring the use of blockAlthough blockchain technology-based systems based technologies, but there is growing market interest and growing expertise in the benefit from increased transaction protection when field of cryptocurrency, or digital coins. compared to the protection systems by centralized One of the objectives of Microsoft Romania is the trading systems, the infrastructure that enables them popularization of new technologies and the increase of and end-user devices to operate is nevertheless subject their use in all fields. to the same security risk categories as any other system.

“I am convinced that Romania can generate “In many of the newest and most sophisticated cybereconomic growth and prosperity in this field with much attacks, the human factor was the main vulnerability greater efficiency than in any other field, because human that allowed successful exploitation of technological resources and the technological innovation capacity vulnerabilities by attackers,” Bisceanu explains. “The use are among the strong points that places Romania in a of blockchain technologies contributes significantly to

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The Diplomat – Bucharest

blockchain

increasing the security of transactions and resilience says Alexandru Bujor, chief operating officer at Bluedrive of systems, in particular due to their decentralized Solutions and member of Blockchain Romania and distributed nature, but this does not solve all the Association.

“Blockchain is nothing more than a distributed data increasingly-complex problems generated by modern cyber threats.” structure, consisting of blocks that store information,” he Speaking about blockchain evolution in Romania, tells The Diplomat-Bucharest. “These blocks are chained he believes that certain economic sectors, with the together, in the order they are added to the blockchain. financial and banking sector in priority, will adapt much The important idea is that all blocks are distributed to all more rapidly to these trends, as products and services blockchain participants who can easily check if the data based on blockchain technology will become more structure is validated by making simple, local calculations and more mature. on their own system.”

“To enable minimal cost testing and the rapid creation If we make an analogy with the financial-banking of blockchain-based applications, there are service field, each bank transaction may resemble a blockchain providers on the global and national market that provide transaction, with the notable difference that in blockchain “BaaS” - Blockchain as a Service - an aspect that increases each participant holds a global account and not an the agility of organizations that want a fast adoption account associated with a specific bank. “When a with low costs and risks of new technologies,” Bisceanu transaction is generated, it is sent to the blockchain says. “Unfortunately, there is no public information that network in the same way that a client of a bank sends it to the banking institution: indicating the source and is allowing us to see the Romanian state displaying a corresponding interest in the adoption of such new destination accounts and signing the transaction. Once technologies in the interest of its citizens and the business the transaction gets signed and sent to the bank, it environment.” is processed,” he explains. “In blockchain technology, Although there is much talk about blockchain's IT this processing translates into adding the requested innovation, it does not provide answers to all of the transaction to the global data structure, and once it is industry's problems, according to Bisceanu: “The more accepted by the network it becomes confirmed. This blockchain-based systems will be deployed in production, process would somehow be equivalent to sending a the more we will be able to explore the bank transaction to absolutely all the banking potential of this technology in the future. institutions in the world if all the banks Considering that society as a whole were linked to a single system, which is not just certain economic sectors - is impossible at the moment considering based on human interaction, we the way the banking system is can imagine an extended series working.” billion of scenarios where life could be Blockchain manages to connect made much more comfortable if people in the world who all participants interested in making these interactions could be made transactions to a global network that are not registered in an can perform verified and accepted online, in safe conditions and at official identification decent cost.” transactions by all participants with He went on to say that whenever a very small effort. system “What is even more important is that certain technologies with large-scale it manages to do so based on cryptographic development potential appear on the algorithms that make the idea of having a central market, regulators have a latency in responding at a proportional speed. “Sometimes, the lack of regulation authority to control and verify transactions virtually can be a factor of evolution, because the market has the redundant. Anyone can become part of the blockchain ability to adjust itself up to a certain point, but, as we have regardless of name, age, country or other restrictions,” he said, governments oriented towards modernization and explains. “Looking beyond the cryptocurrency landscape, evolution take care to see the regulations they generate we can also use blockchain to store information that do not create industry bottlenecks, but rather allow and circulates between applications, people, companies, encourage innovation and quick implementation of new or authorities, so we should not limit the blockchain technologies in public systems. I do not believe at this perspective to that of cryptocurrencies.” time that specific regulation on the use of block-based Blockchain Romania Association aims to provide technologies in Romania would be necessary.” an access point to blockchain specialists who can offer relevant advice, ignoring the global hype issues.

For Bujor, the biggest risk of blockchain technology Alexandru Bujor, Blockchain Romania: is the "theft" of the private key or the electronic wallet.

The biggest risk of blockchain “An attacker who can access the private key associated technology is the "theft" of the with a wallet can do any transaction with that wallet. private key or the electronic wallet There are multiple ways to do this, and methods that are Blockchain technology has become very popular not related to blockchain technology (viruses, malware, with Bitcoin's tremendous growth, but there are only etc.) are generally used,” he explains. “There are also a few who know exactly what is hidden behind it, and browser-level attacks that can, for example, change the therefore the technical details remain rather “mystical”, destination wallet address to which a payment is made

1.1

Q3, 2018

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blockchain

without the user becoming aware of it. It is also worth he tells The Diplomat-Bucharest. “The target audience mentioning the situations in which various sites use the is extremely broad because it can include all three browsers of its visitors as clients to mine cryptocurrency categories - companies (both developers and customers), without them becoming aware. However, my ‘favourite’ traders speculating cryptocurrencies, and farmers who problem is related to the private key loss by the wallet provide the computing resources needed to operate owner and then his desperate recovery attempts. This the blockchain.” situation is quite common and There are still talks about the is an example where the central crypto revolution, but there are still authority could prove useful. In the many steps to be taken to accept normal banking system, losing your cryptocurrencies as a payment method, for example, or to talk ID or card does not automatically about a radical change in the mean that you lose your bank accounts. In blockchain things are current financial system. a bit more harsh.”

“Cryptocurrencies volatility is a big problem. And for now, In his opinion, Romania is it is still quite difficult to turn a an atypical country for the IT market: “We have a community virtual currency into a product to of developers very interested buy from Amazon,” he explains. in the latest technologies, but “Virtual currency trading intensifies, companies and local authorities resulting in a number of beneficial "side effects", especially in the area ‘consume’ the latest news on the market. It is difficult to predict of financial education. Findings that until recently were known what will happen in the future, but there is an important and growing only by specialized traders are now interest in the development available to anyone.” of b l o ckch ain - b as e d In his opinion, the main advantage of blockchain is applications, although mostly that the information, once for external customers.”

“Cryptocurrencies Bujor goes on to say that published in the blockchain, volatility is a big problem. he wants to see an electronic can no longer be changed And for now, it is still quite voting system based on by anyone, not even by the difficult to turn a virtual blockchain. “It would be one who created it: “This allows transactions of any extraordinary to see a voting currency into a product system on the basis of which kind without the existence to buy from Amazon,” we could know the results of a central authority. Then BOGDAN NITULESCU, immediately after the closing traceability - any modification TREMEND of the polls. I'm not saying it made in the blockchain is would be 100 per cent safe, visible.” but it would definitely limit the He goes on to say that any number of frauds,” he explains. industry needs transparency in “The potential is very good, but it depends on many data processing: “Companies in the financial services factors (including authorities).” area were the first to adopt blockchain technology, other industries are soon to follow. We talk about the health system, the insurance system, the Internet of things, the Bogdan Nitulescu, Tremend: manufacturers of smart home appliances and smart There are still many steps to be electronics, the music industry - to create extensive taken to accept cryptocurrencies databases and pay real-time copyright. And the list could as a payment method continue. Many analysts consider blockchain one of the Blockchain technology has multiple applications, at most important technological inventions of the past the beginning of an era where a wide variety of industries decades.”

Blockchain can be used to identify citizens of a state, are ready to adopt this technology - from financial (where it is estimated that it is already implemented for example, according to Nitulescu. As long as information by over 15 per cent of global players) to aviation (there about citizens is stored in silos that do not communicate are airlines that have already stated that they intend to with each other, and there is no dialogue, there is a risk of use the blockchain to provide a better experience for multiple identities. Printed documents are a risk and an inconvenience - they can be stolen, duplicated, falsified. travellers and to optimize the procurement chain), says Bogdan Nitulescu, partner and CTO at Tremend Software But a blockchain approach that puts the citizen at the Consulting. centre would act as a layer over the databases that would “It may also have applications in education systems. provide encrypted communication between these bases, For example, all students' grades in some faculties can providing citizens with access to their data, and allowing be stored in the blockchain, avoiding further alterations,” them to share it with authorities, for example.

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The Diplomat – Bucharest

blockchain

“An endemic issue is the unauthorized cryptocurrencies mining on the victims' systems, whether they are household users, or data centres with immense computing power” BOGDAN BOTEZATU, BITDEFENDER:

Bogdan Botezatu, Bitdefender: Crypto jacking attacks are the most common in the world The Blockchain ecosystem security is achieved using cryptography to arrange transactions in chronological order, says Bogdan Botezatu, senior cybersecurity analyst at Bitdefender. “The same design provides resistance to potential changes to data already arranged,” he tells The Diplomat-Bucharest. “Another strong point is the distributed system, that public ledger that provides transaction verifiability and permanence. Permanence is due to the fact that already validated records cannot be changed without the consensus of the whole network and data cannot be lost because a copy of them is available on the rest of the infrastructure systems.”

According to Botezatu, the biggest problems Bitdefender has encountered over time were not about infrastructure architecture, but human factor vulnerabilities (malware attacks on the user's computer that either look for the victim's private keys (keys that allow transactions), or exchange vulnerabilities (online services that allow users to trade Bitcoin or other cryptocurrencies) and which host their e-wallets.

“Another endemic issue is the unauthorized cryptocurrencies mining on the victims' systems, whether they are household users, or data centres with immense computing power,” he explains.

“For example, in December 2017, when cryptocurrencies cost reached a historic high, we identified a massive increase in crypto-jacking attacks (the infiltration of cryptocurrency-mining computer scripts). These crypto-jacking attacks have proliferated 100-to-one compared to ransomware attacks. Practically, for every identified ransomware attack in the market, we identified 100 crypto-jacking attacks, a sign that hackers understood that they can make more money from unauthorized cryptocurrencies mining than from any

Q3, 2018

other cybercrime.”

At this point, crypto jacking attacks are the most common in the world, according to Botezatu. In his opinion, it is important to understand that these attacks do not target the blockchain, but vulnerabilities that exist in software applications at the home or enterprise user level.

“This phenomenon is extremely complex because cryptocurrencies mining applications use advanced lateral movement techniques (that is, they move from one computer to another through the local network),” he says. “Some families of such applications also use, for example, the EternalBlue and EternalRomance exploits that apparently would have been developed by the NSA for computer spying.”

Nicolae Ghibu, certSIGN: Blockchain potential is huge, this technology cannot fail and there is no turning back Blockchain technology is innovative, and - from a certain point of view - is fundamental to the development of new versions of the technology itself, but also to the development of new business models, the main element being decentralization, says Nicolae Ghibu, chief commercial officer at certSIGN. “Choosing a blockchain implementation must be a well-founded process from a technological point of view and especially from a business point of view,” he tells The Diplomat-Bucharest. “Blockchain technology lends itself to implementing systems that are linked to financial systems.

But there are other political and business endeavours that need to be implemented to the same extent. In an individual or experimental manner, a number of such

implementations have already been carried out, but a general adoption such as "a new financial system" involves many aspects which are monetary policy decisions.”

This technology is equally applicable to any geographical region in any industry, provided it is suitable for that business model. Some implementations may have to comply with business-specific regulations with or without a link to that country, according to Ghibu. He says that the range of application areas is virtually unlimited for both the private area and the government or administrative area.

“It is important to correctly identify the benefits of using blockchain technology compared to the classical technologies for the different business models that will underpin implementations,” he explains.

However, we are not just talking about industries, any area in social life can be subject of implementation as long as it brings added value.”

He goes on to say that the only issues indirectly generating certain implementation dislocations will be related to regulations, which will take time to correlate and uniformize, legislators being generally reactive and not proactive to the situations that arise with the implementation of blockchain technology projects.

“Blockchain potential is huge, this technology cannot fail and there is no turning back,” concludes Ghibu. “Regulations will come gradually and will cover - directly or indirectly - all areas. Undoubtedly, regulations must exist, and the first steps in this regard have already been made in some American states or countries on all continents. There is also a special concern at EU level in this area, regulation being one of the major objectives.”

Teodor Blidarus, FintechOS: Blockchain technology is on the digital transformation agenda of the entire financial-banking system Blockchain technology is at the beginning of its road and by 2027, ten per cent of global GDP will be supported by blockchain solutions, says Teodor Blidarus, CEO and co-founder at FintechOS and managing partner at Softelligence.

“The applicability of this technology is closely related to the concept of Smart Contracts,” he tells The Diplomat-Bucharest.

“I believe that the target audience or the market segments that can benefit from

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blockchain

blockchain technology range from banks and insurers to scholarships and television, from accountants and notaries to the e-government area.”

Blockchain technology is on the digital transformation agenda of the entire financial-banking system, according to Blidarus: “Both banks and insurers already have a digital-first strategy to provide customers with fast, efficient, low-cost services. In the coming years, we will see an increasing differentiation in what we receive as consumers. Ultimately, consumers will validate whether blockchain technology will define the financial system of the future.

From my point of view, an institution that is not anchored in understanding the benefits of modern technology, will lose the train in a few years to technologically-armoured players.”

The biggest advantage is the system decentralization, which allows both a cost reduction and a processing speed of instantaneous transactions with a significantly higher degree of security than in the current situation. Another advantage is that a transaction, once registered, can no longer be erased, and the decentralized registry cannot be destroyed.

Romania unfortunately does not have a powerful technological hub that will generate traction and attention from big investors, as Blidarus explains: “The most important blockchain hubs remain in New York, San Francisco, Dublin, London, Stockholm, Singapore, Hong Kong and Sydney. In Romania the blockchain penetrates through multinationals, especially in the financial-banking area. We have usage scenarios for damage cases, for example where the existence, appearance, accuracy and completeness of information can be instantly made in a Smart Contract, with an automated incident reporting (if there are certain IoT sensors on the insured object). It is an example, but expanded at industry level we can talk about transport / logistics, media / entertainment, healthcare,

“Ultimately, consumers will validate whether blockchain technology will define the financial system of the future,” TEODOR BLIDARUS, FINTECHOS

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“Regulations will come gradually and will cover - directly or indirectly - all areas” NICOLAE GHIBU, CERTSIGN

government.”

He goes on to say that a blockchain solution is much safer against cyber attacks than a traditional architecture: “The use of technology especially in the cryptocurrencies area has brought to the public's eyes more cases of fraud, money laundering or security problems. These situations were not generated by the technology itself. Moreover, problems have been fuelled and exposed by the media and the traditional system, which is not ready to embrace blockchain technology.

I would say that, on the contrary, security is precisely one of the major advantages of the blockchain and is the main driving force in the Identity Management area, for example.”

In Romania, the blockchain technology is strongly associated with cryptocurrencies, as Blidarus says.

“Technology will get into more and more practical areas, but it will

have more impact on the back-office, process, which is an area inaccessible to the general public,” he explains. “Just as AI technology revolutionizes customer interaction and is becoming increasingly useful for understanding human behaviour and creating customized interaction experiences between suppliers and consumers, blockchain technology is more geared toward process, efficiency, and speed. The blockchain has a noticeably strong effect on the companies that adopt it, and its impact is seen in reducing costs.”

Last year, blockchain technology has been used over 50 per cent in the payment area, according to Blidarus.

“The reasons are the same - greater transparency, low costs, no intermediaries, high transaction security,” he explains.

“The second area of use is the Identity Management area. We estimate a doubling of the Identity Management market due exclusively to blockchain technology, precisely because of its high security.

Moreover, the lack of traditional on-line systems for identifying and securing personal identity, the emergence of GDPR and the increasing demand for personal data protection, as well as the need for rapid biometric identification on large volumes of images, all feed the demand for solutions using blockchain technology.”

Blockchain solutions can bring cost reductions of more than 20 billion USD annually for the financial and banking sector, as Blidarus concludes. “Here we are just talking about reductions in infrastructure costs. This adds to the perceived benefits of consumers, the reduction of time per transaction and the reduction of commissions by eliminating intermediation. In the medical field, it is estimated that blockchain technology will experience an explosive increase of over 85 per cent in each of the next five years because real-time interoperability between patients, medical institutions, pharmacies, and researchers through instant and secure access can be ensured, over a variety of data sources such as patient electronics, imaging, dossiers, or IoT sensors.”

The Diplomat – Bucharest

feature

How “smart” is Romania?

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The entire world is going “smart” in terms of technology and living, and Romania is also trying its luck at testing the challenging “Smart City” and “Internet of Things” concepts.

The Diplomat – Bucharest takes a closer look at the state of the ”fourth industrial revolution” in this country.

B

ucharest is no longer the frontrunner when it comes to implementing ”smart” solutions for the betterment of its inhabitants. Most current success stories in Romania include Alba Iulia, Oradea and Piatra Neamt, cities that have so far showed the capital city how to really do the job. And with significant legislative gaps still hindering natural market development, central-level decision-makers are starting to take a closer look at the matter.

Romania’s National Authority for Management and Regulation in Communications (ANCOM) is now part of an inter-institutional working group that aims at drafting an integrated national strategy for the national digital platform required to implement smart city technologies. Also part of this group are representatives of ministries, public institutions, as well as associations of cities, counties, and municipalities in Romania.

“In order to have a strategy adapted to Romanian realities, it is necessary to inventory current functional urban technologies, to develop procedures and standards for future digital technologies and how to connect them, and to develop a best-practice guide on urban resilience, with a view to regulating intelligent urban digital services,” says Sorin Grideanu, president of ANCOM. “Particular attention should be paid to measures to protect digital platforms and data management and ownership, use and control of information,” he tells The Diplomat. “Romania is ready to implement new technologies. Our communications market has always kept pace with the most advanced countries in the world, characterized by innovation, low prices, good quality, and profitability for suppliers, and communications services are widely available. Broadband access infrastructure is one of the opportunities our country has to capitalize on. We have landline networks that allow the highest speeds in the world, this being one of our great advantages.

Q3, 2018

“We have landline networks that allow the highest speeds in the world, this being one of our great advantages,” SORIN GRIDEANU, ANCOM

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“Many countries have recognized the potential value of smart cities and have taken steps to accelerate their development,” OVIDIU GHIMAN, TELEKOM ROMANIA

“National governments have an important role to play in accelerating and coordinating the development of smart cities, and I believe the longterm success of smart cities in any country will depend on whether or not government and local administrations support their development.”

“Many countries have recognized the potential value of smart cities and have taken steps to accelerate their development, but this process is still emerging worldwide,” says Ovidiu Ghiman, chief commercial officer for the business segment at Telekom Romania. “The fact that Romania is now focusing on building a National Strategy for the implementation of the Smart City concept shows that our country is moving in a positive direction in this respect and the authorities understand the benefits of this concept for both the cities and the citizens,” he tells The DiplomatBucharest.

Grindeanu feels that the evolution of Romania's cities towards providing better, cheaper and faster public services through the incorporation of new technologies has begun and will continue to advance in that direction. For example, Alba Iulia has implemented over 60 ”smart” projects, such as air quality monitoring, smart public lighting, Wi-Fi hotspots, and illegal parking monitoring.

city solutions with new projects to be implemented such as traffic volume monitoring, smart parking sensors, digital e-community services, and interactive city tours.

Another example is Cluj-Napoca, which implemented digital solutions for parking payment, finding free parking spaces in the city, and applications for the public transport timetable.

As far as the challenges are concerned, Grindeanu explains there will be some issues with the implementation of new mobile technologies: building or adapting networks and securing the huge amount of data that will flow through them. “However, given the great interest of all involved in the rapid deployment of this technology, these challenges will find appropriate solutions,” he concludes.

The fact that Romania can achieve community modernization by investing in state-of-the-art technological equipment without going through intermediate stages or refurbishments can be an advantage, but for the country as a whole, it must have development plans and well-designed strategies, says Bogdan ghim, general manager for South East Europe at Philips Lightning.

He explains that one of the biggest challenges is the lack of training in the “smart” sector, especially among the public employees who do not know the realities of “open, flexible, scalable, secure, and projected systems for the future.”

Successful stories of Romanian smart cities

Romania is facing an unprecedented growth of the urban population and this growth is beneficial for the society, but is also generating the need to spend resources more efficiently as the administrations’ budgets are declining, says Ovidiu Ghiman, chief commercial officer Romania to fulfil its Smart City potential for the business segment at Telekom Romania.

“The Smart City concept is supporting both the cities Romania should maximize the use of the Smart City and the citizens, by optimizing public services, such potential in as many cities as possible, says Grindeanu. as traffic planning, improvement of the urban Most of Romania's cities are already wellconnected to super-speed internet, and safety and air quality, or by smart lighting the addition of sensor networks can be implementation,” he tells The Diplomat. done at very low cost. Beyond using Telekom Romania has been involved these sensor networks to provide in three Smart City projects, so far, innovative public or private services developed in Bucharest, Constanta number of or to increase performance or quality and Piatra Neamt. In 2016 the company ”smart” projects of existing services, a smart city would launched the first pilot project in implemented by have to actively engage in taking over, Tineretului Park in Bucharest. The project processing/comparing and capitalizing combined some of the latest technologies Alba Iulia City data collected by sensor networks, and in for intelligent parking, free Wi-Fi connectivity, Hall providing real-time information to their own city safety, and intelligent lighting, integrated on a dedicated IoT platform. The next project was residents.

This practice has resulted in a multitude of smart launched in Constanta, in June 2017 and in December 2017 solutions in various areas related to the organization and it implemented the third project in Piatra Neamt. The latter operation of cities. Alba Iulia is Romania’s leader in smart included ”smart” solutions such as efficient lighting, public

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Search for clear objectives safety, internet access, electric car to meet the needs of charging, environment quality, and Romanian citizens real time display of useful information for the citizens.

Romania has the means for The engagement of citizens in the implementation of Smart City this process is also very important, as projects because the country has they will be the main beneficiaries of national and EU funds which can the changes. Knowing what people be accessed. There are companies need helps in developing a smart able to provide smart solutions city plan that can make their lives to the market, and the academic easier. Besides, citizens can be great environment as well is connected to endorsers of such initiatives and their buy-in can help with raising the global Smart City concept. Finally, funding for smart technologies people in general are open to the concept and look forward to seeing implementation. Smart city progress their living standards improve. will also accelerate if cities can “Some cities will move faster, share their successful measures others will have different priorities, taken - as well as their failures “What we should do but I think Romania will be among that everybody can learn from. further is to take this the countries with the fastest Ghiman goes on to say that strategy locally by Smart City development rate,” the impact of the IoT era and adds Ghiman. “Also, to be able to smart solutions on peoples’ setting clear objectives implement any national strategy lives and businesses is rapidly that meet the needs growing, and in the next few efficiently, we need government of local citizens and stability, because somebody has years most of the business governments,” processes and systems will to make the decision to start and probably incorporate some execute these projects. Fiscal BOGDAN BALACI, stability is also important for the element of IoT. “What IoT does PHILIPS LIGHTNING private sector. As soon as the is significantly improve the first signs of instability appear, efficiency of all systems, which the companies involved in the will increase human productivity implementation of Smart City projects start thinking about in all areas,” he explains. “Every day, smart technologies make the impact on their business and wonder if they should production facilities smarter and more environmentally continue or change their investment plans.” friendly, which translates into dramatic improvements in The first steps in the “Smart City” direction have already production and cost reduction. The opportunities brought been made, in the sense that Romania has shown interest by IoT and smart solutions for Romania, as well as for other in the implementation of this kind of project. Each city countries, are related to economic growth and life standard has different goals and needs, different issues improvement.” which smart solutions can address, and the In his opinion, the Smart City concept is very technology should also vary based on the attractive for any urban community in the world, region and needs. For instance, while but it comes with a few challenges that the improving public transportation authorities still have to learn how to handle. might be essential in one city, air A major concern for city administrations is quality improvement might be the how they can afford smart technology, key need in another city. Smart for Ghiman concludes: “Investments in Telekom Romania smart city initiatives are regarded as a city such as Bucharest will be very different to a city like Piatra risky, regardless of the potential return launched the first Neamt, for instance. on investment these technologies can smart city proiect in “It is essential to build offer. High investments should also be Tineretului Park in partnerships between the public made in development and demonstration and private sector to find the best for particular technologies that support Bucharest technological and financial resources for smart cities. Under these circumstances I think the development of smart cities,” says Ghiman. the authorities find it easier to wait until others have Another important step is to assess the potential of the worked the new technology challenges before deciding existing technologies the cities already have, combine them to invest themselves in Smart Cities. with smart technologies and build smart cities on these “Many cities are slow to build smart infrastructure foundations. Not everything has to be built from scratch because they are simply trying to keep up with the urgent and often a city’s pre-existing resources can prove to be needs to deploy more traditional physical infrastructure quite useful if efficiently exploited.” projects. National government funding is focused more

2016

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“I think we need to consider a continuous process of learning and adaptation, depending on requirements that can change over the Smart City phases,”

issues, public transport, making it easier for local authorities to access - securely local services online. Last but not least, the benefits should be considered of optimizing operational costs resulting from digitization and the allocation of additional budgets in priority areas.”

VLAD DOICARU, HUAWEI

on physical infrastructure, instead of smart infrastructure.”

Romania is making efforts to align with the international trend of transforming communities into intelligent cities, with citizens becoming more aware of the need for sustainable development, and becoming increasingly involved in the communities in which they live and in solving their problems.

“There are already cities defining a Smart City strategy such as Cluj-Napoca, Oradea, Alba Iulia, and Constanta. Others as well have begun to develop smaller Smart City projects related to urban mobility, resource management or recycling.

“What we should do further is to take this strategy locally by setting clear objectives that meet the needs of local citizens and governments, designing an action plan and establishing implementation methods,” explains Balaci.

A national Smart City strategy is needed, whether it's for the beneficiaries, the equipment manufacturers, the application developers, or the communications network operators, says Vlad Doicaru, enterprise account director at Huawei.

E-mobility: encouraging public transport, bicycles or car sharing

“There are many cities in the world that have long-term strategies focused on digital development, ‘green’ technologies and innovative transport or health services, for example, providing a solid foundation for smart city programs,” he tells The Diplomat.

“We believe that Smart City government initiatives play an important role and should behave like a catalyst for digital community transformation and smart solutions implementation.”

In his opinion, Romania needs a "smart" transformation and it is a good time to start such a process towards a future system of systems along with suppliers, integrators, developers and end-users.

“When it comes to making steps, I think we need to consider a continuous process of learning and adaptation, depending on requirements that can change over the Smart City phases,” explains Doicaru.

“Completing the national strategy at the central level and defining clear local targets based on interoperability requirements, long-term integration, and openness of applications can be considered as a first step. As for opportunities, we need to consider the benefits. They must be focused on improving the quality of life of city dwellers, resolving traffic and parking

“Electromobility and electric vehicle loading infrastructure is a fast-growing field of development,” CAMELIA ENE, CEO OF MOL ROMANIA

Q3, 2018

Mol Group has put together a strategy on the development of mobility at a regional level. As part of its strategy for 2030, the company aims to adapt to the dynamics of the changing market and transform its traditional fuel trade into a wider business, encompassing consumer goods and services business.

“Electromobility and electric vehicle loading infrastructure is a fast-growing field of development and our concern is to keep up with innovation and make sure that we are also the first choice of our customers in this field as well,” says Camelia Ene, CEO of Mol Romania.

“An important direction is to engage in the development of the e-mobility segment as part of the first network of power stations to be developed at regional level in our “NEXT-E” project which will have 250 charging points, 40 of them following to be located in Romania,” she tells The Diplomat-Bucharest.

The NEXT-E project represents a unique cooperation of four leading companies from the electricity and oil & gas sectors joining forces with OEMs (car manufacturers) to create an interoperable and nondiscriminatory EV charging network, as a viable alternative to the combustion engine vehicles. The consortium consists of E.On Group, Mol Group, Hrvatska elektroprivreda in Croatia, PETROL (in Slovenia and Croatia), as well as Nissan and BMW. In July 2017, the NEXT-E project was selected by the European Commission for co-financing through the Connecting Europe Facility (CEF). The NEXT-E consortium was granted 18.84 million Euro to implement the project, which is the largest CEF grant ever awarded to an EV project. Within the framework of this project, the consortium will install 222 multi-standard fast chargers (50 kW) and 30 ultra-chargers (150-350 kW) along TEN-T core corridors and the core network. For the first time ever, long distance travel, based 100 per cent on

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electricity, will be possible across six Cohesion countries, with connection to the neighbouring countries.

The deployment of fast chargers is expected to start in 2018, while the installation of the ultra-chargers is planned for 2019 in order to prepare for the arrival of a new generation of long-distance EVs. The full deployment is expected to be concluded by the end of 2020.

In addition to charging points for electric vehicles, smart cities should also encourage public transportation or car sharing.

Any strategy for developing a Smart City should answer a simple question - how can we use technology to make life in cities safer, more efficient and, ultimately, better, says Alexandra Corolea, spokesman for Uber Romania.

“Urban mobility is essential because it directly influences the quality of life, from air pollution to time spent in traffic,” she explains. “Bucharest gives us the most relevant example - it is ranked fifth among the most crowded and polluted capital

“Urban mobility is essential because it directly influences the quality of life, from air pollution to time spent in traffic,” ALEXANDRA COROLEA, UBER ROMANIA

cities in the world and first in Europe.

There are over one million cars, over two million people - practically a car for every two people. Each year, a Bucharest resident spends more than 103 hours in traffic because of crowding.”

She believes that a strategy for the development of smart cities has to come up with concrete measures to encourage car alternatives, such as public transport, bicycles, taxis, car sharing or Uber-like services.

According to Uber data, a large number of Romanians use Uber as a complementary

solution and public transport - over 20 per cent of Uber rides in Bucharest start or end near a metro station or a major public transport hub. “Seven out of ten young people in Bucharest and Cluj see services as Uber as a useful and very useful alternative to their personal car,” says Corolea.

For those escaping turmoil, deafened by commotion, worn out with routine. A moment to relax surrounded by fir trees, a farewell to the last snowflakes and a comforting break with all the proper ingredients.

TUSNÁD

138 Oltului Street, Băile Tușnad, Harghita County +40734 194 004 or info@aronson.ro

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opinion

What is

digital transformation?

E CHRISTIAN GAVRILA, GENERAL MANAGER CRISOFT

Web site

verybody is speaking about digital transformation, most say they are doing it, but who can say what it really is? Can the implementation of some enterprise systems be considered digital transformation? Or if we have multiple applications already implemented, then the transformation must be their integration? The good news is that digital transformation is none of these: it’s a cultural change. This hardly looks as good news, as culture is the hardest to change, but we are lucky because we are not alone in this quest.

The digital world has already changed the life of almost everyone on this planet so the clients and the employees have already adapted to this. Also, what computers can really do better than us is repeating a pattern with great performance and accuracy, so it can help us with these qualities to speed up the culture change.

The target of digital transformation is the transformation of business which should be done in a fully digital way. We can look for models at the big IT companies that started only digitally like Amazon, eBay, Paypal. Digital can be reduced to binary, 0 or 1, so everything in the whole process in the enterprise must be based on numbers, codes or, options. But how is that different compared to what are we doing today? We have computers and applications which we use. The key is that now the target is to have the full process digital, including communication with customers and co-workers mainly and the decision-making process. Even if

Mobile application

Customers and partners programmatic interfaces

Enterprise Software Bus

ERP

Q3, 2018

CRM

Process machinery, devices

Customer

we use, e-mail, messenger or digital phones, those are only communication devices, still a person is needed to extract the information from the flow of data in those and enter it into the system. The current technology allows us to do more: to have everyone operate directly with digital information and avoid the unstructured, analog, steps in the processes. We can look forward to a system where not only we have all applications connected using and Enterprise Software Bus, but we can operate the full value chain within those applications.

Why is this better? We all have already decided that it was better when we started to use hashtags in social media posts. It’s the best example of digital coded information, compared to unstructured text or images. Tagging is a solution used first by programmers to identify their code or components and now was generalized and used by everyone. This is the cultural challenge: to think as a programmer the whole business not only an application and use of the available technology, even if this means changing the processes and collaboration between people.

When I founded CRIsoft almost 25 years ago, I chose as a motto „Software that thinks” („Programe care gândesc” in original romanian language). I had many discussions about this, many objecting that people think, not computers. My opinion is that thinking is not only creativity, but also identification of patterns and application of rules, and for this repetitive thinking tasks the computers can help us.

With this vision we did many complex projects with online integration between modules. This made the implementation difficult, because it implied business process change: where an email or an excel file was enough before, now we have to make the process work with structured data, automatically validated at every step by the system to meet the business rules, with no exceptions. The rewards were great for the companies that were willing to walk on this path and many of them are leaders on their market now. Even if, at first, it seems that we go after a target that can never be reached, soon we will find out that this is the way of progress, that does not have an end, but a way paved with benefits.

by Christian Gavrila, General Manager, CRIsoft

www.crisoft.ro 33

real estate

New real estate bubble?

It depends on who you ask Romania’s GDP has been outperforming those of neighbouring CEE countries as of last year, but its Central Bank warns that the mortgage bonanza might lead to a second real estate bubble. With market analysts pointing to a dynamic evolution of the local residential scene, The Diplomat – Bucharest takes a closer look at this year’s prospects.

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I

n the past few years, the increase in new housing demands has been encouraged and preserved by factors such as an increase in purchasing power and income, a low mortgage loan interest rate, all in combination with the Romanian home owner mentality. Under these powerful circumstances, “it is too early to see an impact of the economic environment’s recent changes in housing demand,” according to Daniela Barbu, marketing communications specialist at Conadi.

Housing loans accessibility has put the residential market on an upward path in the past few years. Romanians under 35 have had an option in place though which they could buy a dwelling under preferential conditions guaranteed by the state. Dubbed ”Prima Casa”, the programme is targeted at the low and medium-low residential segment and covers just a part of the residential market. The medium and medium-high segments have nevertheless also been blooming over the past two years, because of economic growth and changes in buyers’ behaviour, without a connection to ”Prima Casa”.

Another category of customers on this residential segment is represented by buyers who access standard mortgage loans, and data from BNR show that their number is increasing. Banks granted 1.35 billion RON in mortgage loans in the first two months of this year, a volume 27 per cent higher than in the same period last year.

“In this context, with optimal financing conditions other than ‘Prima Casa’, the residential market has very good chances to find its balance and to become more mature,” says Barbu.

Although there is a slight increase in mortgage interest rates, the expert feels house prices will remain unchanged on all market segments. “On the medium-high and high-end residential market, one of the reasons why it is unlikely to see a change is the fact that most of the buyers are either using their own financial resources in the acquisition, or small standard mortgage loans.”

Q3, 2018

Risk warning Romania has not exceeded the six per cent risk mark in the real estate market, but it is not very far from it, according to Liviu Voinea, deputy governor of the Central Bank.

"Last year, the European Systemic Risk Board - which is somehow the father of all the national macro-prudential supervision committees - issued risk-warnings in the real estate market to eight countries and Romania has been close to six per cent over the past two years,” says Voinea.

He claims the real estate medium growth is always linked to residential mortgages: “We have not crossed the six per cent threshold, but we are not very far from it.”

Nothing to worry about, says the Romanian Financial Analysts Association (AAFBR).

“The real estate bubble from 2005-2008 in Romania and the extent of the subsequent correction left heavy scars in people's memories, so even [the smaller] house price increases over the past two years have raised fears that we are in danger,” according to its analysts.

The association believes there are arguments to suggest that the market is in a much better position than a decade ago. Moreover, the very high supply could stop a significant price acceleration even before it starts. In its opinion, the traded prices reported by Eurostat are already announcing a “cooling off” of the market, with an increase of only 5.6 per cent in the annual rate over the last three months of 2017.

“However, there are enough elements of fragility which, in case of problems that would manifest themselves on other plans, would transpose into a difficult period for the real estate market as well,” says AAFBR. “Recent statements of the central bank referred to concerns about a too-high level of financial liability”.

The key argument of AAFBR can be summarized as follows: today's average wage buys over 70 per cent more goods and services than the one from 2007-2008, while house prices are more than 40 per cent below pre-crisis highs (despite increases in recent years).

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Rising house prices

local developers. The medium-high Because of the interest rate segment started its recovery in 2016 increase, market analysts feel house and the high-end started to recover prices are to remain unchanged on last year, which market experts feel it all market segments. On the mediummeans that the Romanian residential high and high-end residential market, market is still far from achieving its maturity. one of the reasons why it is unlikely to see a change is the fact that most of “Several market key indicators the buyers are either using their own show that the residential market is more stable now,” says Barbu. “The financial resources in the acquisition, or small standard mortgage loans. increase in income due to economic One of the most valuable growth should cover the increase clues to answering the question of of mortgage loan interest rates.

Moreover, in the past ten years, sustainability when it comes to people have developed a rising house prices is provided by the European Central Bank. saving philosophy, deposits The ECB periodically publishes by the population have “Several market key several indicators in the steadily increased, and 2017 indicators show that European Systemic Risk Board, marked their highest value in the residential market the last ten years - with more including over/under-valuation is more stable now,” of residential real estate assets. than 106 billion RON (22.74 On the ECB model, Romania billion Euro). This means that DANIELA BARBU, appears to be the most despite loans being more CONADI underestimated EU market now, expensive and subsidies being after being considered one of the reduced, the population had most overrated in 2007. acquired significant savings to The current price evolution is a healthy one, reflecting compensate for this. This reflects mostly in the number recent revenue growth, strengthened by the of off-plan house acquisitions and the number of integral in-advance payments on the medium and medium-high resumption of economic growth, says Bogdan residential segments.”

Iliescu, associate director at Crosspoint Real Estate.

Another important indicator is the regaining of “It was a natural thing for interest confidence in the real estate market. If several years ago, rates to rise, a benchmark interest rate people preferred deposits for saving money, in the past below one per cent is characteristic of a three years the residential market has become a more billion RON monetary crisis policy. As soon as we see profitable investment than the deposits, due to yields inflation plummeting, interest rates will higher than bank interest rates. mortgage loans in the stabilize and begin to decrease,” he adds.

Plus, house buyers are financially educated and carefully first two months Developers feel it is important to keep choose their financial solution for house acquisition. in mind that housing supply on the market “For example, in the first two months of this year, due of this year is currently far below demand. to the interest rate increase, more than 60 per cent of The sales manager for Hagag Development customers chose mortgages with a fixed interest,” says Europe, Cristina Ghita, feels that the residential market is Barbu. “This stands as a proof for the fact that as a people, we’ve learned from the experience of a crisis and we are stable with no undue increase, and prices have evolved more cautious.” according to demand. “We do not expect any price drops in the next period,” she says. “From our point of view, longCrises usually occur when nobody talks about them, as term demand will continue to exist, and buyers will access Bogdan Iliescu from Crosspoint explains: “In 2008, everyone financing products that will allow them to purchase a home, thought the party would continue indefinitely, given that even at a higher interest rate.” many key indicators could prove that. Now everyone is talking about the crisis, showing a much higher degree of risk attention, which is just what it takes to avoid a crisis. We New real estate crisis? can also see in history that in the sequence of economic or It doesn’t seem so, if you ask some real estate players. financial crises, they did not happen one after the other on A real estate crisis is the consequence of an economic crisis the same asset class. If history teaches us something, it is most likely that we will see a correction on stocks, maybe which, in the context of globalization, doesn’t originate in Romania, but at a global level. one after Government bonds and then see a correction on As for the Romanian residential market, it has started real estate. We do not see the ingredients of a major crisis in the short and medium term.” to recover, today being closer to normality, according to

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real estate

Two more years for ”Prima Casa”

of financing chose ‘Prima Casa’ to reduce their monthly instalment.

I believe that the government program is no longer necessary for the market,” Iliescu concludes.

Analysts say there are some elements that support the fact that there is a real need for housing especially in cities, or in the vicinity of urban areas. Young Romanians leave the parental home on average at the age of 28, compared to 26 years old, the average age in the EU, according to AAFBR: “Romania has the highest rate of overcrowded families in the EU (48 per cent) compared to the average of 17 per cent.”

What makes Romania different from other countries is mainly the mentality of the Romanians and their desire to own, to be owners. This way of thinking has over time transformed into a lifestyle and propelled real estate into one of the first-line sectors of activity.

“We are talking about a buyer’s market here, a market where all properties, whether apartments or homes, are in high demand. Also, the interest in apartments in new residential complexes is increasing compared to previous years,” Ghita says.

“From our point of view, She feels that big cities, long-term demand especially Bucharest, have all it will continue to exist, takes to offer residents a high Market and buyers will access standard of living, and this vulnerabilities translates into the desire of many financing products people to relocate and to buy a There are some elements that will allow them to home. of vulnerability for the real purchase a home, even at estate market in Romania.

“A good part of those who can access the ‘Prima Casa’ One of the most important a higher interest rate,” programme are doing it. However, is the low level of financial BOGDAN ILIESCU, education, which leads to we are aware that this funding CROSSPOINT REAL ESTATE instrument will only be available situations where buyers get for the next two years, until 2020,” a larger bank loan than they would be able to repay if the she adds.

The ‘Prima Casa’ programme has economy were to enter a correction been a basic pillar of support of the residential market and, period, as has happened before. as far as possible, its prolongation beyond 2020 would be Analysts claim the temptation of “larger loans” remains a good thing for those interested in purchasing a home, as a reality of an emerging economy that has not yet forgotten well as for developers. the shortcomings of communism and which has not yet Developers estimate that after this period, the market gone through enough "boom-bust" cycles to learn painful will indeed experience a slowdown in the purchasing pace. lessons on its own.

Another element that increases market fragility is the However, they are convinced that although interest rates will increase, buyers will find ways to finance their loans. general macroeconomic context, which is no longer at the An overwhelming majority of Romania’s housing stock same good level as two years ago and puts Romania in a consists of dwellings built in the 1950s and 1970s, a stock weak position compared to other EU countries, including that approached or surpassed the deadline for which it those in the region. was designed to resist. Also, it does not offer the comfort At the same time, inconsistent public policies can of a modern life. generate problems in the future, but it would be a pure “From the affordability point of view, Romania is still speculation to argue how this could affect the residential very good,” says Iliescu. “A person with an average income market, analysts say. in Romania can buy a home at an average price in 9.5 years.

“No less important is the fact that the real estate market In 2008, we were talking about a 30-year period when homes is profoundly pro-cyclical, and developers are making were 40 per cent more expensive, but revenues were 70 per decisions rather reactively,” AAFBR experts explain: “In the cent lower. In the region, countries such as Hungary, the case of Romania, the good news came in the past few years, Czech Republic or Poland have this index between 13 and but the fact that we are in a late phase of the economic 16 years, and Western countries over 20 years.” cycle is not at all encouraging.”

In his opinion, the ”Prima Casa” programme program Analysts conclude Romania has nothing to worry about did not stimulate the construction of quality housing, but because housing prices are 40 per cent below the peak rather placed the emphasis on the price. reached before the crisis, while the revenues have increased “Many buyers who could have turned to another form in real terms by more than 70 per cent.

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operational leasing

Operational leasing ignites confidence this year

Romania’s operational leasing industry aims high and keeps its players running in terms if efficiency, digitalization and mobility services, although the local market is undergoing a period of turmoil and change. Alexandra Lopotaru talks to large operational leasing companies to discover their business perspectives and strategies.

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omania is undergoing a period of and medium companies from various political and regulatory instability, industries.” a landscape which is pretty hard As the SME segment has shown a to overlook, affecting as it does the general growing demand for operational leasing business environment. It sends mixed signals in the last years, becoming one of the main growth drivers, customer preferences have to investors, who then may postpone or even cancel certain projects. However, displayed a gradual awareness and increase experts believe the fundamentals exist to in the requests of hybrid and full electric continue to push the Romanian economy vehicles. According to APIA (Automotive forward and the business environment can Manufacturers and Importers Association), regain its confidence. One of the segments the sales of green cars in Romania increased which continues its growth in 2018 is the by 62.4 per cent in the first three months of 2018, compared to the same period of the operational leasing industry, as a result of the maturation of this product on several previous year, to 661 units. Between January geographic areas. While experts see an and March 2018, the share of both electric increased demand for complete services, and hybrid cars in total sales at the national specific aspects such as efficiency, level was 2.2 per cent, while in the less pollution, digitalization same period of the previous year the share was 1.7 per and, overall, more and more cent. mobility services offered to the customers are However, the those which remain infrastructure the most important related to this thousand units trends focused on cluster, for example by the players, at the charging stations, is units under moment. still immature The management at the The local European Alternative end of the third operational leasing Fuels Observatory quarter of 2017 market exceeded 66,000 counts just a little over units under management at 100 charging stations in Romania, while Hungary the end of the third quarter of and Poland have each almost 2017, generating a market growth of 11 per cent compared to the end of 600 stations and Germany provides over 2016, according to a report published by 25,000 charging stations for EV vehicles. the Association of the Operational Leasing Nevertheless, a Romanian governmental plan Companies (ASLO). This year, the industry designed to sustain this energy transition, still kept its growing trend and the first semester under public debate early this year, showed saw a significant development, as Romanian that, by the end of 2020, Romania should new car registrations have increased by have at least 1,000 charging stations for 24 per cent and the operational leasing cars using both electricity and compressed share in the total registrations has been natural gas (CNG). historically around 15 per cent. Dan Boiangiu, “Transitioning to these alternative the president of ASLO and the general energies may seem easy, but it is not,” says Boiangiu. “We need to assist our customers manager of one of the largest operational leasing players, French-based Arval Romania, in all the steps of such transition. This is expects the same trend to continue until the why at Arval we have created the S.M.a R.T. year end, towards a double-digit growth of approach, standing for Sustainable Mobility the total market fleet. and Responsibility Targets. This is a consulting “The operational leasing market has approach that enables us to set reasonable been quite active in the first half of 2018,” targets and appropriate strategies for our Boiangiu tells The Diplomat – Bucharest. customers in the energy transition, based “Clients and prospects are requesting us to on their current situation, taking into account advise them on various projects involving the existing fleet, their carbon footprint and new vehicles for their business or renewal their driver’s usage patterns. It can be a trap of their existing fleets. Also, the operational to disregard these elements before deciding leasing product appeals to more customers’ to on-board full-electric vehicles or plug-in categories than in the past, with the share hybrids, as most of the savings they promise of the large multinational clients decreasing are dependent on some new elements more and more, leaving room for the small like charging availability at home or at the

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office, categories of roads / trips used by each driver, or advanced monitoring of driving behaviour. With diesel being more and more ‘publicly shamed’ and with such transition complexity, the role of a fleet advisor, such as Arval, is increasingly critical for every significant fleet,” he adds.

Arval has significant investments planned to be made in its network and in its systems, mostly in t r ans fo r min g its drivers and customers experiences, by digitalizing its interac tions and increasing its operational “Operational leasing is efficiency. Moreover, the embraced more easily company continues to by companies which are invest in new products confident in their future,” and services, enabled by these technological DAN BOIANGIU, enhancement s . Two ARVAL ROMANIA examples are the recently launched Arval Active Link and Arval Integral Fleet, in which the company will continue to invest by the end of the year.

“The first product, Arval Active Link, is a state-of-the-art telematics solution enabling Arval to proactively advise its customers about fleet costs savings, based on the driving patterns and driving behaviour of their employees, in full respect of the GDPR norm,” says Boiangiu. “The Arval Integral Fleet is also a unique digital service, enabling our customers to consolidate their fleet data in a single reporting tool, even if the fleet is shared with a different provider or it is owned. This tool enables strategic decision making for the fleet topic, offering a simulator and a cost control tool.”

This year, Arval continued its sustainable growth, according to the GM, registering “very good figures” for the first semester without specifying them. Although Arval has a sole office in Bucharest, the company has always covered the entire country with its services. Currently, the operational leasing player has customers based in most of the big cities and cars running everywhere in the country.

Boiangiu notices that the more developed a city or a region is, the more open to operational leasing companies it is.

“Still, in Romania, operational leasing is embraced rather more easily by companies which are confident in their future,” he adds. “So, we look for successful companies in all areas of our country and help them find their optimal mobility solutions, to support them towards their success,” Boiangiu concluded.

According to ASLO, the top five members, at the end of last year, include LeasePlan Romania, Arval Service Lease Romania, ALD Automotive, Porsche Mobility and BCR Fleet Management.

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ALD Automotive, a promoter of the car fleet “greening” concept Efficiency, less pollution, digitalization, and overall more and more mobility services offered to the customers are the most essential trends that shape the face of the operational leasing industry these days. Frederic Banco, the general manager of ALD Automotive, analyses them one by one for The Diplomat – Bucharest.

He starts with one of the most important approaches visible in the past three years related to environmental protection: car fleet “greening”. Although the demand is still small compared to the international market, Banco notices that the popularity of electric and hybrid vehicles is on the increase in Romania and ALD Automotive positioned itself as a promoter of the concept of “greening the fleet,” actively promoting alternative transport modes. Last year, the company launched the “ALD Electric” programme, which, according to the GM, is the first one to provide clients with hybrid and electrical vehicles along with extra benefits, such as charging stations installed at the company’s headquarters.

“Hybrid and electric vehicles are evolving and the technology under their hoods provides drivers with even more autonomy, while the interiors are more comfortable and appealing,” says Banco. “We have already taken a step further and launched a new product for the local market with positive feedback so far, ‘ALD Electric’. Our clients are forward-thinking companies that put a high value on environmental protection through new technologies. We are fully dedicated to supporting this trend and we will continue to invest in eco-solutions.”

It is known that the local infrastructure related to charging stations is still maturing, with the European Alternative Fuels Observatory counting just a little over 100 charging stations in Romania. In comparison, Hungary and Poland have each almost 600 stations, the UK over 17,000, while Germany provides over 25,000 charging stations for EV vehicles.

However, Banco goes on to add that even if, at this moment, a long drive with an electric car in Romania is still difficult because of the small number of charging stations, more of the existing manufacturers have launched electric vehicles with extended range, up to 400 km.

As for hybrid technologies, these have been present for longer in the market, including in Romania, and have more fans due to their easier adaptation to the infrastructure conditions. “There are basically many varieties of hybrid cars (the regular hybrid or the plug-in hybrid) and the advantage of this type of vehicle is that it can adapt rather well to the operator’s life and driving style,” he says. “Since their dependence on infrastructure is much lower than for electric cars, at least initially, they prevail among customers’ choices.”

Continuing, Banco emphasises another trend that addresses the future of the market: digitalization, as we are living the age of speed and “now”. According to him, we are connected more than ever, and this expands in all aspects of a business, especially in the operational leasing industry. Knowledge about the company’s fleet,

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its performance, usage, turnover etc. is the key to development.

“We at ALD Automotive, are constantly working on updating the digital solutions for our clients and we are proud to say that the ‘My ALD’ portal, for example, is one of the most modern and comprehensive platforms for fleet managers,” says Banco.

“The drivers also benefit from ‘My ALD’, provided by live information they can access at any time via the mobile app. They can contact the nearest suppliers or receive directions to the nearest service unit.”

The general manager also noted that more and more companies opt for full service leasing, which, according to him, is the best option for business efficiency and long-term business stability for a company.

“The increased demand for complete services, as well as the awareness of this product are signs of a mature market and consolidation of this funding and fleet management model,” he adds.

At the same time, ALD’s GM underlines driver satisfaction, which is becoming a worldwide trend, because they are,

ultimately, the ones who directly benefit from the operational leasing products.

The latest studies from the United States show that driver support has become the principal consideration in requests for outsourcing. Drivers feel the need to receive instant information, especially through digital and mobile solutions.

“At ALD Automotive, we already have understood this need and are providing our clients the ‘My ALD’ platform which includes a mobile app designed specifically for drivers,” he adds.

So far, ALD Automotive has accessed most of the major counties in Romania additional to Bucharest, in a process that is consistent with its strategy of expansion.

Just last fall it expanded its operations with three regional representatives in Iasi, Cluj-Napoca, and Timisoara. The general manager confesses that this was the natural approach, because in the last three years local clients and SMEs had shown a growing appetite in full-service operational leasing products.

“ALD Automotive’s development [in H1] is in-line with our expectations and forecasts,” he says. “We will be constantly counselling our clients for the best solutions and, of course, we are aiming to expand our solutions portfolio to match the needs of every company, whether an SME or a multinational company,” he concludes.

Lacatus, BCR Fleet Management: “Governmental programmes can boost the ‘eco-friendly’ vehicles cluster”

“The sales of so called ‘eco-friendly’ vehicles, including electric vehicles, have been consistently boosted by the governmental programme,” ADRIAN LACATUS, BCR FLEET MANAGEMENT

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BCR Fleet Management, subsidiary of BCR Leasing IFN, became one of the top five players on the Romanian operational leasing market two years ago. Adrian Lacatus, the general manager of the company, believes that even though the growth curve has a more plateaued evolution than it had in the past years, the operational leasing market will have a double-digit growth rate at the end of this year. In addition, he tells The Diplomat – Bucharest that one of the main trends of the industry, the “eco-friendly” vehicles cluster, can be supported and boosted by governmental programmes.

“The sales of so called ‘eco-friendly’ vehicles, including electric vehicles, have been consistently boosted by the governmental programme,” says Lacatus.

“Hybrid and electric vehicles are evolving and the technology under their hoods provides drivers with even more autonomy,” FREDERIC BANCO, ALD AUTOMOTIVE

“Yet it’s a sure thing that Romania is far from being a mature market for hybrid and electric vehicles. I believe that a similar governmental programme aiming to provide support for electric vehicles related infrastructure, such as charging stations and parking slots, will be very important for the development of this market cluster.”

Discussing about other domestic regions besides Bucharest which might be interested in this type of service, the general manager adds that the market follows the overall economical trend pretty closely: areas with high development rate are more attracted to more complex products, as, one might expect, both consumer and corporate markets have a higher appetite for investments.

“For BCR Fleet Management, the operating lease is meant to provide a flexible and hassle-free mobility solution, in exchange for the best possible cost of usage for each specific vehicle, that can present the opportunity to make the company’s vehicle fleet operation more efficient, regardless of the location of the vehicles,” concludes Lacatus.

The Diplomat – Bucharest

operational leasing

Sixt Group Romania reached 5,000 cars under administration this year

regulatory changes - pollution and emission related - which may influence various taxations and costs of ownership of cars,” he says. “Cluj and Iasi have increased a lot. They Tal Lahav, the CEO of Sixt Group Romania, one of the main players are cities where we have a huge growth in our car rental activity, providing operational leasing, rental, second-hand cars, new cars, and having branches in both airports workshop services under one roof, tells of the cities.”

The Diplomat – Bucharest that 2018 However, speaking about the was planned to be a year of further main challenge of the local market, development and investments. The the CEO underlines the step-by-step company developed its operational development of understanding car rental and leasing advantages and leasing and rent a car fleet by 20 per cent, with up to 5,000 cars under benefits as compared to those of administration in 2018. Sixt Group car ownership. According to him, Romania had over 27-million Euro the local operational leasing market turnover in 2017 and estimates a is at a low level comparing with the 20 per cent increase in 2018, with Western-European countries. In over 20 million Euro planned to recent years, this means less than be invested by the Group in all its one fifth from the total number of “The main driver of the business units. new registered cars in one year are automotive industry “Our mission is to be a market leased, comparing with a rate of is clients’ preferences, leader in all our activities,” says Lahav. one half to one third from the total enhanced by the “We aim to be the chosen supplier number of new registers in other of automotive clients, realizing our developed countries. strong development of quality and price to value and our “One main reason for this is the middle class over ‘Always Yes’ philosophy and attitude. that there is still a market learning the past few years,” We will continue treating our clients curve related to the benefits of as partners and developing the operational lease and rent a car,” TAL LAHAV, synergetic proactive Group with says the CEO. “The operational SIXT GROUP ROMANIA a talented and creative team of leasing and rent a car services are a great product for mature professionals. We have long term plans and aspirations in a market markets and in the eastern European where only the most flexible and innovative players can countries this is increasing year by year. On the international create value and make a difference. We will continue our level, operational leasing and rent a car services are development in the Romanian market and keep a marketcommon services and very well integrated in the daily life leading position in all our activities. We aim to provide a of individuals and companies. According to ASLO and to cutting-edge value adding solutions to the market at the our estimations, the full operational leasing market reached best price to value (…) We will keep supporting SMEs, over 50,000 units in administration, with a continuous five to ten per cent growth year over year. Our growth last year offering them similar advantages which only the big was around 15 per cent, over the market average, and we companies traditionally have access to. We have the right intend to keep this level of growth.” services, the unique mix of professional teams, and the right approach to continue developing our business at the same Asked about the period of turmoil Romania is trend in 2018 and into the future.” undergoing, Lahav confesses that one is experiencing a This year, the company became the exclusive importer period of worsening of debt, trade, inflation, interest rates, of BYD Electric buses in Romania. BYD is the largest and employment combined with demographic challenges. manufacturer and seller of electric cars and buses worldwide He also continues to see a tremendous development of the with over 100,000 electric vehicles sold annually. “This middle class, which in turn contributes to the GDP with partnership is a strategic one for Sixt Group Romania, which significant private consumption. enables us to be closer to the future and broaden our range “At the same time, there is enormous potential for core of services,” he adds. economic development, resulting from significant need for Lahav goes on to say that Romania is developing rapidly infrastructure, housing, hospitals, schools, leisure facilities etc. – namely long-term projects which will in turn push from a Bucharest-based economy to a countrywide-based economy. He notices that many cities and regions outside the economy even further from government investments,” of the capital have experienced tremendous growth and he says. “In addition, we see a huge growth of business development in recent years with further expected trend and leisure visitors into Romania, and we believe this will in this direction. Iasi and Cluj-Napoca are on top of the list. continue. Indeed, while Romania needs enhanced political “The main driver of the automotive industry is clients’ and regulatory stability and clarity, the fundamentals do preferences, enhanced by the strong development of exist to continue to push the Romanian economy forward,” the middle class over the past few years, combined with he concluded.

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Business Lease to see 15 per cent growth by the end of the year Business Lease, providing integrated full-service operational leasing and fleet management service, reached a turnover of seven million Euro in 2017, a ten per cent increase compared with 2016. This increase comes from developing new digitalized services and the growing satisfaction of its clients, according to Philip Aarsman, the managing director. For the first half of 2018, Business Lease saw an increase in turnover of 27 per cent and an increase of 15 per cent of the operational lease fleet, compared with the first half of the previous year. In addition, the company forecasts a 15 per cent increase in turnover by the end of the year.

“The company keeps step with the evolution of the market and for this year we have planned an extension of the mobility concept by creating new mobility opportunities,” Aarsman tells The Diplomat – Bucharest. “Thus, our clients will be able in the future to choose among various means of transportation: vehicle, bike, train, subway, car sharing, or interconnected.

At the same time, we plan to provide our clients a new perspective over full service operational leasing by consolidating tailormade partnerships in which costs, time and operational efficiency display constant care for our clients’ needs. In the following period, we aim at developing our business in Cluj and through our know-how and tailored solutions we plan to become a strategic mobility partner for companies on the local market.”

Last year, the company invested 70,000 Euro opening a regional office in Cluj, aimed at consolidating the existing operations and the development of new ones. Over the next years, Business Lease plans to expand their services to other regions such as Timisoara and Iasi.

“Bucharest remains the most developed region for the business, but here we talk about a consumer who already understands the benefits and the advantages of operational leasing,” says the managing director. “The 70,000 Euro investment in the Cluj office was aimed at consolidating existing operations and the development of new ones, in line with our brand promise: closer to our clients and their needs through personalized services.

Our clients in Cluj need to be familiarized with this new business model and for this we assign a longer period of time for information and analyses. Doors have already been opened by many local companies, especially by those that brought in their top management

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“Bucharest remains the most developed region for the business ,” PHILIP AARSMAN, BUSINESS LEASE

professionals with multinational experience.”

Last year, over 60 new clients joined the company from areas such as FMCG, pharmaceutical, online retail, logistics, and transportation, which brought an over 20 per cent increase to the operational leasing portfolio. This year, the company aims at increasing its clients’ portfolio as well and considers a development of its fleet. On the other hand, the managing director confesses that Business Lease also focuses on its rent and short lease division, planning to provide to its clients varied services based on their needs no matter if they address the short, medium or long term.

Speaking about the face of the industry, the managing director goes on to say that a trend to watch is connected to the purchase preferences of the corporate consumers.

Related to the same period of 2017, Business Lease records a decrease of interest in diesels and a gradual awareness and increase in the purchases of cars with petrol engines, petrol/ hybrids and electric cars. Considering the request of the EU for Romania to comply with the standards imposed for air quality levels in the region and especially for Bucharest - in the absence of objective legislative actions - Aarsman analyses these trends as a repositioning of corporate clients in two directions, one anticipating changes and the other one showing that companies increasingly embrace and implement a sustainable environmental approach.

“In Romania, Business Lease is a pioneer in this field and has clients that embraced electric mobility even when the government provided no facilities,” he says. “We can talk about a trend focused on environment protection and pollution control in all European cities, becoming more and more

visible in Romania too. Our clients become aware of the effects of the pollution and are willing to actively contribute to the reduction of carbon emissions. Although the electric vehicle charging infrastructure is not so well developed as it is in more developed countries such as Holland or Norway, innovative technology vehicles are being asked for more often. There is interest in electric and hybrid cars, but such changes need time, vision, and a performant charging infrastructure. For the next three years, we expect a gradual increase of electric mobility in Romania, too.”

In 2017, the company launched the Connected Care program through which all Business Lease vehicles are standardequipped with a high-tech device transmitting online the mileage, the fuel consumption and all the warnings the user receives from the vehicle. The information provided by the program makes the company proactively efficient by real and due time programming of the vehicles with its servicing partners, thus optimizing costs and repairing time. Its clients and users receive daily data on their vehicles and information on fuel consumption to efficiently manage and decrease total costs of mobility.

Connected Care comes in two versions: the standard one, Connected Care 1.0, helps the company monitor in real time the car dashboard warning lights, the mileage and whether the vehicle was involved in an accident. An improved version, Connected Care 2.0, allows Business Lease to monitor the route of the vehicle, the driving style, fuel consumption, whereupon it can set limitations and geographic restrictions as well as plan a route for each and every vehicle.

“Beginning with 2018, (…) we launched a new operational leasing product for light commercial vehicles (LCVs) covering 400,000 kilometres over a period of 57 months,” says Aarsman. “This product is designed for the market segment with the most pressing need for long distance routes, the segment that has recorded an over 30 per cent increase in the Business Lease portfolio in 2017.”

At the moment, Business Lease has 36 employees and for the current year it plans to grow this number by 20 per cent.

The Diplomat – Bucharest

euro 2020

Romania struggles to save face ahead of

Euro 2020 With less than two years until the start of the 2020 UEFA European Football Championship, Romania struggles to finish its stadiums by kick-off time. And with roughly 200,000 fans flooding the capital city to cheer for their teams, the question lingers whether the city’s transport infrastructure can meet minimum safety criteria. The Diplomat takes the pulse of the current state of play.

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omania, alongside 12 other nations, will host the 2020 European Football Championship. Four matches will take place in the National Arena, but other four stadiums in the city - namely Steaua (Ghencea), Dinamo (Stefan cel Mare), Rapid (Giulesti) and Arcul de Triumf - must be ready to be used for team trainings.

Out of these four stadiums, three (Steaua, Rapid and Dinamo) are slated for a complete overhaul, while Arcul de Triumf is meant to be expanded.

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Demolition works have already started on the Steaua stadium in Ghencea, which is meant to be completed

by July 2020. The Euro 2020 kicks off on 12 June 2020.

Even though the projects are already delayed, national authorities assure the construction on all four stadiums will be completed on schedule.

Football fanatics nationwide pray to God that Romania will be able to keep its promise, at least this time around.

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What if the stadiums aren’t ready?

This is a good opportunity for Romania to improve its sports infrastructure, but state officials don’t seem to be bothered that any wrong step can ruin the country’s Despite current delays in building new and improved image. training grounds, Romania faces no consequences or financial penalties from UEFA, says Razvan Mitroi, Euro “I think we now have the experience to build stadiums 2020 communication manager at the Romanian Football and hope to keep our word regarding the UEFA agreement,” Federation (FRF).

Stanescu was quoted as saying. “It is important that the “There is no such thing as penalties for not getting four stadiums are completed. Of course, it would be good these stadiums ready for Euro 2020,” he tells The Diplomat. to finish them in time but if not, we will find solutions.”

“The Ghencea, Giulesti, Stefan cel Mare and Arcul de CNI took responsibility for the construction and completion of all four arenas. In early March, the Triumf stadiums are nominated exclusively as training Government approved 92 million Euro worth of facilities for the participating teams. It was the Romanian Government’s commitment to modernize or rebuild these investments for modernising two stadiums in Bucharest, namely the Steaua football stadium and Arcul de Triumf stadiums.” rugby stadium.

Should construction works on the four training facilities not meet the completion deadline, FRF has The Steaua stadium will undergo a 65 million Euro as a back-up plan the stadiums in Mogosoaia, Giurgiu, revamping process. It will have a capacity of 30,500 seats, Voluntari, and Ploiesti. “Official games will be played four locker rooms, 24 rooms for accommodating players, a museum, retail spaces and a pitchonly at National Arena, which already meets the European Championship standards,” view restaurant. The project should be says Mitroi. Romania’s biggest stadium will finalized in 25 months after signing the host four matches – three in the group contract. When it comes to the Arcul stage (14, 18 and 22 June) and one in the de Triumf national rugby stadium, the stadium is set to have 8,100 seats and round of 16 (29 June 2020). If it qualifies, thousand the Romanian national team will play at its amenities will also be revamped. least two matches in Bucharest.

The costs amount to some 27 million seat capacity for the Euro. The Giulesti arena is to have a The National Investment Company future Giulesti (CNI), which finances the four-stadiums 14,500-seat capacity after an investment project, claims Ghencea, Giulesti and of around 26 million Euro. As for the arena Arcul de Triumf are following the established Dinamo stadium in Stefan cel Mare, on 18 schedule with enough funds to put them into July CNI announced the signing of the contract for pre-feasibility and feasibility studies. operation by the deadline of 31 March 2020, even though their construction is yet to be started. The fourth stadium, Dinamo, is also part of Euro 2020 project and follows a Infrastructure – the same old problem separate path to recover its current constructions delays, officials say.

Mainstream TV station ProTV ran an experiment. Its This stadium may not be completed in time for Euro reporters tried all three available options for a traveller to 2020, says Romania’s Minister of Development, Paul reach the Henri Coanda International Airport in Otopeni from Gara de Nord, the main railway station that services Stanescu.. the city. As a metro line to the airport is, at the moment, “It is possible that the Dinamo stadium may not the stuff of dreams, a traveller can opt to use the train, be ready by the time the championship starts, but the bus, or their own personal car. we have alternatives in Ploiesti, Giurgiu, Voluntari and Mogosoaia. It is important to finish them all, even after With the state of train carriages owned and operated the championship,” Stanescu explains. by the National Railway Company (CFR) abusing noses and Alongside the Ghencea stadium, on which works providing sauna-like conditions for any adventurer aware have already started, the Minister added that works on of the headlines in recent months, a trip to the airport from Arcul de Triumf would start in June [as we went to press the railway station takes 40 minutes, including the bus there was no movement of this front], while the Giulesti transfer from the small train drop-off station in Balotesti.

The second option was Bus 780, which links Gara de Stadium will be reconstructed starting July this year [again, Nord to Henri Coanda Airport. At 46 minutes, the bus is nothing has so far happened in this respect]. the slowest option, as it runs only once every hour and As sport in Romania is at a turning point, officials say stops a great many times on the route. these football stadiums represent an important objective The last and most efficient way to reach the airport of this Government and a huge step forward for the is a personal car, which gets to the Departures Terminal country. at Otopeni in just 30 minutes, in busy, end-of-the-week The first UEFA official delegation will arrive in Bucharest Friday traffic. in July 2019 for a first inspection.

However, one has to ask: how many football fanatics “UEFA is monitoring the situation and no sanctions would be able to drive their own car? are envisaged [if the four stadiums are not ready],” UEFA officials tell The Diplomat. “The project is progressing There have been years of strategies and debates with within schedule.” regards to a quicker, direct link between Bucharest’s main

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train station and its main airport, yet still no government Bucharest by airplanes (Otopeni and Baneasa airports), has been able to complete anything concrete. trains, or cars.

It’s back to the drawing board for infrastructure The priority for the Bucharest City Hall is that all football strategists; however, no matter the will, a direct link to fans arriving in Bucharest will travel in comfort and safety conditions to hotels, fan-zones, and stadiums. the airport will not be ready in time for the European Football Championships in 2020. CFR, the national railway “The Mobility Plan, issued by the Bucharest City Hall, company, announced a project in the autumn of provides concrete measures for traffic management, public 2016, with Sorin Buse - then Transport Minister transport and city bus transfers for all passengers arriving at the two mentioned airports,” City - pledging completion by 2018. Today, as no Hall representatives tell The Diplomat. “One rail has still been nailed down, CFR is more of the advantages for us is low traffic (two realistic and instead sends travellers to alternative routes. matches on Monday and one on Sunday) The alternative, according to CFR, on the days before the matches when million Euro is the introduction of special busses most fans are expected to arrive in that would take tourists to the train Bucharest. The Mobility Plan implies traffic Revamping process station in Otopeni. This station also restrictions only for the fan-walk, which budget for the needs to be modernised, though, and will start from the Constitutiei Square, as Steaua stadium more investments are needed for a special well as on the streets around the National road to connect the train station to the Arena that will be restricted on match days.” airport, and subsequently the terminal. Asked The City Hall will organize a fan-zone in if the authorities will completely drop the idea of a direct Constitutiei Square, in partnership with UEFA, and other railway line between Bucharest’s main train station and the meeting points in the Old City of Bucharest.

Otopeni airport, the CFR general manager said this is not the case, but that the line would not be ready before 2022.

What about the money?

The project of the train line involves the construction of two kilometres of new track, an underground passage crossing When UEFA chose Romania as one of the host nations the DN1 national road, and a railway station at the airport. for the Euro 2020, the football governing body conditioned 2020 is also the most recent deadline announced for the move by some fiscal incentives the local government should give all those involved. the metro line connecting Bucharest to the Otopeni airport.

Subsequently, the Romanian Parliament decided that Former Transport Minister Felix Stroe said in December last foreign companies and institutions that will be involved in year that this new line would certainly be completed by organizing the Euro 2020 football championship matches 2020, when Romania will host matches of the European in Bucharest won’t pay income tax. Moreover, advertising Football Championship. However, the deadline is very related to the tournament will also be tax-free. The law is tight, as the Government hasn’t yet selected a contractor already in place. for this project. The construction work should start in the The Government estimates foreign tourists will spend second half of 2018 and be completed in two years, which around 100 million Euro in Romania during this event. means that the metro line may not be ready by the start The Diplomat asked whether Romania would get any of Euro 2020.

The European Commission (EC) has asked for financial aid from the UEFA for its hosting duties. UEFA clarifications about the planned metro line that is to link officials declined to comment and diverted the question Bucharest to the Otopeni airport (Line 6), namely about towards the local governing body. Razvan Mitroi, the Euro the route chosen for this line and the cost. The EC would 2020 communication manager at FRF said: “Taking your want to know more about why the new line doesn’t start request into consideration, we inform you that the Romanian from Piata Victoriei but from the existing 1 Mai station, Football Federation is a private legal entity and there is no legal basis on which we could release the information you which accounts for a longer route. asked for.”

Another aspect referred to by the European Commission is the underestimation of the investment for A participating nation in the Euro 2020 Football the construction of this metro line to Otopeni, but also Championship could, however, fill its treasure chests. the overestimation of passenger traffic. Local authorities There is a participation fee of 9.25 million Euro that each estimated that the new line would require an investment qualified nation is automatically allotted. A win in the group of some 1.3 billion Euro (VAT included), and that it would stage is awarded 1.5 million Euro, while a draw accounts ensure the transport capacity of 50,000 passengers per for a 750,000 Euro payout. Going further, the victor of the Round of 16 matches gets two million Euro, a sum which hour in each direction. The metro Line 6 will have 14.2 kilometres and 12 stations. increases to 3.25 million Euro if a team wins the quarter-final fixture. Semi-final winners earn five million Euro, while the runner-up team gets seven million Euro.

Safety and confort for football The laurels go to the victor, with the winner of the 2020 fans – City Hall’s priority European Championships bagging a hefty ten million Euro, According to UEFA's forecast following the latest World which means that the 2020 European Football Champion takes home a total of 34 million Euro.

Cups and European Championships, fans will come to

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