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Doing business with Romania: Data base for foreign businessmen

Authors: students group of the MBA programme organised by the Department UNESCO Chair on the study of inter-cultural and inter-religious exchanges at the University of Bucharest, Romania Coordination Group: Diana-Maria GEORGESCU Ioana Maria DRAGOMIR Andra IOANA Alexandru Cosmin TEODORESCU Cosmin George VLAD Members: Hanelore Brighite BENING Alexandra DIN Corina DUMITRESCU Amalia-Maria OTEA (VOICA) Elena Monica PETRESCU Roxana Andreea SANDU Ileana Oana STAVARACHE (NITA) Ioana Adriana STEFAN (POPA) Mariana UDREA Denisa VINTILESCU

Supervision: Prof Dr. Jean-Daniel CLAVEL, School of business administration (HEG) Fribourg, Switzerland ClavelConsulting, Switzerland Ms Diana-Maria GEORGESCU, Coordinator of the MBA Student Working Group, Department UNESCO Chair on the study of inter-cultural and inter-religious exchanges at the University of Bucharest, Romania Lecturer a.i. Lilian CIACHIR, Department UNESCO Chair on the study of inter-cultural and interreligious exchanges at the University of Bucharest, Romania Translations: Mrs Oana ROMAN-TARCINIU, Manager, Lexigo Translation, Romania Ms Ioana Maria DRAGOMIR, member of the Coordination MBA Student Working Group, Department UNESCO Chair on the study of inter-cultural and inter-religious exchanges at the University of Bucharest, Romania Ms Catalina-Elena-Iulia MARMUREANU, Canada Lecturer a.i. Lilian CIACHIR, Department UNESCO Chair on the study of inter-cultural and interreligious exchanges at the University of Bucharest, Romania With the support of: Prof Dr. Martin HAUSER, Director, Department UNESCO Chair on the study of inter-cultural and inter-religious exchanges at the University of Bucharest, Romania Prof Dr. Mathias Jaques ROSSI, School of business administration (HEG) Fribourg, Switzerland Prof Dr. Paul MEYER, School of business administration (HEG) Fribourg, Switzerland Prof Dr. Lucien WUILLEMIN, Dean, School of business administration (HEG) Fribourg, Switzerland

Table of content
Foreword / 4
1. By Mr Costin LIANU, Director of the Direction of Monitoring Synthesis, Reporting and Exporting Promoting, Ministry of Economy, Trade and Business Environment, Romania 2. By Mr Daniel KNG, CEO, OSEC Swiss Trade Promotion Office

Premises / 10
1. Comparative positioning of Romania (2009) 2. Eastern Europe - Old cultures, new markets, by Prof. Martin HAUSER 3. The research of effectiveness - the inescapable objective, by Prof. Jean-Daniel CLAVEL

Abbreviations & Acronyms / 15 1. Framework conditions / 17

1.1. Historical background 1.2. The Romanian Economy 1.3. Economic policies

2. Legal & fiscal affairs / 28

2.1. Visas, residence & work authorization 2.2. Copyright, patents & trademarks 2.3. Foreign exchange operations 2.4. Fiscal affairs

3. Economic sectors / 40
3.1 Primary Sector 3.2 Secondary Sector 3.3 Tertiary Sector 3.4 Quaternary Sector 3.5 Sectors with High Potential vs. Risky Investments

4. Business model & business management / 66

4.1. Introductory remarks 4.2. Setting up a business 4.3. Official representative (trading partner) 4.4. Subsidiary 4.5. Franchising 4.6. Licensing 4.7. Consortium 4.8. Management contract 4.9. Ceasing a business in Romania 4.10. Business management in Romania

5. Choosing a local partner / 77

5.1. Introductory remarks 5.2. Cross-cultural issues 5.3. Suggestions for a safe choice of partners 5.4. Risk and risk assessment 5.5. Experiences

6. Errors and traps / 83

6.1. Introductory remarks 6.2. Cultural and behavioral gaps 6.3. The corruption issue

7. UBCG University of Bucharest Consulting Group / 87

7.1. The team 7.2. UBCGs network 7.3. UBCGs competencies 7.4. Business tools 7.5. Services offered 7.6. Website

Attachments / 90 Tables
Table 1 - Comparative positioning of Romania (2009) / 10 Table 2 - GDP, Current account balance / 19 Table 3 - Imports & Exports 2006-2009 / 19 Table 4 - Consumer price index by major groups 2004-2007 / 19 Table 5 - Monthly Average Consumption of Selected Food Products in kilograms per Capital / 47-48 Table 6 - Selection criteria for export strategy / 62

Figures
Figure 1: The convergence criteria for joining the Euro zone / 23

Cuvnt nainte la Ghidul de afaceri Doing Business with Romania realizat n colaborare de Departamentul-Catedra UNESCO, Universitatea din Bucureti, Romnia, cu Haute Ecole de Gestion (HEG-HSW) Fribourg, Elveia
Exportul Romniei este direcionat cu precdere ctre rile Uniunii Europene, avnd o pondere de aproape 75% din totalul exporturilor, dup cum arata datele pe primele 8 luni ale anului n curs. De asemenea, potrivit datelor Eurostat, Romnia ocupa locul al doilea n Uniunea Europeana n functie de ritmul de cretere a exporturilor. Un aspect mbucurtor al evoluiei actuale a exporturilor l constituie creterea cu peste 25% a acestora fa de perioada similar a anului trecut, ceea ce arata indubitabil c exporturile i cresterea acestora sunt unul din principalele motoare de ieire a Romniei din criz. Un alt aspect pozitiv al ultimelor luni const n aceea c ritmul de creterea a exporturilor continu s-l devanseze pe cel de cretere a importurilor, tendin ce s-a manifestat pentru prima oar n luna noiembrie 2007. Ministerul Economiei, Comerului i Mediului de Afaceri administreaz mai multe instrumente de susinere a exporturilor. Aceste instrumente au fost dezvoltate i reglementate legal pe parcursul ultimilor nou ani, constuindu-se astazi n cel mai coerent sistem de susinere a exporturilor din rile Europei de Est i posibil chiar la nivelul Uniunii Europene. Dezvoltarea acestui sistem de susinere a exporturilor cu sprijin de la bugetul de stat a rspuns imperativelor Strategiei Naionale de Export n ciclul strategic 2005-2009, urmnd s fie perfecionat n cursul noului ciclu strategic conform noii Strategii Naionale de Export 20102014. Cel mai recent instrument, care a fost dezvoltat i lansat n anul 2009, este Portalul de comer exterior al Romniei. Portalul reprezint un sistem interactiv de informaii i consiliere a mediilor de afaceri privind pieele externe i modalitile cele mai eficiente de a ncheia tranzacii internaionale i de a dezvolta exportul. Portalul este conceput astfel nct s menin o legtur operativ ntre comunitile de afaceri teritoriale i pieele externe prin intermediul reelei de reprezentare comercial-economic din strintate. Rolul portalului este de a concentra informaiile de comer exterior i de a coagula eforturile tuturor celor implicai n exportul romnesc, spre a oferi exportatorilor o fereastr care s le orienteze activitatea de comer exterior i s-i ajute la elaborarea strategiilor de penetrare pe pieele externe. Aceast misiune este potenat de posibilitatea oferit de portal tuturor membrilor reelei de sprijin a comerului exterior de a se coordona prin intermediul su. Ministerul Economiei, Comerului i Mediului de Afaceri a iniiat, n condiiile unei perioade dificile din punct de vedere financiar, o serie de msuri pentru continuarea finanrii exporturilor, susinute de o promovare intens a produselor romneti pe pieele tradiionale, cum ar fi finanarea participrii firmelor romaneti la evenimente promoionale internaionale (trguri, expoziii, misiuni) i dezvoltarea Portalului de comer exterior al Romniei. Analiza structurii exporturilor arat o mbuntire constant a acesteia comparativ cu perioadele similare din trecut, respectiv creterea ponderii ramurilor construciilor de maini, mijloace de transport, componente electronice, electrotehnica i produse ale industriei chimice, inclusiv farmaceutice, ceea ce demonstreaz creterea valorii adugate prin activitatea de export. Din sfera serviciilor, exporturile din domeniul tehnologiei informaiilor, domeniu pe care Strategia Naional de Export a mizat permanent i care s-au comprimat mai puin n anul 2009, dau semne de relansare conform surselor asociaiilor de ramura ARIES i ANIS. Au aprut i s-au consolidat noi produse de export precum: produsele agricole ecologice, cele din audiovizual, componentele auto, navele (valoarea exporturilor de construcii de nave i reparaii de nave

n anul 2009 a fost de 800 mil Euro, iar Romnia ocupa locul 4 n cadrul antierelor navale europene), componenetele electronice i produsele electrotehnice, care vor contribui i n viitor la diversificarea structurii exporturilor. S-a extins baza de export pentru agricultura ecologic i vie-vin prin creterea standardelor de calitate. S-au produs mutaii n sensul certificrii calitii. n ultimii ani s-a constatat o cretere a numrului de firme care export sub brand propriu din domeniile mobilei, designului vestimentar, IT, produselor agriculturii ecologice, vievin. Ministerul Economiei, Comerului i Mediului de Afaceri va avea n vedere n viitor promovarea cu precdere a firmelor cu brand de export i a firmelor inovative. Firmele romneti sunt bine poziionate pe piaa Uniunii Europene, ns se impune o reorientare ctre pieele din afara UE, cu precdere ctre pieele int din rile emergente precum cele numite generic BRIC. Astfel, n Programul de trguri 2009 manifestrile organizate n spaiul din afara UE au reprezentat 39,21 % din totalul aciunilor, iar n 2010 vor reprezenta 40,74 %. n contextul celor de mai sus, lansarea Ghidului de afaceri Doing Business with Romania, realizat n colaborare de Departamentul-Catedra UNESCO, Universitatea din Bucureti i nalta coal (Universitatea) de Finane din Friburg, Elveia, este binevenit. Ghidul se va altura Portalului de comer exterior spre a deschide i mai mult poarta oportunitilor de export firmelor din Romnia, oferindu-le totodat investitorilor stini informaii importante despre potenialul pieei romneti. Cele dou instrumente se vor completa reciproc n mod fericit, furnizand investitorilor strini i exportatorilor locali, unelte sigure, aliniate tendinelor actuale i de viitor de pe piaa mondial, permind realizarea n timp accelerat a procesului decizional privind abordarea pieelor locale i internaionale. Totodat Ghidul se va altura mijloacelor actuale de susinere pentru exportatori n vederea analizrii oportunitilor i msurrii impactului financiar al deciziei de a ataca o pia sau alta. Ghidul de afaceri Doing Business with Romania va putea fi accesat i de pe Portalul de comer exterior al Romniei, ceea ce reprezint, n opinia noastr, o recunoatere a rolului i utilitii sale. Dr. Costin Lianu, Director, Direcia Monitorizare, Sinteze, Raportare i Promovare Export, Ministerul Economiei, Comerului i Mediului de Afaceri, Romnia

Foreword to Doing Business with Romania Business Guide conducted in collaboration with Department UNESCO Chair, University of Bucharest, Romania, and Haute Ecole de Gestion (HEG-HSW) Fribourg, Switzerland
Romanias export is mainly oriented towards the EU countries, which receive up to 75% of total exports as shown by the data collected in the first eight months of the current year. Furthermore, according to Eurostat data, Romania is situated on the second place in EU for exports increase rate. A pleasing aspect of the current export evolution is the 25% growth compared to last years corresponding months, which clearly indicates that exports and their growth are the main factors that will help Romania overcome the finanical crisis. Another positive aspect seen in the last few months is that the export growth rate continues to outgrow the imports one, a tendency that was first observed in November 2007. The Ministry of Economy, Trade and Business Environment manages several instruments that support exports. These instruments have been developed and regulated during the course of the past 9 years, and nowadays constitute the most coherent system of export support in Eastern European countries, and possibly even in the entire EU. The development of this export support system, conducted with the help of state funding, was a response to the National Strategy imperatives for the strategic time-period 20052009, and is set to be optimised during the new strategic time-period in accordance to The National Strategy for Export of 2010-2014. The most recent instrument, developed and launched during 2009, is the Romanian Foreign Trade Portal. The Portal is an interactive information and consulting system for the business environment, offering information on foreign markets and presenting the most effective methods of conducting international transactions and developing export. The Portal is designed so as to maintain an operative connection between territorial business communities and external markets with the help of the foreign economic and trade representation network. The purpose of this portal is to concentrate the foreign trade information and to bring together the efforts of all the parties involved in the Romanian export, in order to provide exporters with a window that will help them target their foreign trade activity and elaborate foreign market penetration strategies. This mission is enhanced by the possibility for all members of the foreign trade support network to coordinate their activities with the help of this platform. The Ministry of Economy, Trade and Business Environment has initiated, during such a financially difficult time period, a series of measures for the continuance of export financing, which are reinforced by an intense mediatisation of the Romanian products on the traditional markets, such as the participation financing awarded to Romanian firms attending international promotional events (fairs, exhibitions, missions) and the development of the Romanian Foreign Trade Portal. The exports structure analysis shows constant improvement when compared to the same months of last year, more precisely in the segments of car construction, transportation, electronic components, electrotechnical sectors, chemical industry and pharmaceutical products, which demonstrates the growth of added value through export activities. In the services sector, exports from information technology segment, an important field for the National Strategy for Export, contracted less during 2009, and according to associations such as The Romanian Association of Electronic and Software Industry (ARIES) and Employers Association of the Software and Services Industry (ANIS) are now showing signs of reinstatement.

New products have appeared and have been consolidated in segments such as bio-agriculture, audiovisual, car components, shipbuilding (the total value of ship construction and repairs exports in 2009 th reached 800 mil Euro, with Romania ranking 4 for shipbuilding sites in Europe), electronic and electrotechnical components that will contribute to export structure diversification in the future. The export platform for bio-agriculture and wine has extended by increasing quality standards and changes have been made to the quality certification process. During the last years a growth in the number of firms that export their own brand has been registered in segments such as furniture, clothes design, IT, bio-agriculture products, wine. From here on out, The Ministry of Economy, Trade and Business Environment will focus on promoting brand and innovative firms. Romanian firms are well positioned in the EU market, although a reorientation towards the non-EU markets is necessary, with focus on emerging markets, such as BRIC. Therefore, in the 2009 Fair Program, the events organised outside The EU represented 39, 21%, and in 2010 the value is expected to rise up to 40, 74%. In the framework presented up until now, the launching of the Doing Business with Romania Business Guide, conducted in collaboration with The Department Chair UNESCO, University of Bucharest and Haute Ecole de Gestion of Fribourg, is auspicious. This guide will join the Foreign Trade Portal in bringing more opportunities of export to Romanian business firms and in the same time give foreign investors important information on the potential of the Romanian market. The two instruments will complement one another, providing the foreign investors and the local exporters with trustworthy instruments, aligned with the current and future tendencies of the global market, permitting an accelerated decisional process of approaching international and local markets. Moreover, the Guide will contribute to the current support measures for exporters by helping them analyse opportunities and measure the financial impact of the decisions to approach a certain market. The Doing Business with Romania Business Guide can also be accessed from the Foreign Trade Portal of Romania, which in our opinion represents the recognition of its purpose and usefulness. By Dr. Costin Lianu, Director, Director of the Direction of Monitoring Synthesis, Reporting and Exporting Promoting, The Ministry of Economy, Trade and Business Environment, Romania

Vorwort von Daniel Kng CEO der OSEC

Liebe Leserin, lieber Leser Die EU ist der wichtigste Handelspartner der Schweiz, wobei rund 60% aller Exporte aus der Schweiz in die EU-Staaten gehen. Wie stark die EU und die Schweiz wirtschaftlich miteinander verbunden sind, zeigt das hohe Handelsvolumen zwischen der Schweiz und der EU: Per Ende 2009 betrug dieses fast CHF 240 Mrd. Auch die neuen EU-Staaten aus Osteuropa werden fr Schweizer Unternehmen immer wichtiger, nicht zuletzt, weil nach Osteuropa auch hohe Betrge an EU-Frdergelder fliessen und sich dort deshalb fr Schweizer Firmen beachtliche Geschftsmglichkeiten ergeben. Fast die Hlfte aller Schweizer Direktinvestitionen liegen in der EU. Auch das zeigt, wie verflochten die Schweizer Wirtschaft mit den EU-Staaten ist. Die Direktinvestitionen der Schweizer Unternehmen in Rumnien haben in den letzten Jahren denn auch stark zugenommen. Seit 2004 haben sie sich mehr als verfnffacht und betragen jetzt ber CHF 2 Mrd. Das drfte auch mit dem Geschftspotenzial in Rumnien zusammenhngen, gilt das Land doch zu den wachstumsstrksten Staaten der Region. Viele Geschftschancen fr Schweizer Unternehmen bieten sich vor allem in der Bau- und Infrastrukturbranche an, weil es in Rumnien in diesem Bereich leider noch einige Defizite gibt. Aber auch im Maschinenbereich, in der chemisch-pharmazeutischen Industrie, im Outsourcing, in der Zuliefererbranche und im Cleantech-Bereich haben Schweizer Firmen gute Chancen. Umfangreiche EU-Frdermittel werden zudem fr Grossprojekte im Wasser- und Entsorgungssektor zur Verfgung gestellt. Als Kompetenzzentrum der Schweizer Aussenwirtschaftsfrderer informieren, beraten und begleiten wir bei der Osec Schweizer und Liechtensteiner KMU bei ihren internationalen Geschftsvorhaben. Dazu vernetzen wir auch Unternehmen, Know-how-Trger sowie private und ffentliche Organisationen weltweit und ermglichen so eine schlagkrftige Aussenwirtschaftsfrderung. Neben der Exportfrderung nehmen wir auch die nationale Standortpromotion der Schweiz sowie die Import- und Investitionsfrderung zu Gunsten von ausgewhlten Entwicklungs- und Transitionslndern wahr. Bei unseren Aktivitten in der Aussenwirtschaftsfrderung koordinieren wir ein dichtes Netzwerk (Business Network Switzerland) mit kompetenten Partnern im In- und Ausland. In der Schweiz arbeiten wir mit kantonalen Industrie- und Handelskammern, Gewerbe- und Wirtschaftskammern sowie mit den kantonalen Volkswirtschaftsdepartementen und Wirtschaftsfrderstellen zusammen. Im Ausland umfasst das Netzwerk unter anderem 16 Swiss Business Hubs, die in Wachstums- und Schwerpunktmrkten bei Schweizer Vertretungen und bei bilateralen Handelskammern angesiedelt sind. Sowohl in der Schweiz als auch im Ausland unterhalten wir ein weltweites Spezialisten-Netzwerk (Pool of Experts) mit diversen Kompetenzen im Bereich Exporte und Internationalisierung. Wenn Sie Fragen zur Internationalisierung haben, bei Ihrer Expansion ins Ausland Untersttzung brauchen oder Kontakte zu Geschftspartnern suchen, dann kontaktieren Sie die Osec. Wir helfen Ihnen gerne weiter. Ich wnsche Ihnen eine interessante Lektre. Daniel Kng CEO der OSEC

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Foreword of Mr. Daniel Kng CEO of OSEC

Dear reader, EU is the most important business partner of Switzerland; about 60% of Swiss exportation products go to EU states. How strongly EU and Switzerland are linked economically each to the Ether, is reflected by the amount representing the business volume between the two: At the end of 2009, this amount reached nearly CHF 240 Milliards. The new EU-states of Eastern Europe have become continuously more important for Swiss enterprises. The reason for that is also the fact that big amounts of European development funds are dispatched in and for Eastern Europe, and so possibilities for business has became interesting for Swiss enterprises in this part of Europe. Nearly half of Swiss direct investment goes to EU. This demonstrates once again how linked Swiss economy and EU-states are. Direct investment of Swiss enterprises in Romania have increased significantly in the last years. Since 2004 it has it has been multiplied five times and has reached until now a level higher then CHF 2 Milliards. This may be based on the big business potential within Romania. Indeed, Romania is considered as one of the states of that region with strong increase potential. A lot of business opportunities for Swiss enterprises are open in the sectors of construction and infrastructure, because of the continuously existing lacks in Romania in these sectors. Furthermore, in the sectors of engines, pharmaceutics, outsourcing, supply services and cleaning technologies Swiss enterprises may be welcomed. Vast developing funds of EU are furthermore dedicated to big projects in the water (energy) and cleaning vector. As Centre of competence of Swiss foreign business promoters, we, within OSEC, inform, advice and accompany SME from Switzerland and Lichtenstein in their international business actions. Furthermore, we connect enterprises, know how centres as well as private and public organisations. Throughout the world, promoting in that way business abroad. Beyond promotion of exportation we sustain the geographical business position of Switzerland as well. We are also active in the import and investment promotion in favour of selected developing and countries of transition. Related to our activities of promoting business abroad, we coordinate a dense network (Business network Switzerland) including competent partners in our country and abroad. In Switzerland we cooperate with chambers of industry and commerce, chambers of trade and economy of the Cantons as well as with Departments of public economy and offices for economic promotion. On abroad this network includes 16 Swiss Business Hubs which are located in increasing and core economies and there related to Swiss representations and bilateral chambers of commerce. We dispose in Switzerland and abroad of a pool of experts, specialized in the area of exports and internationalization. If you have questions related to internationalization, if you need support for your expansion towards foreign countries or if you need contacts to business partners, please contact OSEC. We will be pleased to help you. I hope you will enjoy this information. By Daniel Kng, CEO of OSEC

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Premises
1. Comparative positioning of Romania (2009)* By the UBCG University of Bucarest Consulting Group Romania 55 42
91 Bulgaria 44 50 119 53 56 4 41 95 106 87 Slovakia 42 66 56 81 11 15 109 119 113 61 Hungary 47 39 87 77 61 30 119 122 70 14 Poland 72 117 163 76 88 15 41 151 42 75 Austria 28 122 55 60 39 15 132 102 24 11 20

91 78 39 58 85 Comments: In green, competitive position; in red, position to be improved

* Source: http://doingbusiness.org

Doing business Starting a business Dealing with construction permits Employing workers Registering prooperty Getting credit Protecting investors Paying taxes Trading across borders Enforcing contracts Closing a business

113 92
15

41 149
46 55

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2a. Eastern Europe - Old cultures, new markets The contribution of the Department UNESCO Chair on the study of intercultural and inter-religious exchanges at the University of Bucharest
The end of the Second World War was the prelude to multiple migrations and an intense assimilation of remote cultures on the European continent. From the 1950s to the 1960s, economic, political and intrapersonal exchanges developed quickly, being reinforced by the growing independence of many African States and the fall of the communist regime in Eastern Europe. With the disappearance of the iron curtain, Western contractors seized the occasion to invest in Eastern Europe, delocalizing local companies and consequently widening its markets. However, with an infiltration of new work placements amongst the newly created democracies of Eastern Europe, a loss of local industries transpired as well. This profound change poses, on a European level, the dilemma of managing the convergence of very different cultures. Indeed, Europe is distinguished from Asia, Africa and America, by a mosaic of cultures, languages and religions, coexisting within a restricted space. This extraordinary miniaturization explains, on the whole, the difficulty EU faces in its efforts of integration and political alignment, with its Member States. The cultural topography of Romania is complex as several ethnical groups with their respective cultures have taken part in its construction the Daces, the Greeks, the Romans, the Goths, the Slavs, the Ottomans ect. Yet despite the influence of all these cultures, it is interesting to note that Romania has rigidly maintained a Latin language. This was for instance the case when the Daces invaded by the Goths rd in the 3 century AD, following the defeat of the Roman emperor Aurelian, colonized the invader. And isnt this an interesting trait, worthy of capturing the attention of the foreign businessman?! Shouldnt this Romanian perseverance, inherited from the Daces and Romans, be considered in the pursuit of his objectives?! A flight from Frankfurt to Bucharest is a short distance - approximately two hours. In the cultural plan however, it takes on another span: a German contractor leaves behind a world largely marked by the Protestant spirit, modern and capitalist, to plunge himself in an orthodox space, marked by the impress of traditions. From initial contact, contrast can be particularly strong, especially if our traveler moves away from the capital, venturing out and making contact with the orthodox country side. This very cultural difference can be lessened if our contractor moves towards Transylvania and his German and Hungarian minorities. In fact, the cultural distance between the West and these minorities living in Romania will appear less marked than will that between the West and the Eastern part of Romania where Orthodoxy is entirely dominant. Through its Master programs, the University of Bucharest and the UNESCO Department on the study of intercultural and interreligious exchanges, thanks to its indigenous and international professorial college and its diverse areas of specialization prepare students for the intercultural complexes that arise when cultures convene. The three Masters programs organized by this Department take obvious account of anthropological, religious, social, political and the economic components characterizing Romania and satisfy the requirements of any university formation. This Business Guide, elaborated on within the framework of the training given by this Department, results from the engagement of a group of students, coming from diverse viewpoints but having gathered their forces to improve their formation. By Prof. Martin Hauser

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2b. Europa de Est: culturi vechi, piee noi Contribuia Departamentului-Catedra UNESCO pentru schimburi interculturale i interreligioase, Universitatea din Bucureti
Sfritul celui de-Al Doilea Rzboi Mondial a constituit preludiul pentru multiple migraii i a condus la o intensificare a ntlnirilor dintre culturi ndeprtate. ncepnd cu anii 50-60 schimburile economice i politice, precum i contactele interumane, s-au dezvoltat foarte rapid, aciune ntrit i de obinerea independenei de ctre numeroase State africane. Ulterior aceast dinamic s-a intensificat considerabil ca urmare a cderii regimurilor comuniste n Europa de Est. Odat disprut Cortina de Fier, antreprenorii occidentali au profitat de oportunitatea de a investi n Europa de Est, delocaliznd unele dintre ntreprinderile lor i extinzndu-i astfel pieele. Astfel au fost create, pe de o parte, noi locuri de munc n majoritatea noilor democraii din Europa de Est, ns pe de alt parte au disprut o parte din industriile autohtone. Aceast mutaie pune n profunzime problema gestionrii ntlnirii dintre culturi foarte diferite, n special la nivelul Europei. De fapt, Europa se distinge de Asia, de Africa i de America printr-un mozaic de culturi, de limbi i de religii distribuite pe un spaiu restrns. Aceast extraordinar miniatuarizare explic ntro mare msur dificultatea pe care o ntlnete Uniunea European n eforturile ei de integrare i de aliniere politic, economic i social a Statelor membre. Universul cultural al Romniei este complex, multe popoare participnd la edificarea lui Dacii, Grecii, Romanii, Goii, Slavii, Otomanii Apropo de acest lucru, interesant este de subliniat faptul c dac romna este o limb latin, aceasta se datoreaz Dacilor, invadai de Goi n secolul al III-lea d.H. care, urmare retragerii mpratului roman Aurelian, i-au colonizat pe invadatori. Nu exist, oare, aici o trstur interesant de caracter care ar trebui s atrag atenia oamenilor de afaceri din Europa i din afara acesteia: perseverena de neegalat a Romnilor, motenitori ai Dacilor i ai Romanilor, n cutarea obiectivelor lor ?! O cltorie cu avionul de la Frankfurt la Bucureti reprezint astzi, din punct de vedere temporal, o nimica toat aproximativ dou ore. Pe plan cultural, ns, lucrurile stau altfel: antreprenorul german las n spatele su o lume profund marcat de spiritul protestant, modern i capitalist, pentru a se arunca ntr-un spaiu ortodox i empatic, marcat de religiozitate i impregnat de tradiii. nc de la primele contacte, contrastul poate fi foarte puternic, n special dac voiajorul nostru se ndeprteaz de capital i ntr n contact cu provincia ortodox. Acelai contrast cultural va fi mai puin puternic dac antreprenorul nostru se ndreapt spre Transilvania cu minoritile acesteia germane i maghiare : de fapt, distana cultural ntre Occident i minoritile sale care locuiesc n Romnia va fi mai puin pronunat dect ntre Occident i partea oriental a Romniei unde Ortodoxia este dominant. Departamentul-Catedra UNESCO pentru schimburi interculturale i interreligioase, Universitatea din Bucureti, graie corpului su profesoral autohton i internaional, dispunnd de specializri diverse, i pregtete pe studenii si pentru aceast ntlnire intercultural complex prin intermediul programelor sale de master i de doctorat. Cele trei programe de master organizate de Departament in n mod evident cont de componentele antropologice, religioase, sociale, politice i economice, ce caracterizeaz sufletul romnesc i satisfac n acest sens exigenele oricrei formri universitare demne de acest nume. Acest Ghid de Afaceri, elaborat n cadrul programelor de master organizate de Departamentul nostru, este rezultatul angajamentului ferm al unui grup de studeni care, dei avnd formaii universitare diferite, i-au unit forele pentru a-i perfeciona formarea lor academic. Prof. Martin Hauser

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3a. The research of effectiveness - the inescapable objective

The passage from a planned economy to a market economy, with the emergence of a competitive private sector, at the international and national level of generating employment is not reduced to a simple technical equation; rather the perception and the management of historical, cultural, psychological and sociological components are essential. This immaterial dimension is particularly important, for Europe as well as for Romania, a country deeply anchored in its traditions and crossed by multiple cultural, religious and political currents. The debate on the fate reserved for Rroms in certain EU states illustrates this problem. Already difficult to manage, this process of international openness becomes complicated under the strains of economic globalization: all is in constant movement - competition becomes sour, the modes of consumption change, the methods of management are refined, the dynamics of information hustles marketing and communication, the structures of costs follow the evolution of the production process, the consumers priorities also change quickly, the modes of financing are constantly renewed, this entrepreneurship generates more and more followers. Adhesion in EU arrives thus at a marked point, which offers Romania a more favourable framework that facilitates its integration in the world economy. Unfortunately, the debt crisis of certain European countries, and the subsequent weakening of the euro, will reduce EUs room for movement and as a result, Romania will have to redouble its efforts to accelerate its integration in the European and world economy. The resolution to this combination of problems rests then on a triple requirement: a formation with the point of progress, an economic effectiveness of foreground, and a savage insistence on this effort. This business guide responds this triple requirement. To begin with, the business guide is written by a students group of the MBA programme organised by the Department UNESCO Chair on the study of inter-cultural and inter-religious exchanges at the University of Bucharest, combining university training with intensive and accelerated business preparation. The outmoded B2S principle is replaced by S2B, applicable in our constant changing world. The business guide then offers to the foreign companies interested in the Romanian market, and to the Romanian companies interested in international expansion, a practical and effective working tool, elaborated in direct contact with the Romanian business world. Finally, with the emergence of the UBCG - University of Bucharest Consulting Group the guide reflects the will of a rising Romanian generation, determined to take its destiny in its own hands without asking for assistance. The many challenges EU will inevitably be confronted with, will push the younger generations to pick up their problems and become innovative and effective. Which in todays society, motivate any occupation even that of a student. By Prof Jean-Daniel Clavel

15

3b. Cercetarea eficienei obiectivul ineluctabil

Drumul de la o economie planificat la o economie de pia, n contextul apariiei sectorului privat competitiv, la nivel naional i internaional, de generare a locurilor de munc, nu se reduce la o simpl ecuaie tehnic. Eseniale sunt administrarea i percepia componentelor istorice, culturale, psihologice i sociologice. Aceast dimensiune imaterial este cu precdere important, att pentru Europa ct i pentru Romnia, o ar bine ancorat n tradiiile sale i strbtut de multiple curente politice, culturale i religioase. Discuiile cu privire la soarta rromilor din anumite state europene vin ca o confirmare a afirmaiei de mai sus. Acest proces de deschidere internaional dificil de administrat se complic i mai mult sub presiunea globalizrii economice: totul se afl ntr-o continu micare competiia este acerb, modelele de consum se schimb, tipurile de management se rafineaz, dinamica informaiei ia cu asalt marketingul i comunicaiile, structurile costurilor urmeaz evoluia procesului de producie, prioritile consumatorilor de asemenea se modific rapid, metodele de finanare sunt n permanen nnoite, acest tip de antreprenoriat atrage tot mai muli adepi. Integrarea n Uniunea European survine astfel ntr-un moment marcant, oferind Romniei un cadru mult mai favorabil, care i va facilita intregrarea n economia mondial. Din pcate, datoriile cauzate de criz ale anumitor ri europene i devalorizarea implicit a monedei unice va reduce spaiul de manevr a Uniunii Europene, iar Romnia va trebui s-i redubleze eforturile de accelerare a integrrii n economia European i mondial. Soluia acestui amalgam de probleme rezid ntr-o cerin tripl: un program de formare de ultim or, o eficacitate economic de prim plan i perseveren aprig n effort. Acest ghid de afaceri rspunde acestei cerine. n primul rnd, acest ghid a fost redactat de un grup de studeni de la Programul MBA organizat de Departamentul-Catedra UNESCO pentru schimburi interculturale i interreligioase, Universitatea din Bucureti, combinnd astfel educaia universitar cu o pregtire intensiv i accelerat pentru domeniul afacerilor. Conceptul deja depit de business to school (de la afaceri la coal) a fost nlocuit de cel de school to business (de la coal la afaceri) n lumea aceasta aflat n permanent schimbare. Ghidul ofer, companiilor strine interesate de piaa romneasc i companiilor romneti interesate de extinderea internaional un instrument practic i eficient, elaborat n contact direct cu mediul de afaceri din Romnia. n cele din urm, odat cu apariia Grupului de Consultan a Universitii Bucureti - UBCG ghidul reflect voina i aspiraiile unei noi generaii, hotrt s-i ia soarta n mini. Numeroasele provocri cu care inevitabil se va confrunta Uniunea European vor determina generaiile tinere s i rezolve singure problemele, s fie innovative i eficiente. Acum, mai mult ca oricnd, eficiena este leitmotivul ntregii activiti profesionale, care ncepe astfel chiar de pe bncile facultii. Prof. Jean-Daniel Clavel

16

Abbreviations & Acronyms

Ag AGD AGD AMCOR ANCA ARIS Au bbl/d BMI BP BWA CAEN CAP CCIR CEE CEFTA CIL CMT CNL CNVM CPI CRPCE CSCE EAFRD EC EC EEA EES EFTA EU FDI FEPAIUS FNUP FOB g/t GD GDP GEO/OUG GHz GPRS GSCP GWh Ha. IMF ITC Kcal Kg kWh/m2 M m2 m3 MECMA MGR Silver Anti-Corruption General Directorate Anti corruption General Directorate Romanian Management Consultancies Association National Agency for Agricultural Consulting National Agency for Foreign Investments (since 01.2010 CRPCE) Gold oil barrel/day Business Monitor International Statistical Energy Survey Broad Wireless Access Classification of the Activities in the National Economy Common Agricultural Policy Chamber of Commerce and Industry of Romania Central Eastern Europe Central European Free Trade Agreement carbon in leach cut make and trim Oltenia National Lignite Company National Commission of Movable Valuables Consumer Price Index Romanian Center for Promoting Comerce Commission on Security and Cooperation in Europe European Agriculture Fund for Rural Development European Commission European Community European Economic Area European Economic Space European Free Trade Association Europe Foreign direct investment The Professional Association of Textiles, Clothing and Leather Producers Fonds des Nations Unies pour la Population Free on Board, is an initialism which pertains to the shipping of goods grams per tonne Governmental Decision Gross Domestic Product Government Emergency Ordinance Gigahertz General Packet Radio Service General System of Customs Preferences Gigawatt Hour hectare International Monetary Fund International Trade Centre kilocalorie kilogram Kilowatt Hour per square metre million square metres cubic metres Ministry of Economy, Commerce and Business Environment mass grocery retail

17

MHz MIA MMFPS Moz Mt MW MW MWt NAD NAD NBR/BNR NIS/ INS NES OSCE OSIM OSIM PED ROL SAPARD SME SRL SSA t. tbpd TJ UDI UDMR WB WIPO WTO WWII YoY ZF

Megahertz Ministry of Interior and Administration The Ministry of Labour, Family and Social Protection Million Ounces metric ton Megawatt Megawatt Megawatt Thermal National Anticorruption Directorate National Anticorruption Directorate National Bank of Romania National Institute of Statistics National Export Strategy Organization for Security and Co-operation in Europe Romanian State Office for Inventions State Office for Inventions and Marks Primary Energy Demand Romanias previous currency. 1 RON is equal to 10,000 ROL Special Accession Programme for Agriculture and Rural Development Small and Medium Enterprise Limited company, Ltd. Public company, Plc. tons thousands barrels per day TeraJoule Utilities Dynamic Inc Democratic Union of the Magyars in Romania World Bank World Intellectual Propriety Organization World Trade Organization World War II year over year Ziarul Financiar (The Financial Newspaper)

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1. Framework conditions
Drafting team: Ioana Maria DRAGOMIR (ioana_dragomir2001@yahoo.com) Diana-Maria GEORGESCU (diana.georgescu@ipsos.com) Andra IOANA (andraioana_2000@yahoo.com) Cosmin George VLAD (cosminvlad83@yahoo.com) 1.1. Historical background 1.2. The Romanian Economy 1.3. Economic policies

1.1. Historical background

Past periods (up to the EU accession): Historical background See Attachment no 1 The centrally planned system See Attachment no 2 The transition period See Attachment no 3 The accession of Romania to the EU and its consequences:
o Romania expressed its intentions to become an EU (EC) Member State beginning with 1990, but it took more than a decade for negotiations to commence. During that period, all political declarations and economic measures were conducted in regard to the accession and many locals saw EU as the escape from the severe economic problems Romania was facing. The beginning of the negotiations showed that Romania was far from ready for the EU, and several reforms, some of them very harsh, had to be implemented. The 2004 EU expansion, which did not include Romania, was perceived as a great disappointment and it had become obvious that the country still needed to make great progress in order to be accepted in the EU. st Soon after, the deadline for the EU accession was established by the European Commission (1 of January 2007), after sufficient measures had been taken. Even if many fiscal, economic, monetary and social reforms were undertaken, Romania still had problems regarding justice and agriculture in particular. The main issue that concerned EU was the corruption present in every sector and at every level of the society. Romania had to prove that its justice system was truly independent and that the politicians and public servants accused of corruption would be investigated. Romania succeeded in acceding to the EU in 2007, having solved most of its problems but still having to fight against corruption. st The fact that Romania would enter the EU on 1 January 2007 had a very positive impact on the local economy and on the living standard of most Romanians. Foreign investors, attracted by the prospect of greater profits and by the now stable economy and society, came to invest billions of Euros in the local economy. Now, as EU Member State, Romania and Bulgaria share the status of the poorest countries inside the EU, and still have to make great steps in order to reach the European level.

Romania EU relations see:

o http://www.emergingeuropemonitor.com/file/int_start/160/7580/romaniaarticlelisting.html o http://epp.eurostat.ec.europa.eu/guip/themeAction.do o http://ec.europa.eu/economy_finance/publications/publication10962_en.pdf 19

Main pending issues

Like every country that went through major reforms, Romania still has many tasks on its to do list. Even more so since the country has gone through tough decades from WWII until 1989/1990. Under these circumstances, a lot of topics are still on Romanias agenda for the years to come, such as: o o o Political experience - Romanian political parties still lack experience and their actions do not always follow their doctrine; Justice Romanias justice system is independent but problems and injustice may occur due to corruption. Furthermore, decisions may be influenced by politicians; Infrastructure Even if 20 years have passed since 1989, the Romanian infrastructure does not meet European standards, this being a downside for the economic productivity and tourism. The greatest setback is the lack of motorways and the slow pace at which infrastructural projects are being developed; Bureaucracy It can sometimes take more than a day to solve a minor problem because a great part of the public servants are not committed to their work; Corruption Romania is regarded as one of the most corrupted nations in the EU and st Transparency International placed Romania on the 71 place out of 180 countries; Fiscal Policy Budget revenues are relatively lower than in other EU countries. The collection of taxes is still a problem, even if the flat tax introduced in 2005 appears to have partially solved it; Undeclared income A lot of individuals do not declare their income and there are few and expensive methods to uncover this type of fraud; Labour undeclared work Many SMEs prefer not to register all their employees in order to avoid paying taxes, and even the registered employees earn more than it is declared; Education There are rural regions without sufficient qualified teachers and even in the highest educational institutions modern teaching methods are rarely used; moreover, many teachers have lost their commitment because they are poorly paid; European funds absorption Every country in its first years as EU member had problems regarding funds absorption and Romania is not an exception, with less than 5% of available funds used in some sectors; Citizens protection Minors, orphans, security Romania registered great progress in this field, becoming a safer country that cares about the young generation; there are still problems in the poorest parts of the country where the sets of reforms are slowly implemented; Health This sector still has serious problems as the quality, accessibility and coordination between hospitals and general medicine practices are still dissatisfactory. The private initiative in this sector is not able to offer comprehensive services; Research Many Romanian specialists decided to leave the country in order to earn better wages, gain access to larger budgets and better research infrastructure; Regional development and local administration Decentralisation is not complete and many regions depend too much on financing from the Central Government.

o o o o o o

o o

1.2. The Romanian economy

GDP, Current account balance Imports & exports of goods volume & value Cost of living and consumer price index Inflation rate Key points Romania's ranking in Doing Business 2010 Free World Academy country rating Heritage Index of Economic Freedom

20

After an average annual rate growth of 6% experienced between 2000 and 2008, under the impact of the global financial crisis, the Romanian economy started sliding backwards into recession and contracted by 7% in 2009. In the same year the current account deficit adjusted to approximately 4.5% of GDP from 11,8 % in 2008 and it is expected to remain below 5% in 2010 as well. While the private sector has seen its financing needs being reduced by the downturn in private consumption and export demand, the public sector has been confronted to higher financing necessities. In these conditions the country requested in March 2009 a stand-by agreement with the International Monetary Fund worth 20 billion Euros. According to IMF estimations, Romanias economy will contract again in 2010, shrinking by 1.9 % due mainly to the sluggish domestic demand, before recovering and starting growing by around 1,5 % in 2011. GDP, Current account balance Table 1: GDP, Balance of payments 2005-2009, EUR mill. Indicators/Year GDP (Nominal) GDP per capita Current account Capital and financial account 2005 63,600 3,700 -6,888 6,483 2006 86,086 4,500 -10,156 9,532 2007 103,926 5,800 -16,714 17,467 2008 133,895 6,500 -16,157 17,830 2009 129,781 5,600 -5,054 6,150

Source: Eurostat - The statistical office of the European Union

Imports & exports of goods volume & value Table 2: Trade balance: Imports & Exports 2005-2009, EUR mill. Indicators/Year Exports Imports Trade balance Share of exports in GDP Share of imports in GDP Economy openness: (exports+imports)/GDP 2005 22 30 -8 28 38 66 2006 26 38 -12 27 39 65 2007 30 47 -18 24 38 62 2008 34 53 -19 25 39 63 2009 29,116 35,903 -6,787 22 28 50

Source: www.insse.ro - The National Institute of Statistics

Cost of living and consumer price index Table 3: Consumer price index by major groups 2005-2009, (%) Current period Year 2009 Reference period Year 2005 Year 2006 Year 2007 Year 2008 Food goods 121.66 117.15 112.77 103.25

TOTALS 127.22 119.38 113.88 105.59

Non-Food goods 128.66 118.61 112.97 106.22

Services 136.50 126.16 118.31 108.97

Source: www.insse.ro - The National Institute of Statistics

Inflation rate After the hyper-inflationist period that dominated the Romanian economy for over 15 years, starting with 2004 the annual inflation rate decelerated, reaching its lowest level since 1990, of 3.7% YoY in March 2007. This low level was the result of the national currency appreciation above the equilibrium level that couldnt be sustained on the long term. Therefore, starting with July 2007 a rapid increase in the inflation

21

rate occurred due to several factors: large increase in incomes (public wages and pensions), increase in prices not sustained by productivity, depreciation of the national currency, etc. Since Q2 2009 Romania has started experiencing again a disinflation process as a result of the fall in volatile prices, stable administered prices and lower household expenses. However, the increase of tobacco excises and natural gas prices occurred at the very end of the year kept the inflation rate in 2009 (5,6%) far from the EU 27 average (1,0%) For the inflation rate evolution and benchmarking see Attachment 5. Key points

o Costs of production Even if production costs have grown in the last decade, the cost of production
is still much lower than in most European countries, which turns it into a FDI promotion factor; this is why a lot of western companies decide to outsource their activity in Romania (while others decide to go further east, as lately, Romania has become more expensive). Compared to other countries in the region, the cost of production is lower than in Hungary, Greece and Slovakia but higher than in Bulgaria, Moldova, Serbia and Ukraine. Labour force skills Romanian workers are well qualified, especially when it comes to theoretical knowledge, but they lack experience and need to gain expertise in order to become truly skilled and effective. Romania can provide specialists fluent in English in such fields as IT, petrochemical industry, agriculture, and textile industry. Leadership 20 years after the fall of the communist regime, Romania continues to be in an acute need for leaders in many fields and very often multinational companies are not able to find locals qualified for upper management jobs. Weak infrastructure It represents a huge problem for Romanian development because infrastructure is decisive for any economic activity and society. - the lack of modern motorways which would facilitate a rapid transit between different regions (e.g. the time to reach the Hungarian border leaving from Bucharest is around 9 to 10 hours for 575km); - Local infrastructure such as local roads and public transportation need upgrading; - The railway transportation network is not providing high-speed trains; - Airports need upgrading.
th

o o

Romania's ranking in Doing Business 2010 _________

In Doing Business 2010, Romania is ranked 55 ; the country ranked ahead of Poland, Czech Republic and Moldova but behind Hungary, Bulgaria and Slovakia. The main criteria at the basis of the World Banks Doing business ranking are the costs, time and procedures difficulty in setting up the business, operating in the specific country, employing workers, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and closing the business. For further information see attachment 4. Romania increased the cost of insolvency procedures by requiring that 1.5 percent of the amount recovered from each insolvency procedure be transferred to a fund that reimburses the expenses of insolvency administrators when debtors have no assets. Construction permit costs rose because of a new fee equal to 0.05 percent of the project value. In addition, labour taxes were increased. Property registration was expedited with the introduction of new procedures at the land registry and cadastre. Areas of Reform: Dealing with construction permits (making it more difficult), Registering property, Paying taxes (making it more difficult), Closing a business (making it more difficult)

Free World Academy country rating (according to its potential regarding a small business
investor) Romania, together with Slovenia, Croatia and Bulgaria is placed 47 out of 130 and is given 2 stars equivalent of acceptable conditions.
th

22

Heritage Index of Economic Freedom

Romanias economic freedom score is 64.2, making its economy the 63 freest in the 2010 Index. Its score is 1.0 point better than last year, reflecting improvements in half of the 10 economic freedoms. Romania ranked 29th out of 43 countries in the European region, and its overall score is higher than the world average.
rd

For macroeconomic indicators see

GDP, Current account balance Inflation Trade Consumer price index FDI o o o o o o o o o o o o o o R&D o o o www.eurostat.eu www.bnr.ro - National Bank of Romania www.worldbank.org.ro World Bank www.indexmundi.com from the CIA Factbook www.eurostat.eu www.intracen.org www.eurostat.eu www.insse.ro - The National Institute of Statistics www.eurostat.eu www.bnr.ro - The National Bank of Romania www.eurostat.eu www.oecd.org http://www.anofm.ro/ - The National Agency for Occupying the Labour Force http://www.mmuncii.ro/en/ - Ministry of Labour, Family and Social Protection Science, Technology and Innovation in Europe, Eurostat News release, 8 September 2009 www.oecd.org www.worldbank.org, Doing Business 2010: Reforming through Difficult Times, Fact SheetSummary of Reforms in Europe and Central Asia http://www.heritage.org/Index/pdf/2010/countries/romania.pdf http://www.heritage.org/Index/Country/Romania http://www.freeworldacademy.com/newbizzadviser/fw8.htm#2 www.worldbank.org

Employment

Doing business in Romania (synthesis)

o o o Production & trade o

1.3. Economic policies

Government policy & strategy Central Bank policy & strategy European Union common trade policy General conditions Foreign trade of Romania in 2009 FDI policy Government policy & strategy
The most relevant measures for the development of foreign economic & commercial relations are the following: o o o Cohesion policy: maintaining the current objectives of the EU cohesion policy and renegotiating them for the 2014-2020 time period; Free circulation of individuals: supporting the EC recommendation for the Member States not to impose restrictions on the freedom of movement for workers of the new Member States; Stability and predictability in the public finance domain;

23

o o o o o

Insuring a competitive and predictable business environment; Contributing to attracting FDI to Romania and to the enlargement of the cooperation with foreign partners on third markets; Promoting the products & services of the Romanian SMEs on foreign markets; Stimulating business communication and partnerships; Preparing specialists in the field of export promotion techniques; Note that, unfortunately, in the current recession framework the Governments priorities might not include the undertaking of foreign economic & commercial actions.

Governmental policy & strategy see

o o o o www.gov.ro/capitolul-26-afaceri-europene__l1a2065.html http://portalmfp.mfinante.ro/wps/portal www.mae.ro/index.php?unde=doc&id=4988&idlnk=0&cat=2 www.minind.ro/pdf/planstrategic.pdf

Priority sectors
Energy, Oil and Gas o Ensuring energy security limitation of the import of energy resources; o Durability promoting energy production from renewable sources; o Competition continuing the restructuring and privatisation process of the electric energy and natural gas sectors. Mining Industry o Commercial approach of the mining industry; o Decrease of the Government direct involvement and search for private sector investments; o Undertaking mining activities in compliance with mining protection criteria. Environment o Managing hazardous substances and waste; o Controlling industrial pollution; o Promoting investments in water and air quality control; o Promoting projects for preventing contamination with nitrates in vulnerable areas; o Developing integrated waste management systems and rehabilitation of contaminated sites. Health o Search for an additional involvement of the private sector in the supply of medical services, in order to reduce the pressure put on the public resources and improve healthcare quality; o Increasing quality of life by improving the quality and safety of the healthcare services; o Providing equal access to healthcare for all citizens.

Priority sectors see

o o o o http://www.minind.ro/presa_2007/mai/Strategia_16_mai.pdf http://www.minind.ro/domenii_sectoare/theStrategy.htm http://www.mmediu.ro/pdf/Plan_strategic_2007-2009-componenta_management.pdf http://www.ms.ro/pagina.php?id=119

Central Bank policy & strategy Monetary policy (interest & exchange rate)
o In the short run, prices may respond to many different shocks, some originating in the domestic economy and some in the foreign sector. Both types of shocks will affect aggregate demand and supply, cash and prices; In the medium to long run, monetary policy plays the major role in supplying the appropriate amount of money in order to foster growth and maintain stability.

24

Inflation issues
The National Bank of Romania (NBR Romanias Central Bank) shifted to direct inflation targeting in August 2005. This monetary policy strategy was adopted after completing a preparatory process, whose last stage consisted in setting up and testing of the economic analysis and monetary policy decision framework specific to inflation targeting. The other prerequisites and criteria that are conditional to the effectiveness of this strategy were also fulfilled (see Attachment 5). o Concrete impacts on business development: uncertainties, as far as ROL is concerned, as well as future value of the invested capital. o Given the ongoing disinflation process in the domestic economy - a sustainable inflation rate over the medium term in line with the quantitative definition of price stability has yet to be attained inflation targets are formulated on an annual basis (December/December) and are set over a twoyear horizon. For a more detailed analysis of the inflation impact on the national economy see the Central Banks Inflation Annual Report http://www.bnro.ro/PublicationDocuments.aspx?icid=6876 o

Inflation see
o o o o o o o http://www.bnro.ro/Direct-Inflation-Targeting-3646.aspx http://www.bnro.ro/Characteristics-3653.aspx http://www.bnro.ro/Inflation-Targets-3241.aspx http://www.bnro.ro/NBR-Projections-4353.aspx http://www.bnro.ro/page.aspx?prid=3493 http://www.bnro.ro/Inflation-Reports-3343.aspx http://epp.eurostat.ec.europa.eu/tgm/web/_download/Eurostat_Table_tsieb060HTMLDesc.htm

Shift to the Euro

o o Adoption of the euro foreseen earliest for the 01.01.2015; General conditions to enter the eurozone the five convergence criteria Figure 1. The convergence criteria for joining the Euro zone
Sustainable public finances Government debt as % of GDP

What is measured:

Price stability

Sound public finances

Durability of convergence

Exchange rate stability

How it is measured:

Consumer price inflation rate

Government deficit as % of GDP

Long-term interest rate

Deviation from a central rate

Convergence criteria:

Not more than 1.5 percentage points above the rate of the three best performing Member States

Reference value: not more than 3%

Reference value: not more than 60%

Not more than 2 percentage points above the rate of the three best performing Member States in terms of price stability

Participation in ERM II for at least 2 years without severe tensions

Source: http://ec.europa.eu/economy_finance/euro/adoption/who_can_join/index_en.htm Comments Romania is still far from fulfilling these conditions and the recent financial problems made this objective less important for the moment. It is said that the fast recovery from the crisis will increase chances to entry to the eurozone. The euro will be an objective for BNR but it is important not to obstruct the countrys development which sometimes requires inflation and governmental debt.

25

Relations Central Bank of Romania European Central Bank See

o o o o o http://www.bnro.ro/The-NBR's-role-in-the-preparation-for-joining-the-Eurosystem-1584.aspx http://www.bnro.ro/Coordination-of-the-NBR's-participation-in-the-ECB-ESCB-structures-andsub-structures-1583.aspx http://www.bnro.ro/The-NBR's-participation-in-the-activities-of-EU-fora--1585.aspx http://www.ecb.int/euro/intro/html/map.en.html http://www.ecb.int/stats/exchange/eurofxref/html/eurofxref-graph-ron.en.html http://ec.europa.eu/economy_finance/the_euro/joining_euro9413_en.htm

European Union common trade policy General conditions

Starting 1 January 2007, Romania is applying the EU common trade policy that ensures the observance of: o Uniform frontier taxations; o The Stability and Growth Pact; o Trade security measurements; o Preferential trade and cooperation agreements with third party countries; o Commercial agreements in the WTO.
st

Foreign trade of Romania in 2010

FOB exports during 1.I-30.VI 2010, amounted to 71407.3 million lei (17214.5 million euro). Compared with the corresponding period of 2009, exports increased with 23.7% at values expressed in lei (26.2% at values expressed in euro) (source: NIS).. In order to support Romanian exports, the local MECMA implemented the National Export Strategy (2005-2009) which is available on the web site (www.dce.gov.ro). Furthermore, the strategy for (20102014) was just developed. For more datas regarding exports see attachements page 11

Trade policy See

o o o o o http://www.dce.gov.ro/ http://www.insse.ro/cms/files/arhiva_buletine2010/bsci_6.pdf http://europa.eu/legislation_summaries/external_trade/index_en.htm http://www.intracen.org/countries/toolpd06/tpi-notes-2002-2006.pdf http://www.intracen.org/menus/countries.htm

Primary sector
Oil and other raw materials o Oil law all actions related to the oil operations are the object of the Romanian Oil Law no. 238/2004 o Natural Gas Law - all actions related to the natural gas operations are the object of the Romanian Natural Gas Law no. 351/2004

Oil and other raw materials see o http://www.minind.ro/

The main objective of the National Strategy for Energy for 2007-2020 is: - To satisfy energetic needs on short, medium and long term basis at the lowest price possible and meeting the conditions of the market economy and of a civilized life standard in terms of quality, safety in supplying while respecting the sustainable development principles Strategic objectives:

26

Energetic security - Increase the energetic security by assuring the necessary energetic resources and by limiting the dependency on imported energy resources; - Diversify the import suppliers, energetic resources and their transportation routes; - Increase the level of adequacy of the national transportation networks for electric power, natural gases and oil; - Assure the safeguard of the critical infrastructure. Sustainable development - Increase the energetic efficiency;; - Promote the production of the renewable energy; - Promote the production of electric and thermal energy in power plants with cogeneration, especially in high efficiency cogeneration installations; - Support the research and development activities and the dissemination of the applicable results; - Reduce the negative impact of the energetic sector on the environment; - Rational and efficient use of primary energetic resources. Competitiveness - Develop competitive electric energy, natural gases, oil and uranium markets; - Liberalize the energy transit and assure the permanent and non discriminatory access of participants to the transportation and distribution networks and to the international interconnections; - Continue with the process of restructuration and privatization in the electric and thermal power and natural gases sectors; - Continue with the restructuring of the lignite sector in order to increase its profitability and access the capital market;http://www.minind.ro/domenii_sectoare/H163-

04.html - #
Timber o In Romania, the forestry and timber industry sectors are separated o The legal framework for forest preservation and sustainable management is provided by the Forest Bill (Law no. 26/1996). In this sense, the section 6 Wood Removal specifies that: the harvesting of wood products is in compliance with the provisions of forestry management and with the instructions concerning the terms, methods and ages, logging and handling of wood materials, issued by the central authority responsible for the forestry; When harvesting the wood material, the forest districts, economic agents and legal persons are bound to use methods for harvesting skidding of wood properly selected to avoid soil degradation, damaging of seedlings and of trees. The Ministry of Economy and Commerce is the body responsible for the implementation of Government policy in the field of industrial production and goods.

Timber See
o http://www.unece.org/timber/docs/sem-1/papers/r29Istratescu.pdf - European Forestry Commission, STRATEGIES FOR THE SOUND USE OF WOOD

Agriculture The main objective of the policy for agriculture is to support the sustainable development of the agricultural sector and the domains related to it. o o o o The policy for agriculture respects the EU Common Agricultural Policy (CAP) and its main elements: The Common Customs Tariff The EU bilateral trade agreements The Integrated Tariff of the European Communities

27

The main objectives for the following period are: o Developing a competitive environment in agriculture, forestry and fisheries based on knowledge and private initiative; o Reducing the proportion of the population employed in agriculture along with strengthening the economic viability of farming units; o Reducing the fragmentation of farmland property and stimulating the concentration of small farms; o Maintaining quality and diversity of rural space and forest estates in ways that maintain a proper balance between human activities and the conservation of natural resources.

Agriculture See
o o www.maap.ro The Ministry of Agriculture www.strategia.ncsd.ro - The National Sustainable Development Strategy of Romania

Industry In conformity to the core business of the Romanian economic policies and strategies as well as to the European Economic Recovery Plan the main objectives of Romanias industrial policy for 2009-2012 are: o o o o o o o Increase competitiveness and secure market access; Improvements to the general framework and specific conditions for research, development and eco-innovation domains; Consolidate the ecological potential of the industry; Assure a sustainable use of resources; Develop the industrial services and foster public-private partnerships; Adapt labour market mechanisms to the requirements of a modern integrated economy; Develop cluster mapping projects in order to identify clusters and cluster networks.

Industry See
o o o http://www.minind.ro/ http://www.minind.ro/newsletter/Newsletter_ME_nr_3_2009.pdf http://www.fabricadebani.ro/userfiles/Ghid_ita_2010.pdf

FDI policy
Foreign Investor Rights o national treatment for foreign investors; o foreign investment allowed in all sectors of economy; o possibility to freely manage the company with full ownership rights; o full repatriation of capital and profits; o protection against expropriation and nationalization; o Access to incentives and funds provided by EU and Romanian legislation; Incentives and subsidies Fiscal: o Tax exemption for reinvested profit; o Possibility to use accelerate depreciation of equipments (50% in the first year); o Possibility to carry forward the fiscal losses for a period of up to 7 years; o Exemptions from the payment of taxes on buildings and land applied by local councils in Romania on basis of state aid schemes; o Fiscal incentives for R&D: additional deduction of 20% from the eligible expenses from research and development activities; o Subsidies for hiring and training new personnel. State aid schemes/incentives for: o investments between EUR 10-20 mill and creating at least 100 new jobs; o investments between EUR 20-30 mill and creating at least 200 new jobs;

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investments over EUR 30 mill and creating at least 300 new jobs; investments over EUR 100 mill and 500 new jobs; eligible costs over Euro 50 mill; investments in green energy - 50% subsidy from the total eligible expenses for all regions in Romania, except Bucharest (40% subsidy); Eligible expenses: investment in tangible assets (land, buildings, new equipments, installations) and intangible assets. Intensity ceilings increase by 20% in case of small enterprises, and by 10% in case of medium sized enterprises (Exception: economic agents activating in the field of transport) According to the information presented by the Romanian Center for Trade and Investments, FDI incentives will be provided for investments in the following sectors: o Activities in agro-industrial processing; o Top sectors in the manufacturing industry; o Electric and thermal energy production and delivery; production of equipments for increasing energetic efficiency and use of renewable energy resources; o Environmental quality protection and improvement; o Water distribution, purification, waste management; o IT; o Research, development and innovation activities or new products development; o Activities providing work force services. o o o Beneficiaries are investments and investors complying with the following conditions: o o o o o o o contribute to the achievement of at least one of the condition mentioned above activities are carried on in the above mentioned sectors have no unpaid debts to the funds of the general consolidated budget did not ask the Ministry of Economy and Finance to perform neither falling due payments for state guaranteed foreign and domestic credits, nor payments to the risk fund did not contract any state guaranteed loans are not subject to compulsory execution or insolvency, dissolution or other situations regulated by the law there are no state aid recouping decisions issued against them or, in case there are, these decisions have been executed according to the law

FDI policy - see

o o o o o www.traderom.ro www.monitoruloficial.ro The Official Gazette of Romania Government Decision No 1680/ 2008 State aid scheme ensuring sustainable economic development Government Decision No. 753/2008 State aid scheme supporting regional development by stimulating investment Order No. 479/2008 issued by the Ministry of Economy and Finance State aid scheme granting support for the consolidation and the development of the Romanian productive sector through investments of big enterprises, corresponding to SOP IEC Government Decision No. 718/2008 Horizontal state aid scheme for regional sustainable development and reduction of emissions Government Decision No. 750/2008 Regional state aid scheme for renewable energy resources harnessing www.oecd.org

o o o

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2. Legal & fiscal affairs

Drafting team Amalia-Maria OTEA (VOICA) (amalia_voica@yahoo.com) Ileana Oana STAVARACHE (NITA) (ostavarache@yahoo.com) Mariana UDREA (mariana.udrea@qnet.ro) 2.1. Visas, residence & work authorization 2.2. Copyright, patents & trademarks 2.3. Foreign exchange operations 2.4. Fiscal affairs

2.1. Visa, residence and work authorization

Visa regime in Romania
o o o The stay right granted by visa may be exercised only during the validity period of the visa. The Romanian visa shall be granted by the Romanian diplomatic missions and consular offices. Two main categories of visas for foreigners: short-term and long-term visa, single or multiple entries. Both visa categories allow foreign citizens to stay in Romania for 90 days within a sixmonth period. While the short-term visa cannot be extended, the long-term visa can be extended by the Romanian authorities upon request, by applying for a residence permit. The request filed in this respect must be addressed to the Romanian Office for Immigration, Ministry of Interior and Administrative Reform. The short-stay visa for business purposes (identified through the symbol C/A) issued to foreigners travelling to Romania for economic or commercial purposes, with a view to the conclusion of contracts or for negotiations, to learn or to verify the use and operation of goods acquired or sold under commercial and industrial co-operation contracts and to foreigners who are or will become associates or shareholders within a Romanian company. The required documents are: a travel ticket valid to destination, or alternatively, the driving license, green card and the registration documents of the means of transport, in the case of vehicle drivers; medical insurance; an invitation from a company or public authority for participation in meetings, conferences, fairs or congresses related to the trade or industry they are involved in, stating that the respective company or public authority will cover the repatriation expenses, should the invited foreigner not leave Romania upon expiry of his right of stay; proof of the financial means amounting to EUR 50/day for the entire period, but not less than EUR 500/stay or the equivalent value in convertible currency; proof of accommodation. Depending upon the activity that the applicant is bound to carry out on the territory of Romania, there are different types of long-stay visa, with specific conditions for its granting: the long-stay visa for economical activities (identified through the letters D/AE), the long-stay visa for professional activities (identified through the letters D/AP), the long-stay visa for commercial activities (identified through the letters D/AC), the long-stay visa for employment (identified through the letters D/AM), the long-stay visa for studies (identified through the letters D/SD), the long-stay visa for family reunification (identified through the letters D/VF), the long-stay visa for religious or humanitarian activities (identified through the letters D/RU), the long-stay visa for scientific research (identified through the letters D/CS) , the diplomatic and work visa (identified through the letters DS) and the long-stay visa for other purposes (identified through the letters D/AS). Citizens of EU countries and of the European Economic Area Member States (i.e. Norway, Liechtenstein, Iceland) may enter Romania without a visa, being allowed to stay for a period not exceeding 90 days during a six-month period, by using the passports, or the valid identity cards issued by the relevant authorities from their home country.

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o o

Citizens of the United States of America, Canada and Japan may also enter Romania without visa and extend their stay without providing proof for means of support. Under the immigration law, foreign citizens can obtain in certain cases (i.e. frequent business trips) short-term multiple entries visas, valid for a period of up to 1 year and only for exceptional situations for a period up to 5 years. The provision stipulating that the foreigners are allowed to stay in Romania for 90 days during a six months period is also applicable for this type of visas.

Residence permits
o o Foreign nationals staying in Romania for more than 90 days in a six-month period should apply for a Romanian residence permit; The companies located in an EU or EEA member states can accompany the EU and EEA nationals to Romania for an undetermined period without the need to obtain a Romanian work permit. The individuals should apply directly for a Romanian registration certificate/ residence permit; Foreigners assigned as heads of Romanian branches of foreign companies, as well as foreigners nominated as administrators of Romanian companies will apply only for a residence permit provided that certain conditions are fulfilled.

Work Authorization
The work authorization represents the official document issued under provisions of Emergency Ordinance no. 56/2007 which entitles its bearer to be employed and work in Romania. The work authorization is issued by the Romanian Immigration Office at the employers request if there are met a number of conditions: The employer performs a legal activity in Romania, has no debts and made a legal selection according to the provisions of the law regarding employment and detachment of foreigners on the Romanian territory; The foreigner fulfils the condition of professional training, work experience and authorization, and is able from medical point of view to perform the respective activity; The foreigner has no criminal record. The Romanian Immigration Office shall issue the authorization within 30 days from the date of the employers request.

Main regulations (Law, Government Decision)

o Decision of the Romanian Government no. 1108 of 25 October 2001, on the unilateral exemption of Canadian, Israeli, Norwegian, Swiss and Japanese citizens from the entry clearance regime in Romania. The Emergency Ordinance no. 194/12 December 2002 on the foreigners status in Romania. The Emergency Ordinance no. 56/2007 related to the employment and assignment of foreign citizens in Romania. Visas, residence & work permit See www.ori.mai.gov.ro The Romanian Office for Immigration www.mae.ro The Ministry of Foreign Affairs www.mmssf.ro The Ministry of Labour, Family and Social Protection www.professional.com.ro Professional Human Resources Agency www.ccir.ro The Chamber of Commerce and Industry of Romania

o o

o o o o o

2.2. Copyright, patents & marks

Romania is a signatory party to international conventions with respect to intellectual and industrial property rights (WIPO). As such, the Agreement concluded with the European Union includes specific provisions which reaffirm Romania's commitment to internationally agreed rules in this field.

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Copyright
Nature of the right o Copyright is the set of exclusive rights granted to the author or creator of an original work, including the right to copy, distribute and adapt the work. The original works can be from literary, artistic or scientific field. o The copyright holder has the right to authorize or prohibit its reproduction, distribution, renting, lending and adaptation through derivative works. It must be mentioned that related rights have evolved around the works protected by copyright that protect: Performers for their interpretations or executions; Producers of sound recordings and audiovisual recordings producers for their recordings; Broadcasting organizations to broadcast their programs and services (Article 94 of Law no. 8/1996 with subsequent amendments). Protection o The right is automatically protected on creation of the original work and need not be obtained through official registration with government office or any other public authority. o The Romanian copyright framework is governed by Law no. 8/1996. o Romania is a member of the Bern Convention on Copyrights (In all countries that are members of the Berne Convention copyright is automatic, and need not be obtained through official registration with any government office). o The Romanian authority in this domain is ORDA (the Romanian Copyright Office) and the National Phonogram and Computer Program Register. Law enforcement o Infringing the rights triggers either civil or criminal liability. Duration of the protection o Copyright is assigned to the author and involves moral and patrimonial rights, with copyright protection starting from the creation of the work. The patrimonial rights related to copyright last for as long as the author lives and, generally, after the authors death they are transmitted to his/hers heirs for an additional 70-year period. o The patrimonial rights related to copyright in the case of computer programs last all lifetime of the author, and after his/her death they are transmitted by inheritance, according to civil law for a period of 50 years.

Patents
Nature of the right o A patent shall be granted for any invention having as a subject a product or a process, in all technological fields, provided that it is new, involves an inventive step and is susceptible of industrial application. o An invention shall be considered to be new if it does not form part of the state of the art. o The right to the patent belongs to the inventor or his successor in title. o The patent holder has an exclusive right to exploit an invention for the duration of the patent. Unauthorized production, use, marketing, sale or import of the patented product or of the patented process or of the product directly obtained through the patented process is prohibited. Protection o The patent is protected on registration with the Romanian State Office for Inventions and Trademarks (OSIM).

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o o

The procedure for registering patents with OSIM, as well as the rights and obligations deriving from these patents are governed by Law no. 64/1991. Romania is a party to the 1883 Paris Convention for the Protection of Industrial Property, ratifying all its amendments, and of the 1973 European Patent Convention.

Law enforcement o Infringing the rights triggers either civil or criminal liability. Duration of the protection o o Patents have a 20-year validity from the date of filing the application for registration; not renewable. Law no. 255/1998 enacts a special legal regime for the protection of plant species, also based on a patent certificate. The term of protection of the variety is 25 years from the date of patent. For species of fruit trees, wines and ornamental forest trees the term of the variety patent is 30 years from the granting of the protection.

Trademarks
Nature of the right o A trademark is a sign susceptible of graphic representation which serves to distinguish the goods or services of a natural or legal person from those belonging to other persons. The trademark holder has the right to: use the trademark during the course of its business; prevent others from using the trademark; prevent others from registering a similar or identical trademark; sell or license the trademark. Protection o The right to a mark shall be acquired and protected by registration with the State Office for Inventions and Trademarks. o Trademarks framework and protection are regulated under Law no. 84/1998, which details the procedure for registering trademarks with OSIM, the priority rights recognized and the rights and obligations deriving from trademark protection. o Romania is a signatory party to the 1894 Madrid Agreement on International Registration of Trademarks and a party to the Community Trademark System administered by the Office for Harmonization in the Internal Market. Law enforcement o Infringing the rights triggers either civil or criminal liability. Duration of the protection o The registration of a mark shall take effect on the date of the regular national filing of the mark and shall subsist for ten years. o At the request of the owner, the registration of a mark may be renewed at the end of each ten-year period on payment of the prescribed fee. o The request for renewal of a registration may be made before expiry of the current term of protection, but three months at the earliest prior to expiry of that term. o Renewal of a registration shall take effect as from the day immediately following the expiry of the current term of protection.

Main regulations (Law, Government Decision)

o o Patent Law no. 64/1991; Government Decision no. 499/2003 for the approval of the Law no. 64/1991;

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o o o o o o

Government Ordinance no 41/1998 on the fees in the industrial property protection field and the conditions for using the same; Design Law no. 129/1992; Law no. 84/1998 on Marks and Geographical Indications; Law on Utility Models no. 350/2007; Law no. 255/1998 on the protection of new plant varieties; Law on Copyright no. 8/1996. Copyright, patents & marks See www.wipo.com www.mark-patent.ro www.osim.ro State Office for Inventions and Trademarks

o o o

2.3. Foreign exchange operations

Foreign exchange regime
In Romania, the foreign exchange regime is regulated by the BNR Regulation No. 4/2005 as further amended and supplemented, which confirms the full liberalization of the capital account operations st beginning 1 September 2006.

Currency operations between residents and non-residents Non-residents: - Natural persons - foreign citizens, Romanian citizens and stateless persons residing abroad, with -

identity documents issued by law; Legal persons and other entities established abroad, and individuals, foreign citizens, Romanian citizens and stateless persons residing abroad who are authorized and / or registered to conduct business as provided in the regulations in force; Branches, agencies, representative offices, Romanian legal persons and any other Romanian entities, registered and / or authorized to work abroad; Embassies, consulates and other representative offices and permanent missions of other States in Romania and international organizations or representations of such organizations operating in Romania.

Currency operations:
-

Current operations performed between residents and non-residents and arising, from: a) International trade transactions with immediate reimbursement; b) Repatriation of net revenues in the form of interests, dividends etc.; c) Repatriation of petty cash deriving from legal obligation of supporting family members; d) Other transactions; e) Expenses made by residents abroad other than currency capital operations, for religious, educational, recreational, business, meetings, conferences, and other similar purposes. The current currency operations are not subject to reporting to BNR. Capital operations currency operations performed between residents and non- residents, arising from: (i) direct investments; (ii) real estate investments (related to a direct investment); (iii) transactions with financial instruments; (iv) financial credits and loans; (v) guarantees; (vi) operations in current accounts and in deposit accounts; (vii) transfers representing subsidies, annuities, secured amounts, allowances; (viii) other capital movements. Transactions between resident companies or between resident companies and resident individuals must be made in RON, the Romanian currency. Transactions between residents and non-residents can be made both in RON and foreign currency. Certain transactions that are deemed by law to be capital transfers require the prior approval of the BNR. Such approval is no

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longer required for certain capital transfers (i.e. operations with securities and other instruments st in the monetary market) from 1 September 2006.

Regime applicable to non-residents

In accordance with Regulation (EC) no. 1889/2005 of the European Parliament and of the Council any natural person entering or leaving the Community and carrying cash amounting to EUR 10 000 or more shall declare that sum to the competent authorities of the Member Stare through which he is entering/leaving the Community. Since the currency market is completely liberalized, non-residents have the right to acquire, hold and use financial assets expressed in foreign currency and in domestic currency (RON). Non-residents may open foreign-currency accounts in Romanian banks or foreign banks authorised to operate in Romania and repatriate and transfer their financial assets.

Safeguard measures
Due to liberalization, the capital account transactions are subject to the following principles: a) Inflows before outflows, b) Medium and long term flows before short term flows, c) Direct investment before portfolio investment, d) Respecting the sequence banks - companies - households. The Romanian National Bank can take safeguard measures related to monetary capital operations according to Regulation no. 4/2005, such as: - Compelling residents and non-residents to notify the National Bank of Romania, 10 days earlier, of their intention to perform short-term capital transactions; - Charging a commission fee at the initiation of interbank exchange market transactions concerning the selling/buying of foreign currency; - Raising the mandatory reserve ratio for the amounts representing short-term capital inflows; - Imposing other restrictions or taking supplementary measures for monitoring capital transactions. The period of application of the safeguard measures shall not exceed six months.

Main regulations
o o BNR Regulation no. 4/2005 regarding currency operations, with the subsequent modifications (Currency Regulation) as subsequently amended; BNR Norms no. 17/2002 regarding the statistical reporting to BNR of long and medium term currency capital operations of the long and middle term private external debt type, with the subsequent modifications; EC Regulation no. 1889/2005 of the European Parliament and of the Council, on control of cash entering or leaving the Community. Capital movement & profit transfer See www.bnr.ro The National Bank of Romania www.aris-invest.ro Romanian Agency for Foreign Investment

o o

2.4. Fiscal affairs

As a rule, once an entity begins to carry out business subject to taxation in Romania, as per the legal provisions currently in force, it will have to pay taxes starting with that precise moment.

LEGAL ENTITIES
PROFITS TAX Are subject to profits tax: o Romanian legal persons- it concerns taxable revenues coming from any source, be it Romanian or foreign; o Foreign legal entities which carry out activities with permanent establishment in Romania;

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o o o o

Foreign legal entities and non resident natural persons that carry out activities in Romania in an association that does not result in the creation of a legal entity; Foreign legal entities that obtain income from/in connection with real estates located on the Romanian territory or from the sale/transfer of shares of a Romanian legal entity. Residents natural persons in association with Romanian legal entities for the income obtained both in Romania and abroad for associations without the status of a legal entity Legal entities headquartered in Romania incorporated according to the European law

With regard to the foreign legal persons, they become subject to taxation the moment they begin to carry out part or the whole of their business by means of a permanent establishment in Romania. According to governing legal provisions in the field, before starting business in Romania through a permanent establishment, the legal representatives of the foreign legal person must register the permanent establishment with the competent tax authority. The applicable profits tax quota is 16%. As a rule, profits subject to taxation are calculated as follows: accounting profits minus income exempt from taxation plus undetectable expenses. Where is the case of a permanent establishment, profits tax shall be calculated only based on the profits that can be attributed to the permanent establishment. With a view to determining the permanent establishments profits tax, the permanent establishment shall be deemed as a separate person and intercompany transfer price regulations will be used to calculate the market price of a transfer between the mother company and its permanent establishment. To calculate profits tax, the fiscal year is equal to a calendar year (in case a tax payer starts its business or ceases its business during one fiscal year, the period of time subject to taxation is the period of the calendar year during which the tax payer carried out its business). MINIMUM TAX The taxpayers which carry on activities such as night-bars, night-clubs, discos, casinos or sports betting, including the legal persons obtaining these incomes based on deed of partnership, and for which the profit tax owed for the activities provided in this article is less than 5% of the respective incomes shall be liable to pay a tax equal to 5% of such obtained incomes. Romanian legal person, foreign legal entities which carry out activities through permanent establishment in Romania and Legal entities headquartered in Romania incorporated according to the European law shall be bound to pay the minimum tax established depending on the total incomes registered on 31 December of the previous year (minimum tax is 2.200 lei). EXEMPTED TAX The taxpayers are exempted from paying any tax of the amount of the invested profit in certain conditions. EARNINGS REPATRIATION, PROFIT DISTRIBUTION AND OTHER INCOME Dividends - Net profits distributed by a Romanian legal person to a non-resident entity are subject to dividend tax (16%). A lower tax rate may be applicable, should the provisions of the relevant double tax treaty (DTT) be invoked. Dividend tax is reduced to nil if are complied certain conditions, as established by the agreement between Switzerland and the European Community on the implementation of measures equivalent to those stipulated by EC Council Directive 48/2003 on taxation of income from savings in the form of interest payments, published in the Official Journal of the European Union no. L385/30 of 29th December 2004 Permanent establishments do not distribute dividends, a mere repatriation of net profits (after they pay the profit tax) to the non-resident is made. In this case, for the repatriation of the net profit tax is not due. Interests - According to the internal legislation, interests from a non-resident are considered taxable income realized in Romania. The tax payable by a non-resident (calculated by applying the 16%

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quota onto the gross revenue) is retained and transferred to the state budget by the taxpayer. Consequently, the interest paid to a non-resident is subject to withholding tax in Romania (16%). The rate may be reduced based on the provisions of the relevant DTT. For the permanent establishment, the taxation treatment of interest is the same as for the Romanian legal person, if such interest is an expense deductible for the permanent establishment. Royalties - Royalties paid to a non-resident are subject to withholding tax in Romania (16%). The rate may be reduced based on the provisions of the relevant DTT. According to the Agreement signed between Switzerland and the European Community interest and royalty payments made between associated companies or their permanent establishments are not subject to taxation in the state of source, if there are met a number of conditions, mentioned in this agreement. Capital gains - Foreign legal persons that obtain income from immovable property located in Romania or from the sale-assignment of participation stock in a Romanian legal person are required to pay the profit tax for the taxable profit related to such income. Gambling - In case of income obtained from gambling, the tax shall be calculated by applying the 20% quota onto the gross income. Transfer prices rules The Romanian tax authorities may, in order to calculate the tax obligations of the affiliated persons, to reconsider the records of the affiliate in Romania for the purpose of tax investigation, if following the special relations between the Romanian affiliate and the foreign person, these records do not reflect the actual taxable profits sourced from Romania. Affiliates records are not reconsidered whenever the transactions between such affiliates are conducted in commercial terms on the free market. TAXATION ON WAGES AND CONTRIBUTIONS TO THE STATE SECURITIES BUDGET According to Romanian employment regulations, both employer and employee have to contribute to the social security system but the employer is the one who has to withhold and pay all salary contributions to the state. Social security contributions at the employer level: o Social security contribution between 20.8% and 30.8%, depending on working conditions. It is calculated and paid monthly taking into account the total gross amount paid to employees. o Health fund contribution - 5.2% of the total gross amounts paid to employees; it is withheld and paid every month. o Unemployment fund contribution 0.5% applied to the gross monthly amount paid to employees. o Contribution for medical leave and indemnity - 0.85% of the total gross amount paid to employees on a monthly basis, capped at 12 national minimum gross salaries multiplied with the number of insured persons o Contribution to the National insurance fund for work accidents and professional diseases - the contribution ranges between 0.15% and 0.85% and depends on the risk category; the basis is the total gross monthly amount paid to employees. o Labour Chamber commission - 0.25% or 0.75% applied to the total gross amount paid to employees. It is paid monthly and the different percentage depends on the keeper of the workbooks: the Labour Chamber or the company through the human resources inspector. o Contribution to the Guarantee fund for payment of salary debts - 0.25% applied to the total gross amount paid to employees; the basis of calculus is monthly.

VAT
Taxable operations According to the Fiscal Code, operations that cumulatively fulfil the following conditions are subject to VAT: o they represent a supply of goods or services against payment; o the place of delivery of goods or supply of services is considered to be in Romania; o the delivery of goods or supply of services is made by a taxable person;

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The delivery of goods or supply of services results from economic activities.

From this general rule, the tax code establishes a series of exceptions, for example: if are provided services to real property, place of supply is where the property is located.

TERRITORIALITY The operations relating to the transfer of ownership right over the assets located on the Romanian territory are subject to VAT. The imported goods are taxable in Romania upon registration of the customs declaration. From 1st of January 2010 Romania transposed the Council Directive 2008/8/EC as regards the place of supply of services. According to this European Directive the place of supply of services is changed from the place where the supplier is established to the place where the beneficiary is established. For the services rendered by a taxable person to a non-taxable person, is still applicable the general rule: the place of taxation is the place where the supplier is established.

VAT PAYERS Any entity, regardless of their legal status, that carry out economic activities and that are registered as VAT payers. The importers of assets, regardless as to whether import is carried out directly, by agents or by third legal entities. Individuals, for the goods they bring into the country, as per the customs regulation. Legal entities or individuals, having their headquarters or permanent residence in Romania, beneficiary of services performed by foreigners. VAT RATES AND REGIMES Romanian VAT legislation is generally in line with the principles of the European Directives. Taxable operations may be: o Taxable operations. The standard rate of VAT is 24% and is applied to all supplies of goods and services. A reduced VAT rate of 9% is available inter alia for medicines, hotel services, books, admission fees to castles, exhibitions. Also, a reduce VAT rate of 5% is available, inter alia, for the delivery of housing buildings (maximum 120 sq.m. excluding attachments), social buildings. o exempt operations with right of deduction, for which value-added tax is not payable, but a deduction of the value-added tax due or paid for purchases (such as: Exemptions for exports or other similar operations, for intra-Community supplies and for international and intra-Community transport - supplies of goods which are dispatched or transported outside the Community by the supplier or by another person on his behalf; provisions of services in Romania for the purchased or imported movable property, in view of processing in Romania and that are subsequently transported outside the Community by the provider of services or by the client, if he is not established in Romania, or by another person on behalf of any of these; international transport of passengers;); o exempt operations without right of deduction, for which value-added tax is not payable and a deduction of the value-added tax due or paid for purchases is not allowed (such operations are, inter alia, hospital treatment, medical care, and closely-related operations carried out by units authorised for such activities, regardless of the form of organisation, such as hospitals, sanatoriums, rural or urban health centres, dispensaries, medical practices and laboratories, centres for medical care and diagnosis, treatment and recuperation resorts, emergency stations and other units authorised to carry on such activities;; provisions of the following financial and banking services; insurance and/or reinsurance operations, as well as the provision of services in connection with insurance and/or reinsurance operations which are provided by persons who intermediate such operations); o imports operations and intra-community acquisition, exempted from tax (for example the import of goods and intra-Community acquisition whose supply in Romania is exempt from value-added tax inside the country in any situation; import of natural gas through the natural gas distribution system, or of electricity); o Operations provided, as are mentions above, that are exempted without right of deduction being made by small enterprises which apply the special exemption regime.

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As a general rule, the fiscal period is the calendar month. For taxable persons registered for VAT purposes whose previous year-end turnover did not exceed EUR 100.000 the fiscal period is the calendar quarter. We would like to mention that if a taxable person using the calendar quarter as a fiscal period is performing an intra-community acquisition taxable in Romania, the fiscal period shall become the calendar month. The usage of standard pre-printed invoices is no longer mandatory, but the invoices must contain the minimum information required by the law. For the payment of VAT, the beneficiaries, from Romanian, of services provided by foreign persons, and for Intra-Community acquisitions, the mechanism that will have to be applied is the reverse taxation (the tax is to be registered into the VAT register both as a deductible tax and as collected tax) Simplification measures are applied to the following transactions: selling waste and secondary raw materials resulted from their sale; selling wood material. EXCISE DUTY The excises represent special consumption duties owed to the State budget for certain domestic and imported products. Products subject to excise duties: alcoholic beverages, cigarettes, mineral oils, electricity. Also, subject to excise duties are the following products: green coffee, roasted coffee, soluble coffee. The products shall be subject to excise duties at the time of their production on the Community territory or at the moment of their import to Community territory. However, the internal legislation establishes a series of exemptions from excise duties, such as: o General exemptions - are granted if the excisable goods are intended to be used in areas expressly mentioned by the law (for example: the excisable products intended for supply in the context of consular or diplomatic relations); o Special exemptions - as an example, are exempt from excise duties the products supplied by tax-free shops, the products carried in personal the personal luggage of passengers travelling by air or sea to a third territory or to a third country. This exemptions are granted only under certain special conditions established by legal regulations; o Exemptions for certain categories of excisable goods which are granted in certain situations. Thus, by way of example, we mention, the exemptions for processed tobacco. The processed tobacco shall be exempt from the payment of excise duties, when it is solely destined to scientific tests or quality tests for products. Payment procedures: the excise is due at the moment of the release for consumption or when losses or shortages of excisable products are assessed. The persons liable for the payment of excise duties are the importer or the warehouse keeper. Also we want to note that there are special rules regarding the production and processing of certain excisable goods (such as energy products, tobacco). For these products the production and processing can take place only under a special regime (warehousing procedure). It should also be noted that, moving and receiving excisable goods can take place under excise duty suspension, in which case a series of documents are required. If these documents are missing or are improperly completed, the law provides a series of sanctions, both contravention and criminal sanctions. IMPORT TAXES (tariffs) Romania is a member of the World Trade Organization (WTO), of the Central European Free Trade Agreement (CEFTA) and of the General System of Customs Preferences (GSCP). The custom duties are applied to imported goods, and the applicable rates are specified under the EU Customs Tariff. The customs duties are expressed in percentages and are applied to the customs value of the goods, denominated in Romanian currency RON and valid on the date the import customs declaration is registered (ad valorem). There are cases when custom duties are expressed as a fix amount applied to a specific quantity.

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NATURAL PERSONS
o Direct Taxations:

Taxpayers are: resident natural person; non-resident natural person who carry on an independent activity through a permanent head office in Romania; non-resident natural persons who carry on dependent activities in Romania; non-resident natural persons who obtain the specific incomes from Romania Income taxable in Romania: income from independent activities, income from wages, income from the grant of using the goods; income from investments; income from pensions; income from agricultural activities; income from prizes and from gambling, income from the transfer of real estates; income from other sources. The standard income rate is 16%. Income from dependent activities Pursuant to domestic tax regulations, the income obtained by non-resident natural persons from dependent activities carried out on the territory of Romania, are taxable in the said country provided that one of the following conditions of the Tax Code is met: - The non-resident person is present in Romania during one or several time intervals which, as a total, exceed 183 days of any 12-consecutive-month period, which is closed in the respective calendar year; - The earned incomes are paid by or in the name of a resident employer; - The earned incomes represent the deductible expenditure of a permanent establishment in Romania. In case the 183-day interval is not exceeded, the provisions of the convention shall be applied, and those incomes are taxable in the state of residence. In case the 183-day period of presence in Romania is exceeded, the foreign natural person will be assimilated to a resident natural person and will be imposed in Romania with a quote of 16%. Taxation on other income Dividends - For foreign individuals tax rate on dividends is 16% applied on the gross dividend amounts. A lower tax rate may be applicable, should the provisions of the relevant double tax treaty (DTT) be invoked. Interests - According to the internal legislation, interests from a non-resident are considered taxable income realized in Romania. The tax payable by a non-resident (calculated by applying the 16% quota onto the gross revenue) is retained and transferred to the state budget by the taxpayer. Consequently, the interest paid to a non-resident is subject to withholding tax in Romania (16%). The rate may be reduced based on the provisions of the relevant DTT. Royalties - Royalties paid to a non-resident are subject to withholding tax in Romania (16%). The rate may be reduced based on the provisions of the relevant DTT. Capital gains Non-resident persons that obtain income from immovable property located in Romania or from the sale-assignment of participation stock in a Romanian legal person are required to pay the income tax for the gain obtained, in a quota of 16%. Income from independent professions The income obtained by non-residents, derived from the exercise on their own an independent professions or other activities having an independent character shall be taxable only in the State of residence, provided that the non-resident do not normally have in Romania a fixed base for performing its activity. If he has such a fixed base, the income attributable to this fixed base represents taxable income to Romania, by applying the rate of 16%. Exempted from taxation Salary income earned by employees whose activity consists of the creation of software is income tax exempt, subject to certain conditions stipulated by a Government Order (Order No. 250/189/748/2004

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issued by Ministry of Labour, Social Solidarity and Family, Ministry of Communications and Information Technology and Ministry of Finance). Taxation on wages Social security contributions at the individual level (employees): o Social security contribution (i.e. pension) - 10.5% on the gross income from every month; o Health fund contribution - 5.5% applied to the gross monthly income; o Unemployment insurance contribution - 0.5% applied to the same gross monthly income.

LOCAL TAXES AND DUTIES:

Local taxes in Romania are regulated by the Fiscal Code and represent a distinct category set by the local administration; the local taxes are payable by both individuals and entities in Romania. o Tax on buildings: Real estate owners pay an annual tax on buildings, except for some specific cases provided by the Fiscal Code. o Tax on land: This tax is calculated annually per square meter. The tax varies in accordance with the location of the land. o Vehicle tax: Owners, whether individuals or legal entities, pay a tax on their own means of transport, calculated according to engine cylinder capacity. o Fee for the issuance of certificates, permits and authorizations; o Fee for using means of advertising and publicity; o Tax on shows/performances: Organizers of artistic events, sport competitions, artistic activities and entertainment activities, such as discotheques and videotheques, are liable to pay a tax on shows, determined as a percentage of the revenues from sale of tickets or subscriptions, or as a fixed amount per square meter. o Hotel fee: A tax of between 0.5% - 5% of the hotel tariffs charged by accommodating units may be levied by local councils. Delay penalties Also, we want to mention, that the tax law establishes the responsibility of taxpayers obligations to pay accessories obligations for outrunning the statutory period for payment. Accessories are calculated for each day of delay in payment of taxes from the due date until the date of their payment.

MAIN REGULATIONS (Law, Government Decision)

Fiscal Code approved by Law no. 571/2003, as amended up to date; Fiscal Proceedings Code, approved by GO 92/2003, as amended up to date; Modernized Customs Code, as amended up to date; Law no. 146/1997 on judicial stamp taxes, republished; Law no. 12/2010 approving the social security budget for 2010 Agreement between Switzerland and the European Community on the implementation of measures equivalent to those stipulated by EC Council Directive 48/2003 on taxation of income from savings in the form of interest payments, published in the Official Journal of the European Union no. L385/30 of 29th December 2004. Government Emergency Ordinance no. 58/2010 amending and supplementing Low no. 571/2003 regarding the Tax Code and other fiscal measures Government Emergency Ordinance no. 59/2010 Fiscal affairs See www.eur-lex.europa.eu www.customs.ro National Customs Authority http:///www.anaf.ro National Agency for Fiscal Administration www.mfinante.ro The Ministry of Finance

o
o o

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3. Economic sectors
Drafting team: Hanelore Brighite BENING (hanicutzu@yahoo.com) Alexandra DIN (din_alexandra2005@yahoo.com) Corina DUMITRESCU (corinadumitrescu1@gmail.com) Elena Monica PETRESCU (elena_monica_petrescu@yahoo.com) 3.1 Primary Sector
o o o o o o o o o o o o Agriculture Fishing and Fish Farming Extractive Industry Manufacturing Industry Electricity, Gas and Water Construction and Real Estate Transport Means and Infrastructure Healthcare and Pharmaceutical Industry Tourism IT & Telecommunications Education Media & Communication Industry

3.2 Secondary Sector

3.3 Tertiary Sector

3.4 Quaternary Sector

3.5 Sectors with High Potential vs. Risky Investments

3.1. Primary Sector

Agriculture
Overview o Recent years have shown growing activity in private sector consultancy mostly in response to the financing possibilities offered by SAPARD, with 50% subsidies on investments in farm improvement such as stables and equipment; o 2007 major changes in Romanian agricultural field due to joining the EU; o Agriculture in Romania is a significant sector of the national economy in terms of area contribution to the GDP and in particular (12,4% - CIA Worldfactbook, 2009 est.), in terms of share (29,7% - NIS, 2006) in the total employment; o Romania's total agricultural area is of 14.8 million ha (or 63% of total area), out of which 9.4 million ha are arable land accounting for 63.3% of total agricultural area; o At present, the Romanian extension system is represented both by public and private bodies. The Ministry of Agriculture and Rural Development (MARD) is responsible for the extension of institutional building in the public sector. As a result, the public extension system has been in operation since 1998 and consists of the National Agency for Agricultural Consulting (ANCA), the first institutional structure of European origin, set up in 1998 based on the PHARE Programme RO 9505 01 0. ANCA was established with the aim to initiate the provision of agricultural consultancy services to Romanian farmers. It is an agency operating under the framework of the Ministry of Agriculture and Rural Development. It has been required by the European Union; o Recent years have also shown growing activity in the private sector consultancy;

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The agricultural land size and the natural available human resources makes Romania a very important producer and partner for the Central and Eastern European market of agro-food products; The support available under the EAFRD represents the ambition to implement the core EU policies including the re-launched Lisbon strategy and the Gothenburg declaration on sustainable development; Since February 2010, the European Commissioner for Agriculture and Rural Development Mr. Dacian Ciolos.

Issues o Low performance of the Romanian agriculture not correlated at all with its real potential; o High proportion of small, subsistence farms (56% of farms are under 3 ha); o Low level of productivity and efficiency (due to land fragmentation and lack of capital); o Low access to credits and low development of specific services for agriculture; o Lack of strategic and coordinated plans in the land cultivation area; o Lack of healthy natural products consumption at population level; o Lack of crop gathering points, in conjunction with communication and coordination with suppliers and clients within the value chain; o Lack of watering systems. Opportunities o Increasing the comprehensive, harmonious and sustainable contribution for the development of the rural area; o Reconstitution of ownership of agricultural land and forest; o Completion of the privatization-lease assets and agricultural land and agricultural services; o Stimulating and supporting the establishment of real agricultural farms and professional organizations; o Improving the structure of crops, for maximum efficiency in use of climatic conditions, to meet internal and external market needs and to increase the profitability of farmers; o Improvement of procedures for increasing the budget and its use with maximum efficiency financial resources, internal and external resources; o Protecting and developing the forest and hunting fund; o Settlement on other grounds of education, scientific research and counselling in agriculture, food and forestry which used to be an important asset for local agriculture o Rebuilding the watering systems which worked during the last years of the communist regime o Structural reform of public institutions which falls under the authority of the Ministry of Agriculture; o Achieving gradual but steady growth rate, minimum performance parameters, for integration into the EU structures; o Export of agro-ecologic products; o Building further the certification and inspection systems for various products; o Building export centres; o Biofuels production plants, in accordance with EU biofuel rules.

Agriculture See
o o o o o o o o o o o o www.maap.ro www.apia.org.ro www.fao.org www.consultantaagricola.ro www.agroinfo.ro www.ccir.ro www.mmediu.ro www.ecomagazin.ro www.lumeasatului.ro http://europa.eu/pol/agr/index_ro.htm www.gazetadeagricultura.info www.ecolife/articole/agricultura/

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o o o o o

http://www.3idei.ro/video/leliana-parvulescu/tendinte-in-zootehnie/870 http://www.3idei.ro/video/sergio-d-aloisio/romania--un-loc-virgin-pentru-agricultura/876 www.federatiaagrostar.ro http://countrystudies.us/romania/ http://ec.europa.eu/agriculture/index_en.htm

Fishing and Fish Farming

Overview o Inland waters represent 3% of the total area of Romania. o The fishery sector makes a marginal contribution to the GDP and is continuously decreasing because of the decline in the distant-water fleet and the decline in fish farming. o Local consumption is 90000 tones (2007), which means 5,6kg/ capita (EU average is 20 kg/ capita) o Local fish consumption has fallen; now being only 25-30% of total o Fishery has great socio-economic importance in the Danube Delta, where alternative occupations (agriculture or industry) are not feasible. Issues o Important gap between imports and exports the main cause is a poor diversity of valuable aquaculture species, as well as a narrow range of processed products. In 2007, exports valued EUR 1 million, whereas imports valued EUR 13 million. o The commercial ports of Mangalia, Constana and Sulina have no specific facilities for landing, storage and sale of fishery products. o Fishing is practiced with fixed or towed gears, using small wooden boats. No mechanized fishing is used in inland waters. o Currently, there is no marine aquaculture in Romania. o There are no first sale points and the distribution channels are not developed. Opportunities o Given the landscape diversity, there are suitable conditions in Romania for performing recreational fishing activities in mountain or plain waters. o With the help of The European Fisheries Fund which is designed to promote the sustainable development of fisheries in the European Union, Romania adopted a National Strategic Plan so as to define its objectives. For the period running from 1 January 2007 to 31 December 2013, the total aid for Romania is estimated at EUR 231 million plus 80 million from the government. o The Black Sea fishing - taking into account the potential of marine resources in the Black Sea, that have been estimated by the Romanian Marine Research Institute at about 20 000 t, is important to promote the upgrade of the existing fishing vessels. o Coastal fishing has a long tradition in Romania. It includes small-scale fishing. The support to small-scale fishing will contribute to maintaining employment in coastal areas and to reconvert the fishery activities into activities in other sectors (for example tourism).

Fishing and Fish Farming See

o o o o o o http://www.ecomagazin.ro/piscicultura-poate-deveni-afacerea-anului-2008/ www.anpa.ro http://www.apdrp.ro/ http://www.fao.org/fishery/en www.mmediu.ro http://ec.europa.eu/fisheries/cfp/structural_measures/operational_programmes_en.htm

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Extractive Industry Energy Products (Mining and quarrying of energy products)

Coal Mining
Overview o Romania has coal reserves estimated to 545 million short tons; o According to the 2008 BP Statistical Energy Survey, in 2007 Romania had a coal production of 35.41 million t. and a consumption of around 30 million t (9.01 million t oil equivalent); o Virtually all production is used for power generation, with coal accounting for 29% of Romanian energy production; o More than 90% of Romanian coal reserves are located within the basin of Oltenia Region; o More than 80% of Romanian lignite reserves can be mined profitably in opencasts, whereas the remaining 20% require underground mining; o Two state-owned companies are responsible for lignite and brown coal production, National Lignite Co Oltenia (CNL Oltenia) and National Coal Co Ploieti (SNC Ploieti), whereas one company is responsible for hard coal production - National Hard Coal Co Petroani (CNH Petroani); o CNL Oltenia is the major lignite company. It produces around 35 Mt from 6 open pits and 5 underground mines; o Surface mine technology is predominantly bucket wheel-based, while the underground mines operate ten modern long walls. Issues o Coal is between 50%-200% heavier on the same energy unit, which makes transportation a lot more difficult; o Coal extraction is done with the help of liquid fuel operated machinery. Therefore, the increase in oil price will trigger an increase in the price of coal; o Coal has a recovered energy/invested energy report of 8 -18 to 1; it is estimated that in 2030-40, the report will be of 1 to 1, which means that in order to produce a coal cart, the energy of a coal cart will be necessary (oil has the report of 40 - 60 to 1); o Romanian coal has an energy content of about 1 400 kcal/kg, while in Germany, the energy intake is of 3 000 kcal/kg and that of the United States is of 6 000 kcal/kg; o The coal industry is one of the biggest debtors to the Romanian state, owing about RON 379 Million (about EUR 88 Million); o A large number of employees have been made redundant over the past years; o The miners used to protest in a very violent way in the years before 1989, being a major social problem. Opportunities o The coal industry is being restructured. For this purpose the Government has allocated over USD 2.2 billion between 2004-2010 o The European Commission approved the state help funds for the Romanian coal industry between 2007 and 2010. Thus, the coal and uranium industry received in 2008 a subvention of almost RON 350 million (around EUR 81 Million); o Romania has enough oil and gas proven reserves for 15 years and uranium for 18, whereas coal is sufficient for about 30 years giving the state and investors enough time for necessary investments; o Romanias intention is to erase the debt of the coal industry to the state, in order to attract foreign investors; o Coal is getting more expensive on an international level and thus, the Romanian coal industry is turning into a real attraction for foreign investors.

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Coal Mining See

o o o o o o o http://www.mbendi.com/indy/ming/coal/eu/ro/p0005.htm http://standard.money.ro/articol_104312/industria_carbunelui_si_cfr_ul__marii_datornici_la_s tat.html http://depletition.3x.ro/Carbune.htm http://www.realitatea.net/comisia-europeana-a-aprobat-ajutoarele-pentru-industriacarbunelui_102691.html http://economie.hotnews.ro/stiri-energie-2323330-subventii-300-milioane-lei-pentru-industriacarbunelui.htm http://www.ziare.com/articole/rezerve+carbune+romania http://www.green-report.ro/stiri/psua-construiesc-prima-centrala-verde-pe-carbunep

Oil and Gas

Overview o Romania was the first country with an oil production officially registered in international statistics; o Romania is the largest oil producer in Central and Eastern Europe with proven reserves of 600 to th 950 million barrels (40-45 ). According to the 2008 BP Statistical Energy Survey, Romania st produced an average of 105.4 thousand barrels of crude oil per day in 2007 (51 ), 0.12% of the world total with a difference of 0.9% compared to 2006. The country is a net oil importer, and according to the 2008 BP Statistical Energy Survey, Romania consumed an average of 229.290 thousand barrels of oil per day (tbpd) in 2007, 0.27% of the world total, with a difference from 2006 of 10.44 tbpd. Romania imports 217000 bbl/day and exports 115000 bbl/day (2007 est.). 3 o The refining capacity of the country of 504 000 bbl/d (80 100 m /d) far exceeds its domestic demand for refined petroleum products, with the surplus going for export. (The Oil Refineries in Romania produced in 2008 nearly 9.0 million tones of petrol and diesel); o Romania imports oil via the Black Sea through two major ports, Constana and Tulcea, giving the country the opportunity to be a major energy transport point. Because of its potentially strategic importance, the Romanian government has no plans to privatize Conpet, the state-owned oil transport company, which operates the national pipeline system; o Romania dominates Balkans downstream petroleum industry, with ten refineries and 35% of total refining capacity; none of the Romanian refineries exceeds a refining capacity of 100 000 bbl/d. o According to the 2008 BP Statistical Energy Survey, Romania had in 2007 proved natural gas 3 reserves of 0.62 trillion m , 0.35% of the world total. According to the 2008 BP Statistical Energy 3 Survey, Romania had in 2007 natural gas production of 11.55 billion m and natural gas 3. consumption of 16.36 billion m Local producers are Romgaz (state owned company) and Petrom (former state owned company now OMV Group). o Romania has enough oil and gas proven reserves for only about 15 years. Opportunities o Even though Romania has enough oil and gas reserves to last for about 15 more years, there is still enough time for proper investments. Whats more, Romania has a very high refining capacity, therefore investments can be made in that direction for even more than 15 years from now on; o Romania has a very low royalty rate related to oil extraction; in the last 3 years, the price of oil has tripled, while the royalty has remained at the same rate in 2007, the Romanian state has earned from royalties only EUR 85 million for 32.6 gallons extracted by Petrom. In the case of gas, however, royalties are at a higher rate.

Oil and Gas See

o o o o http://www.mbendi.com/indy/ming/coal/eu/ro/p0005.htm http://standard.money.ro/articol_104312/industria_carbunelui_si_cfr_ul__marii_datornici_la_s tat.html http://depletition.3x.ro/Carbune.htm http://www.realitatea.net/comisia-europeana-a-aprobat-ajutoarele-pentru-industriacarbunelui_102691.html

46

o o o o o o o o o

http://economie.hotnews.ro/stiri-energie-2323330-subventii-300-milioane-lei-pentru-industriacarbunelui.htm http://www.ziare.com/articole/rezerve+carbune+romania http://www.green-report.ro/stiri/psua-construiesc-prima-centrala-verde-pe-carbunep http://rbd.doingbusiness.ro/ro/5/articole-ultima-editie/1/254/crude-refining-petrochemicalssector-in-romania http://www.petrom.com/portal/01/petromcom http://www.romgaz.ro/ http://www.transgaz.ro/ http://www.rompetrol.com/online/index.php?_website_id=67 http://www.lukoil.ro/

Uranium
Overview o The uranium production in Romania has decreased constantly over the last decade, as several plants became unprofitable or ran out of ore and shut down. While Romania's energy strategy for 2007-2020 mentions that the remaining uranium ores will support the functioning of two nuclearelectric units at Cernavod for eight years, NuclearElectrica (national nuclear energy company) officials declared that the reserve will hold for ten years; o In Romania, uranium is extracted at the Crucea-Botuana mine in Suceava, the only mine that is still functioning nowadays. Issues o According to the Ministry of Economy, the state subsidies for the Romanian National Uranium Mining Company have been reduced by 14.3%. On average, the subsidies for all mining companies have been lowered by approx. 28%; o Several tons of waste sludge contaminated with uranium leaked from a mining operation in western Romania into nearby streams and subsequently the Fekete Krs River in eastern Hungary; o Uranium reserves will probably last for 7 more years, until 2017; o In the future, Romania will acquire uranium from Kazakhstan. Opportunities o In the future, the most plausible investment opportunities lie in uranium processing or in the nuclear-electric units at Cernavod.

Uranium See
o o o o o http://www.wise-uranium.org/umop.html#RO http://www.cnu.ro/ http://www.ziare.com/business/economie/12-18-2009/romania-va-cauta-diamante-si-uraniuin-angola-978891 http://www.ecomagazin.ro/minele-si-haldele-de-uraniu-din-romania-zac-neecologizate/ http://www.nuclearelectrica.ro/en

Other Products (Mining and quarrying of non-energy products)

Mining
Overview o During 2004, Romania issued approximately 28 exploration licenses for gold, silver and polymetallic ore exploration, grouped primarily in three areas of the country: in the north around Baia Mare, in the Eastern Carpathians and in the west of the country in the Apuseni Mountains and Western Carpathians;

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There are three leading players on the Romanian gold market: Transgold SA, a 50-50 joint venture between Eurogold Ltd of Australia and its state-owned partner, Remin SA; it operates a modern CIL facility at Baia Mare, initially constructed for a major tailings retreatment project. The company is now progressing to develop a number of mining sites to supply ore from its own sources, and is involved with a number of exploration campaigns, primarily in the north of the country. The Roia Montana gold project in the Apuseni Mountains, where a joint venture between Canadian junior Gabriel Resources (80%), the state-owned company Minvest (19.31%) and smaller shareholders, is endeavouring to develop a major resource around the site of an existing small, Minvest operation. The proposed project target is estimated to contain proven and probable reserves totalling approximately 218 Mt averaging 1.52 g/t Au and 7.47 g/t Ag, containing 10.6 Moz of gold and 52.3 Moz of silver. European Goldfields holds five mineral properties located within the Golden Quadrilateral area of Romania, where it has embarked on a resource development and pre-feasibility programme to underpin the value of its 80%-owned Certej deposit and surrounding satellite bodies. A current resource estimate outlines measured and indicated resources of 31.4 Mt grading 2.1 g/t gold and 11.0 g/t silver for 2.34 Moz of gold equivalent (80% attributable: 1.87 Moz); Important gold areas in Romania are in Maramure, Deva and Roia Montana.

Issues 3 o In the year 2000, in Baia Mare, as result of an accident, 100 000 m of water contaminated with cyanide and heavy metals overflowed. o Gold mining in Romania is currently very much frowned upon due to the controversial situation in Roia Montana, where Gabriel Resources plans to exploit the area. The mine would be Europes largest open cast gold mine. It would destroy Roman ruins more than 2 000 years old, which led the International Council on Monuments and Sites to make a resolution condemning the intended destruction of monuments. The mining company also plans to use cyanide leaching, which creates large quantities of waste and sludge laced with heavy metals and cyanide. The sludge is to be stored in a toxic lake enclosed with a 180 meter high dam. A similar type of dam collapsed in Baia Mare, two years ago, killing most of the freshwater life in rivers for 400 km downstream. Promoters say the mine will create 300 new jobs, but these would last only 17 years whereas the mine would destroy the livelihood of 740 subsistence farmers forever. Due to various tax breaks and other preferential treatment, the mine would provide little revenue to Romania, but instead burden it with the risk of accident and a decades-long toxic heritage; however, villagers look forward to the mine opening, as they are all in desperate need of jobs. In spite of the public opinion and international institutions, the new Romanian government decided on 18 December 2009 to start mining in the area as soon as possible. Opportunities o The Romanian state cannot afford to extract the gold in the Apuseni mountains region due to the very high costs; o Agnico Eagle, competitor for Gabriel Resources, is successfully exploring gold in an area in Finland almost as controversial as Roia Montana; in Kittila, a Finnish town in northern Finland. The people have accepted to compromise the exquisite landscape, as, in the 850 ha occupied by the mine, the vegetation and fauna have been destroyed. The surroundings of the area are, however, intact; numerous jobs have been created for the locals and the company has been involved in several environmental projects, gaining a better image in the public eye.

Gold See
o o o o http://www.mbendi.com/indy/ming/gold/eu/ro/p0005.htm http://www.bankwatch.org/project.shtml?s=153982 http://www.bankwatch.org/project.shtml?apc=--153982g--1&x=326886 http://www.miningweekly.com/article/romania-centrists-support-gold-mine-project-2009-12-18

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o o o o

http://www.ecomagazin.ro/rosia-montana-a-finlandei/ http://www.greenpeace.org/romania/campaigns/ro-ia-montan http://stiri.rol.ro/content/view/319266/2/ http://www.rmgc.ro/

Salt
Overview o There are many salt mines in Romania; Slnic, in Prahova region and Praid, in Harghita region are two of the most famous; o Local salt production was 2,7 million tones (2008) (1,7 for industrial purpose, 0,92 for food industry and agriculture and 100000 tones for human consumption). o In 1989 local production was 5,5 million tones o Romania exports 25000 tones of salt for human consumption per year. o The salt mine in Slnic Prahova is a balneoclimatic resort, located at about 44 km of Ploieti, at 400 m altitude; Opportunities o Romania has rich salt deposits which can fulfil European demand for many decades. o Salt mines are important touristic attractions in Romania, as they offer numerous facilities for visitors: they have therapeutic, as well as leisure purposes, besides their most basic use that of salt extraction; all these facilities are worth further investigation and investment.

Salt See
o http://www.romanianmonasteries.org/romania/salt-mine-slanic

3.2. Secondary Sector

Manufacturing Industry
Food, beverages and tobacco
Overview o The total food and drink market in Romania was worth in 2008 EUR 23.0 billion, EUR 18.5 billion in retail (80.5%) and EUR 4.5 billion (19.5%) in foodservice; o Before the recession the food, beverages and tobacco sector was in continuous growth: the internal demand grew with 27.8% and the export rate with 25.6% in 2007 compared to the previous year. o In terms of competition, there is a slight concentration of power as the Top-10 companies supplied 20.8% of the total market in Romania in 2008; in many food and drink sectors, familybusinesses are still on the lead; o Demand: high on bread and derivates, vegetables and milk; o Demand decreased by 30-60% in some market segments in 2009 Table no. 4 Monthly Average Consumption of Selected Food Products in kilograms per Capital 2000 Bread and bakery products Fresh meat 9.582 2.359 2001 9.825 2.175 2002 9.931 2.284 2003 10.112 2.447 2004 9.875 2.542

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Meat products Milk Potatoes Fresh and canned vegetables Edible fruits

0.951 5.576 4.68 7.967 2.103

0.822 5.96 4.58 7.293 2.144

0.839 5.82 4.396 7.027 2.019

0.894 5.854 4.114 7.102 2.277

0.945 5.934 4.027 7.083 2.457

Source: www.insse.ro - The National Institute of Statistics, 2008 Report o Import/Export: Export small percent from total exports. Main exports are raw materials or processed food. There are low export rates to the EU especially on meat products because of the strict standard regulations of EU. Main imports consist of end products for household consumption distributed especially through local giant retailers.

Issues o The local raw materials are still insufficient or of a lower quality than those of the European competitors. o There still are quality standard issues regarding the EU regulations, especially those concerning meat products, milk and derivates; o A number of Romanian companies, active in both the food and drinks as well as in the mass grocery retail (MGR) market sectors, have begun to feel the effects of economic downturn; o Romanias food and drinks market will continue to be held back by low per capita income, large sections of rural population, and its negative food and drinks trade balance; o Given that the country's MGR sector was hit by a sharper than expected fall in consumer confidence, supermarkets and hypermarkets will struggle to retain their customers, who are increasingly seeking cheaper alternatives from the discount sector; o Demand for cheaper private-label goods has picked up noticeably, while discounters are also benefiting from their ability to set up in urban areas (unlike hypermarkets) and residential neighbourhoods, which reduces transportation expenses for the clients; o Due to the changes in consumption created by the economic crisis in Romania, the survival of some niches of food and beverages is challenged. Opportunities o The MGR market is expected to experience additional changes in the next years. For example, existing supermarket operators will focus on smaller formats in order to address changing needs of their consumers, while smaller and independent retailers are likely to succumb to larger companies, all of which will affect the market penetration of food and beverages; o Over the next five years, the value of food consumption at consumer rates is expected to increase by 48.12% in local currency terms, to reach RON 83.2 billion (USD 35.9 billion), although the remainder of 2009 and into 2010 is likely to be more challenging; o The longer-term potential of the Romanian market in addition to the increasing saturation of Western European markets is one of the key reasons for continued investment in the country; o The Bio-product market is still underdeveloped because of the lack of producers while the demand is growing. The consume represented 1% from all products in Romania in 2008 under the EU average, but remains a market with great potential in the future; o Another potential investment opportunity regards the traditional food and beverages niche (especially the alcoholic beverages sector is now being developed for export). o There is a high export potential for ecologic agriculture sustained thought the National Export Strategy of Romania for 2010-14.

Food, beverages and tobacco See

o o o www.traderom.ro www.ins.ro http://www.cnp.ro/user/repository/industria_alimentara.pdf

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o o o o o o o

http://www.factbook.net/countryreports/ro/Ro_FoodProc&Pack_MktAssess.htm http://www.romalimenta.ro/index.php?l=en http://www.fft-geneva.com/2009_country/2009_Romania_Food_Drink_Markets_Synopsis.pdf http://epp.eurostat.ec.europa.eu http://www.zf.ro/companii/industria-alimentara-in-2015-investitorii-straini-se-vor-uita-maiatent-la-romania-si-vor-iesi-la-cumparaturi http://www.bio-romania.org/tag/produse-bio/ http://www.ccir.ro/

Textile and clothing

Overview o Romania is a medium-sized textile and clothing producer and this aspect is of great importance to our economy; o The contribution of the light industries (textiles, clothing and leather) to the Romanian economy is substantial (in 2004 5.5% of GDP, 9.9% of the countrys industrial production volume, and 34% of exports); o It integrates a high number of employees (approx. 300 000 in 2009), most of them women; o The EU is the destination of approximately 2/3 of Romanian exports. o Romania uses its pricely competitive workforce to supply mainly European customers with a manufacturing and assembly service based on cut, make and trim (CMT) operations; o BMI (Business Monitor International) ranked Romania at the end of 2009 as number 48 in the world in terms of textiles and clothing manufacturing value added. Issues o The Romanian textile industry is declining. Figures show a 67% decline per year since 2005 (FEPAIUS). A decrease in the number of producers (approx. 9 500 in 2006 and fewer than 7 000 in 2009) illustrates the downward trend. There is also a drop in the export rates (EUR 335 million loss between 2007 and 2008); o Despite a long tradition, the technology is obsolete especially in the primary sector (spinning and weaving mills, textile finishing, tanning houses) and requires investment; o The little focus on creating an international brand image made Romania unknown to the public in spite of the product quality and design; o The competition coming from Asian but also from other EU countries (Czech Republic, Lithuania, Hungary, Estonia) shows the necessity of rethinking the overall textile industry strategy. Nowadays, Romania shares the medium-high price market as the Asian products overtook the low price segment. o Economic crisis challenges the light industry in Romania as the export demand decreases and the interior tensions regarding local political and economical instability creates tensions between employers and employees. Opportunities o Romania's textiles and clothing value added fall is by 13.1% in 2009 and by 4.1% in 2010, reflecting very difficult international economic conditions and the country's weak competitive position. A moderate recovery is considered to be setting in from 2011, with a growth of 2.2%. The long tradition and well-trained personnel can be considered an important resource. o A rebirth of the industry with focus on high quality and strategic marketing, with the right investment, is possible, provided that there is little possibility to focus on the low-price segment because of the strong competition. o Niche small and medium size markets can be a successful target for investors; o There is a very high potential for sector specific information, training and consulting services, as well as for export support services; o Local brands can become regional European players.

Textiles See 51

o o o o o o

http://www.fepaius.ro/ http://www.textileiasi.ro/ http://www.romtextiles.ro/presa/mscarlat_DT2004.pdf http://www.cnp.ro/user/repository/industria_romaneasca_in_perioada_de_criza.pdf http://www.wall-street.ro/articol/Companii/60430/Industria-textila-din-Romania-a-scazutconstant-cu-circa-7-anual.html http://www.dce.gov.ro/sne/Textile_clothing_and_leather.htm

Metallurgy and metal products

Overview o Recently, the Romanian production and foreign trade in metallic products have increased remarkably due to the general growth of Romanian economy but also due to international trends; o In Romania there are 31 operating enterprises in this field: 7 integrated plants, 13 manufacturers of various rolled products, 5 manufacturers of seamless tubes, 3 manufacturers of welded tubes, 2 manufacturers of moulded articles and 1 manufacturer of ferroalloys. A study conducted by Finpro Romania shows that there are 7 474 companies in the metal products sector; o In terms of production, in 2007, the steel production was as follows: the liquid steel production was: 6.2 million t, warm rolled pieces production was: 5.5 million t and pipes production was: 0.7 million t; o It is a relatively small industry with a 2% share of the industrial output (although it employed only 3.9% of the total industrial personnel) but has a high degree of internal production integration; o It is characterized by commercial excess: high degree of internal production integration: the internal consumption has a value of 23% from the total production and 13% of total resources; o In terms of competition it is characterized by a high degree of concentration; the manufacturers are scattered all over the country; however, the most important clusters are located in Hunedoara, Galai, Cara-Severin, Slatina and Trgovite regions. Top 5 metal production companies gather 65% of total branch turnover, each concentrating on a different sub-branch (steel, aluminium, special steels, and pipes); o High export rate: 14.1% share of the total exports of the country in 2008, 11.1% steel products and 3% non-ferrous products. As a result, a big part of internal demand is covered by imports; o Demand: 20% from the steel resources (internal production and import) are used in the automotive and construction sectors. Issues o High energy consumption industry o existence of certain big production capacities having obsolete technologies; o High dependency on imported raw materials. Opportunities o Steel production amounted to 7.5 million t in 2007 and it is forecasted to reach 8.8 million t this year as a good asset in the value chain, to be further used in client industries; o With a vast experience and sector specific information, Romania could offer training and consulting services, and even improve the exporting support services.

Metallurgy and metal products See

o o o o o o o o http://mcir.doingbusiness.ro/en/metal.html http://www.sar.org.ro/files/PWR-2009-ro.pdf http://www.dce.gov.ro/Info_business/Metallurgical_industry.htm http://www.cnp.ro/user/repository/f68a53fd74393519fd98.pdf http://www.cnp.ro/user/repository/f68a53fd74393519fd98.pdf http://mcir.doingbusiness.ro/en/metal/metallurgy http://www.dce.gov.ro/Info_business/Metallurgical_industry.htm www.ins.ro

Manufacture of wood and wood products

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Overview o Forestry industries in Romania (exploitation, woodworking and furniture) accounted in 2005 for 3.5% of GDP and for about 7% of the manufacturing sector output produced by 10% from the total employees in industry. o Significant parts of the Romanian forests are located in the mountains: 51.9%, while in hilly areas there are located 37.2% of forests and 10.9% of forests are located in plain areas. Standing wood 3 volume of forests from the national forest fund is 1 341 million m . The average country wood 3 3 volume is 218 m /ha. The unitary average growth of forests is 5.6 m /year/ha. 3 o The total volume of exploited wood was 15 671 thousand m for the year 2005 and this wood 3 volume had two destinations, for economic operators with forestry activity (11 783 thousand m ) 3 and for population supplying (3 888 thousand m ). o In 2005 the furniture production amounted to EUR 1 195 million, out of which around 75% was exported. Issues o The illegal logging phenomenon currently occurring in Romania is estimated at an annual volume 3 of 100 000 m ; o Less than 27% of Romanias territory is covered by forests, which is under the European average and well below what researchers consider, given the countrys natural conditions; the optimal threshold is estimated between 32-35% from the total countrys territory; Opportunities o The Rural Development Programme for Romania 2007-13 whose primary purpose is to facilitate the transformation and modernisation of the forestry production and processing sectors; o Another objective is the development of scientific research and education with focus on forest sustainable management, economical changes of forestry sector and amelioration of the environment on the national, regional and global level; o Design in furniture sector

Manufacture of wood and wood products: See

o o o o http://www.rosilva.ro/ http://europa.eu/ www.maap.ro www.insse.ro

Manufacture of machinery and equipment

Overview o The machine building industry was created and developed in Romania after WWII and nowadays it is one of the most important sectors of the manufacturing industry. o The most important branches are: electric and electronic equipment, equipments and technological aggregates (mining, oil, machines). The most important trade partners for Romania are Germany and Italy. o The total number of companies in this sector is 1 748. o The turnover of the companies active in this field is EUR 1 102.8 million. o Export of transport machinery & equipment amounted to EUR 9 235 million in 2007, which is 33.9% of the total exports. o Export of manufactured items amounted to EUR 6 012 million in 2007 that is 22% of total exports. o Export of manufactured products mainly classified by raw material amounted to EUR 6 040 million in 2007, that is 22.2% of the total export. Issues o Low productivity; o Small percentage (2%) of research & development expenses; o Small percentage of Internet use in the sale-purchase process;

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Small percentage of employees using PCs.

Manufacture of machinery and equipment: See

o http://www.uti.ro/

The Automotive Industry

Overview o In Romania, there are two major car operators: Renault, which purchased the local company Dacia in 1999, and Ford, which, in September 2007, acquired controlling interest in local Automobile Craiova; o The most important car manufacturer in Romania is Dacia; Dacia is a low-cost automobile that competes against second-hand cars. There is no direct competitor on the same price level; o At the moment, the Ford factory in Craiova is only assembling vehicles brought from Turkey; the first fully locally produced automobiles are expected to be delivered this year th rd o Production reached in 2009, 279320 cars (25 place) with a growth rate of 21% (3 place after China and Taiwan) Issues o The year 2010 is still a year of crisis for the automotive industry. Investments will be low on an international level, not only in Romania; o Although at the moment car manufacturers choose Romania due to the lack of alternative in the proximity of Western Europe, increasing labour costs might lead to finding another option in the future; o Most of the car parts producers that intend to build production facilities in Romania have put their plans on hold, as they are waiting for macroeconomic stability; o Dependency of the local car parts manufacturers and subcontractors on the international automotive players. Opportunities o At the moment, there is no other alternative for car manufacturers in the vicinity of Western Europe, as Romania has tradition in manufacturing car parts and still has low labour costs; o It is reported that around 12 car parts producers are planning to build production facilities in Romania (which leaves room for other investment opportunities); o Production diversification of the local car parts manufacturers and subcontractors; o Over the course of last year auto imports to Romania fell by almost 55%, to nearly 106,000 units, while Dacia exports rose by a similar proportion, to more than 258,000 units. Considering an average price of 8,500 euros for the exported vehicles, the value of exports amounts to EUR 2 billion, while that of vehicle imports exceeds EUR 1.4 billion (considering an average price of EUR 13,500), resulting in an almost EUR 800 million surplus.

The Automotive Industry: See

o o o o o http://www.dacia.ro/ http://www.zf.ro/zf-24/seful-ford-romania-incepem-productia-pe-8-septembrie-4687989/ http://www.zf.ro/zf-english/balance-of-trade-in-auto-sector-tipped-in-favour-of-romania-5443133/ http://www.money.ro/english-brief/aris-car-manufacturers-choose-romania-for-lack-of-alternative.html http://www.capital.ro/articol/primul-ford-de-romania-a-iesit-pe-poarta-fabricii-din-craiova-124754.html o http://www.capital.ro/articol/primul-ford-de-romania-a-iesit-pe-poarta-fabricii-din-craiova-124754.html

Electricity, Gas and Water

Overview o Electricity in Romania is primarily generated by thermal power plants (using coal, natural gas and oil) and supplemented by hydroelectric facilities and a nuclear power plant (2 working reactors and 2 under construction out of 5 planned); o Total production was 64,7 TWh (2008) 56,2% power plants (coal and hydrocarbons), 26,4%

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o o o

o o

Hydro, 17,3% nuclear. Export was 5,3 TWh. Romania also imported 0,9 TWh. Main producers: Hidroelectrica more than 25%, Nuclearelectrica 17%, Elcen, CET Rovinari, CET Turceni. The countrys hydropower potential is extremely large, with an estimated additional potential of over 9 MW. There is a total of at least 767 hydroelectric power plants; Wind power: For Romanian wind resources there is a vast range of small existing applications, from small autonomous units for rural areas to large off-shore potential with an approximate capacity of 2.5 MW (UDI Utilities Dynamic Inc., 2009). Currently Romania has approximately 636 MW of wind capacity under construction and 5500 MW planned; Romania has great biomass potential, which is estimated at 88 000 GWh per year. Direct burning in kilns, stoves for space heating, cooking and hot water preparation is about 95 % of the biomass use; About 66% of the firewood and wood waste is located in the Carpathians and Sub-Carpathians; The potential market for solar applications is very large but specific incentives will be needed in order to realise it. (average solar radiation ranging from 1 100 to 1 300 kWh/m2 per year on more than half of the countrys surface); With the third highest geothermal potential of European nations, Romania has a total geothermal installed capacity of about 145.1 MWt producing 2 841 TJ per year. This energy is produced from about 59 direct-use wells with hot water; About 75% of the natural gas Romania uses, is domestically produced, importing the balance from Russia. The gas distribution infrastructure is extensive, with possible providing countries such as Norway, Turkmenistan and the Netherlands; Gas is the dominant fuel source in Romania, accounting for 37.1% of Primary Energy Demand (PED) in 2007, followed by oil, coal and hydro sources;

Issues o Domestic supporting financial sector relatively undeveloped; o Extensive poverty limits the domestic users to invest in energy efficiency; o Market dysfunctionality consisting in the difficulty of increasing household electricity tariffs to costcovering levels due to high inflation and continued depreciation of the leu; o Political resistance to further increases in household electricity tariffs; o The district heating company is losing customers because of continuous poor performance. Opportunities o Romania will account for 3.29% of Central Eastern Europe (CEE) regional power generation by 2013, and will remain a net exporter of electricity to neighbouring states. The country is expected to provide 3.15% of regional thermal generation; o An increase of 66% in hydro-power use during 2008-18 is a key element of generation growth; o Thermal power generation rise by 38% between 2008 and 2018; o Romania's commitment to the European Union is to reach the target of 33% use of renewable energy by 2010. 33% of total electric power and 11% of total energy consumption by 2010 38% of total electric power and 24% of total energy consumption by 2020 o In the first semester of 2009 29.8% from the total energy was provided from hydropower but Law no. 220/2008 for the promotion of renewable energy imputed also the possibility of green certificates (until 2010). o Cernavoda Nuclear Power Plant still has 2 reactors in different stages of constructions. These two will increase the output with more than 100%. o Investments in wind power

Electricity, gas and water: See

o o o o http://www.nabucco-pipeline.com/ http://standard.money.ro/tag/termocentrale.html http://www.gdfsuez-energy.ro/ http://www.distrigazsud-retele.ro/v1/

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o www.ins.ro o http://www.enreg-expo.com/ o http://www.opcom.ro

Construction & Real Estate

Overview o In 2002-2008 periods, the real estate investments were the most attractive investments for the population, mainly due to price developments by 2008 allowing price speculations. Prices for residential units in projects launched in the first half of the year 2007 raised an average of 20%. For example, in 2006 the average construction price was 600/sqm and in 2007 it rose to 750/sqm. The market remained at an average of 1,500/sqm until the beginning of 2009. o In 2007 this sector accounted for 9.1% of GDP. Until the end of 2008 it has constantly expanded. o In 2009, the GDP dropped with 7.6% reflecting the deterioration of the local economic environment in the context of the world economic crisis; As a result the real estate market was affected; o The pessimistic economic outlook and the negative general feeling of the real estate market have generated the contraction of the office segment in 2009; o Non-residential construction there was an externalization of commercial and industrial realms and warehouses, especially in and close by the urban area; o Rehabilitation and maintenance of old buildings (schools, gyms, etc.) was at its peak in 2008. Today the phenomenon lowered although benefiting from the European and national measures targeting the renovation and retrofitting of buildings as a means to reduce the environmental impact of buildings and accelerate economic recovery through support to a high labour-intensive service. o Residential constructions: The most dynamic sector was housing construction and currently the residential market is favourable to buyers, considering the decreases in price and the developers flexibility. Potential clients are almost exclusively interested in residential units in advanced construction stages; o Demand: It changed substantially compared to 2008, as tenants were no longer looking to relocate based on business expansion, but were instead interested in cost savings. Issues o The first effects of the economic crisis were felt since early 2009 in both physical volume of construction works and in the value of the investments volume in the sector, because the Government failed to fulfil a series of promises including the failure to provide the 10 billion euro for investments, non-taxation of reinvested profits, VAT collection from invoices, etc. o There is a high competition, especially in the residential sector due to the low granting stateguaranteed loans in the First Home programme. o The economic recession in Romania caused a decrease in demand as the population lost its purchasing power but kept the construction rhythm rather constant as the materials and manpower became more affordable. This situation created an overstock of dwellings, especially in urban areas. o The financial crisis affected the rate of business trips and the number of functional companies. This affected the rentals of office spaces along with the occupancy rates in hotels. o The increase of VAT from 19% to 24% in 2010 put an extra pressure to the real estate and construction market. Opportunities o The decrease in demand in 2009 will maintain the downward pressure on lease levels, but the decrease rate will be lower compared to 2008-09 due to owners resistance to reaching the profitability limit for their investment; o Despite the negative market feeling, acquiring properties in Romania in expectation of a market recovery on medium term is still a great opportunity.

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o The investment in the sustainable constructions in the context of climate change is a good start
for Romania.

o The infrastructure in Romania is mainly deficitary and is still a good segment for investment. Construction & Real Estate: See
o http://www.realinromania-blog.com/romanian-real-estate-market-spring-2010shopping-in-analmost-empty-super-market/ o http://www.cbre.be/ro_en o http://www.colliersinternational.com/Markets/Bucharest/ o http://www.pr-inside.com/romania-real-estate-report-q-r1859104.htm o http://www.radarfarms.com/?page_id=30&type=573&view=1 o http://www.romaniarealestate.ro/?page=acasa&lang=en o http://domino.colliers.ro/market/2009%20Colliers%20Romania%20Market%20Report%20Mid %20Year%20en.pdf o http://realestate.doingbusiness.ro/en/market-overview/article.php?articleid=455 o http://feaa.ucv.ro/FPV/010-08.pdf o http://www.bucharestherald.ro/interviews-a-analyses/56-interviews-a-analyses/7223-financialcrisis-boosts-leisure-tourism-in-bucharesto http://econpapers.repec.org/article/raujournl/v_3a4_3ay_3a2009_3ai_3a3_3ap_3a127136.htm o http://mnmk.ro/documents/2010/3NistorescuFFF.pdf

3.3. Tertiary Sector

Transport Means and Infrastructure
Overview o Romania's transport infrastructure is fairly extensive, with 73 435 km of road, 10 981 km of rail and 1 779 km of water routes; o Since 1989, every government has established a road-building programme, partly in an attempt to generate employment. The EU has helped, but the money was mainly used for improving border posts and building the major trans-European corridor routes that run through Romania o Railway services, meanwhile, are still provided by the state-owned loss-making rail companies and by private operators, for both freight and passengers. There are also various private and state owned services and rolling stock provider companies. Only a third of the tracks are electrified, and speed restrictions are widespread. In March 2001, the Japanese government lent Romania USD 220 million to upgrade the Bucharest-to-Constana railway; o Romania has 6 major ports, out of which Constana is seen as the most important to the country's future. It is located on the Black Sea coast. o The Danube is the country's most important trade route. In 1999, it was blocked due to NATO's military operations in Serbia. It was soon reopened; problems however remain in the area. o Romania also has 4 international and 13 domestic airports. The dominant carrier is the country's national airline, TAROM. It is currently state-owned, and the government has been trying to find a strategic investor to provide financing and connect the airline into rapidly growing global alliances. o The number of flights has considerably increased during the recent years especially due to low cost companies. Issues o Most of the infrastructure is in a poor state of repair, due to decades of underinvestment. Opportunities o Romania has a key geographical location, at the cross-roads of the major routes which link Western Europe to the Black Sea and the Middle East, and of the corridors which connect the Baltic Sea area to the Balkan peninsula and to the Mediterranean basin;

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o o o o

o o o

Three of the ten Pan-European transport corridors pass through Romania: corridor No. 4 Dresden Prague Vienna Bucharest Salonika - Istanbul, corridor No. 9 Helsinki Moscow Bucharest -Alexandropoulos and corridor No. 7, which follows the route of the navigable Danube and, together with the Main - Rhine Canal and the Danube - Black Sea Canal (opened for traffic in 1984), provides the routes between the North Sea and the Black Sea; Romania will play an important role in the context of the future oil and gas pipelines from the Caspian Sea and Central Asia to South East Europe and Western Europe; The Government elaborated plans to develop a national motorway system, some of them being under developed. The railway network totals 10 981 km, of which one third is electrified track; The public road network totals 73 435 km, of which 14 700 are modernized roads (less than 400km are motorways). River traffic is almost exclusively conducted on the Danube, from Bazia (at its entry point into Romania) up to Brila for 2 m draught ships, whereas maritime Danube, between Brila and Sulina, is navigable for up to 7 m draught ships; There are plans to improve airports infrastructure. Henri Conda (main Bucharest airport) will develop in two phases, the first being under construction). Two more airports will be built: Brasov and Braila) Successive governments have been eager to rectify the poor situation of the infrastructure, although they have had difficulty in finding the necessary funding; However, most hopes rest on foreign aid, particularly from the EU, and on attracting foreign investment; One of the EU projects that Romania is currently part of, is Marco Polo II, which is a 5-step water transport programme, with a total funding of EUR 450 million. The programme has 5 sections: modal transfer projects, catalyst actions, maritime highways, water traffic avoidance actions and common learning activities; The European Bank for Reconstruction and Development continues to support Romanias infrastructure.

Transport Means & Infrastructure: See

o o o o o o o o o The 2008 Romanian Statistical Yearbook http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/ECAEXT/EXTECAREGTOPTR ANSPORT/0,,contentMDK:20647580~pagePK:34004173~piPK:34003707~theSitePK:57112 1,00.html http://www.tarom.ro/ http://www.infotravelromania.ro/aeriene.html http://www.mt.ro/ http://www.cfr.ro/ http://www.nationsencyclopedia.com/economies/Europe/Romania-INFRASTRUCTUREPOWER-AND-COMMUNICATIONS.html Romanias Ministry of Transport website http://www.mt.ro/programe_mt/programe.html https://www.cia.gov/library/publications/the-world-factbook/geos/ro.html

Healthcare and Pharmaceutical Industry

Overview o The services quality is increasingly viewed as inadequate, and the system's performance is poor in terms of equal access. The systems dimension is: 44 Home Insurances, almost 30 000 physicians and 5 350 pharmacies that have a contract with the regional health insurance fund, and also the 12 000 000 insured by the health insurance system of Romania o The number of pharmacies grew so as that in 2008 there were 7 252 units, with 1 429 units more than in 2005, almost all being private. o There are pharmacy chains active in Bucharest and large towns. The big five having 100 to more than 200 pharmacies. o The private health system has been developing due to the shortages of the public one. There are many medical centres across the country, but only in the big cities, not in small or rural areas.

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The prices of prescribed drugs and medical services are rather cheap. The problem is the insufficient amount of money paid by the public system.

Issues o Private sector is still underdeveloped and expensive for the vast majority of population. o An important amount of active population is not paying taxes; o Population per physician in 2008 was 428, less than the EU average; o There is no full service private hospital in Romania; o Public and private sectors are not working together; o The number of taxpayer is going down as proportion of total population and the life expectancy is going up. The public sector wont be able to manage the system; o In many rural areas, few have access to medical services. The access of the rural population to basic healthcare services is hindered by the poor transportation services, which mostly impedes on the medical staffs commuting possibilities. o Bribing doctors is a custom in Romania. Patients use bribery to solicit the standard level of medical care; o Not earning enough, young medical staff decide to leave abroad so there is the risk of not having enough doctors and dentists. Opportunities o By implementing the national system of electronic prescription, the Ministry intends to improve the quality of medical service and optimise the medical services costs; o Developments in the private sector o In the last few years most hospitals went on to be managed by local authorities through public budget financing, which saved the healthcare system big amounts of money o Making healthcare insurance more accessible to the population

Health and pharmaceutical industry: See

o http://www.ms.gov.ro/ o http://rbd.doingbusiness.ro/ro/5/articole-recente/1/256/romanian-healthcare-sector o http://www.prlog.org/10589379-private-healthcare-market-in-romania-2010-growth-to-bedriven-by-health-insurance.html o www.mcsi.ro/Minister o www.worldbank.org o http://www.factbook.net/countryreports/ro/Ro_HealthServices.htm

Tourism
Overview o There is an increase in domestic tourism, more travel within the same region, more travel by road and rail, more direct booking and an increased use of low-cost airlines. o Romania is one of the worlds least tourism intensive countries, ranking 162 out of 174 countries in terms of contribution to GDP. o Real GDP growth for the travel & tourism economy is expected to be -2.4% in 2009. o Availability of low-cost flights: Blue Air, Wizz Air, Germanwings, Jet Tran Air, MyAir, Nouvelair, SkyEurope. o In 2010, the Ministry of Tourism launched an international tourism promotion campaign entitled Romania Land of Choice. Issues o Romania faces a number of major gaps between the rural areas and urban ones in terms of social and physical infrastructure. o Internet access in rural areas is very modest, because of poor development and low income of the population. o Accommodation: poor quality standards of services and accommodation.

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Opportunities o There is much potential for Romania by breaking away from its traditional tourism on the Black Sea. The following sectors should be prioritized: o Meetings, incentives, conferences and exhibitions; o Mountain tourism skiing in winter and hiking in summer; o Heritage tourism using gateway sites such as Braov, Sibiu and Sighioara; o Rural tourism development of wine/monasteries routes and promotion of festivals; o Spa/wellness tourism.

Tourism: See
o o o o o o o http://www.wttc.org/ http://www.nationalgeographic.com/traveler/extras/geotourism/romania.html http://www.romaniatourism.com/ http://www.antrec.ro/ http://www.turism.gov.ro/ro/ http://www.turism.ro/ http://www.zf.ro/zf-24/tui-turismul-romanesc-este-cu-7-8-ani-in-urma-celui-bulgaresc5749361/

3.4. Quaternary Sector

IT & Telecommunications
Overview o The contribution of IT & C to GDP is estimated to 10%; o The volume of foreign direct investment in IT&C represents 22% of the total FDI; o The regulatory measures adopted by the National Regulatory Authority of Communications with regard to the reduction of interconnection tariffs and the implementation of the number portability, which are expected to trigger greater competition in the sector; o The biggest growth was that of the mobile internet connections (a raise of 43%, reaching 2.68 million) due to the evolution of the number of the connections provided through GPRS technology. Issues o In general, urban users benefit from a greater diversity of service offers, in comparison to the rural users, who face either the problem of limited choice, having to choose from one or few providers ,or the lack of access to the communication means, as they live outside the coverage areas of the electronic communications networks. o The level of using e-commerce is still low in Romania, compared to the European average. Opportunities o The strategy for 20112015 foresees the introduction of the BWA (Broadband Wireless Access) systems in the 3.5 GHz, 2.5 GHz and 800 MHz frequency bands and the implementation of the first concrete stages of the digital switchover; o Through the Broadband Strategy, the Ministry of Communication and Information managed to obtain European funds of EUR 84 million for investments in broadband infrastructure; o Bundled offers including audio-visual programmes, broadband Internet access and fixed telephony (triple-play) will be the main driver for the growth of the residential segment; o On the corporate segment, the demand for integrated services of mobile telephony, data transmissions and fixed telephony will gain importance.

IT & Telecommunications: See

o o o o www.anis.ro www.mcsi.ro/Minister www.anrcti.ro www.eurostat.com

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Education
Overview o Teaching staff by level of education, in 2007/2008 school academic year o Pre-school education: 13,5%; primary and secondary education: 50,2%; high school education: 22,3%; vocational education: 2,1%; post high school and foremen education: 0,4%; tertiary education: 11,5%; o Education by level of education from private institutions 2007/2008 (education units) o Pre-school education: 206; primary and secondary education: 32; high school education: 41; vocational and apprenticeship education: 8; post high school and foremen education: 58; tertiary education: 50; o Due to the measures taken within the reform of the national system of education, during the period 2005-08, the number of educational institutions has declined by 30,7%; o Tertiary education is continuously extending; the number of students during the period 2005-08 increased. Issues o Heavy bureaucracy; o Lack of quality, modern education o Corruption; o Ever-changing system; o Although there are more schools than necessary in rural areas, the quality of education is poor, because of the poor infrastructure and the low training level of teachers; o Most schools need new buildings, furniture, utilities and teaching materials. o Financing public and private education programs Opportunities o Due to the fact that the public system cannot cover the need for proper education, there is enough room for private investors to create educational services that meet peoples expectations; o Education has a very important role in creating professionals and people are ready to invest in their own education and in that of their children in order to become competitive on the labour market.

Education: See
o http://www.edu.ro/ o www.ise.ro

Media & Communication Industry

Overview o The communication industry in Romania is in constant development and has undergone a visible evolution since the communism era, when all media was state-owned; Romanian media is highly adaptable, innovative and very receptive to new tendencies such as new media; o Nowadays, the media market is almost completely privately owned by major Romanian businessmen or, in other cases, by major foreign media trusts whose products range from television and radio networks to publishing and new media; o The advertising and public relations industry has had a rather downward evolution in Romania during the last years. In the early 1990s, the industry was blooming, whereas nowadays, during the economic crisis, with marketing budgets being seriously cut, small communication agencies, more or less experienced, disappear one by one, leaving the market to the big names mostly international groups, such as BBDO, Leo Burnett, GMP, McCann Erickson, etc., which offer communication services; o In Romania, there are a total of about 45 advertising agencies, with about 1500 employees and an estimate turnover of EUR 300 million.

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Issues o The financial crisis has severely affected the media and advertising industry. Many magazines, advertising agencies are going bankrupt, and marketing and media budgets are being seriously cut. Opportunities o In such a turbulent time for the industry, a well planned investment can turn into an excellent o The Romanian communication environment is highly creative and innovation-oriented; it is very open to new tendencies and very experimental; it has a rather traditional audience, but the younger public is easily attracted to all that is new.

Media & Communication industry: See

o o o o o o o o o o o o http://www.gruprc.ro/ http://www.f5web.ro/ http://www.protv.ro/ http://www.mpinteractiv.ro/ http://www.mediapropictures.com/ http://intactmediagroup.ro/ http://tvr.ro http://sanomahearst.ro http://ringier.ro http://iqads.ro http://smark.ro http://standard.money.ro/articol_75703/2009__un_an_greu_pentru_publicitatea_romaneasca. html o http://www.adplayers.ro/articol/Business-6/ADVERTISING-AdPlayersREPORT-2009-RaportulAgentiilor-de-Publicitate-editia-2009-3253.html

3.5 Sectors with High Potential vs. Risky Investments

Sectors Primary
Agriculture Fishing and Fish Farming

High Potential
o o o o BIO Foods Cosmetics BIO labels Recreational tourism BIO farm fishing and fishing

Risky Investment
o High percentage of small subsistence farms Lack of specialized technology and labour force Limited resources; investment should be directed towards manufacturing Gold mining controversial in Romania due to the polluting and destructive methods used

Extractive Industry

o o

Cheaper Romanian coal Oil very low royalty rates (payment to the Gorverment) Salt mines touristic attractions

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Secondary
Manufacturing Industry
o Highly qualified and economically reasonable labour force o Increasing costs for labour force

o o o

BIO and organic foods niche Wine sector Medium-high quality textiles and consultancy services due to a long experience Receptiveness to new forms of power generation Great biomass potential High demand and prices, still above real value, especially in Bucharest; Niche markets. European Bank for Reconstruction and Development supports Romanian infrastructure development Private clinics and hospitals, as an alternative to the local public health systems Potential to break away from its traditional tourism.

Insufficient raw material

Electricity, Gas and Water

o o

Construction Estate

and

Real

o o

Textile industry in the low price segment, due to competition against Turkey, India and China Dysfunctional electricity market Difficulty in increasing household electricity tariffs to cost-covering levels High competitiveness Economic sector very much affected by the economic crisis Poor state infrastructure. of the

Tertiary
Transport Means Infrastructure and
o o

Healthcare and Pharmaceutical Industry Tourism

Bureaucracy, corruption

Major gaps between the rural areas and urban ones in terms of the social and physical infrastructure

Quaternary
IT & Telecommunications Education Media & Communication Industry
Export oriented sectors The NES 2010-2014 will focus on a limited number of sectors compared with the previous one 2005-2009, based on following criteria: o Highly qualified and economically reasonable labour force. Room for private investors to create educational services. Population is very receptive to new trends. o Urban / rural gap o Bureaucracy, corruption Highly affected by the economic crisis, in terms of traditional media

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Market and consumption trends Current export performances Supply capacity Presence and quality of resources and factors market access conditions new international rules and norms regulating international l trade or production or stimulating productionbased on renewable energy Table 6 - Selection criteria for export strategy Sectors Criteria for selection Market trends, outsourcing Endowment with factors (Large pool of Qualified work force;) Foreign language skills of the work force; Human resources with creative and innovative skills. Market trends Supply capacity (; Long tradition in manufacturing) Endowment with factors (Qualified work force Natural resources),. Market and consumption trends Endowment with factors (Qualified work force; Human resources with creative and innovative skills); Market and consumption trends Endowment with factors )Soil quality, Biodiversity Good natural conditions); Existing clusters. Market and consumption trends Endowment with factors (Qualified technical educational system; Qualified work force); Foreign investments in the sector; Existing support industries for this sector. Unique cultural and traditional values; Creative and innovative skills; National design; Multiple handicraft centres in the country. Market trends; Endowment with factors Creativity of the human resources , High schools preparing designers). Market trends; Endowment with factor Market trends; Endowment with factors

Telecommunication and Software Technology

Design driven Furniture exports

Designed driven Garments and Shoes exports Agriculture and agricultural products with focus on organic

Machine Building, Auto and means of transport and Components Cooperatives and Handicrafts and rural tourism

Professional services with focus on design, audio visual

8. 9

Plastic materials and pharmaceutical From chemical sector Electronic, electrotechnic, hardware

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As per the table new export strategy will focus on: fields with export traditions and high performance (clothing, footwear, furniture, vinification, food , arts and crafts) fields with export traditions and technological transfers of favorable FDI delocalization such as machinery, means of transport and components construction, electronics, electrotechnical, military technology; information technology and communications, as a central vector of the new economy which contributes decisively to national production chains in all export fields but which also exports a large amount of its production; In the same time, taking into consideration new trends in the world trade demand NES is targeting creation and promotion of specific export offer in fields that have large export potential when considering global imperatives related to environmental, health or hazardous emissions reduction standards such as ecoagriculture, processing raw agricultural material, the low carbon emissions industry, professional services, nanotechnology, design or those related to the capitalization of renewable energy sources; the same category fits professional services, nanotechnology, design or those technologies related to the capitalization of renewable energy sources. Sectors which are not mentioned in this document will be not neglected. As above mentioned regions may prioritise differently on specific regional high profile sectors. Secondly, the export sector may benefit form instruments and projects which are not sector oriented in trade information, competency building, market access, trade finance, quality management or branding. Special attention will be given to fields where strategic investors exist (automobile, ship construction, machine construction, electronics, IT industry). Some of them like IT or professional services are generating positive effects in the value chain of other export sectors or are attracting related industries and investments, increasing the value of production executed domestically (energy). FDI s are increasing the training level of employees in said area (nanotechnology; equipment, technology and training in the oil field) and are stimulating creation of clusters of SMEs as suppliers. In achieving increased competitiveness for priority sectors, the 2010-2014 NES has to first take into account the degree with which requirements globally accepted as favorable to a healthy business environment are met at a national level, considering the following factors: Suply side institutions; infrastructure; macroeconomic stability; health and primary education system; Business environment training and higher education systems; goods market efficiency; labour market efficiency; financial market development status; degree of technological readiness; market size. Development company business development status; innovation. More so, it has to take into consideration factors influencing the efficiency of the domestic goods and services market. The annexes present the sectoral export strategies for the strategic sectors, as developed by the NES working groups.

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The Strategic Consideration no. 4 - Optimizing Value Chains and Sectoral Priorities of Important Strategic Sectors From the point of view of national value chain size, Romania has many areas that need improvement. The difficulties identified are located in areas related to: raw materials suppliers, both as regards capacity and quality; the nature and means of obtaining competitive advantages on a local level; distribution area control of international foreign networks; degree of development of production processes; extent in which marketing and design are used and integrated in the value chain; management approach as regards reduced delegation of authority; innovation and use of modern technologies. Taking into consideration the central role of expanding and optimizing sectoral national value chains in the NES, the document aims to identify priority initiatives meant to: Improve efficiency at sector level; Minimize value losses outside of the national value chain; Add value; Create value; Distribute value. The value chain analysis, as well as other analyses for the sectors of the new strategies which were conducted by the working groups who contributed in the drafting of this document have Promoting Investments and Export Oriented FDIs The activity of foreign investors but also the increase in domestic investments have significantly contributed to the implementation and achievements of the 2005-2009 NES. Foreing investements contributed significantly to the overall export performances of the country contributing with more then one third to total exports. The presence of large investors was a determining factor in the modification of the structure of exports and its increase in volume in strategic industries such as: IT, machinery, means of transportation and components, electronics and electrotechnical. The presence of FDIs in other strategic industries such as furniture, clothing, footwear, was also significant for exports. The general objective for this consideration is to further stimulate highly value added export oriented investments in the strategic sectors of NES like automotive and means of transportation, IT&C, electronics, hardware, agriculture and food processing. For this purpose the following actions are proposed, which are meant to encourage the continuous accumulation of FDIs in Romania for the purpose of creating and retaining as much value as possible in the national value chain, but which also have effects in creating influential competitiveness poles, and ultimately effects on national competitiveness: stimulating local authorities to learn and use territorial marketing good practice models and techniques when they are promoting their regional economic offers to both the domestic and foreign business environment and to potential investors; a proactive local attitude and a public-private partnership to attract transnational companies (TNCs) to delocalize part of their value chain operations to Romania; the stimulation of supplier SME clusters around strategic investments in the automobile, machine construction, equipment, IT, electronics, furniture, construction, architecture and engineering, and design industries.

From the point of view of investors, Romania continues to remain a very attractive country, but in order to remain competitive it has to take measures to keep and attract new FDIs: - Political stability and coherent policies are of the utmost importance to this ends.

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The business climate has to be improved, especially through legal improvements and the continuation of anti-corruption actions. The administrative system has to become more transparent and efficient; to this ends it is recommended that public consultation be institutionalized, especially as regards new legislative proposals. Major and sustained infrastructure investments Better EU fund absorption Thorough budget control, coherent budget strategy and planning Creating a single point of information and support for investors, which would have resources specialized in the fiscal and legislative areas, would support the continuation, stimulation and attraction of FDIs very much. Energy and defence will be priority fields for MECMA for the future strategic cycle.

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4. Business model & business management

Drafting team: Ioana Adriana STEFAN (POPA) (ioanaadriana83@yahoo.com) Denisa VINTILESCU (denisa.v@aostaimobiliare.ro)
4.1. Introductory remarks 4.2. Setting up a business 4.3. Official representative (trading partner) 4.4. Subsidiary 4.5. Franchising 4.6. Licensing 4.7. Consortium 4.8. Management contract 4.9. Ceasing a business in Romania 4.10. Business management in Romania interview Markus Wirth

4.1. Introductory Remarks

Q&A Box
1. What are the most common types of companies in Romania? The two most popular forms of business entities in Romania are: Limited liability company (SRL) Joint stock company (SA) 2. How fast can I incorporate a company in Romania? The company registration in Romania takes maximum five working days after submitting the papers to the Trade Register Office, provided that the documents are complete and accurate. 3. Is it necessary to come personally in Romania to set up a company? No, there is no need to come personally in Romania to purchase a ready-made company, all the needed documents will be sent via courier service to your office address. 4. Do I need a Romanian shareholder or administrator? No. 5. How much is the income tax in Romania? The corporate tax in Romania is 16 % applied to the net income. 6. What are the other types of Romanian companies? Partnership (SNC) Limited Partnership (SCS) Company limited by shares (SCA) 7. What is the main benefit of opening a company in Romania? The company registration in Romania is ideal for those entrepreneurs who want to reduce their tax expenses. 8. Are there financial incentives available? Romania offers certain financial incentives to foreign investors. These may include tax breaks, easy access credit facility or particular benefits for investors seeking to create employment in disadvantaged areas. (Law no. 35/1991 regarding foreign investments in Romania)

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Measures imposed by the Romanian National Bank

o The Romanian National Bank can take safeguarding measures related to the monetary capital operations, measures which will apply to both residents and non-residents. a) Obligation of residents and non-residents to notify the Romanian National Bank with at least 10 days in advance the intention to conclude monetary capital operations on a short-time basis. b) Establishing limitations for monetary capital operations on a short-term basis which generate incoming/outgoing of capital from residents/non-residents. 1 c) Applying a commission for the initiation of transactions regarding the monetary market, etc.

4.2. Setting up a Business2

Organisation of the commercial activities
General partnership o Limited partnership o Joint Stock Company o Limited Joint Stock Company o Limited liability company o Branch o Representative Offices o Subsidiary

Nationality of Commercial Companies

A company registered under Romanian law is a company with Romanian nationality. Registration procedures o Registered capital: The registered capital of limited liability companies may not be less than RON 200 and it is divided into shares of equal value, whose value may not be less than RON 10 each. The registered capital of joint stock companies may not be less than RON 90 000. o Name and logo: The registered name of a company may contain one or several words or letters followed by an indication of the company type or its Romanian acronym. The company logo is the distinctive graphic, literal or figurative sign serving to distinguish a company from another. The logo must be distinct from other logos registered in the same Trade Register Office, for the same business, as well as from the logos of other companies acting in the market 3 where the company carries out its activity. Logo registration is optional . Registering a logo at the Commerce Registry does not offer the same protection as registering a logo as a trademark. Authorizations and permits for companies - Fire prevention and extinction authorization - Sanitary authorization - Sanitary-veterinary authorization - Environment authorization - Labour protection authorization.

Legal Obligations of Romanian companies: payment of taxes and filing of different fiscal statements with the fiscal authorities
o
1

The requirement to keep a Shareholder Registry (limited liability company)

http://www.romanianlawoffice.com/dividends-profit-romania.htm for detailed information see Attachment 23 3 http://www.musat.ro/pdf/capitoleeng2009/2.Forms%20of%20doing%20business.pdf - page 4

2

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The requirement to keep an Employee General Ledger The requirement to keep Accounting Registries - The Register-Journal; - The Inventory Book; - The Ledger; - The Fiscal Evidence Registry. As per Law no. 359/2004, the procedure of authorizing companies has been simplified. It is only the environmental permit that may require special procedures depending on the company's object of activity. Other types of authorizations are granted based on an affidavit given by the company's legal representative. o o

Establishing a Branch in Romania4

o The branch is just an extension of the parent company and therefore has no legal personality and no independence. Law no. 105/1992 on the Regulation of the Private International Law Relationship adopts the accepted international practice by which a branch is governed by the national law of its parent company. Legally, the branch has no separate status from the foreign company itself. It is merely carrying on business in Romania. The foreign company will be liable to the employees and creditors of the branch for the actions of, and debts contracted by, its managers and agents on behalf of the branch. The formation of a branch follows the same steps as that of a subsidiary, but they do not need to establish incorporation statutes: - a notarized copy of the articles of incorporation of the parent company; - evidence of registration of the parent company in its country of origin; 5 - documentation indicating the company's solvency; - Creating a branch in Romania provides the registration with the Trade Register Office, located in the area where the branch will be established. It is possible under Romanian Law to establish branches of an existing foreign company starting its business activities in Romania. The general term of a Romanian branch refers to the location where companies create secondary quarters, locations where the company sets up entities which are either only empowered to administer the Romanian companys business or only empowered to represent. Draft the following documents: - Affidavits - these documents will have a special format according to Romanian legislation; - Specimen Signature - this document must be signed by the future Directors of the company and notarized by a Notary Public; - Articles of Association and By-Laws of your future Romanian company. Subscribe the Share Capital in your name. Open the company's bank account with the bank of your choice. Please note that this account will be active only to deposit the Share Capital. Provide company office for registration purposes only. Submit the file to the Trade Register Office. Time and Subscribed Capital: - It will take 5 working days from the date the entire documentation is provided to the authorities to register the Company. - Necessary funds for the minimum Share Capital: EUR 70 for S.R.L. and EUR 25 000 Euros for S.A. - Any other cases lawfully admitted.

Procedures 6
o

o o o o o

Tribunals

Romanian Tribunals are Courts organized for each county and the Bucharest municipality. They are located in the countys capital.

4 5

for further information see Attachment 24 and 25 http://www.rolegal.com/company-branch-romania.html 6 http://www.romanianlawoffice.com/company_formation_romania.htm

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Competence of Tribunals: - As 1st Phase Courts: a) Commercial Trials of over RON 100 000 as well as trials without a non-financial object; b) Civil Trials of over RON 500 000 with certain exceptions; c) Labour Conflicts with certain exceptions; d) Administrative Contentious Trials with certain exceptions; e) Intellectual and Industrial Property Trials; f) Expropriation Trials; g) Adoption Trials; h) Trials arising from judicial errors in criminal trials; i) Requests to register forced execution of decisions from foreign Courts. nd - As 2 Phase Courts (Appeal): Appeals against 1st Phase Regional Courts decisions. rd - As 3 Phase Courts (Final Appeals): Final Appeals against decisions of Regional Courts which are not subject to 2nd Phase Appeal. Specialised Tribunals Military Courts o Romanian Regional Courts Romanian Regional Courts cover Romanian counties and Bucharests sectors. Regional Courts can contain specialized divisions per the nature and number of the cases. Their competence is for 1st Phase Courts, respectively all trials with the exceptions of those going directly to superior Courts. o The Court of International Commercial Arbitration The Court of International Commercial Arbitration has the mission to promote commercial and civil arbitrage both on a nationwide and international level and alternative solutions to litigation. Attributions of the Court include the following: - Assists the parties on their request in the Arbitrage procedure; - Elaborates models of Arbitrary Conventions and promotes them in specific business areas; - Collaborates with Arbitrary Commissions of Chambers of Commerce; - Maintains evidence of its specific practice; 7 - Collaborates with international arbitrary institutions.

In order to make sure the information is up to date, see

o o o o o o o o http://www.minind.ro/ http://www.mfinante.gov.ro/ http://www.mmuncii.ro/ro/ http://www.cdep.ro/ http://arbitration.ccir.ro/engleza/index.htm http://www.romanianlawoffice.com/courts-romania.htm http://www.rolegal.com/company-branch-romania.html http://www.romanianlawoffice.com/company_formation_romania.htm

Liability of Romanian Administrators o The administrator (Director) of the Romanian Limited Liability Company (SRL) is the main body of the company. o The Ltd. (SRL) company can have one or more administrators, shareholders or non-shareholders in the company, appointed through the Articles of Associations or the General Shareholder Assembly. o The administrators cannot receive, without authorization from the Shareholder Assembly, the mandate to be administrator in other competitor companies or in companies having the same object of activity. Administrators cannot perform the same kind of trade or another competing trade on their own behalf or in behalf of another natural person or company, under the sanction of their revoking and liability for damages.
7

http://www.romanianlawoffice.com/courts-romania.htm

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Appointing an administrator The administrator can be a natural person or a legal entity. Administrators are appointed initially by the Articles of Association and afterwards, during the current activity of the company, through a Decision of General Shareholder Assembly. This Decision shall confer one or more shareholders or non-shareholders the mandate to administer the Romanian company. Obligations and Attributions of the Romanian Administrators o The main obligations of the administrators are: - to manage the current activity of the company; - to maintain correct accounting for the company, insuring the existence and correct filing of the accounting records; - to fulfil the obligations of the companies they represent (e.g. trade regulations); - to inform the shareholders upon the companys activity; - Not to activate in any way as a competitor to the company and follow the companys interests (the administrators fidelity obligation to the company). o The administrator can perform any operation necessary to fulfil the companys activity. The administrator is able to sign documents related to the internal management of the company as well as fully represent the company in relations with third parties. o Liability of the administrators constitutes of both civil and criminal liability. Civil liability refers to liability to the company and shareholders, third parties and in case of companys bankruptcy. Criminal liability refers to cases of fraudulent management, breach of trust, manufacture and use of false documentation, fraud etc. Persons having been convicted of such crimes cannot be appointed administrators and, if currently being administrators, shall lose their position.8 Human Resources Should one intend to employ personnel, one must take into account the following information: o Employment legislation and other norms regarding employment procedures/regulations o Labour institutions and bodies o The Individual and Collective Labour Agreements Employing Romanian personnel implies signing an Individual Labour Agreement and depending on certain factors, a Collective Labour Agreement. o The Individual Labour Agreement is a specially regulated agreement concluded in written form with each respective employee. This type of agreement is formed of 2 parts, respectively: - A mandatory part which contains the rights and obligations expressly stipulated by the law in effect and - A conventional part which contains the rights and obligations established by the parties (e.g.: confidentiality and the non-competitiveness). An Individual Labour Agreement shall contain clauses related to the following issues: - Duration of Contract The rule is to conclude the Labour Agreement for an undetermined period of time. However, signing Agreements for determined periods of time can be done as an exception; - Working Location City and Unit where the actual work takes place; - Type of Work, - Working Conditions, - Salary, - Working Hours. Besides the above mentioned, the Individual Labour Agreement can contain specific clauses related to professional formation of employees, mobility, confidentiality etc. The Individual Labour Agreement must be registered by the employer with the Romanian Local Labour Inspectorate a day before the employee begins his/her employment.
8

http://www.romanianlawoffice.com/administrators-directors-romania.htm

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Collective Labour Agreement If an employer has at least or more than 21 employees, then the employer must start negotiations for the signing of the Collective Labour Agreement with the employees for determining working conditions, payment and other rights and obligations resulted from labour relationships. The clauses stipulated by the this Labour Agreement are regarded as minimal when compared to those contained in the Individual Labour Agreement, in other words, the employees rights cannot be established at an inferior level than the one in the Collective Agreement. This type of agreement concluded at Unit level must be registered with the Directorate of Labour, Social Solidarity and Family in the respective county. Collective Labour Agreements concluded at a higher level (groups of Units, activity branches or 9 national level) shall be registered with the Ministry of Labour, Social Solidarity and Family.

Dismissal of Romanian Employees Labour relations can be terminated in a lawful manner (retirement, certain interdictions, etc.), resignation or dismissal by the employer. The dismissal performed by the employer can be disposed for reasons related to the employee or other unrelated reasons. The employer is able to dismiss for reasons related to the respective employee in the following situations: - when the employee has gravely or repeatedly breached the regulations of labour discipline established through the Individual or Collective Labour Agreements or internal regulations, as disciplinary sanction; - when the employee is arrested for a period of time exceeding 30 days; - when a medical authority decides that the employee is physically/mentally unfit for the position; - when the employee is not professionally trained for the position; - When the employee fulfils all conditions for a pension but has not requested retirement. Dismissal for reasons unrelated to the employee can be disposed in the case of dissolving the position occupied by the respective employee. Collective Dismissal means dismissal of personnel in a period of 30 days, for reasons not pertaining to the employee, of a number of: - at least 10 employees, if the employer has more than 20 and less than 100 employees; - at least 10% of employees if the employer has more than 100 and less than 300 employees; - At least 30 employees if more than 300 employees. It is important to be noted that the employer has the obligation to provide all relevant information and to notify the syndicates or employees representatives with regard to employees total number and categories, reasons for the upcoming dismissals, criteria, and measures to limit dismissals, etc. For both individual and collective dismissals, the employer shall not be able to employ new personnel for the same positions for a period of 9 months, without written notifications to the dismissed personnel for re-hiring. Once notified, these employees will have 10 days to express their interest for the positions. The employees dismissed for their own physical or mental unfitness as well as persons not corresponding professionally to the position as well as those dismissed for motives unrelated to

the employee, beneficiate from a notification period of at least 15 days.10

Main legislation (Law, Government Decision) o Labour Code or Law no. 53/2003 o Law no. 48 regarding workplace discrimination o COR (the Romanian Occupations Code) o The Civil Code o Law no. 31/1990 on Trade companies, republished, subsequently amended and supplemented ("Law no. 31/1990");
9

10

http://www.romanianlawoffice.com/labor-law-romania.htm http://www.romanianlawoffice.com/dismissal-discharge-employees-romania.htm

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o o o

o o o o

Law no. 26/1990 on Trade Register Office, republished ("Law no. 26/1990"); Decree-Law no. 122/1990 on the authorization and operation, in Romania, of representative offices of foreign entities ("Decree-Law no. 122/1990"); Methodological Norms no. 608/773/1998 on Trade Register Office keeping and registration rules, issued by the Chamber of Commerce and Industry and the Ministry of Justice ("Norm no. 608/733/1998"); Government Emergency Ordinance no. 76/2001 on the simplification of administrative formalities required for the registration and authorization of corporate entities operation, republished as subsequently amended and supplemented ("GEO no. 76/2001"); Government Decision no. 573/2002 on the approval of procedures for the corporate entities operation authorization ("GD no. 573/2002"); Law no. 507/2002 on the organization and carrying out of economic activities by individuals ("Law no. 507/2002"); Government Decision no. 161/2006 regarding the employee general ledger; The Accounting Law no. 82/1991 (Accounting Law) republished in 2005 and amended by Law no. 259/2007.

In order to make sure the information is up to date, see

o o www.onrc.ro The National Trade Register Office www.aneir-cpce.ro Foreign Trade Promotion Centre IR

4.3. Official representative

Importing and Exporting in Romania
o The activity of import-export in Romania can be performed in most cases without any measure of control or supervision. This is a particular aspect of the international commercial liberty principle in Romania. The import-export of certain goods is however subject to some measures of control, if regarded as general interest of the national economy. These are exceptions to the general rule, and as a result, if a certain operation is not explicitly categorized as being under supervision, then it is regarded as being allowed to be performed freely. In the cases where measures of control and supervision are imposed, there are 2 types of approvals which can be granted: licenses and other authorizations. In some cases, internal regulations impose the issuance from public institutions of other authorizations (different from licenses) for cross-border transit of certain categories of merchandise. The Romanian legislation requires, in certain special situations, import-export authorizations for commerce with the following type of products: animal and related products; plants and related products; drugs; alimentary and agricultural products; elements of the human body, medical and pharmaceutical products; guns, ammunition, toxic and explosive materials and nuclear products and technologies; waste admitted for import-export, products dangerous for the population and environment; goods part of the national cultural patrimony; tobacco and alcohol; genetically modified organisms; chemical products; precious metals and gems, etc. Granting of the authorization will be denied in the following situations: the legal entity is not in compliance with the legal provisions, the merchandise is subject to control and supervision from the Romanian authorities (or the authorities of the country of destination) and if the conditions for the 11 authorization are not fulfilled, the merchandise is forbidden to be imported or exported etc. Romanian Company Law no. 31/1990

Other Authorizations
o o

Main legislation (Law, Government Decision)

o

11

http://www.romanianlawoffice.com/import-export-romania.htm

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4.4. Subsidiary
o An overseas corporation can very well do business in Romania via a subsidiary. The subsidiary has a legal personality and is regarded as a Romanian entity. According to the Law no.31/1990, a Romanian subsidiary of a foreign company is a Romanian legal person and, consequently, it is subject to Romanian laws. It is liable, on its own behalf, for the actions carried out. It is accountable, on its own part, for the actions taken on. The Romanian subsidiary has its own patrimony and bank account. In practice, subsidiaries are commissioned following the same steps as the registration of companies, and registering the subsidiary with the National Trade Register Office. The formation of a subsidiary must comply with the minimum capital requirements under the Romanian Company Law no. 12 31/1990.

4.5. Franchising
Situated in a continuous expansion in Romania, the franchise is regarded as a legal gateway that allows "copying" a successful business. o Legal framework Within the Romanian Law system the legal frame which must be followed when drawing up the franchise contract is represented by the Government Decision no. 52/1997 regarding the legal regime of the franchise, approved with modifications by Law no. 79 of 9 April 1998, republished in the Official Gazette as Law no. 180 of 14 May 1998.

The franchise contract The law does not define the franchise contract, but only the franchise as a trading technique. The franchise contract can be defined as the contract by which the franchiser binds to provide the franchisor a trade name, so that the franchisor, in exchange of a royalty payment, be able to exploit or develop a business, a product, a technology or a service under the franchisers mark. The franchiser only transmits the usage right of the client commercial signs (trade name, trade marks and know-how) and not the ownership right of the aforementioned. Following the laws structure, there are three contract phases 1. The pre-contract phase 2. The contract phase 3. The post-contract phase

4.6. Licensing13
Permits required prior to company incorporation
Below are listed some important types of Romanian companies which require prior permits and authorisations in order to be incorporated. Please note that there are also other types of commercial activities which require obtaining permits from the authorities subsequent to their formation: o Banking activities Credit Institutions, Romanian legal entities, can be constituted and are able to function only on the basis of an authorization issued by the Romanian National Bank. The authorization granted is valid for an undetermined period and cannot be transferred to another entity. Insurance and insurance brokerage The Commission of Insurance Supervising is able to grant authorization for the companies activating in the insurance/re-insurance market, in the case of cumulative fulfilment of the following conditions: http://www.romania-company.com/romanian-branch.php http://www.romanianlawoffice.com/permit-license-company-romania.htm

12 13

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Procedure to cover all risks in one class of activity and in the situation which the insurance company only wishes to cover certain risks included in the respective class, a feasibility study must be drafted which must contain the following information and documents: a) The nature of the legal engagements or risks which the insurer wants to cover. b) The calculations methods used for the establishment of the technical reserves. c) The principles of the re-insurance program and the lists with the re-insurers as per the provisions of the norms issued for the application of the Law. d) The components of the Safety Fund, as per the legal norms. e) The financial resources to cover the expenses and resources of the insurer for granting the assistance; f) The first three financial exercises, the feasibility study which will also contain: - The estimation of the expenses pertaining to the executive management and to management positions specific to the insurance area; - Estimation of bonuses and damages; - Budget of income and expenses; - Estimation of the financial resources necessary to the constitution of technical reserves and margin of solvency; - An information technology system adequate for the optimal insurance activity per the information required at point 1, as per the norms regarding the authorization of the insurers, issued for the application of the Law.

IMPORTANT: For obtaining the authorization to function, as well as at any time during the actual activity, an insurer or a re-insurer must be in working relations with at least one actuary and in the case which the volume of activity requires the employment of 2 or more actuaries. An insurer cannot be registered in the Romanian Trade Register Office without the prior permission for registration from the Insurance Supervision Commission. o Companies with activities in the administration of the National Commission of Movable Valuables (CNVM) The Law regulates the formation and functioning of the financial instruments market, with the specific institutions and operations as well as the collective placement bodies for the purpose of the mobilization of the financial resources through investment in financial instruments. IMPORTANT: The National Commission of Movable Valuables (CNVM) is the competent authority which applies the provisions of the Law through the prerogatives established in its governing regulations. The financial investments regulated by the Law are: 1. Main Services a) The takeover and transmittance of the orders received from investors related to one or more financial instruments; b) The execution of the orders related to one or more financial instruments, other than in own name; c) Transaction of financial instruments in own name; d) Administration of the portfolios of the investors individual accounts, on a discretionary basis, respecting the mandate given by the latter in the case when these portfolios include one or more financial instruments; e) The subscription of financial instruments on the basis of a firm arrangement and/or placement of financial instruments. 2. Related Services a) Custody and administration of financial instruments; b) Renting of safety boxes; c) Granting of credits or loans of financial instruments to an investor in certain conditions; d) Consultancy given to legal entities in regards to any matter related to the capital structure, industrial strategy, as well as consultancy and services related to company mergers and acquisitions;

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e) Other services related to the subscription of financial instruments; f) Investment consulting regarding financial instruments; g) Currency exchange related to financial investment. Companies with the following activities: Retail Sale Import Export Producing of Firearms and ammunition The companies which wish to activate in this field are required to apply for a permit from the central or local structure of the General Inspectorate of the Romanian Police. In order to obtain the permit mentioned above, the persons interested will file with the Romanian police a request with the following documents attached: a) For all future shareholders and administrators (directors) ID and certificates of criminal records; b) The persons mentioned on point a) whose activity will imply actual access to arms and ammunition, must provide the following documents: (i) Medical approval showing that the person in question can own, carry and use arms and ammunition, issued with no more than 12 months before the request is filed. (ii) A medical certificate issued by specialized unit with no more than 6 months before the filing of the request, showing that the person is not suffering from any of the conditions making impossible the authorization to own, carry and use firearms and lethal ammunition. (iii) A certificate showing that the person in question has finished a practical and theoretical training course in the field of arms and ammunition. Romanian security and protection companies In order to obtain the license to function, the following documents have to be provided to the police: a) Approval from the Romanian police related to the object of activity, name of the company, approval of the shareholder and management personnel obtained before the registration of the company with the Trade Register Office. b) The verifications for this approval will be extended upon the husband, wife or person cohabitating with the associate(s) and the management, to find out more about their activities, their interactions with the society and their criminal records. Legal depositions: Romanian Company Law no. 31/1990 and the CAEN Romanian Code (Classification of the Activities in the National Economy)

4.7. Consortium
A consortium represents a short-term agreement in which several firms (from the same or different industry sectors or countries) pool their financial and human resources to undertake a large project that benefits all members of the group. A consortium lasts for a period that is usually shorter than that of a syndicate. Domestic legislation allows for the conclusion of a joint venture agreement (in Romanian contract de asociere in participatiune). Under this agreement, parties act together for the accomplishment of a common business goal. This form of doing business in Romania does not create a legal entity. Generally, one party is in charge of the bookkeeping of the joint venture.

4.8. Managing contracts14

Management of personnel Accounting
14

For further information, see the information in Attachment 26 Signing contracts in Romania

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Marketing services Training Main legislations Law no. 66 of 7 October 1993 Labour Code no. 53/2003 The Civil Code

In order to make sure the information is up to date, see

o o o o o o o o http://www.gov.ro/ The National Union of Public Notaries from Romania: http://www.uniuneanotarilor.ro/ Chamber of Commerce and Industry of Romania: http://www.ccir.ro/ The Court of Accounts: http://www.rcc.ro/ The Romanian Ministry of Justice: http://www.just.ro/ The Official Website of the Romanian Presidency: http://www.presidency.ro/?lang=ro National Trade Register Office: http://www.onrc.ro/ The information centre of the European Commission in Romania: http://www.infoeuropa.ro

4.9. Ceasing a business in Romania15

A business in Romania can be dissolved in the following ways: Dissolution, Winding, and Bankruptcy o A Romanian company can be dissolved through the following methods: Exceeding the limited timeframe for which the company had been initially incorporated for; Impossibility to fulfil the companys object of activity; Declaring annulment of the company; Decision of the General Shareholder Assembly; Court Decision, upon the request of each associate for well-founded reasons as well as conflicts between associates resulting in cease of companys activity; Companys bankruptcy; Other reasons stipulated by Law or the Articles of Association. In certain cases, the shareholders of SRL companies are able to decide at the

moment of dissolving the company upon the winding method of the company, when agreeing upon the assignment and winding of the companys patrimony and when insuring payment of debt to potential creditors. On the date when the Court decision to dissolve the company is issued, the entity enters winding, as per the provisions of the Law and a winder has to be either hired by the company or appointed by the Judge. Main legislation: Romanian Company Law no. 31/1990

15

http://www.romanianlawoffice.com/dissolving-romanian-company.htm

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5. Choosing a local partner

Drafting team Alexandru Cosmin TEODORESCU (acteodorescu@gmail.com) Roxana Andreea SANDU (roxana_sandu04@yahoo.com) 5.1 Introductory remarks 5.2 Cross-cultural issues 5.3 Suggestions for a safe choice of partners 5.4 Risk and risk assessment 5.5 Experiences

5.1 Introductory remarks

The first question that comes to mind is Why should a foreign businessman look for a Romanian partner? and surprisingly enough the answer is not that hard to find. First of all, Romania, as a country, represents a point of interest when compared to its neighbours, considering the market size and the power of purchase. If we focus on Romanian businessman profile we will find that the advantages outweigh the disadvantages: starting with their professional experience, especially technical skills, the willingness to become successful entrepreneurs, their innate affinity for foreign languages and going as far as capacity to work hard in order towards profitable goals.

5.2 Cross-cultural issues

The official language of Romania is Romanian (spoken by 90% of the population), while Hungarian, Romani and German are spoken by minorities. Romania is a secular state, therefore it does not have a national religion and all religions have the same legal status. However, from a cultural and ceremonial point of view, the Christian Orthodox religion may be considered the dominating one. The main religions and denominations in Romania are Christian: Romanian Orthodox (88%), Greek-Catholic, RomanCatholic and Protestant. Other denominations (Islam, Judaism) and atheists are under 1%. According to the Culture in the Workplace Questionnaire, the landscape looks as follows. Individualism o This dimension focuses on the degree to which a society reinforces individual or collective achievement and interpersonal relationships. The Romanian culture encourages people to have an individual style. This is an archaic feature that the Romanian people have preserved to the present day. All of Romanias traditional cultural background is strongly related to this. Power Distance o This measure the extent to which subordinates accept that power is unequally distributed in an institution or organisation. In the case of Romania, one can find an accepted hierarchy which is taught and put into practice starting from school. This is considered as the old-school style dating back to the communist era, that Romanians strive to overcome. Certainty o This dimension describes the level of acceptance for certainty or ambiguity within a culture. Romanians do not accept changes easily. It is safe to say that it is a structure-oriented society. This can be explained by the fact that the Romanian nation is very old and has gone through numerous wars, political turmoil and economic changes.

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Achievement o This dimension measures the degree to which the society values tasks and work or relationships 16 and quality of life. In the case of Romania, studies have shown that it is a task-oriented society. This conclusion is easily explained by the fact that Romania exhibited strong dictatorial leaderships throughout time. High context environment Romanians belongs to a high context type o society where informal, contextual communication is important. Social capital Romanians belong to the low trust type of society where capacity of trustful association is hard to achieve between non family members. Therefore there is lack of capacity to associate and to trust, a lack ofsocial capital which increases the transaction costs Time Orientation o This dimension reveals the extent to which the members of a society can adapt themselves to reach a desirable future or, based on past experiences, they focus on fulfilling the present needs. In the case of the Romanian society, one will discover the focus on fulfilling present needs and targeting especially short term results and goals

The political dimension

In the past years Romania has become an attraction for foreign investors. There are many reasons for this, but at the same time this interest has yet to materialise in the figures that statistics show. We cannot yet determine the exact causes for this phenomenon, but we can present some of the aspects of todays reality: PROs Flat tax 16% Selling products in the EU without paying taxes Port to the Black Sea Properties at reasonable prices A market of 21.5 million people Well trained people willing to perform CONs Bureaucracy Political instability Corruption Incoherent changing of the Fiscal Code Weak infrastructure Unforeseen new laws

The psychological dimension

The Romanian businessmen are not that different from other businessmen. But, at the same time, they have their particularities that have to be mentioned: Points of specificity for the Romanian businessmen: o o o o o Dress code (mostly formal mainly for old managers) The handshake The exchange of business cards The promptitude of the responses to their requests Pays attention to status symbols and to the context during negotiations

Other points to consider while doing business with Romanians: o Romanians have an innate talent for learning foreign languages to the extent of understanding their interlocutors body language and mimics o Romanians have a great willingness to learn and will steal anything as copy their auto locates (e.g.: the way you negotiate)

16

Ingrid Aioanei, (2006) "Leadership in Romania", Journal of Organizational Change Management, Vol. 19 Iss: 6, pp. 705 - 712

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o o o o

Romanians will put in 110% dedication in any project Romanians will ask from you more than you are willing to pay (they love to negotiate a bargain) To close a deal in their terms, Romanians will make promises they cannot always keep (sometimes more than you ask for) The leadership styles in Romanian companies differ from the ones in Western Companies. It is widely known the rule that any decision can only be taken by the owner/managing director of the company, this meaning that the hierarchy is very strong.

Considering the above, we could try to draw the portrait of the ideal Romanian businessman as follows: He would have to be Christian Orthodox. He should be able to speak at least perfect Romanian and English, with at least one MBA degree. He should have an intermediary position in an international company, with some connections in the political sphere (that are not publicly admitted). He should have a strong character, but at the same time he must be willing to accept outside ideas meant to help his business.

Culture and beliefs: See

o o o o o www.europa.eu www.mimmc.ro Culture in The Workplace Questionnaire Romanian papers Leadership in Romania, Ingrid Aioanei, 2006

5.3. Suggestions for a safe choice of partners

Potential / interested partners When it comes to choosing a local partner in Romania, a foreign businessman has several options: Asking own trusted contacts for a recommendation; Contracting the services of a consultancy company; Prospecting the market himself, and contacting the persons from his area of interest that may be keen on developing a partnership; Attending forums and conferences organized by the Chamber of Commerce and Industry of Romania (CCIR) or by bilateral Chambers of Commerce, such as the Chamber of Commerce Switzerland Romania; Searching through business opportunities pointed out at: - CCIR's National Business Information Centre - CCIR's Business Online service - the Foreign Trade Department of the Ministry of Small and Medium Enterprises, Commerce and Business Environment - the different confederations and patronages Posting his own offer at CCIR; Requiring assistance from one of the European Commissions Enterprise Europe Network partners.

Potential / Interested partners : See

o o o www.ccir.ro The Chamber of Commerce and Industry of Romania www.dce.gov.ro The Foreign Trade Department of the Ministry of Small and Medium Enterprises, Commerce and Business Environment www.enterprise-europe-network.ec.europa.eu Enterprise Europe Network

Information needed and required After establishing contact with one or several potential business partners, the foreign businessman should proceed with a background check of the candidate and his current business (es). Aspects that should be verified:

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The businesses experience on the market The products/services offered and their prices The human resource fluctuation The local and international competition The business relations with other partners The legal situation of the company and its administrator - on the website of the Ministry of the Public Finance; this shows information about the balance sheet - turnover, profits (where one must pay attention to the local practice of not reporting all profits in order to avoid taxation), assets, debts and others, as well as on the website of the National Trade Register Office (against a small fee) - that shows even more information The list of insolvent companies on the electronic version of the Insolvency Procedures Bulletin, edited by the National Trade Register Office The debts to the state budget, social state insurance, unemployment government tax and health government tax - on the website of the National Agency of Fiscal Administration The list of inactive as well as the list of reactivated fiscal taxpayers - on the website of the National Agency of Fiscal Administration The list of past payment incidents - if any - at any local bank's Payment Incident Register Private websites focusing on unmasking business felonies, such as www.antitepari.ro or www.bonitate.ro. However, they rely mostly on reports done by other parties and therefore they should not be used as unique source of information. The litigations where the potential business partner is the party sued and asked to pay a certain amount of money or he is demanding his insolvency. These lawsuits are normally filed st in a court of law in the proximity of the culprit. This can be the 1 phase court (in the first nd resort) or the 2 phase court (for the appeal). Therefore it is advisable to search the lawsuits in both courts of law. The search can be conducted on the website of the Ministry of Justice. One should bear in mind however that the mere existence of litigation is not proof of guilt. By conducting such an investigation one can find out the potential collaborator's background and choose to continue or cease the relations with a partner that is close to bankruptcy or who only pays his debts when he is brought to court to do so, or who is generally not doing correct, legal business.

Information needed and required : See

o o o o o o o o www.mfinante.ro Ministry of the Public Finance recom.onrc.ro The National Trade Register Office www.buletinulinsolventei.ro The Insolvency Procedures Bulletin www.anaf.ro The National Agency of Fiscal Administration www.bnr.ro The National Bank of Romania portal.just.ro the Ministry of Justice www.antitepari.ro www.bonitate.ro

Finding the appropriate information sources Whenever possible, it is recommended to use official sources of information, such as the websites of the different Romanian Ministries, websites of International Organizations (ITC, WTO, Eurostat etc.). The information found on unofficial websites, newspapers and magazines, as well as the opinion of different local businessmen may be very interesting, but also highly subjective and therefore should be considered and used cautiously. It is advisable to use the services of a consultancy company that is locally represented. When contracting such services, one can choose between: big international companies, such as PWC, EY, KPMG, Deloitte, etc. small & medium local companies If the business is large, then it may be necessary to go with one of the Big 4. Otherwise, it might be better to choose a local consultancy company: not only because of the cost of the operation, but also because the local consultant may have a better grasp of the local customs and procedures.

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The best way to find a good consultancy company is to ask for reference from business partners, clients, suppliers who have conducted business in Romania at some point. If this is not possible, one can turn to the Romanian Management Consultants Association (AMCOR). All members of AMCOR are Romanian consultancy companies that specialise in management consulting. A full list can be found here with links to each company and its contact details. Additionally, one may also get assistance from the Romanian Agency for Foreign Investment.

Finding the appropriate information sources : See

o o o o o o www.pwc.com/RO PricewaterhouseCoopers Romania www.ernst&young.ro Ernst&Young Romania www.kpmg.ro KPMG Romania www.deloitte.com Deloitte www.amcor.ro The Romanian Management Consultants Association www.arisinvest.ro the Romanian Agency for Foreign Investment

5.4 Risks and risk assessment

Regardless of the country that he wants to invest in, the foreign businessman is aware of the side he might have to assure. In most cases he can find help in consultancy firms, but at the same time he can seek the advice of someone that has already taken this step.

What are the risks to be considered when entering the Romanian market with / without a local partner?
Enter the market with a local partner: o He is familiar with the laws of their country and could take advantage of the fact that the foreign businessman does not know all the details. Enter the market without a local partner o Getting lost in the bureaucracy o Necessity to learn the customers preferences by hiring a specialised company (to avoid losing money and time)

Who can help deal with these risks?

As afore mentioned, there are several ways of dealing with these risks. For instance: Hire a consultancy company that you know and worked with before: most likely it will be from your own country and you will not have the certainty that it knows the laws of Romania Hire a consultancy company from Romania: you have never worked with it before, but it is familiar with the local laws and market. Hire a law firm: can help from a legal point of view, but not from an economic point of view Conduct your own research (yourself or your employees): the results will probably be the same as in the first case Take the advice of a business partner that already conducts a successful business in Romania: if he is in the same market he might give you wrong information and if he works in another market he may not be capable of drawing a realistic picture of Romania.

Risk and risk assessment: See

o o www.ey.com www.minind.ro

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5.5 Experiences
For having a concrete input, we applied a short questionnaire to the Romanian Economic Associations. The research was developed in July-August 2010 having as main sample all the companies members of the Romanian Economic Associations. The response rate to the research was 10%, which is normal in this period of the year (summer holiday). The main information is revealed by the following questions: 1. Please specify the difficulties you encounter in managing your business. a. Poor infrastructure. b. Poor brand image and promotion. c. Difficulties in accessing the European Founds. d. Frequent price increase of marsh gas and energy. e. Difficulties in re-qualifying current human resources skills. f. The migration out the country of the high skilled human resources. 2. Please specify the first needs you have in order to manage successfully your business: a. Legislative stability b. Accessible loans to various banks c. Eliminate the tax on the profit coming from reinvestments. d. Encouraging the development of new techniques for increasing energetical efficiency. e. Decreasing the price of march gas by increasing the weight of the national march gas in the light of the reduction of the imported quantity. f. Promoting the exporting products with public financial support.

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6. Errors and traps

Drafting team Hanelore Brighite BENING (hanicutzu@yahoo.com) Elena Monica PETRESCU (elena_monica_petrescu@yahoo.com) 6.1 Introductory remarks 6.2 Cultural and behavioural gaps 6.3 The corruption Issue

6.1. Introductory remarks

Errors can be seen as actions that lead to failure because of disregard of some crucial elements and they are neither controlled nor intended. Causes of this type of actions lay in cultural differences, unknown specific characteristics of people and local market. On the other hand, traps are elements, usually barely legal that create to the unadvised person a turn from the course of its actions. Such traps regard the incompetence of certain public servants or other collaborators, the all-level manipulation or other phenomena like corruption. This type of elements affect local activities in every society, but it is even worse when creating translational partnerships.

6.2. Cultural and behavioural gaps

The general cultural heritage
Romanians perceive themselves as Europeans. There is a strong belief that before 1944 Romania was very well integrated into the general European practice of culture and politics. It is generally considered that between 1964 and 1972-1975, the Ceausescu regime was relatively open towards the West. This historical window was a good opportunity to create the actual leading intelligentsia and to recall some of the major interwar Romanian heritage.

The communist and cultural heritage

Tendency towards inefficient bureaucracy : o In the EU list of countries with the most taxes per year, Romania ranked second with a number of 113 taxes (PriceWaterhouseCoopers Romania); o Regarding the time spent on paying these taxes per year, Romania totals 202 hours, while the European average is 232 (see Attachment 27); o Extremely dynamic changes in regulations of rules and procedures after 1989; Weakness of leadership and lack of the true management social techniques. o Workers are waiting to be managed; o Employers do not know how or do not have the culture of trust enough to empower their managers and workers with true leadership or autonomous self-governance powers. Corruption o There is a relative well spread belief that corruption increased after 1989. (See Chapter 6.3)

Prejudice and Discrimination

Broadly, Romanian society is still a conservative society. Here are some figures on this aspect:

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The main causes for discrimination in Romanian society are: 1. Ethnicity (64%); 2. Disabilities (53%); 3. Sexual orientation (50%) (2006 Euro Barometer). However the discrimination sentiment is not too powerful in Romania in comparison with other countries worldwide. Gender o Romania is within the European average figures (Metro Media Transylvania), women being well represented (by number) on the labour market since communism; o Although the situation improved in the last years, the presence of women is still poor in the Government: 12% of Ministers and 13.3% of state secretaries are women (FNUP and MMFPS study); 72% of the population (2006 Euro Barometer) considered necessary that women should be more present in management positions (the European average is 77%) o Main regulation: Law no. 202/2002 regarding gender equality. Religion o 85% of population declare themselves Orthodox, followed by the Roman-Catholics, Reformed and Pentecostals. o There are no declared tensions among Romanians caused by religious orientation; Ethnic o The largest ethnic groups in Romania are: Romanians 89.5%, Hungarians 6.6% and Roma 2.5% (General Survey, 2002); o There are some tensions over the systematic political action of UDMR (the Democratic Union of the Magyars in Romania) to segregate labour and education according to ethnicity in Harghita and Covasna counties; o Roma people are the most discriminated ethnic group, also because of the international prejudices against them that affect the image of Romania; Sexual orientation o Homosexuality is not well accepted in Romania, figures being over the EU average (58% of Romanians considered homosexuality as inappropriate behaviour whereas the EU average was 48% - Special Euro Barometer 2007). Homosexuality is seen in opposition with the general values of family and Christianity. Issues: Romania had a well established social welfare system before 1989, like any European communist country, but with a lot of shortcomings, especially in the social care system. After 1990 the system collapsed. New radical changes came fast (for example the Pension Law) and future investors should be aware of the rapid changes in the Social Welfare sector.

Cultural and behavioural gaps: See

o o o o o o o o o o o http://www.capital.ro/articol/romania-pe-al-doilea-loc-din-ue-la-birocratie-pentru-plataimpozitelor-128370.html http://www.wall-street.ro/articol/Economie/74562/ING-Romania-Birocratia-excesivablocheaza-finantarea-proiectelor-din-sectorul-energetic.html http://www.capital.ro/articol/birocratia-ingreuneaza-accesul-ong-urilor-la-bani-europeni129323.html http://ebooks.unibuc.ro/psihologie/rascanu/6-2.htm http://eu.gallup.com FNUP and MMFPS study on http://www.9am.ro/stiri-revistapresei/Social/12920/Discriminare-pe-baza-de-sex-Femeile-din-Romania-au-salarii-submedia-nationala.html http://www.balkan-monitor.eu http://www.mmt.ro/Cercetari/discriminare%202004.pdf http://www.insse.ro http://ec.europa.eu/ http://ro-gateway.ro/node/193598/comnews/item?item_id=313195

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6.3. The corruption issue

General overview
Romania ranks 71 out of 180 countries in the Corruption Perception Index (See Attachment 28) Highest level of corruption perceived among EU countries: Romania shares the last place with Bulgaria and Greece in the EU, according to the Corruption Perceptions Index (3.8 points at the end of 2009)
st 17

Enabling factors
Lack of proper control from the authorities; Lack of transparency from the Romanian authorities; Poverty and scarcity of goods;

Combating corruption
Legislation o Law no. 78/2000 on preventing, discovering and sanctioning of corruption acts; o Decision no. 43/2002 regarding the National Anticorruption Directorate o Law no. 365/2004 regarding the Ratification of the United Nations Convention against Corruption; o 52/2003 and 544/2001 regarding decisional transparency; o Law No. 161/2005 establishing The Anti-Corruption General Directorate; o Law no. 54/2006 establishing The National Anticorruption Directorate; o Law no. 144/2007 creating The National Agency for Integrity. Institutions o National Anticorruption Directorate (NAD) Set up on the 1 September 2002; Carries out criminal investigation and prosecution for the offences stipulated in Law no. 78/2000 mainly for high level corruption; 18 Reports show a growing rate of sentences in corruption cases investigated by the NAD; o Anti-Corruption General Directorate (AGD) Established by Law No. 161/2005 on regulating certain measures for preventing and combating corruption within the Ministry of Interior and Administration Has the ability to : - prevent, provide information about/and to combat corruption offences, connected to corruption or directly linked to corruption offences of the MIA personnel; - receive citizens complaints on the alleged corruption offences of the MIA personnel; - perform judicial police activities, according to law; - organize and perform activities for testing the professional integrity of the ministry personnel; o The National Agency for Integrity Founded in 2007 made Romania the first European country to have an institution specialised in the verification of assets, conflicts of interest and incompatibilities; Verified by The National Council of Integrity. Campaigns o Several campaigns were launched in Romania in order to raise awareness among citizens about the corruption issue: Coalition for a Clean Parliament - before the 2004 elections, with the intention to expose the candidates involved in corruption scandals;

17

Corruption Perception Index: a way of ranking countries by the perceived existence of corruption among officials and politicians. The country with the highest score is perceived as the least corrupt. 18 REPORT on the Activity of the National Anticorruption Directorate carried out in 2008 on http://www.pna.ro/

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Dont bribe, a campaign supported by Transparency International designed to increase the awareness level of people towards the problems generated by corruption.

Perspectives

Since 2000 important steps were made by Romania in order to overcome the corruption issue, especially in order to comply with the European norms. The 2009 report of Transparency International shows positive as well as negative aspects: An increase in the number of investigations completed and in the importance of individuals investigated by the AGD. The activity of NAD continued and was able to gain more trust among population; The lack of evaluation of the National Council of Integrity activities; The Government, because of the financial crisis, reduced the level of transparency in using public funds;

As a commitment of the new mandate of President Traian Basescu, the removal of politicians immunity clause is to be expected. Overall Romania gained the necessary means to fight against corruption and stays on an ascending course.

Risks

Unfair competition especially in several important sectors (See Chapter 3), mostly due to oligopoly situations generated by privatizations with strong state owned foreign entities (in Telecom, Gas and Electricity, Water, Transportation and Banking) Difficulty in penetrating the Romanian market because of already consolidated coalitions between local businessmen and decision makers at political level; Creating long term trust, communication and commitment

Corruption issue: See

o o o o o o o o o o o http://www.transparency.org.ro http://www.coe.int/t/dghl/monitoring/greco/general/about_en.asp http://www.nobribes.org/ http://www.mai-dga.ro http://www.integritate.eu/ http://www.fundatiaithaka.org http://www.just.ro/ http://www.freedomhouse.ro http://www.clr.ro http://www.guv.ro http://www.onpcsb.ro

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7. UBCG University of Bucharest Consulting Group

7.1. The team 7.2. UBCGs network 7.3. UBCGs competencies 7.4. Business tools 7.5. Services offered 7.6. Website

7.1 The team

UBCG includes: Group Manager Diana-Maria GEORGESCU Production Manager Alexandru Cosmin TEODORESCU Sales Manager Cosmin George VLAD and Ioana Maria DRAGOMIR Marketing and PR Manager Andra IOANA Translation Coordination Ioana Maria DRAGOMIR Collaborators: o Elena Monica PETRESCU o Mariana UDREA o Roxana Andreea SANDU

7.2 UBCGs network & support

UBCGs network (main partners) University of Bucharest Haute cole de gestion (HEG-HSW Fribourg) Foreign Trade Department, Ministry of Economy, Commerce and Business Environment, Romania Chamber of Commerce Switzerland - Romania (CCE-R) OSEC, Zrich ITC, Geneva

UBCGs support (main direct supports) Jean-Daniel CLAVEL (PhD Professor, Clavel Consulting Switzerland) Paul MEYER (PhD Professor, School of Business Administration Fribourg, Switzerland) Rico Johannes Baldegger (PhD Professor, School of Business Administration Fribourg, Switzerland) Mathias Jaques ROSSI (PhD Professor, School of Business Administration Fribourg, Switzerland) Thomas STRAUB (PhD Professor, School of Business Administration Fribourg, Switzerland) Mihai KORKA (PhD Professor, Academy of Economic Sciences, Bucharest) Radu BALTASIU (PhD Professor, Faculty of Sociology and Social Work, University of Bucharest) Magdalena IORDACHE PLATIS (PhD Professor, Faculty of Administration and Business, University of Bucharest)

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7.3 UBCGs competencies

Competencies Market research Project management and process Networking and cross cultural Project management Online business development (webdesign, quality assurance, marketing, etc.) Sales management Healthcare sector Romanian regional issues E-business (ecommerce, marketing, pricing, internet applications, etc.) English-Romanian, Romanian-English translator Teaching and training skills Languages English Italian French Coordinator in charge Diana-Maria GEORGESCU diana.georgescu@ipsos.com

English

Alexandru Cosmin TEODORESCU acteodorescu@gmail.com

English English French Spanish English Japanese

Cosmin George VLAD cosminvlad83@yahoo.com Andra IOANA andraioana_2000@yahoo.com

Ioana Maria DRAGOMIR ioana_dragomir2001@yahoo.com

7.4. Business tools

Business reports analysis and synthesis Enquiries and interviews Business guide UBCGs Vademecum GO GLOBAL (foreign market analysis tool and risk assessment) Databases of partners Traditional tools: PESTEL, SWOT, PORTER

7.5 Services offered

Consultancy (Market intelligence) Establishment of contacts, search for partners, networking Corporate support, coaching, local assistance Reporting Translations

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7.6 Website

www.doingbusinesswithromania.com

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ATTACHMENTS

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ROMANIA
Anthem: Official Language: Capital: Area: Population: Density: Ethnic groups: Formation: Desteapta-te, romane! (Awaken, Romanian!) Romanian Bucuresti (Bucharest) 2.1 million inhabitants 238391 km2 (82nd) 22.215.421 (2009 est.) (51st) 90/ km2 (104th) 89,5% Romanians; 6,6% Hungarians; 2,5% Roma; 1,4% others January 24, 1859 - Reunification of Wallachia and Moldavia July 13, 1878 - Officially recognised independence from the Ottoman December 1, 1918 - Unification with Transylvania December 1 Unitary semi-presidential republic
President - Traian Bsescu Prime Minister - Emil Boc Pres of Senate - Mircea Geoan House Speaker - Roberta Anastase Empire

National Holiday: Government:

Affiliation: Domestic Currency :

EU, NATO, WTO, IMF, WB Leu (RON)

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COUNTRY INDICATORS
1. Economic Growth Indicators

GDP
Subject Descriptor Units
U.S. dollars U.S. dollars Current international dollar Current international dollar Persons

Scale
Billions Units Billions Units Millions

2006
122.696 5.670 226.592 10.471 21.639

2007
169.286 7.850 247.533 11.478 21.564

2008
200.074 9.310 270.772 12.600 21.489

2009
160.674 7.502 251.741 11.755 21.415

GDP, current prices GDP per capita, current prices GDP based on (PPP) GDP based on (PPP) per capita Population

International Monetary Fund, World Economic Outlook Database, October 2009 http://unstats.un.org/unsd/snaama/resCountry.asp http://www.imf.org/external/pubs/ft/weo/2009/02/weodata/weoselgr.aspx

Economic Growth
2002 2003 5,2 2004 8,4 2005 4,1 2006 7,9 2007 6,3 2008 7,3 2009(e) -7,1
(e) estimate (f) - forecast

2010(f) 1

Economic Growth

5,1

Data from Coface International and NSI (National Statistics Institute)

http://www.coface.com/CofacePortal/COM_en_EN/pages/home/risks_home/country_risks/country_file//Romania?nodeUid=572 200

Gross fixed capital formation (GFCF) as % of GDP or investment ratio

GFCF (USD) GDP (USD) 75.794.733.525 99.172.613.716 122.695.850.812 169.285.963.293 203.317.150.958 GFCF as % of GDP 21% 23,70% 25,60% 30,40% 34% 16.499.988.433 23.519.134.255 31.424.892.755 51.530.934.072 69.283.054.823

2004 2005 2006 2007 2008

Data from UN Statististics Divisions http://unstats.un.org/unsd/snaama/resCountry.asp

2. Price Stability Indicators

Inflation
Year
2000 40.7% 2001 30.3% 2002 17.8% 2003 14.1% 2004 9.3% 2005 8.6% 2006 4.86% 2007 6.6% 2008 6.3% 2009 4.7%

Inflation Rate
Data from NSI

94

Change of Price Monthly Average %

Total - Rate of inflation 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 10,3 9,6 12,1 4,1 2,1 3,8 8 2,9 3,7 2,9 2,2 1,4 1,1 0,7 0,7 0,4 0,5 0,5 0,4 Food Goods 12 10,2 11,6 4,2 1,9 3,7 7,8 2 2,6 3,2 2 1,2 1,1 0,6 0,5 0,1 0,7 0,5 0 Non-food Goods 9 9,3 12,9 3,7 2 4 7,7 3,2 4 2,7 2,3 1,4 1,1 0,9 0,8 0,7 0,3 0,5 0,6 Services 9,1 8,4 11,8 4,7 2,9 3,6 9,7 4,4 5,7 2,7 2,6 1,6 1,2 0,7 1 0,4 0,7 0,6 0,6 Data from NIS

2008 Dec 2009

http://www.insse.ro/cms/files/arhiva_buletine2009/bsp_12.pdf http://www.insse.ro/cms/rw/pages/arhivaBuletine2009.en.do

GDP Implicit Price Deflator (IPD)

GDP - IPD RON USD 184 231 265 344 381

2004 2005 2006 2007 2008 Data From UN Stats

267 300 331 374 427

95

3. Use of Human Resources and Social Stability Indicators Urban population: 55,20%

Population growth rate: -0,136% (2008)

Birth rate: 10,61 birth/ 1000 population (2008) Death rate: 11,84 death/ 1000 population (2008) Life expectancy: 72,18 years (2008 est.) - male:68,69 years - female: 75,86 years Fertility rate: 1,38 children born/ woman (2008 est.) Age structure: 0-14 years: 18% 14-65 years: 68% Over 65 years: 14% Net migration rate: -0,13 migrants/ 1000 population (2006 est.) Talent pool : 106 universities ; 631 faculties ; 125000 univ. graduate/ yr Religions: Romanian Orthodox: 86,7% Roman Catholic: 4,7% Protestants: 5,3% Greek Catholic: 0,9% Islam: 0,3% Unemployment rate:
2002 8,40% 845 2003 7% 692 2004 8% 799 2005 7,20% 704 2006 7,30% 728 2007 6,10% 599 2008 5,80% 568 2009 6,80% 699

Unemployment rate Unemployment (x1000) Data from: NIS

Quota of active or occupied population in the total number of inhabitants

2002 2003 9915 5465 4450 2004 9957 5471 4486 2005 9851 5431 4420 2006 10041 5526 4515 10079 5525 4554

Active population (x1000) Male Female

96

Urban Rural Active rate

population) (from 15-64 years total

5188 4891 63,60% 845 494 351 581 264 8,40%

5151 4764 62,40% 692 408 284 489 203 7%

5423 4534 63,20% 799 491 308 517 282 8%

5361 4490 62,40% 704 420 284 472 232 7,20%

5595 4446 63,70% 728 452 276 480 248 7,30%

Unemployment Male Female Rural Urban Unemployment rate

Data from: NIS

http://www.insse.ro/cms/rw/pages/indicatoriAnuali.ro.do

Gross Average Monthly Wage

2002 2003 2004 2005 2006 2007 2008 2009

Year

EUR
Source: NIS

174

179

204

267

326

428

474

445

Human Development Index (HDI) HDI (2007) = 0,837 (63rd) Life expectancy index = 0,792
Education index GDP index Human Poverty Index (HPI-1) Probability of not surviving to age 40 (%): Adult illiteracy rate: Population not using an improved water source: Population below income poverty line (2 USD/ day)
http://hdr.undp.org/en/media/HDR_2009_EN_Complete.pdf

= 0,915 = 0,804 20 ; 5,6% 4,3% 2,4% 12% 3,4%

Democracy Index: Press Freedom Index: Corruption Perception Index: Index of Economic Freedom: GINI Index (2005):

7,06 (50th) 12,75 (42nd) 3,7 (69th) 61,5% (68th) (2008) 31 (21st)

Globalization Index (2010): 39th (from 156 countries) - Economic Globalization: 44th - Social Globalization: 77th - Political Globalization: 21st
https://www.cia.gov/library/publications/the-world-factbook/geos/ro.html http://globalization.kof.ethz.ch/static/pdf/rankings_2010.pdf

97

4. External Sector Equilibrium Indicators

Current account imbalance as % of GDP

2002 2003 -5,2 2004 -7,6 2005 -7,9 2006 11,6 2007 -13,6 (e) estimate 2008 -12,6 (f)forecast 2009(e) -5 2010(f) -5,4

Current account balance (%GDP)

-3,1

Data from Coface International

External debt as % of GDP

2002 Foreign debt (% of GDP) 39,9 Data from Coface International 2003 39,6 2004 41 2005 37,4 2006 48,1 2007 50,8 2008 51,3 2009(e) 68,6 2010(f) 75,4

(e) estimate (f)forecast

Foreign exchange reserves (in mouths of imports)

2002 3,7 2003 3,7 2004 4,2 2005 4,8 2006 5,3 2007 5,3 2008 4,5
(e) estimate

2009(e) 8
(f) forecast

2010(f) 8,2

Data from Coface International

Inward FDI Flow

Year

EUR
(million)

2000 1147

2001 1294

2002 1212

2003 1946

2004 5183

2005 5213

2006 9060

2007 7250

2008 9496

2009 4556

Data from NBR

Top 10 Investing Countries Country

Austria Netherlands Germany France Italy Greece Switzerland Cyprus Luxemburg USA

Share
18.8% 17.2% 15.4% 8.8% 7.3% 6.5% 4.7% 3.9% 2.3% 1.8%

Data from NBR

Main Foreign Companies by Sector Companies

Sector
Automotive Electronics IT Service Financial Services Telecom R&D Centers Logistics Pharmaceuticals

Renault; Ford; Delphi; Dura; Honeywell; Lear; TRW; Yazaki; CalsonicKansei; Continental AG; Michelin; Pirelli; Autoliv; Ina Scheffler Selectron; Celestica; Nokia; Systronic; Elcoteq; Benchmark; Elbit; Selex; Kathrein Microsoft; Oracle; HP; Intel; IBM; Cisco; ACI; Amazon; Siemens; Wipro; Siveco; Ericsson ALPHA Bank; ING; Erste; Raiffeisen Bank; Unicredit; Societe Generale; Millenium; HVB Vodafone; Orance; UPC; OTE; ZAPP Renault Tech.; Infineon; Alcatel-Lucent; Freescale; Microchip; Alvarion DHL; TNT; Maersk; Hapag; Frans Maas Gedeon-Richter; GSK; Zentiva (Sanofi); Sandoz; Ranbaxy

98

Chapter 1
Attachment 1: Ancestors, origins of the language and people
The land of modern Romania was inhabited since immemorial times. The first organised population were the Dacians, a Thracian tribe. Dacia developed into a regional power due to its mineral resources and soon it became a target for the Roman Empire. After 20 years of conflicts the Romans led by Emperor Traian conquered Dacia in 106 AD. The Romans staid here till 273 influencing decisively the culture and language. In 273 Romans army and officials retreat from Dacia but the roman population remained and having no influence from Rome, the local culture and language developed separately into something similar with present Romania. In the 4-13th centuries the Romanian people had to face the waves of migrating peoples - the Getae, the Huns, the Gepidae, the Avars, the Slavs, the Petchenegs, the Cumanians, the Tartars - who crossed the Romanian territory but never conquering the local population who was able to maintain its values by retreating in the mountains. Middle ages Romanians feudal states th Beginning with the 10 century the local population started to organise itself into small states led by th Romanian leaders. This process ended in the 14 century when the three Romanians feudal states were created: Moldavia, Walachia and Transylvania. Constraints from three empires The next step was the fight for maintaining the independence as long as Hungarian Kingdom, than Poland, Ottoman Empire, Hapsburg Empire and Tsarist Empire all intended to express their influence and even conquer Romanians states. The greatest danger came from Ottoman Empire which th succeeded in imposing its influence after 3 centuries of fights. The influence was maximum in the 18 century when The Ottoman Empire introduced the "Phanariot regime," (until 1821), under which the Sublime Porte appointed in the two principalities Greek voivodes recruited from the Phanar district of Istanbul. Also Transylvania was almost continuous under Hungarian and later under Hapsburg rule. Freedom, independence and formation of the Great Romania The peace treaty of 1829 signed at Adrianople (today Edirne) ended the Russian-Turkish conflict of 1828-1829; this treaty greatly weakened the Ottoman suzerainty, but it increased Russias "protectorate." Now that trade was freed, Romanian cereals began to penetrate European markets. In 1859 Moldavia and Walachia succeeded in uniting themselves creating Romania as a country which independence was recognized in the Russian-Turkish peace treaty of San Stefano (March 3, 1878). Also Romania became a kingdom ruled by the German Hohenzollern-Sigmaringen family. At the end of WWI, due to the dissolution of Austro-Hungarian Empire, Transylvania became an independent state and soon united with Romania creating the Great Romania. Developing into a modern country After WWI a lot of reforms took place and soon Romania became a rather modern and competitive state in Europe, well-known for its cereals and oil reserves. WWII and communism WWII found Romania in the position of a local power with some of its leaders influenced by German politics. Romania took part in the campaign from the east alongside with Germany. But in 1944, when the fate of the war was obvious, the new Romanian leaders decided to fight together with the Russians till the end of the war. After that, the soviet forces remain in Romania and help introducing the communist regime with local rulers but with directives from Moscow. Romania remained an independent communist country till 1989 revolution. The worst period was during the last decade when Nicolae Ceausescu transformed its regime into a disnature which isolated Romania in foreign relations and transformed local economy into an underperforming and unrealistic one. Revolution, transition and EU membership Romania decided to transform itself into a modern democracy and to become a member of EU and NATO after the revolution. The first years war very hard due to the fact that neither the leaders nor

99

the population was prepared for democratic reforms. Only in 2000 the economy started to grow. Later st in 2004 Romania became a NATO member and than, on 1 of January 2007, an EU one. Even though Romania grew a lot last decade, there are still a lot of things to improve: corruption, forgetting the old mentalities.

Historical background see

o o

http://www.roembus.org/English/romanian_links/history_of_romanians.htm http://www.sjsu.edu/faculty/watkins/romania.htm

Attachment 2:
o

The centrally planned system

Communist leaders introduced after the war Stalinist reforms as nationalising the economy, collectivisation of the agriculture and developed a secret police to persecute the population, punished by prison or labour camp all the opponent of the regime; also the 5 years plans were established. The population also suffered because the private initiative was banned and culture and church were influenced in order to serve the regime. In 1965 Ceausescu came to power and first he made some democratic moves but later he transforms Romania into a ruthless dictatorship. Ceausescu accelerates the process of industrialisation by building huge industrial units financed by foreign loans. In some sectors the heavy industry was producing 8 times more than local needs but the service sectors were underdeveloped. Due to this situation the population suffered a lot and as long as Romania isolates itself on the global map, Romanian products became unneeded. In order to pay foreign debts communists forced the population to work hard and decided to cut utilities like water, electricity, heat. Also Ceausescu decided to export as much as possible cereals, fruits, vegetables and meat without feeding the Romanians enough. To sustain agriculture Ceausescu even demolished a lot of villages and moved the peasants into block of flats destroying their values. Today Romania is a fully democratic society but one can see that there are still relics from the past regime. First of all many Romanians still have old mentalities and will never be fully prepared for these new values and politics. Also corruption developed its methods during the communist regime and became a national problem very hard to solve. Now Romanian economy is mostly own by private sectors and only some enterprise especially in the energetic sector (natural gas producer, nuclear energy producer, some big power plants, biggest hydroelectrically plants, electricity transporters, railway transporter and other few industrial plants and only one important bank are owned by the state. Centrally planned system see http://books.google.ro/books?id=5_Q1KadVl08C&printsec=frontcover#v=onepage&q=&f=f alse Dimitri G. Demekas, Mohsin S. Khan - The Romanian economic reform program - IMF, Washington DC , nov 1991 Barry P. Bosworth - Reforming Planned Economies in an Integrating World Economy, Brookings Institution, 1995. 192 pgs. - chapter 4: Central Europe http://www.britannica.com/EBchecked/topic/508461/Romania/42846/Economy http://www.cee-socialscience.net/archive/economics/romania/report1.html#jump389 http://www.sjsu.edu/faculty/watkins/romania.htm http://countrystudies.us/romania/27.htm

o o o o o o

Attachment 3: The transition period o In January 1990 Romania began a long and difficult road through democracy and capitalism. The

new leaders were former second echelon communists but it would have been almost impossible to have non-communist in power as long as former Romanian communist party was present in every structure of the society. The first years were difficult and the still young Romanian democracy had to face little reforms, some communist measures and a lot of protests and social unrest. Many huge industrial plants, most of them the pride of communism, proved to be unprofitable, with old technologies and gained debts fast. Soon after the revolution the first private enterprises start their

100

activities but their mission was hard as long as almost no support came from authorities so their influence in the economy was unimportant. The first step for privatisation was made through a mass privatisations but its success was of small proportions. Foreign investors became interested in Romanian economy only after 1999 when enough reforms were finished and Romanian ratings show a positive direction; in that period also the market liberalisation happened. Today most of Romanian economy is owned by multinational companies and the greatest part of production is exported. The privatisation brought social unrest as long as new owners decided to dismiss thousands of workers in order to optimise the production and to make the enterprise profitable; also the public opinion was subjective and considered the selling of Romanian industry to the foreigners as a great mistake. These days the unprofitable state owned companies represent a very small part of the GDP and they are represented by unprofitable tourism infrastructure, small agricultural companies and few industrial plants. As long as economy was growing the local consumption grew too but it also grew a lot because Romanians desired a lot of products not available during the communist regime. Thats why imports grew faster than exports year by year. As a conclusion the transition period changed Romania in all its aspects: economy, society, culture but it would be a great mistake to say that the past was forgotten. Even today a lot of Romanians have problems regarding their mentality and many Romanian educated by the communist regime are not capable to think realistic. There is still a great corruption in the public sector and it can happen that one has to pay bribe in order to have his problems solved legally. The transition period see: http://www.bbc.co.uk/worldservice/specialreports/1989.shtml http://www.ebrd.com/pubs/econo/lits.pdf http://www.ebrd.com/country/country/romania/ro/index.htm http://www.cee-socialscience.net/archive/economics/romania/report1.html#jump389 http://www.sjsu.edu/faculty/watkins/romania.htm http://www.britannica.com/EBchecked/topic/508461/Romania/42846/Economy

o o o o o

Attachment 4

The Romanian economy

Exports:
Romanian export dynamic grew fast during last years from a value of 6 billions USD (approx. 4.4billions Euro) in 1994 to 11.2 billions USD (approx. 8.7 billions Euro) in 2000, 18.9 billons Euros in 2004 and 35.1 billion Euros in 2008 (data from CIA World Fact Book)

40 35 30 25 20 15 10 5 0 1994 2000 2004 2008

101

Romanias main trading partners (1.I 30.IX.2009)

Source: www.insse.ro - The National Institute of Statistics

Exports during 1.I-31.VIII 2009 amounted to 78638.4 million lei (18591.7 million euro). Compared with the corresponding period of 2008, exports decreased with 5.9% at values expressed in lei (19.0% at values expressed in euro). The main export partners for Romania are presented in the table bellow (data for 2009) with grows in case of: Germany, Netherlands and Spain, Austria and Norway and falls for: Ukraine, Turkey, Moldavia, Hungary and USA
Posi Country 1.I-31.VIII 2009 tion Mil. lei 1 Germany 14830.5 2 Italy 12219.9 3 France 6174.8 4 Turkey 4026.4 5 Hungary 3372.1 6 Bulgaria 3057.8 7 UK 2558.4 8 Netherlands 2554.8 9 Spain 2148.5 10 Austria 1945.7 11 Poland 1613.3 12 Greece 1518.8 13 Belgium 1456.3 14 Russia 1308.8 15 Czech Republic 1247.2 16 Serbia 1130.2 17 Norway 1088.1 18 Moldova 985.3 19 USA 917.6 Ukraine 826.6 20 Data from National Institute of Statistics Period: 1.I 31.VII. 2009 Mil. euro 3509.3 2890.7 1461.2 950.2 797.8 724.0 605.5 603.8 508.4 460.5 381.8 359.3 344.7 308.4 295.0 266.2 255.7 232.2 216.1 194.8 Weight in total exports % 18.9 15.5 7.9 5.1 4.3 3.9 3.3 3.2 2.7 2.5 2.1 1.9 1.9 1.7 1.6 1.4 1.4 1.3 1.2 1.1

102

In the structure of exports, six sections of the Combined Nomenclature hold 74.5% of total exports, as follows:
Section of the Combined Nomenclature Value -million lei19965.1 Value -million euro4720.0 Structure in % as against total exports 25.4 in % as against 1.I-31.VIII 2008 For values For values expressed expressed in lei in euro 104.2 89.8

Machinery and mechanical appliances; electrical equipment; sound and image recorders and reproducers Vehicles and associated transport equipment Textiles and textiles articles Base metals and articles of base metals Mineral products Plastics, rubber and articles thereof Data from National Institute of Statistics

13032.2 8397.0 8062.3 5197.6 3818.2

3082.0 1986.0 1904.9 1227.2 902.9

16.6 10.7 10.3 6.6 4.9

133.3 93.9 61.5 61.2 86.3

114.9 80.9 53.0 52.6 74.3

The following table present the main export products (industries) and the most important clients: 1 2 3 4 5 Clothes Wine Furniture Glass objects Chemicals and petrochemicals EU, Russia EU, USA, Japan EU, Russia, CIS, Midd-East EU (Germany, UK, Holland, France), Japan, USA EU, Transnational Corporations(TNC) Turkey, Africa, Asia EU, Turkey, Midd-East, EU, TNCs Asia, Midd East, Emerging countries. EU, Regional EU, TNCs USA, Europe, Japan Developing countries EU (Germany, Scandinavia) EU (Germany, Scandinavia) Germany, Scandinavia TNCs, EU (Germany, Italy, France), USA, Japan EU (Germany, Italy, others) TNCs, EU (Germany, Italy, France), USA, Japan USA, EU

6 7 8 9 10 11 12 13 14 15 16

- fertilizers; - tires and rubber; - plastics; - pharmaceuticals Metal products Machinery constructions IT&C Services and consulting Organic products Rural tourism SPA treatment Components for transport industry Crafts and handicrafts Electronics and electrics devices Culture (audio-visual)

Data from the governement

103

Romanias Ranking in Doing Business 2010:

Trading Across Borders Ease of Doing Business Rank Getting Credit Paying Taxes Dealing with Construction Permits

Registering Property

Employing Workers

Protecting Investors

Starting a Business

Enforcing Contracts

United States Switzerland Germany Lithuania Macedonia, FYR Slovak Republic Bulgaria Hungary Romania Poland Turkey Czech Republic Italy Moldova

4 21 25 26 32 42 44 47 55 72 73 74 78 94

8 71 84 99 6 66 50 39 42 117 56 113 75 77

25 35 18 64 137 56 119 88 91 164 133 76 85 161

1 16 158 119 58 81 53 77 113 76 145 25 99 141

12 15 57 4 63 11 56 61 92 88 36 62 98 17

4 15 15 43 43 15 4 30 15 15 71 43 87 87

5 165 93 93 20 109 41 119 41 41 57 93 57 109 154

61 21 71 51 26 119 95 122 149 151 75 121 136 101 76

18 39 14 28 62 113 106 70 46 42 67 53 50 140 80

8 29 7 17 64 61 87 14 55 75 27 82 156 22 89

Greece 109 140 50 147 107 87 For more data visit : http://www.doingbusiness.org/economyrankings/

Attachment 5 Economic policies Interest Rates on Monetary Policy and Standing Facilities, history:
Policy Rate Date iun. 2010 mai. 2010 apr. 2010 mar. 2010 feb. 2010 ian. 2010 oct. 2009 iul. 2009 apr. 2009 ian. 2009 iul. 2008 ian. 2008 iul. 2007 ian. 2007 6,25 6,25 6,50 6,50 7,00 7,50 8,00 9,00 10,00 10,25 10,00 8,00 7,00 8,75 10,25 10,25 10,50 10,50 11,00 11,50 12,00 13,00 14,00 14,25 14,00 12,00 14,00 14,00 2,25 2,25 2,50 2,50 3,00 3,50 4,00 5,00 6,00 6,25 6,00 2,00 1,00 1,00 Credit facility rate Deposit facility rate

104

Closing a Business

Economy

15 38 35 36 115 39 78 58 91 85 121 116 29 90 43

ian. ian. ian. ian.

2006 2005 2004 2003

7,50 16,50 21,25 19,25

14,00 25,00 30,00 45,00

1,00 5,00 5,00 5,00

Selected data from: NBR For more data visit: http://www.bnro.ro/Interest-Rates-on-Monetary-Policy-and-Standing-Facilities,-history-3337.aspx

Central Bank policy & strategy Data & Statistics:

Exchange rates: http://www.bnro.ro/Exchange-rates-1224.aspx Open market operations: http://www.bnro.ro/Repo-3989.aspx Financial Info (Average interest rates on interbank market; Interbank market deposits; Forex market operations; Government securities): http://www.bnro.ro/Financial-Info3319.aspx NBRs Reference Interest Rate, history: http://www.bnro.ro/NBR%27s-Reference-InterestRate,-history-3338.aspx Interest Rates on Monetary Policy and Standing Facilities, history: http://www.bnro.ro/Interest-Rates-on-Monetary-Policy-and-Standing-Facilities,-history3337.aspx Inflation Reports: http://www.bnro.ro/Inflation-Reports-3343.aspx Financial Accounts: http://www.bnro.ro/Financial-Accounts-3726.aspx Indicators for Credit Institutions: http://www.bnro.ro/Aggregate-Indicators-for-CreditInstitutions-3369.aspx Financial Behaviour of Households and Companies by Country: http://www.bnro.ro/Financial-Behaviour-of-Households-and-Companies-by-County3211.aspx#peloc FDI: http://www.bnro.ro/Foreign-direct-investment-3213.aspx Gross External Debts Statistics: http://www.bnro.ro/Gross-External-Debt-Statistics3209.aspx International Reserves and Foreign Currency Liquidity: http://www.bnro.ro/InternationalReserves-and-Foreign-Currency-Liquidity-3210.aspx NBR Interactive Database: http://www.bnro.ro/Interactive-database-1107.aspx# NBR Press Release: http://www.bnro.ro/Press-releases-1104.aspx

Inflation rate evolution 2000-2010

Source: www.insse.ro - The National Institute of Statistics

105

Comparison regarding inflation of EU Member States:

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

European Union (EC6-1972, EC9-1980, EC101985,EC12-1994, EU15-2004, EU25-2006, EU27) Euro area (EA11-2000, EA12-2006, EA132007,EA15-2008, EA16) Euro area (16 countries) Belgium Bulgaria Czech Republic Denmark Germany Estonia Ireland Greece Spain France Italy Cyprus Latvia Lithuania Luxembourg (Grand-Duch) Hungary Malta Netherlands Austria Poland Portugal

1.3 1.2 1.9 2.2 2.1 2.0 2.0 2.2 2.2 2.3 3.7 1.1 1.1 2.1 2.3 2.2 2.1 2.1 2.2 2.2 2.1 3.3 1.2 1.2 2.2 2.4 2.3 2.1 2.2 2.2 2.2 2.1 3.3 0.9 1.1 2.7 2.4 1.6 1.5 1.9 2.5 2.3 1.8 4.5 18.7 2.6 10.3 7.4 5.8 2.3 6.1 6.0 7.4 7.6 12.0 9.7 1.8 3.9 4.5 1.4 -0.1 2.6 1.6 2.1 3.0 6.3 1.3 2.1 2.7 2.3 2.4 2.0 0.9 1.7 1.9 1.7 3.6 0.6 0.6 1.4 1.9 1.4 1.0 1.8 1.9 1.8 2.3 2.8 8.8 3.1 3.9 5.6 3.6 1.4 3.0 4.1 4.4 6.7 10.6 2.1 2.5 5.3 4.0 4.7 4.0 2.3 2.2 2.7 2.9 3.1 4.5 2.1 2.9 3.7 3.9 3.4 3.0 3.5 3.3 3.0 4.2 1.8 2.2 3.5 2.8 3.6 3.1 3.1 3.4 3.6 2.8 4.1 0.7 0.6 1.8 1.8 1.9 2.2 2.3 1.9 1.9 1.6 3.2 2.0 1.7 2.6 2.3 2.6 2.8 2.3 2.2 2.2 2.0 3.5 2.3 1.1 4.9 2.0 2.8 4.0 1.9 2.0 2.2 2.2 4.4 4.3 2.1 2.6 2.5 2.0 2.9 6.2 6.9 6.6 10.1 15.3 5.4 1.5 1.1 1.6 0.3 -1.1 1.2 2.7 3.8 5.8 11.1 1.0 1.0 3.8 2.4 2.1 2.5 3.2 3.8 3.0 2.7 4.1 14.2 10.0 10.0 9.1 5.2 4.7 6.8 3.5 4.0 7.9 6.0 3.7 2.3 3.0 2.5 2.6 1.9 2.7 2.5 2.6 0.7 4.7 1.8 2.0 2.3 5.1 3.9 2.2 1.4 1.5 1.7 1.6 2.2 0.8 0.5 2.0 2.3 1.7 1.3 2.0 2.1 1.7 2.2 3.2 11.8 7.2 10.1 5.3 1.9 0.7 3.6 2.2 1.3 2.6 4.2 2.2 2.2 2.8 4.4 3.7 3.3 2.5 2.1 3.0 2.4 2.7

1.0 0.3 0.3 0.0 2.5 0.6 1.1 0.2 0.2 -1.7 1.3 -0.3 0.1 0.8 0.2 3.3 4.2 0.0 4.0 1.8 1.0 0.4 4.0 -0.9

Romania
Slovenia Slovakia Finland Sweden United Kingdom Croatia Former Yugoslav Republic of Macedonia, the Turkey Iceland Norway Switzerland United States Japan
Source of Data:: Eurostat
:=Not available=See explanatory text=Estimated value

59.1 45.8 45.7 34.5 22.5 15.3 11.9 9.1 6.6 4.9 7.9
7.9 6.1 8.9 8.6 7.5 5.7 3.7 2.5 2.5 3.8 5.5 6.7 10.4 12.2 7.2 3.5 8.4 7.5 2.8 4.3 1.9 3.9 1.3 1.3 2.9 2.7 2.0 1.3 0.1 0.8 1.3 1.6 3.9 1.0 0.5 1.3 2.7 1.9 2.3 1.0 0.8 1.5 1.7 3.3 1.6 1.3 0.8 1.2 1.3 1.4 1.3 2.1 2.3 2.3 3.6 : : 3.7 4.5 4.3 2.5 2.4 2.1 3.0 3.3 2.7 5.8 : : : : : : : : : :

5.6
0.9 0.9 1.6 1.9 2.2 2.2 : 6.3 16.3 2.3 -0.7 -0.4 -1.4

82.1 61.4 53.2 56.8 47.0 25.3 10.1 8.1 9.3 8.8 10.4 1.3 2.1 4.4 6.6 5.3 1.4 2.3 1.4 4.6 3.6 12.8 2.0 2.1 3.0 2.7 0.8 2.0 0.6 1.5 2.5 0.7 3.4 : : : : : : : : 1.0 0.8 2.3 1.6 2.2 3.4 2.8 1.6 2.3 2.7 3.4 3.2 2.8 3.8 0.6 -0.3 -0.7 -0.7 -0.9 -0.3 0.0 -0.3 0.3 0.0 1.4

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Direct Inflation Targeting 1. bringing the annual inflation rate to single-digit levels; 2. earning and strengthening central bank credibility; 3. strengthening both de jure (via the new NBR Statute effective 30 July 2004) and de facto independence of the NBR; 4. lower fiscal dominance, further fiscal consolidation and improved co-ordination between fiscal and monetary policies; 5. a relatively more flexible exchange rate of the domestic currency and diminishing the Romanian economy's vulnerability to exchange rate movements; 6. the soundness and strengthening of the banking system and a relatively higher degree of banking intermediation; 7. greater transparency and accountability of the central bank and more effective communication with the public and financial markets, including the presentation of various aspects related to the inflation targeting approach and the preparatory steps for its adoption; 8. better insight into macroeconomic behaviour patterns and economic mechanisms in order to identify and enhance the effectiveness of monetary policy transmission channels.

Attachment 6 International commitments Purpose and positioning of Romania

The Ministry of Foreign Affairs created the Economic Diplomacy Directorate as a link between Romanias diplomatic missions abroad, the business environment and other institutions with economic responsibilities. It is in charge of: o Promoting Romanian economic interests abroad; o Cooperation with international economic organizations; o Inter-institutional cooperation on economic issues; o Offering economic expertise within the Ministry of Foreign Affairs.

Economic diplomacy

External policy priorities

o o o o o o o o Consolidation of Romanias role as an active and influential EU member Supporting the integration of the Moldova Republic in the EU Assuring a democratic and prosperous regional stability Promoting the US Strategic Partnership Promoting Romanias bilateral and multilateral cooperation partnerships Promoting Romanias security interests Promoting the economic and commercial interests of Romania and Romanian companies Supporting and promoting the rights and interests of Romanian citizens on a global scale.

Purpose and positioning of Romania: Sources of information

o o o o o o o http://www.mae.ro/index.php?unde=doc&id=26644&idlnk=1&cat=3 http://www.mae.ro/index.php?unde=doc&id=38538&idlnk=1&cat=3 http://www.ccir.ro/ccirweb/menuIntEU/PageIntEU.aspx?submenu_id=362 http://www.crpe.ro/eng/pagini/index.php http://ec.europa.eu/economy_finance/eu_economic_situation/member_state8616_en.ht m http://www.dae.gov.ro/ http://www.mae.ro/index.php?unde=doc&id=5031&idlnk=1&cat=3

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Strategic alliances of Romania

Bilateral relations
The long lasting desire to maintain a permanent and active involvement in international affairs led to the fact that today Romania develops bilateral diplomatic relations with 182 out of 192 UN member states, plus the Holy See and the Sovereign Military Order of Malta.

Parliamentary friendship groups

Parliamentary collaboration on the friendship groups plane is an important component of the external relations of the Romanian parliament. These friendship groups have the role to further bilateral cooperation in all common interest domains.

Strategic alliances of Romania: Sources of information

o o o o o http://www.mae.ro/index.php?unde=doc&id=5772&idlnk=1&cat=3 http://www.mae.ro/index.php?unde=doc&id=5772&idlnk=1&cat=3 http://www.senat.ro/pagini/rel_int/UIP/grui/gpp%20ie%202008-2012/Prez.gen.gpp.htm http://www.mae.ro/index.php?unde=doc&id=5772&idlnk=1&cat=3 http://www.senat.ro/pagini/rel_int/UIP/grui/gpp%20ie%202008-2012/Prez.gen.gpp.htm

Attachment 7

List of international Treaties, Agreements and Conventions

www.mae.ro/index.php?unde=doc&id=5090&idlnk=1&cat=3

List of IO memberships
Romania is a part of the following International Organizations: o o o o o o o o o o United Nations Organization for Security and Cooperation in Europe Council of Europe Japan Bank for International Cooperation JBIC World Bank Group International Monetary Fund IMF European Bank for Reconstruction and Development EBRD Organization for Economic Cooperation and Development Asia-Europe Meeting International Organization La Francophonie

List of IO memberships: Sources of information

o o o
o

http://www.mae.ro/index.php?unde=doc&id=34&idlnk=1&cat=3 http://www.bnr.ro/Relatii-cu-organismele-internationale-1399.aspx http://www.mae.ro/index.php?unde=doc&id=34&idlnk=1&cat=3 http://www.senat.ro/Start.aspx

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Chapter 3
Attachment 8 Agriculture

Source: Romanian Statistical Yearbook 2008

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Attachment 9
Overview

Fishing and Farming Extra Information

Romania has a large diversity of landscapes and inland waters representing 3% of the total area. There are 40 000 ha of natural lakes and ponds, man-made reservoirs, including the Danube Delta; 84 500 ha of fish farms; 15 000 of fish nursery areas; 66 000 km of rivers of which 18 200 km are in the mountain area; 1 075 km are located in the lower part of Danube. Romania has a coastline along the Black Sea of around 250 km, while the exclusive economic zone covers 25 000 square kilometres. However, most of the fisheries activities are carried out within the 12 mile-zone and in inland waters. The fishery sector makes a marginal contribution to the Gross Domestic Product and is continuously decreasing because of the decline in the distant-water fleet and the decline in fish farming. The demand and consumption of fish have changed significantly since the early 1990s. Fish consumption has fallen, largely because of the reduction in availability of the domestically produced fish and the increase in the price of fish relative to other animal protein products. In 2001, the average consumption of fish and fish products per caput was 3.4 kg, while the yearly average consumption of meat and meat products was 48 kg per caput. There are an estimated 10 600 persons working in the Romanian fisheries sector, of which 46% are subsistence fishers, 18% are involved in fish farming, 27% are active in inland fisheries and 9% in marine fisheries. This estimate does not include those working in the fish processing industry. Fishery has great socio-economic importance in the Danube Delta, where alternative occupations (agriculture or industry) are not feasible. Important gap between imports and exports the main cause is a poor diversity of valuable aquaculture species, as well as a narrow range of processed products. (In 2007, exports valued EUR 1 million, whereas imports valued EUR 13 million). Issues

o Sea fishing
As there are no specialized fishing ports in Romania, the marine fishing vessels have to use the commercial ports of Mangalia, Constana and Sulina for docking. None of these ports has specific facilities for docking, storage and sale of fishery products. Infrastructure such as quays, warehouses and locations for first sale is missing in Romania. An important fishing area is the Danube Delta Biosphere Reserve, where fishing activities are forbidden for trawlers. In addition, the area near the Black Sea Coast up to the 20 m isobaths is also forbidden for fishing vessels using towed gears. The only fishing activity allowed is fishing by fixed rods and nets. o Inland fishing Fishing is practiced with fixed or towed gears, using small wooden boats. No mechanized fishing is used in inland waters. Inland fishing is an important activity, but the landing sites in the Danube River and in Danube Delta are scarce and not equipped. The total number of landing sites is 83 located as follows: 36 in Danube Delta and 47 along the Danube River. Only 16 landing sites in the Danube Delta and 5 along the Danube River comply with the veterinary standards. All the other 62 need to be modernized and equipped. Fisherman doesnt have facilities to transport their catches. In consequence, these services are performed by those who market the fisheries products. Aquaculture The area used for aquaculture activities in Romania is of 100 000 ha, structured as follows: 84 500 ha of fish farms, 15 500 ha of hatcheries, and 25 ha of trout farms. Currently, there is not marine aquaculture in Romania. One isolated private company is active on mussel culture. 4 areas along the Romanian Black Sea coast were identified by the Romanian Marine Research Institute as being suitable for mussel culture.

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The best area for aquaculture is the one situated between South Agigea and Mangalia. One can find here plots of land on the coast, suitable to build aquaculture facilities with easy access to clean water that can be used in aquaculture. Processing Currently, there are 56 enterprises in the fish processing industry, and 33 supermarkets providing primary fish processing. The main species for processing are imported sea species, especially mackerel, and herring. Imports consist mostly of frozen fish (mackerel, herring, sprat, Alaska cod, whiting, sardines and anchovies). Local species that are processed are carp (90% of the local fish processed), trout, zander, pike, European catfish and perch. Marketing There are no first sale points and the distribution channels are not developed. Fishery products are mainly delivered through producers and importers, and to a lesser extent through specialized intermediaries. Fishery products reach final consumers through supermarkets and specialized shops. Recreational fishing Given the landscape diversity, there are suitable conditions in Romania for performing recreational fishing activities in mountain or plain waters.

Opportunities o With the help of The European Fisheries Fund which is designed to promote the sustainable development of fisheries in the European Union, Romania adopted a National Strategic Plan so as to define the objectives. For the period running from 1 January 2007 to 31 December 2013, total aid for Romania is estimated at EUR 231 million; o Modernisation of fishing vessels; o Development of inland water fishing; o Modernisation of existing aquaculture and processing units; o Encouraging intensive aquaculture; o Organize fishery ports; o Organize first-sale centres; o The Black Sea fishing a modern fishing port is needed, endowed with the necessary facilities for product storage, processing, marketing, loading. Taking into account the marine resources potential in the Black Sea that has been estimated by the Romanian Marine Research Institute at about 20 000 tons, it is important to upgrade the existing fishing vessels; Coastal fishing has a long tradition in Romania. It includes small-scale fishing. The support to smallscale fishing will contribute to maintaining employment in coastal areas and to reconvert the fishery activities into activities in other sectors (for example tourism). Farming http://rbd.doingbusiness.ro/ro/1/articole-recente/1/226/raport-agricultura-2009-potential-oportunitatisupravietuire http://rbd.doingbusiness.ro/ro/1/articole-recente/1/102/romanian-agriculture-potential-vs-reality

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Attachment 10

Manufacture of wood and wood products

Overview o Less than 27% of Romanias territory is covered by forests, which is under the European average and well below what researchers consider, given the countrys natural conditions, the optimal threshold estimated between 32-35% from the total countrys territory. o Significant part of the Romanian forests are located in the mountains, 51.9%, while in hilly areas there are located 37.2% of forests and 10.9% of forest are located in plain areas. Standing wood volume of 3 3 forests from the national forest fund is 1 341 million m . The average wood volume is 218 m /ha. The 3 unitary average growth of forests is 5.6 m /year/ha. 3 o The total volume of wood exploited was 15.671 thousand m for the year 2005 and this wood volume had two destinations, for economic operators having forestry activity (11.783 thousand m3) and for 3 population supplying (3 888 thousand m ). The wood harvested from the state forests is being sold by public auctions, while the forest owners could commercialize independently their wood. In both cases the wood logging is fulfilled by authorized economic operators. 3 o Regarding illegal logging Romania is facing this phenomenon, estimated at 100 000 m /year. o Romania is one of few European countries that still have virgin forests approx. 300 000 ha, mainly located in the mountain areas. All forests have multiple environmental and social values, e.g. wild life habitats, assuring the protection of torrential hydrographic basins, fulfilling the most diverse protection functions and assuring, also important social nature services for human communities. In the cases were these values are considered to be of high or critical importance, the forests may be classified as forests with high conservation value. Until the end of the year 2005, 1119.7 thousand ha of Romanian forest have been certified. o According to national legislation, Romanian forests are divided in two functional groups, as follows: o 53.3% forest with special protection functions (water protection, soil protection, climatic protection, wildlife and recreation) o 46.7% forest with both production and protection functions. o Forestry industries in Romania (exploitation, woodworking and furniture) accounted in 2005 for 3.5% of GDP and for about 7% of the manufacturing sector output produced by 10% from the total employees in industry. Opportunities The Rural Development Programme for Romania 2007-13 includes the following objectives: o facilitate the transformation and modernisation of the forestry production and processing sectors, improving competitiveness and ensuring environmental sustainability o development of scientific research and education with purpose on forest sustainable management, economical changes of forestry sector and amelioration of the environment on the national, regional and global level. Other high potential areas within the furniture industry: o Clustering o Further general specialization within the industry o Introducing and using design in furniture, at product and process level o Information, training and consulting services for the furniture sector have very high growth potential

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Attachment 11

Electric, gas and water

Primary energy resources, in 2007

Source: Romanian Statistical Yearbook 2008

ENERGY INDEPENDENCE DEGREE

Percentage 2002 Total
1)

2003 72.2 68.7 52.0 68.7

2004 71.8 67.5 43.4 74.1

2005 71.4 66.3 37.8 69.0

2006 68,7
2)

2007 69.7 68.1 35.4 70.6

75.8 69.4 48.5 77.9

Coal (including coke) Crude oil Natural gas 3)

1)

67.9 35.9 65,72)

Inclusiv produsele energetice obinute i consumate n gospodriile populaiei. / Including energy products obtained and consumed in households. 2) Date rectificate fa de cele publicate anterior. / Rectified data as against those previously published.
3)

Exclusiv gazolina i etanul din schelele de extracie care sunt cuprinse la iei. / Excluding gasoline and ethane from extraction oilwells which are included in crude oil.

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Attachment 12

Food, beverages and tobacco

Production of Main Agro-Food Products, 2000-2004 Products Wheat and rye Barley and tworow barley Maize Sunflower Sugar beet Potatoes Edible vegetables Edible fruit Grapes Meat M.U. thou tones thou tones thou tones thou tones thou tones thou tones thou tones thou tones thou tones thou tones live-weight 2000 4456.2 867.0 4897.6 720.9 666.9 3469.8 2527.8 1301.0 1295.3 1414 2001 7763.8 1580.0 9119.2 823.5 875.5 3997.1 2877.4 1352.8 1121.7 1415 2002 4441.1 1160.4 8399.8 1002.8 954.6 4077.6 2863.5 952.0 1076.7 1604 2003 2496.4 540.8 9577.0 1506.4 764.4 3947.2 3358.3 2088.5 1078.0 1699 2004 7644.0 1553.0 14891.0 1727.0 568.0 4655.0 3679.0 1444.0 1153.0 1550

Source: National Institute of Statistics - Romanian Statistical Yearbook 2004, Crop Production in 2004

Livestock and animal production in 2004

Attachment 13

Food, beverages and tobacco

2002 7.0 190.6 20.9 29.2 35.3 26.0 24.8 70.2 76.0 30.4 9.5 66.4 4.9 102.0 28.8 25.0 2003 - US$ million 2004 22.3 343.4 39.3 39.3 48.2 50.8 47.5 117.4 54.6 273.5 79.2 64.6 5.4 145.4 35.3 58.1

Foreign Trade with Main Agro-Food Products, 2000 2004 HS Code and Chapter 2000 2001 02 Meat and edible meat offal 04 Dairy produce; birds eggs, natural honey 07 Edible vegetables and certain roots and tubers 08 Edible fruit and nuts, peel of citrus or melons 10 Cereals 15 Animal or vegetable fats and oils 17 Sugar beet and sugar confectionery 22 Beverages, spirits and vinegar Export Import Export Import Export Import Export Import Export Import Export Import Export Import Export Import 3.2 75.3 15.1 26.3 17.8 20.6 21.1 60.4 33.8 57.5 21.0 34.6 3.1 113.5 21.1 16.9 5.4 165.8 17.0 29.1 35.7 22.9 25.5 55.9 67.5 115.1 24.8 33.8 3.4 151.3 24.0 20.3

14.3 187.5 37.4 34.1 37.7 47.9 35.6 89.3 19.7 351.1 31.8 62.1 3.3 133.6 32.2 38.5

Source: Romanian Trade Promotion Center - Database for foreign trade

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Attachment 14

Construction & Real Estate

Construction works, by manner of performing and by type of ownership

Attachment 15

Transport Means and Infrastructure

Railway: The railway system as a whole is affected by long term bad management from the state in: Maintaining the infrastructure in a good condition (10 981 km of rail, very dense network). Maintaining the clients portfolio of CFR Marfa freight transport company Ensuring the populations demands in passenger traffic are met. Keeping the competitive advantage high, from the former state owned national railway company

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Passengers transport is assured by one state-owned company CFR Calatori, and a handful of private operators. Romania has significant flows of traffic suitable for movement in trainloads and many of these flows continue despite the poor economic situation, albeit subject to some reduction in overall size. These flows are likely to continue at least into the medium term; in the longer term, issues such as problems with extraction and climate change may affect coal traffic. Other flows seem likely to continue, but it is unlikely to be a significant growth above the traffic levels of 2007, a boom year. By contrast, flows of consumer goods, (and motor vehicles in particular), are likely to build up and become a very promising traffic for rail once the Romanian economy improves. Flows of containers moving by sea have also increased rapidly because of the strength of Asian manufacturing; although it may be that much of this has run its course and there will not be so much growth in the future. By contrast, whilst smaller domestic flows are still available for movement, the growth of road competition, offering flexibility, door-to-door services and attractive transit times has taken a lot of this traffic. Whilst the state of Romanian roads and the size of the country have meant this process has not been rapid so far, it is likely to continue, representing a direct threat to the Marfa wagon load service. Market share (%) Rail Road River Pipeline 2005 17.0 75.6 4.1 3.3 2006 15.8 77.7 3.5 2.9 2007 15.2 78.8 3.3 2.7 2008 14.5 79.5 3.3 2.7 H1 2009 17.2 70.9 8.6 3.3

Table courtesy of CFR Marfa Activity Report Sept. 2009

From the above overview, it is our belief that there are two concurrent trends affecting Marfa carryings. The first is a long-term and irreversible decline in wagonload traffics mainly caused by road competition being able to offer more appropriate services. This decline must call the provision of an everywhere-toeverywhere wagonload freight service into question. The second trend is the movement in the economy away from a producer-centric one with its emphasis on production and movement of basic (bulk) goods towards a lighter service-based economy. A new restructuring of the sector involves high unemployment rates within the sector, especially with CFR Marfa. It is a high potential for sector specific training and consulting services. Infrastructure (tourism perspective) Roads o Romania faces a number of major gaps between the rural areas and urban ones in terms of the social and physical infrastructure o In rural areas, the roads are the most important transportation routes, but the development of rural roads and traffic is far from the European standards. Only half of the communes have direct access to the road network, meaning that the current road network only serves 3/5 of the total rural population. More than 25% of the communes cannot use the roads in case of snow or rain. o Public roads in Romania cover 73 435 km, and 80% of these are country and commune roads o In 2007, the urban streets length was 26 168 km of which 15 757 km have been modernized Airports o Availability of low-cost flights: Blue Air, Wizz Air, Germanwings, Jet Tran Air, MyAir, Nouvelair, SkyEurope o Currently there are 16 commercial airports (13 international airports and 4 national airports as classified by the Government) o The development of regional airports should be prioritised, so that visitors do not have to connect via Bucharest. Railway: 10,981 kilometres of rail

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Attachment 16

TOURISM Extra Information

Overview There is an increase in domestic tourism, more travel within the same region, more travel by road and rail, more direct booking and an increased use of low-cost airlines. Accommodation: poor quality standards regarding services & accommodation o Seaside (excluding the city of Constana): 117 864 places o Mountain resorts: 31 448 places o Spas: 38 404 places o Danube Delta (including Tulcea Municipality): 3 266 places o County residence towns: 53 987 places o Other localities: 38 741 places There are more than 20 five stars hotels (9 in Bucharest only) Economic impact th o According to Global Economic Forum Travel and Tourism rankings, Romania was the 69 th country in 2008 and the 66 in 2009. o The contribution of travel & tourism to GDP is expected to be 5.7% in 2009. Directly, the tourism industry is expected to contribute 2.1% to GDP in 2009 o The contribution of travel & tourism economy to employment is expected to be 582 000 jobs in 2009, 6.8% of total employment. o Real GDP growth for the Travel & Tourism Economy is expected to be -2.4% in 2009 o Export earnings from international visitors and tourism goods are expected to generate 4.6% of total exports in 2009 o Government Travel & Tourism operating expenditures in Romania in 2009 are expected to total RON 1.4 billion (USD 479.5 million), or 4.4% of total government spending. Telecommunications o The rural infrastructure in telecommunications is poor by all standards. o Internet access in rural areas is very modest, because of poor development and income of the population. o For more details, please see chapter 3.4.G Promotion & marketing: In 2009, the Ministry of Tourism launched an international promotion campaign entitled Romania Land of Choice). o 550 video commercials will be broadcast on Eurosport, 475 on Eurosport 2, 529 on CNN o 9 000 000 banners on the internet. o there is also a sponsorship campaign on Eurosport TV for 325 billboards of 6 seconds. o the advertising campaign Romania Land of Choice will run on two TV stations, CNN and Eurosport, between August December 2009. o the main characters of the video clips are three Romanian champions: Nadia Comaneci, Ilie Nastase and Gheorghe Hagi. o New country logo project was launched at the end of 2009. o Government funds for promotion and marketing were entirely cut by the Prime Minister through a decision taken in February 2010. Opportunities: o Rural and agro-tourism development is a priority o Sustainable development (product diversification): Romanias travel & tourism is characterized by a high level of seasonality. A focus on new types of tourism will encourage the development of an industry diverse in opportunities as well as seasons. o There is much potential for Romania to break away from its traditional tourism on the Black Sea and the following sectors should be prioritized: o meetings, incentives, conferences and exhibitions o mountain tourism skiing in winter and hiking in summer

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o o o

heritage tourism using gateway sites such as Braov, Sibiu and Sighioara Rural tourism development of wine/monasteries routes and promotion of festivals Spa/wellness tourism

Potential touristic resources o Mountains Eco & agro tourism - mountain areas are mostly suitable for mixed economic activities: agriculture with cattle raising and orchards, forestry and lumber production, various small companies in industry and crafts, agro-tourism and ecotourism. - products which are mostly organic, game and flora resources, as well as the picturesque natural landscape are elements of support for the development of agro and ecotourism in the mountains The Carpathians - due to their width, easy access, rich mineral waters and many possibilities for winter sports, they represent the largest and most complex tourism area of the country - numerous mountain resorts: Poiana Brasov, Sinaia, Predeal, Busteni, Borsa, Stana de Vale, Balea (for more information, please visit www.romaniatourism.ro) Culture and heritage - encouraging rural tourism and agro tourism (beautiful and original ethnographical and folklore elements) wine tours and monasteries - There is an important potential which is not exploited because there are no tourist centres to inform and promote it at the local level - Physical and access infrastructure is poor and this is a major drawback for the development of tourism activities in rural areas - The development of rural tourism in pensions depends on the specific traits of each region, folklore, ethnographic regions and agricultural or wine products - The specific tourism for Bucovina (North East) is religious tourism, in Maramure (North West) is the architecture or ethnography tourism, in Transylvania (Centre) recreational and cultural tourism, food and wine, and in the Carpathian foothills fishing - Probably the best indicator that shows the growing interest in rural tourists is the expand of rural pensions stimulated in a certain manner by the availability of SAPARD funds UNESCO World Heritage Sites: Sighioara Historic Centre, Dacian Fortresses, Monastery of Horezu, Danube Delta, Maramure Churches, Moldavian Monasteries, Transylvania Fortified Churches Danube Delta - A high natural value due to biodiversity which allows for many types of tourism to be developed (recreational, fishing, food). - It is the richest fauna park in Europe, with over 300 species, 60 fish species of great economic value Spa/wellness tourism - There are approximately 1 300 registered sources of mineral water in Romania a third of all mineral spas in Europe, both potable and curative. - There are already between 2 500 and 8 500 spas which cater mainly to domestic tourists but currently only two (Bile Felix and Eforie Nord) have been modernized to international standard - High potential in Bile Herculane, other sulphurous water spas: lovrin in Timi, Cciulata, etc. - Development of further spas for higher-spending international and domestic visitors would not only increase income and create jobs but would also help to conserve an important aspect of the countrys heritage. MICE (meetings, incentives, conferences, exhibitions): Bucharest, the capital of Romania Sun & beach - the Romanian seaside at the Black Sea stretches on 245 km, with the Danube Delta and the lagoon complex Razim-Sinoe in the North and about 70 km of beach to the South.

o o

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The seaside resorts which are well known at international level Mamaia, Techirghiol, Costineti, Mangalia, Olimp, Neptun, Venus, all have modern accommodation, treatment centres and various entertainment opportunities (for more information, please visit www.romaniatourism.ro); the threat here is the beach condition in Mamaia, the best know resort, because of the works in Constana port Geo-tourism: in September 2005, Romania became only the 3rd country in the world to sign a Geo-tourism Charter with National Geographic.

Attachment 17

Health and pharmaceutical industry Extra Information

Overview o Due to the development of the private sector the number of pharmacies increased so as that, in 2008 there were 7 252 units, 1 429 units more than in 2005 o Medical sanitary staff (population per physician) in 2008: was 428, very low, and the trend is constituted by a decrease in present as well o The private healthcare system has been developing due to the defective public system. There are many medical centres across the country, but only in big cities, not in small towns or rural areas. Issues o Bribing doctors is common in Romania. Patients use bribery to solicit the standard expected level of medical care. o These so-called informal payments are estimated at USD 360 million annually. o When hospitalization is needed, the Romanian patient typically pays 3 or 4 bribes equivalent to 3/4 of a familys monthly income. o The cost of bribes depends on the treatment, ranging from EUR 100 for an uncomplicated appendixremoval operation to up to EUR 5 000 for brain surgery. The suggested bribery rates are passed on by word of mouth, and are publicized on blogs and Internet sites. o The Ministry of Health is trying to root out the practice, and recently set up a free phone line for patients to report abuses. Within an hour, the telephone line was jammed. o Many patients (who can afford) are going to private hospitals or medical centres in order to get treatment, because here they find the proper level of quality and also the respect towards the patient. o The problem is that there are patients who cannot afford state medical services because of the bribe rate, but they cannot afford to go to a private medical centre either, because of the high costs. o There are difficulties in many rural areas in accessing healthcare services. The access of the rural population to basic healthcare services is hindered by the poor transportation services, which mostly impedes on the medical staffs commuting opportunities. o Rural areas have poorer medical services than urban areas. In most communes, only basic medical services are provided. For specialised services, rural inhabitants must go to town to find treatment. o The quality of medical services is also affected by the training of the medical staff, mostly nurses, while the number of doctors is not enough to provide high quality medical services in rural areas. o Limited applicability of the e-health project to the areas with PC machines and internet/ network connection. o Specialists deciding to go for better pay abroad.

See also: http://rbd.doingbusiness.ro/ro/5/articole-ultima-editie/1/256/romanian-healthcare-sector

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Attachment 18

IT & Telecommunications Extra Information

By boosting economic growth, information and communication technologies present great potential for creating new and better jobs, and generating greater prosperity. Overview Telecommunications The telecommunications market has reached its maturity. The main players in the market are: Romtelecom, Vodafone, Orange, Cosmote, Rcs&Rds, Upc. Romtelecoms market share diminished, mainly because of the aggressive competition of the cable operators that launched integrated service bundles combining television, telephone and Internet access. To counteract the competitors two/ threeservice bundles, Romtelecom launched the satellite TV service (DTH Direct to Home), whose success was proven by the fast increase of the number of subscribers. In the mobile sector, Cosmote significantly improved its position on the market by promoting an aggressive price policy while extending its network coverage, whereas Rcs&Rds has already launched mobile telephony services in one region of Romania and committed to developing the network to reach national coverage within the next 4 years, which will enable this operator to integrate all four main services (TV, fixed telephony, mobile telephony and Internet access) within one bundle. o For the first time in the last years, the fixed telephony experienced an important increase in the number of access lines, which has risen by 18.3% compared to the end of 2007. o The penetration rate of mobile telephony services, calculated upon the number of valid prepaid SIM cards, has risen in 2008 with almost 20.7%, reaching 133%. The mobile telephony generates the largest share of the revenues from electronic communications services in Romania, featuring annual average growth rates of 35.3% over the last 4 years. o The total number of broadband internet connections at fixed points registered at 31 December 2008 was of 2.51 million connections, the penetration rate reaching the value of almost 11,7% o The number of Wi-Fi connections has doubled and that of XDSL has increased by 78% o The biggest increase was that of the mobile internet connections (an increase of 43%, reaching 2.68 million) due to the evolution of the number of the connections provided through GPRS technology. o In 2007, in 255 communities with no access to knowledge have been developed electronic networks of local communities, connected to broadband internet, acting as knowledge centres, information provider o 91% of the Romanian companies are connected to the Internet, but only 59% of these have a connection with a bandwidth larger than 256 kbps) o The volume of foreign direct investment in IT&C represents 22% of the total foreign direct investments. o The contribution of IT&C to the GDP is estimated to represent 10%. o The regulatory measures adopted by the competent Authority concerned the reduction of interconnection tariffs and the implementation of the number portability. These are expected to trigger more competition in the sector. IT Industry today almost everybody agrees on a clear decline in the software and IT services market; the majority of IT suppliers have considerably re-evaluated their annual targets, and for many achieving the same level of turnover as in 2008 seems highly ambitious. the IT suppliers that sell licenses and products are hit the worst, with adoption substantially lower than the previous year. Poor utilisation rates among IT services suppliers move competition in the price arena, with suppliers sometimes bidding on the zero margin or even dumping prices in hope of rebound in profitability in the medium term. The fight on pricing may sharpen towards the third quarter of 2009, as demand tends to shrink seasonally in this quarter, followed by a price relaxation towards the end of the year, when part of the companies will flush pieces of unconsumed budgets. The buy side also exerts price pressure - largely in the commoditized areas, as IT end users are much more careful with the money they have been allocated. During times of economic turmoil, outsourcing finds good premises to get adopted. The externalization of selected IT functions tends to find better resonance because companies are looking

120

to cut costs and reduce non-strategic assets from their balance sheets. However, this is valid for mature IT markets. The economic crisis will definitely accelerate the consolidation of the software and IT services sector in Romania.

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Issues and opportunities Telecommunications

o Electronic commerce use is still low in Romania, compared to the European average, but was one of
the few sectors growing in 2009 at a peace of 20%.

o Internet usage level in 2008 was 26% of the population, compared to the European average that is
56% of population (people using the Internet at least once a week).

o With regard to the electronic commerce (e-commerce) in Romania, only 12% of the companies total
o

o o o o

income comes from electronic commerce. Romania has the lowest percentage of businesses with broadband connections in the European Union, with only 44% of enterprises having a broadband connection as compared to a EU27 average of 81%. The above levels reflect in the household area, with only 13% of households (the second lowest level in the EU) having a broadband connection compared to a EU27 average of 48%. Lowest percentage of enterprises owning a website: 27% compared to a EU27 average of 64%. 91% of the population with no coverage live in rural areas. In general, urban users benefit from a greater diversity of the service offer, as compared to the rural users, who face either the problem of limited choice, having only one or few service providers to choose from, or the problem of no access to the means of communications, as they live outside the coverage areas of the electronic communications networks.

IT Industry Acquisition opportunities: According to PAC (Pierre Audoin Consultants)'s research, about 70% of the mid-tier companies in the software and IT services industry in Romania are, potentially, for sale. The most interesting companies for financial investors are those with software products developed in house, but with no financial support for further development and sales & marketing push outside Romania.

Objectives Telecommunications The strategy for 201115 regards the introduction of the BWA (Broadband Wireless Access) systems in the 3.5 GHz, 2.5 GHz and 800 MHz frequency bands and the implementation of the first concrete steps of the digital switchover. Through the Broadband Strategy, the Ministry of Communication and Information Society managed to unlock European funds amounting to EUR 84 million for investments in broadband infrastructure. Raising the percent of households with Internet access to 45% Increasing the number of rural communities with access to broadband networks facilities Raising the percent of companies using the internet as primary communication tool with the public institutions to 60% Promoting e-commerce and offering financial and technical assistance for SMEs to adopt innovative solutions by offering irredeemable financing Since the transition to digital television is likely to accrue, the fixed telephony is expected to decline as a service provided separately. Bundled offers including audio-visual programmes, broadband Internet access and fixed telephony (triple-play) will be the main driver for the growth in the residential segment In the corporate segment, the demand for integrated services of mobile telephony, data transmissions and fixed telephony will gain importance.

o o o o o o o o

See also: http://rbd.doingbusiness.ro/ro/5/articole-ultima-editie/1/258/the-impact-of-the-economic-crisis-on-theromanian-software-and-it-services-market http://rbd.doingbusiness.ro/ro/5/articole-ultima-editie/1/257/romanian-telecom-market-overview

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Attachment 19

Education Extra Information

Overview o The diversification of rural economic activities depends on education, knowledge and skills. o Education and training are essential for rural communities, but there are noticeable gaps in the school infrastructure. Although there are more schools than necessary in rural areas, the quality of education is poor, because of the poor infrastructure and low training level of teachers. o Most schools need new buildings, furniture, utilities and teaching materials o Vocational and primary education is important for the conversion of the agricultural workforce to nonagricultural skills. o Rural school units do not have enough IT equipment. o Generally speaking, the quality of education in rural areas is poorer than that in the cities, because of the difficulties in attracting skilled staff in those areas, and also funding issues. o The higher-educated population in rural areas represent 1.8% of the total population because of poor access and low income. o At university level and professional training areas there are multiple areas of improvement/opportunities: - Introducing new specialisation and new subjects (shoe design, presentation, communication skills, branding, etc) - Adapting curricula to market demands and conditions (e.g. IT, design, textiles, furniture, agriculture) - More collaborations and cluster initiatives in the research field, together with the business environment and the research institutions. Country
Romania Hungary Germany UK France Russia USA Switzerland Bulgaria Moldova China Greece Denmark Turkey
QHC = quality of human condition Data from: Richard Lynn and Tatu Vanhanen (2006) - IQ and Global Inequality

IQ (2002)
94 99 102 100 98 96 98 101 93 95 100 92 98 90

IQ (2006)
94 98 99 100 98 97 98 101 93 96 105 92 98 90

QHC
53 64,1 78 76,7 78,1 64,5 86,6 82,2 59,1 46,2 39,7 76,1 85,4 50,2

Rank
1 10 19 26 31 32 38 39 40 Finland Greece USA Hungary Germany Poland Czech Republic Switzerland Russia

Country

Value
0,993 0,98 0,968 0,96 0,954 0,952 0,938 0,936 0,933

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41 48 55 61 92 105

Bulgaria Romania Moldova Serbia China Turkey

0,93 0,914 0,9 0,891 0,849 0,824

UN Global Education Index 2008 (Part of HDI)

EU Indicators Regarding Education (Lisbon Agenda) Romania Prematurely leaving education system* Highschool graduate Students under lowest level of performance Adults involvement in permanent education *for 18-24 years of age population 23,60% 66,50% 41% 1,60% EU 14,90% 77,30% 19,40% 10,80% EU Target 10% 85% 15% 12,50%

Data from: PIRLS (Progress in International Reading Literacy Study) for 4 th grade students
500 International Average Lietva Lithuania Hungary Bulgaria 512 Romania 470 480

545 543 543 550

490

500

510

520

530

540

550

560

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Data from: OECD program for evaluateing students PISA

520 500 480 460 440 420 400 380 Mathematics Romania Science International average Reading 426 441 428 500 500 500

Data from: TIMSS (Trend in International Mathematics and Science Study) - for students in 8th grade

Science

52 48

Mathematic

48 45 Romania International Average

Attachment 20
o

Communication Industry Extra Information

The Realitatea-Caavencu Group - http://www.gruprc.ro/ - owns, among many others, a news channel (the first one of its type), Realitatea TV, which holds a top position in the Romanian audiences preferences; the group was founded in 2001 and is owned by Sorin Ovidiu Vntu, a controversial Romanian businessman, which makes the groups media products less trustworthy to some viewers; the group also includes more niche-oriented products, such as The Money Channel, addressed to viewers interested in the Romanian business market; the groups products and projects are addressed to well differentiated targets and has recently suffered a very visible tendency towards new media the F5 division - http://www.f5web.ro/ ; The Mediapro Group, also associated with a somewhat controversial businessman, Adrian Srbu; the group owns one of the most famous and watched Romanian TV channels, PRO TV, which was

125

launched in 1994; the TV Channel continues to launch popular show formats, such as Dansez pentru th tine / Dancing with the Stars, which has reached its 8 edition; the group also has several niche TV channels and publications, as well as new media products through the Mediapro Interactiv Group; Mediapro also produces its own TV series (some sitcoms and soap operas promoted on Acas TV, a channel dedicated exclusively to the female audience) and movies, under the Mediapro Pictures label with a moderate success; The other important player on the media market is INTACT Group, financed by Dan Voiculescu, another controversial Romanian businessman; Antena 1, the groups most important media product, was the first privately owned national Romanian TV channel; Antena 1 focuses on light entertainment TV shows, just like PRO TV, its long time rating adversary, while the news channel Antena 3 is a direct competitor to Realitatea TV; the group also owns several newspapers among which the daily Jurnalul Naional is one of the most known, along with other niche publications, other TV and radio channels, as well as new media; TVR1 is the national TV channel and the oldest; it is state-owned and it was the only available TV channel during the communist era; it is therefore associated with that period and, being state-owned, is not regarded as equidistant; Other publications on the Romanian media market are the glossy magazines which are shared between Ringier, Sanoma Hearst, Burda, Attica Media, as well as MediaPro or Intact. Some of the glossy magazines are international brands (Elle, Cosmopolitan, Maxim, etc.), while others are local brands, such as Tabu, The One, Bolero, etc.;

Attachment 21

Romanian top companies according to Deloitte CE Top 500 (top 500 companies from Central Europe)
Revenue from Sales in 2008 4551,3 3029,8 2076,5 1841,1 1658,5 1557,2 1528,3 1301,7 1280,1 1255,6 1188,6 1099,9 1032,6 1015,6 999,9 999,9 979,8 891,2 Net Income in 2008 277,8 -196,2 60,3 154,2 N/A N/A -57,7 N/A 437,9 2,8 306,6 N/A 20,1 34,9 N/A N/A N/A 146

Rank Name Petrom Rompetrol Automobile Dacia Arcelor Mittal Metro Electrica Rompetrol Downstream Petrotel LukOil Orange LukOil Vodafone Interagro Carrefour GDF Suez Energy Romania Porche Transilvania General Import-Export British American Tabacco Romgaz

16 39 77 89 100 110 113 139 142 144 157 174 184 189 193 194 201 221

Sector Energy and resources Energy and resources Manufacturing Manufacturing Consumer Business and Transportation Energy and resources Energy and resources Energy and resources Technology, Media and Telecommunication Energy and resources Technology, Media and Telecommunication Consumer Business and Transportation Consumer Business and Transportation Energy and resources Manufacturing Consumer Business and Transportation Consumer Business and Transportation Energy and resources

Subsector Oil and Gas Oil and Gas Automotive Process industry Wholesale and distribution Power and Utilities Oil and Gas Oil and Gas Telecommunication Oil and Gas Telecommunication Consumer Products Companies Retail Oil and Gas Automotive Wholesale and distribution Consumer Products Companies Oil and Gas

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233 237 272 331 367 383 385 393 404 414 418 420 432 492

Selgros Romtelecom Kaufland Hidroelectrica OMV Romania MOL Romania Electrocentrale CFR Calatori Alro Coca Cola Renault Industrie Roumanie Philip Morris Oltchim CFR Marfa

Consumer Business and Transportation Technology, Media and Telecommunication Consumer Business and Transportation Energy and resources Energy and resources Energy and resources Energy and resources Consumer Business and Transportation Manufacturing Consumer Business and Transportation Manufacturing Consumer Business and Transportation Manufacturing Consumer Business and Transportation

Retail Telecommunication Retail Power and Utilities Oil and Gas Oil and Gas Power and Utilities Transportation Process industry Consumer Products Companies Automotive Consumer Products Companies Process industry Transportation

858,5 845 778,5 663,9 612,6 591,9 587,9 579,2 563,8 551,2 546,9 543,4 529 468,2

N/A 1,1 3,7 17,7 16,5 12 -93,9 -70,7 56,2 66,2 0 N/A -63,6 -46

Attachment 22
Country Singapore Switzerland US Japan Germany France China Hungary Czech Republic Greece Russia Poland Bulgaria Turkey

Global Innovation Index 2009 BCG

Overall 2,45 2,23 1,8 1,79 1,12 1,12 0,73 0,51 0,41 0,12 -0,09 -0,12 -0,13 -0,21 Innovation Inputs 2,74 1,51 1,28 1,16 1,05 1,17 0,07 0,8 0,88 0,01 -0,02 0,22 0,23 0,15 Innovation Performance 1,92 2,74 2,16 2,25 1,09 0,96 1,32 0,18 -0,1 0,23 -0,16 -0,44 -0,48 -0,55 Sum 7,11 6,48 5,24 5,2 3,26 3,25 2,12 1,49 1,19 0,36 -0,27 -0,34 -0,38 -0,61

1 3 8 9 19 20 27 31 32 42 49 52 53 58

61

Romania

-0,29

0,22

-0,77

-0,84

64 Ukraine -0,45 -0,13 -0,73 -1,31 72 Brazil -0,59 -0,62 -0,51 -1,72 83 Moldova -0,8 -0,24 -1,28 -2,32 Global Innovation Index 2009 - BCG (Boston Consulting Group) & NAM (National Association of Manufacturers) http://www.nam.org/innovationreport.pdf

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Chapter 4
Attachment 23
o

Registering a Romanian company

Buying shares in a Romanian Company

The purchase of shares in a Romanian company is performed through the Share Assignment Agreement concluded between the two parties, namely the actual shareholder who is going to assign the shares in question and the future shareholder who will take over the shares in the Romanian company. The share assignment can be performed at the shares' nominal value, mentioned in the companys articles of incorporation, or it can be performed at a higher value than the nominal one. In the latter case, the new shareholder has the obligation to discharge to the state the tax in amount of 16%. This percentage applies to the difference between the nominal value and the purchase value. The share assignment, in the case of limited liability companies, must be registered with the Trade Register Office for opposability to third parties. The dividends which are incumbent after the share transfer data belong to the purchaser, excepting the case where the parties have agreed otherwise. Although the law refers to Romanian joint stock companies, this also applies to Romanian limited liability companies. As a result, the shares assignment agreement can contain a provision on the right of the purchaser to obtain the dividends for the period prior to the assignment. If the parties have not regulated the legal situation of the dividends, the practice inclines to assign them to the purchaser for the period of time prior to the conclusion of assignment. Therefore, the right to dividends, being a fundamental social right of each shareholder, cannot be alienated only through the partys convention. The company is forced to pay to its shareholders the agreed dividends.

The share assignment and their rights over the dividends

o

Share assignment to a foreign legal entity

8. The Procedure: Between the Romanian company (as a purchaser) and the foreign company (as a seller) a share assignment agreement shall be concluded. All the shareholders of the Romanian limited liability companies adopt the Decision of the General Meeting of Shareholders by which the following are approved: the share assignments the modification of the Articles of Association as a result of the assignments. The updated version of the Articles of Association of the Romanian Limited Liability Company (SRL) showing the new shareholding structure and new amendments (if applicable). In the case where the share cession by the Romanian limited liability companys shareholders is concluded at a higher value than the nominal one, it is necessary to pay the investment income tax. This tax amounts to 16% of the income computed as the difference between the assignment price and the nominal value of the assigned shares. The investment income tax in this case entails the following problems: o the investment income tax is withheld (i.e. the seller will pay to the purchaser the assignment price reduced with the investment income tax value); o payment of the income tax depends on the following aspects: if the seller is Romanian legal person (PJ) or natural person (PF) and the purchaser is non-resident PF or PJ (see article 67 of the Fiscal Code) o in the case of the foreign legal entities without permanent office in Romania (without a fiscal registration number), the foreign legal entity must designate a fiscal representative. The foreign legal entity which becomes shareholder in the Romanian limited liability company will need a series of documents for registering the share assignment with the Romanian Trade Registry Office.

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Romanian Shelf Companies

d) There are a significant number of investors interested in purchasing an already registered company rather than incorporating a new one. This could be intended for a number of reasons, ranging from offering additional confidence to business partners or a presumed easier procedure for entering the Romanian market. e) The procedure of purchasing shares in a Romanian company, even if this company did not have any activity in the past (a so-called shelf company) has its specifics when compared to the same procedure abroad, respectively: The procedure implies a larger number of paperwork and takes more time and is more expensive than incorporating a new company. The procedure automatically implies the following changes in the company structure: change of shareholders, change of company headquarters, change of directors (administrators), and issuance of a new Certificate of Registration. The procedure requires a Share Assignment Agreement which has to be signed by both actual shareholders and future ones. All changes in the company must be registered with the Trade Register Office in order to be considered valid. The procedure requires the following documents: the Shareholders Decision drafted in a certain format, the updated Articles of Association, a Share Assignment Agreement, Affidavits and Specimen Signatures for the future shareholders and directors and documents necessary for the new company headquarters. f) There are also the following aspects to be taken into consideration when interested in purchasing a Romanian ready-made company: There is no such concept as nominee directors as per the Romanian legislation; There is no real method to verify in what type of transactions/operations the company was involved in the past; therefore a diligent approach is recommended.

Romanian Non-Profit Organizations and Associations

o Romanian Associations The Association is the legal entity constituted of 3 or more persons who have brought together their financial contribution, knowledge or labour for a general interest, or the interest of a specific group or their own non-patrimonial interest. It must be underlined that an Association cannot conduct commercial operation or perform activities in order to obtain profit as a main activity. However, an Association can perform commercial operation as secondary activity if related to their main non-profit activity. The patrimony of an Association cannot be less than the equivalent of the minimum gross salary in Romania and may comprise both in kind and monetary contributions. For the registration of the Association, the associates will have to provide the Articles of Association, drafted per the specific regulations as well as the statute, proof of headquarters and social capital and availability of the chosen name of the Association. The file containing the aforementioned documents is subject to approval of the regional court of competent jurisdiction in the area where the headquarters are located. According to the Government Ordinance no. 26/2000, within 3 days the judge will either approve the registration or request further documentation. Nonetheless in practice it takes approximately one month until the decision is rendered. The Association shall consist in the following organizational bodies: General Assembly; Management Council; Censor or Censor Committee. It is important to note that an Association is able to be shareholder in a Romanian commercial company. The dividends obtained from the activities of these companies, unless reinvested, must be used for the purpose stipulated in the Articles of Association. o Romanian Foundations The Foundation is the legal entity constituted by one or more persons assigning a certain patrimony permanently and irrevocably to the fulfilment of a general interest purpose or the interest of a specific group.

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The patrimony of the Foundation must include assets (in kind or monetary) in value of at least 100 x the minimum gross salary in Romania on the date of its incorporation. The founders shall provide the following documents for the registration of the Foundation: Articles of Association and statute, proof of headquarters and initial capital and availability of the chosen name. The organizational bodies of the Foundation are the following: Management Council, formed of at least 3 members appointed by the founder(s) at the moment of its creation; Censor or Censor Committee, formed of an uneven number of members. Foundations can become shareholders in commercial companies in a manner similar to that of an Association (described above). Differences between Romanian Associations and Foundations The Object of the two entities: unlike the Association, the Foundation cannot act in the interest of its founders. The number of founders: whereas for an Association the number of founders must be of at least 3, the Foundation is able to have one or more founders. The minimum social capital: it is one minimum gross salary for an Association and 100 x the minimum gross salary for a Foundation; Organization bodies for an Association: General Assembly, Management Council, Censor or Censor Committee; for a Foundation: Management Council and Censor or Censor Committee. Termination of the entities: unlike the Association, the Foundation cannot be dissolved through the Decision of the General Assembly.

Attachment 24

Legal Types of Trade Companies

o General partnership A general partnership can involve two or more partners. The partnership relationship is based upon a contract and any person who is capable of entering a binding contract may enter a partnership. Following this agreement, the parties must register their partnership with the National Trade Register Office. In a general partnership, partners are jointly liable for the debts and obligations of the partnership and each partner can be personally liable for the overall debts and liabilities, which are not satisfied by the assets of the partnership. The capital of the partnership is formed of the partners' contributions. These contributions can include cash, real estate, equipment, or other property. Contributions become assets of the partnership and comprise its registered capital. Romanian laws do not set maximum or minimum limits on capital, nor do they indicate how much of the capital must be in cash or other assets. These decisions are left with the partners. o Limited partnership A limited partnership consists of one or more general partners who manage the business of a partnership and one or more limited partners who contribute capital (money or other property) to the partnership but do not participate in its management. Generally, limited partners are not liable for the debts and obligations of the partnership beyond their contributions to the registered capital. The liability of the general partner is the same as the liability of partners in a general partnership. For an investor, therefore, being a limited partner is similar to having an investment in a corporation. Limited partners share the profits or other compensations by way of income in proportion to their partnership contributions. A limited partnership must use in its name the specific words limited partnership. o Joint Stock Company A joint stock company is a corporation with registered capital of a minimum of RON 90 000 and at least two shareholders. When an SA is established, at least 30% of the share capital, or 100% in respect of contributions in kind, must be immediately contributed upon formation of the company and all registered

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share capital must be fully paid up within twelve months of formation. Shares could be nominative shares or bearer shares and can be freely traded or pledged. A joint stock company may be set up privately or by public subscription. The management of a joint stock company is managed by a Council of Administration (Board of Directors), although it is possible to have only one Administrator. The Directors do not necessarily need to be shareholders. The Directors are appointed for a maximum mandate of four years by the General Meeting of Shareholders, which also decides their powers. Directors may be re-elected. A joint stock corporation is normally recognized by the use of the words limited incorporated or corporation in its name. o Limited Joint Stock Company A limited joint stock company is a rare form of limited partnership. It has characteristics of both a joint stock company and a limited partnership. o Similarly to a limited partnership, there are general and limited partners. o Similarly to a joint stock company, the registered capital of the limited joint stock company is represented by shares. o Similarly to a partnership, the general partners may be liable for the debts and obligations of the company beyond the amounts they have contributed. o The limited partners, not active in the management of the company, have their liability limited to their share stake. o A limited joint stock corporation is normally recognized by use of the words SCA in its name. o Limited liability company A limited liability company is a company formed by a limited number of partners (no more than 50). It is based on the constitutive documents. The registered capital of a limited liability company cannot be less than RON 200. The registered share capital of a limited liability company is normally divided into social parts/shares with a registered value of not less than RON 10. Shares cannot be freely traded, making limited liability companies similar to what are known as private companies in other legal systems. Shares of these companies cannot be pledged as collateral for loans. The Articles of Incorporation of the limited liability company will include: - the full name, place and date of birth, residence and citizenship of individuals; - the name, registered office and nationality of the shareholder, as legal person; - the type, name, headquarters and, if any, the company logo; - the object of the company, specifying the main domain of activity; - the subscribed and paid in registered capital, the shareholders contribution in cash or in kind, the value of the contribution in kind and its valuation method as well as the date of the full payment of the subscribed share capital; the number and nominal value of shares as well as the number of shares subscribed to each associate for his/her contribution; - the shareholders in charge with the representation and administration of the company or the nonshareholder administrators, natural or legal persons, and their powers which are to be exercised jointly or separately; - the share of profits and losses for each shareholder; - the secondary offices (branches, agencies, representative offices or other such entities with no legal personality) whether or not established as the same time with the company, or the conditions of their subsequent establishment if such establishment is taken into account; - the duration of the company; - the methods of dissolution and liquidation of the company. Decisions are made by majority vote in the General Meeting of the Shareholders (1 share = 1 vote). Decisions involving changes in the constitutive documents must be agreed by all shareholders, if these documents do not state otherwise. One or more Directors/Managers are appointed in the constitutive documents or by the General Meeting and are put in charge of the management of the company. Limited liability companies may also be formed by a sole associate.

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Currently, the majority of companies registered in Romania whether domestic or foreign-owned, are limited liability companies. A limited liability company is known as a SRL. o Other Types of Companies Branch o Foreign firms are allowed to establish a branch office in Romania; o Branches can operate only in the same activities of their parent company; o Branches must have a general manager, who can be a Romanian or a foreign citizen; o Branches do not have legal personality. Representative Offices o Can be set up by a foreign company in Romania; o Function as first steps for checking future activities in Romania; o Are not allowed to commit in legal engagements, as separate legal entities. Subsidiary o Commercial company with legal personality; o Separate and distinct entity regarded as a Romanian one; o The Romanian subsidiary has its own patrimony and bank account. Nationality of Trade Companies According to Law no. 31 of the Fiscal Code, a company registered in Romania is a Romanian legal person.

Attachment 25

Practical advices

Registering a Trademark in Romania

A trademark registration gives the holder an exclusive right to use the trademark for products and/or services for which registration was made, for a term of 10 years from the date of the deposit, and the right to prohibit third parties to use its trademark or fraudulent imitation. On request, the registration of a trademark can be renewed at the end of each term of protection of 10 years. For the registration of a trademark it is required to file an application for registration with the State Office for Inventions and Marks (OSIM) by filling a standard form provided by OSIM comprising of: - for a Romanian applicant: name and address of the applicant, including telephone and fax; - for foreign applicants: country, name of country of residence, name of the country where the activity takes place; - for a legal entity applicant: the respective country whose legislation served as a framework for establishing the legal person; - name and address; - statement to invoke the right of priority, indicating the state and the first deposit, if the priority is claimed from an earlier application; - statement to invoke the priority of exhibition, indicating the location and name of exhibition and the dates of the products or services in that exhibition; - indication of colour or colours claimed to indicate the main parts of the brand; - statement on the three-dimensional shape of the brand; - the trademark characters (letters or figures) other than those used in Romania; - a translation of the words constituting the trademark if they are not in Romanian; - identifying the goods or services for which trademark registration is required, grouped according to "Classification of Nice"; - signature of the applicant or his representative, as applicable. The application shall be accompanied by graphic or photographic reproduction of the mark in sizes up to 6 x 6 cm, as follows: - 5 reproductions of the trademark in black and white when colour is not claimed as a distinctive element; - 5 reproductions of the trademark in black and white and 5 colour reproductions of the trademark when claiming at least one colour as a distinctive feature.

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Duration of protection is 10 years; trademark may be renewed at the end of each period of 10 years, at the request of the proprietor, the tax provided by law. OSIM trademarks are protected only in Romania.

Romanian Trade Register Office

o

o o

The Romanian Trade Register Office is an institution organized by the Romanian Ministry of Justice. The Trade Register in Romania has the following responsibilities: keep records on the legal and financial status of all Romanian companies, provide economic and statistical information, provide commercial information, simplify the procedures concerning incorporation and companies, inform and assist business people on issues related to the Trade Register activity. Legal registration operations such as the incorporation of new Romanian companies, change of the social headquarters of the company, amendment of any clause in the Articles of Association, transfer of social shares, require the verification of the file and documents by a clerk and a Trade Registry (see GEO no. 116/2009) Beginning with the date of approval of the registration, the Romanian Trade Register usually requires around 3 - 5 business days to issue the Certificate of Incorporation. Other useful information about the Trade Register and its activities throughout Romania: The Trade Register is a public institution and is obliged under law to issue, on the expense of the person requesting it, official copies of the documents registered in its database as well as information regarding the registered data and to provide information in regards to the existence of certain documents in the records of the Romanian Trade Register. The Romanian Trade Register has branches in 42 counties, representing the National Trade Register which is coordinated by the Ministry of Justice. The activity of Public Notaries in Romania provides the official recognition of the civil or commercial relations as well as the exercise of rights and protection of interests. The Public Notary is invested to perform a service of public interest and has an autonomous statute. Notaries activate through individual offices or associative structures, much like attorneys. Romanian Public Notaries have the following attributions: drafting legal documents, on the request of the parties involved in the proceedings; authentication of documents drafted by the Notary, the party or the attorney (the Notary verifies the identity of the parties, their approval and is present while the parties sign the respective document); inheritance procedures (started by any party with interest in the case); certification of certain facts, according to the Law (e.g. the fact that a person is alive, that is located in a certain place, that a person has shown up at a specific time and date, etc); notarization of signatures, specimen signature as well as seals/stamps; certification of documents presented by the parties; maintaining records of documents presented by the parties (the Notary will have to mention a date, identify the documents with all relevant information, mention the name of the person to whom the records must be released, etc.); notarization of copies; notarization of translations. All Notary procedures are performed upon request. The documents drafted by the parties or their representatives, shall be verified to fulfil the conditions related to form or content, the Public Notary being able to bring modifications or addendums, with the approval of the parties. The documents are drafted in accordance with the disposition of the parties and under the conditions of the law. The services provided by the Romanian Public Notaries are used on much broader scale than in other countries, especially if comparing to Anglo-Saxon or Northern European countries.

The Romanian Public Notaries

o

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Overview of the Romanian Courts

Romanian legislation stipulates the following Courts of Law: o High Court of Cassation and Justice The High Court of Cassation and Justice is organized in 6 divisions: Civil and Intellectual Property section, Criminal section, Commercial section, Fiscal and Administrative section, the Panel of 9 judges and the Joint section (which renders decisions for the interest of law in order to harmonize the application of law by the lower courts). The High Court solves the following litigations: o Final appeals against the Decisions of the Courts of Appeal; o Final appeals in the interest of the Law; o Any other areas of competence (by Law). o Courts of Appeal Each Court of Appeal has jurisdiction in an area where a number of Tribunals operate. The Courts of Appeal are organized in specialized sections such as: civil criminal, commercial, minor and family section, administrative and fiscal section, labour and insurance conflicts section etc. The Courts of Appeal rule in: o As a 1st phase Court: administrative litigations concerning administrative acts issued by central public authorities and institutions; o As 2nd phase (Appeal): appeals against decisions rendered by the Tribunal as 1st Phase Court Decisions; o As 3rd Phase (Final Appeal): final appeals against decisions of Tribunals rendered as 2nd phase courts or against decisions of Tribunals rendered as 1st Phase courts which according to the law are not subject to 2nd Phase Appeal. o Any other cases provide by law. Tribunals Romanian Tribunals are Courts organized in each county and the Bucharest municipality. They are located in the countys main city. Competence of Tribunals: o As 1st Phase Courts: a) Commercial Trials of over RON 100 000 as well as trials without a non-financial object; b) Civil Trials of over RON 500000 with certain exceptions; c) Labour Conflicts with certain exceptions; d) Administrative Litigations with certain exceptions; e) Intellectual and Industrial Property Trials; f) Expropriation Trails; g) Adoption Trails; h) Claims arising from damages caused by judicial errors in criminal trials; i) recognition and enforcement of a foreign judgment in Romania. o As 2nd Phase Courts (Appeal): Appeals against 1st Phase Regional Courts decisions. o As 3rd Phase Courts (Final Appeals): Final Appeals against decisions of Regional Courts which are not subject to 2nd Phase Appeal. Specialized Tribunals Military Courts Romanian Regional Courts Romanian Regional Courts cover Romanian counties and Bucharests sectors. Regional Courts can contain specialized divisions per the nature and number of the cases. Their competence is for 1st Phase Courts, respectively all trials with the exceptions of those going directly to superior Courts.

o o

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The Court of International Commercial Arbitration The Romanian Arbitration Court has the mission to promote commercial and civil arbitrage both on a nationwide and international level and alternative solutions to litigation. Attributions of the Arbitration Court include the following: - Assists the parties on their request in the Arbitrage procedure; - Elaborates models of Arbitrary Conventions and promotes them in specific business areas; - Collaborates with Arbitrary Commissions of Chambers of Commerce; - Maintains evidence of its specific practice; - Collaborates with international arbitrary institutions.

Attachment 26
o

Signing Contracts in Romania

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In the case where Romanian laws are applicable to the specific Contract (any litigation between the parties are to be solved by a Romanian Court), entering into contractual relations with a Romanian party requires knowing more about the respective Romanian regulations. The requirements listed below are to be taken into account when concluding commercial contracts as per the Romanian Law such as: sale/purchase pre-contracts and final contracts, rental/lease agreements, mortgage contracts, cession contracts, leasing, services agreements, construction contracts, insurance contracts, commission agreements, transportation contracts, etc. As per the stipulations of the Romanian law, a contract should comprise certain elements: obligations incumbent to each party for the fulfilment of the contract, delivery and quality conditions of goods and/or services, terms, payment methods and payment guarantees, payment instruments and price insurance, contractual risk, as well as the jurisdiction applicable to potential litigations arising out or in relation with the interpretation, execution or breaching of any term or condition within the respective contract. Other required elements include the complete name and identification details of the parties (for legal entities these include headquarters address and registration number with the Trade Register Office) and name of the person signing the contract (when representing a legal entity). In case of partial or total non-fulfilment of any obligation stipulated in the contract, besides the penalties established by the parties in the contract, the party which has fulfilled its obligations can claim damages in an amount already anticipated and set forth in the contract as of the moment of its execution or established by court decision. The following payment methods are acceptable: payment order (bank transfer), check, bills of exchange (in certain conditions expressly mentioned by the Law), factoring. In case of non-fulfilment, the contracting parties are able to begin debt recovery procedure for claiming in court their amounts due by the other party along with all the accrued penalties to the outstanding amounts... The creditor will be able (after a final decision rendered by the court of competent jurisdiction) to enforce the court decision against the debtors assets such as: liquidities (including funds in bank accounts), dues, products, receivables or other patrimonial values. The enforcement procedure is carried out by the services of a receiver having jurisdiction. Romanian Law contains vast legislative dispositions concerning the form of certain contracts in order to be valid and binding. There are an important number of exceptional requirements (e.g. authentic form for sale purchase of real estate properties, written form, accordance with dispositions regarding each separate type of contract, etc.) and important general dispositions that directly influence business relationships with Romanian partners.

Governing Law of Contracts signed with a Romanian party 9. Considering that the Romanian Civil Code allows the parties to establish the content of a contract, it is obvious that in the case of an international contract, they could choose the applicable law of the contract. 10. The Law stipulates that the applicable law must be expressly mentioned or result in a clear manner from its content or circumstances. There are two methods for the parties to express their will: an explicit choice (through the actual mentioning of this information in the contract or annex) or a tacit agreement. The elements used for deducting an eventual tacit agreement of the parties are the following: Using legal notions or institutions specific only to a certain Legal System.

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Reference to a procedure used only in a certain country can place the contract in that Legal System. Signing the Contract in a certain language can indicate a choice of the parties; however this is not regarded as highly relevant. Choosing a specific Court of Law in a state is not regarded as highly relevant. If the parties have not expressly or tacitly designated an applicable jurisdiction governing the contract, the Court will have to make a decision in this sense, based on objective criteria. (see Law no. 105/1992) The main criterion is applying the law of the state which the contract has stronger ties with. This is a more recent solution, an influence of the Anglo-Saxon law (the notion regarded as proper law). For example, a contract is stronger related to the law of the state where the debtor has on the date the contract is enforced his/her/its legal domicile/headquarters. The secondary criteria will be applying the law of the location where the contract is signed. In the case the contract is signed by parties through correspondence, it is considered to be signed in the state of the party which has initiated the offer to contract, offer which was accepted.

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Chapter 6
Attachment 27
Tax / Contribution Social insurance contribution Profit tax Health insurance contribution Unemployment contribution Risk fund contributions Fuel tax Building tax Medical leave Guarantee fund tax Auto vehicle tax Land tax Company tax

Tax payments
Payments / year 12 4 12 12 12 1 2 12 12 2 2 4 Time needed (hours) 110 32 Tax quota 19.50% 16.00% 6.00% 2.00% 0.4% - 3.6% 1.00% 0.90% 0.25% - 0.75% 0.30% Fixed tax(140 lei) 0.3 lei per sq. meter Tax base gross salary Taxable profits gross salary gross salary gross salary Included in fuel price gross salary gross salary gross salary land area Tax is computed in dependency to the area of lighted billboards The surface of the project Depends on the type of contract Weight of the packaging Added value

Urbanism tax Contract stamp duty tax Environment tax VAT TOTAL

1 0 1 12 113

60 202

Fixed tax Different rates 1 leu/ kg of packaging 24.00%

Source: http://www.capital.ro/articol/romania-pe-al-doilea-loc-din-ue-la-birocratie-pentru-plata-impozitelor-128370.html

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Attachment 28
Rank 1 2 3 3 5 71 71 71 71 176 176 178 179 180

Corruption Perception Index

Country/Territory New Zealand Denmark Singapore Sweden Switzerland Bulgaria FYR Macedonia Greece Romania Iraq Sudan Myanmar Afghanistan Somalia CPI 2009 Score 9.4 9.3 9.2 9.2 9 3.8 3.8 3.8 3.8 1.5 1.5 1.4 1.3 1.1 Surveys Used 6 6 9 6 6 8 6 6 8 3 5 3 4 3 Confidence Range 9.1 - 9.5 9.1 - 9.5 9.0 - 9.4 9.0 - 9.3 8.9 - 9.1 3.2 - 4.5 3.4 - 4.2 3.2 - 4.3 3.2 - 4.3 1.2 - 1.8 1.4 - 1.7 0.9 - 1.8 1.0 - 1.5 0.9 - 1.4

Source: http://www.transparency.org/policy_research/surveys_indices/cpi/2009/cpi_2009_table

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Chapter 7
Attachment 29 Tax payments

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