August 2005

Romania's FOB exports rose by 15.2% year-on-year in the first seven months of the year, reaching ¤12.52 billion, data released by the National Statistics Institute shows.

Exports stood at ¤1.993 billion euro in the first seven months of 2005, up by 8.2% compared to the same period last year.

The value of trade recorded in July 2005 is the highest since 1990.

Romanian exports to the European Union (EU-25) increased by 7.1 percent compared to the first seven months of 2004, with 68.6 percent of Romanian exports having been bound for the EU.

CIF imports in the first seven months reached 17.49 billion euros, up by 21.8 percent compared to the same period last year.

CIF imports totalled 2.546 billion euros in the first seven months of 2005, up by 16.2 percent compared to the same period of 2004.

Imports from the EU-25 rose by 17.7 percent year on year, making up 63 percent of Romania's imports.

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Pipe producer Mittal Steel Roman had a good start this year, registering a net income of ¤4.6 million (RON 16.9 million) in the first half of the 2005 year. In the similar period of 2004 the company reported losses of more than ¤3.7 million.

Mittal Steel Roman is part of Mittal Steel, the world?s biggest steel producer. Mittal owns other facilities in Romania, such as the iron and steel mill in Galati, the Tepro Iasi steel pipe producer and the alloy and non-alloy steel firm Siderurgica Hunedoara.

Mittal Steel Roman had a turnover of ¤107.1 million for the first half of this year, more than double compared to the same period of last year, when the turnover only amounted to ¤47.2 million.

The whole iron and steel industry benefited from the increased demand coming from the Asian markets this year.

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The Netherlands' Rabobank confirmed its interest in acquiring a majority stake in state-owned Romanian savings bank Casa de Economii si Consemnatiuni, or CEC.

Romania, which is privatizing its entire banking sector, has asked foreign investors to express formal interest in CEC before August 31 and will then form a shortlist by September 9.

CEC has EUR1.3 billion of assets under management and a network of 1,400 branches - the largest in Romania.

Apart from Rabobank, French-Belgian bank Dexia SA and France's Societe Generale have expressed a formal interest in CEC.

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The rapid appreciation of the local currency, the leu, against the euro is creating increasingly bigger problems for local managers, who claim the developments in the exchange rates of the leu are triggering major economic perturbations, ACT Media News Agency reports.

According to a recent study conducted by the National Bank of Romania (BNR), 21 percent of the managers interviewed, up from 16 percent in 2004, say the appreciation of the leu poses problems to them. The developments in the exchange rate are now the second most economically perturbing factor.

The most perturbing is said to be insufficient demand (33 percent, down from the previous study).

Also mentioned as causing economic disruption are the financial blockage (13 percent, the same as in the previous study), the level of interest rates (11 percent, up from the previous study) and supply (7 percent, down from the previous study).

The leu has strengthened almost 11 percent in nominal terms against the euro, in the year to the present date, which made almost one quarter of the respondents rate this phenomenon as hindering production the most.

The study was conducted on a national sample of approximately 420 industrial and construction companies selected to represent the economy of the county in which they operate.
Source: ACT Media News Agency

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"Romania will privatize its postal and national radio communication companies, the government said.

The radio communication company would be sold by the end of next year, while the postal company would have to be restructured first and could be sold by 2008, Communication and Information Technology Minister Zsolt Nagy said.

The state is interested in finding a strategic investor to take over the postal company, Nagy said.

The government also intends to list its minority stock in national telephone company Romtelecom on the stock exchange. The state owns 46 percent in Romtelecom, which is majority owned by Greek company OTE.

Consultants for the sales would be hired after a public auction, Nagy said.

About 25 percent of the state-owned stock in the Romanian Post and 20 percent of Romtelecom's stock would be transferred to a fund which compensates people whose property was confiscated during the communist regime.

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In the second quarter of 2005, RomTelecom posted revenues of ¤ 232.4 million, up 16.4% from revenues of ¤ 199.6 million in the same period last year. The increase is primarily due to positive evolution of rental, interconnection and leased lines and data services.

Revenues from monthly rental fees increased by 38%, primarily reflecting the February 2005 and June 2004 tariff rebalancing rounds.

Wholesale revenues rose by 21% in the quarter, reflecting a 56% gain in wholesale traffic, a natural consequence of the upward trend characterizing the Romanian telecommunications market.

Retail traffic decreased in comparison to the second quarter of 2004 due to mobile substitution and heightened competition from alternative carriers.

Conversely, tariff rebalancing resulted in an increase in international traffic for residential customers.

Operating income before depreciation and amortization as a percentage of revenues rose to 42.6% in the second quarter of 2005, as compared to 31.7% in the second quarter of 2004, as a result of increased revenues.

Total operating expenses before amortization and depreciation dropped by 2% during the second quarter of 2005, compared to the same period of 2004.

Despite the drop in personnel expenses by 13%, operating expenses before depreciation and amortization remained roughly at the same level as in the second quarter of 2004, mainly due to increased interconnection expenses and expenses related to other services (Universal Service fees, advertising expenses, consulting, etc.).

Interconnection expenses rose by 7.9% as a result of increased traffic.

In the second quarter of 2005, RomTelecom achieved a significant improvement in profitability, posting net income of ¤ 57.6 million, resulting in net profit margin of 24.8%, compared to 4.7% in the second quarter of 2004.

RomTelecom?s management is pursuing the implementation of its Transformation Plan:

? Efficiency improved from 240 Lines per employee at the end of 2004, to 275 Lines per employee at the end of the second quarter of 2005, an increase of 14.5%.

? Headcount was reduced to 15,242 by the end of June 2005 from 18,083 at December 31, 2004.

? Implementation of several projects is proceeding according to plan, including development of a new central billing system, which became operational in July 2005, and deployment of a financial e-business system. Operational and network services improvements are driven by several key projects, including replacement of manual switches which is almost completed, further reduction of operating expenses, and provision of modern services like ADSL, which was launched for both residential and business customers.

OTE, through its wholly owned subsidiary OTE International Investments Ltd, holds a 54.01% interest in RomTelecom S.A., the incumbent telecommunications operator in Romania.

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he Romanian market for IT services grew a healthy 28.3 per cent to ¤136.5m in 2004, according to a report from market advisory firm IDC. A combination of economic growth, large privatisation deals and vertical market development spurred investment in IT services. The Romanian IT services market should expand by an annual average of 16.8 per cent over the next few years, reaching ¤297m in 2009.

There was a considerable shake-up in the vendor rankings on the Romanian IT services market last year. S&T jumped from sixth to first, Siveco fell from first to third, and new entrants Softwin, Forte and Romysm Consulting all cracked the top ten. IBM held on to second position while HP dropped a notch to fourth. Despite the shuffle, the market further consolidated in 2004, with the top 10 vendors representing just under 70 per cent of market revenue, up from 60 per cent in 2003.

Systems integration was the largest single area in the IT services market in Romania in 2004. Hardware support and installation was a close second, as enterprises continued to replace obsolete equipment. Custom application development and software support and installation were a distant third and fourth, respectively. Together these four areas accounted for 66.5 per cent of IT services revenue.

The utilities sector was the single largest vertical in the Romanian IT services market last year due to a number of major projects in the sector. The privatisation of the country's biggest bank helped make banking the second largest sector, as did the implementation of e-banking services and additional steps towards satisfying Basel II requirements. The central government was the third largest vertical. Together, these three verticals comprised 34.0 per cent of IT services spending.

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2004 was an advantageous year for most of the 84 thousand companies in Romania, operating in the IT field. In 2004, Romania?s IT market reached 770 million euros in value, an increase of 10 percent as compared to the previous year. A survey conducted by the US-based International Data Corporation, estimates growth of over 11 percent for the IT market for 2005 also forecasting significant growth in the Internet and IT service sectors. The number of computers in Romania has increased from 700 thousand in 2001 to 2.45 million in 2004, while the number of Internet users has reached 5 million, as compared to 950 thousand four years ago.

Another indicator, well underlining the development of the IT sector in Romania, are the developments in terms of ?.ro? domains, whose number has increased from 16 thousand in 2000 to 85 thousand at the end of 2004. But what?s really happening on the Romanian IT market? Let?s take for instance, Hewlett Packard?s subsidiary in Romania, which in 2004 reported 100 million euros in sales, 24 percent more than in 2003. Radu Enache, director of Hewlett Packard Romania has shared with us his opinions concerning the Romanian IT market.

?Romania benefits from an IT market in line with international standards. In my opinion, the professionalism of Romanian IT experts, the managers? abilities, and the high level of technical information is increasing competition, which is an excellent thing for Hewlett Packard - for only in this way can a company grow and develop. The Romanian IT market, will continue to grow, with forecasts standing at around 10 percent, but as far as our firm is concerned I believe we?ll experience a growth rate higher than that in the country on average.

This is the time of complex solutions and systems, and this is one of our strengths, if you take into account what we have on offer. We are determined to continue to invest in our team in Romania, and in the resources we have in this country. And by our resources, I mean, besides our team, the well-trained, skilled partners, that we have. These two elements are part of a whole which plays an extremely major role in our activity.?

In turn, the Romanian branch of the US company Dell has reported a sales increase of 176 percent against 2003, without giving further information concerning the number of home PCs sold or the turnover. It is true this US company opened a branch in Romania only in early 2003, and that could be a good explanation for the soaring sales.

The Taiwanese company Gigabyte has recently opened a branch in Romania, although its products have been on offer on the Romanian market for much longer. Here is Alexandru Ticea, head of Gigabyte?s Romanian subsidiary, with more.

?By opening its branch in Romania, Gigabyte is continuing its regional policy of enlargement towards south-eastern Europe. Four other Gigabyte subsidiaries have been opened in countries in our region, such as Poland, Serbia Montenegro, the Czech Republic and Turkey. In another development, Gigabyte is the number one brand in Romania in terms of motherboards and video cards, and our main aim is to maintain this leading position and if possible to widen the gap between us and the other big producers. About the Romanian IT market, I would say that it has a significant potential and it has developed considerably of late. Let?s take for example the year 2001 as a reference point; well, we can say that as compared to that year, the IT market in Romania has doubled. That?s a fantastic growth, a growth which can be experienced only in Eastern Europe.?

Another good example, is the Romanian subsidiary of the world?s biggest business software producer, the German company SAP. Its returns from licenses and maintenance grew by 72 percent in 2004, in comparison with 2003. Valentin Tomsa, manager of SAP-Romania told the Romanian daily paper Ziarul Financiar, that the company he was leading had the biggest rate of returns as against the objectives agreed upon by the subsidiaries of the German company. The SAP business solutions have so far been employed by over 7 thousand users in Romania.

Microsoft-Romania also increased its revenues in 2004, by 30 percent, reporting an annual average growth in its eight-year activity of over 60 percent. Xerox has been present on the Romanian market for 35 years, and the results the company obtained in 2004 are the best in the history of its presence on the Romanian market, as Marius Persinaru, general manager of Xerox Romania has confessed to us.

"In 2004, the company?s revenues in Romania totaled 40 million dollars, and the year is definitely the best Xerox has ever had in Romania. Its growth, compared to 2003, hit 16 percent, and practically all our divisions contributed to it. Our goal for 2005 is to obtain growth of at least 15-20 percent, for the market?s potential allows us to do that. That means we are seeking faster growth than the market?s actual pace.?

The Romanian software companies managed to obtain better results in 2004 as compared to those they achieved in the previous year. Softwin, one of the best known companies, thanks to their BIT DEFENDER anti-virus technology, obtained a 60% higher turnover than during the year 2003. BitDefender is directly distributed in 37 countries, the company?s objective for 2005 being that of covering more than 40 markets. All in all, SOFTWIN estimates that by the end of 2004 the BitDefender technology was already protecting over 41 million users from about 100 countries. BitDefender is currently available in 17 languages of international circulation, the programme?s latest upgrade being in Korean, Japanese and Russian. BitDefender employs a revolutionary method of virus detection, being recognized by 28 Science academies in the European Community.

In December 2004, Softwin was shortlisted by the BBC from among 25 providers, in an international bid for a project involving the use of computers to improve the teaching of certain subjects in schools, targeted at pupils between 5 and 15 years of age. The project value stands at 215 million euros. Softwin was the only non - British company winning the agreed provider status. Within the project, Softwin?s aims at providing interactive educational content covering several age groups and school subjects, especially Physics, Biology, Chemistry and Mathematics. At present, Softwin is a company with 600 employees having branches in Germany, Spain and the US.

Another major Romanian Software company, GeCad, also reported good results for 2004. GeCad is also known due to the fact that Microsoft purchased the RAV anti virus technology from them in 2003. GeCad?s main objective for this year is the launch, on the international market, of a new software product, developed using the firm?s own technology.

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According to Romanian Prime Minister Calin Tariceanu, the consolidated budget deficit 2005 will most probably widen to some 1% of GDP, Reuters reports.

Romania, which hopes to become an European Union member in 2007, had already agreed with the International Monetary Fund (IMF) to limit the budget deficit to 0.74% of GDP.

However, this proved to be unfeasible due to spending needs resulting from extensive floods the country has suffered this year. Source: REUTERS

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While on a visit in Constanta County, President Traian Basescu denied rumours that Romania could be left out the ?operating plan? of the pan-European IV Transport Corridor, stating that such rumours were launched by the main Opposition party, PSD.

?This is a story launched by PSD leaders these days, to accuse the Government of jeopardising the Fourth Corridor in Romania, but it is a huge lie. I can tell you that in 1997 in Helsinki, after lengthy negotiations and enough hindrances, it was I who managed to introduce Romania in the Pan-European IV corridor and to have Constanta Port agreed on as the terminus point of this main transport route.
Later on, on this basis, I signed the EUR 220 M financing agreement with the European Investment Bank (EIB) in 1999, for the Bucharest-Cernavoda motorway, whereas PSD in the 2000-2004 mandate only managed to boycott the idea of a pan-European transport route taking the motorway to Cornu, because they were concerned with anything but the development of IV Corridor. The Nastase Government never invested any funds in this project,? Traian Basescu said.

The Head of State assured the audience that the transport infrastructure continues to be one of the main concerns of the incumbent Government, but also of the Presidential Administration.

In reply, former Premier, incumbent PSD executive president Adrian Nastase stated that construction of the Pan-European Corridor has nothing to do with Cornu locality, where one of his residences is located. ?As a sailor, he (Traian Basescu, editor?s note) has travelled less on the country?s roads. Corridor IV has nothing to do with Cornu, and if he imagines the Brasov-Bors motorway crosses Cornu, it means he has lived too long on the sea and less in the country,? Nastase said. Source: Nine oClock

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A unique dealership is expected to join Palmdale's auto mall, selling off-road vehicles from Romania.

Auto dealer Mike Taheri is buying 3.1 acres from the city in the Antelope Valley Auto Mall to build a Cross Lander dealership, expected to open by December 2006.

"This will be one of the few places where you can buy one," said Councilman Mike Dispenza. "It's a good fit for our area. It's a very affordable vehicle."

In keeping with similar land transactions at the auto mall, Taheri will not actually pay for the property. Instead, the city would write off the $810,000 sales price through sales tax revenue generated by the new business over the next 10 years.

The total taxable sales projected from vehicle sales on the property are expected to exceed $7.8 million.

Targeted at off-road enthusiasts rather than at SUV owners who seldom need their four-wheel-drive capability, the Cross Lander 244X sport recreation vehicle is tall and boxy, described by manufacturer Auto Romania as a no-frills vehicle.

The vehicle gained U.S. Environmental Protection Agency certification last December.

Manufactured in Campulung, Romania, the vehicles will be equipped with a 4.0-liter V-6 engine and are expected to sell in the low- to mid-$20,000 range, the company said.

There are 148 dealerships signed up nationwide, but sales have not started, company officials said.

The company calls itself the only international manufacturer aggressively targeting American off-road enthusiasts.

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Various banks, among which Greece's Eurobank and National Bank of Greece (NBG), will soon submit their offers to acquire Romania's CEC and Banca Comerciala.

Offers for CEC are expected to stand at about 340m euro.

Bids for a 51% stake in CEC must be submitted by August 31, while a short list will be ready on September 9.

Many banks, such as Erste, Raiffeisen, Rabobank, OTP, Eurobank and NBG are interested in acquiring CEC.

Also, the government of Romania will sell 62% of Banca Comerciala.

Deutsche Bank, ABN-Ambro, BNP, Intesa, Dexia, Fortis, KBC, Erste, BCP and NBG are among the prospective buyers.

The banks will submit their bids on September 19 in order to participate to the short list.

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Misr Romanian Bank, whose main shareholders are seeking to sell a controlling stake in the bank, said Egypt's Central Bank had authorized the Lebanese bank BLOM to start due diligence work, the bourse said. The moves follows reports that BLOM had offered to buy a controlling stake in Misr Romanian. BLOM said it was considering entering the Egyptian market but said it was too early to single out Misr Romanian as a partner.

State-owned Banque Misr and other shareholders are planning to sell a controlling stake but a Banque Misr executive said only informal inquiries had been received.

Banque Misr and Egyptian funds together hold 51 percent, while Romanian banks hold the remaining 49 percent.

"Our bank received a letter from the Central Bank of Egypt dated July 27, 2005 authorizing BLOM to start due diligence procedures on our bank," Misr Romanian Bank said in a statement sent to the stock exchange. The bank said it had no further details.

Misr Romanian Bank, with branches in Egypt and Romania, offers a range of retail and commercial services, such as personal loans and project finance. The bank had total assets of 3.7 billion Egyptian pounds ($641 million) at the end of March 2005.

The bank's shares are listed in Egypt but not traded.

The Egyptian government last year restarted a privatization program that includes selling state-owned stakes in banks.

BLOM, the largest bank in Lebanon in terms of assets, deposits and profits, has been eying other countries in the Middle East as part of its strategy of expansion in the region.

The bank is already operating in Syria and Jordan. Other leading Lebanese banks such as Banque Audi and Byblos Bank have set up offices in Jordan and Sudan and have received an approval to operate in Syria. The Central Bank is encouraging local banks to expand outside Lebanon because of the limited size of the local market. Despite the economic problems in Lebanon following the assassination of former Prime Minister Rafik Hariri on February 14, BLOM maintained its high profits in the first six months of 2005 and assets grew to more than $10.9 billion. "Leading Lebanese banks can use their wide experience to enter new markets in the region," one banker said.

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The economy ministry announced on Saturday (27 August) that the drafting of the new national strategy for the defence industry would be completed by 7 September. The document would focus primarily on restructuring measures for Brasov-based plants administered by the state-run company Romarm.

In other news, Deputy Prime Minister Marko Bela says government officials will meet with Hungarian officials in late October. The focus would be on concrete bilateral projects and issues related to the environment and minorities.

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The Romanian Government okayed on Thursday the subsidizing of wheat storing in special spaces, and its trading. Farmers will be granted subsidies for storing a total of 1.5 tonnes of wheat, or 20.4 percent of the crop. Minister of Agriculture, Forestry and Rural Development, Gheorghe Flutur, said subsidies will be given over six months, January 2006 included. As many as 2.5 euros per tonne will be paid for the first month, Flutur also said. For the farmers to enjoy fair participation, the programme does not work according to the principle that the first served is one having come first. The step has been taken for the regulation of the wheat market and for protecting it from speculation.

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Bucharest - Across eastern and central Europe on Sunday, work began to clean up after the disastrous downpours and flooding that have taken at least 26 lives across the region.

The Harghita region in Romania, where 15 lives were lost in a week and 33 people have died since mid-August, was among the hardest-hit.

Three hundred people have been washed out of their homes there and will not be able to return until mid-October, local authorities said.

"About 30 houses have been completely destroyed by the floods and several hundred seriously damaged," the head of the local authority said.

"Reconstruction work cannot begin until the roads have been rebuilt." He said 200 troops were busy clearing away "mud and debris."

The cost to Romania of damage since the start of the month has been put by the interior ministry at ¤260-million.

In Switzerland, where six people have died in the last week, the 70 inhabitants of Oey-Diemtigen, near Bern, have been told they will have to wait weeks, if not months, before their homes can be lived in again.

In Bern itself about 340 people living in the lower town along the river Aar have been able to go home but many other local residents have had to stay in temporary shelters because electricity and gas supplies have not been restored.

In Austria, where four lives were lost, thousands of troops, firefighters and volunteers - among them 100 asylum-seekers - have been cleaning up in the western provinces of Vorarlberg and the Tyrol.

Priority is being given to clearing river beds to lessen the risk of future flooding. In most communes electricity supplies and phone lines have been restored.

First estimates put the cost of damage to the rail system in the two provinces at ¤15-million and to the main highway system at ¤5-million.

Many roads remained impassable, in particular in the Paznau valley in the Tyrol and in Vorarlberg, where damage to local roads is put at ¤30-million.

Gargellen in Vorarlberg will have to be supplied by helicopters for several days to come.

Further west, in Carinthia and Styria, more landslides were reported late on Friday and rain was forecast for Sunday, raising fears of further damage.

In Germany, where one person died, levels of the Danube and its tributary the Isar were falling, police said.

"But we shall have to wait several days for all the water to leave for good," a spokesperson said.

At Passau, at the meeting of the Danube, the Inn and the Ilz, water levels were almost back to normal and sandbags used to form dykes were being removed and streets cleaned.

In Poland electricity and gas services have been restored in flooded areas near the Czech border but movement by road remains difficult, according to local authorities who complain of the lack of reaction by central government.

On the side of the continent, in Portugal four new wildfires broke out as temperatures rose, just hours after firefighters tamed three blazes overnight, including one that raced through a nature reserve, officials said.

Two fires were burning in the northern districts of Braganca and Vila Real, one was burning in the central district of Aveiro and another in the southern district of Faro in the Algarve, Portugal's main tourism centre, the civil protection agency said in a statement.

A pilot was killed when his plane crashed while water-bombing a wild fire in Mallorca, Spanish emergency services said. - Sapa-AFP

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The car leasing market in Romania is expected to reach ¤1 billion within two years.

Car leasing company New Kopel is expanding its operating license activity in Romania.

The company, which began operating in Romania several months ago, is one of the first companies offering the full operating leasing services available in the Israeli market.

New Kopel?s current leasing fleet in Romania is estimated at 200 vehicles, consisting mostly of popular models, such as Skoda, Renault, and Honda. The company is focusing on large business customers in Bucharest, most of which are international or Israeli companies aware of the advantages of leasing.

Operating leasing services are provided through a central garage near Bucharest owned by New Kopel. Large international banks operating in Romania provide financial coverage, and New Kopel also uses its own independent sources. The company will begin a nationwide campaign in Romania next month.

Most of Romania?s estimated ¤385 million car leasing market is confined to finance leases. A number of leasing entities owned by auto manufacturers operate in the country, but they also offer finance leases with no operating component.

According to projects, the Romanian car leasing market will reach ¤1 billion within two years, and continue to grow as the date of Romania?s accession to the European Union nears. The Romanian auto leasing marking grew 112% last year.

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Romanian electronic equipment maker Electroaparataj reported H1'05 results, according to which net profit fell 71.4% year on year to 4.8bn old lei, because of gains in the domestic currency, the leu, versus the euro.

Pre-tax profit amounted to 6.1bn old lei, compared to 22.4bn old lei in the same period last year.
Turnover stood at 309.6bn old lei, compared to 285.8bn old lei in H1'04. Total revenue amounted to 302.4bn old lei, against 305.5bn old lei in H1'04. Total costs stood at 296.3bn old lei, compared to 283.1bn old lei in the same period last year.

Electroaparataj's PR officer, Gabriela Niculae said they will protect the company from the currency fluctuations by increasing the imports of raw materials.

Moreover, they will revise their prices for the clients that pay in euro.

"For the whole of 2005, we hope to achieve at least the same level as last year", Niculae also said.

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Three days ago, our collaborator Sorin Adam Matei, was starting, from the United States, an inciting debate. He was wondering which should our priorities be in point of infrastructure: highways or rural roads? The article received much interest from our readers, as proved by the vivid debate on the www.evz.ro forum.

So, which should our priority be? The answer is simple: we have no choice. Without good connections with the small localities, the highways are asphalted lanes suspended over a world whose life has not been changed in any way. Just like, in their absence, many serious investors will stop considering Romania for their businesses. Ten hours in a car, between Bucharest and Nadlac, means an intolerable torture.

We talk about the acquis, the European funds, the country brand, we have politicians who talk with people in Brussels and Strasbourg. We haven't got though, after 15 years of pro-European policies, at least one kilometer of new highway, oriented towards the West. This is the true measure of the abilities of those who have run the country after the revolution!

The inclusion of Nadlac-Conastanta route in the Pan European Corridor 4, in 1996, opened for Romania a "window of opportunity". If we had moved faster back then, we would have probably had now several good highway lanes towards the West. But things have been brought to a stalemate during the 1996-2000 legislature, and under Adrian Nastase's rule, the priority was switched to the "Bechtel highway", towards Oradea-Bors, financed from Romanian sources alone, outside the European plans and allotted without tender to a partner from the US. Now, talks are being held in Brussels about the reassessment of priorities, to the detriment of the Romanian corridor. We now learn that the "Bechtel highway" costs us to much and that we risk losing the European financing for the route towards Nadlac.

And the PSD's propaganda mongers are attacking the current rulers, while forgetting about the situation they themselves triggered. Demagogy? Stupidity? Or at little of both? It would have been a totally different thing if the PSD had focused on the corridor 4 and channeled the money for the "Bechtel highway" into the refitting works for highways and roads. The national interest would have been much better served, obviously, instead of the real estate speculations in Transylvania!

But the current rulers cannot blame everything on the "difficult heritage" for ever. They have the obligation to take quick decisions, to find financing and make sure the works will run fast. Otherwise, we will celebrate 20 years since our failure to align with Europe. And no reason will impress anyone any more.

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"Hewlett-Packard Co is planning to open a new business process outsourcing center in Romania, following stronger-than-expected demand for its finance and accounting services.

Speaking at an outsourcing conference in London, Les Mara, the head of HPs BPO operations in EMEA said: We opened a center in Poland which we thought would give us enough capacity to 2007, but we are about to announce a new center in Romania in the next few weeks as the Polish center is already full.

HP provides finance and accounting services to a number of consumer products companies including Gillette, and Proctor and Gamble.

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The Shareholders Assembly of the Ploiesti-based Unilever South Central Europe decided to cut the company's share capital by 19.5 million USD. The amount stands for the fiscal loses posted by the company and is to be covered by Dutch-based associates Marga BV and Wemado BV, Bursa reports.

According to Unilever representative Alexandra Olaru, the losses were incurred by the company between 1996-2000.

"During those years the company invested a lot in its brands and personnel training. Procedurally speaking, the amounts recorded as financial loses were regulated only this year", she said.

In 2001, the company posted profit, which increased on a year to year basis since then. With investments of some 90 million EUR, Unilever is one of the most important foreign investors in Romania.

The company produces consumer goods and owns brands such as "Knorr", "Delma", "Rama", "Dero", "Dove", "Rexona" and "Axe.

Unilever operates in Romania three production facilities and posted some 93 million EUR turnover in Romania in 2004.

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Romania received 12 letters of intent from banks willing to advise on the sale of its 45.99 percent stake in fixed-line carrier Romtelecom, majotity owned by Greek firm OTE, the Romanian Communication Ministry said.

Romania's centrist government, which came to power in December, intends to complete the privatisation of Romtelecom by 2006.

The deadline for submitting the letters expired on August 25.

The letters came from ABN Amro , BNP Paribas , CAIB, Citibank , Credit Suisse First Boston, JP Morgan, Lazard & Co, Merrill Lynch and Morgan Stanley, the Communication Ministry said.

Other bids were placed by Deutsche Bank in a consortium with BRD Securities ; HSBC in a consortium with Romania's leading bank BCR, and a consortium made of UBS , ING and CET.

Romania said it wants to sell its remaining stake through an initial public offering and float the company's shares on the Bucharest stock exchange and on a foreign bourse, yet to be selected.

Romtelecom is Romania's largest telecoms operator.

Also, the company is OTE's biggest investment abroad and employs about 15,000 workers.

It reported a net profit of 107.1 million euros last year, reversing a 13.1 million euro loss in 2003.

Romtelecom's revenues grew by 5 percent to 839.1 million euros in 2004, when the company managed to slash operational expenditures by 4 percent to 554.1 million euros.

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Romania?s central bank (BNR) will only partly drain liquidity from the leu money market to avoid hiking interest rates and deter hot money from flooding the booming economy, governor Mugur Isarescu said yesterday.

Analysts say hopes of a leu currency appreciation are prompting yield-hunters from abroad to pump billions of euros into Romanian assets as the European Union candidate country approaches accession, as early as 2007.
?When we feel that short-term and very short-term capital is behind a treasury transaction, we will be seeking to prevent them from achieving their expected gains,? Isarescu said in a statement to private news agency Mediafax, sent to Reuters by his office.

Isarescu said the bank was determined to leave some excess liquidity in the market to keep interest rates at a level that would discourage speculators.

?There is plenty of money on the market which has nothing to do with the real economy,? Isarescu said. ?There are funds which come here to speculate and then leave. These funds are a big source of financial instability.?

The BNR has stepped into the money market only once in 11 trading days to drain leu funds via one-month deposit tenders since merging its key interest rates to a single 8.5 percent benchmark on August 9, to make its policy more transparent.
The BNR?s quasi-absence from the money market triggered a drop in short-term interbank interest rates to 3/7 percent from 6/8 percent before it merged its key rates, dealers said.

The BNR shifted its focus from targeting the exchange rate to targeting inflation last week, but it was forced to intervene in the foreign exchange market for four days in a row to tame a rising leu, in a challenge to its own policy switch.

Isarescu said that increased leu liquidity might prompt some commercial banks to lower deposit rates for individuals, but that would be an isolated phenomenon.

?Some banks may consider lowering rates for deposits. But I count on the serious banks with strategic thinking and involvement in the economy, which look after their clients on the credits and deposits side, such as BCR,? Isarescu said.
?We are not against cheaper resources from abroad, but if we allow too many funds, people might get used to not saving money any more,? he added.


By Radu Marinas
Source: Reuters

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Identa Corp. reported this morning that the Romanian Anti Drug Authority, the national agency of Romania, (ANA) has ordered an additional 30,000 units of Identa drug detection kits. The order brings the total number of Identa's drug detection kit sales to over 45,000 - exceeding Identa's first-year sales projections to Romania by 2500 units. The tender was particularly important as it is financed by the European Economic Community through Spain and Belgium.

"This order confirms our promise to the Romanian legal law enforcement and the European community," said Yaacov Shoham, IDTA CEO. "Identa has always represented its products as superior. This new order from the Romanian government confirms that Identa has delivered exactly what was promised. We are determined to be a long-term partner in the mission to reduce the spread of illicit drugs around the world."

About Identa

Identa develops, manufactures and distributes drug detection products for the both professional and civil markets which consistently pass the highest qualifications and testing procedures of law enforcement and security agencies around the world. The company has corporate representatives in 20 countries including 15 companies in the U.S., and 4 companies in Great Britain.

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The Czech Catholic Charity's campaign seeking humanitarian support for flood- stricken Romania has met a very limited response from Czech donors, who provided a total of CZK 565,000 crowns for this purpose, a mere fraction compared to the recent wave of solidarity with Thailand.

"However, people in Romania have no other possibility to cope with the disaster", Vaclav Keprt from the Charity's Olomouc branch told journalists yesterday.

Olomouc Archbishop Jan Graubner, too, asked potential donors for help yesterday.

"I'd like to join the appeal for help [to Romania]. Local people cannot secure any help for themselves," Graubner said.

Experts expect the aid to Romania, where the floods afflicted 470 towns and killed several people, to last about five years.

The Catholic Charity immediately earmarked CZK 75,000 crowns from its emergency fund in support of Romania. It also launched a public fund raising campaign a month ago, but has managed to collect only CZK 565,000, which is a fraction compared to the 80 million which people donated in support of Thailand several months ago, Keprt said.

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On Sunday, September 11, 2005, the Jewish Architectural Heritage Foundation (JAHF) and AMHN, its Romanian sister organization, will dedicate Romania's first fully functional Holocaust memorial museum.

A formal ceremony will be held on the grounds of the museum in Simleu Silvaniei, Romania, at 12:00 PM local time. Supporters include the Romanian government, the Honorable Warren L. Miller, Chairman, U.S. Commission for Preservation of America's Heritage Abroad, prominent Holocaust survivors such as Elie Wiesel and Oliver Lustig, American Jewish leaders Rabbis Andrew Baker and Shea Hecht, and many others.

The Northern Transylvania Holocaust Memorial Museum will highlight the Jewish life of the region before the Holocaust and the sequence of events that led up to the darkest period in its history, focusing on regional Romanian and Hungarian history at the time. A fully functioning synagogue, which will be used during the upcoming dedication ceremony, is also included. Other features include video presentations, survivor testimonials and Jewish artifacts recently found at the site.

The old synagogue of Simleu Silvaniei, in this historic region of Transylvania, was built in 1876. In May/June of 1944, the area's Jewish population was forced out of their homes into the brutal Cehei ghetto and from there packed into cattle cars and transported to Auschwitz-Birkenau. Over 160,000 Jews from the region perished.

Adam Aaron Wapniak, a Brooklyn native and architectural designer, became interested in the abandoned synagogue's restoration on a 2003 visit, sparking the interest of Dr. Alex Hecht, a New York dentist and son of Holocaust survivors Zoltan and Stefania Hecht, who was born in the nearby village of Nusfalau.

Dr. Hecht had actually attended Hebrew school and holiday prayers at the synagogue as a child. For the past two years he and Mr. Wapniak have traveled back and forth between New York and Simleu Silvaniei, vigorously driving the restoration and contributing as well as raising funds. "While we have the support of several major Jewish organizations," explains Dr. Hecht, "We hope that once the greater world community sees a real museum functioning to educate an interested population, they'll be encouraged to help us generate a greater support base."

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In 2005, the Romanian market for medical equipment and supplies is estimated at US$240.9 million, or US$11 per capita.

It is expected that the device market will continue to expand at a rate of 6.4% per annum. This will take the Romanian market to US$329 million in 2010. Around 92% of the medical device market is supplied by imports.

The USA and Germany are the leading suppliers, accounting for over 60% of imports in 2002. The domestic production of medical devices contributes little towards the market size in Romania, and as a result, the value of exports is low.

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Bucharest - The death toll in storms and floods over the past 10 days in Romania has reached 25, the interior ministry said on Wednesday in Bucharest.

Seven people drowned in the hard-hit Harghita district since Sunday and eight have gone missing. By the end of the weekend, 18 people were confirmed killed by incessant storms and floods.

Only in the town Odorheiu Secuiesc, in the Harghita area, 800 houses were submerged. In the broader region, the number of homes penetrated by water rose to 2 800 in 22 towns.

The picture is incomplete, as entire areas remain cut off, owing to floods and landslides.

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Romania's current account deficit increased by 60% year on year in the first six months of the year to 2.7 billion euro, data released by the Romanian central bank BNR show. The country may thus not be able to meet its full-year target.

The trade gap, which widened by 51% year on year to 3.1 billion euro in the first half of 2005, was the main driving force behind the increase in the current account deficit, the data show.

Romania wants to keep its current account deficit below 7.75% of gross domestic product (GDP) in 2005, as agreed with the International Monetary Fund (IMF).

However, the unrelenting growth of household consumption, which continues fueling imports, will most probably result in the country missing the target, analysts claimed.

Exceeding the current account gap target for a third year running could strain relations between Romania and the IMF, whose assessment of the country's reform efforts is seen as a key factor influencing the European Union's decision to let Romania enter the bloc by 2007, as scheduled.

In the short-term, Romania can rather easily cover the deficit, as capital inflows into the country continue rising. However, the long-term impact causes concerns.

Romania's central bank can nevertheless not do much to reduce consumption growth.

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Romcarbon, Romania's sole gas mask producer, announced that net profit rose to 15.18 billion old lei in the first six months of the year, compared to 2.44 billion old lei in the same period last year, on the back of the sale of non-core assets.

Some 48% of its gross profit of 17.4 billion old lei came from the sale of buildings and land, the company said.

Romcarbon's turnover rose to 185 billion old lei in the first half of 2005, from 161 billion old lei in the same period last year.

Exports accounted for 2.66% of the company's sales.

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Prosegur Cia de Seguridad SA said it has signed an alliance with risk capital group GED Eastern Fund II FCR for joint investments in security firms in south east Europe.

In a statement, Prosegur said that both members of the alliance 'will provide knowledge in their respective areas with the aim of creating a a leading company in the area with the maximum guarantees of security.'

GED will be offering the 15 years of 'socio-economic experience' of its work in south east Europe.

Prosegur said the alliance's first acquisition has involved the taking of a 51 pct stake in Romanian security company Dragon Star Guard SA for 1.2 mln eur.

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AMSTERDAM (AFX) - Wolters Kluwer NV said that its Legal, Tax & Regulatory Europe division has bought Rosetti, a Romanian legal publisher, for an undisclosed amount.

Rosetti, based in Bucharest with 17 employees, reported 2004 sales at 350.000 eur. The company is a legal and fiscal publisher for professionals in organizations and governments, such as lawyers, accountants, HR specialists, and public administrations.

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Rompres, EurActiv, EUobserver, FT - 23/08/05; AP, AFP, Reuters, BBC, Rompres - 22/08/05)

With only weeks to go before the European Commission releases a key report assessing Romania's readinesss for EU membership, Foreign Minister Mihai-Razvan Ungureanu voiced confidence Tuesday (23 August) that his country is on track.

"I am confident that the monitoring report of October 2005 will evoke the progress Romania made over the past eight months," Ungureanu, a member of the National Liberal Party (PNL), told a summer school for young liberals held at a Black Sea resort.

Bulgaria and Romania signed their accession treaties with the EU on 25 April. Both are scheduled to join the Union on 1 January 2007. But safeguard clauses included in the treaties allow the EU to postpone their entry by one year, if they fail to meet the commitments made during membership negotiations. Ungureanu warned on Tuesday that any activation of the EU safeguard clause would cost the country 2 billion euros. That is approximately the same amount provided by the EU for implementation of scheduled reforms.

Romania's specific commitments include reforms in the judiciary and public sector, as well as stronger anti-corruption measures and a reduction of steel subsidies.

In his comments Tuesday, Ungureanu acknowledged that Romania is lagging behind slightly in the implementation of judicial and environmental measures and in bringing competition rules in line with EU standards and norms.

However, both Ungureanu and PNL vice president Teodor Melescanu sought to downplay the effect of a possible negative recommendation in the October report, saying an April 2006 assessment by the EC would have greater weight.

"It is only in April 2006 that the European Commission will draw up the final report on the two countries' capability to join the EU on 1 January 2007," Romanian state news agency Rompres quoted him as saying.

Melescanu and Ungureanu's statements came a day after Prime Minister Calin Popescu Tariceanu replaced four ministers -- two from each the PNL and the Democratic Party (PD) -- in a bid to boost popular support for the ruling coalition and accelerate the reform process.

Among those sacked Monday was European Integration Minister Ene Dinga, who was replaced by Anca-Daniela Boagiu. Finance Minister Ionut Popescu, who angered some by announcing an unpopular VAT increase without clearing it first with partners in the four-party coalition government, was replaced by Sebastian Vladescu. Gheorghe Pogea was appointed deputy prime minister in charge of co-ordinating business activities in place of Gheorghe Seculici. Eugen Nicolaescu replaced Mircea Cinteza as health minister.

"We need ministers who will perform superbly, not just well," Tariceanu said Monday.

Tariceanu announced his resignation last month following a move by the constitutional court to water down EU-required judicial reform laws. He reversed his decision several days later after being warned by EU officials that Romania could not afford to waste time for early elections that his resignation would have sparked.

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Heavy flooding has claimed the lives of 13 people in Romania over the past three days and three more are missing, the country's interior minister said warning that the toll could rise further.

Detailing the extent of the disaster, Vasile Blaga said nearly 2,000 people had been evacuated from their homes over the past two weeks and 400 houses had been swept away by flood waters. He said authorities had deployed nearly 10,000 troops and police to help rescue operations, while the cabinet, meeting in emergency session offered 370,000 euros to help reconstruction efforts.

The latest victims brought the toll from extreme weather to 31 since August 14 and to 66 since the beginning of this year, Braga said. Most were elderly people swept away by the currents of raging rivers.

"Unfortunately, we are expecting the number of victims to rise hour by hour," Blaga said at a news conference, although flood waters are starting to recede. "Our priority is the safety of residents. For that reason we have deployed nearly 10,000 military troops and police to help in rescue operations," Blaga added. "The damage from flooding since the beginning of the year runs to more than 1.5 billion euros."

The central Romanian region of Harghita has been worst hit, with rainfall there at times reaching an intensity of more than 100 litres per square metre in a period of just 15 minutes. Normal rainfall for August is a total of 150 litres.

The weather is expected to improve over the coming days and flood waters to begin receding.

Romania has been the country worst affected by the floods in central Europe this summer, with the highest death toll.

In July the country experienced its worst flooding in 30 years, leaving 24 people dead and causing damage estimated at 650 million euros.


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Restricting the deepening of the current account deficit and counteracting speculative fund inflows by means of discouraging short-term gains could explain, according to analysts, the operations conducted by the National Bank of Romania over the past two weeks, in order to meet the desired inflation target.

With the shift to the inflation targeting strategy, the National bank's primary objective is to ensure and maintain aggregated price index stability.

The inflation target for this year is 7.5 per cent, with a plus/minus one per cent margin. The need to minimise risks of potentially volatile capital coming into the country forced the central bank to maintain a prudential conduct in the monetary policy, with the exchange rate turned into an anti-inflation anchor.

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Sales of new automobiles in Romania continued at a sustained growth pace during July. Despite July sales being 12 percent lower than sales in June, there have now been over 154,000 cars delivered since the start of the year, a 60 percent increase on the number sold in 2004., "ACT media News Agency" reports


As the second half of the year is traditionally known as a much better period for sales on the Romanian market, total sales might very likely exceed 250,000 units, significantly above the predicted level of 200,000 units, shyly announced by market players at the beginning of the year.

Car sales in the first seven months of the year have accounted for around 2 billion euros, also an increase of nearly 60 percent as compared with the same period last year.

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Romanian agriculture is faced at the moment with problems linked by unfavourable weather conditions, lack of products' quality, but also with the absence of a short-term strategy, according to President of Agrostar trade union, Nicolae Stefan,"ACT Media News Agency" reports.


Romanian agriculture needs product councils that could guarantee a minimum price to all products, help the development of agricultural exploitations and manage funds earmarked for agriculture, as well as short-term strategies, the release shows.

As well, there is a shortage of processing units, of taking over and stocking facilities for vegetables and fruits in rural areas, representing one of the main causes for the big imports made by Romania as far as the most agricultural products are concerned.

The President exemplifies those shortages with wheat that needs a technology at compatible prices with those in the European Union and the United States and, finally, reaches the market at prices practiced "on the third world markets".

The main consequencies of such a situation could be the closing down or a decreased activity in the case of 35-40 percent of all agricultural exploitations, as well as a deficit of the food products' balance account in the range of 1.3 billion euros, the release also stressed.

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Romanian hotel management and consultancy company Peacock Hotels said on Tuesday it would open ($7.3 million) a four-star hotel in the capital Bucharest next month after a six million euro revamp.

Peacock Hotels started revamping a 15-year-old building in Bucharest in 2003 to turn it into its Times Hotel, Peacock Hotels said in a statement sent to SeeNews.

The Times Hotel will have 70 beds, several conference halls, a restaurant and a parking lot.

Peacock Hotels (www.peacockhotels.ro) signed a deal earlier this year to represent the hotel chains of Dutch company Golden Tulip Hotels, Inns & Resorts in Romania and Moldova. The partnership aims to contract under franchise deals at least 10 or 12 hotels by the end of 2006.

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The Romanian market for IT services grew a healthy 28.3% to $167.81 mln in 2004.

According to IDC, a combination of economic growth, large privatization deals, and vertical market development spurred investment in IT services.

The Romanian IT services market should expand by an annual average of 16.8% over the next few years, reaching $365.20 mln in 2009. S&T held the #1 spot, IBM was #2, SIVECO was #3, and HP dropped to #4. Top 10 vendors represented just under 70% of market revenue, up from 60% in 2003.

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NNSBRUCK, Austria (AP) ? Rescue workers piled sandbags to hold back surging floodwaters and evacuated hundreds of people from alpine valleys Tuesday as heavy rains and landslides battered central and southern Europe.

At least 26 people have died in storm- or flood-related accidents in the past week; most drowned, were crushed by debris or collapsed buildings or struck by lightning. Two Swiss firefighters were killed Monday in a landslide.

Worst hit was Romania with 18 dead, some 20,000 homes inundated and more than 1,000 small bridges damaged.

Five people were reported dead Tuesday in Austria, Bulgaria and Switzerland. Thundering torrentsof water surged along riverbanks in many regions, causing millions of dollars in damage.

Austrian firefighters, soldiers and rescue workers fanned out to help hundreds to safety in the hard-hit Landeck region. The Kleinwalsertal Valley, which borders the German state of Bavaria, was completely cut off, with flooding of major access roads.

In a dramatic rescue in the southern province of Carinthia, firefighters saved a 72-year-old woman whose car was perched for two hours at a 45-degree angle into surging waters.

As water gushed around the windshield, a firefighter lowered by a helicopter shattered the rear window and attached cables to the frame. The car was dragged from the water with the driver inside. She suffered shock, police said.

Brown waters rushed just under a bridge spanning the Inn River, which was nearly overflowing its banks. Firefighters and volunteers heaved sandbags in a desperate attempt to hold back the river in Innsbruck, the capital of Tyrol province.

Rising waters caused a gas explosion in the town of Reuthe, Austria Press Agency reported. At least three people were treated for burns at area hospitals. Storms caused power and telephone cuts and interruptions in train service.

In Bavaria, German soldiers evacuated residents as river embankments collapsed, sending flood waters surging through several Alpine resort and farming towns.

"All hell broke loose," said Albrecht Ott, spokesman for regional authorities.

Rescue crews helped build makeshift barriers and personnel from police and fire departments around Bavaria were called in to help, the state Interior Ministry said.

Several regions of Switzerland reported the heaviest rainfall on record, and five people there have died in the past two days.

A new wave of rain hit northwestern Bulgaria, flooding dozens of communities and killing one man, Bulgaria's Civil Defense agency said Tuesday. Border areas between Croatia and Slovenia were flooded, and emergency officials were on alert.

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The continuing development of the social security systems in Bulgaria and Romania will leave both countries in a tenuous position for EU accession scheduled for 2007, exacerbated by recent political instability.

Romania?s Prime Minister Calin Popescu Tariceanu recently resigned and then reneged on his decision. His centrist government has still to make sufficient progress according to EU officials.

Reforms have been undertaken which are aimed at reducing poverty and social exclusion, higher living standards for older people, to decrease the amount of claimants and to search for alternative sources of social security funding.

Traditionally Romania employed an austere system especially with unemployment benefit, a major example being the doubling of the total non-eligible unemployed to claim benefit payment which doubled between 1998 and 2003.

The evolution of social security in Romania has been guided by the principles of European Union legislation number 1408/71/ EEC on social security regulations on employed, self employed and on their family members moving within the European Community.

In respect of this, a legal framework consisting of three pillars has been constructed, the first pillar on mandatory public administered redistributive payments which include old age pensions, benefits for disability, maternity, sickness and a survivor?s benefit in case of bereavement.

Ensuring that all payments are in line with the European social security code and all of the rudimentary benefits which are offered, as like in all EU countries, are regulated.

The two remaining pillars, one for mandatory payments and one optional privately administered component, are currently under review for redefinition and improvement for the protection of supplementary pension funds.

Administrative competence will be further enhanced by the integration of the pension system into the national computer to eradicate voids in the legislative structure from cases which exceed national boundaries, aimed primarily at migrant workers and their family members.

Bulgaria is currently suffering with political instability following the
national socialist party?s inability to form a government from the recent election, the last administration introduced significant changes.

This included the introduction of a minimum insurance calculation based on groups of professions to be paid by employer and employees, and a fund for the guarantee of employees claims in case of employer insolvency.

There are restrictions on the amount that can be yielded on private pensions with law restricting investments to protect the insurer. The major investment possibilities are with a maximum 5% of real estate assets and 50% of securities, like bank accounts, leaving little room for manoeuvre.

Svetla Kostadinova, senior economist with the Bulgarian Institute of Market Economics, said: ?There have been many changes in respect of becoming a member of the European Union, which include the introduction of the widening of the possibilities for the transfer of social insurance rights with the inclusion of the directive, like in Romania, of 1408 which allows social security rights for workers in the free movement area within the EU.?

She added: ?There will also be the increase of the pension age and to even the payments between employer and employee to 50/50 by 2009.?

Although Bulgaria will have to sustain effort in its deregulation reforms to decrease unemployment which is currently twice that of the EU average level, the current rate of unemployment stands at 11% which is the lowest since 1998.

Further improvements will have to be made to the health system to continue the improvement of its social insurances. Emigration increased through the nineties and into this decade, with most working in low paid jobs or becoming ?welfare tourists?, relying on the host country to make insurance payments.

The returning labour have caused a public issue in using a system to which they did not contribute, there have been further complaints from those that can afford private healthcare whilst still being forced to pay into the state system.

The current system is very state bureaucratised and subsidised, whilst the belief that the increase of market influence and the incentive of service provision will improve the system was contradicted by the pre-electoral message, which projected that contributions will have to increase.

According to sources from the European Commission both nations have no major drawbacks which could scupper accession in the area of the framework of social protection programmes, though later membership in 2008 now remains a possibility.

Author can be contacted at petertaberner1976@hotmail.com

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Orange says that it has become the first mobile operator in Romania to reach 6 million customers. After announcing 5 million customers in January, Orange announced last week, that it had excedeed 6 million subscribers. In June mobile phone market penetration surpassed 50%, and estimations for the end of the year are envisaging penetration of up to 60%, these being clear indicators of a positive economic climate in Romania.

In a more and more dynamic telecommunication market, Orange Romania is the operator that for the last two years has registered the largest increases in both customer base and revenues. This strong development was underpinned by significant investments and by the launch of innovative products and services.

Richard Moat, CEO Orange Romania commented "Reaching 6 million subscribers is another milestone for Orange, which is strengthening its position as market leader in Romania. Since the beginning of the year, Orange has added more than 1 million customers. We are committed to focusing further on offering the best possible customer experience and providing innovative products and services that enhance people's lives. I would like to take this opportunity to thank to our 6 million customers for choosing Orange."

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The Romanian Commodity Exchange (BRM) reported positive price differences of 17.24% in real terms registered by bourse order issuers in the third week of August ? reads a BRM press release.

The amount of deals closed in the interval August 15 ? 19, 2005 through the 20 purchase and selling procedures available in the BRM ring attained 6 million US dollars. The record of August was registered by the amount of positive price differences (calculated as the difference between the starting price and the adjudication price).

BRM order-issuers obtained in average a price improvement of 17.24% as to the starting price, respectively 1.24 million US dollars. The contracting authorities for which BRM has organized the most substantial deals have been ? in decreasing order of the amounts: SNCF CFR SA, CFR GEVARO, CFR Passengers, CFR Commodities, the Romanian Road Authority, the Bucharest Regie Autonome for Transports, Petrom's supply base in Floresti, RA ROMATSA etc.

Some of the commodities and services that have contributed to the increase of trades in the BRM ring are diesel, woodstuff and timber, a staff recording computer program, dyes and diluters, data processing components.

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Two new foreign investment funds are seeking businesses in Romania, the Financial Week magazine reports in its latest issue.

UK investment fund Equest Partners will extend operations also to Romania after setting up Equest Investments Bulgaria in 2004. Petri Karjalainen, director and managing partner with Equest said the investment find would open offices in Bucharest early in September, the main fields of interest being financial services, energy, retail and real estate.

Equest Partners, headquartered in London, is specialized in investment management and consultancy, being one of the top companies in this field.

Australian company Quintessential Wealth Ltd (QWL) has in view investments in Eastern Europe and Baltic area, Romania being under the interest focus of investors, by launching a new investment funds for niche businesses.

QWL Euro II Fund was launched last week and is aimed at investments in Lithuania, Latvia, the Czech Republic, Hungary, Poland, Slovakia and Slovenia. The fund also targets investments in important companies in Russia, Bulgaria, Romania, Croatia and Scandinavian countries.

QWL Euro II Fund will initially gather the assets of 4 funds - Hansabank Eastern Europe Equity, Hansabank Baltic Growth, SEB Eesti Uhispank Central and Eastern Europe Growth, and also funds in cash and bonds with flat interest.

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Although the tendency of Romanian refrigeration equipment manufacturers after 1990 has been to switch from production to design, installation, assistance and servicing for the same equipment, these companies are now trying to consolidate their positions by investing in production facilities, after having shared the market among them, daily Ziarul financiar reports.

Domestic demand is over 90 percent met by imports, says management adviser Nicolae Bara of Frigotehnica, a local refrigeration company with a tradition of almost 60 years. Only 10 percent of the business turnover of Frigotehnica is derived from the production business, while 90 percent of it comes from design and installation of refrigeration equipment.

Frigotehnica became private in 1995, when it discarded all its production business. Although securing stability and recording solid annual growth thank to partnerships with big equipment retailers, Frigotehnica has finally decided to resume production. In 2004, it invested 1 million euro in commissioning a factory for the manufacturing of refrigeration doors.

The most recent project of the company is a production facility for compressors, which it built on an investment of 200,000 euros. Frigotehnica is expecting a business turnover of 20 million euros in 2005, up over 50 percent year on year. With a market share estimated at 60 percent, the company has customers in all the retail trade chains in Romania.

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The weapon factory in Cugir (center of Romania) will be privatized in the spring of next year, at the latest, and several European and U.S. companies have shown interest in the process.

According to State Secretary of the Ministry of Economy and Trade Cornel Chiriac, a company working with a military unit in Cugir will be included in the privatization process, due to start next month. Chiriac adds that an analysis has been already made, with a view to re-directing the production flows, some ''assets can be made better use of by concentrating manufacturing in some halls,'' and in this way debts can be paid to the state budget and to the local budget.

If the production of the weapon factory in Cugir has met East-European norms so far, with much manpower and unjustifiably high costs, it now has equipment making possible for it to meet the NATO norms, the state secretary says.

A first string of ammunition 5.56 mm and 7.62 mm in caliber has been manufactured in Cugir and is expected to be certified by the British BAE Systems Co. ''next month at the latest.'' Companies based in Canada, Italy, Germany have shown interest in this NATO-type ammunition.

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The company Cefin Real Estate, developer of the industrial project Cefin Logistic Park, bought out last year by Europolis investment fund, succeeded to finalize the first two stages of this project and, at this month-end, it would start the last two development stages inside the industrial park, Ziarul Financiar daily writes in its edition on Thursday.

"We will start construction of stage three, respectively, four, inside the Cefin Logistic Park that provide two warehouses with a capacity of 25,000 square meters each. The necessary investments to implement the last two stages of this project are approximately 16 million euros", George Margescu, director general of Cefin Real Estate said, according to the newspaper.

Recently, the company increased its share capital by some 1.7 million euros. Simultaneously with Cefin's capital increase, the Austrian investment fund Europolis increased its share capital by 5 million euros. When the project is completed, Cefin Logistic Park would comprise storage spaces amounting at some 150,000 sq m. The entire land allocated for this project is in excess of 300,000 sq m. The value of this project is estimated at around 70 million euros.

In the last seven years, Europolis Group gradually developed into one of the biggest real estate companies in the region with a portfolio of 21 projects in Romania, the Czech Republic, Hungary, Poland and Croatia, at an estimated value of 900 million euros till last year-end.

Cefin Holding, out of which Cefin Real Estate is part, is one of the most significant partners of the Italian producer IVECO. This holding is present with activities in Romania, Hungary and Bulgaria, where it sells commercial vehicles, automotive parts and sub-systems. Along its integrated services for the transport sector, Cefin also produces buses for the Romanian market in partnership with Autobuze Astra (Astra Buses) from Arad (western Romania).

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Pharmaceuticals company GlaxoSmithKline Romania has reported H1 2005 sales of $80 million, up 15 percent year on year. GSK H1 2005 sales figures also included the results of Europharm Distribution, a company taken over by the group two years ago.

"Drugs sales recorded an increase in the first three months of 2005, on market demand, but in the second part of the half year they declined as a result of problems in the Romanian healthcare system," says GSK South-East Europe Reginal Director Roberto Musneci. In his opinion, one of the main developmet guidline of GSK Romania will be strengthening its presence on the segment of national healthcare programmes .

The sales figures so far of GSK Romania has been 20 percxent derived from selling products included in national healthcare programmes and 14 percent from the selling of over-the-counter drugs. The comapny reported total sales of approximately $140 million in 2004, and posted a business turnover of $87 million, the distribution business excluded.

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So far almost 50 percent of the total number of animals in Romania has been identified, which accounts for about 8.8 million head, said managing director of the National Medical and Veterinary Authority and for Food Safety Gabriel Predoi .

The highest percentage of ear-tagged animals was registered with cattle, 60.2 percent, that is about 1.635 million head of cattle, and is followed by sheep and goats, 48.6 percent (5,150 million head), and pigs, 35.7 percent (1.649 million head). 48.6 percent (430,557 head) of horses were identified out of a total number of 886,195 horses, but only 19.3 percent (169,124) were registered in the database, Predoi told a news conference.

The Romanians raise about 5.1 million pigs, 8.3 million sheep and goats and almost two million cows. The deadline for finalizing the identification and registration of animals is December 31, 2005.

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OMV AG, Central Europe's biggest energy company, said second-quarter profit jumped 63 percent, boosted by the acquisition of Romania's SNP Petrom SA and soaring oil prices.

Net income climbed to 337.1 million euros ($410.5 million) from a revised 206.5 million euros in the year-earlier period, Vienna-based OMV said in an e-mailed statement. That was more than the 331 million-euro median estimate of six analysts surveyed by Bloomberg. Earnings before interest and taxes gained 64 percent to 510 million euros.

"Petrom and the high oil prices are driving the results,'' said Alfred Reisenberger, an analyst with Bank Austria Creditanstalt in Vienna, who has a "buy'' recommendation for the stock. "The numbers are in line with what we have expected.''

Chief Executive Officer Wolfgang Ruttenstorfer, 54, in December completed the 1.5 billion-euro purchase of Petrom, the largest Romanian oil producer and OMV's biggest acquisition ever. The purchase almost tripled the company's oil production. OMV also benefited from a 39 percent surge in oil prices in the second- quarter from the year-earlier period.

Shares of OMV slipped 0.3 percent to 40.34 euros. The stock has soared 82 percent this year, the best performer among the 17 members making up the Dow Jones Stoxx 600 Oil & Gas Index, which climbed 29 percent in the period. Six of 16 analysts covering OMV advise buying the company's shares. Nine have a ``hold'' recommendation for the stock, with one ``sell.''

Reorganization Planned

OMV said it will reconfigure the oil cracker at its Schwechat refinery, denting third-quarter profit. The company also said it expects a "softening'' of oil refining margins in the second half. It repeated that 2005 net profit will "significantly'' exceed 2004 earnings after the Austrian government slashed corporate taxes by a third to 25 percent.

Petrom contributed 162.9 million euros to earnings before interest and tax, before one-time items, in the second quarter, OMV said.

OMV said it will reorganize Petrom's operations, shutting unprofitable units and starting a franchise system for the filling stations unit. It has set aside 60 million euros for the program, the company said.

"The successful implementation of our growth strategy enabled us to capitalize on continuing strong crude prices and healthy refining margins,'' CEO Ruttenstorfer said in the statement.

Selling Prices

New York crude oil futures averaged $53.22 a barrel in the second quarter, up from an average price of $38.31 in the year- earlier period. OMV's average selling price increased by 57 percent in the period from a year ago, the company said. Petrom prices increased by 19 percent compared with the first quarter.

Production at Petrom was 215,000 barrels of oil equivalent a day in the second quarter, compared with OMV's 126,000 barrels a day, OMV said.

Romanian production in the third quarter will fall by 10,000 barrels a day, the company said.

Hungary's Mol Rt., the largest oil company in the 10 newest European Union countries, said Aug. 12 that profit in the second quarter more than doubled as demand for oil products widened refining margins. PKN Orlen SA, Poland's biggest oil refiner, last week said second-quarter profit rose 27 percent as prices for its products increased more than the cost of the lower-quality Russian oil it processes.

OMV's net income in the first quarter was 256 million euros.

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Pharmaceutical company Sicomed posted 16.7 million RON in H1'05 net profit, up by 66% compared to the same period last year, ACT Media reports.

H1'05 turnover stood at 99.56 million RON, up by 15% compared to the same period last year. In H1'05, Sicomed made investments worth 68 billion ROL, mainly to bring production technologies in line with international standards.

The salary-related expenditures rose in the mentioned period by 19% year on year, despite the fact that the number of employees decreased from 1,175 in June 2004 to 945 in June 2005. The company's marketing-related expenses increased by 146% in the first half of the year, compared to the same period of 2004.

In the first half of 2005, Sicomed widened its portfolio by 12 new products.

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German group Stabilus GmbH, a leading producer of gas springs and hydraulic shock absorbers for car seats, will invest 10 million euro in the construction of a gas spring plant in Brasov, central Romania, ACT Media reports.

This investment will enable Stabilus to obtain a competitive edge on the car seat market, countering the current pressure coming from Asian and east European manufacturers, Arno Guellering, Stabilus Romania general manager said.

Management expects 30 million euro in turnover after one year of activity, and investment amortisation after two years.

The new plant will start operating in October, according to German officials' latest estimates. The annual production capacity will stand at 6.5 million export-oriented gas springs.

Stabilus' most important customers are BMW, Audi, Renault and Citroen. The company also manufactures gas springs for swivel chairs.

Stabilus posted 375 million euro in sales in the 2003-2004 fiscal year.

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The new bridge over Danube river that will be constructed jointly by Bulgaria and Romania might be left out of the European main transport maps.

Under a new strategy of the European Transport Commission the so call Corridor N4, which includes the Danube bridge, might be replaced by a route connecting Budapest - Belgrade - Nis - Sofia and will then divide into two routes one to Greece and one to Turkey. The German MEP Markus Ferber cited by Deutsche Welle broke the news.

Ferber claimed that such a change in the transport strategy is dangerous. He pointed out that Europe, Sofia and Bucharest have already invested too much in that project.

The 2km Danube bridge, which is a key element of a European transport corridor connecting the German city of Dresden with Istanbul in Turkey, is designed to span over the river connecting Bulgaria's Vidin and Romania's Kalafat.

The project will cost a total of EUR 226 M and Bulgarian government has pledged to chip in more than EUR 60.7 M. Besides, it is also financed by loans and grants from the European Investment Bank, the French Development Agency and the German Credit Institution for Reconstruction and Development.

At the moment, the only bridge on the 610km Danube section of the Bulgarian-Romanian border, links Russe in Bulgaria and Giurgiu in Romania by road and rail.

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Romanian market for mergers and acquisitions amounted to USD 834 million in the first six months of 2005, up from USD 719.11 million reported in the year ago same period, a KPMG study showed.

The main investors came from France, who invested USD 574.47 by 6 June 2005. Romanian investors came second with USD 109.58 million, followed by Luxemburg, with USD 109.27 million. Poland, Great Britain, Israel, Greece and Italy are among significant investors.

Investors? appetite for Romania was triggered mainly due to economic development and EU accession expectation.

Telecom and industrial sector were the main industries were investors put their money with total transactions amounting to USD 642.7 million.

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During the first half year of 2005, Petrom?s sales exceeded EUR 1.3 bn; approximately EUR 752 mn were generated during the second quarter. Petrom?s EBIT for the first half year of 2005 was EUR 239 mn; for the second quarter of 2005, Petrom?s EBIT was around EUR 103 mn. This decrease was caused by a EUR 60 mn restructuring charge accrued in Q2/05.

?OMV is well-positioned to continue delivering on its strategy of profitable growth. Going forward, we will continue strengthening Petrom; our modernization plans are in place and are being implemented, said Wolfgang Ruttenstorfer the OMV President. ?Petrom is already making a significant contribution to profits. We are confident that our clear strategy of profitable growth, combined with our efficient management of the business and our outstanding employees, will deliver record full year?s results in 2005?, he added.

Petrom net income reached RON 601 mn (EUR 164 mn), while turnover reached RON 4,612 mn (EUR 1,259 mn) by 16% higher than in H1/04. Reasons for these results are mainly higher oil prices and hence higher product prices as well as an increase in efficiency and cost awareness in business relations.

?We have reached a good result. However, in order to secure Petrom?s activities, we need to enter a lasting modernization process. In a number of benchmarks, we do clearly lack behind the industry average in Europe. We have to close this gap and we will do everything necessary to achieve that. We are facing a very competitive environment in the region and we want our company to be up at the top», said Gheorghe Constantinescu, CEO of Petrom.

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In a classification of EU members and hopefuls by the minimum wage paid per economy in January 2005, Romania stands at the end of the list with 72 euros, after Bulgaria, which reported 77 euros ? reads a recent study of the EU institute for statistics Eurostat.


Covering the month of January 2003, 2004 and 2005, the report places Romania last in 2004 too, with 69 euros, after it had been last but one in 2003, with 73 euros (ahead of Bulgaria, with 51 euros). In January 2005, Hungary paid a minimum wage of 232 euros whereas Poland paid 205 euros. This parameter had a sinuous evolution in both states, sliding from 212 euros in 2003 to 189 euros in 2004 (Hungary), respectively from 201 euros to 177 euros (Poland).

In the Eurostat classification, Luxembourg holds the leading position with a minimum monthly wage of 1,467 euros in January 2005. Second and third came The Netherlands with 1,265 euros, respectively Belgium with 1,210 euros. Early this year, both France and the UK were paying a similar minimum wage of 1,197 euros. Of the EU members, Latvia registered the lowest pay with 116 euros, whereas Lithuania ranked last but one with 145 euros.

After applying the purchasing power parity ? that is after removing the effect of price differences ? Romania was still last in the January 2005 classification, with 219 euros, after Bulgaria (registered with a minimum wage of 232 euros). Of the states with the highest wages, Luxembourg ranked first with 1,293 euros, followed by Belgium with 1,211 euros and The Netherlands with 1,202 euros. Latvia was the last of EU members with a minimum wage of 283 euros, whereas Lithuania was last but one with 327 euros.

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The transaction volume of MasterCard cards moved up over the first half of the year 90 percent, up to 330 million dollars, the company informs in a release.

In June, some 490,000 MasterCard cards were issued on the local market, some 71 percent more than in June 2004.

Romania is thus first in Europe in terms of gross transaction volume growth on MasterCard cards.

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Foreign investors acquired Romanian stock in excess of 1.3 billion new lei, January through July, 2005, show data with the National Securities Commission (CNVM).

CNVM reports that the Romanian capital market recorded inflows of 747.62 million new lei, outflows of more than 634.97 million new lei, and a trade volume of 1.3 billion new lei. As many as 657 foreign investors - 444 individual and 213 corporate investors - entered the Romanian capital market in January through July 2005, and 91 - 84 individual and 7 corporate investors - left the market.

Inflows in July stood at 84.55 million new lei, outflows at 20.99 million new lei, with acquisitions worth 111.89 million new lei and sales of 33.86 million. Also this July, 48 investors - 40 individual and 8 corporate investors - entered the market, and 23 - 21 individual and 2 corporate investors - withdrew.

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Bucharest is Europe's heaven when it comes to the office spaces business, as constructing and renting spaces in office buildings are few times cheaper than in Western Europe, while profit is much higher and demand not met yet, daily Cotidianul reports .

The Romanian capital city is one of the cheapest European cities in terms of office space rent, according findings in a survey conducted by the real estate company CB Richard Ellis, which analyses office spaces rentals in 37 European cities.

In Bucharest, the rent for one sq m of office space is 179 euros per year, cheaper only in Istanbul - 169 euros per year per sq.m. The same study shows that one of the highest profitability rates of this sector, of 10 percent, is recorded in Bucharest City.

The Romanian capital is surpassed only by Istanbul, with 11 percent and Moscow - 12.5 percent. At the opposite pole are Western European cities, with profitability rates for this type of real estate investment being much lower: 4.8 percent in Vienna; 5.1 percent in Paris and 4.75 percent in London.

As the profitability rate reflects the annual gain of the investor building or buying the space for future rental, the conclusion could be only one, namely that building (or acquisition) costs are much lower than in the other countries, so small that they bring high revenues even if the spaces are rented for fewer money.

A 10 percent profitability rate means the owner recovers his investment in ten years. As in Bucharest the rent is of 179euros/sq m, this means the owner paid for this sq m some 1,790 euros, a much lower price compared with the other European cities. Seventeen high-rising office buildings totaling 140,000 sq m. are expected to be completed in Bucharest in 2005. Almost the entire space has been rented out before the buildings were finished, which means the demand still exceeds the offer, Cotidianul explains.

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Assuming that Romania will duly join the EU on January 1, 2007, the country will adopt the euro somewhere between 2012-2014 at the earliest. According to a recent study by Bank Austria Creditanstalt (BA-CA), chances are still high for Romania and Bulgaria to join the Union according to the initial schedule, provided that they fulfill the accession criteria and promptly solve their domestic political problems, "ACT Media News Agency" reports.

According to the provisions of the Maastricht Treaty, in order to be able to adopt the European currency, candidate states must meet a series of nominal convergence criteria. Given the fact that at present Romania fulfils two of the four criteria of accession to the Eurozone, the adoption of the unique European currency could take place between 2012 and 2014.

Thus, the budget deficit should not exceed 3% of the GDP; with a deficit planned at 1% for this year, Romania successfully meets this requirement (Bulgaria registers a budget surplus of 1% of the GDP). The public debt should not exceed 60% of the GDP; both countries duly meet this criterion too, since Romania?s public debt is 23.4% of the GDP and Bulgaria?s ? 38.5%. On the other hand, July?s inflation rate should have been less than 2.4%, but both Romania ? with 5.1% and Bulgaria ? with 4.8% missed this target by far.

According to the Maastricht Treaty, the inflation rate should not exceed by more than 1.5% the average of the three EU member states with the lowest rate. As for the long-term interest rate, in July this should have been kept below 5.2%. Romania was far off this limit with 14.2%, whilst Bulgaria was able to observe it, with a rate of 3.3%.

Before it can adopt the European currency, a state must participate for two years in the European Rate Mechanism (ERM II). BA-CA estimates that Romania might be ready to adopt the euro in the interval 2012-2014, whereas Bulgaria might be prepared for that in the interval 2009-2010 (yet provided that both states join the EU in 2007).

According to the Austrian analysts, Poland, the Czech Republic and Hungary, which all joined the EU in May 2004, will not be able to adopt the European currency any sooner than 2010, whereas Estonia, Lithuania and Slovenia might become Eurozone members even earlier than 2007, as they already are ERM II participants since 2004.

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At least 16 people have died in severe storms and flooding which have hit Romania in the past week, the interior ministry has said.

The latest victim was an 11-year-old boy, who was swept away by flood waters as he was playing with friends. Another two people are still reported missing.

More than 1,400 people from across the country have been evacuated and thousands of homes have been damaged.

This year Romania has suffered some of its worst floods in decades. In July, flooding killed dozens of people and left thousands of homes and acres of farmland and other cultivated areas submerged. More than 1,000km (620 miles) of roads have beenflooded and thousands of wells contaminated, officials say.

Interior Minister Vasile Blaga said some 9,000 soldiers had been deployed to help those affected by the bad weather.

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CAIRO (Reuters) - Egypt's state-owned Banque Misr and other shareholders are planning to sell a controlling stake in Misr Romanian Bank this year, a senior Banque Misr executive said on Sunday.

Banque Misr and Egyptian funds together hold 51 percent, while Romanian banks hold the remaining 49 percent.
"Banque Misr and other major shareholders are planning to sell a controlling share in Misr Romanian Bank before the end of 2005," the executive, who asked not to be named, told Reuters.

Misr Romanian Bank was established as an Egyptian-Romanian joint venture in 1977 and has branches in both countries. It offers a range of retail and commercial services, such as personal loans, letters of credit and project finance.

The bank reported zero profit in the first three months of 2005, compared to 4.81 million Egyptian pounds in the same period a year earlier, the bank's Web site said. The bank had total assets of 3.7 billion pounds at the end of March 2005.

The bank's shares are listed but not traded, the executive said. He said Banque Misr had received some informal inquiries about buying a controlling stake but that the process was at a very early stage. He did not name any of the interested banks. The daily Al-Gomhuria said Lebanese bank BLOM had offered to buy a controlling stake in Misr Romanian Bank. BLOM officials could not immediately be reached for comment. The Egyptian government relaunched a stalled privatisation programme last year that includes selling state-owned stakes in banks.

Banque Misr and other shareholders agreed last week to sell a controlling stake in Misr International Bank to France's Societe Generale.

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In the 1970s, communist dictator Nicolae Ceausescu ordered the nation's universities to make sure young Romanians learned about computers. As freedom came, many well-trained young programmers moved to other parts of Europe and to America to escape the dismal economy at home. But many stayed.

It was much the same in the former Soviet Union. The education system cranked out scientists and computer programmers, but the economy staggered. Graduates of schools there had computer skills that rivaled any in America, but most of them couldn't afford computers.

Now, as both countries slowly turn toward capitalism, new businesses are being created that take advantage of those skills.

One of those businesses is identity theft. Romania, along with Russia, is a hotbed of computer crime.

One sign of the hackers' skill occurred in May 2004, when researchers at Romania's South Pole Research Center got this e-mail: "I've hacked into the server. Pay me off or I'll sell the station's data to another country and tell the world how vulnerable you are."

The e-mail contained enough information from government computers to prove it was no idle threat. The FBI, which has an office in Romania, traced the e-mail to one of many Internet cafes in Bucharest, the capital. Two men were arrested and charged by Romanian authorities.

Arrests like that are becoming more common in Romania. This year, the country set a prison sentence of up to 15 years for computer crime, twice the maximum for rape.

The stiff penalties are needed because of the strength of organized- crime families flourishing there.

"I know of a case in Romania where a man literally had a gun held to his head," said Bill Hancock, chief security officer for Savvis, a global Internet company. "He was told to work for them or they'd kill him and his family."

Hancock said organized crime operates freely in Russia and many Third World countries. In other countries, authorities "do their best. But (in Romania) there is a grand total of two computer crime specialists in all of law enforcement there."

Officials at the FBI Computer Crime Center in Fairmont, W.Va., agree cooperation has been forthcoming from Romanian law enforcement. Federal officials are less complimentary about Russian efforts.

Even when foreign governments cooperate, the challenge for law enforcement is great. The combination of overseas locations and advances in money transfer technology make it difficult to follow a money trail. And the same computerized banking system that makes it easy to use your credit card to pay for dinner in Paris makes it easy for the bad guys, too.

"Placing a credit card charge out of the U.S.S.R. 15 years ago was very difficult," Hancock said. "Now practically any Russian business or front operation can hook up with an international bank of some sort and allow credit-card charges to be posted to bank accounts."

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After drawn-out talks for the signing of the confidentiality agreement that would have given it access to the data room of the Commercial Romanian Bank (BCR), ABN Amro officially announced that it quits the competition for BCR?s privatization."ACT News Agency" reports.


?We have decided this morning to withdraw from the privatization contest. We have no reason to carry on. We cannot give you any further details,? the representative of the ABN Amro press bureau told the press.

The Dutch bank was one of the ten contenders shortlisted in the privatization of BCR, but talks over the confidentiality agreement were delayed because of ABN Amro?s special situation: on one hand, its local branch is competing with BCR on the corporate segment and on the other hand, alongside PNB Paribas, ABN Amro is BCR?s mandated broker for the Romanian bank?s eurobonds issue scheduled for September.

Sources close to the process assert that the ABN officials did not accept the confidentiality terms imposed by AVAS. The same sources add that other prestigious names still left in the competition are not actually after the BCR stake put up for sale, but rather seek to assess BCR?s financial situation or ? like Dexia or Erste Bank - are just having a drill before trying to acquire the Savings Bank - CEC.

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Blue Air, a Romanian low cost airline has leased a former Airwork (of New Zealand) B737-300. It will launch twice weekly B737-300 service from Bucharest Baneasa to Madrid on October 30

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Taking advantage of the interest shown by the great European financial groups for the Egyptian market, the Romanian Commercial Bank will put up for sale its 19% stake in MISR Romanian Bank ? announced on Friday BCR general executive Nicolae Danila, "ACT Media News Agency" reports.

A quite discreet presence in Romania, MISR Romanian Bank has a three-decade history: it was established in 1977 as a joint venture of the Romanian and the Egyptian State, wherein Romania was controlling 49% through the former Foreign Trade Romanian Bank.

After the Revolution, the stake of the Romanian State was transferred to Bancorex from where BCR has inherited it. BCR insisted on keeping its stake intact and participated in the first decade of August in the increase of the MRB capital.

Following a new requirement of the central bank of Egypt that it should augment its initial capital of 500 million Egyptian liras, the institution increased its capital by 151 million Egyptian liras (26 million US dollars). On August 1, the Romanian-Egyptian Bank (MRB) issued about 15.166 million shares with a face value of 10 Egyptian liras each. 16.6 million shares were previously sold to Banque MISR (10.5 million shares), BCR (6 million shares) and MRB employees, in a private transaction.

Further to this capital increase, BCR preserved its participation of 19% in MRB, whereas another two shareholders present in Romania, Raiffeisen Bank and BRD-Groupe Societe Generale, renounced their preemption right ? said Nicolae Danila. In order to preserve its 19% stake, BCR acquired new shares worth 4.9 million US dollars, increasing its capital participation to 14.4 million US dollars.

After the operation, BRD and Raiffeisen?s stakes decreased from 15% to some 6%. The shares that should have been underwritten by the two are freely floated on the Egyptian bourse.

Before the capital increase, Banque MISR and five Egyptian investment funds were holding an aggregate of 51% of MRB (with Banque MISR controlling 33% of the stake). Two of the five funds, which account for an aggregate of 9.34% of MRB, are also controlled by MISR Bank. ?The Egyptians and BCR maintained their shares in MRB,? declared Danila.

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BUCHAREST (Reuters) - The death toll from extensive floods across Romania over the past four days has risen to 14, with more than 1,200 people evacuated from their collapsing houses, the Interior Ministry said on Saturday.

A 25-year-old man and two shepherds from northern Romania were killed by lightning and two other men drowned in a swollen river in central Romania in the last 24 hours.

Lightning killed four and three other people have drowned in southern Romania in the past four days. A 9-year-old girl drowned in the northern region of Botosani and an elderly villager was crushed under a collapsing electricity pole.

Interior Minister Vasile Blaga said floods destroyed 200 houses and damaged some 5,500 others. As many as 33,000 hectares (81,540 acres) of farmland were flooded and 88 villages remained without electricity.

The government has yet to estimate losses.
Torrential rains have swept across the Balkans for most of the summer, killing dozens of people in Bulgaria and its neighbor Romania and causing hundreds of millions of euros in damage to roads, bridges, railways and crops.

About 30 people lost their lives in the worst floods in 50 years, which hit Romania in April, May and in July.

Meteorologists said more rain was expected next week.

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New Delhi , Aug. 20 GAIL (India) Ltd is likely to bag equity participation in the Rs 25,000-crore Nabucco natural gas pipeline project, a transnational 3,300-km pipeline from the Caspian Sea to Central Europe.

According to a company communiqué, GAIL has sent an expression of interest for participation in the project. A final decision on GAIL's equity participation in this project is expected by the end of 2005.

To implement the project, a new company Nabucco Company Pipeline Study GmbH has been set up with the major objective of financing, selling of the transportation capacity and all related activities.

The Nabucco Company, owned by Nabucco consortium partners from five participating countries ? BOTAS from Turkey, Bulgargaz EAD from Bulgaria, S.N.T.G.N. Transgaz S.A. from Romania, MOL Natural Gas Transmission Company Ltd from Hungary, and OMV Gas GmbH (a 100 per cent subsidiary of OMV Aktiengesellschaft) from Austria ? has agreed to evaluate the GAIL offer.

GAIL has also offered its services for carrying out operations and maintenance of the proposed pipeline, highlighting its experience and expertise in this field.

The pipeline would run from the Georgian/Turkish border and the Iranian/Turkish border, respectively, to Central Europe via Turkey, Bulgaria, Romania, Hungary and Austria, GAIL said.
The capacity of the pipeline would be 26-32 billion cubic meter per annum (BCMA)/70-90 million standard cubic meter per day (MMSCMD).

Out of the total pipeline capacity, around 50 per cent of the gas is to be supplied to Austria.
The project is likely to be completed by 2011.

The decision to nominate GAIL as the nodal agency to pursue Indian participation in the project was taken during a meeting held in New Delhi in March this year between officials of the Ministry of Petroleum and Natural Gas and GAIL with a Romanian delegation led by the Director-General, Ministry of Economy and Commerce, Romania.

Subsequently, during the visit of an Indian delegation led by Mr Mani Shankar Aiyar, Minister of Petroleum and Natural Gas, to Romania in July, GAIL had a meeting with Transgaz, Romania, regarding participation in the project.

GAIL has a memorandum of cooperation with BOTAS, Turkey, a state-owned company. Under this framework, GAIL and BOTAS are also in discussion for GAIL's participation in the Nabucco project.

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The death toll from floods across Romania over the past three days rose to nine, with more than 1,100 people forced to abandon their crumbling houses, the Interior Ministry said on Friday.

A 9-year-old girl drowned in a swollen river in the northern region of Botosani and an elderly villager was crushed under an electricity pole which collapsed in torrential rains in southern Romania.

Lightning killed four, and three other people drowned in southern Romania on Wednesday.

Interior Minister Vasile Blaga said floods destroyed more than 140 houses and damaged some 4,000. others. He said more than 1,000 people were evacuated from collapsing homes.

As many as 21,200 hectares (52,390 acres) of farmland were flooded and 321 villages remained without electricity.

Torrential rains have swept across the Balkans for most of the summer, killing dozens of people in Bulgaria and its neighbour Romania and causing hundreds of millions of euros in damage to roads, bridges, railways and crops.

About 30 people lost their lives in the worst floods in 50 years, which hit Romania in April, May and in July.

Meteorologists said more rain was expected.

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The Government of Iraq today announced that it has signed a bilateral agreement with Romania canceling approximately U.S.$2.0 billion, amounting to 80%, of Romanian claims against Iraq.

The accord is comparable to the agreement in principle concluded in November 2004 between Iraq and the governmental creditors comprising the Paris Club, which together hold a plurality of the total outstanding claims against Iraq. The Romanian accord is the first to be signed with Iraq's non-Paris Club bilateral creditors. The first agreement with a Paris Club creditor was
signed in December of last year.

Prior to this agreement, the claims of the Romanian government against Iraq totaled approximately U.S.$2.5 billion. When fully phased in, the agreement signed today will reduce this debt stock to approximately $500 million. The debt reduction will take effect in three installments.

Approximately $760 million will be cancelled immediately; a second installment of approximately $760 million of debt cancellation will automatically become effective upon the signing by Iraq of a formal stand-by arrangement with the International Monetary Fund (expected during the fourth quarter of 2005); and a final installment, equal to approximately $510 million, will automatically take effect upon completion of a stand-by arrangement in 2008.
The residual debt stock will be repayable over a 23-year period with 6 years of grace on
principal payments. No principal or interest will be payable during the first three years.

"Today's agreement with Romania -- the first outside the Paris Club -- marks a significant step in Iraq's ongoing debt management program," said Iraq's Minister of Finance Ali A. Allawi.

"Iraq appreciates Romania's prompt and constructive approach to reaching this agreement. The signature of an agreement today by the Romanian government, one of Iraq's largest creditors, is consistent with its ongoing policy of support of the difficult reconstruction process of a free and democratic society in Iraq, paving the way for Iraq to contribute to international and regional security and stability," said Mr. Dragos Neacsu, Secretary of State with the Ministry
of Public Finance.

He added: "Romania considers this agreement as an important precedent for the constructive resolution of the Iraqi debt towards countries that are not members of the Paris Club. It also represents more than a financial settlement, as it should trigger the re-launching of the business development between our two countries."

Iraq expects that similar bilateral agreements with governmental creditors that are not members of the Paris Club will be signed over the remainder of the year.

Also, on August 8, 2005, Iraq made an offer to settle the first batch of Saddam-era claims against the country held by commercial (non-governmental) creditors. The total amount of Saddam-era claims against Iraq held by both bilateral and commercial entities has been estimated at more than $125 billion.

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The monthly growth of Romanian export was, during the first semester, remarkable, even under the conditions of national currency appreciation, the minister delegate for commerce Iuliu Winkler stated according to "ACT Media News Agency"

There was a positive evolution in the export structure, by lowering the volume of products of medium complexity and increasing the products of high complexity. There was a decrease of exports in lohn from 53,8 percent last year to 46,3 percent? Winkler specified, underlying the fact that the results of foreign trade are very good. Romanian export has increased during the first six months by 16,6 percent ( 1,498 billion euros), worth 10,53 billion euros, with a historic record of exports in March ? 1,9 billion euros.

The most significant increase was registered at cereals ( plus 282,9 percent), aircraft parts ( plus 193,4 percent), food ( 191,8 percent) clockwork ( plus 119 percent), fertilizers ( plus 68,9 percent), pharmaceutical products ( plus 65,6 percent), fuel ( plus 63,3 percent), automobiles, parts ( plus 54 percent), ships, and floating structures ( plus 35,8 percent), etc.

The European Union has remained the main trade partner for Romania, 68,87 percent of export reaching EU countries. The main countries for export were Italy ( 20,6 percent), Germany ( 14,1 percent), Turkey ( 8,1 percent), France ( 7,5 percent), Great Britain ( 5,6 percent), Hungary ( 4 percent), USA ( 3,6 percent), Austria ( 3,1 percent), The Netherlands ( 2,8 percent), Spain ( 2,3 percent). During period there was a considerable increase in export with the Russian Federation ? plus 92,9 percent, USA ? plus 77,3 percent, South-Eastern European countries ? plus 71,2 percent. Asia, Africa, the Middle East ? plus 29 percent, the minister cocluded.

CIF imports grew by 22,9 percent as compared to the same period of last year, worth 14,739 billion euros. Significant increase was in fertilizers ? plus 178 percent, meat and organs ? plus 115,3 percent, automobiles ? plus 50,4 percent, fuel ? plus 47 percent, iron, steel products ? plus 44,8 percent. The main partners for importation were Italy ( 16,5 percent), Germany ( 13,9 percent), Russian Federation ( 7,8 percent), France ( 7 percent), Turkey ( 4,8 percent), Austria ( 3,7 percent), China ( 3,6 percent), Hungary ( 3,2 percent), Khazakhstan ( 3,1 percent) and Poland ( 3,1 percent).

Trade deficit FOB ?FOB was, in the case of merchandise trade of 3,074 billion euros. The significant increase in fuel, automobiles and metallurgical products imports significantly influenced the level of trade deficit.

Negative balance was registered especially with cars, electrical appliances ? minus 1,467 billion euros, mineral products, energy products included ? minus 1,211 billion euros, cars, aircraft, ships and transport installations ? minus 705 billion euros, chemical products ? minus 675, 1 billion euros, plastic and rubber materials ? 491,4 million euros, food, beverages, tobacco ? 317, 8 million euros.

For the main part, negative balance was compensated by surplus registered in footwear ? plus 461,2 million euros, metals and metal products ? plus 436,7 million euros, textiles and fabrics ? plus 370 million euros, varied merchandise, wooden furniture included ? plus 294,2 million euros.

For the end of this year, analysts estimate a 6,7 billion euros deficit.

surce

Bucharest has officially asked the Czech Republic for extradition of businessman Frantisek Priplata who was sentenced to eight years in prison for instigation to murder in Romania, but escaped home in July, the Romanian paper Adevarul reports on its website.

The Romanian Justice Ministry has sent the request for extradition to Czech authorities after the Romanian side had it confirmed that Priplata is staying in the Czech Republic after his escape.

Bucharest recalls that Romania and the Czech Republic signed the European convention on extradition of prosecuted persons.

The Czech legislation does not allow for the extradition of a Czech citizen abroad. Romanian authorities, however, recall that the Czech Republic did point to it when signing the European convention.

Adevarul writes that the Czech Justice Ministry has already announced that competent authorities will asses the application for Priplata's extradition. The Brno Regional Court should deal with it, according to Romanian media.

Czech Justice Ministry spokesman Petr Dimun said at the beginning of August that Priplata is in the Czech Republic legally and will not be extradited to Romania. The Czech law explicitly bans the extradition of Czech citizens abroad.

A Romanian court sent Priplata to prison for having incited to the murder of trade unionist Virgil Sahleanu.

Sahleanu sought the abrogation of a contract under which the Zelezarny Veseli Czech iron works company gained a majority stake in a metallurgical company in Iasi, Romania. It was Priplata who signed the contract on behalf of the buyer.

Priplata, 57, was given the sentence in June and he was to start serving his sentence on September 7. The court in Satu Mare however adjourned the start of the service of the sentence at his request for health reasons.

Before he started serving this sentence, Priplata escaped from Romania to Hungary from where he arrived in the Czech Republic using his Czech ID only. He did not need a passport as both Hungary and the Czech Republic are EU member states.

Priplata pleads non-guilty. He says he plans to bring a suit against Romania with the European Human Rights Court in Strasbourg for violating his human rights during the five-year trial.

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The average performance (the unitary value of the net asset) of the open investment funds since the start of the year has been 8.1%, higher by 3% versus the 5.1% inflation rate recorded in the first 7 months of 2005, according to the data with the National Union of Collective Investment Bodies (UNOPC).

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The monthly growth of Romanian export was, during the first semester, remarkable, even under the conditions of national currency appreciation, the minister delegate for commerce Iuliu Winkler stated on Wendesday.

The European Union has remained the main trade partner for Romania, 68,87 percent of export reaching EU countries.

The main countries for export were Italy ( 20,6 percent), Germany ( 14,1 percent), Turkey ( 8,1 percent), France ( 7,5 percent), Great Britain ( 5,6 percent), Hungary ( 4 percent), USA ( 3,6 percent), Austria ( 3,1 percent), The Netherlands ( 2,8 percent), Spain ( 2,3 percent).

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The World Trade Organisation representatives undertake an assessment of Romania?s trade policy, action launched in the first semester of the year, the minister delegate for commerce Iuliu Winkler announced.

? Such actions are organized periodically, every 3-4 years, with every member country. We have required the collaboration of the National Statistics Institute, customs and economic ministeries involved in trade activity. The action is crucial for Romania?s position with the WTO and for complying with the obligations assumed as a member of the organization? Winkler mentioned in a press conference.

Romania is a founding member of WTO. This organization was set up by the WTO Agreement which came into force on January 1, 1995, after ratification by 81 countries, Romania included, representing 88 percent of world trade.

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The situation of some state subsidies granted to the steel industry sector over 2000-2004 period have been discussed on the occasion of a meeting between Leonard Orban, state secretary in the Ministry of European Integration (MIE) and experts from MIE, Ministry of Public Finance, Ministry of Economy and Trade, Competition Council and the Authority for State Assets Recovery (AVAS), "ACT Media News Agency" reports.


The experts convened by Leonard Orban examined the state subsidies received in the respective period by companies in Romania that manufacture steel products, but not included in the restructuring strategy of the steel industry sector for 1993-2008, agreed with the European Union. The respective strategy, that made the object of the accession negotiations, included only steel companies with an integrated character (that have their own manufacture, foundry and processing facilities and are able to produce finite products).

"In each and every case, we need to conduct, together with the European Commission, a detailed analysis of the state subsidies that were granted to those companies and of their compatibility with the EU acquis.

According to its results, the Competition Council is going to determine if the state subsidies received till present should be recouped or not. Anyway, since the beginning of this year, Romania has stopped granting subsidies in this field other than those that fully observe the EU acquis.

Every company should prove its efficiency and competitivity on the national market and on the European and global markets, as well," Leonard Orban said.

In its EU accession negotiations Romania obtained a grace period for the restructuring of its steel industry sector till 2008. Six integrated companies in this sector have been included into this sector's strategy for which an amount of state subsidies were negotiated (approximately 50,000 billion lei, granted over January 1, 1993 - December 31, 2004).

The situation of the state subsidies granted to the integrated steel industry companies is included into Romania's Accession Treaty to EU. As for the other companies in this field, the situation of state subsidies is evaluated on the basis of a permanent consultation mechanism with the European Commission, MIE reminds, as well.

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Bulgaria's Black Sea resorts are cleaner, cheaper and more beautiful than Romania's, Romanian Cotidianul newspaper reported.

The seacoast in Bulgaria is more diversified than Romania's, it combines the sea with forests and valleys and the tourists are offered all kinds of amusements, the newspaper comments.

The Cotidianul article also reads that process at Romania's Black Sea coast have been increased by at least 10%, whereas in Bulgaria they have remained unchanged.

The article also presents Bulgaria's Black Sea town Balchik as an attractive tourists destination, which boasts rich history and beautiful nature. It also tells the story of the Romanian Queen Maria, whose palace is still in Balchik.

Bulgarioa's Black Sea capital Varna and the modern Golden Sands resort are also in the limelight of the newspaper article.

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Seven Romanians died and over 300 people fled their homes as torrential rains hit the Balkan country, disrupting traffic and cutting off remote villages, officials said on Wednesday.

Lightning killed a 77-year-old woman and three men, and three people drowned in southern Romania over the past 24 hours, the Interior Ministry said in a statement.

About 30 people lost their lives in the worst floods in 50 years, which hit Romania in April, May and in July.

The ministry said floods destroyed over 60 houses and damaged 1,400 others. Some 337 people were evacuated from collapsing houses.

As much as 2,900 hectares of farmland were inundated and 127 villages remained without electricity. The ministry has yet to offer an estimate for the damages.

In neighbouring Hungary, some 30 homes have been evacuated in the northeastern town of Szikszo, due to heavy rain causing stream flooding, MTI news agency reported. (Additional reporting by Budapest bureau)

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Teams responding to devastating flooding in Romania received assistance from orbit, with satellite images and maps of affected areas provided in near-real time following activation of the International Charter on Space and Major Disasters.

Torrential rainfall across Southeast Europe has led to serious floods across Romania, described as the worst for half a century. Some 31 counties out of 42 have been affected, the worst hit being the counties of Bacau, Vrancea and Galati in Moldavia, where the Siret River burst its banks to flood numerous towns.

Soldiers and firefighters have had to evacuate more than 12 000 people. Preliminary estimates are that 14 751 homes have been flooded, with 3571 houses destroyed completely and 2993 houses damaged. Around 300 500 hectares of farmland and many hundreds of kilometres of roads have been inundated.
Army helicopters have been delivering emergency supplies to otherwise unreachable communities. The death toll is reported to stand at 22 and the country's government estimates overall material losses at 2394 million lei (675 million euro).

The International Charter on Space and Major Disasters was activated on 15 July, following a request by the Romanian government to the European Commission. Member space agencies then prioritised acquisitions over the basin of the Siret River.Strasbourg-based rapid mapping specialist company SERTIT generated and distributed products on a near-real time basis, working with French space agency CNES, responsible for the management of this Charter activation. Some 43 satellite-derived maps and products have since been delivered via the Romanian Space Agency (ROSA) to the Ministry of Environment and Water Management (MEWM). The products were disseminated to daily crisis cell meetings, to relevant government ministries and also featured in the Romanian media.

"We can say we had the chance to get very fast, very good images and maps," stated Iurie Maxim at the Nature Conservation Directorate of MEWM. "We were able to show out minister at 8pm some posters with images from the same day. The next morning the same posters were presented to the Prime Minister and forwarded to the people working on this issue. "We were able to provide the necessary tools to the people involved in the water department and to those involved in the civil protection."

The International Charter on Space and Major Disasters
The International Charter on Space and Major Disasters represents a joint effort by global space agencies to put resources at the service of rescue authorities responding to major natural or man-made disasters. To date the Charter has been activated more than 80 times.

Following the UNISPACE III conference held in Vienna, Austria in July 1999, the Charter was initiated by ESA and CNES with the Canadian Space Agency (CSA). Other members include the Indian Space Research Organisation (ISRO), the US National Oceanic and Atmospheric Administration (NOAA), the Argentine Space Agency (CONAE) and the Japan Aerospace Agency (JAXA), with the United Nations as a 'cooperating body'.

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1057 GMT [Dow Jones]

ABN Amro (ABN) decision not to pursue stake in Banca Comerciala Romana (BCR.YY) is wise, says Rabo Securities. Synergy potential in Romania and Eastern-European market is limited for ABN, which owns 5% market share, says Rabo. Sees KBC (KBC.BT) as more likely takeover candidate. Retains neutral rating, EUR20 target. Shares -0.3% at EUR19.63. (NSP)

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Petrom, Romania's former state-owned monopoly, has announced that it will be implementing a pilot project that will allow selected partners to take over the running of certain stations. As reported by Mediafax, the franchise process will initially apply only to newly-built stations, but the company plans to gradually expand its franchise operation to other stations over the years ahead.

The new system has a number of implications for Petrom and the regional fuel retailing market as a whole. Firstly, as a former member of the Soviet bloc, Romania has been dominated by state-owned corporations that have stunted competition, development and profitability. In more developed western fuel retailing markets, company-owned, dealer-operated sites (CODOs) are commonplace.

For example, in Austria, Datamonitor calculations show that 63% of total sites in the market were CODO, 29% were independent and only 8% were both owned and run by a company. In contrast, in the Romanian market, 96% of stations at the start of 2005 were company-owned and company-operated (COCO).

Furthermore, while a high proportion of COCO sites can indicate a greater degree of network planning control, Petrom's nationwide network of 690 stations is relatively inefficient. The average throughput per year for a Petrom site is 4.7 million liters, compared with Petrom's majority shareholder, the Austrian firm OMV, which has an average throughput of 7.9 million liters per annum - almost doubly efficient.

Based on this evidence, Petrom's decision to franchise a portion of its network, no matter how small, is a step towards positive market development and liberalization.

With less involvement in the day-to-day administration of the sites and the capacity to plough more resources and time into managing the network, CODO sites can be more efficient and, ultimately, more profitable. Without divesting any of its assets, this move will enable Petrom to retain its geographic scope while ensuring that a degree of network rationalization is achieved.

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Romania has set an August 25 deadline for letters of intent from foreign banks willing to advise on the sale of its 45.99 percent stake in fixed-line carrier Romtelecom, majority owned by Greek state telecom OTE.

Romania?s centrist government, which came to power in December, plans to complete by 2006 the privatization of Romtelecom, the country?s largest telecoms operator.

Internationally reputable investment banks must submit letters of intent by August 25 at 1400 GMT, Romania?s Communication Ministry said in a statement yesterday. Romania had said it wants to sell its remaining stake through an initial public offering and float the company?s shares on the Bucharest stock exchange and on a foreign bourse, yet to be selected.

Romtelecom is OTE?s biggest investment abroad and employs about 15,000 workers. It reported a net profit of 107.1 million euros last year, reversing a 13.1-million-euro loss in 2003. Romtelecom?s revenues grew by 5 percent to 839.1 million euros in 2004, when the company managed to slash operational expenditures by 4 percent to 554.1 million euros.

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Bucharest Stock Exchange is on the fourth place after those in Poland, Czech Republic and Hungary in a top build by Vanguard, taking in account market capitalization, average daily liquidity, P/E and alternatives for portfolio diversification.

There are chances for these indicators to improve significantly as margin trading and short selling ? transactions usually performed on a normal basis on developed markets, would be allowed on BVB.

Stere Farmache ? the General Director of BVB, announced that it is possible that until the end of the year these transactions would be also allowed on Romanian market and a draft of new regulation is to be submitted for CNVM?s (National Securties Committee) approval.

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As many as 5,723 joint ventures were registered in Romania during the first half of 2005, with a subscribed foreign capital of 27,558.6 billion lei ($1.054 billion or 890.083 million euros), show data with the National Statistics Institute.

As many as 1,053 joint ventures were registered in June and their subscribed share capital totalled 178.69 billion lei ($6.168 million or 4.986 million euros). Most of them - 387 - were registered in Bucharest, followed by the counties of Timis, Cluj, Bihor, Arad, Brasov, Constanta and Mures.

Most of the foreign investors in June came from Italy - 235, Germany - 121, Hungary - 69, Turkey 66, France - 50, Austria - 48, Spain - 45, Cyprus - 43, Greece - 41 and the US - 40.

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The Gross Domestic Product ofRomania in the first quarter of 2005 was 497,251 billion lei (1 euro is the equivalent of 35,969 lei), some 5.9 percent more in real terms as against the similar period of 2004, the National Statistics Institute informs.

The increase was caused mainly by the growth of the activity volume and, consequently, of the gross added value on services (plus 6.8 percent) and industry (plus 5 percent). The final consumption increased 12.1 percent in Q1 2005 as against Q1 2004.
The GDP in agriculture was 16,666 billion lei (1.8 percent increase), 150,613 billion lei in industry (5 percent increase), in construction 18,604 billion lei (some 3.8 percent increase) and in services 259,364 billion lei (6.8 percent increase).

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A 1.2 billion euro ($1.47 billion) real estate development in former plum orchards north of Bucharest illustrates the fruits being picked in Romania and Bulgaria, future EU members seeing an economic boom while much of old Europe stagnates.

The Baneasa development, one of the largest of its kind in the region, will include more than 3,000 houses, a business park and a large commercial district, developers say. It is expected to create 10,000 temporary jobs and space for 25,000 permanent jobs.

While the office space will be open to all clients, it is expected to draw software, communications and other high-tech companies, said Bogdan Todea, a spokesman for the developer.

Bucharest Mayor Adriean Videanu announced plans two weeks ago to annex dozens of surrounding villages to spur similar developments. The project would give the crowded city space to grow, while modernizing the undeveloped surrounding area, Videanu said.

Following the 1989 overthrow of communism, Romania and its southern neighbor, Bulgaria, lagged behind Hungary and other Central European states in attracting foreign investment, as they struggled to privatize state industries and retool centralized economies.


But analysts say the countries are catching up, and their economies have been expanding rapidly since 2000. Economic growth is expected to hover at around 6 percent for the next three years in both countries, with Bulgaria seeing lower inflation.

"Romania and Bulgaria are perceived as the new forces," said Radu Craciun, an analyst at ABN AMRO. "They have low labor costs, and due to their geographical positions have better access to the Middle East, Russia and the Balkans." Both are scheduled to join the European Union in 2007, but could face one-year delays if they fail to reform their inefficient justice systems and crack down on corruption.

While both countries already have easy access to EU markets, a postponement would delay EU funds for infrastructure improvements and rural development. But it wouldn't have a major impact on large investors, Craciun said, as they take a long-term view.

"Foreign direct investment potential is and has been very favorable, and all the years I have been here I have not heard of anyone losing money," said Gil Woods, a U.S. lawyer who heads the Foreign Investors Council in Romania. He said the country was hampered in the past by bad public relations and nonresponsive governments.

This year, however, direct foreign investment reached 951 million euros from January to May, a 12 percent rise compared with the same period last year, according to official figures.

"Romania has a great future in development," said Andreas Wiennen, general manager of the German-based auto parts maker Eckerle, which opened a new factory in 2003 in the Transylvanian city of Cluj. He said the group had also considered expanding in Bulgaria or Ukraine before choosing northwest Romania, which he said was more developed.

"The company is doing great here," he said.

Bulgaria, though smaller, has also emerged as an attractive destination for foreign investors, mainly due to its economic stability. Direct foreign investment reached 2.14 billion euros in 2004, and up 14.2 percent from 2003, one of the highest per capita investments in the region.

The increasing investment and the expectation of EU membership has also led to a boom in real estate in Bulgaria and Romania, with prices doubling in the last few years before appearing to level off recently.

"At the moment we register a slight decline in, for example, Britons' interest in Bulgarian property," said Krasimira Georgieva, manager of the Yavlena real estate agency in Sofia. "The reasons could be fear from the globally increased terror threat, and talk that Bulgaria's EU entry would be delayed."

Despite relatively low monthly wages by EU standards of about $300 in Romania and $255 in Bulgaria, the domestic markets are also becoming attractive due to a high appetite for electronics, appliances, mobile phones and new cars.

In Bucharest, a city of 2.3 million, two new malls opened last year, and a dozen of hypermarkets and supermarkets have sprung up in the last few years. French chain Carrefour reported last month that sales in its four Romanian stores nearly doubled to about 190 million euros ($233 million) in the first half of 2005. The supermarket company plans to add four more stores by next year, the daily Ziarul Financiar reported.

The Romanian car market has boomed as well, with sales up 60 percent in the first five months of 2005. Renault -- which also owns Romania's top carmaker, Dacia -- has sold more than 100,000 of its popular new model, the Logan, since it began production last year. The French automaker recently announced plans to build a 219 million euro new gear-box plant in Romania.

Fearing an overheating of its economy and a rise in inflation, Romania has enacted stricter credit rules and is considering raising the VAT to slow the pace of consumption.

The economic boom is not evenly distributed, however, with a strong concentration of investment in urban areas and around Bulgaria's and Romania's Black Sea coasts, while few foreigners venture in rural, poorer regions of eastern Romania.

Meanwhile, the Timisoara region, in western Romania, is home to some 1,900 Italian businesses.

"Romania is a Latin country that will soon be in the European Union," said Mauri Giancarlo, whose Perugia-based Mauri System sells pastry and breadmaking equipment and has expanded its business in Romania. "It is a market that I am slowly discovering, and I am convinced that I will work well herA 1.2 billion euro ($1.47 billion) real estate development in former plum orchards north of Bucharest illustrates the fruits being picked in Romania and Bulgaria, future EU members seeing an economic boom while much of old Europe stagnates.

The Baneasa development, one of the largest of its kind in the region, will include more than 3,000 houses, a business park and a large commercial district, developers say. It is expected to create 10,000 temporary jobs and space for 25,000 permanent jobs.

While the office space will be open to all clients, it is expected to draw software, communications and other high-tech companies, said Bogdan Todea, a spokesman for the developer.

Bucharest Mayor Adriean Videanu announced plans two weeks ago to annex dozens of surrounding villages to spur similar developments. The project would give the crowded city space to grow, while modernizing the undeveloped surrounding area, Videanu said.

Following the 1989 overthrow of communism, Romania and its southern neighbor, Bulgaria, lagged behind Hungary and other Central European states in attracting foreign investment, as they struggled to privatize state industries and retool centralized economies.


But analysts say the countries are catching up, and their economies have been expanding rapidly since 2000. Economic growth is expected to hover at around 6 percent for the next three years in both countries, with Bulgaria seeing lower inflation.

"Romania and Bulgaria are perceived as the new forces," said Radu Craciun, an analyst at ABN AMRO. "They have low labor costs, and due to their geographical positions have better access to the Middle East, Russia and the Balkans." Both are scheduled to join the European Union in 2007, but could face one-year delays if they fail to reform their inefficient justice systems and crack down on corruption.

While both countries already have easy access to EU markets, a postponement would delay EU funds for infrastructure improvements and rural development. But it wouldn't have a major impact on large investors, Craciun said, as they take a long-term view.

"Foreign direct investment potential is and has been very favorable, and all the years I have been here I have not heard of anyone losing money," said Gil Woods, a U.S. lawyer who heads the Foreign Investors Council in Romania. He said the country was hampered in the past by bad public relations and nonresponsive governments.

This year, however, direct foreign investment reached 951 million euros from January to May, a 12 percent rise compared with the same period last year, according to official figures.

"Romania has a great future in development," said Andreas Wiennen, general manager of the German-based auto parts maker Eckerle, which opened a new factory in 2003 in the Transylvanian city of Cluj. He said the group had also considered expanding in Bulgaria or Ukraine before choosing northwest Romania, which he said was more developed.

"The company is doing great here," he said.

Bulgaria, though smaller, has also emerged as an attractive destination for foreign investors, mainly due to its economic stability. Direct foreign investment reached 2.14 billion euros in 2004, and up 14.2 percent from 2003, one of the highest per capita investments in the region.

The increasing investment and the expectation of EU membership has also led to a boom in real estate in Bulgaria and Romania, with prices doubling in the last few years before appearing to level off recently.

"At the moment we register a slight decline in, for example, Britons' interest in Bulgarian property," said Krasimira Georgieva, manager of the Yavlena real estate agency in Sofia. "The reasons could be fear from the globally increased terror threat, and talk that Bulgaria's EU entry would be delayed."

Despite relatively low monthly wages by EU standards of about $300 in Romania and $255 in Bulgaria, the domestic markets are also becoming attractive due to a high appetite for electronics, appliances, mobile phones and new cars.

In Bucharest, a city of 2.3 million, two new malls opened last year, and a dozen of hypermarkets and supermarkets have sprung up in the last few years. French chain Carrefour reported last month that sales in its four Romanian stores nearly doubled to about 190 million euros ($233 million) in the first half of 2005. The supermarket company plans to add four more stores by next year, the daily Ziarul Financiar reported.

The Romanian car market has boomed as well, with sales up 60 percent in the first five months of 2005. Renault -- which also owns Romania's top carmaker, Dacia -- has sold more than 100,000 of its popular new model, the Logan, since it began production last year. The French automaker recently announced plans to build a 219 million euro new gear-box plant in Romania.

Fearing an overheating of its economy and a rise in inflation, Romania has enacted stricter credit rules and is considering raising the VAT to slow the pace of consumption.

The economic boom is not evenly distributed, however, with a strong concentration of investment in urban areas and around Bulgaria's and Romania's Black Sea coasts, while few foreigners venture in rural, poorer regions of eastern Romania.

Meanwhile, the Timisoara region, in western Romania, is home to some 1,900 Italian businesses.

"Romania is a Latin country that will soon be in the European Union," said Mauri Giancarlo, whose Perugia-based Mauri System sells pastry and breadmaking equipment and has expanded its business in Romania. "It is a market that I am slowly discovering, and I am convinced that I will work well here

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Romania's central bank governor said Monday that the economy was growing strongly and he expected inflation to fall in the third quarter.

Governor Mugur Isarescu said the bank expects inflation to drop to 7.5 percent for 2005 and 5 percent for 2006, down from 9.3 percent in 2004. He said inflation was higher than expected in the second quarter due to increases in energy prices and taxes, but that inflation was expected to decrease in the last three months of the year.

"Chances are that we will achieve our inflation targets for this year and next year," Isarescu said. He added that controlling inflation was a top priority for the bank.

Isarescu warned, however, that the inflation target was threatened by a rise in foreign investment.
"We are flooded by foreign capital," Isarescu said, adding that the bank was happy about incoming direct foreign investment but wanted to discourage excessive short-term capital flow into Romania. A possible rise in the value-added tax in 2006, from 19 percent to 22 percent, would also threaten the inflation targets, as would measures stimulating demand.

The governor added that the central bank would continue to apply limited controls on the flotation of the national currency, the leu, to ensure that its levels against foreign currencies remain at sustainable levels.

Isarescu said the economy was improving, with a small public debt and a reduction in arrears that have plagued the Romanian economy for more than a decade.

Romania's economy is expected to grow at about 6 percent for the next few years.

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BUCHAREST, Romania -- Storms pounded eastern Romania at the weekend, damaging houses, roads and infrastructure in the counties of Buzau, Prahova and Dambovita. According to local press reports Monday (15 August), about 150 families in these regions are isolated by flooding that cut communication links. The floods also caused the collapse of two bridges -- a railway bridge in Giurgiu and a pedestrian one in Maracineni.

It was also announced that the Development Bank of the Council of Europe has extended an 8.8m-euro loan to Romania. The funds will go towards rebuilding the water supply system in the western region of Banat, ravaged by floods in July. (Rompres, Curierul - 15/08/05)

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Romania's economy grew 5.9 percent in the first quarter this year compared with the same period last year, the national statistics office said Tuesday.

The service sector was the country's main economic growth engine main showing a 6.8 percent rise from the same period last year, while industry grew by 5 percent and agriculture by 1.8 percent.

Romania hopes to join the European Union in 2007. On Monday, Romania's central bank governor said that the economy was growing strongly and urged the government to refrain from further stimulating demand as it could lead to higher inflation.

Governor Mugur Isarescu said the bank expects inflation to drop to 7.5 percent for 2005 and 5 percent for 2006, down from 9.3 percent in 2004.

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G. Philip Stephenson does not cut the figure of an Eastern European oil baron, clashing with formerly communist security officials over the legality of his budding empire.

Stephenson is a talkative, Texas-bred lawyer and former U.S. Treasury official who in the past four years has tried, with some success, to create a personal fortune from the privatization of Romania's oil industry. But his success has drawn the attention of Romanian prosecutors and demonstrated the potential and pitfalls of private investment in developing economies in Eastern Europe.


The story of how Stephenson became a target of Romanian anti-corruption officials began in Washington 13 years ago. The mixing of politics and money in the 1990s gave rise to a number of private investment partnerships here -- Carlyle Group being the most prominent -- that helped change Washington careers and fortunes.

Stephenson, a native of Houston and a Harvard law graduate, moved to Washington in the late 1980s to work as a corporate lawyer for the Republican-connected law firm Baker Botts LLP. When George H.W. Bush was elected president, he spent 18 months at the Treasury Department's Office of International Affairs. That job gave Stephenson a close look at the rapidly evolving economies of Eastern Europe. When Bush was voted out of office, Stephenson did what many political appointees in Washington did in the 1990s: He used his Washington contacts and experience to launch a private equity fund.

He raised money from friends and associates -- including Carlyle Group's Edward J. Mathias; Ed Rogers, a White House official in the senior Bush's administration; former U.S. ambassador to Germany Richard R. Burt; and several large institutional investors. Rogers's and Burt's Republican lobbying firm, Barbour Griffith & Rogers LLC, is working for Rompetrol.

The result was International Equity Partners LP, a private equity fund to buy private companies in India and Romania. By 1998, he had raised $20 million to invest in Romania and Moldova. In 1997, Burt introduced Stephenson to Patriciu, a former member of the Romanian parliament who had begun investing in Romanian privatization efforts. Patriciu became a partner in the fund. After the collapse of the communist regime in Romania in 1989, the economy and government began a fitful and sometimes chaotic process of privatization of state-owned industries.

"It was blood-in-the-streets time," Stephenson said of the mid-1990s. "But there was opportunity everywhere if you could stomach it."

Mathias, who has no business relationship with Stephenson now, remembers him as "very smart, very enterprising and very willing to take on risk."

Prosecutors in Romania allege Stephenson and Patriciu evaded taxes and illegally profited from the privatization of Rompetrol. No charges have been filed. Patriciu and Stephenson say the investigation is a sham, triggered by their refusal to buy refineries owned by well-connected Romanian businessmen. The controversy has drawn the attention of officials considering whether to admit Romania into the European Union pact and has drawn statements of concern from the U.S. State Department.

Last month, Stephenson, deputy chief executive and 20 percent owner of Rompetrol, was in Washington visiting old friends in government and out. In those conversations and in meetings with reporters, he is trying to draw international attention to his situation, thereby persuading Romanian prosecutors to, as he puts it, "do the right thing and finish up this trumped-up investigation."

"We want a fair, open, transparent and expeditious process," said Rompetrol's attorney, Obie L. Moore, a Bucharest-based lawyer for the international firm Salans. "Otherwise, if we don't, Romanian reality could drastically change."...



entire story posted here

Bank Austria Creditanstalt will not bid for Casa de Economii si Consemntiuni (CEC), Romania's fourth largest bank, it announced ahead of an August 31 deadline for letters of intent to Romania's privatisation agency.

Bank Austria Creditanstalt is already active in Romania.

It had previously said it might be interested in CEC.

Italy's UniCredito , which is bidding for Bank Austria and its German parent HVB Group , has stated that it does not intend to pursue any further acquisitions for the next three years, while it focuses on merging HVB and its units.


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Recas Vineyards in Timis County exports over 300,000 liters of wine to the US every year and it is expected that State incentives for exportes of origin-controlled wine (DOC) will further improve the current status, Rompres reported.

Gheorghe Iova, the manager of Recatim Recas Vineyards, announced that Agriculture Minister Gheorghe Flutur has signed the paperwork granting a premium of 80 RON per hectoliter of DOC wine exported to any non-EU country within the limit of 8,080 hectoliters, which is almost double last year's cap. Iova welcomed the decision in the context that export revenues had slid 15 percent because of the RON's appreciation over hard currencies.

Iova also said Recas Vineyards had recently completed a 750,000 EUR project that materialized in several new bottling lines. Half of the sum was financed through non-reimbursable SAPARD funds. Another SAPARD project will materialize in 50 hectares of young vine for a total cost of 1 million EUR.

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The Belgian-based Delhaize reported Q2 developing market sales of 99.7 million EUR, up by 5.85 percent year-on-year, especially due to sales surges in Romania and Indonesia.

The emergent market operating profit amounted to 0.2 million EUR, down from the corresponding period of 2004. Emergent market sales reached 196.7 million EUR, up by 5.5 percent from H1, 2004. Delhaize also reported the completion of 11 Delvita units in Slovakia to Rewe.

At global level, Delhaize reported an operating profit of 206.4 million EUR, down by 10.3 percent year-on-year. Net sales gained 3.1 percent to 4.6 billion EUR, whereas the net profit gained 20.4 percent to 76.9 million EUR.

Delhaize operates a global network of 2,614 stores in eight countries on three continents. In Romania, Delhaize owns the Mega Image network of 16 supermarkets.

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BUCHAREST, Romania (AP) -- Romania's central bank governor said Monday that the economy was growing strongly and he expected inflation to fall in the third quarter.
Governor Mugur Isarescu said the bank expects inflation to drop to 7.5 percent for 2005 and 5 percent for 2006, down from 9.3 percent in 2004. He said inflation was higher than expected in the second quarter due to increases in energy prices and taxes, but that inflation was expected to decrease in the last three months of the year.

"Chances are that we will achieve our inflation targets for this year and next year," Isarescu said. He added that controlling inflation was a top priority for the bank.
Isarescu warned, however, that the inflation target was threatened by a rise in foreign investment.

"We are flooded by foreign capital," Isarescu said, adding that the bank was happy about incoming direct foreign investment but wanted to discourage excessive short-term capital flow into Romania. A possible rise in the value-added tax in 2006, from 19 percent to 22 percent, would also threaten the inflation targets, as would measures stimulating demand.
The governor added that the central bank would continue to apply limited controls on the flotation of the national currency, the leu, to ensure that its levels against foreign currencies remain at sustainable levels.

Isarescu said the economy was improving, with a small public debt and a reduction in arrears that have plagued the Romanian economy for more than a decade.

Romania's economy is expected to grow at about 6 percent for the next few years.

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Romanian business people made a mistake in 1990, when they reoriented their exports from their traditional export markets towards the European Union, the Chairman of the Bucharest City Chamber of Commerce and Industry (CCIB), Stefan Popa said.


Romania used to export products to the Russian Federation, Africa and the Caucasus area; these markets used to appreciate Romanian products.

Now, the CCIB is trying to convince companies that they should reorient their exports towards these markets, Popa said.

He also said the CCIB is presently holding talks with Serbian businesspeople, who are interested in a partnership for exporting light industrial products to Russia.

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Less than three months after severe flooding in the Banat region of western Romania ? which caused damage exceeding US$ 600 million - the country has again been hit by devastating floods.

Torrential rains lashed Romania in July, swelling rivers, flooding homes and churning up roads. The eastern part of the country was particularly hard hit. Thousands of homes were affected, hundreds destroyed and people lost their lives in the worst floods in 50 years. The week of 11-16 July brought extremely heavy rain seriously affecting 31 counties out of 42 and resulting in massive destruction The most seriously affected region is Moldavia, which is one of the poorest provinces in the country. The region was devastated by a number of extremely powerful flash floods caused by large (mountain) rivers and their tributaries overflowing due to the heavy rains.

The situation in the counties of Moldavia is the most desperate, as the mountain tributaries of two major rivers ? the Siret, with the tributaries Suceava, Moldova, Putna, Trotus, Buzau and Prut, with the tributaries Jijia, Sitna, Miletin, Bahlui ? have turned into raging torrents, devastating the villages on their way. The consequences are tragic, with most of the victims from the poorest social categories: villagers, farmers, isolated riverside colonies, families with many children and gypsies.

ACT member AIDRom plans to assist 500 of the most affected and vulnerable families in the county of Bacau (one of the most severely hit counties) with crisis phase items ? food, water and non-food items and 150 families with post crisis rehabilitation ? home repairs. AIDRom was previously operational in the same are with ACT Appeal EURO41.

Project Completion Date: 30 November 2005

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The acquisition of Omniasig by Austrian company Wiener Staedtische has received the all clear and the money has exchanged hands.

This is to be followed in September by a decision on the operating structure to be adopted by the seven companies now under Austrian control in Romania, which will see it either become a single entity or a multi-brand structure.

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Andrei Costea, a Romanian student of the Computer Science High School based in the southeastern Constanta port city, has placed second along with a team in the contest called International High School Space Settlement Design Competition (IHSSSDC) organised by NASA and Boeing Company, a spokesperson for a Foundation for Educational Institutions announced in a release.

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Banca Cassa di Risparmio di Firenze said it has reached a preliminary agreement to acquire a 56.23 pct stake in Romania's Daewoo Bank (Romania) SA for 31.4 mln eur.

The agreement includes a put and call option on a further 26.77 pct in Daewoo Bank, which can be exercised in the six months from Jan 1, 2009, it said, without naming the seller.

'The acquisition will allow for a rapid set-up in a banking market that is being reorganised. This allows (CR Firenze) to support its customers already present' in Romania, it said.

In 2004, Daewoo had a net loss of 400,000 eur, total assets of 50.3 mln, and nine branches.

The deal is subject to authorisations in Italy and Romania.

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Romania and Bulgaria must overcome their political problems and complete their essential reforms in time in order to be able to join the European Union on schedule, suggests a poll among political analysts taken by Reuters and published by Mediafax. According to the poll taken on 8-11 August, in which 34 analysts participated, the probability that Bulgaria may be admitted into the European Union over the next two years is 70 percent, while Romania's chances are 63 percent. The previous poll, published in May, gave Bulgaria a 90-percent chance and Romania an 80-percent chance of joining the European Union on deadline.

"Political instability, both in Bulgaria and Romania, seriously influences their chances of joining the European Union in 2007," said Tim Ash of the Bear Stearns Company in London. Ash added that the two countries must enact new, very important laws, and must make efforts to observe the commitments made for the next 18 months, at a time when they do not have strong governments. Bulgaria is facing political deadlock following the inconclusive result of the 25 June election, when the socialists defeated the reformists led by former King Simeon Saxe-Coburg-Gotha, but did not manage to form a majority.

Tariceanu, Political Obstacles
In turn, Romania is facing political obstacles. These could have led to an early election after Prime Minister Calin Popescu Tariceanu announced in July that he would resign, but this was a decision he later reversed. According to EU officials, the centrist coalition in power has made significant progress, but there still remain problems that need to be solved. In the opinion of 27 out of the 34 analysts polled by Reuters, Bulgaria's chance of joining the European Union in 2007 is 50 percent or higher.

In Romania's case, only 26 analysts said this probability was higher than 50 percent. "Only domestic factors, such as a lack of progress in observing the convergence criteria, lack of reform, and political incertitude like the formation of the Bulgarian Government, could delay the process," said Marianne Kager of Bank Austria Creditanstalt in Vienna. The parliaments of the 25 EU members must ratify Bulgaria's and Romania's accession treaties. Most of them will do so after the European Commission publishes the country reports in the latter half of this year.

Corruption Forewarns Black October
Currently, Romania's EU accession is scheduled for 1 January 2007 and it is premature to discuss a possible postponement by one year, said EU Enlargement Commissioner Ollie Rehn in an interview for Radio Free Europe, reports Rompres.

As far as the European Commission is concerned, Romania's accession is set for 1 January 2007, so the door will be open as of that day, said Stefaan De Rynck. However, he reiterated that, if the European Commission reached the conclusion that Romania had not carried out all its pledges, they would propose a postponement of the country's accession until 2008. Asked whether the process of Romania's accession may be influenced by the current tension in the Romanian governing coalition, De Rynck said that domestic political crises are not unusual in the existing EU members. "A much more serious issue is corruption, which you know we are watching very carefully in our annual reports, and which we will look at again when Commissioner Rehn presents the annual report in late October this year," said Spokesman De Rynck.

The Brussels official refused to make any comment on the domestic political situation in Romania. Schroeder Maintains Position Yesterday, the Romanian Foreign Ministry initiated a range of contacts with representatives of the German authorities in Berlin to clarify the recent statements made by Chancellor Gerhard Schroeder on Romania and Bulgaria's EU accession. The discussions have clearly indicated there is no change in the known position of the German Federal Government on Romania's EU accession. In the context of the election campaign in Germany, Schroeder reasserted the consistent position of the German authorities, according to which Romania's accession may occur on the target date on condition Romania fulfills the pledges it has made.

The German Government will continue to support the efforts made by the Romanian Government and citizens to fulfill those pledges, in order to join the European Union on 1 January 2007, reads a press communique issued by the Romanian Foreign Ministry. Dinga Mentions German Election Campaign Schroeder's statements possibly postponing Romania's accession date by one year must not be taken out of context, namely the ongoing election campaign in Germany, said European Integration Minister Ene Dinga yesterday. "Schroeder made that statement in the run-up to their election, which will be held soon, so it must be viewed with this amendment or reservation. However, of course, the statement is important, because it may warn against something, it may refer to a situation on which we must focus," Dinga told the BBC.

Dinga was keen to emphasize that Schroeder's remarks shed light on a well-known fact: namely that, if Romania does not do its homework, they can actually postpone its accession." However, Dinga emphasized that the postponement may only be decided based on the evaluation of Romania's progress and included in the monitoring report due on 25 October. As for the monitoring report prepared by the European Commission, Dinga reiterated his opinion that the report would only include "an enumeration of the progresses made by Romania in its preparation for accession and firm recommendations, possibly in a heavier tone, about the need to implement the reforms."

But, he does not believe they will make any reference to the safeguard clause: an explicit reference to it will be made in the report published in April 2006. Source: Bucharest Ziua

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The European Commission (EC) approved the amendments proposed by Romania with respect to measures 1.1 (Improving agricultural and fish products processing and marketing), 3.1 (Investments in farms) and 3.4 (Development and diversification of the economic activities) of the SAPARD programme, referring to the increase of the co-financing percentage and of the projects' maximum eligible value, the amendments okayed being of a procedural order.

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Television remains the dominant media in Romania, according to a report commissioned by BBC World Service. The survey, carried out by local fieldwork agency TNS CSOP, questioned 1985 people and took place in October/November 2004.

Television
Television is the most popular broadcast medium in Romania: 96 per cent watch weekly. This is followed by radio (68 per cent) with internet a long way behind - just 9 per cent of Romanians go online weekly.

This pattern is unsurprising given the differences in penetration levels of the respective technologies: home ownership of satellite and cable TV is high, 71 per cent nationally rising to 92 per cent in the capital, while home PC ownership and access to the internet are especially low at 21 per cent and 8 cent respectively.
TV is the primary mode for consuming news but radio is also very frequently used for this purpose: 97 per cent watch TV for news while 80 per cent also listen to radio news. Just 4 per cent ever use the internet in this way.
Radio

Listening to stations which are mainly speech-based is a minority activity in Romania - just 12 per cent of weekly radio listeners tune into this type of station per week. Stations which offer a mixed format of music and speech are the most popular: 70 per cent of weekly radio listeners tune to this type of station.

Although the Romanian radio market is slowly advancing and consolidating with the entrance of powerful new players bolstered by foreign capital, the structure is still far from mature. There are over 200 radio stations serving a country of 22 million people. TV, press and even outdoor media exceed radio in terms of advertising spend (source: AC Nielsen Media International - Emerging Markets report). Furthermore, the Romanian licensing authority has been very generous in its recent awards of low power FM licences, however the majority of the latest tranche were specialist/niche stations.

Radio Romania Actualitati - the main state owned station and the only one with national coverage - leads the radio market. Its weekly reach is 33 per cent. This has stabilized after a fall in listenership between 2002 and 2003. Radio Europa FM and Radio Kiss, with weekly audiences of 22 per cent and 18 per cent respectively, are the next most popular private commercial stations. Although they are both expanding their networks, neither of these stations has full national coverage yet.

Romanians are highly attracted to radio news and current affairs. Interest in news content on the radio is as high as that for music - Two-thirds of Romanians describe themselves as "extremely or very interested" in radio news. The same was found for music on the radio.
Geographically, Romanians are most interested in domestic news but international news is also important to nearly half the population. 65 per cent are "extremely or very interested in" domestic news compared with 46 per cent for international news.

International radio
Although listening via shortwave continues to fall, it is still more common in Romania than nearly all other European markets which have much higher FM usage. International radio maintains a stable presence in Romania.

The withdrawal of VOA and less output from Radio Free Europe in Romanian have not had a significant effect on overall foreign radio listening levels: 10 per cent of Romanians said they listened to one or more international radio stations in the past week, consistent with 2003 levels.
Radio Free Europe is the most well-known foreign radio broadcaster in Romania, achieving 53 per cent awareness compared with 21 per cent for Deutsche Welle and 16 per cent for Radio France International. There is significant awareness of the BBC too.
[Source: BBC World Service research 10 August 2005]

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Despite the country?s promise as a holiday destination, it still fails to compete with its neighbours - By Floriana Scanteie in Bucharest (BCR no 570, 10-Aug-05)

Every year, at the start of the tourist season, officials announce another major push to attract foreign visitors to Romania?s beaches, mountains, medieval towns and virgin forests.
Some of the figures would suggest the drive is working: last year 6.6 million people visited Romania, an 18 per cent increase on 2003, according to figures from the World Trade Organisation.

But the reality is a lot different, with Romanians preferring to go abroad if they can afford it, and foreign tourists deterred by crumbling infrastructure and poor service.
Socialist Romania developed a tourist industry in the Sixties and Seventies, and was able to encourage Westerners to come and enjoy its Black Sea beaches, as well as receiving Communist-bloc tourists who had fewer travel options.

But almost 16 years after Communist leader Nicolae Ceausescu was toppled, the country is still struggling to shake off its image of being grey, dull and poverty-stricken.
Data for this year?s summer season are not yet available, but reports from hoteliers and tourism officials suggest the results will be no better than last year?s disappointing figures.
According to the Institute of Statistics in Constanta, just 2,000 foreign tourists checked into hotels in Mamaia, the main resort on the Black Sea, between January and September 2004.
The 60,000 foreigners who visited Black Sea beaches last year represented about the same number who came in 1996.

Romanians, too, are staying away from the Black Sea resorts which were favoured destinations for most families in the Communist era.
As prices rise relentlessly while incomes remain static or even fall in real terms, Romanians are increasingly visiting the coast only for short weekend breaks. They take their own food with them when they go, and most stay in cheap one- or two-star hotels, or make do with tents on the beach or rooms rented from local farmers.

Lucia Morariu, the owner of Eximtur tourism agency, says his business has sold 30 per cent fewer bookings this year than last year.
?Less and less people are coming,? Morariu said. ?The number of bookings made by trade unions is falling owing to their poor resources, while the cost of the food is up by 20 per cent on last year.?

High-season prices average 20 euro per day for a bed in a two-star hotel. That may not be much for many foreign visitors, but it is by no means cheap for Romanians, who earn on average only about 150 euro a month.
Foreigners are not rushing to take advantage of such deals, either, since the service is often poor and the beaches are not always clean.

Lavinia Popescu, who works for an insurance firm in Bucharest, says holidays at home don?t match up to going abroad.
?I have holidayed in Greece and Turkey for three years now and everything there is as it should be - beautiful, tidy and relaxing,? she said. ?I?m very disappointed by the lack of diversity in Romania.?
Experts say one problem is that privatisation has resulted in hotels being milked for profits by new owners, without any investment in infrastructure or personnel to compensate.
Although there are media reports of millions of dollars being invested in seaside hotels, this money has gone on a few four- and five- star establishments at the top of the range.
For most of the 300 odd hotels on the Black Sea coast, there is no sign of even a superficial facelift. Many are over 30 years old and in need of major investment after years of neglect.
In that context, it is not surprising that wealthier Romanians choose to spend their holiday money abroad.

The preferred options are Spain, Greece and Croatia, where prices are similar to those at home while the quality of service is much higher.

Tourist industry chiefs try to paint a more cheerful picture.
?If we take into consideration additional expenses like as airport taxes or the price of a dinner for two at a restaurant, it?s cheaper to spend a week?s holiday in Romania than abroad,? said Marius Crivtonescu, president of the National Tourism Authority.
But while operators talk up the potential of Romanian holidays, most experts concede that the country is still failing to compete on the international market.
When the country?s performance is measured against that of its regional competitors, the results are less than uplifting.

Romania?s total income last year from tourism amounted to 768 million US dollars, for example. In comparison, tourists brought 800 million dollars to neighbouring Bulgaria, which is far smaller and less populous.

Successive post-communist governments have promised to develop Romania?s north-eastern Bucovina region, home to numerous 15th and 16th century monasteries, whose frescoes have made them a world heritage site.
Other potentials draws are the medieval towns and fortified churches of Transylvania, the outdoor sports on offer in the Carpathian mountains, and the wildlife of the Danube delta, home to Europe?s largest colony of pelicans as well as countless other water birds.
But muddles over privatisation legislation and the failure of successive governments to resolve problems and develop a coordinated strategy for the industry have kept the foreigners at bay.

?In recent years there has been a constant increase in demand for tickets to health resorts or rural tourism,? said Marcel Badescu, director of the successful Nova Touring Eurolines agency. ?But many problems still remain, because Romania has not come up with a strategy to promote its beauties.
?The infrastructure is poor, many employees lack professionalism and corruption is a kind of national trade-mark.?

Floriana Scanteie is a freelance journalist in Bucharest.

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The National Bank of Romania's board of governors has decided to increase the rate of interest the central bank pays on one-month deposits by commercial banks from 7.9% to 8.5%, in an attempt to cope with the inflationary pressures it expects in the short term. The NBR is therefore offering a much better interest rate for one-month deposits than commercial banks, which pay their clients around 7%, a level that risks not covering inflation. The NBR decision could give a boost to savings.

"Commercial banks could easily increase their rates for deposits in RON as a result of the rise in the interest rate paid by the central bank for attracted deposits. The central bank's aim could also be to keep interest rates positive in real terms, given the prospects for an increase in the inflation target for next year after the rise in VAT and controlled prices," said Mihail Ion, the head of Raiffeisen Bank's treasury department. He says that the rate of savings in gross domestic product fell to 9.4% in the first quarter of the year, the lowest level for the last five years, reflecting an increase in the current account deficit.

While increasing the purging interest rate, the NBR also gave up using the so-called monetary policy rate introduced in February to indicate the maximum rate it is wiling to pay to attract cash from the monetary market, which has since become completely irrelevant to players given the interest rate used for operations is dwindling. As of April this rate has maintained at 12.5% a year, indicating increased caution by the NBR in terms of inflation risks, while the interest rate used on the market even dropped below 7% a year.

The interest rate decisions come after the NBR board of governors decided in its Monday session to resort officially to the strategy of direct inflation targeting, after the first quarterly report on price trends had been endorsed. The central bank's expectations for the inflation rate trend over the next eight quarters will be made public on August 15. There is little doubt that the central bank is expecting prices to rise soon.

"Considering the forecasts for short-term inflationary pressures, as well as the need to minimise the risk of an increase in potentially volatile capital inflows, the NBR board of governors deems it necessary to keep on maintaining a prudent monetary policy," an NBR release says. This means the central bank is trying to keep inflation in check by upping the purging interest rate, though only by a small amount so as not to arouse the interest of speculative capital.

What will the practical effects be of the NBR's decisions in the near future? "The most important thing for the market is that the purging interest rate is going up, which could be a signal of monetary policy contraction amid inflationary pressures," said Radu Craciun, ABN Amro Romania's chief analyst. He believes that the increase is not significant for foreign investors and therefore the decision would not attract any more foreign currency inflows over and above those already pressuring for an exchange rate decline in five weeks.

Mihail Ion believes the effect of the NBR decisions on the current account deficit level is ambiguous, since any possible improvement in savings would induce a temporary decline in the deficit.

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Romania?s yearly inflation remained to single digit in July, sliding further to 9.3% from 9.7% in the previous month. Monthly inflation was 1% in July, up from 0.3% the previous month.

August?s monthly inflation is expected to pick up due to the utilities price increases implanted starting July1.

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AFX News Limited
BUCHAREST (AFX) - Romanian car maker Dacia is set to cut a further 1,000 jobs by the end of the year, owing to restructuring of a factory in the south of Romania, a trade union source said. Formerly state-owned Dacia, which was taken over by French group Renault SA in 1999, has made 15,000 workers redundant since the change of ownership.

'The casting and forgery divisions will experience a slight reduction in output, while other services will be closed, according to a new multinational strategy from Renault,' Dacia trade union representative Nicolae Pavelescu told Agence France-Presse. The job losses will be at a factory in Pitesti. Renault employs 12,100 people in Romania and has invested 400 mln eur in modernising the factory and plans to invest a further 215 mln eur to build a new gearbox assembly line.

The extended operations are forecast to generate sales of more than 2 bln eur by 2008, according to the head of Renault in eastern Europe, Francois Fourmont. For 2005, Dacia-Renault has forecast sales of more than 1 bln eur in 2005. The company expects to sell 175,000 of its affordable model, the Logan, with 60,000 earmarked for export markets.

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Trade between Romania and Spain will amount to some 1 billion euro this year, Rosa Maria Sanchez Yebra Alonso, commercial attache of the Spanish Embassy in Bucharest said. However, Romania must still improve its business environment in order to attract further large-scale investment projects, Bursa reports. "For 2005, we estimate trade between the two countries to exceed 1 billion euro, especially given that in the first half of the year, trade rose by 50% compared to 2004", Yebra Alonso said.

However, the uncertainty of Romania's legal frame, as well as red tape do not favour medium- to long-term investments, she added.

In 2004, trade between Romania and Spain reached 853 million euro.
"Romania remains an attractive market for Spanish investors. Moreover, as Romania catches up with European Union standards, Spanish companies are all the more interested in the country's market", Yebra Alonso claimed.

Spanish investments have mainly involved greenfield projects, in particular in industries such as the automotive, food processing, wood processing and home appliance industries, she said.
Spanish companies are now interested in investing in industrial parks, commercial facilities and the energy and agricultural sectors in Romania, according to the Spanish official.

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Bank Austria Creditanstalt will not bid for Casa de Economii si Consemntiuni (CEC), Romania's fourth largest bank, it announced ahead of an August 31 deadline for letters of intent to Romania's privatisation agency.


Bank Austria Creditanstalt is already active in Romania.

It had previously said it might be interested in CEC.

Italy's UniCredito , which is bidding for Bank Austria and its German parent HVB Group , has stated that it does not intend to pursue any further acquisitions for the next three years, while it focuses on merging HVB and its units.

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Nearly three-quarters of EU Member States have some form of statutory national minimum wage, with sectoral collective agreements playing the main role in setting minimum pay rates in the remainder of the countries.

This comparative study (which also includes Bulgaria, Romania and Norway) examines these minimum wage systems, looking at: current rates (both absolute and as a proportion of average wages) and their recent development; beneficiaries; the existence of differentiated rates (eg for young workers); adjustment mechanisms; enforcement; the role and positions of governments and social partners; and current academic debates on the issue.

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Iasi-based Mittal Steel will increase its production of high added value products by 20 percent, after having received the API 5L certification from the American Petroleum Institute (API), the company announced. Mittal Steel Iasi obtained the API 5L certification, which is given for products that can be used in the oil and gas industries.

API is the only institute in the world that issues certificates for products used in the oil industry. "Now that we have obtained this certifiacate, we will be able to start exporting to new markets in the Middle East, Africa and Scandinavia. Furthermore, the certificate will allow us to participate in bids that oil companies organize for their top projects", Regie Paul, Mittal Steel Iasi General Manager said.

Mittal Steel Iasi had been trying to obtain this API 5L certification for ten years. An audit team from the API came to Iasi to examine the quality norms at the production facility. The team forwarded its report to US-based API and Mittal Steel Iasi obtained the certificate in June.

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Bucharest - 10 August 2005 -
Romania's eight regions are showing increasingly marked differences in terms of entrepreneurial activity, according to a study conducted by the Romanian Centre for Economic Modelling (CRME). In Bucharest, there are 24.3 companies per 1,000 people, while in the north-eastern region there are three times fewer firms, the study shows.

The pace of entrepreneurial development in both Bucharest and the north-eastern region has remained stable since 1997. However, in the West, North-West and Centre regions, the pace has increased and in the three southern regions it has slown down since 1997, according to the CRME.

Overall, there are 2.5 times less companies per 1,000 people in Romania compared to the average in the European Union, the study shows. Note that it is the regions closest to Hungary and the rest of the EU that perform better in terms of entrepreneurial activity.

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13:19 - 09 August 2005 - Unicredit Romania, the local unit of Italy's banking group Unicredito Italiano, opened its 38th branch in the country, in Bistrita, north-western Romania, the bank announced. The opening of the new branch is part of the bank's expansion strategy.
The newly opened branch offers the full range of the bank's products and services aimed at individual clients as well as small and medium sized enterprises (SMEs).

Unicredito Italiano holds a 99.94 percent stake in Unicredit Romania. The bank operates in Romania since 1997.

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Announcement for the privatisation of CASA DE ECONOMII SI CONSEMNATIUNI C.E.C.-S.A. through negotiation based on the selection of bids

The fall of communism continues to revolutionise economies in South East Europe, with the privatisation of energy giant Petrom set to change how energy is administered in the region as a major example of new corporate governance. An objective of the Ministry of Economy and Commerce, the Petrom sell off was Romania?s largest ever privatisation deal with Austrian oil company OMV buying a majority shareholding of 51% in the company.

Completed in December last year the cost to OMV is expected to reach over 800 million Euros in buying out the shares of which 93% were previously owned by the Romanian state with 7% being traded on the Bucharest Stock Exchange.The Romanian government still retains 32% of the shares with company employees taking up 8%, a figure which provoked contention amongst union figures who wanted to control up to 10% of the stockholding. In return for outstanding debts of $73million on pre privatisation loan in 2002, the European Bank of Reconstruction and Development own 2% of the shareholdings, the bank?s involvement there to promote EU objective?s of wider private ownership and quality and transparency of the privatisation process.

How will the deal effect the market? Many alterations have taken place, OMV have increased their market share in Romania from 6% to 30 %, have tripled their oil and gas reserves and now own 500 more petrol stations globally taking their total to 2380.With the inclusion of Petrom in the accounts the profits of OMV rose to 256 million Euros for the first quarter well ahead in comparison to last year?s profit margin. ?Petrom, starting from January of this year will benefit from pricing polices based upon European Oil practices our prices did not reflect international quotations, we also have a leadership position in marketing and refining and plan to expand our business beyond Romania,? said the spokesperson for Gabriel Nabustane, Petrom?s corporate communication director. He added: ? As part of our seismic exploration work programme we intend to drill through several hundred square kilometres, we also put a special focus on the exploring and production licence for hydrocarbons in Kazakhstan,?

Despite the increase in production techniques Petrom is a company still in need of management restructuring to increase profit margins, in particular a more centralised accounting department and oil wells are connected by decaying pipelines which will need further investment. A challenge still remains in clearing the cobwebs of communism and past autocratic regimes.

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Bucharest, Aug 10 (InvestRomania) - Romania's rate of inflation is expected to stay high relative to that of its main trading partners, necessitating continued nominal depreciation of the leu against the major currencies in 2005-06 to maintain competitiveness, the Economist Intelligence Unit (EIU) says.

However, the EIU forecast assumes a strong real effective appreciation of the leu in 2005, given that capital-account liberalisation and a generally positive view of Romania's prospects will spur large inflows of foreign capital. The EIU revised forecast for the exchange rate of the US dollar against the euro in 2005 means that the leu will appreciate more strongly against the euro than previously assumed, and less so against the US dollar.

Expressed in new lei (following the redenomination of the currency on July 1st 2005), we expect the leu to appreciate in nominal terms to an annual average of Lei3.05:US$1 (Lei3.73:¤1) in 2005, compared with Lei3.26:US$1 (Lei4.06:¤1) in 2004. This implies a real appreciation of about 13% against the US dollar and 16% against the euro. A more modest real appreciation is expected in 2006.

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Romania is set to register in 2005 the biggest annual economic growth from among all Central and Eastern European countries, but also the highest inflation rate, according to a UniCredit survey, "ACT Media News Agency' reports. Country's GDP over 2005-2007 is expected to grow by 10 billion euros annually, reaching 96.138 billion euros,in 2007 .

According to UniCredit's macroeconomics research team, Romania will achieve this year an economic annual growth rate of 6 percent, greater than those estimated for Bulgaria (5 percent), the Czech Republic (4.2 percent), Hungary (3.3 percent) and Poland (4.1 percent). For Romania the report shows that while GDP will go up by 5.7% per year, industrial production will record average rates slightly lower, some 4.6% in 2006 and 4.9% in 2007.

At the same time, the year-end inflation rate will place Poland first with 1.9 percent, followed by the Czech Republic (2.5 percent), Hungary (3.3 percent), Bulgaria (5.5 percent) and Romania at the bottom of the list with an estimated level of about 8 percent. The prognosis drawn up by Unicredit indicates also a progressive reduction in inflation, from some 8% in 2005 to some 5.5% in two years' time. The situation regarding the interest rates looks almost similar: the greatest interest rate is predicted for Romania, 7.6 percent year-end, as compared to the Czech Republic (1.75 percent) and Bulgaria (2.05 percent). As for the fiscal ranking of the states in the region, Romania and Bulgaria' prognosis is better than for their neighbouring countries - the Czech Republic, Hungary and Poland.

Therefore, while Romania's consolidated budget deficit will amount to about 0.9 percent of the Gross Domestic Product (GDP) and Bulgaria will end 2005 with a budgetary surplus of 1 percent of GDP, Poland, the Czech Republic and Hungary will post budget deficits between 4.5 and 5.5 percent of GDP, the source concludes. Romania's current account deficit will experience the some period a descending trend to 6.6%, but unemployment will slightly go up each year: 6.1% in 2005, 6.2% in 2006 and 6.3% in 2007. Moreover, direct foreign investments will represent an average of 4.7% of GDP, but the country's foreign debt will maintain its share around 28.4% - 28.5%.

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BANEASA, Romania (AP) -- A euro1.2 billion (US$1.47 billion) real estate development in former plum orchards north of Bucharest illustrates the fruits being picked in Romania and Bulgaria, future EU members seeing an economic boom while much of old Europe stagnates.

The Baneasa development, one of the largest of its kind in the region, will include more than 3,000 houses, a business park and a large commercial district, developers say. It is expected to create 10,000 temporary jobs and space for 25,000 permanent jobs.

While the office space will be open to all clients, it is expected to draw software, communications and other high-tech companies, said Bogdan Todea, a spokesman for the developer.
Bucharest mayor Adriean Videanu announced plans last week to annex dozens of surrounding villages to spur similar developments. The project would give the crowded city space to grow, while modernizing the undeveloped surrounding area, Videanu said.
Following the 1989 overthrow of communism, Romania and its southern neighbor Bulgaria lagged behind Hungary and other central European states in attracting foreign investment, as they struggled to privatize state industries and retool centralized economies.
But analysts say the countries are catching up, and their economies have been expanding rapidly since 2000. Economic growth is expected to hover at around 6 percent for the next three years in both countries, with Bulgaria seeing lower inflation.

"Romania and Bulgaria are perceived as the new forces," said Radu Craciun, an analyst at ABN Amro. "They have low labor costs, and due to their geographical positions have better access to the Middle East, Russia and the Balkans."

Both are scheduled to join the European Union in 2007, but could face one-year delays if they fail to reform their inefficient justice systems and crack down on corruption.
While both countries already have easy access to EU markets, a postponement would delay EU funds for infrastructure improvements and rural development. But it wouldn't have a major impact on large investors, Craciun said, as they take a long-term view.
"Foreign direct investment potential is and has been very favorable and all the years I have been here have not heard of anyone losing money," said Gil Woods, a U.S. lawyer who heads the Foreign Investors Council in Romania.
He said the country was hampered in the past by bad public relations and non-responsive governments.

This year, however, direct foreign investment reached euro951 million (US$1.16 billion) from January to May, a 12 percent rise compared to the same period last year, according to official figures.

"Romania has a great future in development," said Andreas Wiennen, general manager of the German-based auto parts maker Eckerle Group, which opened a new factory in 2003 in the Transylvanian city of Cluj.
He said the group had also considered expanding in Bulgaria or Ukraine before choosing northwest Romania, which he said was more developed. "The company is doing great here," he said.

Bulgaria, while smaller, also has emerged as an attractive destination for foreign investors, mainly due to its economic stability. Direct foreign investment reached euro2.14 billion (US$2.49 billion) in 2004, and up 14.2 percent from 2003, one of the highest per capita investments in the region.

The increasing investment and the expectation of EU membership has also led to a boom in real estate in Bulgaria and Romania, with prices doubling in the last few years before appearing to level off recently.

"At the moment we register a slight decline in for example Britons' interest in Bulgarian property," said Krasimira Georgieva, manager of the Yavlena real estate agency in Sofia. "The reasons could be fear from the globally increased terror threat, and talk that Bulgaria's EU entry would be delayed."

Despite relatively low monthly wages by EU standards of about US$300 (euro240) in Romania and US$255 (euro207) in Bulgaria, the domestic markets are also becoming attractive due to a high consumer appetite for electronics, appliances, cellular phones and new cars.
In Bucharest, a city of 2.3 million, two new malls opened last year and a dozen of hypermarkets and supermarkets have sprung up in the last few years.

French chain Carrefour SA reported last month that sales in its four Romanian stores nearly doubled to about euro190 million (US$233 million) in the first half of 2005. The supermarket company plans to add four more stores by next year, the Ziarul Financiar daily reported.
The Romanian car market has boomed as well, with sales up 60 percent in the first five months of 2005. Renault, which also owns Romania's top carmaker Dacia, has sold more than 100,000 of its popular new model, the Logan, since it began production last year.
The French automaker recently announced plans to build a euro219 million (US$270 million) new gear box plant in Romania.
Fearing an overheating of its economy and a rise in inflation, Romania enacted stricter credit rules last week and is considering raising the VAT to slow the pace of consumption.
The economic boom is not evenly distributed, however, with a strong concentration of investment in urban areas and around Bulgaria and Romania's Black Sea coasts, while few foreigners venture in rural, poorer regions of eastern Romania.

Meanwhile, the Timisoara region in western Romania is home to some 1,900 Italian businesses.
"Romania is a Latin country that will soon be in the European Union," said Mauri Giancarlo, whose company, Perugia-based Mauri System, sells pastry and breadmaking equipment and has expanded its business in Romania. "It is a market that I am slowly discovering and I am convinced that I will work well here."

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Romanian incumbent telco Romtelecom has announced it plans to invest some 500m euros in upgrading its infrastructure over the next three years. Romtelecom has already awarded contracts to Ericsson and Alcatel for the supply of equipment to build a nationwide next generation network (NGN). The upgrade will allow Romtelecom to provide high-speed internet access, and new voice and data services, including video and audio applications.

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