December 2005

A joint venture between Russia's gas monopoly Gazprom and German Wintershall, a unit of chemical major BASF , has agreed with Romania to extend their gas supply deal until 2030, Gazprom said on Wednesday.

Gazprom and Wintershall supply the bulk of gas to Romania via the 50/50 venture, Wintershall Erdgas Handelshaus Zug Ag, and the previous contract was due to expire in 2012. Romania heavily depends on Russian gas and Gazprom, the country's export monopoly, supplied Romania with 4.14 billion cubic metres in 2004, down from 5.10 bcm in 2003. In the first 10 months of 2005 supplies stood at 3.78 bcm, up from 3.49 bcm in the same period of 2004. Gazprom said the venture supplied Romania with a total of over 40 bcm of gas since the start of operations in 1993, but did not give the volume of planned supplies under the new long-term deal.

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International Leasing, the only relevant company traded on the Rasdaq market, issued bonds for the third time in 2005, amounting to a total value of 4.8 million new lei, during a public offer where 119 natural and legal persons, according to a release of the company, subscribed some 180,024,000,000 old lei.

This bond issue targets at financing the operational leasing agreements. The above-mentioned leasing company issued some 48,000 nominative bonds insured, non-convertible, in dematerialised form, having a face value of 100 new lei (one million old lei, 1 euro selling for about 3.6 new lei). International Leasing borrows money for four years, reimbursement being scheduled in four annual instalments equal to a variable interest rate, calculated for each half of the year at the BUBOR+2.25 percent level. The afferent interest for the first period of calculation is 10.75 percent per annum.

The public offer was carried out over December 12-23, 2005, the placement being intermediated by the SSIF Intercapital Invest manager and also by the co-manager of BCR Securities and insured by BCR Insurance. The issues in the previous years, amounting to 220,000 new lei, 1.5 million new lei respectively, were already redeemed.The company has a capital of 7.26 million new lei (72.6 billion old lei), the majority shareholder being general manager Ioana Necula, with 71.12 percent of the titles.

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The Finance Ministry announced that amendments made to the fiscal code will be sent to the government at the beginning of 2006. These provisions will be included in a bill which the government will be sent to Parliament for debate. According to finance minister Sebastian Vladescu, the amendments made to the fiscal code will take into consideration suggestions made by businessmen, unions and employers. In Brussels premier Calin Popescu Tariceanu declared that the new Fiscal Code would not be applied as of 1 January 2006 and there will be some time between approving the amendments and their coming into force. The variants of the new Fiscal Code discussed until now provide among other things, the application of a 16% tax on interest rates for bank deposits and dividends, as well as a new controversial tax on corporate stock. Taxes on buildings with commercial use will also rise. According to the finance ministry, real estate transactions will be taxes with 2% of the contract value.

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CIF imports (including transport and insurance) made in the first 11 months of 2005 amounted to 29.44 billion euros, on the rise by 24.2% against the same period of 2004, INS informs. In November 2005, CIF imports amounted to 3.307 billion euros, being 25.6% higher than in November 2004.

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FOB exports made in the first 11 months of 2005 totaled 10.43 billion euros, on the rise by 17.4% compared to the level recorded in the same period of 2004, the National Statistics Institute (INS) informs. In November 2005, exports amounted to 2038 billion euros, on the rise by 22.2% compared to November 2004.

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Foreign direct investments dropped, over the last ten months, by 24 percent against the same time frame of the previous year, down to EUR 3.5 bln., according to the data released by National Bank of Romania (BNR). Based on BNR revised data, foreign direct investments reached EUR 4.3 bln. over the next ten months of 2004.

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Money supply in a large sense (M2) stood at the end of November at 81.402 million RON, up 0.4 percent (minus 0.8 percent real terms drop), as against October. Reported to November 2004, money supply accounted for a jump of 43.1 percent (31.7 percent in real terms), according to a release issued by Romania's National Bank (BNR)..

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 SISCOM in cooperation with the Romanian Embassy have agreed that the best and most fruitful way in accessing the GCC and Middle East markets should commence with Saudi Arabia, being the largest market in the Middle East.

December 29, 2005 (Riyadh, Saudi Arabia) --  SISCOM in cooperation with the Romanian Embassy have agreed that the best and most fruitful way in accessing the GCC and Middle East markets should commence with Saudi Arabia, being the largest market in the Middle East.                                            

To this end SISCOM offered its online B2B e-marketplace, tradekey.com to streamline the entry of leading Romanian companies to create business opportunities in Saudi Arabia.

We have done some business with the Saudi Market over the years. We expect that with TradeKey.com s penetration, exposure and user-friendliness the task will become much more comprehensive, fruitful for both countries, said Mr. Cristi Catalan, Embassy of Romania, Economic Secretary.

With tradekey.com the Saudi market is able to get acquainted with different business opportunities being offered from Romania and their Romanian counterparts will be able to benefit from both the manufacturing and buying powers eminent in the Saudi Market, said Mr. Bishr Al-Madani , SISCOM, Marketing Manager.


About Sawabeh Information Services Company (SISCOM):

Sawabeh Information Services Company (SISCOM) is an information technology and marketing consulting firm serving Saudi Arabia and the Middle East region since 1989. First founded as a small private consulting practice, it had undergone an era of exponential growth during the 90s. With the rise of e-Procurement marketplaces and corporate portals, SISCOM began transforming a part of its technology competency to serve this important strategic market. SISCOM now dominates the e-Business and e-Commerce regional market pioneering the launch of several globally operated networks. SISCOM has a commitment to its community in readying the regional governments for the electronic government local initiatives. For more information about our products, visit www.saudicommerce.com and www.tradekey.com

Contact Info:
Bishr Al-Madani
Marketing and PR Manager
Tel: +966-1-201 0000 (Ext. 133)
Fax:+966-1-201 3003
bam@siscom.com.sa

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The next 6 months are crucial for Romania's EU entry and it is very important for Romania to continue its efforts, said UK ambassador in Bucharest, Quinton Quayle, ACT Media news agency reports.


Quinton Quayle, whose country holds until the end of 2005 the rotating presidency of the EU, underlined that it would be decided whether Romania joins the EU in 2007 or in 2008 at the end of the Austrian presidency, which starts in January 2006. "The monitoring report on Romania, presented by the European Commission in October 2005 showed that Romania has made important steps and may join the EU in 2007, but there have been warnings that have to be treated with much seriousness," said the UK ambassador.

He added that in 2005 Romania has achieved much more than everybody expected in terms of preparing the EU entry.

Quayle indicated minister Monica Macovei's efforts to reform justice and the measures taken by interior minister Vasile Blaga in the anticorruption fight as "steps forward," which contributed to a good monitoring report in the autumn. Quayle said that one of the achievements of the UK presidency of the EU was ensuring the consensus on the EU budget for the next period, which also created the financial basis for Romania's accession. "It would be a tragedy of the accession were postponed by one year. I hope it will not happen.

We will look forward to the spring report of the European Commission and your country's results," said Quinton Quayle. In his opinion, Romania should lay out in 2006 an efficient system of allocation at regional level of the significant structural funds earmarked by the European Union for this country, following the integration moment on January 1, 2007. "We are just one year ahead the integration moment and, if this system is not becoming functional, Romania could not benefit of these structural funds.

It is a matter of urgency to decide who is going to manage the structural funds and how the overall system would function," Quinton Quayle underlined.

He stressed that, according to the European budgetary package, convened on the occasion of the Winter European Council, over December 15-16, Romania could accede an amount of 3.5 billion euros per year, in the period 2007 through 2009 and 5 billion euros per year, starting on 2010. The British Ambassador showed that the implementation of this complex system, different of the absorption system of pre-accession funds, took a pretty long time in other candidate countries and the Government should decide who will lead this mechanism and be sure that all involved sides - state's authorities and private agencies - would be able to cooperate starting on January 2997. Quayle mentioned that in EU countries these funds are managed by different institutions - either by a Ministry for Regional Development, a Ministry for European Affairs or a body subordinated to the Ministry of Finance or to the Prime Minister. The British Ambassador believes that it will not be an easy task for Romania to absorb correctly and efficiently these funds also due to the corruption problem that must be solved in a firm and fast manner.

"Great Britain and EU can rightfully speak about corruption in Romania because these funds are drawn from their contribution and they represent the equivalent of 6 percent of the Romanian Gross Domestic Product in the first three years and 8.5 percent in the following four years, investments that give a huge chance to an emergent economy as Romania's," British Ambassador to Bucharest highlighted.

At the same time, he was keen to draw the attention that, in order to accede the significant European structural funds, the Romanian side must ensure a co-financing of 50 percent.

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The Romanian Ministry of Public Finance in 2006 will launch loans amounting to 4,150 million lei (1 euro sells for 3.6 lei) through the agency of bonds, on the domestic market only, ACT Media news agency reports.

The bonds are structured on types of maturity in treasury notes with maturities in six and twelve months and benchmark state bonds having maturities in three, five and ten years. The treasury notes will be launched in an amount of approximately 900 million lei, 450 million lei respectively on each type of maturity, having as tender date the Monday of each of the third week in every month and Wednesday as settlement day. The benchmark state bonds will be launched in an amount of approximately 3,250 million lei.

The issues are be organized monthly, starting with the second quarter of the year, in the first week of each month, with Thursday as tender day and Monday as settlement day. The bonds having maturities of three years will be issued in an amount of approximately 1,250 million lei, while the amount of the bonds having maturities in five and ten years will be approximately one billion lei, for each of the two types of maturities. Every quarter, the Public Finance Ministry will make known the orientating values of the loans in each month of the current quarter, and on the basis of the monthly issue prospect, their real amount is to be announced. In 2006, the ministry will issue no treasury notes to be put up for sale through the state treasury network.

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Romania's FOB/CIF trade deficit stands at 9.006 million euros January through November, the increase being 43.52 percent as compared with the same period in 2004, when it stood at 6.275 billion euros, ACT Media news agency reports.

In November, the FOB/CIF trade deficit was 1.268 billion euros, according to the data provided by the National Institute of Statistics, as compared with the 956.4 million euros in November 2004, the increase being 32.66 percent. In FOB/FOB prices, the deficit stood at 6.74 billion euros in the period analysed in 2005, the increase being 51.31 percent January through November 2004 and 1.014 billion euros in November 2005 (plus 34.4 percent) as against November 2004.

The FOB exports amounted to 20.433 billion euros in the reference period, their value being by 17.4 percent higher as compared with the January 1- November 30, 2004 period. The CIF imports amounted to 29.44 billion euros, the value being by 24.2 percent higher as compared with the same period in 2004. According to the data released by the National Bank of Romania, the exchange rate of the national currency in late November 2005 was 3.6549 new lei for one euro (minus 7.9 percent as against the end of 2004) and 3.1024 new lei for one dollar (plus 6.7 percent as compared with the end of 2004).

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The palace and museum were confiscated by the communists

(RFE/RL)

That?s what one Phoenix High teacher found when she visited the former East-bloc communist nation
By PARIS ACHEN
Mail Tribune

The mention of Romania used to elicit comments about Dracula and orphans from Mary Barton?s students and colleagues at Phoenix High School.

After visiting the former communist country earlier this month, the social studies teacher hopes to offer a different image of the fledging democracy.

"What I saw was a country very eager to enter the Western world as it transitions from socialism to capitalism," Barton said. "They know (capitalism) from the Internet, and by golly, they want it."

Barton, 53, of White City, traveled Dec. 1 to the Eastern European country of 22.3 million as a part of the Economics International program.

The program, sponsored by the National Council on Economic Education, provides educational training to teachers in countries in transition to market economies.


The program sends a dozen U.S. teachers on study tours to one of 21 such countries each year free of charge in an effort to enrich economics education in the United States.

Funding for the program comes largely from the U.S. Department of Education.

As a part of this year?s 10-day tour, Barton and 11 fellow teachers visited schools, teacher training sessions, government officials, economists and educational leaders in Romania.

The birth of capitalism in that country has been particularly painful, with spiking inflation and other troubles, Barton said.

Before the fall of communism, a 100 lei coin, the Romanian currency, was enough to purchase a plane ticket from Bucharest to anywhere in the country. Now, the coin is worth about one-third of a U.S. penny, she said.

The Romanians use the U.S. and Western European economies as models for their own, she said.

They hope to make some economic progress by gaining admission into the European Union.

A visit to the office of Capital magazine showcased some of the economic strides the country has made.

In November, Capital published its first 300 richest Romanians list in the style of Forbes Magazine.

As in the United States, the personal glories of capitalism are not always welcome, she said.

"Students were very resentful," Barton said. "They said, ?We don?t even have a door on our bathroom, and these guys are so rich. They should be doing more for our country.?

"Students in the U.S. would say that about Bill Gates," she said.

Barton said she plans to use that anecdote and others in her classroom to illustrate key principals of economics.

"I have now examples for every single unit in my class: supply and demand, inflation, monetary policy," she said. "I could have read about it, but when you?ve been there and seen the reactions and expressions, it?s real."

She said making her class memorable for her students is important, as it?s the only formal economics instruction they?ll receive in high school.

"Some will never study it again," she said. "When students understand why interest rates on home mortgages change, why house prices in Medford are in the $400,000 range when they weren?t five years ago, then, they aren?t living in mystery."

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Romanian health authorities have stepped up immunization campaigns to contain a measles epidemic that has infected more than 4,300 children, killing 10 of them, the health ministry said Thursday.

The first cases of measles appeared in January, but the disease spread rapidly at the end of November. Authorities have vaccinated more than 306,000 children in the last month and have lowered the immunization age from a year old to seven months.

Health Minister Eugen Nicolaescu has said the epidemic occurred because many children were missed by immunization campaigns in 2003-2005. He has asked prosecutors to review whether medical officials had done their jobs properly.

In recent days, an outbreak of chickenpox was also confirmed by health authorities, Health Ministry spokeswoman Oana Grigore said, adding that about six cases per day were being reported, mostly in Bucharest.

"In January we'll decide whether to make immunization for chickenpox mandatory, because right now the vaccination is just on a voluntary basis," said Adrian Streinu-Cercel, head of the Matei Bals Hospital in Bucharest.

He said 1.5 million children under age 5 are vulnerable to chickenpox.

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According to the estimates of the European Bank for Reconstruction and Development (EBRD), Romania will register a general economic growth worth 5.3% in 2006, a year which will decide the fate of Romania's accession to the European Union, ACT Media news agency reports.


The fields which are expected to develop most are constructions and the real estate sector, where important projects have already started at residential level, but also in infrastructure, trade, communications and information technology.

After the growth registered in the car market, particularly in the first half of this year, importers said it is very hard the performance to repeat in 2006 and a slight increase of 10% is expected. Increases are also expected next year in two sectors with huge potential:

Agriculture, food industry and tourism, fields which have been promising several years now but where development is sluggish.

When it comes to agriculture, 2006 could bring the introduction of the tax on farm land, which will prompt its efficient use in big farm holdings to the detriment of its use for the production bound for home consumption. 2006 will be an interesting year for the market of capital. The big battle will be fought in communications in 2006 on two fronts:

Business customers and those from the big cities, for the services with VAT, and the digitalization of villages and small towns in order to win a market share.

In constructions and real estate, at least two big projects - Esplanada and Baneasa Investment, one billion each, are to start in Bucharest.

The investments will be redirected to the residential sector and to the field of buildings, offices and commercial spaces.

Investments will also be made in housing compounds of over 1,000 flats, which have recently started.

At the same time, the change to the law on direct investments and the creation of a legislative framework for investors to obtain certain facilities will bring important foreign investors.

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Transelectrica company, transport operator of the Romanian electricity system, will be listed on the Bucharest Stock Exchange (BVB) as of May 2006, according to ACT Media news agency reports.

The company will offer a 10% stake in the share capital, the value of the issuing being established at 73 million new lei, namely 7.3 million shares with a nominal value of 10 new lei (RON).

Although it had been scheduled for this year, the listing with the Stock Exchange has been postponed for 2006, because the process required some time for the preparation and clarification of all aspects, stated company officials.

They also said the postponement was caused by the revision of the Regulations of the National Securities Commission (CNVM).

Transelectrica ends this year with an estimated turnover worth 1.392 billion new lei, up by about 25% as compared to the previous year.

The predicted gross profit is of 50 million new lei, down as against the previous year.

The national electricity transport operator will invest next year around 140 million euros, much more compared with the investments unfolded this year. (1 euro sells for about 3.6 new lei).

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The national electricity transporter Transelectrica expects 1.6 billion lei (or 452 million euros) in turnover for 2006, up 23 percent from 2005, said General Manager Stelian Gal, ACT Media news agency reports.

Transelectrica predicts its net profit will increase 14 percent, to 56.6 million lei (or 15.7 million euros), with the listing on the stock exchange postponed for 2006.

The listing of 7.3 million shares with 10 lei face value, the equivalent of ten percent of the company's share capital, had been planned for the autumn of 2005.

A preliminary offer scheme is being drawn up, due to be finalized in January 2006.

The public tender is scheduled for April 2006 and the listing on the bourse for May 2006.

The scheme is devised by a consultancy consortium composed of Alpha Finance, Raiffeisen Capital Investments and BRD Securities. The company announced last year the signing of a contract of 9.2 million euros with the Japanese from Fujikura Ltd. on supplying and mounting fibre optic cable insulators.

The contract completes the last component of a telecommunications system implemented by Transelectrica.

The company's objective related to the telecommunications market is to create a telecommunications company with the participation of Transelectrica, Teletrans, the internal operator of the telecommunications and IT infrastructure of the company and the supplier of specific services in the deregulated telecommunications market, as well as of a strategic investor not chosen so far.

The electricity transporter is engaged over 2005-2007 in a comprehensive investment programme worth 375 million euros, for the upgrading of the energy transport infrastructure, for which 150 million euros were earmarked in 2005.

The funds will mainly go to the building and development of the infrastructure of the electricity market and the re-engineering and upgrading of the high-voltage system by mounting transformers, in line with the norms of the Union for the Coordination of Transmission of Electricity, which the company joined in 2003. Part of the money will be spent for the development of the high-voltage system through interconnectors.

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The government modified a series of provisions in the privatisation strategy for the Societatea Comerciala Filiala de Distributie si Furnizare a Energie Electrice Electrica Muntenia Sud SA, ACT Media news agency reports.

The amendments took into consideration the maximisation of the price and the increase of competitivity and the reduction of the period necessary to close the deal.

Thus, the selection will be undertaken in two stages:

The first stage, after the presentation of the bids,the second stage, after the presentation of the bids improved by the investors qualified in the first stage.

Qualified investors are those who, after the first selection got a minimum of 75 percent of the highest average.

Societatea Comerciala Electrica SA has the right to reduce the minimum average by 7.5 percent in order to take into consideration as qualified investors those investors who got a minimum of 67.5 percent of the highest average.

There will be no more than five investors qualified, except for the case when several investors got the same average with the fifth investor qualified, thus being considered qualified as well.

For the privatisation of the Societatea Comerciala Filiala de Distributie si Furnizare a Energiei Electrice Electrica Muntenia Sud SA there are ten potential investors who were shortlisted after the first stage.

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Shareholders in Petromidia Rompetrol refinery, the main company of the Rompetrol holding, have approved the registration with the National Securities Commission and the trade on the Bucharest Stock Exchange (BVB) of the company's bonds issued two years ago, according to ACT Media news agency reports.

The bonds worth over 530 million euros issued in 2003 resulted from a conversion of the company's outstanding debts and late time penalties owed to the Budget.

In October 2003, the Government approved an emergency decree under which these debts were allowed to be converted into seven-year bonds. The company will pay out approximately $25 million each year as interest until 2010, when the bonds will be converted into shares.

Rompetrol has so far serviced 22 million euros to this end as the annual interest due for the second year on the bonds issued in 2003. Rompetrol posted a net profit of almost 30 million euros in the third quarter of 2005.

The business turnover of the company is expected to reach $2.5 billion in 2005. Shares in Petromidia were quoted at 0.112 RON each.

Petromidia's capitalisation is put at almost 646 million euros.

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Approximately 5 million lei ( 50 billion ROL) were spent in 2005 to rehabilitate the electrical energy distribution grid in Suceava county, while 10 million euros are allocated to the same purpose for 2006, ACT Media news agency reports.

Many electrical energy distribution grids in the county are 40-50 years old, while their maximum lifespan is of 20-25 years.

Starting January 2006, the activity of E.ON Moldova will be organised in departments and strict domains, with responsibilities over the whole territory of Moldova, while in the counties there will be left only offices for subscribers and exploitation offices.

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The operators and administrative-territorial units which run development projects for public services infrastructure with EU-granted non-repayable funds, through ISPA program, have the obligation to set up a fund for upkeep, replacement and development (IDD), ACT Media news agency reports.

The measure, approved by the government, stipulates that the respective fund will serve to upkeep, replace and develop investments achieved through the unfolded projects and provide the necessary resources for the payment of public debt due to the financing of these projects.

The emergency ordinance includes the norms for the setting up, fund supply and accession of IDD fund which regulates the minimal obligations of the operator or the administrative-territorial units. The norms stipulate the obligation of the operators and administrative-territorial units of setting up the IDD fund from the signing of the loan agreement and at least until the whole repayment of loans. The fund will be supplied with sums cashed in local or county budgets.

The funds are to be mainly used for the upkeep, replacement or development of the assets given for administration or concession, including those developed with EU non-repayable funds and according with the programme approved by the authority of local public administration or with the specific programme for operation and upkeep, agreed upon with the European Commission or the co-financing bank.

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Petrom signed a contract to sell six mobile sea drilling units and also equipment and shore utilities to the Oil Services Group (OSG), with the total value of the transaction nearing $100 million, ACT Media news agency reports.

The transaction will not take into account sea production equipment (fixed platforms in the Black Sea).

The mobile drilling units to be transferred in January 2006 are Atlas, Fortuna, Jupiter, Orizont, Prometeu and Saturn.

Operating the mobile platforms is a specialist domain with the services related to the oil field and needs special attention and expertise.

Petrom's necessity related to such services is limited and there is no other significant demand in Romania - that is why Petrom has already been trying for years to sell this assets at the international level, offering sea drilling services to other oil companies. Two of the units, Fortuna and Orizont, were commissioned in the Persian Gulf in 2000,while the others were also used outside Romania on different occasions.

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Mountains form about a third of Romania's relief and the country is about three times bigger than Bulgaria, yet it only has a third of the skiing tracks that it's Southern neighbor boasts, a Romanian newspaper has stated.

Bulgarians had been quicker in understanding that the mountain tourism business meant expensive skiing resorts and big competitions, Romanian Cotidianul wrote.

Romania, on the other side, has still kept its equipment since the period between the two world wars, the newspaper says. Although the sport has been practiced in the country for over 80 years, and the relief is favorable, the Romanian winter sports still paid the dues of party decisions taken fifty years ago, Constantin Arghiropol, Secretary General of Romanian Ski Biathlon Federation, has said.

The country has a total of eleven tracks that are compatible with the International Ski Federation requirements, the newspaper states.

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Dye and paint producer Policolor recently announced the sale of a 139,012-sqm plot with buildings included for EUR 7.5 million. The plot is in Bucharest and the constructions on it total some 24,421 sqm.

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The European Drinks Group has announced that from next year it will produce its own detergent and put some EUR 10 million into establishing a production unit. According to Ioan Micula, CEO of the group, construction work on the new production facility is to be completed in early 2006.

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Two of the major home appliance retailers on the Romanian market, Domo and Altex, recently announced multi-million euro expansion plans for Romania. Domo announced that its investment strategy for next year is around EUR 8 million and said it would focus on new large-surface stores.

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Tnuva expects EUR 68 million annual revenues from its planned dairy production unit in Popesti Leordeni during the plant?s early years.

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Romania's Prime Minister, Calin Popescu-Tariceanu, said on Wednesday, in Brasov, 171 km north-west of Bucharest, that the talks for the privatization of Tractorul Brasov Co, with the Indian firm Mahindra & Mahindra, were going on. ''I can say nothing about the privatization deal of the tractor maker, as the negations are not over yet,'' said the premier, during a visit he paid on Wednesday to a truck maker in Brasov, at the invitation of businessman Ioan Neculaie, who is the main shareholder of the truck plant. According to him, the central and local authorities should take more interest in Romanian products.

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The Ministry of Communications and Information Technology (MCTI) notified seven investment banks of international reputation shortlisted out of the 10 that presented letters of intent regarding the bid of financial consultancy in the privatisation of the National Radio-communications Society SA, MCTI press release informs. The above mentioned banks are Credit Suise First Boston (CSFB) Europe Limited ; HSBC Bank and European Privatisation and Investment Corporation (EPIC) ; Raiffeisen Investment AG and Nestor Nestor Diculescu Kingston Petersen ; BN PARIBAS Corporate Finance (BNP Paribas) and Central Europe Trust Company Ltd (CET) ; CE-IB Corporate Finance Beratungs Ges.mbGH ; Society Generale Corporate Finance Advisory SA and Rotschild &CIE.

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The Romanian Lottery and the National Printing House will be privatised through an ordnance of emergency approved by the government. 68 percent of the shares will be owned by the state, 20 percent going to the former owners and 7 percent will be sold to employees and those in the board of directors. The government decision is strongly criticised. The stake of this decision is in fact a large sum of money. It is all about a huge flow of money and profit reaching almost 50 million euros per year in the case of the National Lottery. The profit could be increased when there are private interests. Journalist Catalin Tolontan considers the National Lottery was not set up for profit, but to stream the gaming desire of the population.

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The Romanian Commercial Bank's profit on the first 11 months of the year exceeded 211 million euros, occasion with which Standard&Poor's upgraded the bank's rating, following the announcement on Erste Bank winning the privatization bid. BCR's take over by Erste Bank immediately drew the rating agencies' attention that highlighted this transaction's significance. Financial rating agency Standard&Poor's upgraded BCR's long-term creditworthiness rating from "BB minus" to "BBB minus" with a stable perspective.

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BRD-Groupe Societe Generale (BRD-GSG), Transylvania Bank (TB), the Romanian Commercial Bank (BCR) and CEC Savings Bank bought on Tuesday five percent each of the share capital of ASIBAN insurance company, data from BRD-GSG and TB say.

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Connex is the biggest Greenfield investment in Romania, with a value of investments currently exceeding $1bn, said the marketing manager of Connex Vodafone Ken Campbell, ACT Media news agency reports.

At the same time, Connex Vodafone produces one percent of Romania's gross domestic product. The most important moments in 2005 for the mobile telephony operator were the purchase of Connex by Vodafone, the release of 3G services for the first time on the Romanian market, the launch of the co-brand campaign called ''Together'', as well as the development of the programme called ''Connex for the future.'' According to the Connex Vodafone marketing manager, customers will enjoy the status of customers of the Vodafone group in 2006.

At the same time with the release of services such as Vodafone Family, Vodafone live! or the programme Vodafone Passport, Vodafone brings an extremely strong 3G offer and an enlarged portfolio of services which permanently develop, and which customers enjoy in several countries.

Many of the new services which are to be released on the Romanian market will be services of news or entertainment, as well as applications devoted to the business climate, established at world level for all the customers of Vodafone, said Campbell.

Regarding the overall number of customers, Connex registered on September 30, 2005 over 5.529 million customers, accounting for a 27-percent-growth as against the same period one year ago.

Also on September 30,2005, revenues derived from services went up in Q4 by 40 percent over the same period in 2004.

According to marketing manager of Connex Vodafone, the Romanian market of telecommunications has a huge potential and will continue to grow in terms of the number of customers and also as regards the expansion of the range of offered services and services required by customers.

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The privatization of the Romanian Commercial Bank tells a lot about Romania and the country?s commitment to the reform process, declared the representatives of EBRD and IFC, on the occasion of the announcement of the new BCR controlling shareholder, ACT Media news agency reports.

The above mentioned officials said that ?the best results are yet to come and that the privatization arrangement is a great opportunity for BCR to strengthen its position, inclusively on the European market.?

IFC representative Declan Duff said that this is the most spectacular privatization process he has witnessed in his entire institutional experience with privatization deals.

EBRD representative Kurt Geiger specified that EBRD has invested so far over 3 bn euros in Romania in more than 150 projects, and that it has mobilized another 900 million euros for future projects; of this amount 500 million euros were invested only in 2005.

?We are absolutely enchanted that we entered the Romanian banking market.

We are aware of the responsibility we have taken by acquiring the BCR controlling stake.

BCR thus enters Erste Bank?s European universe and will at the same time lead Romania towards Europe,? declared Manfred Vimmer, Erste Bank director for international relations and development.

In conformity with the privatization contract, Erste Bank acquires 36.8825% state-owned shares plus the 25% held by EBRD and IFC.

The stakes of the five SIFs, that jointly hold 30.12% of the shares, and the 8% held by the BCR staff will remain unchanged.

The takeover of BCR by Erste Bank highlights the importance of the European Union?s enlargement towards the east of the continent ?Austrian Chancellor Wolfgang Schuessel asserted, ACT Media news agency reports.

Schuessel mentioned that other Austrian companies such as Raiffeisen, Telekom Austria and OMV have recently performed massive acquisitions in Eastern Europe.

The Chancellor praised the activity of the Austrian companies in the East European states and underscored that in this line, the political commitment towards the EU enlargement meets Austria?s strategic and economic interests.

Note that the exports of Austrian companies to the new EU members in the last year were as high as 12 bn euros and accounted for 0.5% of Austria?s economic growth.

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One of the biggest lacquer and paint maker, Koeber Romania Co., estimates it will end 2005 with a turnover of some 33 million euros, roughly equal with that of last year, but with a higher profitability rate. Some 85 percent of the company's turnover comes from sales in the local market, of decoration products mainly (65 percent). Koeber Co. has a research and production unit for lacquers and paints, a facility for the production of heating stations and a facility for the production of electronics. Set up in 1991, the company employs around 450 people. The lacquer and paint market in Romanian reports annual sales of over 140 million euros. Policolor, Guzu Chim and Dufa Romania are among the most important market players. Paint demand in Romania is on the rise, but consumption is among the lowest in Europe, of only 2.8 kg per capita annually, compared with 9 kg in Hungary, 12 kg in the Czech Republic or 17 kg in Germany.

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The furniture producer Mobex of Targu Mures estimates a relaunching of sales for 2006, after the company's sales dropped in 2005 following the fluctuations of the rate of exchange. The company estimates for 2006 some 10.7 million euros in turnover, 9 percent above the 2005 figures, when Mobex ends the year with 9.8 million euros turnover. Sales of the company dropped 9.5 percent in 2005, yet profit will reach 700,000 euros, 25 percent above the 2004 figures. Export sales will reach 8 million euros this year, under the previous year's figures, due to the depreciation of euro as against the leu, said general director Daniel Egri. The company exports in France, Italy, Great Britain and Russia. The European Union is the main export market with 85 percent of products. Mobex was privatised in 1995, being taken over by employees.\

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Nestle Romania, the local branch of Swiss Nestle, the world's biggest food company, will earn a turnover worth 82 million euros in 2005, as expected. Nestle Romania General Manager Paul Nuber thinks the company has achieved its goals both as regards the sales and the profit margin, mentioning the change in the distribution system, streamlining the management and motivating the employees, among the steps taken. Nestle Romania sells Joe wafers, Maggi products, Nesquick and Fitness cereals, Kit Kat and Chocapick chocolate bars, as well as Purina and Friskies cat and dog food. Nestle has diversified its portfolio by buying the Greek Delta ice-cream maker this week. Joe tops the wafer market by 40 million euros a year, the company's market share representing 39 percent. Alka Romania is Nestle main competitor on the wafer market, ACNielsen Romania market report says. This year, Nestle Romania increased its share capital by 9 million euros, money to be invested in enlarging the product portfolio.

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The European Union will contribute approximately 5 million euros toward Romania's Mineral Water Route project. The project has been approved and will be started off in spring 2006. The aim of the Mineral Water Route is to rehabilitate the mineral-water rich central counties of Covasna and Harghita, economically, socially and culturally and to put them back on the map of health tourism. The route will cross 14 localities with health tourism potentials along National Road (DN) 12, where there are some 400 mineral water springs. There will be three major loops on this road: Sfantu Gheorghe, Valcele, Belin, Baraolt, Batanii Mari and Bixad, all located in the western part of Covasna County; Covasna, Balvanyos and Martanus in the eastern part of the county, as well as the Homorod Valley to Remetea in Harghita County. Less than three quarters of the mineral water springs of Covasna County are currently put to use. Only 20 percent of the mineral water originating in this county is bottled, which means millions of litres of water is wasted daily. The water in many of these springs is credited with spectacular curing properties. The water spring at Valcele is said to contain the highest concentration of magnesium in Europe, and magnesium is a successful cure against stress. At the Sugas Spa, located close to the city of Sfantu Gheorghe, is the Elisabeta spring, which water has been used for thousands of years to cure liver conditions and gastritis. In the northern part of the county, at Balvanyos, is the eye spring, which water is used to treat conjunctivitis.The Mineral Water Route is one of four projects selected for PHARE funds for big regional infrastructures that will be awarded 15.5 million euros in 2006.

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The demography decrease trend in Romania, shown by the almost one million inhabitants drop over 1990-2002, was the topic of a recent academic debate, the Romania Libera newspaper reports. A debate on ''Romania's population in 2005. Where to?'' was held by the National Institute of Economic Research in cooperation with the U.N. Fund for Population Activities. ''Romania needs energetic intervention as the only alternative worth considering, not for stopping the drop in population, which would be difficult, if not impossible in the short and medium term, but for diminishing the degradation of the future demographic structures,'' Director of the said institute, Virgil Voineagu, says. Migration, a high death rate and a low birth rate are features of the drastic population drop trend. The death rate was high notably among people aged more than 60 (79.2 percent of the sample, in 2004, higher than in 2003). Estimates say Romania, that numbered 21.8 million dwellers in 2002 can count 20 million in 2020, some 19 million in 2025, and roughly 14 million or 16 million according to optimists in 2050, the daily says. Archives say that in 1920, Romania was a state of medium size, with 17,339,149 inhabitants. In 2005, scientists believe urgent steps are necessary in order to stop the diminution in the number of dwellers.]

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OTP Bank Romania invested ¤150 mln for taking over RoBank and insurer Ceccar Romas, capital increases and investments in launching the retail segment and bank re-organization, ACT Media news agency reports.

OTP expanded, in the past two months, its network by 12 branches, and the portfolio of retail loans has reached ¤6 mln.

OTP Bank started earlier this year to apply an accelerated strategy for developing its network, which currently stands at 27 branches.

The bank intends to open in 2006 43 more branches, up to a total of 70.

Since October, the OTP expansion focused on Bucharest - with 4 branches opened - and Transylvania, with a branch in Miercurea Ciuc, Sfantu Gheorghe, Odorheiu Secuiesc, Alba Iulia, Oradea and Satu Mare.

The bank is interested in attracting Hungarians, by offering consumer loans in forints for an annual interest rate of 16%.

OTP has also started to become a financial group by taking over insurer Ceccar Romas.

The insurer was bought through the relevant division of OTP, Garanta Insurances of Hungary, following a transaction worth ¤1.92 million.

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The trade on the Bucharest Stock Exchange (BVB) ended in 2005 at a record level of almost 36.7 million euros, with most of the bourse players opting to sell their stock, being unsure of the taxes to be levied from January 3 onward, according to ACT Media news agency reports.

The trade in the securities of the Transilvania, Muntenia, Oltenia and Banat-Crisana SIF financial investment companies as well as in shares in BRD-Groupe Societe Generale and Rompetrol Rafinare exceeded the $1-million value mark. Bourse analysts said that BVB investors who have kept intact their shareholdings for the year stood to gain more than those having invested in other capital instruments, bank deposits included. BVB management argued that a 1% tax on long-term investment gains is the best solution for the current development levels of Romania's capital market. Analysts added that 2005 was a good year for BVB because of major institutional developments, the latest of which were RASDAQ electronic exchange merging with BVB and the selection of companies along transparency and liquidity lines, as well as the slated merger with the Sibiu Derivatives Exchange. Bucharest Equity Research Group (BERG) analyst Dan Barbulescu said that a significant appreciation of the stock exchange indices in Romania is expected in 2006, at the same time with an increase in trade, particularly as a result of the floating of more energy companies, a rise in gas and electricity prices, the floating of the Proprietatea (Ownership) Fund, which will compensate owners of abusively confiscated real estate property impossible to be returned in kind, and also as a result of the forthcoming accession of Romania to the European Union.

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Renegotiations With Bechtel Bring ¤126 mln to the Ministry of Transport, Construction and Tourism (MTCT) as US-based company Bechtel recently completed the re-negotiation of the contract on the establishment of the Transylvania highway, announced Transport Minister Gheorghe Dobre, Bursa news agency reports.

During the past two months, the two parties discussed on the down payment for the project and the guarantee letter, which was initially inspired by the Anglo-Saxon model.

Dobre added that following the negotiations Romania would save some ¤126 mln for the construction of the Transylvania highway.

Thus, Bechtel agreed with a yearly down payment of some 30 percent in the overall value of the work.

The amount will be justified at the end of each year, according to Dobre.

The budget for 2006 stands at ¤100 mln, of which Bechtel will get a down payment of ¤30 mln at most.

Dobre added that the design services were transferred from the US company to the Romanian National Highways and National Roads Company.

Initially, the contract signed by the two parties included a clause referring to a down payment of ¤250 mln, which has to be explained when the project was completed.

The construction of the Brasov-Bors highway, covering some 415 kilometers, was initiated last summer while the overall value of the project is at ¤3.8 bn.

The Curtici-Arad Free Trade Zone Attracted Investments of $15 mln in 2005.

The administration of the Curtici-Arad Free Trade Zone (ZLCA) stated that this year has been very good for businesses.

According to Mircea Pavel, head of ZLCA, the institution signed 152 contracts this year.

After the tenders that they organized, three companies - Coindu, ERT and International Lighting Technologies - decided to invest over ¤15 million.

The company also negotiated with major companies in France, Belgium, The Netherlands, China, India and Japan, hoping tht in 2006 , they iwll sign contracts with companies from Asia.

The revenues for 2005 amount to 3.9 million RON, up by 15 percent compared to the same period last year.

Following the ten tenders that were organized this year, the institution leased some 10 hectares of land.

The overall investment that companies made into the ZLCA amounts to some $120 mln, while establishing 4500 new jobs.

Exports are expected to rise 15% in 2006.

The target will be reached aided by investments, the qualitative certification of products and the law frame for foreign trade, according to Iuliu Winkler, delegated minister for trade.

The initiatives and measures included in the SNE focus on the technologic development, the identification of resources and products that are in demand on foreign market, the improvement of production and services, the cut in production costs, training programs, the support of research and design, the promotion of Romanian scientific researches abroad, the increase of business alliances, the expansion of services and the increase of leadership skills among others.

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President Traian B?sescu stated on Wednesday at the Business Excellency Gala organized by CCIR that they still had a long way to go until the entire Romanian business environment observed the law, and stressed out that he went to that festivity as no company with debts to the state budget received awards.

"Before I came to this festivity, I asked the CCIR president, Victor Babiuc if any company with debts to the state budget received awards and he gave me a negative answer. That is why I am here, to thank you for the way you pay your debts to the state", the President told the representatives of the companies that received awards from CCIR.

"We still have a long way to go until the entire Romanian business environment understands that the law must be observed", B?sescu added.

He said that 2005 was a difficult year "mainly because of the significant changes that took place in the economic environment". The President referred to the introduction of the flat tax, the RON, the BNR interest policy and other such novelties in this field.

In B?sescu?s opinion, the year 2005 was also a "turning point" for the way in which the Romanian business environment is perceived. He gave the EBRD and World Bank reports as examples, as they showed that the Romanian business environment had become cleaner. "First of all, the mentality of the business community registered a progress, as they understand that they themselves hold the key of success, which is their entrepreneurial ability", the head of state said.

He stressed out that no company included in the Top 10 companies in Romania according to opinion polls received awards from CCIR. "This is the real business environment, the one that pushes Romania towards development and prosperity. There is a difference between the public opinion and the economic reality", the President said.

B?sescu also said that CCIR should take more actions to promote the values in the Romanian economy. "The awarded firm understood that nobody can get rich overnight, that performance is the only one to bring about profit", the president also said.

He mentioned that in 2005, the Romanian business environment was fitter to face the accession to the EU. "At the beginning of this year, we acknowledged that a large part of the economy was not ready to face the shock of the accession. One year later, we notice that a bigger part of the economy is ready for the accession. We witnessed an evolution and I am convinced that the shock of the accession will be less significant than at the beginning of 2005", the president explained.

B?sescu promised that one of his objectives would be to turn the business environment into a cleaner one and thus the Romanian economy should be able to guarantee the positive evolution of the living standard. "I will see to it that we have a clean business environment", the president also told the representatives of the firms awarded by CCIR.

After the end of the speech, B?sescu handed over the diplomas to the people present in the hall. Thus, the firms received an award of excellence in the business field and another 12 companies were awarded distinctions of excellence in the business field as well.

Junior Chamber International offered an award for a young enterpriser, and another award was granted for female entrepreneurship.

B?sescu also granted an award for significant economic and social impact on local development, from the Romanian Agency for Foreign Investments.

National Institute for small and medium-sized enterprises also granted an award for innovative entrepreneurship.

B?sescu offered several awards from the National Association of Exporters and Importers in Romania (ANEIR). One of the awards went to a company held by vice-premier George Copos, who is also an ANEIR founder member.

On the same occasion, OSIM offered awards for research/education and production/services.

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The Reconstruction Capital II Limited (RC2) fund announced that it plans to invest 50 mln euro in Bulgaria and Romanian companies over the next 2 years, "Dnevnik a.m." reports.

RC2, a closed-ended Cayman Islands company created to invest in private and listed equity securities and fixed income securities, including convertible and other mezzanine instruments, primarily in Romania and Bulgaria, has already raised 24.42 mln euro on the LSE.

Its capital will be raised further to 50 mln euro in the first half of 2006.

RC2 intends to invest in significant or controlling stakes in companies, both listed and private, established and/or operating primarily in Romania and Bulgaria.

Additionally, the company aims to make portfolio investments in listed equities and fixed income securities, including convertible and other mezzanine instruments, issued primarily by Romanian and Bulgarian entities, under a trading programme.

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The normative act on the modification of the Fiscal Code will be submitted to Parliament in the form of a draft law and will come into effect six months after its endorsement by the Legislative, stated Premier Calin Popescu Tariceanu.
 
?The bill will be submitted to Parliament, where it will be analysed.

The date of coming into effect depends on the moment of its endorsement by Parliament.

Six months after the parliamentary debate is over the modifications on the Fiscal Code will come into force,? Tariceanu pointed out adding that the text of the bill to modify the Fiscal Code, in the form in which it will be passed by the Government in the coming days.

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The Board of the National Bank of Romania (BNR) will raise the minimum reserve requirement ratio on foreign currency-denominated liabilities to 35% from 30%, tighten control over liquidity and will take measures to reduce credit growth, standing ready to use its entire array of instruments to counter growing inflationary pressures.

The BNR Board believes that growth of consumption is unsustainable, a trend which implies a tighter economic policy mix to safeguard the continuation of disinflation in the medium and long run.

In its meeting of December 21, 2005, the BNR Board assessed the latest developments in macroeconomic and financial market indicators as well as their prospects in the context of the macroeconomic and structural measures to be implemented in 2006.

Latest data showed year-on-year inflation risen to 8.7% in November - under the impact of administered price adjustments - revealing the prospect of a year-end figure slightly above 8.5%, the upper limit of the 2005 target band.

The expected marginal overshooting of this year?s target band came as a result of supply-side shocks (steep adjustments in administered and fuel prices as well as in excise duties) but also due to pressures on the domestic demand side.

However, annual average inflation is estimated at around 9% versus 11.9% in the previous year, signalling a consolidation of the disinflation process.

Moreover, core inflation, which measures free prices and those with low volatility is slowing down, with CORE2 computed by the BNR (CPI less administered prices and prices of vegetables, fruit, eggs and fuel) falling to 6.2% in November 2005 from 8.3% in December 2004.

Developments in the macroeconomic area reveal a notable slow down of the increase in domestic supply and productivity, while consumption growth stayed strong, at levels similar to the same period of 2004.

The increase in domestic demand still significantly exceeds domestic output, thereby sharpening the external imbalance and fuelling lasting inflationary pressures.

The BNR Board has assessed the current economic conditions, both domestically and internationally, as well as the associated risks and uncertainties, and has decided to tighten control over liquidity and measures to slacken credit expansion.

In this context, the BNR Board has decided to raise the minimum reserve requirement ratio on foreign currency-denominated liabilities to 35% from 30%.

Given the forthcoming adjustments in administered prices, the fiscal position and of other economic policies envisaged for 2006, the BNR Board is ready to resort to its entire array of instruments to counteract growing inflationary pressures in the period ahead.

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Romania's national airline operator Tarom examines the possibility to resume flights to some European routes such as Barcelona, Amsterdam, Copenhagen and Zurich and to open flights to Lisbon, Tarom's general manager Gabriel Dumitrescu told Rompres.

The final decision in this respect is most likely expected to be taken later in 2006, when Tarom will purchase two Airbus 318 planes. In 2007 it will buy two more Airbus 318 planes.

At present, Tarom's fleet is made up of 16 planes: five Boeing 737-300, four Boeing 737-700 and seven ATR 42-500.

Tarom will have to pay much attention to its steps in order to resume a flight or open a new one because the expenses spanning on approximately six months are very high and, many times, can exceed expectations and for this reason the company could register losses,'' said Dan Andrei director of the Civil Aviation Department with the Ministry of Transport, Constructions and Tourism.

Tarom's general manager said the new planes would be used for the company's existing routes and for the new ones, but cannot be used for long-distance flights to Beijing or New York.

Tarom has flights to Vienna, Paris, Larnaca, Munich, Frankfurt, Rome, Milan, Budapest, London, Athens, Thessalonica, Chisinau, Prague, Warsaw, Moscow, Istanbul, Amman, Beirut, Damasc, Tel Aviv, Cairo and Dubai. Most flights are operated from Henri Coanda airport in Bucharest, or airports of Constanta, Cluj-Napoca, Timisoara and Sibiu.

For 2005, Tarom estimates a profit from exploitation of about seven million dollars, an operational profit of about two million dollars and a turnover worth 250 million dollars. As regards the number of passengers transported in 2005, it could reach about 1.4 million passengers, as against 1.25 million passengers in 2004.

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Nine twinning European projects, financed through PHARE programme, have been launched on Friday by the Romanian Ministry for Environment and Water Management (MMGA), at the Palace of Parliament, in view to implement the Community acquis in the field of environment both at national level, as well as regional and local ones. "Administrative and institutional capacity in this field should be urgently improved", Minister for Environment and Water Management Sulfina Barbu stated in her opening speech. Minister Sulfina Barbu reminded that this was also pointed out in the European Commission's Report issued in October this year. Environment protection is an important process as regards Romania's EU integration and not only through the transposition of the Community acquis, but also through the creation of an administrative capacity in the field, Sulfina Barbu said. Romania made substantial efforts lately to hire and train more personnel specialized in environment protection for the eight regional agencies and the National Agency of Environment Protection established in 2004. EU supported Romania for the re-organization of these structures, with nine twinning projects underway financed from PHARE programme, in the total value of 12 million euros. These projects are implemented during the period 2005-2007.

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Transilvania Nord and Electrica Muntenia Nord electricity distribution companies might add over 400 million euros to the capitalisation of Romania's bourse, data with the Active International financial investment company report. In analysing this potential contribution, Active International took into account an average price paid by the strategic investors for each customer of the electricity companies and an average price paid by the strategic investors for each MWh traded by the companies owned by them. The calculations indicate a value of between 172 and 183 million euros for Electrica Transilvania Nord and a value of between 205 and 250 million euros for Electrica Muntenia Nord. There are three more utilities to be floated on the bourse: Transelectrica, Transgaz and Romgaz. All together, the five energy companies might add over 1 billion euros to the capitalisation of the Bucharest Stock Exchange (BVB). The project regarding the floating of the Proprietatea (Ownership) Fund on BVB might further increase by 4 billion euros the capitalisation of BVB, propelling BVB to the lead of the stock exchanges in Central and South-Eastern Europe, currently taken by Poland, the Czech Republic and Hungary.

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Romanian grid Transelectrica represented by general manager Stelian Gal and Electromontaj Romelectro Consortium represented by Electromontaj president Mihai Valeriu Otto and Romelectro president Viorel Gafita signed the turnkey agreement on the building of the new Oradea-Nadab-Bekescsaba 400 kV interconnector, a Company's release says on Wednesday. The agreement is worth 12 million euros and it is aimed at building a 93-km segment of the Oradea-Nadab-Bekescaba 400 kV interconnector on Romania's territory, and the enlargement of the Oradea South 400 kV Station by installing a 100 Mvar, 400 kV reactive coil. The project is funded by a guarantee-free EBRD syndicated credit, exclusively based on Transelectrica's good financial rating and Transelectrica's money. According to EBRD rules, the turnkey agreement was gained in an international pre-qualification auction. The construction agreement was concluded with Hungarian company MVM Rt , in May 2005. March 2008 is the completion deadline agreed upon with the Hungarian partners. MVM Rt is Hungary's National Electricity Supplier and is licensed as a gross electricity operator. Transelectrica is the Romanian Electricity Transport and System Operator and it provides the infrastructure of the Romanian electricity market. Transelectrica manages, operates, maintains, re-equips and develops the electricity transport network numbering 78 substations totalling 33,000 MVA and 8,800 km of open lines of 220 kV, 400 kV and 750kV under the management of eight transport branches.

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Romtelecom's establishing new interconnection fees based upon costs was probably the most important decision in 2005, for the development of competition on the electronic communications market, according to Chairman of the Romanian National Communications Regulatory Authority (ANRC) Dan Cristian Georgescu. Georgescu explains that preventing the appearance of some anti-competitive practices on the retail markets was one of the priorities of ANRC in 2005, which resulted in the naming of Romtelecom as an operator with significant power on the specific retail relevant market, as well as in imposing some obligations on it, so as to prevent the appearance of some anti-competitive practices. ANRC took the initiative to regulate access to infrastructure. Also in 2005, ANRC reconsidered the operational mechanisms to implement the universal service, in order to increase the attractiveness of installing telecentres for potential suppliers and also to reduce risks for business developed in the rural areas.

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US group DGL Land intends to invest hundreds of million dollars in luxurious residential and shopping spaces in Bucharest, Cluj-Napoca, Prahova Valley, and on the Romanian coast of the Black Sea. Some 6 hectares will be bought in Bucharest for building "a big shopping centre and some luxurious dwellings." The flats that will be built will be sold or rented. As to the price of the flats to be built by the US company, a DGL Land official said that the built square metre would be sold for some 2,500 dollars. For the implementation of its real estate projects, DGL Land collaborates with businessman Constantin Samson, who owns Mebis company of Bistrita.

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Consumer goods sales will go up 30 percent in 2006, according to data of the GfK Market Research Institute, while sales of foodstuffs and beverages will rise 25-30 percent, Capital weekly says in a supplement. There has been recorded a 24 percent increase in sales of consumer goods January through September 2005, as compared with the same period of last year. The products found in the first stage of development on the market, such as fruit yoghurt, instant coffee, natural juice, fabric conditioner and others, are also estimated to acknowledge an increase rate of sales. Also, an increasing potential of the sales was reported in the case of products with a high degree of maturity, such as detergents reaching a high level of penetration in the market in 2005, of over 90 percent, which leads to positive estimates also for 2006. The same study conducted by GfK shows we see a sustained level of development for brand products, to the disadvantage of cheap and wholesale products.

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Renault Nissan Dacia set prudent sale goals for the next year after the spectacular evolution of the Romanian auto market in 2005, Renault's deliveries reporting double sales. "We believe we are approaching the maximum limit of the market and we begin to be a little prudent," Nicolas Ianculescu, general manager of Renault Nissan Romania importer, said. Some 24,000 Renault cars were sold in Romania in 2005, and the company expects to sell 20,500 Renault units and 2,500 Nissan models in 2006. "We are firmly convinced that Nissan can do more on the Romanian market. This is the reason for which we bet on Nissan next year, although it will not come with novelties. Only in 2007 Nissan will come with many new models, to be revealed at the moment," said Ianculescu. He said the importer would continue with the same models, plus the variant Clio III, to be launched in March 2006. Clio III is a model expected on the Romanian market, as it has been appointed car of the year in Europe.

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"One of the most important achievements of the SAPARD Agency in 2005 was the full absorption of the funds worth 208.38 million euros earmarked to it for 2001 and due for final use this year," SAPARD Agency Director General Samoila Szabo told on Friday. He also mentioned that the agency will soon finalise the procedures for the accreditation of four new financing measures under the SAPARD Programme, for which the first projects are expected in the first quarter of 2006. The main improvements in this field in 2005 were simplifying the procedures for granting SAPARD financial assistance and the inclusion of excellent easy terms for Romanian farmers. "Farmers aged 40 and below will qualify for non-repayable SAPARD funds of 65 percent, at most, of their investment projects for farm holdings, according to the zone where the projects are to be carried out," Szabo explained.

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2006 promises to be an important year for infrastructure as commercial companies to manage short-distance passenger traffic will be set up on the existing eight railroad regional management companies, weekly Capital informs in its latest supplement called "The World in 2006." Train names will also be adjusted for their European counterparts. Thus, the existing stopping trains will become regional trains, whereas the fast and express trains will become inter-regional trains. Upgrading works will start in 2006 on the Bucharest-Constanta, Campina-Predeal, and Curtici-Simeria railroad portions to allow train speeds of 160 km/h. Twenty sleeping wagons will be added to the existing fleet, whereas upgrading works on the existing railroad cars will continue and talks will start for the acquisition of motor trains electrically fed. The Bucharest metro will receive 84 new cars and 36 will follow in 2007, all which might bring the frequency of runs to three minutes. In the naval field, Romania will become in 2006 the second country, after Austria, to set up an electronic traffic monitoring system for the Danube River.

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Banca Transilvania has raised a syndicated loan worth 75 million euros, daily Ziarul financiar informs. The loan is repayable in five years. The interest is 1.25-percent over the Euribor (Euro Interbank Offered Rate). Mandated to arrange the loan were Bank Austria Creditanstalt and Citibank. Banca Transilvania raised another loan in 2004, worth 22.5 million euros, under a financial arrangement towards which the European Bank for Reconstruction and Development (EBRD), the principal shareholder in the bank, contributed 15 million euros and the remaining was raised in a syndicated loan. Banca Transilvania reported a net profit of 73.4 million RON (20 million euros) for the first nine months of 2005, up 72 percent from the similar period of 2004.

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The year 2005 was the best since the establishment of the Administration of Curtici-Arad Free Area both in profit as well as in investments attracted. Revenues obtained in 2005 amount to 3.9 million lei, 15 percent above the 2004 figures, of which royalties represent 2 million lei, said director of the area Mircea Pavel. Investments made in 2005 sum up 614,000 lei of own sources, plus 250,000 lei received from the Arad County Council for a connection with the Curtici water purification station. "Although some of the advantages of the investors in the free area will disappear after the EU accession, the companies investing here until 2012 will receive state aids, such as the use of 50 percent of royalty for main investments and 65 percent for others," said Pavel. Since establishment five years ago, the two platforms of Curtici-Arad Free Area organised 49 auctions, their winners investing 120 million dollars and creating 4,500 jobs here. The Curtici platform is 74 percent occupied, while Arad Airport platform is fully occupied. Six auctions have been organised in 2005, which led to the licensing or renting or 105,800 sqm and creation of 2,400 jobs. The Free Area currently negotiates with companies of France, Belgium, Netherlands, China, India and Japan. (1 euro = 3.6 lei)

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The volume of share and securities acquisition by foreign investors on the Romanian capital market was worth 2.48 billion RON over the first 11 months of the year, according to the data presented by the National Securities Commission (CNVM). The sums entering the market amounted to 1.91 billion RON, the sums out of the market were worth over 1.44 billion RON and the volume of sales on the capital market amounted to 1.94 billion RON. Between January and November, the Romanian capital market received 740 foreign investors, out of which 273 legal persons, 175 investors left the market, out of which 9 were legal persons. In November, the sums entering the market were 343.99 million RON, the sums leaving the market exceeding 144.36 million RON, the volume of acquisition being 355.8 million RON, and the volume of sales on the capital market was 199.94 million RON. 86 foreign investors entered the market out of which 11 legal persons, and left the market 21 investors, no legal person.

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After Erste Bank was announced as the winner of the bid for the BCR takeover over a sum of 3.75 billion euros, the other bidder Millenium BCP Portugal recorded a growth of 3.1 percent on its shares in the stock exchange, worth 2.31 euro/share, Bloomberg reports. The Portuguese bank, the second largest in Portugal, is looking for new opportunities to expand, the daily Diario Economico reports, quoting a memo by CEO Paulo Teixeira Pinto to his employees. The Portuguese bank considers its offer showed the maximum sum they could allocate for that acquisition. On December 21 when the news the Portuguese bank lost the bid, Millenium registered a quick growth of 8.7 percent on its stock exchange shares, Bloomberg reports. On the other hand, Standard&Poor?s Ratings Services confirmed the short-term rating « A-2 » granted to the Austrian banking group Erste Bank.

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The net assets of the Financial Investments Companies (SIF) amounted at end-November 4.9 billion RON, up by 3.9 percent against the previous month and 54.6 percent against end- 2004, according to the data offered by the National Union of Collective Placement Organisms ( UNOPC).

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The quality of fiscal policies is the one that could regulate the existent imbalances, the NBR governor Mugur Isarescu presented in a press release. The governor showed that, at present, there are a series of imbalances, such as the one between loan in lei and loan in hard currency, or the one between household loan and corporate loan.

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The liquidity of the Romanian stock exchange might grow by 50 percent next year, and the BET index ? showing the price evolution of the most important listed shares ? will appreciate by 30 percent, based on the present structure of financial instruments, Razvan Pasol chairman of the Intercapital Invest estimates. ? I expect a very good year for 2006. Of course, we expect the present structure of financial instruments to develop as soon as possible. If no new financial instruments come, the growth period of the stock exchange will stop in 2007? the chairman of Intercapital Invest stated.

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The industrial production prices index on the domestic and external market was in October 8.2 percent up against 2004, according to the data of the National Statistics Institute. The most striking evolution of industrial production prices, over the first ten months of the year was registered in January, when the level was 14.6 percent up against 2004. In September, the same index was only 8.1 percent up against 2004.

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The Romanians' minimum gross basic wage will be 3,300,000 old lei from January 1, 2006, that is by 200,000 old lei higher as compared with the current one, Labour Minister Gheorghe Barbu announced on Thursday, after the Executive had passed a resolution on this matter.

According to Barbu, the increase in the minimum gross wages at the level of the entire country will bring higher revenues for approximately 630,000 employees, "ACT Media News Agency" reports.

Also, the basic salary of the public sector employees shall not be lower than the minimum gross basic wages at the level of the entire country. (1 euro sells for 36,623 old lei)

Romania will develop consultancy projects for the introduction of mortgage insurance regulations while mortgage financing could extend up to 90 percent of the residence's value, based on a guarantee and an additional cost, "ACT Media News Agency" reports, citing magazine Capital.

Romania has three systems of mortgage financing: banking credit, credit from a financial company and the saving-crediting system developed by banks for residences.

The international context determines Romania to adopt more regulations specific to the mortgage market, says Capital.

In other countries, the value of mortgage credit for some categories can extend up to 90 percent of the value of the building purchased on credit, the source says. The procedure is called mortgage insurance and is based on the issuing of a guarantee of the state or of a private company for an additional cost for the client.

"Next year we will know if mortgage financing extended up to 90 percent of the building's value, based on a state guarantee, is a viable solution for Romania or not," said President of Domenia Credit, Carmen Retegan.

This guarantee is issued in order to cover the 10-15 percent difference of the value of the advance solicited by a bank. In order to see if such regulations can be beneficial for Romania, the Romanian Government is developing a project analyzing the opportunity of introducing such procedures.

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Foreign capital inflows in Romania reached a record level of 94.1 million euros in November 2005, almost 4 million euros more than the previous record figures, "ACT Media News Agency" informs citing Ziarul financiar

As far as net capital inflows are concerned, record figures of 54.6 million euros were reported, double the previous maximum reported in October 2004. Foreign investment in the capital market doubled in the first eleven months of 2005, touching 130 million euros.

The record figures were mainly the result of transactions of 16 million euros performed by Indian GHCL company to take over local calcinated soda maker Bega Upsom.

Foreign investors bough securities worth 94.7 million euros and sold stock worth 54.7 million euros in November 2005, being the most active traders in the category "other financial broking."

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According to data with the National Securities Commission (CNVM), 11 new foreign investors, all legal entities, entered the Romanian capital market in November 2005 and no foreign investor withdrew.

Romania?s trade deficit has grown, the electronic edition of the Greek newspaper Naftemporiki reports. Romania posted a record trade deficit of EUR 1.4 billion in October and of EUR 7.73 billion in the first ten months of 2005, the national institute of statistics announced. This is a growth of more than 46% compared to the same period last year.
The data of the national institute of statistics show that in October Romania had exported goods worth EUR 1.93 billion, up 10.8% from the year before, while spending EUR 3.07 billion on imports, up 26.9%.
Over the ten months period, exports rose to EUR 18.39 billion, up 16.9% from the previous year, and imports were EUR 26.12 billion, up 24.1%.

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Construction and engineering group Amec PLC said it has bought a 50.2 pct stake in Romanian civil and mechanical engineering business Stevenson & Associates SRL for 91,000 usd.

Stevenson provides engineering services to the Romanian nuclear industry. AMEC Nuclear also provides a range of nuclear consultancy services in Romania and advises the Romanian nuclear regulator.

Bucharest-based Stevenson has 10 staff and had a turnover of 365,000 usd in the year ended 31 December 2004.

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Ranbaxy, India?s largest pharma company, is in the race to acquire Romanian generic pharma company Terapia. The company is among the top five players in the Romanian branded generics market.

Terapia is currently managed by Advent International, a private equity firm that acquired 95% of the erstwhile public company in ?03. The company was then Romania?s third-largest pharmaceuticals business. The leveraged buyout, in which Advent acquired 90.7% of the company?s shares, was valued at $44m. Turnover in ?02 was $32.6m. The company was privatised in 1996.

Ranbaxy officials declined to comment. ?We are looking at investment opportunities in Europe and the US but cannot comment on any specific deal,? said a company spokesperson.

The Romanian pharmaceuticals market is estimated to be worth over $600m and is understood to be significantly underdeveloped with one of the lowest expenditures per head in Central Europe.

The market has almost doubled since 1996, driven by growing GDP and purchasing power, improved health education and living standards and increased life expectancy. According to Advent International, Terapia will present an attractive acquisition target for strategic investors looking to enter the Romanian or the broader Central European market.
Ranbaxy has been on the prowl to acquire large-sized pharma firms in Europe and the US. Sources close to the development said Ranbaxy has submitted its bid for Germany-based pharma firm betapharm. Earlier, the company had bid for the US-based generic pharma firms Alpharma and Ivax Corporation.

Ranbaxy plans to achieve significant business in proprietary prescription products by ?12 with a strong presence in developed markets. It also aspires to be among the top five generic players with a sales of $5bn by ?12.

To translate these objectives into reality and to optimise value creation, the company has adopted a multi-pronged strategy which consists of brand acquisitions overseas, an emphasis on brand marketing in the US and Europe, and entry into high potential new markets with value-added product offerings.

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The Minister of Public Finance Sebastian Vladescu is the president of the privatization commission of the House of Savings CEC, while a state secretary will be appointed vice president, according to a governmental decision of Thursday, according to " ACT Media News Agency"

The privatization commission includes four officials of the ministry, three representatives of the National Bank, two officials of the Justice Ministry and two other experts.

The normative act regulates the juridical situation of buildings under CEC's heritage on June 1996, the payment of compensatory salaries for employees affected by the restructuring process as well as the framework for the sale of 5 percent of CEC's social capital to employees and members of the board.

The decision says that the sale of 5 percent of CEC's social capital to employees and members of the board as well as to pensioners having worked last with CEC will be done through an association established for this purpose.

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PSZÁF, the Hungarian financial market regulator, has given the go-ahead for OTP Bank's subsidiary, Garancia Insurance Ltd to acquire Romanian insurance company Ceccar Romas.

On Nov 23, Garancia purchased a 95% stake in the insurer for ¤1.92 million. Ceccar Romas, set up in 1998, currently pursues non-life insurance activities.

The company's insurance fee revenue rose to more than ¤1.75m in 2004, from around ¤1.07m in 2003 - mainly due to an increase in the proportion of third party insurance for cars.

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The value of direct foreign investments this year should exceed the 4.1 billion euros registered last year and reach five billion euros, said state minister George Copos on Wednesday.
"It's certain that direct foreign investment made this year will exceed five billion  euros," stated Copos addressing Ana-Maria Cristina, the president of the Romanian Agency for Foreign Investments (ARIS) during a conference organized by European Bank for Reconstruction and Development (EBRD) and the Austrian company Egger.
Copos believes that 2006 will be a good year for foreign investors to come and invest in Romania.
"I come from the business environment and I know when is the appropriate time to invest. We received 3.75 billion euros for the Romanian Commercial Bank (BCR), the EU budget was approved and I assure you that Romania will become an EU member in 2007," stated Copos.
The state minister said that Romania is very attractive for foreign investors because it has the 16% flat tax.
The minister also mentioned the approval of the insolvency law, considered by him as "important for companies which want to enter the Romanian market".
Foreign investors made 2.7 billion euros investments over the first ten months of the year.
ARIS estimated that the end of the year will show approximately 3.2-3.8 billion euros in investments.

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The takeover of BCR by Erste proves the trust of the Austrian company in the business opportunities in Romania and will cement bilateral relations between the two countries, said Andreas Treichl, Erste president.

"It is a great day for the bank I represent, for Austria and Romania," said Treichl after signing the privatization contract of the Romanian Commercial Bank (BCR), the largest in Romania. The privatization represents the largest foreign investment in the country, amounting to 3.75 billion euros.
The Prime Minister, Calin Popescu Tariceanu, stated that the government will pay special attention to the privatization of the bank, especially to the way in which it will be reflected in the economic and social development of Romania over the next few years. The sums obtained from BCR will be used for infrastructure projects, added the PM.
The privatization contract stated that Erste does not have to guarantee the jobs of the present employees of BCR. Moreover, the Austrian investor has announced that it intends to reduce the total surface area of BCR's subsidiaries by 50 percent.
The contract stipulates that the BCR name will be kept for at least three years, but the authorities allowed the Austrian group to modify the bank's brand to show its affiliation to Erste. Another provision of the contract grants the minority shareholders the right to veto on decisions regarding mergers, liquidations, major sales of assets and capital increases.
The Austrian bank will create a Consultative Council for Transition, with ten members, which will have unrestricted access to internal and external information of the Romanian bank from December 22. Erste will appoint seven of the council's members, while the rest will be named by other shareholders.
According to the contract, Erste Bank must focus on increasing the market share for individual loans from 26% to 30% by 2010, and on keeping the bank's status as a leader on the Romanian banking market.
The costs allocated by Erste to integrate BCR into its activities should amount to approximately 90 million euros in 2006, while the expenses for the following three years could total as much as 100 million euros. The sums should be directed mainly towards the IT infrastructure and to the optimization of the subsidiaries.
The profitability rate of the BCR investment for Erste should be around ten percent from 2009, excluding financing costs. The average increase rate of the profits initially set to 15 percent for 2005-2008 will be increased to more than 20 percent for the 2005 - 2009 period.
Erste bank will list the shares for BCR within three years, but the Austrian officials announced that will not list its own shares. If the bank is listed, the shares will belong to the minority shareholders, according to Reuters. Adriean Videanu, the general mayor of Bucharest and a member of the privatization commission, said that the minority shareholders requested that the shares be listed on the stock exchange.

BCR will increase competitiveness

The governor of the National Bank of Romania (BNR), Mugur Isarescu, believes that the privatization of BCR will boost the competitiveness of the local banking system and re-orientate the market towards financing products for companies. "The privatization of BCR is most significant transaction in the banking system of post-communist Eastern Europe," concluded the governor of the central bank.

Millenium's shares gain on BCR news

The shares of the Portuguese bank Millenium recorded an advance of 8.7% after the bank lost the competition for the privatization of BCR, according to Reuters. The bank's shares decreased prior to the final offers for BCR as the Portuguese investors feared a capital increase would be necessary if Millenium had won the bid.
Currently, analysts estimate that the bank's representatives, although disappointed with their failure to take over the Romanian bank, will continue to search for new opportunities, including the privatization process of the last state-owned bank in Romania, the Romanian Savings Bank (CEC). "We understand that CEC could be valued at 650-750 million euros and Millenium could make up its mind quite soon whether it is interested or not," said Joao Carlos Fidalgo, an analyst at Lisbon Brokers.
On the other hand, the privatization of BCR boosted the local stock market to near its yearly maximum. "The privatization of the BCR was marked on the Bucharest Stock Exchange (BVB) by cumulated transactions of 35.6 million SIF shares (Financial Investment Companies - holding 30 percent of BCR)," said Cosmin Raduta, operations director for the brokerage company Ieba Trust. The transactions with the SIF titles pushed the overall stock exchange operations to more than 30 million euros, ranking third in value in 2005.

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Representatives of the Ministry of Transport, Constructions and Tourism and those of American company Bechtel concluded, the negotiations on Transilvania motorway construction, "ACT Media News Agency" reports.


"We presented today (Thursday) in a Government meeting a note, announcing the conclusion of negotiations with American company Bechtel, note approved by the Prime Minister. We have agreed upon both the down payment and the letter of guarantee that initially was drawn up according to an Anglo-Saxon model and could not be applied in Romania", Minister of Transport, Constructions and Tourism Gheorghe Dobre stated to the press.

According to the Minister, some clarifications were brought as for the letter of guarantee's model, Bechtel acknowledging that it should comply with the Romanian legislation. "The letter was applicable in England alone so that, if we advanced the money to the American company and if from 30 million euros they would have spent 15 million euros, the remainder could not have been recovered as no bank in Romania accepted such a guarantee", Dobre explained.

The Minister underlined that, following negotiations, 126 million euros were saved, 100 million euros for these works being allocated for 2006. Thus, Bechtel agreed to observe the Romanian legislation, accepting an annual advance of 30 percent of the value of Brasov-Bors motorway works and the amount was due to be justified at year-end.

Initially, the agreement between the two sides stipulated an advance of 250 million dollars (about 213 million euros) to be justified at the end of the works. Brasov-Bors motorway construction was started on June 16, 2004. Total costs for the motorway, with a length of 415 kilometers, are evaluated at about 3.8 billion euros, of which 2.2 billion euros destined to these works.

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The Austrians have become the great champions of large privatizations in the Romanian economy, writes today's Adevarul.
"Banca Agricola became Raiffeissen, SNP Petrom is Petrom - OMV, and BCR has just received an Erste emblem on it. The black era of financial frauds is over after a long period in which the much needed trust between credit institutions and their clients has been practically inexistent. In the glory years of Caritas, when Romanians were sleeping in peace, people were called to deposit money. Now they are asked to borrow. If last decade's advertisements had taking money from the people as their undeclared purpose, now they call for debts, be they long or short term. Little by little, the center of trust has moved from the client to the financer, and financers have proved to be more flexible in the case of a conflict caused by lack of payment, than those who lost money with Caritas, the National Investment Fund or Bancorex were. Taking over the risks, the risks have triggered a mechanism which has not been encountered so far, which has led to the situation in which half of Romanians' refrigerators, TV sets and cars are bought through banks. And the mortgage credits have taken the real estate market to unimaginable rates. One of the pillars of the economy, the system that generates money has gotten rid of the terrorists and is showing signs of recovery. However, the other one is still sick: industry, especially that which produces goods, is falling because of the unforgiving competition from imported goods but also because of lack of capital. Producers complain that the banks do not give them enough money except in conditions which they consider unfair, while bankers blame the incapacity of businessmen to draw credits. We are in the middle of a conflict between creditor and client, which is generated by mutual distrust and the refusal of the two sides to divide fairly the risks involved. Of course, it is not the same to grant a credit of a few thousands euros to a client who puts his salary at stake in order to be able to buy a fridge and something else if we talk about a business worth hundreds of thousands of euros which carries out its activities in an extremely risky economy."

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The International law firm Salans initiated some days ago international arbitration proceedings against the Government of Romania (?GOR?) on behalf of its client, Netherlands-based Rompetrol Group N.V. (?TRG?), at the World Bank?s International Center for the Settlement of Investment Disputes (?ICSID?) in Washington D.C, following unsuccessful negotiations with the GOR earlier this month, "ACT Media News Agency" reports.

TRG?s claims before the ICSID are based on the failure by the GOR to observe the fundamental rights and protections owed to TRG, pursuant to the Bilateral Investment Treaty between the Netherlands and Romania. On December 8, the GOR rejected TRG?s claim for damages caused to the company by the continuous judicial and administrative harassment conducted by state agencies and prosecutorial bodies against the company and a number of its managers over the past two years.

TRG has suffered serious economic damages, currently estimated at in excess of USD 100 million, and maintains that the investigations and charges are unfounded and politically motivated. TRG, through its law firm Salans, filed on July 19, 2005, a Notice of Dispute (?NOD?) with the GOR seeking to reach an amiable settlement of the dispute through good faith negotiations, in order to correct the material damages caused to the company and its shareholders by the violation of its fundamental rights and protections over the past two years.

The Salans team advising TRG is led by Obie L. Moore, managing partner of the Bucharest office, and Sarah François-Poncet, Paris-based partner and chair of the firm?s International Arbitration Practice.

Rompetrol Group NV is an oil company active in 12 countries, with the majority of its assets and operations based in Romania, Bulgaria, France, and Spain. The group is active primarily in refining and downstream marketing of petroleum products, with additional operations in petrochemicals, exploration and production, and other oil industry services such as drilling, EPCM, transportation, etc. With a staff of more than 7,700 employees, TRG reported gross revenues of $1.61 billion in 2004. TRG aims to become one of the largest integrated oil companies in Southeastern Europe and obtain a strong position in the Black Sea area.

Salans is a full service international law firm with 15 offices worldwide and over 450 lawyers. The firm is one of the global leaders in providing international arbitration advice, serving clients particularly in connection with cases in emerging economies.

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The Austrian company Egger intends to invest 500 million euros in the Romanian wood sector, the company's director Michael Egger stated.
"During the first stage the Romanian investment for the laminated boards will be of approximately 210 million euros. For the future we intend too invest in other classical wood products," stated Egger.
The Austrian company and the European Bank for Reconstruction and Development (EBRD) have signed yesterday the agreement for the financing of the Egger investment in Suceava County.

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Omnilogic, one of the largest IT&C system integrators on the domestic market, will see its revenues increase by 35%, company officials estimate.

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The number of taxpayers contributing to the public pension system will increase by a million from 2006.

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Distrigaz Sud will invest some EUR 90 million next year in restoring and expanding its natural gas distribution network.

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For the coming year, Transelectrica projects turnover standing at 1.6bn RON (452m euros), 23% higher than the level reached this year. The company will be floated on the Bucharest Stock Exchange in May.

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The Targu-Mures based company DAW Benta, producing and importing construction materials, forecasts that turnover will rise by about 30% next year, to 12 million euros, according to the company's representatives.

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Adriean Videanu

The General Mayor of Bucharest, Adriean Videanu, said in an exclusive interview with Bucharest Daily News that the European Commission Delegation to Romania might be used to make public the city hall?s projects. The statement came after a dispute with the EC Delegation head, who said Bucharest does not deserve to be a European capital. Videanu and Sheele met last Friday to try and find solutions to improve Bucharest?s situation.
Videanu admitted Bucharest has major problems, such as the chaotic traffic, the inefficient public administration and bad public transport. However, the mayor said he has solutions for each of these issues.
Videanu warned the citizens of Bucharest that modernizing the city involves sacrifice, so they should not be surprised if things get worse next year because of the work that will block traffic and make the city look like a working site.
The general mayor defended the city of Bucharest, saying it will always be a European capital, despite its huge deficiencies and problems.

You just had a meeting with Jonathan Scheele, the head of the European Commission's Delegation in Bucharest, who a few days ago said Bucharest does not deserve to be a European capital. What did you discuss with him?

We tried to clarify some of the aspects of his statement and we reached the conclusion that the lack of communication was to blame.
What I wanted to clarify was that Bucharest will always be Romania's capital, with all its problems, and that Bucharest will always be a European capital, with all its problems.
I never disputed the problems of Bucharest, which are real and visible for each citizen. But he made a statement influenced by his emotions, which led to a misrepresentation, in my opinion, taking into consideration that he is a European official. One must be careful, from this point of view.
That's why we wanted to present to him the modernization plan in detail for the 2005-2008 period and we agreed to organize a joint event.

What will this event consist of?

We would like to use the European Commission to make the city hall's projects public. This way the Commission will be a point of reference for the image of City Hall's plans.

After the first eight months of your term as general mayor, what are the achievements that make you most proud?

The development plan for Bucharest for 2005-2008, which determined the priorities that can be subsidized. Bucharest has a huge number of problems and we would need almost unlimited resources for these problems to be solved. So I tried to realistically determine the resources I can use by 2008 and I have selected some of the problems which I want to solve by the end of my term.

Tell me some of these problems that you plan to solve by 2008.

First of all, those related to the traffic in Bucharest. And I have to give you a bad news: in the next two years, the traffic will be even worse than now because we will start the infrastructure work that will block certain access ways, but I have no other solution. But things will be better in the third year, when I will have solved a large number of these problems. When I am talking about the traffic, I am referring both to the street infrastructure and to the underground infrastructure, because I can not do things only half way. I will begin with the underground infrastructure and then I will modernize the surface one. I launched eight design studies for street decorations and, implicitly, for the advertising in Bucharest. I also launched a study of the townscape, because we can afford, for example, along Elisabeta Boulevard to have wax cherry trees planted. Bucharest needs quality trees that give it the range of a European city. We have also launched the pre-feasibility studies for the 22 underground parking garages in the central area, which will offer about 15,000 to 17,000 parking spaces. We also have started the traffic master plan that is aimed at solving the problem of one way streets, correlated with widening the streets by reducing the sidewalks, in order to make parking lots on both sides of the street. Moreover, together with the underground parking I spoke about earlier, this will also solve the problem of parking in Bucharest. Nevertheless, these lateral parking spaces will be placed on secondary streets, not on main ones.
We have also finalized the auction for 500 new buses, we finished the public debate on the Basarab passage and we will soon have the environment approval in order to start the auction.
The street infrastructure upgrade will be carried out simultaneously with repairing the sidewalks, placing street decorations and planting trees. We want to solve them all in the same time.

Won't it take much longer this way?

Yes, it will. It will take longer, but it will be much cheaper and less bothersome for the population, because once you disturb them by renovating the infrastructure, it is better to solve all the other problems, so you don't disturb them several times in the same area.

Are you prepared for the citizens' negative reaction?

Yes. I always say that it is going to be a big problem - a great disturbance in Bucharest in the next two years. I assume this risk, both as a human being and as a politician, but I can not do things half way. This is my way of being. I hope that people will fairly judge the actions I take, as we should not solve things only in appearance, as it has happened most of the time.

How will you subsidize these projects of modernizing the city?

This is also one of the great achievements, as we have set the premises for the subsidizing for all the projects. We organized a city hall bonds issue and we obtained 500 million euros, the biggest amount Romania ever gained in the last 15 years.
The most important thing we obtained from this bond issue is the city hall's credibility on the capital market. At the moment I have an avalanche of requests for subsidizing from all international financial institutions; from all the big international banks, such as the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB), the World Bank, the International Finance Corporation, the ABM-AMRO commercial banks, Citibank. They are all interested in subsidizing the city hall projects, which is something extraordinary. When the subsidizer is the one that makes the request, you have the necessary conditions for the costs to be very small. In addition, there are the Romanian banks, such as the Romanian Commercial Bank (BCR), Raiffeisen and BRD that also want to subsidize the city hall's projects. But the most important thing for me is a strategic partnership with the European Investment Bank that will offer a credit line to City Hall, which is a new thing in the subsidizing filed in Romania. A credit line from an international institution that will guarantee the subsidy for all the projects we have initiated.

How will Bucharest look in 2006?

Worse. We will initiate work at the beginning of the year and the capital will look like a worksite. The work will block traffic. But I have to say that there is no other way. We will suffer for a while, but afterwards the horizon will brighten up.

A much debated subject over this year was the modernization of the historic center in Bucharest, part of the city hall's projects. The Association of the Investors in the Historic Center (AICI), including foreign investors in the area, have complained that their businesses are going very bad because of the area's isolation. What news do you have for them?

We often communicate and....

Nevertheless, they accused you of lack of communication...

They were unfair by making such accusations. I already had three meetings with the representatives of the investors in the historic center. Listening to their complaints, I allowed taxis free access in the area and I established three taxi stations around the historic center. I have prohibited the traffic because we can not go back to the previous chaotic situation in the historic center. At the moment we are auctioning the infrastructure work. In the historic center investors' benefit, I want the work to last about two years, and not 20 years, if we would allow the traffic in the area. The taxis will have specific routes determined by us, but their presence set the premises for the businesses to continue in the historic center. For the first time in the last 50 or 60 years, work in the historic center is initiated, we have the subsidy, and we have all the study ready, we have the projects approved. We also ended the final stage, which was the analysis of the underground infrastructure so we can have all the data about the area when we start the work. Thus we preferred to lose more time with making projects and finding all the information about the area, this way saving more time for the actual work.

The investors in the historic center have accused you of not having a concrete plan of modernizing this area. How do you comment on these accusations?

I can not solve their ignorance. They have the possibility to inform themselves and I am convinced that I am dealing with people who have the capacity to get the information. Moreover, I myself had several meetings with them, I showed them the projects. Of course, I can not talk with them every week or every month, because time doesn't allow me to.

And what were their reactions?

Ones of understanding. Out of their seven requests, I agreed with five.

Which were the requests you accepted?

Among them was the better illumination in the area, which is proceeding at the moment, the access of taxis, and the station of taxis in the area.

And the ones you refused to accept?

The free access of cars and another one that I cannot remember at the moment. Nobody can say that I did not agree to have talks with them, when I had the time.

Another problem many foreigners complained about was the public administration. Even the British Ambassador, Quinton Quayle, said the public worker does not work for the citizen, but for his own interest. Moreover, your message to public workers after you were elected was "maximum efficiency in minimum time." However, the situation has not much improved in the last eight months. What measures will you take in order to improve this situation?

One of the first things I did when I took over my position was an evaluation of the human resources I have and I work with. The conclusion of this evaluation was that we have a big problem. And the biggest problem is that, taking into consideration the quality of the public workers, those who actually work with citizens are the communication both inside the structures part of City Hall, between departments, and communication with the citizens. That is why I began a program of training for the human resources I work with; I don't believe in the solution of rapid changes, I believe that it is better to give the person a chance, to tell him where he is wrong. This was the evaluation I made. Each person received a report of his or her activity, that person and I are the only ones who know everything about him or her. Of course, I am referring to the departments' managers because I could not test all City Hall's employees. So each manager knows the minuses and pluses in the report and the field that needs more training and improvement. At the beginning of next year I will carry out a new evaluation and if I will see there is no improvement, I will have to dismiss that person. 
I admit that unfortunately, at the moment the public administration does not respect its task, we have very many things to do about it, but it is a process that can not be changed in one or two years, but a much longer period of time.

Many foreign citizens have complained about the problems of public transport, such as the bad quality of buses, their small number on several routes which leads to crowding and so on. What are your solutions for busses in public transport?

Yes, it is true. Yesterday I announced the winner of the auction for 500 new buses and starting in March we will bring the Mercedes buses in Bucharest, which will undoubtedly increase the quality of public transport. We will bring 400 buses next year and 100 in 2007. We will also initiate an auction for buying 50 trams and 100 trolleybuses, and they might be very new models, so the quality of public transport will increase. Of course, those complain about this are right, but I will solve their worries once we will bring these buses. You should know that everything is connected: we are modernizing the infrastructure; we are buying buses, so they will not be driven on bad roads, this way damaging them in a few days.

Who is to blame for all these problems you admit Bucharest has?

I would like to talk about the period starting with 2000, as I know the situation very well. If President Traian Basescu (Traian Basescu was General Mayor from 2000 to 2004) would have been allowed to carry on this term properly and the legislation would not have been modified in order to restrict the general mayor and increasing those of district mayors, transforming the city into six different cities, if Traian Basescu would have been allowed to continue the infrastructure projects, which were the result of a study carried out in 1999 by a prestigious Japanese company, things would have been better now. The absurd political fight led by the former General Council and by the Social Democratic Party led to nothing being done in Bucharest for many years, not to mention that before 2000 almost nothing was done in Bucharest, when talking about the major infrastructure projects. It was well known that Bucharest has a 100 year old sewage system, that it has a network of drinkable water that does not respect the standards, that it has an incredibly bad network of cables. I am the general mayor, I assume all these problems although I am not blame for them, but it is my job to find solutions. Of course, the resources are limited, and, as I have told you, I established the quantity of resources for the projects I selected to finalize before 2008 from the huge number of problems.

Lately you had some differences with the Social Democratic councilors, who accused you having run City Hall from an airplane lately, due to your many visits abroad.

I am sorry about their lack of horizon. The general mayor is the one that represents City Hall abroad and I believed it was important to continue having a very good collaboration with the International Association of the Francophone Mayors, of which the Bucharest mayor is a member, especially since next year we will organize in Bucharest the summit of the Francophone community, which is the reunion of the Francophone states' leaders. This reunion is preceded by the reunion of Francophone cities' mayors, so I will be guest of this even, so I had to go to Madagascar to establish the theme of next year's event and all the other organizational aspects of the even, as they will be organized both by the Bucharest City Hall and by the International Association of the Francophone Mayors. I had another visit in Moscow, as I was especially interested in Moscow's Bank, a bank established by the Moscow city hall which has exceptional results after 10 years of functioning. It is a matter that I had to evaluate, if not to imitate. I also talked with the Moscow mayor the possibility for an interest of our city hall in finding the best energetic solutions for Bucharest.
I had another visit, but on my own money because the city hall's budget was reduced, I went to London, where I had a series of meetings with representatives of banks who are interested in investing in the city hall's projects.
So in eight months I had three visits abroad, which were not in my personal interest.

The latest concern when talking about Bucharest is the threat of bird flu. What measures have you taken for its prevention?

I am also the president of the Anti-epidemic Committee in Bucharest, so I have the obligation to take preventative measures for eliminating the appearance of the bird flu. We have decided to set a structure aimed at permanently monitoring the possibility for the virus to appear. Thus all the entries and exits of Bucharest are being monitored. Moreover, we prohibited the commerce of live birds in Bucharest and we asked the citizens not to consume meat from relatives or relatives outside Bucharest. We restricted access to the lake areas which have the highest level or risk, taking into consideration the fact that wild birds gather around lakes.

How would you evaluate the risk of bird flu to appear in Bucharest?

It exists. That's all I can say, but there is no reason for panic. I wanted for the responsible authorities to be prepared.

What do you wish for Bucharest in 2006?

I wish for all the studies we have launched in Bucharest to have the expected results.

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The Financial Investment Companies (SIF) will keep the shares owned at BCR commercial bank in the current privatization stage and each company will decide how to handle these stakes, acoording to the Finance minister Sebastian Vladescu.

PM Calin Popescu Tariceanu and the minister of Finance met with the representatives of the five SIFs to analyze the effects of BCR privatization on minority shareholders.

AVAS owns 36.88% of BCR?s capital and is entitled to buy back the 25% plus two shares equally owned by International Finance Corporation and the European Bank for Reconstruction and Development (EBRD).

The five SIFs own about 30% of BCR shares, and the bank employees own 8% of the shares.

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BCR Leasing forecasted a turnover of 230 million euros for the entire year, having contracts worth more than 220 million euros in the first eleven months of the year, ACT Media news agency reports.

That is why BCR Leasing is likely to surpass Porsche Leasing, which was the biggest leasing company on the domestic market in 2004.

For 2005, Porsche Leasing management estimates a volume of financing topping 210 million euros. The market share held by BCR Leasing increased from 8.1 percent in late 2004, to 11 percent in 2005.

In the first eleven months, the total value of financed goods amounted to 185 million euros, 120 percent higher as compared to the similar period of 2004. The company launched this year a real estate leasing product, employing a classical financial leasing system, or sale and lease back, also focussing on the acquisition of industrial halls, production spaces, office buildings, commercial centres, hotels and guest houses.

BCR Leasing also made its first offer of financial services for Autodesk software products, targeting construction projects.

Car financing continues to account for the largest share of the total financing volume, with cars standing at 59 percent, utility services - 20 percent and equipment and industrial machinery - 20 percent.

Real estate leasing accounts for just slightly more than one percent, after the finalisation of the first contracts in this category.

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The Cluj-based company Electrogoup, specialised in electrical installation and the construction of telecommunications networks estimates approximately 5 million euros turnover this year, ACT Media news agency.

The company intends to complete an investment of more than 2.6 million euros in a new production facility in Cluj Napoca (north-west, 426 km from Bucharest).

Electrogroup already owns a similar place in another part of the city, and the two facilities will employ 150 people next year.

Electrogroup opened Entel company in Bucharest in 2002, which it devised as an operational office for the area, focusing on telecommunications.

The development plans for 2006 include the opening of new office in other major cities.

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The Romanian Competition Council has fined Wrigley Romania and 26 connected companies ¤5.5 million for introducing minimum prices on its products, which was seen to be a measure that is in violation of EU law.

The Competition Council proved that Wrigley along with 26 other companies that distribute Wrigley products violated competition law by fixing prices when signing distribution agreements.

Wrigley's fine, which represents approximately 10 per cent of the value of the Romanian chewing gum market in 2004, was brought about by an infringement of article five paragraph one of the competition law 21/1996.

This states companies should not impose resale prices either directly through clauses included in distribution contracts or indirectly through discount policies. Allocating markets and clients is also banned.

According to the council, fixing prices and actions taken to divide the client base completely eliminated the competition. This resulted in consumers paying a price that is not affected by the element of supply and demand.

An example of the fixing can be seen with one of Wrigley's trade partners Rodipet, which purchases directly from Wrigley. An agreement was made establishing the retail price in the company's kiosks.

Wrigley is now forbidden from recommending, the sale price of its products including a maximum level, and has been recommended not to make exclusive agreements in the future.

Previously Wrigley had requested an exemption from the competition law regarding both the buying and distribution of its products resulting in a campaign against the company.

Interbrands Marketing and Distribution launched the petition against the confectionery giant in 2004 claiming that Wrigley was in violation of competition law due to its dominant position in the market.

The Competition Council however ruled in its investigation that Wrigley had complied with all the laws regarding the selling and promotion of its products.

Founded in 1891 Wrigley is present in 180 countries worldwide and last year achieved global sales of $4 billion.

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Constanta South Container Terminal (CSCT), the terminal operated by DP World in Romania, has increased volumes by more than 450%, achieving its 500,000 TEU* milestone recently while servicing the MSC Jemima.

The full year throughput for 2005 for CSCT will be around 560,000 TEUs compared with just under 100,000 TEUs last year.

The success story underlines CSCT's position as the hub for the Black Sea, as trade continues to expand in Eastern Europe. CSCT handles a mix of local cargo and transshipment cargo for many other countries in the Black Sea region. Barge services linking Constanta and Belgrade have recently been initiated, and there are plans for a rail link between CSCT and Budapest in Hungary.

Dubai's DP World, a leading global port operator, took over management of CSCT in January 2004, with operations commencing in April 2004, and has since set new productivity records at the Romanian terminal. CSCT recently operated the MSC Queensland at more than 80 moves an hour for 3,200 moves on the vessel. This was the largest number of moves per single vessel ever handled at the Port of Constanta, beating a previous record set in July by CSCT on the ZIM Marmara Sea. In another significant achievement, CSCT last week handled 22,890 TEU - 1.2million TEU on an annualised basis, and another record for the terminal.

Demonstrating its commitment to investing ahead of demand, DP World is in the process of expanding yard capacity at CSCT and has ordered five new rubber tired gantry cranes to be delivered mid-2006 and additional quay cranes due for delivery in first half 2007. DP World expects throughput for 2006 and beyond will continue to grow at a good pace, and in due course, additional berths will be brought on stream.

Commenting on the achievement, Mohammad Sharaf, CEO, DP World, said:

    "This is a significant milestone for CSCT, and it demonstrates the effectiveness of our management model. We are fully committed to investing ahead of demand and to constantly improving our facilities to the advantage of our customers. Our achievements in Constanta reflect our experience and success in managing large ports around the world."

DP World Managing Director and Senior Vice President, Europe and West Africa, Simon Moore added: "One of the reasons for the early success of CSCT is the close partnership we have with the Maritime Ports Administration Constantza S.A.(MPAC). They have been key to establishing efficient services that enable us to serve our customers' rapidly growing needs in this important emerging market. We look forward to building further on this relationship and creating a world class terminal that Romania can be proud of."

* TEU = twenty-foot equivalent unit, a measure relating to container capacity

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GE Energy announced today that it has completed a retrofit of the turbine-compressor control and protection systems at Rompetrol's Petromidia Refining Complex near Constanta, Romania.

The project, which was completed this month, replaced older mechanical controls for the plant's steam-turbine-driven hydrogen gas, main air, and wet gas compressor trains with GE's Integrated Turbine Compressor Control (ITCC) solution. The ITCC incorporates triple modular redundancy and advanced control algorithms, allowing critical compressor trains to boost operational margins while enhancing the refinery's process reliability. Project scope also included turbine speed control, auxiliary system control, overspeed protection, mechanical actuation, new anti-surge valves, and numerous hydraulic components including sensors, actuators, and power units.

Because a particularly important facet of the project was to improve compressor operation, GE mapped the compressors' performance and then created custom algorithms. These algorithms enable Rompetrol to take full advantage of the compressors' flow capabilities, while maintaining process stability and limiting the cost impact of unnecessary recycle valve operation.

Commenting on the project, Dan Heintzelman, president of energy services for GE Energy, underscored the value that controls upgrades can deliver for customers. "A controls upgrade is about more than just replacing older technology with newer technology," says Heintzelman. "It is about using technology intelligently, enabling our customers to run their equipment more efficiently, with better overall system performance, and with decreased operational costs. I'm pleased that Rompetrol has chosen GE to deliver those benefits."

The Rompetrol Group is Romania's largest privately owned oil & gas company, with revenues of $1.6 billion in 2004. Founded in 1974, it serves as the international arm of the Romanian oil & gas industry.

GE Energy's custom-designed control solutions address turbines, generators, and compressors, as well as plant-wide process control and performance optimization solutions. Encompassing a variety of plant designs and equipment manufacturers, GE's solutions are focused on enhancing customers' operating revenue and providing tangible economic and environmental benefits.

About GE Energy GE Energy (www.gepower.com) is one of the world's leading suppliers of power generation and energy delivery technology, with 2004 revenues of $17.3 billion. Based in Atlanta, Georgia, GE Energy provides equipment, service and management solutions across the power generation, oil and gas, transmission and distribution, distributed power and energy rental industries.

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Cemacon company in Zalau (north-eastern Romania) specialized in the production and trade of bricks will finalize next summer a new production line following an investment worth 6 million euros. In the first nine months of this year, the company's turnover was of 5.46 million euros, up compared with the 5 million euros registered in the same period one year ago, but the net profit dropped by 45 percent. This growth was prompted by the drop in the euro exchange rate, which favoured imports from the market of construction materials,'' forcing local producers to cut selling prices. The company's managers estimate that, over the next years, the local market of construction materials will grow continuously, but the competition will become more and more tight, imposing higher quality standards. Cemacon's majority shareholder is Ceramica with a 24.5 percent stake, the remainder being held by other companies or individuals.

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Local carmaker Automobile Dacia expects to post 2.3 billion euros in turnover in 2008, the Ziarul Financiar newspaper reports on Monday. ''We intend the turnover to stand at nearly 1.9 billion euros in 2007 and at 2.3 billion euros in 2008,'' head of the department for foreign relations of Automobile Dacia, Iulian Albu, told a seminar held by the Romanian Agency for Foreign Investment. The turnover rise will be due to a diversification in the range of cars and to production growth. The company expects for 2006 a turnover of more than 1.5 billion euros, jumping some 33 percent from this year, when, estimates say, it is to reach roughly 1.2 billion euros. According to Albu, the plant's production is going to grow to 300,000 cars annually in the few years ahead, and the trend in turnover will be ascending.

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Although it still has about 100 companies in which it owns majority stakes, the big privatisation contracts will be carried out by mid-2006 and the privatisation process will be carried through in the first quarter of 2007, daily Cotidianul informed on Monday. The difficulty about establishing an exact date for the finalisation of the privatisation process relates to the fact that about 50-60 companies already turned private are each half year coming back to the portfolio of the State Assets Realisation Authority (AVAS), currently making up 30 percent of the entire portfolio. AVAS Deputy Chairman concerned with privatisation matters Laszlo Gyerko says that over 150 companies turned private returned under the ownership of AVAS in 2005, mentioning that the companies standing no second chance of privatisation will be considered for winding up. The companies still with AVAS are ridden with economic and financial problems, for instance huge debts, obsolete technology and large-sized staff, all which are seen as deterrents by potential investors

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The Administration of Maritime Ports Constanta ends the financial year with a total estimated profit of 7.7 million euros and a turnover of 50.4 million euros. "Investments in 2005 amounted to 61.8 million lei, half of the sum being from own sources. The main investments aimed at environment protection and infrastructure. The Constanta Port will thus become a 3rd generation terminal, equipped with the latest technologies of waste collecting and recycling in Europe," general manager with the company Mircea Banias told Rompres. According to him,the harbour traffic continued its ascending trend of 17 percent this year, in line with the previous yearly increases, which led to a total traffic of 59 million tonnes of commodities. "This gives us the hope that we will exceed the 62 million tonnes limit in 2006, the record of the past 25 years," the manager said. In 2005 the container terminal operated some 500,000 units, which represents an explosive 92 percent increase. (1 euro = 3.6 lei).

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Communications are set to put the most important IT&C companies on market due to a privatisation agenda in 2006 that comprises three big projects, Minister for Communications and Information Technology (MCTI) Zsolt Nagy was quoted as saying in an interview published by Saptamana financiara in its latest issue. Communications Minister says he is going to use the Stock Exchange for the privatisation of the companies in MCTI portfolio. He stressed that MCTI is set to start listing on the Stock Exchange of the state owed stock in Romtelecom. "It accounts for a stock package of 46 percent held by the state in this company, of which 20 percent is going to be transferred to Proprietatea Fund. We have launched a listing process on the capital market accounting for 26 percent", Minister affirmed, adding that MCTI is in a selection phase of the international consultant. The Government's representative forecasts that, in the first half of 2006, a first Romtelecom stock package could be traded on the market.

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The number of Romanian tourists who preferred foreign destinations rose 36,8% in the first 9 months of 2005 versus the similar period of 2004, according to the data presented during a Friday's press conference by the National Association of Travel Agencies (ANAT). "We expect this year a total increase of some 40% in the number of tourists who preferred foreign destinations through travel a agencies," said ANAT president Lucia Morariu. Over 90% of those who opted for foreign destinations chose Europe. The biggest number of tourists preferred Greece (over 27%), followed by Italy (10.6%), Turkey (10%), Spain (9.9%) and France (4.9%). The number of Romanians who preferred to spend their holiday in the country decreased 14.5% in the first 9 months. "The demand for the seaside decreased some 20%, where the occupancy rate over 1 May - 15 September stood at 50%, and there will be a slight decrease in terms of health-treating tourism, " added Morariu. As to the domestic tourism destinations, the demand for mountain resorts rose 15%. The total number of tourists that visited Romania in the first 9 months rose 12-15%. Foreign tourists mainly came from Europe (Germany, Nordic countries, France, Italy and UK). For 2006, ANAT estimates a decrease of 20% in the number of tourists at the seaside, due to the absence of new 3-star hotels and some facilities for spending free time. ANAT announced that the 2006 prices at the seaside may be 10% lower. Agritourism is expected to grow 20%, while the business tourism - by 30-35%.

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Agriculture Minister Gheorghe Flutur says 2005 can be deemed the year of the property return, following the approval of law no. 247 that is to take effect in December. The return of property is one of the main achievements of the ministry in 2005, Flutur told on Wednesday. "We are speaking about the completion of the return of lands in Romania and, finally, about the respect of the ownership right. This enables us to set the farming on sound bases and start its capitalisation. The effective return of lands to their owners will continue in 2006, but I am certain that when we enter the European Union, the problem of the land property will have been solved," he explained. The most efficient programme for the farm producers in 2005 was the introduction of vouchers, Flutur believes. Another important programme conducted by the ministry was the one meant to support the mountain areas. The ministry's policy was to gradually move the support from the plant production to the animal production, with the subsidies for pork, beef, chicken and mutton having been increased by 40 to 120 percent, he added.

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The bank had been established initially from Dresdner - BNP Paris and Egnatia Bank made the acquisition of the business in 2000, President of Egnatia Bank Stylianos Sofianos said. According to the Bank's President, this year was the best one in terms of financial growth until now. By the end of the year the bank expects a net profit of approximately 2 million euros, while the assets will surge at over 100 million euros. Moreover, in the respect of the financial year-on-year evolution, all the figures will double their amount in 2005. The market share also surged to 0.3 percent, as of June 2005. This year was a very successful one both due to the achievement of all the bank's expectations with the largest budget ever since entering the Romanian market and initiating a network. In 2006, the bank expects a similar growth, meaning another doubling of the balance sheet and figures.

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The most dynamic sector on the real estate market, in the first half of 2006, will continue to be the residential acquisitions one, Bucharest being the city where the lack of living space is acutely felt, especially for youth, Director general of real estate company Regatta Eduard Uzunov stated . "Bucharest will need, in 2006, more dwellings built at an accelerated pace in order to meet the demand estimated at 40,000 units. Residential sales sector is directly and strongly influenced by a rapid increase in the number of mortgages that stimulated the demand. Prices jumped for each and every type of real estate, for instance, in the case of blocks built ahead of 1989 even with 100 percent. Mortgages will be further sought after, despite hardened conditions, as they offer more advantages compared to other financing sources", Uzunov said. At present, the biggest real estate development takes place in the north of the city and surrounding zones: Herastrau - Nordului, Baneasa - Iancu Nicolae, Ionescu Sisesti and even Sangov. These zones will account, in 2006, too, for high shares of the market, especially the development of residential parks type. Despite all these, there is a significant demand for condominium projects, blocks type, but apartments with bigger surfaces than those built ahead of 1990 and superior finishing that ensure another comfort level.

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Sales of import cars advanced 72 percent over the first 11 months of the year as against the similar period of the last year, reaching 111,301 units, according to the statistics of the Automotive Manufacturers and Importers Association (APIA). Imports advanced 81.1 percent for family cars (92,545 sold units), 38.1 percent for commercial vehicles (17,251 sold units) and 52.3 percent for buses (1,505 sold units). Renault maintained its first position among import cars with 20,011 sold cars, more than double compared to 2004, mainly due to models Clio and Megane. Skoda ranks second, with models Octavia and Fabia reporting the most numerous sales. The ranking for the remaining best sold import cars in Romania stands as follows: third is Volkswagen with 10,408 units, followed by Peugeot with 8,003 units, Ford with 4,845 units, Opel with 4,732 units, Chevrolet with 4,342 units, Fiat with 3,767, Hyundai with 3,720 units and Toyota with 3,362 units. The most popular car models of import in November were Renault Clio (1,219 units), Renault Megane (805 units), Skoda Octavia Tour (662 units), Skoda Octavia (487 units), Peugeot 206 (404 units), VW Passat (398 units), Skoda Fabia (372 units), VW Polo (284 units), Ford Focus (243 units) and Chevrolet Spark (239).

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Romania's National Navigable Ways Administration Corporation (CNACN) (CNACN) based in Constanta has reported a net profit of over 1 million euros in 2005, derived from fees levied on 31 million tonnes of goods having transited through the inland ways managed by it. CNCAN Director General Valentin Zeicu says this financial performance was the result of the daily traffic being of 100,000 tonnes of goods and the recording for the first time of a 50 percent profitability rate for traffic on the Danube-Black Sea canal The financial results are at least double the 2004 figures in terms of revenues, but at least 1 million euros were lost as a result of fluctuations in the exchange rates of the local currency to the euro. Zeicu mentions that in 2006 fees on ships for the first time transiting through the Danube-Black Sea canal will be diminished by 50 percent, according to a new CNCAN tariff policy and management strategy, whereas tariffs will be diminished proportional to the increase in the goods traffic for the main operators using this commercial route permanently. Also in 2006, CNCAN will switch to European standards regarding the satellite monitoring of naval traffic.

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Romania's Central Bank attracted, on Monday, 1.3 billion euros (the equivalent of 4.7 billion lei) from the money market. That is the second tender the Central Bank has held of late, after having sold late last week deposit certificates worth five billion lei (the equivalent of 1.36 billion euros), maturing in three months. At the tender on Monday, the Central Bank set the interest to an annual 7.5 percent and attracted all the offers of the commercial banks. After the tender on Monday, the interest to one-day deposits rose to 4.5-7 percent annually. Dealers say there still is money in the market.

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Erste Bank AG, Austria's second- biggest lender, won the bidding for Banca Comerciala Romana SA with an offer of 3.75 billion euros ($4.45 billion) to add more than 5 million clients at Romania's largest bank.

The Austrian lender beat a competing bid from Portugal's Banco Comercial Portugues SA to buy 61.9 percent of the bank known as BCR, Finance Minister Sebastian Vladescu said today in Bucharest.

``The privatization of BCR will strengthen Romania's banking sector to prepare it for competition before joining the European Union,'' Vladescu said at a news conference in the Romanian capital. The choice of Erste as a winner ``was a very hard call to make.''

The banking industry in Romania, a former communist country scheduled to join the European Union in 2007, offers one of the clearest opportunities for growth in Europe, analysts said. BCR controls a quarter of the market in a country of 22 million residents where the average person's savings and credit is a 10th that of EU peers.

``Romania's still an under-banked country,'' said Radu Craciun, head of research at ABN Amro Bank Romania in Bucharest. ``The stakes are so high because BCR is the last large bank for sale in the region.''

Romania initially attracted seven offers for BCR from banks across Europe, including Germany's Deutsche Bank AG, in a bidding process that began six months ago.

Bank assets in Romania totaled 40 percent of gross domestic product last year, according to a study by the Austrian central bank earlier this year. That compares with 76 percent in Hungary, 97 percent in the Czech Republic and 65 percent in Bulgaria, which also aims to join the EU in 2007.

Eastern Growth

Vienna-based Erste expects demand for financial services to grow three times faster in eastern Europe than in the countries using the euro, Chief Executive Andreas Treichl has said.

Erste will buy Romania's 36.9 percent stake plus the 25 percent and two shares jointly owned by the European Bank for Reconstruction and Development and the World Bank's International Finance Corp.

The price is the highest ever paid for any Romanian asset. The amount is so large for Romania's $75 billion economy that the money should stay in an account abroad to avoid sharp fluctuations in the Romanian currency, the leu, central bank governor Mugur Isarescu has said.

``Auctions for large east European banks have clearly become more competitive but Erste has a strong track record of extracting value from deals,'' said Matthew Clark, an analyst at Keefe Bruyette & Woods in London.

Erste Expansion

It wasn't disclosed how much BCP bid for BCR. The government selected Erste and BCP in October as the final bidders for BCR. Preliminary bidders included BNP Paribas SA of France, Italy's Banca Intesa SpA, Dexia SA of Belgium and the National Bank of Greece.

For Erste, buying BCR caps a decade of expansion in eastern Europe, where the company now makes most of its money. Domestic rivals Raiffeisen Bank and Bank Austria Creditanstalt AG are already in Romania.

Erste paid a total of almost 1.3 billion euros for Prague- based Ceska Sporitelna in 2000 and 2002, or 1.5 times its book value. It won approval from Slovakia in 2000 to buy 87.2 percent of Bratislava-based Slovenska Sporitelna AS.

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The privatization of the Romanian Commercial Bank (BCR), the largest privatization in Romanian history, is the last of a series of important similar transactions carried out in the post-1989 era in various sectors.
In the energy sector, the largest privatization was that of Petrom, bought by the Austrian group OMV for 1.4 billion euros which included the acquisition of shares and a capital increase up to a 51 percent participation.
The second largest privatization in the oil sector was the sale of the refinery Petromidia Navodari to the local group Rompetrol for 515 million euros in 2000.
In the banking sector, the French bank Societe Generale won the tender for the privatization of the Romanian Bank of Development (BRD) in 1998. Societe Generale paid 115 million euros for 42 percent of the BRD capital but later increased its participation to 51 percent. 
In telecommunications, the Greek group OTE - Hellenic Telecommunication Organization took over a 35 percent stake in landline telephone operator Romtelecom in 1998 and usufruct rights for another 16 percent for about 570 million euros. In 2003 the Greek investor increased its participation to 54 percent by social capital increase. 
The largest privatization in the auto industry happened in 1997 when Renault bought the majority stake in Dacia Pitesti for 225 million euros.
In iron and steel, the Galati steel plant was sold in 2000 to LNM Holdings for about 420 million euros.
The acquisition by the French company Lafarge of local cement producer Romcim in 1997 is the largest privatization in the construction materials sector. Lafarge paid over 335 million euros for the deal, of which about half represented investments to be made in the next few years.

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Prime Minister Calin Popescu Tariceanu warned the American company Bechtel that the contract for the Brasov - Bors (Transylvania) highway could be annulled if the company does not follow the laws to the letter.

"If the company does not understand that the Romanian legislation comes before its desires, that the contract could be annulled," said Tariceanu in the Parliament while making a speech about the EU accession progress.
The contract was signed by the former government, led by the Social Democrat Party, and it was contested by the Tariceanu office, which required renegotiations of the contract to ensure the contract is compliant with the European legislation.
The Bechtel contract for the Brasov-Bors highway, worth 2.2 billion euros, was granted to the American construction company without a public tender, leading to negative reactions from the European Union. After the 2004 election, the new administration repeatedly expressed its intention to support another infrastructure project; the Pan-European Corridor IV, which crosses Romania from Constanta in the east to Timisoara in the west.
One of the contract's clauses contested by the authorities stipulates that the government should make a down payment of 250 million euros which Bechtel would justify at the end of the project in 2012.
The Minister of Transportation Gheorghe Dobre announced two weeks ago that the American company "understood it has to follow the Romanian legislation" and accepted to justify at the end of each year the expenses for the Bucharest - Brasov highway.
The provision did not comply with Romanian law, the government argued, as the legislation states that a company involved in a public works contract should only receive advances for the year in question, and should present an annual expenses statement, explained the Minister Delegate for Public Works, Laszlo Borbely.
"It is not a matter of utility," stated Prime Minister Calin Popescu Tariceanu, emphasizing that the main problem of the contract was the initial stipulation of the down payment, under which Bechtel would only have been obliged to detail the use of the funds at the end of the project, in 2012. "There are other technical issues, which are also the object of re-negotiations," added Tariceanu, who nevertheless expressed confidence that the financing and the construction work will resume in full strength next year.
The negotiations with Bechtel are nearly ended," said Dobre, adding that a final discussion with the Bechtel representatives will take place this week (one week ago)."
"The results of the re-negotiations are favorable for the government," stated the UDMR (the Democratic Alliance of Hungarians in Romania) Senator Gyorgy Frunda, pointing out that all the illegal provisions have been cancelled and that the contract will be made public next week.
The leader of the Social Democratic Party (PSD), Mircea Geoana, recently stated that the government must take a strategic decision on economic development by concentrating on infrastructure and public investments, to eliminate the discrepancies in development between Romania and the European Union.
The PSD president stated that the sums provisioned by the 2006 budget for highway construction are insufficient and prove the government does not consider economic development as a priority.
The ministry's priorities for next year, as announced by the authorities, are housing construction for young persons, rebuilding roads, constructing water supply facilities for villages, thermal upgrade of the buildings and consolidation of buildings with earthquake risk.
The budget of the Ministry of Transportation should amount to approximately 239 million euros, 55 of which represent international credits. Most of the funds should be directed to residences for the youth through the National Housing Agency.

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The frequent changes in the Fiscal Code and a new Labor Code, freezing of the IMF agreement and Romania's preparations for EU accession are some of the highlights of 2005 in the opinion of the general director of Siemens Romania, Adrian Baicusi.
Moreover, the new government elected last fall in Romania brought a large scale change of mentalities, and of leaders and this lead to the interruption of some major projects, said Baicusi, pointing out that it is very important for foreign investors to benefit from a stable political environment.
Baicusi believes that by the end of the year, Romania could probably show the largest growth rate in Europe, but warns about the negative effects of political interference in the economic sector.
When speaking about EU accession, Baicusi thinks that if the accession date were to change this could have a devastating effect over the Romanian economic environment.
With long experience in the Romanian economic environment, both as a manager and as an economics professor, Adrian Baicusi is facing Romanian economic reality from his position as general director at Siemens.

For the Romanian economic environment, the current year meant the introduction of the flat tax, EU accession preparations and the frequent legislative changes which took place, such as to the fiscal and the labor codes.
What are the positive and the negative aspects of the Romanian economy in 2005?
The first good thing that happened in the Romanian economy is its development and the fact that it continued the same ascending trend registered in the past five years. I believe that this was the most positive thing of all.
At the end of the year Romanian will most probably show the largest growth rate in Europe.
The second good thing is that, because of its growth, Romania's image in Europe and for investors has improved as well.
And if Bucharest was seen as the most economic developed city, you can now notice that other regions in the country have made remarkable economic progress.
The first major negative thing is that some economic sectors continue to be influenced by politics.
It's true that this happened less compared with previous years and it should decrease each year but this phenomenon continues to apply at certain levels of some economic sectors.
A new government in Romania always meant a large scale change of mentalities, and of the leaders and this has led to the interruption of some major projects.
I'm not referring to the small projects but to the major infrastructure programs that were initiated by each government. We cannot afford to lose a year every four years after an election because we have to see what the other governments did and then initiate other programs.
Is it very important for foreign investors to benefit from a stable political environment.
This will not automatically take place beginning in 2007 when we should access the EU but it is clear that politics will decrease its interference with the economic sector.
Another negative development would be the frequent changes which took place in Romania's legislation and especially in the fiscal sector.
The introduction of the flat tax was a good thing but its worst negative effect was that it created a deficit in the state budget.
This forced the government to "freeze" several infrastructure programs.
The frequent changes in legislation changes affected the political stage which focused more on solving its problems and neglected negotiations with the international organizations.
Automatically this led to bad financing of infrastructure projects.

Do you think that Romania's economic growth is the result of the EU accession scheduled for 2007?
Yes. If I had to express it in percentages I'd say 90%. Because Romania's rating was improved, this lead to the reduction of Romania's economic risks and especially the fact that Romania will enter an international organization that has its own set of private rules.
If Romania's accession date were to change to, let's say, 2020 or like in Turkey's case, the country were scheduled to enter EU in 2013, this would have a devastating effect on the Romanian economic environment.

At the end of October, the Romanian authorities and IMF officials failed to reach common ground over the stand-by agreement. The main issues signaled by the IMF were an unrealistic budget and budget deficit for the next year, macro-economic imbalances, slippage in wages policy and the absence of structural reform.
Do you believe that ending the IMF agreement was necessary?
On this issue I will speak from my own experience. Ten years ago I was involved in the negotiations with the IMF and those were not easy negotiations.
This institution has a set of rules that do not take into consideration the emotional load as to whether these will be accomplished or not.
From my point of view what happened does not represent the dropping of the agreement but the "freezing" of the discussions.
For Romania, at the moment, this may represent an advantage because the IMF applied the same set of measures used ten years ago and these were very restrictive.
At the moment Romania can no longer suffer the same harsh measures as it did ten years ago because things have changed.
Otherwise I support the government's policy that says this is a major chance for Romania to show international organizations that it can manage to exist without these funds.
If the IMF rules were to apply, and I'm referring to the zero budget deficit that was scheduled, we would find ourselves in the situation that Romania could become less interesting for foreign investors.
For example, Romania would be forbidden to access any credits for the development of infrastructure because the budget deficit would grow.
The positive aspect would be that the IMF is worried about Romania's inflation and the possibility of entering other annual inflation curves.
In my opinion Romania is very close to the EU. Capital funds are entering the country, Romania's improved image can be seen and foreign capital is being invested.
And I don't believe that the IMF's rules were necessary at the moment.

Romania has gone through a lot of serious legislative changes lately and I'm referring especially to the Fiscal Code and the Labor Code. What was the impact on foreign and Romanian investors?
The introduction of the flat tax, for small and medium investors represented an advantage.
The main reason was that a salary increase took place and it did not have to be made from employer's pockets.
The state gave up a series of taxes and several times this meant a salary increase.
This also led to the calming of pressure from the unions and from these points of view the flat tax had a series of positive effects.
For the Labor Code I think we do have a problem here. I'm not talking from the unions' point of view but from that of the employers and I believe that the way in which the Labor Code was approached was political.
You cannot impose your own point of view by simply pressuring the unions and unfortunately the main strategy applied was that of the "bigger mouth".
The Ministry of Labor was under a lot of pressures from the unions and the political parties and I don't believe that the problem has been solved.
No matter how the powerful the unions are, in time they will have to comply with international rules. Let's not forget that we have an extraordinary example of the unions in Germany.

How do you see the Romanian economic environment in the future?
If the Romanian economy grows, the economic environment will improve. The number of small companies that could face bankruptcy will decrease, large international companies will appear and they will use the already existing companies as sub- contractors.
Because of this large interest in the Romanian economy, more powerful competition will appear.
For example, the average salary in Sibiu has increased considerably because of investments that brought 4,000 new jobs. And these are the result of the investments made especially by foreign companies.
I do not believe those pessimistic opinions that say EU accession will bring major economic crisis because Romania is powerful enough to be competitive.
And let's take the example of Greece, Portugal or Spain which entered the EU and whose economies did not "die".
We can expect a natural selection process in which some companies will disappear from the economic arena while other will continue their activity.
If the interest of foreign investors continues for a period of at least two or three years Romania could register spectacular economic growth.

What are the factors that determine foreign investors to become interested in Romania?
First of all, most of them see Romania as a market. And we have to admit that Romania is an attractive market. We are talking about an emerging market and of a country that has 22 million inhabitants and quite a large surface area. For example let's think of the large investments that will be made in the next few years in the infrastructure sector.
Another aspect is that Romania is an extraordinary resource for cheap labor.
Europe, USA and Japan are currently scared by the Chinese and Indian offensive.
I'm saying this because, automatically, the cheap labor force determines the traditional large economies to close some of their companies.
For foreign investors Romania represents the opportunity of coming closer to their areas of influence and using the Romanian labor force.
Romania is a safe country. For an investor which wants its business to be safe, institutions like NATO or the EU represent a guarantee.

What did 2005 mean for Siemens?
In 2005 Siemens maintained the same development trend. Two years ago the company had 650 employees in Romania while now it has more than 2,500. This represents an explosive increase for Siemens.
Romania represented a very important development target. First of all I refer to the development of the software sector. The company has 1,200 employees in the Siemens Automotive Timisoara factory and produces extremely complex software components.
Another important software facility is in Brasov where we have 350 employees who are developing hospital software.
We opened the third factory in Sibiu last week and the company began to take over some important IT companies from the Romanian market.
All these, plus our traditional projects (transportations, communications and the medical system) led to the development of Siemens especially in the last two years.
Let's not forget that the company's target for 2013 is one billion euros turnover per year.
And I can say that we are accomplishing the steps for this target.

One of your former statements referred to the fact that, even though Siemens has been present in Romania for one hundred years, the intentions of development came in the past few years. Why did this happen?
It's true that, at the beginning the company reported a boom but after that historical events transformed the company into a simple branch.
After the 1989 Revolution, Siemens resumed its activity but the decisive factor was that three years ago Siemens Romania entered under the authority of Siemens Austria.

I have in front of me your CV. This recommends you as an experienced manager. What have been your biggest challenges since you became leader of Siemens Romania?
When I started working for OMV I had to practically start from zero. In Siemens I began from a certain level. The largest challenge was to build the proper team because as a manager you can have a set of knowledge and information but the main idea is that the people working with you are the most important.
At the end of the day, after you've discussed with them and solved a series of problems, it's not you but them who will go and solve the problems further.
That's why I believe that the secret in business or in a large company is the building of the proper team and how to work with that team, how to keep it close.
I was reading the other day a statement by President Basescu, who said that a man cannot be perfect but a team can.

What were the negative things you have had to face since you have taken this position?
I always tell my colleagues who come from other countries: this is not an easy country to deal with!
This is not a country that has fixed or easy rules. And I sometimes give as example Bulgaria where businesses can easily be compared with Romania.
And I'm saying that because most of the time if you have a business plan in Bulgaria, you have every chance to fulfill that plan.
In Romania it's not that easy. You plan something, work for years and have the surprise of solving all your problems in a single day. So Romania is not a predictable country.
The economic and social environment is not predictable.
And for this point of view it is impossible sometimes to start a business plan.

What is Siemens Romania for the mother company (Siemens Austria)?
Siemens Romania occupies an important place because Romania is the largest country in the region, with the largest population and a great economic potential.
We like to say that Siemens Romania is the "jewel in the crown."
And from this point of view we have a program with Siemens Austria for the development of the Romanian branch.
We do not have the proper abilities at the moment to initiate business plans and that's why we are making competence transfers. But our long term goal is to transform Siemens Romania into an entirely Romanian company from the staff's point of view.

What are your hopes from the new year?
 First of all more rest. And of course professional success. Unfortunately when you try to build a company your leisure time is rather rare and you try to live your moments of peace and relaxation to the maximum.

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It might not quite be a global car but if Renault has it right the French automaker?s new Romanian-produced Logan could be well on its way to becoming at the world?s top ?no frills? car. The car is fast turning into a symbol of modern Romania, with Renault planning it from Central and Eastern Europe through to North Africa, Asia, South America and the Middle East, including Iran. The plan is for completely knocked down versions of the Logan to be assembled in those markets with parts manufactured in Romania.

After launching production in September 2004, Renault hopes to sell what some industry observers have called a ?no brand? car in about 30 nations. The cost of a basic Logan starts at about 6,200 Euro (USD 7,246) in Romania.

As a measure of the car?s early success in the intensely competitive global car market, Romania?s Prime Minister Calin Popescu-Tariceanu recently said that the Logan had done more for Romania?s image than any government-run promotion campaign.

Romania car exports leapt by 276 percent in the first nine months of the this year compared to the same period last year, largely propelled by the growing popularity of the four-door Logan, which follows a long line of ?no frills? cars such as the VW beetle.

Produced at a factory about 60 kilometres from Bucharest at the Pitesti plant, Renault hopes Logan sales to hit one million Logans by 2010. The Logan?s worldwide sales so far total 114,000 and there is a huge backlog in orders,

?The first results have been extremely positive,? said Jean-Michel Sicre, commercial director with Automobile Dacia in Bucharest. Renault took over Dacia, the Romanian state-owned car company, in 1999.

?We did not expect the Romanian car market to be so strong,? Sicre said. Sales of the Logan jumped by a staggering 97.1 percent during the first nine months of the year, turning it into Central and Eastern Europe?s second most sought after car behind brand leader Skoda. The enormous pent up demand for cars, a sense of growing prosperity and this year?s introduction of a flat tax means that total auto sales in Romania have shot up by 60 percent this year compared to 2004.

Romania has one of the lowest car ownership rates in Europe. Unlike established Italian auto markets like Italy, where there is one car to less than two people, in Romania, there are 140 cars per 1,000 inhabitants.

Romanians? seemingly insatiable appetite for cars meant that last month?s Bucharest International Motor Show lead to a 25 percent jump in the number of exhibitors, which included Volvo, Volkswagen, Kia, Porsche, Skoda and Audi.

The leap in car sales has also helped to propel Romania towards an expected 2005 annual growth rate of about 5.5 percent, which is one of CEE?s fastest expansion rates.

Sicre believes that the boom in car sales is also a sign of Romanians? optimism about their future prospects as members of the European Union, possibly from January 2007.

?Tomorrow is going to be better than today,? he said summing up the mood among Romanians. ?They have a clear view of joining the EU.? Moreover, with Romania perched between western Europe on the one side and Russia and the Middle East on the other, the strong performance of Romania?s auto sales combined with its relatively low labour costs have also helped to boost the nation?s attractiveness as a possible new hub for the global car industry.

The average worker at the Dacia factory in Romania earns about 300 Euro a month, which is about a tenth of what a worker could expect in western Europe. In addition, EU membership means that Romania will be able to sell the Logan in western Europe without import duties. More recently, Renault has considered joining other big global carmakers such as Ford and General Motors in the race to take over the run-down Romanian Craiova works of South Korea?s Daewoo in a bid to keep pace with the demand for Logan cars.

The Logan?s prospects have not been confined to the developing world. Despite a shaky start in Germany, the Logan appears to have struck a chord with western Europe?s price conscious and choosy consumers. In June the Logan went on sale in France and soon after in Spain. Next on the company?s plans are Austria, Italy, Belgium, Switzerland and the Netherlands. The Logan sells for about 7.500 Euro in western Europe. Sicre sees in the interest in the utilitarian Logan among some western European car buyers as a sign of a new trend among especially older consumers, which is essentially a backlash against the new era of high-tech electronics and IT wizardry in new cars.

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he buyer of Daewoo Automobile Craiova (car producer) will have to export most of the production in order to gain profits as the Romanian market has a low absorption capacity in this sector, representatives from the auto industry stated.
Nicolas Ianculescu, the general manager of Renault Nissan Romania, said that Ford, General Motors, Renault or other companies will not buy Daewoo Craiova to sell cars in Romania because this segment of the general market reached its limit.
"Nobody buys a factory to produce 30,000 cars yearly; the volume that could be sold on the Romanian market," stated Ianculescu.
Constantin Stroe, the vice-president of Automobile Dacia, confirmed the fact that the future buyer will orient the production towards the external markets.
Stroe stated that the factory would not be profitable if it would produce less than 150,000 cars per year. This volume cannot be taken over by the internal market, he added.
Marius Carp, the general director of the Vehicles Producers and Importers Association (APIA), believes that the Romanian market has an insufficient absorption capacity for such a factory.
"Daewoo is selling 20,000 cars per year in spite of the fact that it does not have a competitive range of vehicles. Even if the internal demand would be of 20-30,000 cars, the investments in equipment would not be justified unless a minimum 200,000 cars a year are produced," stated Carp.
The investments which are to be carried out by the investor could boost the factory's production capacity to a maximum 200,000 units per year.
The negotiations for the recovery of Daewoo Automobile Craiova by the Romanian state will be completed in the first quarter of 2006, according to a release of the Ministry of Economy and Commerce (MEC).
The representatives of MEC claim they demanded the Korean party to endeavor to end negotiations by the end of the week. Daewoo Motors apparently replied they were compelled to defer the continuation of negotiations for January, due to internal issues of the company.
Romanian officials say the negotiation process has reached its final phase as only a few details were still to be settled before the takeover of the 51 percent stake in the Craiova-based factory.
The Office for State Participations and Industry Privatization (OPSPI) negotiated the yield by Daewoo Motors of the 51% stock of the DAR back to the Romanian authorities for the removal of the Korean car manufacturer's debt. The government authorized the OPSPI to hire a local law firm and an international consultant for the resolution of the DAR situation. DM went bankrupt in 2002.
Automobile Craiova can still produce under the Daewoo trade name until January, as General Motors, the owner of the Daewoo brand, prolonged the license that expired in October.
The ministry's representatives said Automobile Craiova was discussing with GM Daewoo Auto & Technology Company the possibility to continue deliveries of spare parts for the automobiles in the production portfolio.
Romanian authorities plan to resell the participation in Automobile Craiova to a strategic investor as soon as the factory returns in the state's possession.

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To provide advanced collaborative design and engineering services to its worldwide customers, electronics manufacturing and supply-chain management services provider Solectron Corp. reported today it has expanded its Timisoara, Romania-based facility to include a design and engineering services center.

Core capabilities in the Timisoara facility, Solectron?s largest plant in Europe, will include electrical and mechanical design, advanced process technology, leading edge test development and failure analysis, the company said.

Creating a competitive design execution center in Europe is a core element of the company?s global design and engineering strategy, according to Mike Cannon, president and CEO of Solectron, who attended the opening of the new design and engineering services center.

?With the addition of the design and engineering services center, Solectron Timisoara is now a full-service manufacturing center in Europe,? said Dave Purvis, executive VP and CTO of Solectron, in a statement.

?We?re seeing a definite increase in customer demand for Solectron?s unique collaborative approach to product design and engineering. The Timisoara Design and Engineering Services Center is another example of how Solectron is helping OEMs to reduce costs, improve quality and increase time-to-market,? he continued.

?The proximity to our customer base, highly competitive cost structure and strong local pool of technical talent all point to Timisoara as an excellent choice and a formidable capability in our future design and engineering services portfolio,? added Purvis.

Solectron also said Timisoara offers high levels of technical talent -- both within the company as well as from Timisoara's Technical University, that the company has a positive relationship with. The university and Solectron said they will continue to develop specific projects and educational programs initiated in close partnership.

Finally, Solectron said the Timisoara facility offers lead-free manufacturing to meet RoHS requirements.

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Veolia Environnement unit Apa Nova said it will invest 50 mln eur in renovating Bucharest's water distribution network, following the serious flooding in Romania earlier this year.

The unit came under fire from the local press and elected representatives for its handling of the flooding this autumn.

Apa Nova's director, Andreas Baude, defended the company's record, saying: 'During the September floods in Bucharest we carried out 2000 operations in 72 hours, the production and distribution were secured and there was no interruption of service, like there was in Prague during the floods of 2002.'

Apa Nova has invested a total of 126 mln eur over the past five years in Romania, including spending 51 mln on the creation of a new water treatment plant in Crivina, according to its South-East Europe regional director, Jean-Patrice Poirier.

Apa Nova won the Bucharest public water contract in 2000, and it is valid for 25 years.

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Albalact, one of the major companies in the Romanian dairy market, expects sales worth more than ¤30 mn in 2007, after the opening of a new plant which is expected to double the current production capacity.

Moreover, Albalact will launch a new range of products under the Zuzu brand early 2006.

Turnover forecast for 2007 is almost double the level reached this year - ¤16 mn.

Albalact will invest up to ¤7 Mn to build a new milk plant, with financing to be secured from SAPARD funds, the company's own sources, banking loans and from a capital raise.

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Real estate investment company Equest Balkan Properties, based in UK, will invest 100 million euros in the acquisition of office and commercial space on Romanian market, ACT Media news agency reports.


Equest Balkan expects 9-10 percent yearly yield for their investment and the first acquisitions target properties are in Bucharest and Iasi (north-east; 406 km from Bucharest).

The company is already operating on the real estate market in Bulgaria, with the latest project in which it was involved being a major shopping complex.

Equest Balkan also focuses on the real estate markets in Albania, Bosnia and Herzegovina, Croatia, Fyrom, Serbia and Montenegro, and Turkey.

The capital of the company raised through an issue of shares in the London Stock Exchange that was oversubscribed.

Foreign institutional investors have stormed the real estate market over the last three or four years, with the amounts set aside for their plans being in the range of hundreds of millions of euros.

Their main problem is the lack of major projects for the investment segment.

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EBRD grants Romanian authorities ¤22.5 mn for modernisation of railway infrastructure. The EBRD loan will cover in a 100% proportion the eligible costs of railway electrification while the Romanian government will allocate ¤4.2 mn for this project.


Representatives of the Finance Ministry, of the Transport Ministry and the EBRD have officially signed the loan agreement at Victoria Palace.

Finance Minister Sebastian Vladescu, Ion Gavrila, Electrification Director within Romanian Railways Company (CFR) represented the Romanian side while Hildegard Gacek represented the EBRD.

This loan will improve the speed of railway transport in Romania by modernising the electricity distribution network and will create benefits for those contracting the services of the Romanian Railways Company, appreciated Hildegard Gacek, EBRD Director for Romania, during the ceremony.

Transport Minister Gheorghe Dobre declared that the project is part of a group of measures that are aimed at rehabilitating, modernising the railway system and at making transport safer.

The money will be used for electrifying railway tracks on the Craiova-Caransebes-Timisoara-Arad sections, while they are placed on the strategic European transport corridor IV.

The modernisation project requires purchase of equipment and installation into four electrification centres, purchase of eight maintenance vehicles and contracting of consultancy services for supervising the works.

The loan will be paid back with money from the state budget, through the Ministry of Transportation, Constructions and Tourism in a 12-year period.

In this time, an interval in the 4-year grace period has also been included.

The project will be implemented by Electrificare CFR, a subsidiary of the national railways company, which was set up in 2004 in order to supervise the maintenance and rehabilitation of the electricity distribution network that ensures energy supply to the railway network.

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Foreign direct investments (FDI) reached ¤5.2 bln last year, over ¤1 bln more than the preliminary data indicated early this year, according to data presented by the National Bank of Romania (BNR).

This spring, BNR announced that FDI amounted in 2004 to approx. ¤4.1 bln, up 160% since the previous year.

Audited central bank data reflected a change in methodology, through which more categories of incoming capital were included in the foreign direct measurement, such as the reinvested profit.

The Romanian Agency for Foreign Investments estimated an FDI volume of EUR 3.2 - 3.8 bln for this year, lower than last year.

According to BNR data in the first nine months of the year the value of foreign direct investments slightly exceeded EUR 2.7 bln, accounting for a 29% decrease compared to the corresponding period of last year.

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Romania?s trade balance will be 6.7 billion euros in 2005, up by 20 percent against last year, according to the estimates of the National Commission of Prognosis, ACT Media news agency reports.

Goods exports will register a growth of 15.7 percent against 2004, worth 21.9 billion euros, while imports will amount to 30.9 billion euros, up by 17 percent against last year.

Over the first seven months of the year, exports registered a growth of 15.2 percent and imports ? 21.8 percent.

Among the unfavourable elements of the evolution could be considered the appreciation of the national currency against the dollar and the euro, which, according to CNP should liead to the massive reduction of exports, as well as international factors.

Romania?s European trade partners registered lower growths against estimates.

The annual growth rate of imports of the 25 countries in the European Union from non-member countries decreased from 14.4 percent in 2004 to 9.2 percent in 2005.

Moreover, the demand on external market for certain products such as chemicals and metallurgical ones has decreased.

July registered the highest growth in exports in the modern history of Romania, 1.9 billion euros respectively ( growing by 7.5 percent against last month).

For exports, the Romania?s most important partners are Italy, Germany, France, UK, Turkey, Hungary, Austria and Spain who, together own 68 percent of the exports.

Among countries partners in import, Italy is the first, with 20 percent, followed by Germany, Turkey, France and Great Britain. Main exported products in 2005 are industrial products ( 35 percent of exports) consumer goods ( 31 percent) capital goods ( 10 percent) fuel and lubricants, transport equipment.

At the same time, Romania imported industrial products, capital goods, fuel and lubricants.

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KBC, the Belgian bank and insurance group, will analyze the possibility of expanding on the Romanian market.
The financial institution is also interested in expanding on other Balkan markets and to perform several acquisitions in Poland and Hungary, according to Reuters.
KBC stated that these acquisitions are part of the market positioning strategy before the consolidation of the bank's European branches.
The bank also showed that it will take the necessary measures before becoming a take over target for other companies.
"All the projects will be realized from the bank's private funds," sources close to the bank stated.
KBC announced its intention of purchasing shares totaling one billion euros in 2006.
Another plan refers to the reorganization of its operations and the creation of five divisions each led by a separate executive director.
KBC was interested in the take over of the Romanian Commercial Bank (BCR) but decided not to continue the race.
The Belgian group stated that it cannot comment on the decision it made because of the confidentiality agreement signed.
Nevertheless, KBC showed that Romania can become one of the most important banking markets in Central and Eastern Europe because of its development potential and the trade.

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The economy lost another 17,000 employees in October, with a total of 40,000 people laid off from July through September. Industry has been hit hardest by layoffs, while the construction and trade sectors witnessed the highest numbers of new personnel this year.

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A study carried out by realtor Colliers International shows that banks continue to be the most active players on the market, furthering their search for the best sites in all areas. The average requirement is 100-150 sqm with easy access, excellent visibility, parking possibilities, high traffic both pedestrian and vehicular, a one-level display only and large frontage.

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The EBRD is lending the Romanian government EUR 145 million to boost infrastructure projects around Constanta. A part of the loan will specifically help repair key road infrastructure sections that were affected by severe floods in the country earlier this year.

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Marshal Turism travel agency, one of the top three players on this market, announced its intention to invest 10 million euros to acquire a plot of land and construct a four-star hotel upon it, located in Sector 1 of the Romanian capital city.

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Foreign investment projects focusing upon the production of automotive components announced this year are close to one billion euros. Foreign automotive component manufacturers continue to regard Romania as an attractive location, as the Romanian Agency for Foreign Investments (ARIS) has registered eight investment projects, whose value exceeds 200 million euros, since November alone.

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Erste Bank has better chances to win the privatization process of the BCR, say analysts.

The new owner of the largest Romanian bank will be announced today.
"Erste is in a better position than Millenium because it is a bigger bank," stated Jiri Stanik, analyst at the Wood and Co brokerage company in Prague, quoted by Reuters. The Austrian bank is experienced in acquiring and restructuring banks in the regions, according to Stanik, who believes the strategic advantage is on Erste's side.
Erste Bank operates several banks in Hungary, the Czech Republic, Slovakia, Croatia and Serbia, while the Portuguese bank Millenium is present on the Polish and Greek markets.
"Erste has experience in the region," said analyst Florin Petria. "But if Millenium fails to takeover BCR, I do not know where it could buy," he added.
The Spanish bank Santander forecasts that Millenium BCP will win the privatization run and will pay 3.8 billion euros for the main share package.
According to Petria, the Millenium investors did not appreciate the bank's intention to take over BCR. Erste's shares increased by 0.2 percent when it made the BCR privatization announced. However, Millenium's quotation decreased by almost eight percent. "If it would buy such a large bank, it should carry out a significant capital increase," said Stanik. 
According to Santander, Millenium could request the investors to contribute with 1.7 billion euros to the final sum to be paid for BCR, if it is chosen as new owner of the bank. "BCR represents a transaction which will transform Millenium and it should not be evaluated from a short term financial view," said the analysts of the Spanish bank.
The Authority for the Recovery of State Assets (AVAS) will announce today the winner of the BCR privatization race, and the government could sign the contract tomorrow.
The Romanian state offered 61.88% of the bank's shares. BCR is the largest Romanian bank, with assets of 7.3 billion euros and 4.5 million clients at the end of June. The bank also has more than 340 branches.
The analysts expect the two competitors in the privatization to boost their offers to the maximum, tented by the first place on a market with a fast development pace. The transaction is estimated at approximately 3 - 3.5 billion euros. According to the government officials, a technical procedure implemented on request from the two investors will automatically erase the losing offer and its amount will never be known.
The two banks that were chosen as finalists were announced on October 26 and after a week the negotiations for the draft of the privatization contract began.
The document was approved by the government and sent to the two banks at the beginning of December.
The main shareholders of the BCR are AVAS, holding 36.88%, the European Bank for Reconstruction and Development (EBRD) and the International Finance Corporation (IFC), holding together 25% plus two shares.
The European Bank for Reconstruction and Development could gain from the sale of its stake in the Romanian Commercial Bank (almost twice more than all the participations owned in Romania). According to analysts, the sums offered by Erste Bank and Banco Commercial Portugues could top 3.7 billion euros, EBRD's stake in that case amounting to approximately 745 million euros, equal to the share of the International Finance Corporation (IFC). The international institutions acquired a package of 25% plus two shares equally split in 2003, with a total value of more than 187 million euros.

The total banking assets in Romania amounted to 38.3 percent of the Gross Domestic Product at the end of 2004, according to a study carried out by Bank Austria Creditanstalt. By comparison, the average in the new European member states represents 65.6 percent of the GDP.

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The completion of negotiations for the recovery of Daewoo Automobile Craiova by the Romanian state was postponed to the beginning of 2006 by the Korean side, Daewoo Motor Co. Ltd, according to a release of the Ministry of Economy and Commerce (MEC).
The representatives of MEC claim they demanded the Korean party to endeavor to end negotiations by the end of the week. Daewoo Motors apparently replied they were compelled to defer the continuation of negotiations for January, due to internal issues of the company.
Romanian officials say the negotiation process has reached its final phase as only a few details were still to be settled before the takeover of the 51 percent stake in the Craiova-based factory.
The Office for State Participations and Industry Privatization (OPSPI) negotiated the yield by Daewoo Motors of the 51% stock of the DAR back to the Romanian authorities for the extinction of the debt of the Korean car manufacturer. The government authorized the OPSPI to hire a local law firm and an international consultant for the resolution of the DAR situation. DM went bankrupt in 2002.
Automobile Craiova can still produce under the Daewoo trade name until January, as General Motors, the owner of the Daewoo brand prolonged the license that expired in October.
The ministry's representatives said Automobile Craiova was discussing with GM Daewoo Auto & Technology Company the possibility of continuing deliveries of spare parts for the automobiles in the production portfolio.
Romanian authorities plan to re-sell the participation in Automobile Craiova to a strategic investor as soon as the factory returns in the state's possession.
General Motors, Ford and Renault Nissan are allegedly some of the investors potentially interested in acquiring the plant.

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There is room in the cooperation between Jordan and Romania for an in-depth exploitation of the investment potential of these the two countries, stated Romanian Minister of Foreign Affairs Mihai Razvan Ungureanu on the occation of his official visit to Jordan last October.
Appearing to decline constantly after the 1989 Romanian Revolution that ousted communism, bilateral economic relations returned to an ascending trend in the last two years but the trade potential is still generous. The volume of trade between Jordan and Romania reached 39.4 million US dollars in 2004 (37.4 million US dollars in Romanian exports and 2 million US dollars in Romanian imports), after all-time record of 46.6 million US dollars in 1993 and 2001's worst performance ever, with only 15 million US dollars.
In 2005 in particular, Romania has made substantial efforts to resume the traditional strong economic relations with the Arab nations, and the visit of the Foreign Affairs Ministry to Jordan was one of the most important steps in this sense.
According to Minister Ungureanu, the Jordainan market is open for the Romanian offer of energy services, pharmaceuticals, construction materials, furniture and textiles.
Jordan, instead, has an excellent investment potential in Romania, especially in the hotel accommodation industry, in the conditions of a local market with great growth and even greater development potential.
Cooperation between Jordan and Romania in the field of energy started in the 1970's with construction by the Romanian oil group, Rompetrol, of a 43 kilometers pipeline in 1975 and the stationing Romanian professionals on the 318 kilometers aerial power line joining Amman and Aqaba between 1979 and 1982, according to data from the Romanian Chamber of Commerce and Industry.
More recently in 1999 the Romanian company Romelectro, in partnership with Jordan's National Electric Power Company (NEPCO), installed 38 kilometers of power lines and erected 124 electric pylons to carry 132 kilovolts of power to Jordan's east Dead Sea coast mainly for the benefit of tourist facilities and hotels in the area.
In October 2005, on the occasion of Ungureanu's visit to Jordan, a contract worth 3.9 million US dollars was signed between electric equipment producer Electroputere Craiova and NEPCO, for the delivery of power transformers by the Romanian company.
Jordan is 35th largest foreign investor in Romania as far as the invested capital is concerned, with a contribution of over 16.5 million US dollars to the social capital of 2899 companies registered by October 2005, according to data of the Romanian Agency for Foreign Investment.
Most of the capital is invested in the wholesale trade sector (45.2%), followed by the industry (30.7%) and retail (16.5%). Other activities of Jordanian investors are professional services with 3.5% of the invested capital, tourism with 1.8%, agriculture with 1.6%, construction with 0.4% and transportation with 0.3%. The largest Jordanian investors on October 31, 2005 were wholesaler J&R Comp with a 1.11 million US dollars investment and food producer United Food Industries with 724,000 US dollars. The incorporation of Jordanian companies in Romania had a peak in 1992 when 824 new entities were registered but then consistantly decreased until 2005 when only 47 new registrations appeared.
Romania is one of the most important economic partners of Jordan in Eastern Europe as the two countries collaborate in various projects in the field of electricity, oil infrastructure and oil refining.
At the moment, Jordan's main imports from Romania are timber, chemicals, plastic products, iron and steel products, vehicles and parts, textiles, tools, machinery, ceramics, paper and furniture.
Romania imports chemicals, pharmaceuticals, plastic products, textiles and consumer goods from Jordan.
The official visit of President Traian Basescu, who is expected to return today from a two-day visit to Jordan in which he was accompanied by representatives of the economic bodies of the government, is expected to further improve cooperation in the sectors of tourism and military industries.

Most of the capital is invested in the wholesale trade sector (45.2%), followed by the industry (30.7%) and retail (16.5%). Other activities of Jordanian investors are professional services with 3.5% of the invested capital, tourism with 1.8%, agriculture with 1.6%, constructions with 0.4% and transportation with 0.3%.

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Although Nestle's acquisition of Delta Ice Cream comes at a relatively high price, it makes strategic sense. Through small, bolt-on acquisitions such as this, Nestle is successfully trading up to a more premium portfolio and securing a foothold in growth markets such as Romania. The buy will also bolster Nestle's position in the global ice cream market and see it gain ground on archrival Unilever.

Nestle is set to buy a 96% share in Delta Ice Cream from the Greek dairy products group Delta Holdings. The move will see the Swiss food giant gain the Nirvana, Boss, Aloma and Magnum brands in Greece, where all are household names, and will further the company's presence in Europe's premium ice cream market.

In addition to being the leading ice cream business in Greece, Delta holds a leading market position in Romania, Hungary, Bulgaria, Macedonia, Serbia and Montenegro, and in 2004 generated sales of E122 million. Last year the company held 30% of the Greek market and 26% of the Romanian market, according to Datamonitor figures.

Given Delta's strong position in these markets it is clear why Nestle has targeted the company for expansion. The ice cream markets in the Balkans and in Greece are set to grow more rapidly than in many of Nestle's Western European markets. In Romania in particular, where Delta holds almost a third of the market, the value of the ice cream market is set to increase at a CAGR of 6.7% over the next five years, according to Datamonitor figures, while the value of the Hungarian market will increase at a CAGR of 2.5%. This compares to the more modest growth in the UK and in French markets, which are forecast for a CAGR of 0.9% and 1.7% respectively.

In recent years Nestle has made a number of small, bolt-on acquisitions of premium labels in an effort to challenge Unilever's position as worldwide ice cream market leader. While Unilever held a leading 20% share of the global market at the end of last year, Nestle's latest acquisition will add to the Dreyer's Grand Ice Cream and Movenpick buys of the early 2000s, and will likely now see Nestle challenging Unilever for the top spot.

At twice sales, the E240 million price tag for Delta is high, but Nestle has wisely chosen a niche acquisition that will simultaneously ensure success at a local level and bolster its global position. Looking ahead, however, Unilever will be reluctant to relinquish its position and may strike back with acquisitions of its own in other high-growth markets.

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Flutur considers the reform of land ownership to be one of the 2005 greatest achievements of the agriculture system.

Agriculture Minister Gheorghe Flutur spoke to Bucharest Daily News about the challenges farmers will face after EU accession. He said in an exclusive interview that Romania will fight for subsistence farms to be acknowledged as a particularity of the country after 2007. However, he admitted the only chance for success in the field will be the association of producers in bigger farms.
Flutur agreed that bringing the Romanian village to the level of highly developed Western farms will take as much as 25 years, but emphasized the ministry has already started information campaigns for farmers and even hired a peasant as his advisor.
Because people in the countryside have little access to the media and are rather skeptical about change, the ministry's strategy is to inform people step by step about the measures necessary for adjusting to the EU market, Flutur said.

What achievements in Romania's agriculture in 2005 have made you most proud?

First of all, the reform of land ownership. The package Property-Justice, for which the government took responsibility in June, is the first stage of restitution of agricultural and forest property. We can say that, from the point of view of the legislation, we finalized land restitution this year. Now applying the law and the effective returns are next, which we will finalize by the EU accession deadline.
Secondly, I really want to underline that this year we set the legal bases for the Farmer project. I believe this program will be the most important activity of 2006, just as land ownership was the main theme of 2005.
There are other good things which have been done at the Agriculture Ministry and I have to say that support for mountain areas is one of them. This year we issued a government decision to support mountain areas, consisting of subsidizing milking devices, electric mowing machines and other agricultural equipment. This was a law expected in the mountain counties, which have certain handicaps and which need to be helped in order to develop.

Agriculture is one of the weak points the EU report drew attention to. What exact measures will you take for this sector not to represent a danger for Romania's accession to the European Union?

I have to say that agriculture is not a sector that can trigger the safeguard clause. There is no reason for Romania to fail to join the EU because of agriculture. But there are things we need to accelerate to be ready by January 1, 2007. We have to take action in two directions: the Agency for Payments and Intervention in Agriculture and the sanitary-veterinary sector. But we need to say that we have the political will and the budgetary resources to solve the problems next year. For example, we will continue hiring people for the Agency for Payments from January 2006 and in March 2006 we will finalize the registration in the Farms' Register. Moreover, we will identify parcels and add information to our data base during 2006. These are actions with an exact calendar, they are real steps on the accession path.
Concerning the sanitary-veterinary sector, we mainly have to apply measures for disease control on animals and in meat and milk factories where food safety standards are not respected. This sector has a series of problems that have been neglected for years and have now reached a dead end.
But we are determined to promote the necessary legislation, most of it was already promoted this year, and to enforce the implementation of European food safety standards.
We worked a lot to make the owners of meat and milk processing plants aware that high technology has to be used, as we have slowly to improve standards. We are determined to respect the timetable for accession.

One of the problems specified in the EU report was the delay of the chip implanting program for horses and passports for cows. What caused these delays?

The main cause for this delay is the bad situation we inherited from the Social Democrats. There is a trial which has lingered for more than a year. Every time I asked the justice representatives to accelerate this process I have done the same thing constantly.
Nevertheless, we will finalize introducing chips for small animals-pigs, sheep and goats.

What kind of reform is necessary in agriculture to change the Romanian village profoundly, even at a cultural level? How can we create a link between the primitive Romanian village and the highly developed farms in the West?

If we talk about bringing the Romanian village to the level of that in the West, we cannot make this possible overnight. It is a process that will take about 25 years. But we can take the right path, and the first measure towards achieving this was the agricultural life annuity law. Thus, for a life annuity from 50 to 100 euros for a hectare the elderly can give their lands to young people, so that in this way, scattered property will be merged and will be more efficiently tilled.
This fusion of land is a basic condition and in no European country has agriculture become efficient before family farms became predominant. These family farms will have the financial force to buy agricultural equipment and machines, the presence of which in Romania is several times lower than in the West. So everything begins with property.

Most of the people living in rural areas know very little about how their lives will be affected by Romania's accession to the EU. Moreover, they are often victims of euromyths, such as "there will be no markets in Romania after accession" or "the EU will not let us cultivate vegetables for our own consumption." What causes this misinformation?

It is harder to get information to the country side because people have little access to the mass media. But a certain interest in finding out new things is also necessary. Poverty enhances a certain skepticism, a certain lack of interest for society's problems. When you have very little or nothing, you are not very interested in what is happening, because you feel the changes cannot affect you very much. The peasant has to know one thing: nothing will change suddenly. The changes, especially those on the subsistence farms, will be slow. What will change will be the relationship with the market. Everything going to the organized market will gradually be settled. But people will continue slaughtering the pig and cultivating their own piece of land.  It is important to offer alternatives to the younger generation so they can have a better life than their parents.

What measures will you take for the changes brought by accession to be known in the rural areas, also?

The information will come with accession. It is simpler to explain to people what will happen to them in the near future than what will happen in a year or two. It is important to know that the information about accession comes gradually, in accordance with necessities. So far we made public what was necessary. I will give you an example: the farms' register. Starting on October 1, agricultural agents knocked on people's doors and registered their farms, explaining to them how things stand. Communication comes step by step and is connected with what people are interested in.

You recently said there is a need for a functional business environment in the rural areas. How will the Agriculture Ministry help farmers face a competitive environment?

There is only one answer: forming groups of producers. When farmers realize they have problems with the competition, they will have to associate. There is a SAPARD measure for stimulating producers' groups and we will also allot funds from the budget for this. I am convinced they will succeed and they should be aware that they have all our support.

In September you said subsistence farms should not be neglected, but helped. How exactly will you help this category of rural citizens?

Support for subsistence farms must primarily be focused on helping the farm move on from this subsistence stage. This is why we launched the Farmer Program. But I admit there will be a large number of farms which will remain subsistence based. It is this that we will fight for in the EU's decision-making bodies; to have this particularity acknowledged for Romania, a country with a dominant rural area still made up of subsistence farms. After we obtain this acknowledgement, the necessary money will come from the European Union. Meanwhile, the ministry continues to give support to subsistence farms and I remind you of the (fuel) tickets we distributed this spring and fall. The aid will increase after Romania joins the EU.

How do you think agriculture will be described in the EU's spring report?

I am sure it will be described based on the results of its activity. The November report acknowledged progress and I expect the May 2006 report to do the same thing. We are on the right track and, even if we have arrears for the second half of 2006, I am sure agriculture will get a good grade.

You have announced the launch of the "green offensive" in 2006, a program that would increase the total of forested areas by one percent (approximately 7,000 square kilometers). What does this project consist of?

The national forest fund has decreased since the (1989) Revolution, and natural regeneration processes did not manage to grow back the trees that were cut down. A true green offensive is needed, which means a massive campaign to plant trees. We must make it clear that forest owners, regardless of whether it's the state, through the National Forest Administration, individual owners or churches, have the obligation to plant trees. Planting trees is not optional and this is why, besides the increase in funds allocated for planting trees, we also ordered sanctions; fines for anybody who does not do it. The state will plant trees on the properties of those who do not plant new tress within two years since they cut down old trees and will send the owners the invoice for the work by mail. We need the forest and we must know how to protect it.

Your name was suggested as a possible next prime minister supported by the president in case of early elections. How do you comment on these statements?

I am a team person and a long-term man. As a team person, I believe in Prime Minister Calin Popescu Tariceanu's team, each has his or her role and they must act according to it. As a long-term man, I have come to the Ministry of Agriculture with certain projects and I want to carry them through, I want to leave something behind me, because positions do not last forever, but what you do stays. I would like at least three things to stay in Romanian agriculture after my term: property restitution, the Farmer Program and the life annuity. If these things remain after me, I will be happy.

What do you want for Romania in 2006?

For the country, I would like it to receive a green light to join the European Union on January 1, 2007.

What about for you personally? If one wish could come true for Christmas, what would it be?

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Romania did not take full advantage of its unique opportunities and capabilities in the year about to end, believes the President of Raiffeisen Bank Romania, Steven van Groningen. At a time when Romanians should focus on trying to make sure the EU has no reason to demand a delay to accession, local decision-makers are wasting precious time on party-related issues, he says.
As for local companies, van Groningen thinks they need to decide whether they will continue to look at European accession as a threat or turn it into an opportunity.
With the potential to become a regional center, Romania should set out to elaborate a clear draft of its aspirations for the longer term, urges van Groningen.
Having occupied top management positions in several subsidiaries of Western banks in Hungary, Russia and Romania, Steven van Groningen has become an expert in the Central European banking market. Living in Bucharest for quite a few years now, he speaks Romanian almost perfectly and refers to Romanians as "we".

Mr. van Groningen, this year has been good for the Romanian economy. What do you think were the most important events that made it happen?

Yes, that is not so easy, I've been thinking about it, maybe the best thing is that there were no single very important events. Of course, everybody mentions things like the privatization of Petrom and, of course, it is a most significant event. But in order to have sound economic development we don't need events, we need a stable environment, with a very consistent policy and rules. We don't necessarily need events.

How about the introduction of the flat tax?

Of course it had a significant impact on the economy, but not everybody agrees on whether it was a positive or a negative one. Personally I can only be positive about it, I pay less tax, but if it causes problems in meeting the budget then the price we'll have to pay for it might be too high. It certainly is a very important event and many people will be positive about it but whether in the long run it will still be perceived as positive remains to be seen.

How about the biggest failures of this year? Can you think of any?

I cannot think of any really big failure, I would say maybe the lack of important decisions is the biggest failure of the year. I think that there is a general feeling that this year we did not see a lot of important decisions being made. Politicians seemed to be very busy with party issues and not so much with country-related issues and that has maybe led to some delays in the other processes.

What were the decisions you expected but didn't see coming?

Well, at times I wonder if we have a clear vision about what our role should be in the EU. I'm clearly closer to the financial sector, which I know best, and I can only conclude that we do not seem to have an overall view about the role Romania should have. From the moment we are part of the EU it will be much easier for banks from the EU to sell banking products in Romania. They don't need to have subsidiaries and bank operations in Romania all they need is to establish sales channels. So, on the one hand, that is clearly a risk because, then, why would we need banks in Romania if all it takes is sales channels, on the other hand, if you look to South-Eastern Europe, Romania is clearly the only country with the critical mass, with the size required to make a difference. Romania has the opportunity to become a sort of regional center. And there does not seem to be any sense of urgency in Romania to try to define what our position should be in 2010. And in a way, that concerns me a bit. Because I think that is the job of the politicians.

Next year could make even more pressure on the economy because of the preparation for EU entry. What do you think the government should do to secure it?

I think there are two sides to the story. That of Romania and that of the EU. In the EU, in the newspapers there are more and more voices that are concerned about expansion. And especially about the timing of expansion. I think what we should be doing as Romanians is to make sure we do not give the EU any possibility, any reason to demand a delay. I think we should take very seriously what has been said in the country report to make sure we are as much as possible, 100% if possible, in compliance with the "acquis communautaire" and not to open anything for re-negotiations, which would be opening the doors to delays until who knows when.

This year several modifications to the Labor Code have been made. Do you think they were appropriate?

Since I'm on the side of businesses, my job is to complain about them, and my answer is, of course, no. I'm joking, of course, but, well, I think what we need at the moment, is an environment of rapid growth, batter capacity for adaptation to the environment. We need a high mobility of the labor force. What we see is that it gets more and more difficult. The mobility of the labor force has systematically decreased through the new labor laws. It gets more expensive to hire people; it gets more expensive to fire people. We are in a period when we would like a better mobility of the labor force, we could use it. But here, again, there are two angles. That of the business environment and the government's. The business environment has not always been able to send one clear message in terms of what they need. There are I don't know how many different groups or pressure groups, lobby groups, or "patronate" (employers' unions in Romanian, e.n.) and I don't think the business environment has been able to come up with a very consistent message about what needs to be done. If businesses cannot agree among themselves, it is kind of difficult for the government to find a solution we could be happy with.

This brings me to my next question. Recently the president of one of these employers' organizations qualified the attitude of the Romanian business environment in its relationship with the government as "passive'.

I think it's a complaint you'll have in other countries as well. The business environment complains about politicians but is, usually, not too eager to get involved in the political scene. So it is not the exclusive problem of Romania. But for me what would be important is to have more dialogue between the players: politicians, regulators and businesspeople. That is easier said than done. What I have seen is that a lot of this local dialogue is usually focused on minor things, on trying to change certain provisions or certain laws. What I think is missing is a longer-term view. Where would we like to see Romania in a number of years? Let's look at a country like Ireland for instance. Ireland, a few years ago made the decision to invest a lot in education. And that has clearly brought the country from a nice green agricultural-oriented island to a high-tech environment. These are the things we should do in Romania as well. And if we do not want to invest in certain fields then we should accept that Romania will not be able to compete in these fields. But this must be a conscious decision and not the result of a lack of interest. That is why I think there should be more dialogue, not about the problems of yesterday and today, but about where do we want to be in a number of years, about what our role is in Europe. The provider of cheap labor and cheap raw material? Do we want to sell timber? I don't think so.

Another complaint about the local economic environment is the lack of viable business plans. Do you think it is true?

Well, you can have the best plans in the world but, you also need money. Now, I agree that there is enough money around but when we talk about money we also have to see what kind of money. I think sometimes people misunderstand the role of a commercial bank. A commercial bank attracts deposits from its customers at an interest rate and then places it with companies at another interest rate. It makes money out of the difference between the two interest rates. We place the money with an acceptable risk. Once you start a new business, for instance, that means no credit history, no collateral, the risk is too high for a bank, so for this we need risk capital, venture capital. What we need now is maybe more venture capital. When someone puts in their own money then, a bank will be more willing to finance the whole or a part of the business plan. In itself there is plenty of money out there but what we may miss is the risk capital, the venture capital. The loss for a person who invests their money can be the whole amount they put in but it can also go up to, I don't know, ten times the amount or much more. And that is why one should distinguish between business plan financing opportunities. There is this capital where the involvement of a bank can be high, the sky is the limit, and bank financing where the bank will not take charge of more than a few percent of the capital.

How about the problem of the low absorption capacity of European funds?

It is important that you meet certain criteria. But then again, many countries have not been able to make the most out of the European funds so there's nothing new. If we want to make the most out of the available funds, we need to make clear rules and we have to play by those rules. The people who made the money available need to make sure it is used for the purpose it was meant for. That involves certain rules.

What do you think Romania should do to adapt to the European market?

I think there are two ways to look at this: you can see it as an opportunity, or you can see it as a threat. So you need to decide which side you are on. If you see it as an opportunity, it means the chance to sell your products and to improve your business. You have to understand what your advantages are and how you can benefit from them. If you see it as a threat, because maybe your products don't respect European standards then, well, you're very, very late but you still have to understand what your options are. But I certainly don't recommend sitting and waiting. The market will decide what your fate will be. I think that Romanian companies that are expanding into the region, into Europe, in South-Eastern Europe have an advantage. So it can be a positive thing, it can be a negative thing, it can be an opportunity, it can be a threat.

One last question. If you would have one wish for Christmas what would it be?

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The interests charged for credits will not decrease in 2006 ? said former BRD president Bogdan Baltazar, adding that the depositors are currently faced with effective negative interests of about (- 4%) against the inflation rate, ACT Media news agency reports.

The interests for deposits stand at 4 ? 4.5%, whereas inflation this year is at least 8.5%.

?In my opinion, the 2005 year-on-year inflation will be of approximately 9% or even 9.2%,? said former BRD president and analyst Bogdan Baltazar.

Baltazar asserted that 2005 was profitable for bank institutions, ?the more so as BCR?s privatisation will be practically completed this year.?

He noted as another success the expansion of the consumer credit, despite harassment from the side of the central bank, so that the banks saw substantial profits, which are important for the vigour of the system.

The number of savings instruments and especially of instruments with subsequent credit disbursements increased in 2005, as a prerequisite for the client?s fidelisation and civilisation.

?The client must save in order to get a credit for housing and then, under the force of circumstances, he becomes loyal to the institution and also extends the duration of deposits,? explained Baltazar.

A partner in the financial consultancy company Baltazar, Bloom & Parvulescu, Bogdan Baltazar stated that in Romania the maturity of deposits is still very reduced.

?The average maturity of a deposit is three months, which is very little, and under these unfavourable circumstances the banks must finance credits with maturities of 25 years.?

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The two international financial institutions, Erste Bank and Millennium BCP, which are in the race for the acquisition of the majority participation in Romanian Commercial Bank (BCR), have to submit tomorrow the final price offers, whose threshold is estimated to exceed ¤3 bln.


?The amount to be paid for BCR privatisation is significantly over the threshold of EUR 3 bln., according to Adrian Iorgulescu, Minister of Culture, this Ministry being on the list of the entities that will benefit from the proceeds resulted from the bank?s privatisation.

The winner of the tender, which will be announced tomorrow, considering that the privatisation contract is signed on Wednesday, will open an escrow account abroad, with a bank in London, selected by the Romanian State, according to sources close to the privatisation process.

?Until the final settlement of the price for the participation sold, the winner transfers the amount into an escrow account, opened abroad. The privatisation commission will decide what bank will be, most likely by considering the commissions charged?, the cited source explained.

The opening of an account where a few EUR bln. will be deposited with a bank from Romania would bring a significant surplus of high currency in the internal market, with impact on the volatility of the exchange rate of the national currency, as Mugur Isarescu, BNR Governor, has recently affirmed.

The payment of the shares is settled within 90 days since the contract signing, a time frame during which the Romanian side must fulfil several requirements, among which having the Government Ordinance related to the privatisation contract passed by the Parliament.

BCR is the largest bank in Romania, with assets worth EUR 9 bln.

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Banca Romana pentru Dezvoltare - Groupe Societe Generale (BRD-GSG) and the Romanian Agency for Foreign Investment signed a protocol, based on which, they will select Romanian and foreign investors for joint-venture partnerships as well as for green field and brown field projects.

The protocol aims to contribute to an increase in the presence of the two institutions in the business environments of Romania, France and the rest of Europe, as well as to Romania's economic development ahead of its accession to the European Union.

France is currently ranked third in terms of share capital invested in Romania, whereas BRD_GSG is the second biggest bank in Romania, with assets in excess of 5.2 billion euros.

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Romanian authorities should consult foreign investors before adopting certain laws regarding them, executive director of the Romanian-American Chamber of Commerce, Amcham, Anca Harasim said in news conference organized by the Romanian Agency for Foreign Investments. ''This is one of Amcham's priority fields in 2006 and we'll request the authorities a better implementation of impact surveys, before laws' implementation,'' he said. Ancham representative said that less pleasant for foreign investors is the taxation and the bureaucracy. Progress has been made this year in this respect,'' said Harasim. According to AmCham's official, the labour legislation needs certain changes for a bigger flexibility of the labour market. ''A better collaboration should exist between the state's institutions dealing with investors' problems,'' stressed Harasim. According to Harasim, Romania should adopt the law on bankruptcy, the reform of the judiciary, the establishment of medium and long-term fiscal strategies, curbing social contributions and their introduction into the fiscal code. However, Harasim deems that, generally, investors are content with the Romanian business climate, the main element they appreciate being ''the labour force's quality and fidelity.''

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The new fiscal code will not come into force on January 1, 2006, the Romanian PM Calin Popescu-Tariceanu announced on Friday in Brussels. "We cannot approve it on December 29 so as to come into force on January 1. First, the Minister of Finance must present it," said Tariceanu.

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The deal on the EU budget which was sealed at the European Council meeting in Brussels, allows the continuation of the enlargement process and offers a safe financial perspective for the EU newcomers and for those who, like Romania, are about to join the bloc, said UK Ambassador to Romania Quinton Quayle in a press statement carried on Saturday. Quinton Quayle deems the deal is very good for Romania, considering Romania will be earmarked approximately 11 billion euros in the 2007-2009 period.

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Superclick announced today that it has completed a significant installation in partnership with Locatel of its private-label branded LIHSA (Locatel Internet High Speed Access) high speed Internet solution in Bucharest (Romania) at the Crown Plaza, an Intercontinental hotel. Through its OEM partnership with Superclick, Inc., Locatel intends to aggressively roll out the LIHSA product throughout Europe and the entrance into the Romanian market. ``This is the first step in our renewed efforts to add market share,'' commented Guillaume Deguerry, Export Director for Locatel. Both wired and WIFI solutions were installed at the property.

Mr. Franz Rattenstetter, manager of the hotel stated, ``We chose LHISA for the great references given by other hotels as well as the competitive prices and financing offered by Locatel. The local representative and the 24/7 helpdesk also helped us reach our decision. The installation was completed in time within the promised deadline. We have now been running LHISA for a couple of months and have already noticed the positive addition of this new revenue stream. Our guests are very happy of the quality of the service and its ease of use.''

Mr. Larry Calaghan, for Intercontinental in London added, ``LOCATEL, thanks to its coverage and the Lihsa platform it supplied us with, enabled us to install efficient and reliable Internet services and reach the highest level of our guest's satisfaction.''

Mr. Deguerry commented further, ``The hotel sector in Europe is seeing major changes and high speed Internet service is catching on rapidly. We are aggressively pursuing our marketing campaign leveraging our North American relationships through Superclick as well as Locatel's LIHSA brand.''

According to European-based research firm EHLITE, Europe retains by far the greatest hotel capacity of the six worldwide tourism regions, as defined by the WTO, with about 6.2 million rooms (an estimated 38% of the total).

About Locatel

Locatel Europe belongs to Platina Ltd (a private equity fund), specialized in Business Services for B to B.

European Leader, its sector, Locatel France SAS, subsidiary of Locatel Europe's Group, has specialized for more than 40 years in developing and integrating multimedia technologies for the Hospitality and Healthcare industries. Revenues in 2004 were 26 million Euros. The group, with 228 employees, has 11 offices in France,a subsidiary in Italy and 27 distributors over EMEA (Europe Middle East and Africa) and serves over 500 000 guest rooms.

About Superclick, Inc.

Superclick, Inc. (OTC BB:SPCK.OB - News), through its wholly-owned, Montreal-based subsidiary Superclick Networks, Inc., develops, manufactures, markets, and supports the Superclick Internet Management System (SIMS)(tm) in worldwide hospitality, multi-tenant units (MTU), and university markets. Superclick provides hotels, MTU residences, and universities with cost-effective Internet access utilizing high speed DSL, CAT5 wiring, wireless, and dial-up modem technologies. Superclick's proprietary technology converts dial-up analog Internet calls to digital access, improves connection speeds, unclogs local trunks, consolidates Internet traffic, supports flexible billing, and provides targeted advertising to end-users. Current clients include MTU residences and Candlewood Suites(r), Crowne Plaza(r), Four Points by Sheraton(r), InterContinental Hotels Group PLC, Hilton(r), Holiday Inn(r), Holiday Inn Express(r), Hampton Inn(r), Marriott(r), Novotel(r), Radisson(r), Sheraton(r), Westin(r), and Wyndham(r) hotels in Canada, the Caribbean, and the United States.

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Transactions with industrial spaces reached 63,000 square metres this year, the highest level seen in the past 15 years, according to a real estate market survey conducted by realtor DTZ Echinox.

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The Pro Confort Group has announced that it will invest EUR 30 million establishing a 70,000-sqm residential compound. The new compound will be in north Bucharest, in the Pipera area. ?Confort Residence will comprise 235 villas and two apartment buildings with 60 apartments in total. Construction work will be completed during the summer of 2006,? said Ionut Negoita, general manager of the Pro Confort Group.

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Ploiesti-based distribution company Aquila and consumer goods producer Unilever South Central Europe (USCE) last week opened a distribution center in Ploiesti following an investment of EUR 3.5 million.

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The Cluj-based company Electrogrup, specialising in electrical installations and the construction of telecommunications networks, intends to complete an investment of more than 2.6 million euros in a new production facility in Cluj Napoca. The company already owns a similar space in another part of the city, and the two facilities will employ 150 people as of 2006.

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In the first eleven months of the year, BCR Leasing logged contracts worth more than 220 million euros, 70% higher than the value of contracts sealed last year.

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The Ministry of Communications and Information Technology will be supplied electronic signatures by E-Lock, a leading vendor of digital signature products, through its Romanian business partner Trans Sped srl Romania. E-Lock DeskSeal - the signature solution that will be used by the MCIT ? is a very easy to use signing and encryption software, which enables signing/encryption of any document or file format. It is a wizard-based utility and is extremely user friendly.

?With widespread use of electronic processes and applications comes the issue of security, protecting data, and identifying individuals electronically. Electronic signatures help address this and as a step in this direction, The IT&C Ministry will be piloting an electronic desktop signature solution. This will help in digitally signing all kinds of documents and will replace the need for handwritten signatures. It will also help identify users electronically (through the use of digital certificates) and protect data where required (through encryption) making it available only to intended recipients.? declared the Minister of Communications and Information Technology, Mr. Zsolt Nagy.

The Romanian Ministry of Communications and Information Technology is the specialized body of central public administration in the IT&C sector, established with the objective of implementing the Romanian Government policy in this sector. The mission of the Ministry is to create solid premises that will ensure the transition to the Information Society in Romania.

The transition to the Information Society is a strategic objective for the Romanian Government for 2004 - 2008. The Romanian Government is strongly promoting and recognizing the widespread use of the Internet and electronic applications in various areas right from e-government and electronic commerce to education and basic everyday use.

In December Trans Sped won the auction for implementing the electronic signature system for The Ministry of Communications and Information Technology. The development of electronic communication demands a resizing of protection systems for public institutions and companies. Trans Sped will offer in Romania such a solution by using a platform designed by E-lock. This technology will be implemented for The Ministry of Communications and Information Technology by replacing signatures with electronic signatures on the institution?s documents. Using digital certificates, the new system will also allow the identification of all the users, which have permission to access the electronic documents from this institution.

E-lock is one of the top international companies to supply encrypting solutions, offering products for the Romanian market, distributed by Trans Sped. The application that will be implemented for The Ministry of Communications and Information Technology is called E-lock DeskSeal; it represents an e-signature software very easy to use by ministry employees for signing and encrypting documents in any electronic format.?, said Mrs. Viky Manaila, Managing Director of Trans Sped srl.

?We have seen tremendous interest in our electronic signature solutions by Romanian companies and we have concrete deployments in industries such as banking, hospitality and telecom in Romania?, said Dr Nimish Shah, VP Business Development for E-Lock. ?Our solutions are used by over 15 Government organizations worldwide and we are proud that the Romanian IT&C Ministry has chosen to pilot our solution.?

About E-Lock
Frontier Technologies Corporation (E-Lock) is a privately owned corporation headquartered in McLean, VA (US). It entered the PKI and Security market in 1997 by launching the E-Lock range of digital signature products. The digital signature solutions developed by E-Lock have been used by former US President Bill Clinton to digitally sign the US E-Sign Act that legalizes digital signatures, and by Bulgarian President Petar Stoyanov to electronically sign the Bulgarian Electronic Document and Signature Act. E-Lock?s customer base spans countries such as the US, UK, Greece, Spain, Portugal, Lithuania, Czech Republic, Slovakia, Slovenia, Ukraine, Romania and others.

For more information, please visit http://www.elock.com

About Trans Sped srl
Trans Sped is a privately owned company headquartered in Bucharest, Romania. Trans Sped is a Certification Authority according to Romanian Law on electronic signature and to Directive 1999/93/EC of the European Parliament on a community framework for electronic signatures, which are issuing qualified digital certificates.

For more information, please visit http://www.transsped.ro

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Positive outlook for Romanian-Polish exchanges in 2005

The last 10 months of 2005 meant a dynamic development of commercial exchanges between Poland and Romania, although the rate of exports to Poland dropped significantly, according to statistics presented Friday by the Economic Department of the Polish Embassy.
The rate of imports from Poland doubled, reaching 66 percent. This growth was determined by the import of a new series of products from Poland, especially minerals, and mostly coal.
Other products that raised the level of imports were chemical industry products, electric devices, and equipment.
However, there is a disproportion of the commercial exchanges between the two countries caused by the low rate of Romanian exports to Poland which is close to 30 percent, but much lower than last year. In 2004, the exports level to Poland was 83 percent.
The products exported to Poland in 2005 were mostly metals, food, chemical products, equipment, vehicles and textiles.
Out of the total volume of exports, the industrial products reached a level of 94 percent. However, statistics showed that the food exports to Poland diminished by half, from 10 percent last year to five this year.
Bucharest is still the number one destination for Polish investors, followed by Constanta and Cluj-Napoca.
The Polish Ambassador, Jacek Paliszewski, said that the good news about commercial relations is that there are economic structures to help develop the exchanges, such as the Romanian-Polish Business Chamber.
He explained that the next step in developing these relations is the creating of Polish banks in Romania to ensure transactions.
He also tackled the cultural relations between the two states, saying that a Romanian Institute of Culture in Poland should be open soon.

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Tehnofrig Cluj SA wants half the stake held by vice-premier and businessman George Copos in the Hilton Hotel, Ziarul Financiar writes.
"One of the most interesting deals of this year, the takeover of the Hilton Hotel in Bucharest by vice-premier George Copos, is now being challenged in court. Tehnofrig Cluj is claiming half the stake acquired by Ana Hotels, saying that this was what the two parties agreed upon when they became part of this business.
Case file 5197, with Tehnofrig SA as plaintiff and Ana Hotels and Gheorghe Copos as defendants was registered by the Bucharest Court of Law's Department VI (commercial court) on October 13. The first court date was November 11, and the second December 2, when the defendants petitioned the court for an extension of the trial until they hired a lawyer for the defense, market sources say. The French at Vivendi Universal this year sold 52.54% of the shares in the company that controls the five-star Athenee Palace Hotel in Bucharest to the Ana group controlled by George Copos, in a transaction estimated at 21 million dollars (some 18 million euros).
The sale of Vivendi Universal's stake in the Hilton business to the Romanian party was assisted by French law firm Gide Loyrette Nouel, with lawyers from its Paris and Bucharest offices.
Market sources say Copos's group and Tehnofrig had reached an agreement prior to the signing of the deal with the French, which should have seen Tehnofrig and Ana Hotels buy the Hilton stake together, through an investment vehicle.
Copos does not want to share the stake with Tehnofrig Cluj now. However for its part, Tehnofrig claims entry into the Hilton business.
The two parties failed to agree on how they were supposed to come up with the money to buy this stake.
The Cluj-based company therefore filed a suit against those that control the Hilton business at the moment, hiring the law firm Calin Zamfirescu & Asociati, headed by Calin Zamfirescu, rated as one of the top commercial litigators on the Romanian market. Zamfirescu is also chairman of the Union of Lawyers of Romania."

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The Romanian state did not collect any money from the privatization of Alro Slatina (alumina producer), stated Bogdan Olteanu, the minister for relations with Parliament, on Saturday. The minister alleged that the lack of transparency in the privatization, such as secrecy of contracts, led the state to lose important sums.
The minister considers that the privatization of the Romanian Commercial Bank (BCR), "whose contract will be made public after the signing," is a positive example, contrary to the privatizations of Petrom and RAFO.
Olteanu said that Alro Slatina was one of the most profitable companies in Romania privatized without obtaining profits. The alumina producer company is now owned by Marco International.
The company became Alro's major shareholder in 2002 when it bought a ten percent share package from the former Privatization Authority. Marco Int. was already the owner of 40% of Alro's nominal capital, acquired by stock exchange transactions.
The National Liberal Party (PNL) minister recalled that a series of questions referring to illegalities in RAFO's privatization were raised during the election campaign last year.
"We are curious if we were wrong because we want to apologize to the public if we were," stated Olteanu.
In October, 2005, Romania's Court of Accounts identified significant irregularities in the privatization of RAFO Onesti.
RAFO Onesti has debts to the state budget totaling 164 million euros. The company asked ANAF to approve the payment of 15-20% of this debt, with the difference to be paid in 72 monthly installments.
Last Saturday, the National Agency for Fiscal Administration (ANAF) requested the opinion of the Ministry of Public Finance (MFP) on RAFO's debts, according to ANAF's chief, Sebastian Bodu.
Bodu added that the MFP had announced it will request the Government's opinion on this issue. 

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The Chairman of the Bulgarian Parliamentary commission on foreign policy Solomon Passy turned the first sod of the tourism complex "Saint Vlas" in the Romanian Black Sea resort Mamaia.

This is the biggest Bulgarian investment in Romania and the first investment in the tourism sector, Bulgaria's Embassy in Bucharest explained.

The investment has been made by the Bulgarian entrepreneurs Dinko and Yordan Dinevi from Burgas in cooperation with the Romanian Vinid Construction. The two Bulgarian entrepreneurs are known for their investments in Bulgaria's Saint Vlas resort.

"Saint Vlas" complex in Mamaia will boast 70 flats that will be for sale in a year.

Situated just north of Constanta, Mamaia lies between the sea and Lake Siutghiol. This Romanian Sea Coast "Pearl" owes its fame to its beaches - large and with unbelievable fine sand. The biggest tourist resort in Romania has been modernized in the last years to provide excellent holidays for the tourists.

It is located at 50km away from the Bulgarian border and at an hour and a half from the Bulgaria Black Sea capital Varna.

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KBC, the Belgian bank and insurance group, will analyze the possibility of expanding on the Romanian market.
The financial institution is also interested in expanding on other Balkan markets and to perform several acquisitions in Poland and Hungary, according to Reuters.
KBC stated that these acquisitions are part of the market positioning strategy before the consolidation of the bank's European branches.
The bank also showed that it will take the necessary measures before becoming a take over target for other companies.
"All the projects will be realized from the bank's private funds," sources close to the bank stated.
KBC announced its intention of purchasing shares totaling one billion euros in 2006.
Another plan refers to the reorganization of its operations and the creation of five divisions each led by a separate executive director.
KBC was interested in the take over of the Romanian Commercial Bank (BCR) but decided not to continue the race.
The Belgian group stated that it cannot comment on the decision it made because of the confidentiality agreement signed.
Nevertheless, KBC showed that Romania can become one of the most important banking markets in Central and Eastern Europe because of its development potential and the trade.

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Already enjoying large success at home, two of Israel's leading dairies are undertaking plans to make an international splash.

Bat Yam-based Gad Dairies said it was in talks with two unnamed US dairy companies to build a production facility in New Jersey, for an estimated investment of $4 million.

Gad - Israel's fourth-largest dairy - specializes in labneh, bulgarit, fresh mozzarella, ricotta, among 70 other products.

The US branch of the dairy initially would produce some 20 types of cheeses destined primarily for the country's Jewish and Israeli markets, before extending both the product range and customer base. The facility would produce roughly 300,000 units monthly.

Gad made the decision following the success of trial exports over the past six months, according to Gad CEO Ezra Cohen.

Separately, Tnuva said the construction of a planned dairy factory in Romania - at an investment of ¤44m. - was set to begin in August. The facility was expected to begin production in early 2007.

Within seven years, sales to Romania's population of 22 million should reach ¤65m., with the initial facility and its 1,200 cows serving as a basis for the development of local milk sources, Tnuva said. Expected rises in the country's standard of living were seen likely boosting demand for dairy products and creating interest for a wider range of products.

The European Bank for Reconstruction and Development (EBRD) has agreed to fund 35 percent of the project.

Nonetheless, some within the cooperative remain opposed to the move.

"It's a risky adventure," said Ziv Matalon, a dairy farmer for Tnuva. "In a period of change, it would have been better to invest in a more solid project."

The cooperative has been gripped by internal conflict since management began efforts to issue its stock to the public in 1999. Tnuva - Israel's largest dairy producer - was founded to market the produce of the country's kibbutzim and moshavim.

Opponents of the IPO - primarily within the moshavim - have been intensifying calls for the the removal of the cooperative's CEO, kibbutznik Arik Raichman, and included the planned Romanian expansion as an example of his mismanagement. Matalon stressed that the basic complaint on the part of the moshavim is the way the decision to establish the Romanian factory was taken.

Tnuva management, led by Raichman, made the decision without seeking approval from neither the 61-person council that represents the dairy farmers who own the company, nor from the 610 member units who are represented directly through Tnuva's general assembly, Matalon charged.

"Such a big move - both financially and in principal, since this is Tnuva's first expansion beyond Israel - should have received the owners' approval," Matalon said.

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On 14 December the Senate of the General Assembly of Spain passed unanimously the law for ratification of the EU accession treaty of Bulgaria and Romania, the Bulgarian Ministry of Foreign Affairs announced.
Through this vote Spain fulfilled its political engagements towards Bulgaria as a strategic ally. Bulgaria closed the highest number of chapters during the Spanish presidency and received effective political support from Spain in a number of critical situations.

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Wintershall Erdgas Handelshaus Zug AG (WIEE, Germany), a joint venture of Gazprom and Wintershal, and Romanian Distrigaz Sud S.A. intend to supply over 9 billion cubic meters of gas to Romania until 2012. The agreement was signed on December 12, 2005 in Budapest.

Pursuant to the contract, within the next seven years it will be annually supplied approx. 1.3 bcm of gas from January 1, 2006. This is the first long-term export contract with this country since the Romanian power sector was privatized.

Wintershall and Gazprom have been active in Romania for many years

Since 1993 a large part of natural gas imports to Romania have been secured via the WIEE joint venture, in which the strategic partners Wintershall and Gazprom each have a 50% share. In that time more than 40 billion cubic meters of natural gas have been supplied - a major contribution towards supply security in Romania.

In addition to the trading activities of WIEE direct investments are also made in the urban supply networks in Southern Romania via WIROM Gas S.A. (51% WIEE, 49% Distrigaz Sud).

Wintershall AG, based in Kassel, Germany, is a wholly-owned subsidiary of BASF AG in Ludwigshafen. It is also its largest European subsidiary. Wintershall has been active in the exploration and production of crude oil and natural gas for 75 years. Today, the company is Germany's largest crude oil and natural gas producer.

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Romania's Ministry of Economy and Trade (MEC) approved the transfer of the majority stake in Distrigaz Sud from the French company Gaz de France to Romania Gas Holding B.V., announced MEC, ACT Media news agency reports.

The new owner of the Distrigaz Sud gas distribution company, Romania Gas Holding B.V., is an affiliated company of Gaz de France in which the European Bank for Reconstruction and Development (EBRD) and the International Finance Corporation, the investment arm of the World Bank, are holding 10-percent stakes.

The transfer was approved under the terms of a privatisation contract for Distrigaz Sud signed on May 31, 2005.

EBRD and IFC bought over 10-percent stakes in the holding company, which offers them 5-percent stakes in Distrigaz Sud.

Gaz de France has voiced intention to fulfil the contract obligations mentioned in the privatisation contract, as a result of its commitment to control, directly or indirectly, all its affiliated companies that might own shares in Distrigaz Sud. The 49% share package held by MEC remains unchanged.

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Sotiris Emmanouil, natural person from Greece is the only competitor for the CNM Petromin Constanta privatisation, announced the Authority for Privatisation and Administration of State Shares, ACT Media news agency reports.

Currently, the negotiating commission analyses the possibility that the Greek investor be admitted to negotiations for the privatisation of the Constanta company.

The consortium consisting of SC Algoritm Consult SRL Bucuresti and Asociatia Salariatilor CNM Petromin SA Constanta was taken out the shortlist.

The above-mentioned consortium could not meet the criterion of pre-qualification, namely "a minimum 5 year experience in the domain of water transport ( CAEN 61)," decided the negotiating commission.

Petromin has a social capital of 56.219 RON and deals mainly with maritime and shore transport.

AVAS has 70.012 percent of the company?s assets, SIF Transilvania 23.83 percent, and 6.158 percent are owned by other shareholders.

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Bucharest mayor Adriean Videanu met in London with the representatives of several international banks and discussed the opportunities to open at Bucharest an investment bank which would finance the city hall's projects, Bursa reports.

London-based bank DEPFA already got involved in the project by closing a partnership with the Bucharest City Hall.

Other banks that are interested in the project include JP Morgan, CitiBank and ABN Amro.

The country has a limited debt level on the international markets, which this year was of ¤3.5 bln which affects the central and local administration when trying to raise funds.

Therefore, Vdeanu said that alternative financing resources needed to be explored for Bucharest's investments and that an investment bank could be an extraordinary chance in this respect.

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Low interests the Romanian banks offer for Romanian leu/lei currency deposits and the rise in the interests for foreign currency ones, in addition to the increase in the foreign-currency exchange rate over the past few months have made hard-currency savings more attractive. Foreign currency deposits of individuals grew by 23.2 percent, over October 2004 - October 2005, while the lei savings were by 17.2 percent higher. The term deposits stood at 28.7 billion lei in end October 2005, namely the equivalent of 7.8 billion euros, and the foreign deposits totaled 4.8 billion euros at that time, the Romanian Central Bank says. Whereas the annual average interest for the USD deposits stood at 2.6 percent in October, the lei interests were staying at historically low levels then, as a result of the Central Bank's policy to allow a surplus of Romanian currency in the market, the newspaper says. Nevertheless, as expectations related to low inflation are not really great, the market expects the Central Bank to adopt a firmer policy on the currency surplus and the interests, and if the situation stays the same, banks will be left without money for Romanian currency credits.

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President Traian Basescu claims to have received signals regarding the withdrawal of European funding for the Magistrates? High Council and asked the CSM members to find ways to collaborate with the government and with the Ministry of Justice. Basescu stated on Wednesday, in CSM plenary, his concern about the signals received in Brussels regarding EU accession as there are still problems as regards anti-corruption fight and the duration of lawcases. On the other hand, the head of state said he had signals regarding the withdrawal of European funding for CSM ; he mentioned his future discussion with European Commissioners in Brussels to present CSM?s efforts to regain its credibility. « I require you make all necessary efforts to make CSM credible », Traian Basescu stated in a one-hour speech in the CSM plenary. It is the fourth time that Traian Basescu has used his presidential prerogatives to chair the Council meetings. The Minister of Justice was not present at the president?s speech, coming three quarters of an hour later. Monica Macovei explained her delay by metioning her previous meetings at the Government and the Committee for Integration. According to article 132 in the Constitution « Romania?s president chairs the meetings of the Magistrates? High Council when he attends the meetings ». Thus, the head of state can take part whenever he considers it necessary to any meeting of the kind.

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Premier Calin Popescu-Tariceanu said on Wednesday that Romania could not support the proposal made by the British presidency for the budget of the European Union. "We were expecting something else as regards the British proposal for the EU budget. We were expecting that the proposal should be based on the fundamental principle the EU was built on, namely the reduction of the gaps among countries by granting some funds to the less developed states by the rich countries. The British proposal covers too little of this principle," said the Prime Minister. The head of government thinks that for Romania and Bulgaria the sums granted through the EU budget are important as the investments to be made in various fields such as infrastructure, policy of social cohesion, economic development will bring "tenfold dividends." Premier Tariceanu made it clear that the Romanian side was waiting for the new budget proposal of the EU British presidency, which will be discussed on December 15 and 16 during the winter European Council in Brussels, and voiced hope that it would be an improved budget proposal.

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The main budgetary revenues of the first 11 months amount to 73.8 billion RON, according to the data on the Ministry of Public Finance site. At the same time, the revenues for the state budget for the first six days of December 2005 amount to 1.508 billion RON, against 1.338 billion RON in 2004, up by 12.7 percent.

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President Traian Basescu promulgated on Wednesday the State Budget Law for 2006. The head of state signed a Decree as regards the promulgation of the State Budget Law for the next year, following the Constitutional Court's reply in which it rejects the objection of non-constitutionality formulated by a group of parliamentarians from the Social Democratic Party (PSD) and the Greater Romania Party (PRM) against this normative act. On Wednesday, as well, President Traian Basescu signed a promulgation decree of the State Social Insurance Budget Law for next year.

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State incentives permitted by the legislation in force will be granted on the basis of priorities which will be established within the next week. Priorities will be established relying on a strategy to be elaborated by a special commission headed by the Deputy Prime Minister Gheorghe Pogea. The decision of the creation of the commission was made in yesterday's government session. The commission will include representatives of the Ministry of European Integration, of the Ministry of Public Finance and of the Competition Council. 
Prime Minister Calin Popescu Tariceanu said that some of the activity fields considered priorities were agriculture and the development of rural areas, research and development and the small and medium enterprises (SMEs).
Romania is preparing to align to the regulations of the European Union and to use state aids as instruments for the stimulation of various fields of activity, said Tariceanu. "We do not want state incentives to be granted on subjective criteria but on the principle of priority, added the head of the government.
Romanian authorities also intend to establish by the end of March 2006 an action plan for the state aid strategy.
Competition is one of the most sensitive issues in view of the European accession of Romania. Last week the European enlargement commissioner Olli Rehn warned central authorities about anti-competition clauses in Romanian regulations in the ruling of minimum tobacco price, fiscal facilities to certain companies and the pharmacy law.

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Romanian-Turkish commercial exchanges will increase in 2005 by about 25 percent as against the same period one year ago, up to approximately $4 billion, sources with Turkish Embassy's foreign trade center told Rompres. The volume of bilateral trade amounted at the end of October 2005 to $3.4 billion, namely 8 times higher than the one registered in 1989. Romanian exports until the end of October stood at $1.8 billion, a value which exceeded the volume registered at the end of last year. The commercial balance was of $221 million in favour of Romania, with Turkey being the third commercial partner of Romania with 8 percent of the total of export. At present, in Romania there are over 8,800 companies running on Turkish capital, with an overall value of capital worth $470 million (12ve place in terms of invested capital). The main fields the Turkish companies invested in Romania are: the banking sector, food industry, textile industry, electronic industry, constructions, home appliances, steel&iron sector.

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The mining company Rosia Montana Gold Corporation (RMGC) estimates to get profit four years after the first gold ingot was produced, most probably starting with 2013, the Vicepresident and financial manager Gabriel Resources, stockholder with RMGC Richard Young reported. The representatives of the company will invest almost 800 million dollars for construction works of the gold exploitation in Rosia Montana and they expect to obtain net profit of almost 1.2 billion dollars.Initially, the investment plan in the project was aimed at total investments of 600 million dollars, out of which 437 million dollars for the construction stage and 123 million dollars for the operational stage. Environmental investments will amount to 250 million dollars. The profit will be larger than the one initially calculated in 2003, of almost 869 million dollars, as the price of gold grew to over 500 dollars /ounce, against 315 dollars as initially estimated. « If we calculate at the present value of gold, we could get to a higher rate of return on gold ounce, that could be at about 150 dollars/.ounce » Young mentioned.

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The National Commission for Control of Nuclear Activities (CNCAN) over December 12-13, 2005 hosts a working meeting on sending back to the Russian Federation the waste nuclear fuel coming from Russia, which was used at the research reactor VVR-S at Horia Hulubei Institute of Nuclear Physics anbd Engineering (IFIN) at Magurele (near Bucharest), informs a release issued by CNCAN on Monday. Attending the talks are representatives of the US Department of Energy, of SOSNY Company from the Russian Federation and of the Magurele-based Institute of Nuclear Physics and Engineering. During the two-day working meeting they will deal with subjects referring to the creation of the integrated concept of burnt nuclear fuel transport, procedures of inspecting burnt nuclear fuel, technical changes that are necessary at Horia Hulubei IFIN to make transport possible, technical requirements for loading burnt nuclear fuel in containers, staff certifications, the authorization of making changes and the authorisation of transport.

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Net profits obtained by commercial banks in the first three quarters of the year reached over 470 million euros, a level corresponding to that of the entire year 2004, results from data released by the Romanian National Bank (BNR).
Over 60 percent of the profit registered in the Romanian banking system in January to September periods was obtained by the Romanian Commercial Bank (BCR) and BRD Societe Generale, the largest financial groups in the country.
After the first nine months, BCR reported a profit of 180 million euros while BRD obtained 124 million euros.
Credit granted by commercial banks to the population progressed in this period with 24 percent, in real terms, as financing of individuals grew by 54 percent.
Financial resources attracted as deposits attained ten billion euros from the population, by 1.36 billion euros more than the level at the beginning of the year.
The assets of the financial institutions in the local banking system reached 13 billion euros, by 3.2 billion euros more than at the end of 2004.
BCR has targeted a market share of 25 to 30 percent through the launch of a new mutual fund. The bank's executive vice president, Dan Bunea, said BCR's strategy involved an extensive development on all the segments of the financial market. Doru Puiu Tiberiu, president of SAI BCR Asset Management (member of the BCR group) said the mutual funds sector could double its assets in the next two years. Romania could become a regional center in the Balkans, an evolution that would be reflected in the development of the capital market and of the financial sector in general, he explained.
At the moment, the mutual funds market attained the level of 80 million euros for a number of investors slightly superior to 69,000.

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The real estate company Equest Balkan Properties could invest 206 million euros in commercial, retail and industrial projects in the Balkans with a focus on Romania and Bulgaria. The funds were obtained through a bonds issue which was oversubscribed. The realtor announced that it has a few opportunities in accordance with the company's investment strategy. Two funds managed by the company have already signed exclusive contracts for 14 real estate projects and for an important project in the retail sector.
Equest Balkan Properties Limited targets commercial investments with high efficiency rates and with a potential to appreciate the capital.
Besides retail, office spaces and industrial facilities, the companies could also invest in hotels and parking lots, which also provide high efficiency rates. The output of real estate investments in Romania is well beyond the European average but investors should consider developing large projects to maintain the same results, said Alexandru Nitescu, Projects and Investments Department coordinator for real estate agency Regatta.
According to the real estate agency, the residential sector has recorded the highest profit margins in Romania, followed by the retail development sector and the office buildings sector.
But investors have preferred to maintain holdings in land so far, rather than develop large scale projects. Low activity has been recorded by the commercial centers sector due to high land prices.
For the next few years, real estate agencies' representatives consider investors will be ever more drawn to the residential sector, which now faces an acute lack of quality projects, especially in the medium and medium plus segment.
Other countries targeted by the Equest fund are Albania, Bosnia, Croatia, Macedonia, Serbia and Turkey.

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Petrom has transferred 51 of its gas stations into the Full Agency management system.
This system allows a private manager to head a gas station while its assets remain the property of Petrom.
By September this year Petrom had received more than 2,500 requests from people interested in taking over the management of these gas stations.
In October Petrom inaugurated its first fuel station under the new brand name of PetromV. The oil group controlled by Austrian OMV is using the new brand for all newly constructed stations through which it plans to impose a new concept and provide additional services besides those normally offered by a gas station. Consequently, in each PetromV station there will be a Viva store, also available in OMV's own network, restaurants and children's playgrounds.

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Prime Minister Calin Popescu Tariceanu stated on Tuesday evening that the price for natural gas is to increase by 17-18% from January, 1, 2006.
Tariceanu said that the issue was discussed at recent meetings of the Alliance and the coalition and the PNL leaders have decided to increase the price of natural gas because this must be aligned to European market prices.
The PM said that parallel measures will be taken so people with low incomes will benefit from state aid.
"We will have to align to European market prices by 2006. Most probably, special state aid measures will be given people who have incomes under 85 euros per family member," stated Tariceanu.
Tariceanu made clear that the government will pay more than 83 million euros for these subsidies.
The Prime Minister stated during a public press conference that the government will allocate approximately 83 million euros as state aid for people whose monthly incomes per family member vary between 30 euros and 87 euros.
The assistance will be paid on a sliding scale, with 52 euros being granted for households with incomes per family member of 30 euros, falling to 11 euros subsidy to those with incomes of 87 euros per family member.
Subsidies will also be granted for installation of individual heating systems in apartments, ranging from 276 to 414 euros.
The largest Romanian natural gas distributor, Distrigaz Nord, announced this week that it could report 17.5 million euros losses at the end of the current year because the prices of the natural gas provided to consumers increased less than the acquisition prices, according to the company's deputy general director, Achim Saul.
Saul said that this could create a danger for all natural gas distribution companies which could face problems in acquiring gas from the international market.
Another risk comes from the low investments made in the safe functioning of the distribution network.

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The cancellation of state companies' debts to the budget is to be analyzed separately for each case so that the compatibility of the state aid it represents with the EU directives can be established, said the president of the Competition Council Mihai Berinde, yesterday. It is clear that any derogation from the obligation to pay taxes is to be identified as state aid some of which may be compatible with the European legislations and some of which may not be, commented Berinde.
He added that state companies with debts will need to present a re-organization plan if they want to be granted state aid.
Discussions on the cancellation of the debts by state companies are impractical and a possible favorable decision in this sense would cause the state budget a double loss, said the state secretary of the Ministry of Labor, Social Security and Family Mihai Seitan. The Minister argued that state companies' debts involved not only income tax but also their contribution to the state pension fund.
According to the Labor ministry representative, who is also president of the National Pension and Social Insurance House, the authorities involved in the privatization of state companies have already prepared a report recommending the cancellation of all state budget debts for these companies, claiming that after privatization they will become profitable and will pay taxes again. The state secretary said that if they present such arguments he will remind them that the loss to the state budget would be double, as besides the fact that the state companies' contributions to the budget would not be collected, the state budget would still have to provide the necessary funds for the pension fund, Seitan explained.

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Hungary's financial market regulator PSZÁF has on Wednesday green-lighted the acquisition of Romanian insurance company Ceccar Romas by OTP Bank's fully-owned subsidiary, Garancia Insurance Ltd.

OTP Garancia purchased on 23 November a 95.81% stake in Ceccar Romas for EUR 1.92 million.

In a preceding move, the insurance company's 10 October general meeting decided to increase the registered capital by EUR 4.30 million, which has been undertaken jointly by OTP Garancia Insurance Ltd. and OTP Bank Romania. The capital increase was aimed at securing the adequate capital, prescribed by Romanian regulations in 2006, for carrying out non-life and life insurance activities.

Ceccar Romas, set up in 1998, currently pursues non-life insurance activity. The company's insurance fee revenue - mainly due to an increase in the proportion of car third party insurance - rose to above EUR 1.75 million in 2004 from around EUR 1.07 million in 2003.

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Russia's Mechel has raised its stake in Romanian steel firm Mechel Targoviste SA to 83.66 percent from 81.5 percent, a Mechel spokesman said on Wednesday.

The spokesman said Mechel bought $5.9 million worth of Targoviste's additionally issued shares as part of its investment agreement with the Romanian government.

Mechel is a mid-size Russian steel company with a strong position in the raw materials business.

Weak steel prices squeezed Mechel's profitability in the first half of the year, but its vertical integration, which enables it to supply coking coal and iron ore concentrate to its smelters, has helped it to soften the blow.

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The second largest piping manufacturer in the world, the Russian TMK Group, which took over Resita Steel Plant (CSR) last year, made over 22 million euros investments in the Resita-based company, Caras-Severin county (south-west, 486 km from Bucharest), ACT Media news agency reports.

In the first stage, the investments were appraised by the plant and by the State Assets Resolution Authority (AVAS).

The value of this investment was of approximately $8,000 million.

However, in order to address the serious environmental issues the plant faces, in real terms, and also in order to build high performance installations, the value increased at $22 million.

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Assembly Devices Co. of Brasov, center of Romania, will make by 2007 investment of 9.8 million euros. The money will be spent for new automated production lines and the upgrading of the existing ones, for the Automotive Division, in particular. According to the Ziarul Financiar newspaper, investments are part of a new strategy of economic restructuring and re-launch, devised by Transylvania Financial Investment Company. ''In the past five years, one could notice a continual diminution in the demand of assembly devices in the domestic market, because of the slippage in the Romanian economy, triggering a drop in orders for the Romanian industry of trucks, tractors and off road cars,'' says a manager of the company. According to him, the company steered to export, with 52.3 percent of the production of the first three quarters of this year going to foreign markets. According to company records, screws and bolts for the auto and electrical industry are best sold abroad Set up in 1920, nationalized in 1948 and fully transferred to private hands in 1997, the Assembly Devices Co. mainly produces screws and rivets for the auto industry and the railway infrastructure, says the web page of the company.

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Bouygues Romania predicts it will post at the end of this year a 25-million-euro turnover worth, up by 12 percent as against one year ago, daily Ziarul financiar reports on Monday. The main projects carried out this year are the construction of Novotel hotel as well as the works for renovation-consolidation carried out at the Justice Palace in Bucharest. Bucharest-based Novotel hotel has a capacity of 277 rooms, and under the project for the renovation of the Justice Palace, Bouygues Romania has demolished and reconstructed about 34,000 sq.m. of reinforced concrete floor, and carried out a range of works for the cleaning of the building's wooden elements, reads the paper. For 2006, the management of Bouygues Romania estimates its turnover will increase and might reach 30 million euros. According to the company's web page, the project carried out by Bouygues in Romania are located in the country's capital: World Trade Center with Sofitel hotel, residential complex called the French village, as well as Bucharest Financial Plaza, whose main building is an 18-storey office building.

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HVB Leasing Romania and UniCredit Leasing, the leasing units of the German group HVB and of the Italian UniCredito respectively, having total contracts worth around 300 million euros this year, are likely to combine their activities in 2006, as part of the merger policy announced by the two groups this year, Ziarul Financiar daily reads . UniCredit Leasing particularly specialises in the industrial equipment segment, while HVB Leasing specialises in real estate and car leasing. UniCredit Leasing owns about 30 percent of the industrial equipment market, and cars account for the biggest share of the total volume of leasing contracts. The retail segment (car dealers) counts for the largest proportion out of total volume of contracts signed by HVB Leasing. The company projects financing contracts worth around 130-135 million euros, while UniCredit Leasing officials forecast a volume of 160-165 million euros. UniCredit Leasing is one of the first leasing firms to have emerged on the domestic market in 1994, while HVB Leasing Romania started operation in 2002, as part of the German financial group. The total value of the contracts signed on the domestic market in the first nine months of the year is put at 1.6 billion euros. According to certain estimates, it could exceed two billion euros for the entire year.

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Romanian banks have started increasing the interest paid on deposits opened with them, and if the rise will go on the people keeping their savings in bank deposits might stand to win, daily Gandul quotes analysts as saying. Analysts with the KTD Invest investment consultancy company argue that the increase in the interest rates is still small, but, if continued, the interest rates on bank deposits in lei might became positive in real terms again. The big banks, with a significant market share, have upped their interest rates on one-year deposits to 7-7.5 percent, at the highest, and if the rise continues by one percentage point, they will be satisfactory for the current circumstances, the paper reports. The Central Bank has decided to keep the reference interest rate for December at the same level as in November, which is almost the same as the most generous banks pay out for one-year deposits. At the opposite end, there are the banks working with juridical persons, paying out interest of 2-3 percent.

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While the stock exchange and land transactions were the most profitable investments in 2005, financial profitability of the bank deposits kept dropping down. inflation's reduction, but especially a change in the monetary policy conducted by the central bank, due to the liberalization of the capital account, have led to a drastic decrease of the financial profitability offered by bank deposits, so the investors who traded on the Stock Exchange or those who bought SIFs stock proved to be inspired. SIF Moldova ranks first in the profitability list, with an increase of 175.47 percent, but also SIF Banat-Crisana, that almost tripled the value of its stock, reaching at 155.26 percent. As for investment funds profitability they accounted for values of 33-55 percent in 2005, said a borker who also thinks that, in 2006, funds investing in bonds - "most risk free" - will have "a profitability slightly beyond the predicted inflation rate". As well, year 2005 brought a spectacular increase in land's prices, especially in the Capital's ring zone. As such, in Otopeni zone, for instance, the price doubled, from 20 euros per square meter to 40 euros per sq m. Whereas the prices for apartments in old built blocks showed modest increases in the last year a significant one happened for dwellings in Primaverii Bucharest district, where the price per square meter jumped in a single year from 1,500 to 2,200 euros.

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Romanian Prime Minister Calin Popescu-Tariceanu announced on Tuesday after meeting the leadership of the Labour Ministry that the expenditure on social protection will amount to 8.1 percent of GDP next year. "The budgets assigned to social protection are on the rise and they prove that our concern is not merely political rhetoric, but that we have implemented measures which lead to the increase of the costs for social assistance to more than 8 percent of GDP. This is an important rise compared to 2005 and 2004," the Prime Minister stressed. He also announced that starting from January 2006, the Government will cut the employers' contribution to the unemployment welfare budget to 2.5 percent down from 3 percent. According to Tariceanu, another move that will foster the creation of new jobs is the reduction of the social security contribution by 2 percent next year. Both measures are meant to cut illegal labour, he explained. The Government will not condone illegal labour and it had required the labour inspectors to step up controls for detecting the employers who do not observe the legislation, the Prime Minister said.

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The economic growth of the past years reflected in the companies' turnover, more and more of these exceeding one billion euros as result of their business. In 2004, five companies posted one billion euros in turnover: Petrom, Mittal Steel Galati, Electrica Bucuresti, Rompetrol and Metro Cash & Carry. Daily Cotidianul reports that in 2005 Electrica did not report the same figures, but Dacia car manufacturer and Romtelecom telecommunications operator are on the rise. "These companies have regional vocation and the state must grant them support for expansion, just as it happens in Greece and Hungary, for they have reached the critical mass which exceeds the Romanian market," says a representative of the Businessman Association in Romania. These companies form another league, borrowing money from the capital market or from international markets, and more visible and very active on the market of acquisitions and partnerships, the representative believes.

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Dasimpex Group, a company with entire Romanian capital has become the biggest retailer on Romania's mobile phone market while it estimates a turnover of $24 mln in 2005, versus $15 mln in 2004, ACT Media news agency reports.

The company, set up in 1998, opened the first store in Piatra Neamt, and currently is an Orange partner.

Afterwards, Lexor company (Connex partner) and Dasino&IT (Zapp partner) joined Dasimpex Group.

Dasimpex has a central service centre in Unirea Shopping Center-Bucharest and a national network of 9 centres.

''In the context in which this year Dasimpex covers 6% of Romania's GSM market, in 2006 we want to come to a leading position,'' said the group's president Sorin Stoica.

"In terms of business concept, we intend to move from the dealership type of business to the retail one and the consolidation of our brands.

This plan is based on the takeover in 2006 of some competitive store chains,'' added Stoica.

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Romania is likely to receive more than EUR 220 million from the World Bank through three loans by next April, to improve citizens? access to digital information and reform the judicial and revenue administration systems. The first EUR 60 million loan, for the Knowledge-Based Economy project, was signed last week and will be approved by the Cabinet this week.

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Flamingo International IT&C group, which announced it would take over the Flanco chain of electronics and home appliance stores, has revised its profit target for this year, forecasting a 30% profit slump from 2004. The company's representatives blame the floods and NBR's lending norms, which strongly eroded their hire purchase sales. The operation to be completed in March 2006.

The overall value of the transaction is around EUR 35-40 million. One third of the price will be paid in cash, while the remainder will be covered by a share issue. When the transaction is complete, Flanco will own around 30 percent of the new company.

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Romania?s Savings Bank (CEC) plans to invest up to EUR 17 million next year in upgrading its IT infrastructure and developing its card activities, Business Review has learned from Vasile Ifrim, the bank?s vice-president.

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The European Drinks food group will invest up to 100 million euros over the next two years to boost the production capacity of their brewery in Draganesti, Bihor County. The company announced it has doubled the production capacity to 2 million hectolitres a year, with the factory's capacity set to reach 3.5 million hectolitres by the end of 2006.

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If the 100 million euros figure is confirmed, the recent acquisition of the largest independent French oil distributor by Romanian group Rompetrol would be the fourth largest acquisition made by an Eastern European company for a Western company in the last five years, according to Business Magazine.
First place in Western takeovers by Eastern European companies goes to the takeover earlier this year by Lukoil of the British company Nelson Resources Ltd. for 1.7 billion euros. Second place is the acquisition of the American company Sobel Holdings by the Croatian drug producer Pliva for 224 million euros followed by the takeover of the German network of gas stations of British Petroleum by the Polish company PKN.
Other important transactions of the same type were that of the Polish producer of telecommunication and electric equipment, Elektrim, who bought two divisions of the Dutch company Eastbridge in 2001 and the takeover by Hungarian bus constructor Nabi who became the owner of British Optare Group in 2000.
After the Dyneff acquisition, Rompetrol is estimated to register a turnover of five billion euros and become the largest Romanian company, surpassing its direct competitor Petrom. Rompetrol representatives forecast an increase of earnings before interest tax depreciation and amortization (EBITDA) by 20 to 25 percent and of the net profit by 10 to 12 percent. In the same period the group's assets will gain approximately 25 percent.
Dyneff sold 3.2 million cubic meters of oil products last year, the equivalent of 66 percent of the Romanian market's total volume, and estimates a turnover of 2.4 billion dollars for this year and an operational profit of 20 million dollars. The company holds a 3.5 percent market share in France, the largest among independent companies. The highest shareholders are Total, Exxon, Shell and BP Amoco totaling 54%, followed by supermarkets - 36 percent, independent operators - 8% and others.
Dyneff has 226 gas stations and the takeover boosted the outlets' number owned by Rompetrol by 70 percent, to 550.
"The key to the business is the Petromidia refinery," said Rompetrol president Dinu Patriciu, pointing out that the company will not sell the company's products in France but import them from Italy and avoid high transport costs. Representatives of the local oil group estimate that Rompetrol will sell on the French and Spanish market double what they sell in Romania.

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The Austrian K+K hotel chain has recently taken over the Elisabeta hotel in Bucharest under a EUR 5 million deal, Ziarul Financiar daily reveals on Tuesday, December 13..

Former owner of the hotel, Romanian-Italian joint venture Multitrade Group (MTG) started construction works last year, and indoor finishing works are currently being finalised. The unit will be operational starting next January.

The Elisabeta Hotel will have 11 floors and 66 rooms - 58 double, seven junior and a presidential suite, two conference halls with a 25-50 person capacity, a spa and a bistro.

Paul Marasoiu, chairman of hospitality consulting and management company Peacock Hotels , a central location such as the Elisabeta hotel may ensure and annual average occupancy rate of 69-72 per cent.

"The structure is fully adequate, in functional terms, to the standards for a minimum three-star, or even four-star hotel," Marasoiu pointed out.

K+K Hotels is a private hotel chain established in 1961 by Austrians Josef and Helmuth Koller, and operates nine hotels, all in Europe. K+K is present in Paris, London, Munich, Vienna, Prague and Budapest. The Group has 400 employees and in 2004 it reported a EUR 40 M turnover.

This is the first Austrian hotel chain to enter the Romanian market, after Austrian companies made substantial investments, over the past few years, in several sectors in Romania such as the oil industry, wood, construction materials, mass media, foodstuff industry, banks and insurance.

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Real estate investment funds are open to individual investors, offering them a possibility to buy real estate securities carrying an interest rate of at least 20 percent per annum starting 2006, ACT Media news agency reports.

Specialists said that Romania's real estate market has proved the most attractive and most profitable such market in Central and Eastern Europe over the past three years.

Studies conducted by the World Bank on the real estate segment in developing countries, Romania included, indicate that the built areas of big cities will triple in the following 30 years.

On this background, big investment funds and real estate developers have started using the opportunities offered by Romania.

The most active players in real estate investment in Romania are Austrian CA Immo and Europolis, plus non-institutional investors.

New Century Holdings, the administrator of one of the biggest investment funds in Romania, Broadhurst, has recently unveiled plans to enter the Romanian market as both an investor and a developer.

Yet, the most interesting prospects are arguably for the two real estate funds to be released late this month, administered by Certinvest, weekly Capital repots in its latest issue.

A self-administering fund of Certinvest will be open to both individual and corporate investors.

It will operate under the supervision of the National Securities Commission (CNVM) and will get involved in new development projects, from land acquisitions to construction of buildings and apartment buildings for sale or rental.

The self-administering fund will only be connected to the administrator via the persons involved in the projects.

"In the case of the Certinvest self-administered real estate fund, there will be real estate project financing and a system under which real estate investment will be professionally managed," Chairman of Elite Financial Services Chairman Ioan Bejan explained.

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Inflation rate increased by 1.2% in November - against 0.9% in October ?an average growth rate registered both at prices of food and non-food goods, and services, according to the data released by the National Institute of Statistics (INS).

The annual inflation rate (November 2004 - 2005) reached 8.7%, higher by 0.6% than the annual inflation rate at the end of October.

Compared to the end of 2004, people?s consumption prices went up by 8.1%, and this year?s inflation target made public by BNR and the government reached 7.5% plus/minus 1%, namely the variation interval 6.5% - 8.5%.

Regarding the structure of prices, the most amazing increase was registered at thermal power tariffs, namely 20%.

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Bucharest mayor Adriean Videanu has stated that the authorities intend to create an investment bank in cooperation with several municipalities in the country and a series of international financial institutions, which will exclusively support infrastructure projects. According to the general mayor, the initiative is necessary because of the lack of financing for investment projects which have already been developed.
There are several investment banks in the European Union which have expressed their interest in supporting the initiative. "Depfa is out main discussion partner, but ABN Amro, JP Morgan, Citibank and other banking institutions have announced their interest in the project," said the general mayor.
"It is an invitation sent out to all the banks interested in the project," concluded Videanu. 
The project was initially announced in November, when the general mayor presented several projects for the capital city, including the renovation of the Historic Center, the Bucharest-Danube canal, an airport in the south of the city, the Basarab passageway and mansard roofs for apartment buildings. The cumulated value of the 35 projects, which should be developed by the authorities in Bucharest, amounts to six billion euros over the next three years.

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Metro is to launch its Real hypermarket in Romania in 2006.  Local press reports suggest that the first store will open in Timisoara, western Romania and will be followed by other openings during the year.

The hypermarket, which will have a sales area of 6,000sqm - 8,000 sqm, will carry over 50,000 food and non-food lines including household appliances, sports goods and textiles.  It will also have a restaurant area and small store concessions.

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The Council of Europe Development Bank (CEB) will grant Romania a credit worth some 150 million euros to pave the communal roads with asphalt and for water supply works to the benefit of towns with a number of inhabitants below 50,000, stated the Minister delegate for the coordination of public works and territory management Laszlo Borbely, ACT Media news agency reports.

"The Memorandum of negotiation with CEB is quite advanced and I hope that, till March next year, we will be able to sign the contract in the value of 150 million euros earmarked for the development of villages' infrastructure," Laszlo Borbely said.

Initially, the Ministry of Transport, Construction and Tourism carried out negotiations with the World Bank in order to secure some financing resources for the development of local infrastructure but, in the end, CEB is the one that was going to fund these works, whereas the World Bank (WB) would act as a consultant for upgrading the administrative capacity of local authorities, bound to produce feasible projects able to draw these money and further absorb the structural funds provided in the period following 2007.

Minister Borbely said that, up to now, some 2,800 communal roads were stone paved with money from the state budget, out of about 7,600 planned ones.

He said that towns with less than 50,000 inhabitants no longer have access to SAPARD funds and therefore they should be aided.

The World Bank is in the process of implementing a pilot project in five counties - Salaj, Botosani, Tulcea, Dolj and Calarasi through which it serves as a consultant to the respective communities.

WB would like a reorganization of the county and communal roads also proposing different financing forms to ensure a more efficient management of the European funds or the funds supplied by other financial institutions. Based on WB data, Romania has a road network of about 14,810 kilometres of national roads - accounting for 18.9 percent of the total, 36,000 county roads - 45 percent and about 27,781 communal roads that represent some 35.3 percent of the total.

WB considers that an amount of 700 million euros in grants (500 million euros for county roads in the next 20 years and 200 million euros for communal roads in the upcoming 15 years) are necessary for the rehabilitation of Romania's road infrastructure.

The necessary loans for the same upgrading works are about 430 billion euros, of which 330 million euros in the upcoming 20 years for county roads and 100 million euros in the following 15 years for communal roads.

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The introduction of a flat tax this year has boosted budget revenues, raised people's incomes and reduced unemployment, Prime Minister Calin Popescu Tariceanu said Sunday.

Since Jan. 1, when the government replaced the country's progressive taxation of 18 to 40 percent for individuals with a flat tax of 16 percent, budget revenues grew by 20 percent compared with the same period last year, Tariceanu said.

"These figures show the results are much better than our most optimistic evaluations," he said, adding that the extra funds went to raise employee wages and pensions and to fund reforms needed for the country's accession to the European Union, which Romania is scheduled to join in 2007.

Corporations also received a tax break, as their income tax was reduced from 25 to 16 percent.

Unemployment fell from 6.2 percent to 5.5 percent, while inflation also fell from 9.3 percent in 2004 to an estimated 8.5 percent this year. Average income after tax increased from about 600 lei (US$200; euro170) last year to 740 lei (US$250; euro210) per month in September.

Tariceanu, a Liberal who came to power in December 2004, said that authorities also focused more on recovering unpaid tax debts and reducing corruption in the customs system by changing personnel and simplifying procedures.

He pledged to use privatization money to fund projects in transportation, education and health care.

"The money from privatization, including that of the Romanian Commercial Bank, will not be wasted on worthless things. We want to invest it in infrastructure," he said.

Austria's Erste Bank and Banco Comercial Portugues are bidding for the Romanian Commercial Bank in one of the most important privatizations in the region, with the bank expected to sell for over euro3 billion (US$3.5 billion). The winner is expected to be announced later this month.

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French company Veolia Water, the major shareholder in Apa Nova Bucuresti, plans to invest EUR 50 million by 2008 in improving the efficiency of its network, acquiring new equipment and improving the quality of water.

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The general manager of the operations carried out by the Siemens German group in Romania reported that the domestic unit derived turnover worth 350 million euros in 2005. This year, the domestic branch of Siemens has reached 2,500 employees and is present in 13 locations, up from 600 employees and 6 locations two years ago.

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Electronic and home appliances retailer Altex that operates the store chain Altex, Altex Megastore and Media Galaxy in Romania, announced for October and November a sales increase of some 80 percent as against the same period last year. "We predict that sales are going to rise this year by approx. 80 percent compared to 2004. As such, we maintain our sales estimation for 2005 to 330 million euros", Dan Ostahie, President of Altex said. This marked sales increase in October and November is also due to Altex Bonus Card product that boosted the company's sales by 17 percent, according to the company's estimations. Compared to the similar period last year, when Altex installment sales accounted for 70 percent and those in cash 30 percent, at present sales in cash jumped to 40 percent out of the total. Retailer's sales increase in H1 of the year from 15 million euros, in January, to 27 million euros in March. April brought a slight drop in sales, to 26 million euros, explained through the re-introduction of excise tax for digital photo cameras and the trend continued in the upcoming three months.

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Prices for land for real estate developments have tripled in Romania over the past three years, show data in a recent report drawn up by the SGA Real Estate Consultancy Institute. The report mentions that the surge in these prices might lead to a market blockage because of a consequent diminishing in the return on investment rates. The report says one square metre of land in the Bucharest downtown Dorobanti Road would cost 335-350 euros in early 2003, whereas now it costs 1,000 euros. According to the same report, the price of land for real estate developments should not exceed 15 percent of the investment value, or 25-30 percent in the case of more complex projects. SGA specialists expect land prices to continue on a rising trend until a market blockage appears, similar to the one on the residential segment. The report mentions that high price levels automatically lead to market blockages, because investment projects are no longer profitable if land costs 45-50 percent of the total value of projects. The forthcoming accession of Romania to the European Union has determined sellers to increase prices on grounds that there are foreign customers with high purchasing powers. The report warns that such investors will not come to Romania to buy block apartments. On the contrary, it says, they will come to buy farmland, which still costs only 400-500 euros per hectare, compared with approximately 5,000 euros in the Czech Republic and even 6,000-7,000 in Poland.

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Under the new brand of Cosmote, Cosmorom - a nearly dead mobile telephony operator, was relaunched , announcing an aggressive market policy based on lower tariffs and phones for free. Cosmote will benefit from about a half a billion-euro investments in infrastructure development and in territorial coverage over the next few years. The company's sales network includes ten exclusive shops, 75 exclusive RomTelecom and 175 commerical partner's shops, including the Germanos stores. The prepaid cards will be available through thousands of additional points of sales across the country. Cosmote's weak point at the moment is territorial coverage - 55 percent, which means 80 percent of the population. Cosmote Romania CEO Nikolaos Tsolas estimates that more than 70 percent of the Romanian territory will be covered by the end of June 2006, which means 90 percent of the population, and also the launching of 3G services, Ziarul Financiar daily informs. Cosmote's special holiday offer includes a 47 percent cheaper prepaid card, 16 eurocents for one minute of call and 5 eurocents for a SMS.

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Negotiations between the Ministry of Transport, Constructions and Tourism and the American company Bechtel are almost over, the minister of transports, Gheorghe Dobre, said at a press conference. ?Negotiations with Bechtel are almost over, not completed. There will be a final talks, probably this week, with company representatives to finish talks about some annexes to contracts and we will decide after that?, Gheorghe Dobre said. The minister declared that Bechtel agreed to a down payment of 30% of works for Brasov-Bors highway, the amount being justified at the end of the year. According to Bechtel sources, talks may be completed by 15 December, the date established initially by the two sides. The Ministry of Transports requested the re-negotiation of the contract with Bechtel motivating that it had been established according to the principles of Anglo-Saxon law which does not provide the justification of money paid in advance. The authorities accused the high price of the construction, two to five times higher than the ones practiced in Romania. Initially, the accord between the two parties provided a down payment of 250 million dollars (about 213 million euros) to be justified at the end of works.The minister of transports,m Gheorghe Dobre announced that negotiations with Bechtel would be concluded until the end of the year, so that works could resume after being stopped in summer for lack of finance. According to minister Dobre, the government has already approved to grant 100 million euros for 2006. Works on Brasov-Bors highway began on 16 June 2004. Total costs for the 415 km highway are evaluated at 3.8 billion euros, of which 2.2 billion for works.

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Besides the contribution to the health insurance fund, Romanians spend, each year, a sum equivalent to 1.5 percent of the GDP (gross domestic product) namely about 1.08 billion euros, for medical tests, treatments and advice under the private or public system, but for money, said Silviu Radulescu, representative of the World Bank addressing the conference called ''Reform of health system,'' which has recently taken place in Bucharest. The money, according to the World bank, and the Romanian Health Ministry might turn into complementary health insurance. Attending the abovementioned conference, the World Bank's official said that in the case of a country as Romania, which spends relatively low resources for health, the development of private health insurance is pretty favourable. ''The private system should have a chance to develop. It is not about rejecting those who can't afford, but about those who afford to give much and receive more,'' said Radulescu.

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The European Union invests in the creation of Romanian institutions needed for an agriculture operating under the European system. From a package of 15 institutional twinning projects, three such projects with a total budget of 4,354,000 Euro were launched today at the Ministry of Agriculture, Forests and Rural Development, in the presence of high-level Romanian and European officials.(...)The concrete results envisaged are as follows: - reinforcing the Managing Authority within MAFRD, so that to enable it to efficiently manage and implement the EU-funded measures in the field of rural development and fisheries; - developing a Farm Accountancy Data Network in compliance with the EU requirements and assuring the capacity to supply the information requested by the Directorate General for Agriculture of the European Commission and by EUROSTAT; - implementing the carcass classification system for bovines, pigs and sheep, in compliance with the EUROP system and presenting this system to the animal breeders, to slaughtering units and to other interested parties; - ensuring trained staff for specific activities.

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Euro could continue to loose ground against national currency - leu - according to the dealers, after it registered two consecutive and marked drops at the end of last week, Ziarul financiar daily informs on Monday. The National Bank calculated on Friday an exchange rate of 3.6377 lei for an euro, with 1.23 bani less than in the previous day. Leu strengthened against the dollar, as well, the rate dropping by 1.6 bani, till 3.0855 lei/dollar. American currency's depreciation has been fed by the evolution of quotations on international market, to which leu's appreciation against euro on the local market has been added. On the interbanking currency market quotations dropped on Friday, December 9 to a 3.6330/3.6380 lei level for a euro at the end of the day, with 0.0100 units under the closing level of the preceding day. According to the dealers, the euro is set to further register some strengthening, although not spectacular ones, this depending on the accumulated pressures either on the selling or on buying side. The market is calm enough, close by the year-end, and it seems to follow an entirely new script. Traded volumes on Friday were within the last days' average, a dealer said. Market's evolution renders difficult all estimations on an exchange rate for this year-end, the dealers having in view bigger hard currency in-flows, including the money brought by the Romanians working abroad. On the other side, it is possible to assist to out-flows due to speculators on the market who have sold hard currency recently.

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A number of 435 direct investment projects, that exceed one million dollars each, were registered in the period October 1 2001 through November 30, 2005, based on the Law on direct investments with a significant impact in economy, the total engaged value being in the amount of 4.91 billion dollars, according to data provided by the Romanian Agency for Foreign Investments (ARIS).

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Inflation rate in November was of 1.2 percent and of 8.1 percent in the first eleven months, according to the figures carried on Monday by the National Statistics Institute. As against October 2005, prices of foodstuff, services and non-food staff increased on average in November by 1.2 percent. Compared with the end of last year, prices of services went up by 12.8 percent, non-food stuff - by 9.6 percent and foodstuff by 4.5 percent. The average monthly inflation rate this year stood at 0.7 percent, compared to 0.8 percent in the first 11 months last year. Inflation rate over November 2004-November 2005 was of 8.7 percent.

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Chisinau, December 12, 2005 (Moldova.org) -- On December 9-11, the Moldovan Wine Festival was held in the capital of Romania, Bucharest. It is part of a larger campaign of Moldova aimed at promoting Moldovan wines on the Western market.

?We came here to conquer [Romania] with our wines?, said Moldovan president Vladimir Voronin at the opening of the festival. His Romanian counterpart, Traian Basescu, who also participated at the festival, replied that "We allow you to do that with pleasure. This would probably be the only conqueror that we will receive with joy - the Moldovan wines".

The Moldovan Wine Festival in Bucharest was organized by the "Moldova-Vin" wine state agency, Moldova's Export Promotion Organization, assisted by both Chambers of Commerce from Romania and Moldova, Bucharest City Hall and the Moldovan embassy in Romania. The festival brought together some 40 Moldovan wineries, including the most known: Mile?tii Mic, Cricova, Barza Alb?, Vinuri Ialoveni, Aroma, Vin?ria Purcari, Cimi?lia, Acorex Wine Holding, Romane?ti, Lion-Gri, Tomai-Vinex. They offered a variety of red and white dry wines, dessert wines, sparkling wines and brandies.

Wine represents the major product of Moldova's economy, with exports in a good year accounting for up to half of the country's total export earnings. This small country of 4.5 million inhabitants and of a size of Holland is placed the 7th among the top world wine exporters. Wine's share in Moldova's GDP is some 25 per cent.

Currently, Russia is the main market for Moldova?s wines -- some 90 percent of Moldova-made wines and brandies are exported to Russia -- and Moldova consumes only 5 percent of its produced wine. In 2005, the wine and brandy exports to Russia valued about 228 million U.S. dollars, a 13 per cent increase from 2004. But things might change after Russian customs stopped to issue excise duty stamps to Moldovan wineries this fall and after Russia?s ban of agricultural products imported from Moldova in the spring of 2005. In fact, the Russian government's trade policy against Moldova affected Russian businesses that own many Moldovan wineries. It affects Russian consumers as well since they prefer Moldovan wine thanks to its high quality and relatively low price. It has a potential to affect Russia?s accession process to the WTO if Moscow continues to aggressive raise non-tariff barriers against Moldova that is a WTO member since 2002.

There are 150 wineries in Moldova with an annual production of 3-4 million hectoliters from 170,000 hectares of vineyards. Moldova has great potential for wine production. 10% of the countries land is covered by vineyards located mostly in the country?s center and south regions.

Still the wine industry needs substantial financing to recover from Gorbaciov's anti-alcohol campaigns run between 1985 and 1991, and from the general underinvestment characterizing the industry since then. Investment in the industry is likely to increase once the ban on the free sale of land is lifted, as vintners insist on controlling vineyards as well as wineries.

Moldovans produce European vines such as: Chardonnay, Sauvignon Blanc and Cabernet Sauvignon, Muscat, as well as Moldovan varieties: Feteasca, Rara Neagra, Moldova, etc.

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Romanian managers often reduce marketing to advertising and neglect in-depth analysis of market conditions, concluded ten top executives at a roundtable discussion organized by StantonChase Romania.
Businesses are conducted, more often than one may think, almost exclusively according to financial and legal principles, to the prejudice of any market potential assessment, said Jacques Nantel, director of the RBC Financial Group and moderator of the discussions, to which Bucharest Daily News had exclusive access. The roundtable discussion was attended by representatives of the local boards of Parmalat, Romtelecom, Elmec, Cegedim, Siemens, Synovate, Robank OTP, KPMG and the American Chamber of Commerce (AmCham). 
Research carried out by Nantel on approximately 600 Canadian and US corporations revealed that less than three percent of companies' board members have a marketing background compared to 80 percent who are either financial or legal professionals.
A case study which formed part of the research investigated the evolution of on-line book store Amazon.com and showed that poorer results were not always the consequence of unfavorable market conditions. Nantel concluded that a miscomprehension of market potential and conditions can result in governance problems.
Questioned by Bucharest Daily News about the "marketing culture" of the Romanian business environment the executives present at the roundtable all agreed that despite some success stories based on strong consumer-directed marketing analysis, most of the market was focused almost exclusively on the advertising and sales management directions of market research.
Advertising in particular, a market with a growth rate of 20 to 30 percent per year, is developing fast, said Interbrew Romania's General Manager Mihai Ghyka. However, he added that the understanding of marketing as a whole is still very limited. Ghyka believes that new advertising companies appearing every year and managing to survive are part of the so-called "Romanian miracle" but rely on the growth of the Romanian market as a whole and not on companies' performance.
Other elements of the marketing approach relating to market size, market shares, brand equity or pricing strategies are developing at a very slow pace especially in the small and medium enterprise (SMEs) sector of the economy, said the executives. Because they integrate marketing into their business approach better than SMEs, large multinational enterprises have a de facto monopoly over these marketing analysis indicators which constitute an important competitive advantage.
Metro Cash&Carry Managing Director Bert van der Velde, who attended the discussion along with another nine top executives from various sectors of the Romanian market, commented on the great impact takeover announcements had on the market value of the companies which make them, often regardless of market potential and the perspectives of the operation. CEOs do seem to have a huge appetite for takeovers, the other participants in the discussion agreed. As the best way to generate growth is making acquisitions, in the absence of serious marketing focus, takeovers are made even when they are not directly linked to an in-depth understanding of the way in which the transaction would build an additional market share. Every time a company makes an acquisition the price of its shares goes up but at the same time its profits go down, observed Nantel, but most often the acquisitions are usually about the message they send.
Part of the reason why this happens seems to be related to the pressure of the financial market, shareholders and financial analysts, said Nantel. This results in serious difficulties in assessing the real value of a company, especially when some CEOs, as Edwin Botterman from Brau Union Romania noted, respond to the pressure with "creative accounting" solutions.
At the end of discussions, which lasted around three hours, participants concluded that most managers could benefit from at least some degree of further marketing training.

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Stork Fokker is boosting its presence in Romania by opening an engineering centre in Bucharest to carry out ?detail design? engineering. Stork Fokker president Ad Louter says the facility currently has an engineering capability of 30,000 man hours a year, which is expected to grow to 50,000 a year by the end of 2006.

?There is a great demand for qualified aerospace engineers worldwide,? says Stork. ?That also applies to Stork Aerospace, which is why it approached Romania, which has a long tradition in the aviation industry and respected educational programmes in this field.?

Romania is attractive to Stork because of its highly educated engineers, low cost base, flexibility in sourcing, a good infrastructure that is opening up to the West, and because all Stork?s customers consider Eastern European countries an interesting base, says Louter.

The company has signed an agreement with the Polytechnic University of Bucharest, the Delft University of Technology and the Netherlands National Aerospace Laboratory to set up an aviation technology knowledge centre with the support of the EVD (Netherlands Agency for International Business and Co-operation), ?to bridge the knowledge infrastructures of the two countries?.

Also, Fokker Engineering Romania aligns with Stork Fokker?s strategy of strengthening its position in Romania to enable it to operate more flexibly and competitively. It already has a joint venture ? FOAR ? in Bacau with Romanian company Aerostar to produce thin aluminium sheet sections.

Stork Aerospace, with 3,182 employees, posted a turnover of E495 million ($585 million) in 2004 out of the total Stork turnover of ¤1.82 billion.

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Less than a year has passed since the privatization of the largest company in Romania, and Petrom could already post more than half a billion euros in net profit, a record high for any company in this country, writes today's Ziarul Financiar.
Mittal Steel Galati (the former Sidex), posted net income of 345 million euros against a 1.693bn-euro turnover last year. No profit estimates for this year were provided, however.
When asked by Ziarul Financiar about the estimates of Petrom's management for turnover and profit for this year, Gheorghe Constantinescu, the general manager of the company, said he anticipated a 2.7-2.9bn-euro turnover.
The petroleum company's turnover stood at 2.1bn euros last year, a level it has already exceeded nine months into the year.
If its business reaches 2.9bn euros in 2005, Petrom could make some 520 million euros or nearly one cent per share, as long as it maintains its net profitability margin for the first three quarters, 18%. Petrom officials said the 389 million-euro net profit in the first nine months would be improved by yearend, without offering any further details as to how much this final figure might be worth.
Petrom's' results were given a boost by the increase in the price of oil and petroleum products on the international market and, to a lesser extent, by the reduction of its own costs due the first streamlining measures imposed by the new majority shareholder.
Petrom's nine-month profit contributed to the tripling of the OMV Group's income.
The Austrian Group OMV took over 51% in Petrom last year as part of a transaction worth 1.5bn euros. The Austrians took control of the Romanian company exactly one year ago and replaced almost the entire management, retaining only Gheorghe Constantinescu as chief executive officer.
OMV deregulated the company's pricing policy, tying it to international petroleum product prices, which allowed it to make record profits compared with previous years, when a state-run Petrom had made either meager profits or even losses.

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The Romanian company MYO-O filed a legal notice to the Competition Council against the Authority for the Recovery of State Assets (AVAS) for alleged irregularities in the privatization process of the local company Tractorul Brasov. MYO-O, which filed an offer for the Tractorul takeover but lost to the Indian company Mahindra&Mahindra, considers that the AVAS created an advantage for its competitor by approving the collective layoff of 1,455 employees of the company.
The Romanian company had filed an offer which included a clause to maintain all the employees of Tractorul Brasov. MYO-O representatives consider the measure to layoff employees, adopted by AVAS mid-process, modified the situation which has favored the Indian company.
"If the collective layoffs were necessary, than it should have been done before the privatization process, ensuring all the participants (in the privatization process) have equal chances," said Ion Radulea, MYO-O president.
The representative of the Romanian company stated that AVAS carried out faulty evaluation of the offers, especially of the environment protection chapter of the MYO-O offer. Moreover, the representatives of the company stated that the financial offer presented to AVAS was double compared with that of Mahindra&Mahindra.
"The best offer was filed by Mahindra&Mahindra," said an AVAS representative.

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The privatization contract of Banca Comerciala Romana (BCR) will be handed over to Erste Bank (Austria) and Millenium (Portugal), and the two banks will present the final bids for BCR takeover on December 20, said the minister of Finances, Sebastian Vl?descu.

The final draft of BCR privatization contract was approved during a meeting lasting approximately 45 minutes.

The bids of the two banks will be opened on December 20, so that the privatization contract would be signed on December 21.

Authorities will only announce the bid submitted by the winner company.

BCR is the biggest bank in Romania, with assets of approximately ¤9 bn.

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The preliminary prospect for the listing of Transelectrica shares will be completed in January next year, while Stelian Gal, the general manager of the company said that te public offer is to be launched in April 2006, and the listing at the Bucharest Stock Exchange will be made in May 2006, Bursa reports.

Transelectrica's legal advisors in this operation are Popovici & Asociatii firm and the financial advisor is a consortium made of Alpha Finance Romania, Raiffeisen Capital & Investments and BRD Securities.

The consortium will complete the financial intermediation by primary public share issues and all the processes related to the listing.

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OSLO (AFX) - Orkla ASA said its Orkla Foods Romania unit has acquired the Royal Brinkers group in Romania from RBH International and the Dutch Brinkers family.

No financial details of the transaction were disclosed.

Royal Brinkers, which is the second largest retail margarine producer in Romania, posted net sales of around 15 mln eur in 2004 and employs nearly 200 people.

Orkla said the transaction is awaiting approval from the Competition Council of Romania.

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16:14 - 12 December 2005 - The society International Leasing launched the third bond issue worth 4.8 million RON (48 bn ROL, respectively $1.538 million)which will finance the company?s operational leasing contracts, ACT Media news agency reports.

International Leasing issued 48,000 nominative, secured, non-convertible, intangible bonds, with a face value of 100 RON (1 million ROL) and a four-year maturity.

The reimbursement will be made in four equal annual installments, for a variable interest rate that will be calculated every half year as the BUBOR+2.25%.

The interest for the first calculation interval is 10.75% a year and the public bid is scheduled in December 12-23.

The brokers of the arrangement are SSIF Intercapital Invest and BCR Securities.

International Leasing is the only leasing society listed on the RASDAQ market and the first private company that launched a bond issue in 2000.

The society was set up 10 years ago and closed over 3,800 leasing contracts worth a total of over 45 million euros.

Necula specified that the contracts signed this year worth 25 million euros and that the estimated turnover will exceed 500 bn ROL.

Financial leasing accounts for 65% of the company?s portfolio, whereas operational leasing represents 45%.

The society has a car fleet worth 1 million euros.

International Leasing has a share capital of 7.26 million RON and reported in 2004 profits worth 10 bn ROL (1 million RON).

According to a bill drawn up by the National Bank of Romania concerning the credit activity of non-banking financial institutions (NFI), leasing companies will be classified in the NFI category, which is banned from bond issues.

International Leasing representatives consider that this provision discourages leasing, which has asserted itself as an engine of economic development.

Source: ACT Media News Agency and reporter.gr

Zsolt Nagy, Minister of Communications and Information Technology, talks to eGov monitor about the challenges and opportunities Romania faces in developing an Information Society and making sure everyone will be given access and skills to use ICT

Q1 The EU has an ambitious goal to create a sustainable information society for all by 2010. As a candidate member of the EU, can you give us a high level overview on the policies and strategies you are putting in place to ensure a sustainable Romanian information society?

The Romanian IT&C sector has the largest growth rate compared to the other sectors of Romania?s economy (20,2%), a contribution of 8% from the GDP, being also one of the fastest growing markets from Central and Eastern Europe.

The Ministry of Communications and Information Technology has established, as an objective for 2006 and in view for 2007-2009, the development of the Information Society, in accordance with Decision no 744 from July 3, 2003.

The spread of ICT to the entire economy represents a goal of high importance both for the growth of the global production level and for the regional competitiveness. Also, it stimulates the reorganizing of production methods and the emergence of new business and private services.

The Ministry of Communications and Information Technology has as objective to stimulate the use of IT, taking into consideration that the Romanian IT&C sector is an active and dynamic one (especially the software component), by stimulating the demand of IT products and taking measures for the stimulation of competition for the local providers.

The spread of PC?s and Internet access on a large scale for every citizen is a necessary requirement in order to build the Information Society. Since the need of improving the PC?s penetration rate in private residences still exists, supporting the PC and Internet accessibility continues to be a very important priority.

Q2 Effective framework to regulate the convergence of technologies and ensuring effective competition will be one of the challenges that member states will have to address to achieve the goals of i2010. Can you give us an insight into how you are looking to address this particular challenge?

The role of the MCTI is to create the premises for a sustainable development and a transition to the Information Society. MCTI aims at emphasizing the favorable effects registered so far, the use of IT&C that can stimulate the extensive development (access of new markets by the Romanian companies at the regional or global area or promoting products and services on internal market by using electronic means) and intensive development (increase of the productivity by reducing the production costs, administration due to the use of IT&C) of the sector for goods and services. These goals include ensuring the competion on the IT&C market and reducing the costs by increasing the number of offers on the market.

The further development of the Information Society, in order to achieve the goals of i2010 has as results: establishing new markets for developing high quality products, strengthening the communications sector by stimulating the investments and giving employment opportunities for the disadvantaged and socially excluded persons.

At the European level, the European Council stipulated in the Lisbon strategy several objectives that could lead to the change of economy of the European Community states, including Romania, as a future member state, in 2010 in world?s most dynamic knowledge based economy.

According to the last EU Monitoring Report of Romania?s progress towards accession, our country continued to make progress with liberalizing the telecommunications market and with completing the alignment with the 2002 acquis, including implementing legislation. Promoting the end-users? interests represents a major objective of the strategy for developing the electronic communications sector.

The Romanian legislation in the field of electronic communications defines the right to universal service as the right of all end-users on the Romanian territory to benefit from the provision of services within the scope of universal service, at a specified quality level, regardless of their geographical location, and, considering the specific conditions, at affordable prices. The services within the scope of universal service are: connection to the public telephone network at a fixed location, availability of directory information services, availability of public pay telephones.

Q3 EU member states face a challenge of ensuring that there is no knowledge gap between prosperous and under developed regions within a country. How are you looking to ensure that local communities in Romania are able to develop sustainable knowledge societies with indigenous competitive advantages?

At the moment, in Romania, an increased gap between the rural and the urban areas is registered, regarding the use of fixed and mobile communications, as well as the access to the new technologies. The Ministry of Communications and Information Technology developed several projects in order to facilitate the transition to the Information Society and to minimize the gap between the rural and the urban areas in regard to the access to information.
Here are some of these projects:

Service centres for citizens
The lack of access is one of the reasons for the low usage rate of the public administration electronic services. With a view to facilitate the access to information, the Ministry of Communications and Information Technology proposes the setting up of Service centres for citizens, a program that aims to create information and public administration services access points.

Call centres for central and local administration
With a view to optimize the administrative activity, the civil servants involved in the integration of the technology in current activity for the purpose of productivity and efficiency growth, as well as those who use electronic services are often confronted with problems that require expert advice. The call centre should offer a fast and easy access to information on IT&C, as well as the necessary support for the use of electronic services.

Extension to the medium economic enterprises of the on-line forms
Based on the existing project that is available to almost 400 large taxpayers, an extension will allow the inclusion of the medium economic agents in the system, many of them having expressed the desire to use this modern reporting system.

Emergency-warning system
This system enables the authorities to access directly and in real time the entire population via the mobile phones, transmitting alerts, instructions and recommendations in emergency situations. By the use of mobile phones, an omnipresent communication means of our times, this system could attain a maximum coverage without massive investments in new substructures and without requiring additional training of the population.

Budgetary execution portal
The portal should offer electronic space to host the budgetary executions and the budget plans of the state institutions with a view to ensure the transparency of the budget allocation.
E-learning portal is created in collaboration with the National Institute of Administration, allowing, through modern means, fast and easy access to continuing education.

Electronic health cards
A project which will sustain the public health system reform, contributing to ensuring the management and reimbursement system, improving medical support, online medical services, and also allowing, from the perspective of EU accession, the interoperability of the systems and the mobility of the patients.

?Knowledge-Based Economy?
A project initiated with the support of the World Bank, and has been designed to ensure the citizens? access to information in the digital format and to narrow the IT&C education gap at the level of the whole population by means of the Local Community Electronic Networks (RECL). In the following years, approximately 200 local virtual networks serving as ?knowledge centers? will be set up in the rural and small urban areas, in order to provide online information and services to the citizens and the business environment. Nine local communities were already selected in the pilot phase of the project and until now, the networks were inaugurated in 3 of them, the 6 remaining communities following to be inaugurated until the 19th of December.

Power Line Communications (PLC)
A pilot project developed by MCTI in order to reduce the digital gap between the urban and the rural areas by implementing the Personal Handyphone System, this way developing the micro-cell networks with minimal costs. By using the PLC technology, an existent infrastructure can be used in communications, the electrical one, taking into consideration the fact that over 99% of the population has access to the electrical network.

Telecenters
The solution for ensuring access to communication services for all of Romania?s citizens, considering the fact that there is a low penetration rate of telephone services throughout the country, consists in providing access to the public telephone network, at a fixed location, for an entire community at a time, by means of telecenters. The telecenters are meant to offer, in the vicinity of people's homes, at affordable prices, telephone, fax and Internet services and non-stop access to emergency calls.

Q4 How are you looking to use ICT to provide more efficient and transparent government, especially for those who are more vulnerable in Romanian society?

The solutions for eGovernment will be, in the near future, daily instruments for an effective public administration, and this is why more eGovernment services will be provided, in order to increase the comfort of the citizens and the business environment in its relation with the public administration.

The eGovernment strategy of the Ministry of Communications and Information Technology is related to the growth of the entire IT&C sector and focuses on the continuation of the governmental effort in implementing electronic services with a high economic and social potential.

The institutional transparency, the regulation credibility, the cut of costs for regulation and management processes represent a fundamental determinative of the economy?s competitiveness. All these will be achieved through indicative actions of development and efficiency improvement of modern electronic public services of e-governement, e-learning and e-health.

The level of interaction between citizens and the government is still low, both at the extensive level (number of users) and the intensive one (low proportion of two-way interaction). The goals of e-government services are: the use of ICT instruments in the public administration, thus increasing the efficiency, the existence of public administrations on web, making the information more accesible for citizens and companies, increasing the utility and the use of interactive services by the citizens and companies, the change of experience at the national level and the cooperation between member states.

Q5 What message would you like to send to the European Commission and other member states with regard to creating an information society for all in Europe?

For Europe?s regions and the EU?s regional policy, the new technologies are both an opportunity, because these technologies create new development options, and a challenge, because of the penetration discrepancy from the digital field. The new technologies could be an instrument of social integration or an exclusion cause in case of unavailability.

A Single European Information Space can offer an affordable and secure high bandwidth communications, rich and diverse content and digital services.

The European Strategies must take into consideration the different development stages of each country. It is necessary that the member states and the European Commission should concentrate their efforts in order to financially support the eGovernment programs with European funds.

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Central bank governor Mugur Isarescu declared this Friday that the fervent promotion of credit cards exacerbates the consumption crisis and advised the public to keep consumption moderate. ?November?s inflation rate will be 1.1 ? 1.2%, exclusively on account of the adjustment of administered prices and demand might put supplementary pressure in December, so that the year-end inflation might slightly exceed 8.5%,? declared Isarescu on the occasion of the seminar ?Balance of payments current account deficit,? organized by BNR and the Romanian Economic Policies Center. The BNR governor admitted that the inflation target of 8.3% is compromised, also under the effect of the recent wage increases, but that the yearly average inflation is expected to reach 9.1% - 9.2%, confirming the consolidation of the single-digit parameter. Apart from the tempering down of consumption, Mugur Isarescu recommended the encouragement of the population?s savings. ?Savings do not refer only to bank deposits?In the USA, for instance, savings ground on private pension funds. Conversely, in Romania accent is laid on consumption and the promotion thereof,? said Isarescu.

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The bill on commodity exchanges that recently cleared the Parliament and was sent to the President for promulgation requires these institutions to have a minimum share capital of 1 million euros and have only judicial persons as shareholders. The shareholders are allowed to directly or indirectly hold a maximum of 5% of the voting rights. The commodity exchanges can administrate availabilities, bidding, mixed and claims markets, provided that the requirements set forth in the specific legislation are met. On the availabilities market offers are negotiated and deals are performed for spot and forward contracts; the bidding market is organized for the sale/purchase of commodities, services or works that need technical specifications in order to be identified and put up for sale. The mixed market, which is only in an incipient stage, is organized whenever a commodity is being transferred from the bidding on the availabilities market and synthesizes the features of these two institutions. The claims market is intended for the sale or purchase of commercial claims.

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After consultations with the National Union of the Romanian Insurance & Re-Insurance Societies and with the National Office for the Prevention and Combat of Money Laundering, the Board of the Insurers Monitoring Commission (CSA) approved the Norms concerning the prevention and combat of money laundering and the financing of terrorism via the insurance market ? informs a Commission communiqué quoted by the ?Romania libera? daily. The norms apply to all the domestic insurance/re-insurance societies as well as to the Romanian branches of foreign such entities and instate a set of obligations regarding the clients? identification and the reports to be sent to CSA and the National Office for the Prevention and Combat of Money Laundering. Thus, before starting any business relation, the insurer must identify, record and update the client?s identity and if doubts arise on whether the client is acting on his own behalf or not, the insurer shall take steps to obtain accurate information concerning the real identity of the person on whose behalf he is handling.

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RTC Holding and Trainergy opened last week one of the biggest toy trains showroom in Europe. The showroom is located in a Diverta shop in a commercial center on Timisoara Boulevard and has a surface of about 100 sqm. The investment made by RTC for this showroom reached EUR 200,000.

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Scholz & Friends, the international agency network, has opened an office in Bucharest. At the head is Lucian Georgescu, East European advertising veteran and founder of the creative workshop gav/balkanski. The Romanian office works under the name GAV/Scholz & Friends Bucharest.

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Bucharest-based Eurocheese Production and Distribution, a company operating in the dairy industry, has said it will invest 4 million euros next year in the construction of a cheese plant in Jilava. The company's representatives said that half of the investment would be secured from the company's own resources, with the rest being covered through SAPARD financing.

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Dacia will make more than 1.1 billion euros in turnover this year, almost five times more than at the time Renault became a shareholder in 1999. The domestic manufacturer will also break even this year.

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The foreign direct investments in Romania in 2005 will reach the forecast figures, between 3.2 billion and 3.8 billion euros, said on Friday President of the Romanian Agency for Foreign Investment (ARIS) Ana Maria Cristina. "We are optimistic that we will fulfil our estimations and will reach 3.2 billion euros in investments by the end of the year," said the ARIS President adding that important sums will be derived next year from the privatisations of Banca Comerciala Romana and Tractorul Brasov. The most attractive fields for investments in 2005 were the auto, IT&C, car building and wood processing sectors. In 2004, the level of foreign direct investments in Romania reached 4.1 billion euros, but a study of the Romanian National Bank reveals that the level of investments was even higher if the investments done with the reinvested profit, from banking loans whose mother companies are present in Romania or from other capital inflows are added. Thus, the level of investment for 2004 stood around 5 billion euros.

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Romania faces a high increase in consumption, above what it can currently bear, said on Friday Governor of the Romanian National Bank (BNR) Mugur Isarescu during a debate regarding the evolution of the current account deficit. "While banks pay attention to their turnover, we must moderate them. They are driven on by the market's mechanism, by shareholders, while our duty is to ensure financial and price stability," said Isarescu. "If we are not corrected by attitude, than the markets will correct us, but I hope we will not get there," he said referring to the tendency of having larger consumption than production. "Last year, when the economic growth was 8 percent, analysts spoke about overheating. After the March figures, the economic growth in 2005 will be less than 5 percent," said the BNR governor. "When I spoke about the budgetary deficit, I referred to budgetary policy. I have been speaking about fiscal strategy for years. People do not need strategies, but a long-term vision," he added. The share of budgetary revenues within GDP of 30 percent is in line with the European model of 32-35 percent," Isarescu stressed.

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The GDP estimated for the interval January 1 ? September 30, 2005 was 187,107.9 million RON in current prices, up by 3.6% in real terms against the similar interval of the previous year. The increase was significantly determined by an activity intensification and implicitly by the increase in the gross value added from services (+7.9 %) and constructions (+7.1%), which had a contribution of 52.4% to the GDP.

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The pressure put on the exchange rate of the national leu currency in November, when the euro traded at more than 3.7 lei, might continue in December as well, being the result of the peak repayment of the Romanian foreign loans amounting to nearly 1 billion euros, the Capital weekly reports. It explains that the national currency, if need be, will benefit from the support of the central bank that has amassed roughly 17 billion euros in its accounts and might easily calm speculative attempts. Based on these elements, the Capital analysts predict the euro will keep steady at about 3.65 lei during December, with a possible jump to 3.7 lei by the end of the month. The Sibiu futures market put the rate of exchange of the leu to the euro due at Christmas at 3.6410 - 3.6500 lei, "this being a sign that the investors do not expect major changes of the exchange rate," the weekly writes, adding that a similar situation is estimated for the end of March, with the euro to trade at 3.6251 - 3.64 lei.

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The reinvestment of profits from direct foreign investments has widened the current account deficit from 7.6% to 8.6% this year, stated central bank governor Mugur Isarescu, ACT Media news agency reports.


If the figures prove correct, the question arises: ?How far can Romania?s debt increase without generating sustainability problems,? warned Isarescu.

The public and private contributions to this deficit stand in a ratio of 1/7, proving that the contribution of the public gap to the foreign deficit is progressively shrinking.

Some measures were enforced to temper down the contribution of the private sector to the foreign deficit and according to the BNR governor, even European Council general director for economic and financial issues Giovani Ravasio does not consider that the current account faces sustainability problems, but that this is rather an early-warning issue.

Referring to the public debt, Isarescu specified that in the last five years it has decreased from 30% to 20% of the GDP, whereas in the same interval, the public deficit has narrowed from 4% to 1% of the GDP.

Among the elements with a considerable influence on Romanian macroeconomy in 2005, the central bank governor mentioned the successive floods, the substantial inflow of foreign capital, the tax reform and the reduction of taxation quotas, as well as the nominal appreciation of the domestic currency.

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The international company DGE Brussels has entered the Romanian market, in order to provide assistance to enterprises for access to EU and domestic funding, ACT Media news agency reports.


While over 85% of the SMSEs choose self-financing, some 40% of the companies do not apply for credits, whereas 53.2% of them only seek financing through leasing, DGE Brussels considers that the prohibitive access to funding will affect the capacity of Romanian companies to face competition on the unique market.

?We acquired our experience with EU funding since 1996; we run 300 offices in 6 EU member states, we work with over 600 consultants and experts.

Our efficiency coefficient (the number of approved applications per number of filed applications) is 89%.

We offer complex solutions for debt refunding and the obtainment of development funds,? said DGE Brussels managing director Slawomir Pawluk quoted by the ?Romania libera? daily.

?We came on the Romanian market to fill a gap at a time when the absorption of EU funding becomes a high-stake problem.

The Romanian entrepreneurs need support in this direction,? added Pawluk.

DGE Brussels provides financial assistance for the obtainment of bank credits on the short and long term, of loans from non-banking institutions, operational and financial leasing, the restructuring of bank claims, the financing of start-up projects from risk-bearing capital.

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The SAPARD Agency stated that the non-reimbursable funds that are available for projects in the rural tourism currently stand at ¤1.5 million, which is enough for 20 projects, Bursa reports.


Thus, the use of the funds in this program has reached 93 percent.

Until now, money went to 255 projects.

However, those that want to invest in rural tourism have other options to access European funds as some ¤30 million are available under the program referring to other types of rural tourism.

Romanian authorities estimate that the money is enough for 350 projects.

The essential requirement to get access to non-reimbursable SAPARD funds is for the applicant to prove that the future investment would be viable from the economical and financial points of view.

In other words, the beneficiary would have to prove that it can pay its duties and taxes and have a profit of minimum 5 percent.

Permits for the establishment of tourism facilities are given by the Ministry of Transports, Construction and Tourism - the National Tourism Authority.

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The shareholders of Cluj-Napoca based Fortpres-Cug approved the participation as major shareholder (51%) in the establishment of a limited liability company, Bursa reports.

The new company will have a share capital of 36.000 RON and will handle the retail of metallurgical materials.

The company's share capital will also be increased by a cash injection of ¤850.000 from Industrialnai Soiuz Donbassa company.

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Research and Markets (http://www.researchandmarkets.com/reports/c29237 ) has announced the addition of 2006 Telecoms, Mobile and Broadband in Europe - Geographic Reports to their offering.

The 2006 Telecoms, Mobile and Broadband in Europe - Geographic Reports, contain over 1330 pages of research, on 37 European countries (including the ten new European Union (EU) access countries) and provides research on the trends and developments in telecommunications, mobile, Internet and broadband in Europe.

Summary
Eastern Europe
The telecoms markets that make up Eastern Europe are not homogenous as those in the west, reflecting the various stages of economic development in each country. The ascension of the 10 new EU member states marks a new era in Eastern Europe, as the countries in the region integrate themselves with their western neighbours. Requirements to the EU and World Trade Organisation (WTO) have been major influence behind liberalisation in the region. As a result of liberalisation prices for services have come, resulting in increased uptake of new services such as broadband. The mobile market in the region is also facing increased competition as an increasing number of operators have to find new sources of revenue due to maturing or saturated markets. This too has led to the introduction and uptake of mobile data and content applications.

Bulgaria and Romania are both scheduled to join the EU in 2007. Croatia is a candidate EU country and the potential EU candidate countries include Albania, Bosnia and Herzegovina, the Former Yugoslav Republic of Macedonia and Serbia and Montenegro. These countries are in varying stages of implementing the EU's regulatory framework for communications. Liberalisation of Belarus' telecoms market is expected in 2007 and the Russian long-distance market in 2006, as both must liberalise their markets by 2007 as part of WTO entry requirements.

Privatisation of the Russia's state-owned telecoms group Svyazinvest is underway as in September 2005 plans to privatise the telecom operator were submitted to the government for approval. The privatisation of Svyazinvest is significant as it holds controlling stakes in all seven 'mega-regional' operators that dominate their respective markets but require upgrades to infrastructure. 2005 is also the year of privatisations for other countries in the region and more are slated for 2006. In 2005; Bulgaria privatised its remaining 34.6% state-owned stake, Montenegro privatised its remaining 51.12% majority stake and Albania privatised a 76% majority stake. Bosnia is set to privatise its incumbent by mid-2006 and Romania plans to complete privatisation of its remaining 45.99% stake in 2006. Serbia is moving to privatise its 49% stake in its mobile operator but has been hampered by an ownership dispute. The disposing of state-owned stakes will have implications for competition as it removes the inherent reluctance of governments to introduce extensive competition against their state-owned operators.

The Czech Republic, Lithuania and Cyprus had penetration levels in excess of 100% as at March 2005, with Estonia, Slovenia and Greece near 100%. Russia's massive mobile market is maturing although it is still showing strong signs of growth as the mobile operators concentrate on acquiring subscribers in the outer regions, where penetration in some regions is in the single digits.

Third generation mobile services have been launched in Slovenia and Hungary but the launch of services have been delayed in Poland and the Czech Republic numerous times by the operators. A number of countries also offer Enhanced Data Rates for GSM Evolution (EDGE). Commercial launch of 3G services that have either occurred in the Balkans in 2005 or are expected to occur by 2006 include Croatia, Cyprus and Romania.

Mobile data usage is increasing in the Baltic region. In Lithuania there were 413,700 subscribers of GPRS and EDGE services as at July 2005, compared with 341,120 subscribers of mobile data services as at 1 January 2005. Estonia also experienced strong growth in mobile data services, with a 17% increase in SMS messages sent in 2004 and a 150% increase in the number of GPRS users in the same period. The operators are promoting the use of higher-margin mobile data services for two reasons; to compensate for reductions in voice tariffs and to increase ARPU as although the mobile voice markets are reaching saturation, the mobile data sector is still in the growth stages of market development. The introduction of additional content such as mobile TV in Lithuania, and the eventual introduction of high-speed third generation services in all three countries will have a positive impact on mobile data usage. The introduction of mobile applications such as email and services that use mobile phones to monitor the status of cars and houses in Estonia highlights the increasing potential of the mobile applications market. The Russian mobile applications market is developing and was estimated to be worth US$270 million in 2004, a 300% annual increase. There are approximately 100 distribution companies providing or promoting content, and about 40 content providers. The majority of them develop their own content while a few purchase programs from foreign companies.

Strong broadband growth has been recorded in all five countries in the Central European region the highest growth rate attributed to the Czech Republic, where the number of ADSL connections increased sixfold in 2004 to 101,000. However broadband penetration in each of the countries remains below the EU average of 9.6%. Strong growth has also been recorded in the Balkans, with annual growth rates of 95.19% to 382,783 broadband connections in Romania, 584% in Croatia to 30,550 connections, 300% for ADSL in Greece to 88,400 subscribers and 547% increase for broadband in Macedonia to 5,530. In the CIS region broadband penetration grew strongly in Belarus, with penetration increasing threefold in the capital, although the increase came from a small user base. Broadband penetration is very low in Moldova but is growing as new operators launch services for cable broadband and WiFi. The situation is the same in Russia where future broadband penetration holds much potential as current penetration levels were less than 1% in 2004.

WiMAX services are growing in Russia. In May 2005 Moscow-based operator MediaNetworks launched a WiMAX-specification network in Nizhny Novgorod. Major alternative operator Golden Telecom is also reported to have launched a WiMAX-specification network. Another operator, Prestige Internet holds a licence to provide wireless broadband services in 29 major Russian cities and plans to launch services by end-2005 and expand services to all 29 cities by end-2007. The operator is 50% owned by Japanese firm Sumitomo. The increasing availability of broadband offerings is expected to significantly drive broadband uptake.

Cyprus has made the early progress in convergence as it offers a full Video-on-Demand broadband TV service with an Electronic Program Guide, email and web access that is available via an ADSL connection and set top box. This is beyond what many other countries in the region are offering but gives a glimpse at what may be in the near future due to the increasing prevalence of ADSL in the region.

Digital TV is in the nascent stages of development. Poland is the most advanced Central European country in terms of developments with trials launched and others to be launched soon. Broadband TV is still in its infancy due to low penetration rates although Poland has a large user base. Public broadcaster TVP launched an interactive TV pilot in May 2005 offering TV content online. Slovenia was the first to launch IPTV services in September 2003. Sistema in Russia officially launched its IPTV service under the brand 'Stream TV' in July 2004.

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Press Release - European Bank for Reconstruction and Development

The EBRD is lending the Romanian government ¤145 million ? the Bank?s largest loan in the country, of which a portion (¤56 million or RON 204 million) will be in Romanian Lei ? to boost infrastructure projects around Constanta, the port city along the country?s Black Sea coast. A part of the loan will specifically help repair key road infrastructure sections that were affected by severe floods in the country earlier this year.

The government will on-lend the loan to the state-owned National Company for Motorways and National Roads (NCMNR) to help build a new 22.9 kilometre bypass around the city, significantly reducing traffic congestion and pollution by re-routing heavy port traffic and peek seasonal tourist traffic. It will also help upgrade ten key bridges that cross the Danube or the Danube - Black Sea channel located on the bypass or on and adjacent to the Bucharest-Constanta motorway. Around ¤45 million of the loan will specifically target flood-damaged areas, including fifteen bridges, and 105 national road sections.

Riccardo Puliti, EBRD Director for Transport, said this loan will significantly benefit many residents, tourists and businesses in Constanta. Creating the bypass will on the one hand decrease traffic levels in the city that will improve safety levels, and it will also enable businesses using the port to transport goods quicker and more efficiently, said Mr Puliti. Furthermore, by promptly supporting flood damaged areas in the country, the Bank is reiterating its commitment to Romania, he added

The loan will be implemented by NCMNR, which is responsible for areas such as administration, maintenance, and operation and development of the country?s national road network. This latest project builds on previous cooperation between the Bank and NCMNR, in projects supporting road infrastructure in the country.

?This EBRD loan is innovative and unique in the Romanian long-term debt market, and it demonstrates the Bank?s responsiveness to client needs, said Sebastian Vladescu, Minister of Public Finance. It also shows the EBRD?s confidence in the recently redenominated Romanian currency,? Minister Vladescu added.

The EBRD is the largest investor in Romania, having committed more than ¤2.8 billion in around 150 projects.

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Justice Graeme, the IMF representative in Romania, stated that the government should pursue economic reforms to ensure the country completes the transition period successfully.

The latest test carried out by the International Monetary Fund (IMF) ranks Romania in the low risk category, but cautious and pro-active policies are needed to complete the transition, advised Graeme Justice.
"It is true that the imbalances in Romania are just as common as those in other emerging countries," stated Graeme Justice, the IMF's representative in Romania, adding that accession to the European Union will not solve the current problems very fast.
The IMF representative presented some of the analysts' expectations related to the benefits of EU accession and warned that these are "myths" which most of the time are not confirmed but encourage the authorities to liberalize economic policies. 
"Romania needs better policies to manage the transition," said Justice.
One of the myths is that incomes will increase to near European levels soon after accession, stated Justice. The IMF official explained that the evolution of Portugal, Spain, Greece and Ireland in the first ten years after integration shows that the share of Gross Domestic Product (GDP) per capita had not increased to reach the average of EU members.
On the other hand, Justice states that EU accession will not lead to a fast restructuring of the new members' economies. Thus, the structure of GDP in Hungary, Poland and the Czech Republic recorded slight variations by the present time and is comparable to that of ten years ago. In the three states, agriculture holds a 17% share of GDP, the same as in 1995, while the contribution of the services sector increased from 50 percent to 54 percent. By comparison, in the old EU member states, agriculture contributes five percent to GDP, while services contribute up to 70 percent.
"EU accession must not be seen as a panacea," said Justice, advising the government to continue its reform and restructuring processes. "In this situation, I do not think it is appropriate to accept 50 percent wages' increases," he added.
On the credits expansion, the IMF official pointed out that the poor management of the situation will most likely produce a crisis. According to IMF studies, approximately 75% of long term fast increases in crediting activities have led to economic crisis.
At the end of October, the Romanian authorities and IMF officials failed to reach common ground over the stand-by agreement. According to the government, the IMF's requests on economic policies (zero percent budget deficit, jobs freeze, collective layoffs etc) were unacceptable. The main issues signaled by the IMF were an unrealistic budget and budget deficit for the next year, macro-economic imbalances (on the inflation target, and current account deficit), slippage on wages policy and the absence of structural reform.

ROMPETROL, Romania?s largest private oil company, will take the country?s government to court this week to try to claw back ?hundreds of millions? of dollars in damages resulting from what it sees as a concerted legal attack by the Romanian authorities.

Senior company executives confirmed to The Business that negotiations with the Romanian government had been unsuccessful and that it would file a suit this Wednesday or Thursday at the Washington-based International Centre for the Settlement of Investment Disputes. It has hired French law firm Salans to make its case.

This summer the Romanian authorities detained Rompetrol chief executive Dino Patriciu for 24 hours on charges of money laundering and fraud, and in March, the Romanian general prosecutor charged 14 managers of Rompetrol with money laundering, tax evasion and fraud. The company?s problems stem from the 2000 privatisation of Romania?s Petromidia refinery, which Rompetrol bought for $50m (£29m, E43m), building a business with an expected 2005 turnover of $2.5bn.

Last week, Rompetrol bought Dyneff, France?s largest distributor of petrol, diesel and fuel oil, in a deal that will double its annual turnover to $5bn, and secure markets for its products in France and Spain.

Dyneff supplies about 3.5% of the total French market, or almost 3m tons, and its primary assets are its strategically located storage depots, along the Mediterranean and Atlantic.

Philip Stephenson, Rom-petrol?s vice chairman, said: ?With a presence on the Atlantic, Mediterranean and Black Sea, the post-acquisition Rompetrol will be able to source crude oil from the least expensive areas of current production and sell directly into the most lucrative markets.?

Neither side would reveal the price Rompetrol paid.

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The Authority for the Recovery of State Assets (AVAS) will close the strategy for recovering the debts that must be paid by World Trade Center (WTC).
This action will be followed by the selling of shares owned in this company, stated the institution's president, Giliola Ciorteanu.
AVAS is trying for the third time to sell through tender assets belonging to Sere Codlea. The starting price will be of 3.5 million dollars, according to an institution statement.
Sere Codlea owns 60 hectares of greenhouses and 200 hectares of farm fields.
The CNM Petromin Employees Union will appeal the AVAS decision that excluded the consortium formed of a Romanian company and the Petromin employees association from privatization, in favor of a Greek individual.
Pavel Fronea, the company's general director, stated that Petromin will also request the ceasing of the privatization process.

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Rosia Montana Gold Corporation (RMGC), the company that is developing a gold works project in the Apuseni Mountains, intends to sue Academia Catavencu journalist Mircea Toma. The journalist, who decided to cancel the advertising contract that RMGC had signed with Academia Catavencu, said last week he has finally "canceled the pact with the devil".
"We will talk with our lawyers to see if we can sue Toma. His statement is insulting and we can not accept it," said RMGC Vice-president Adrian Samson.
Samson also said that Academia Catavencu decided to cancel the contract just because National Geographic announced it will no longer publish the RMGC adverts. 
In reply, Toma said he doesn't think RMGC will sue him. "I really doubt that a smart devil will conclude that it is a good idea to draw the media's attention on him," said Toma. However, the journalist said that in case he will be sued, he will appeal the European Court for Human Rights.
The Gold Corporation had initiated a gold exploitation project in the Apuseni Mountains and had obtained the approval of the authorities for 39 drilling points in the Rosia Montana perimeter.
In 1997 a Canadian company, Gabriel Resources, leased Gold Corporation the land plot on which the perimeter is located for three million dollars. Studies carried out by experts revealed the existence in the perimeter of about 331 tons of gold and 1,600 tons of silver which Gold Corporation planned to extract.
The Rosia Montana project benefits from the facilities to which disfavored zones are entitled and those are offered under the old legislation related to mining activity. Therefore, Gold Corporation is exempted from the payment of profit tax until 2009 and from the payment of any customs tax until the completion of the project. However, the company would pay the Romanian state a contribution of two percent of the value of gross production.
In 2000, an accident at another gold mine caused a major ecological incident when a great quantity of cyanide was spilled in the Tisa River whose course runs through Hungary before joining the Danube River. The incident caused several NGOs to ask for the mine to be closed.
Local environmental organizations, but also members of the Romanian Academy, say the Rosia Montana project would have a negative impact on the population, the environment and the archeological vestiges in the area. The area is also the best-known archeological site in Romania, famous for the remains of the Dacian-Roman civilization and those of migratory populations.

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The gold reserves in Rosia Montana amount to about 330 tons and the silver ones to about 1,600 tons, according to geologists, so at the current price, the gold reserves in Rosia Montana are worth about 5 billion euros, Bursa writes. 
"The Gabriel Resources company from Canada invested over 35 million dollars in geological research between 1997 and 2003, carrying out about 1,200 drillings in the area. The Rosia Montana project involving the Canadian company has been strongly attacked by non-governmental organizations. Recently, the "National Geographic" media trust announced it would stop broadcasting publicity for the company. In Rosia Montana, the gold concentration per excavated ton of ore has been established to be between 1- 1.5 grams but there are areas with 5 grams of gold per ton. Adrian Samson, one of the vice-presidents of the company said that "although the concentration of gold per ton of ore is not very great, the exploitation is profitable taking into account the total gold quantity existing in this perimeter." Referring the drillings which have been made, he said they had to overcome obstacles from the "Alburnus Maior" Association which managed to secure the suspension of 39 of them in court, "which affected first of all the local community which lost 100 workplaces for a year," said the vice-president of Gabriel Resources. On this subject, the management of the company considers that "Alburnus Maior" supported a media campaign with great influence over the court in Alba Iulia and that it has always declined the invitation to dialogue made by the representatives of the company.  On the other hand, Corina Bors, a consultant on archeological problems said "the Rosia Montana project was an opportunity to research the cultural - archeological patrimony of the area." She said that 80 Romanian and foreign specialists took part in the research and 20 local and foreign institutions were involved.
The investment made by the Canadian company in archeology amounts to 8 million dollars. Bors said all the discoveries made, which consist of graves, Roman dwellings, and ruins of cult buildings, will be preserved where they are, by creating protection areas around them."

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Slovakia's no-frills airline SkyEurope began flights to and from Sofia and Bucharest on December 9 and 12, respectively, with fares starting from as low as EUR 25 one-way excluding taxes.

The first flight is scheduled to take off from Sofia to Bratislava at 5 pm.

The Boeing 737-500 will take off from Sofia Tuesdays and Thursdays at 12.30 am and Fridays and Sundays at 5.30 pm.

SkyEurope Airlines was established 4 years ago, in 2001, and pioneered low-cost aviation in Central Europe by becoming the first low-cost airline to open bases in Bratislava (Slovakia), Budapest (Hungary) and Krakow (Poland). To further build on its first mover advantage, SkyEurope is now expanding eastwards, with the first low-fare flights between Bratislava, conveniently located only 50 km away from Vienna, and the Bulgarian and Romanian capitals.

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The take over of Electrica Moldova by the German group E.ON moved up Germany from the fifth place to the fourth, in the classification of the foreign investors in Romania, following Austria, France and Holland as the value of investments made by the German companies in the last 15 years in Romania exceeds ¤1 bln, being involved mainly in the energy, retail and car parts sectors.


?Of the ¤12.8 bln invested by foreign countries in Romania starting 1989, over ¤1 bln come from German companies.

The Romanian statistics place Germany in the fourth position of foreign investors,? stated German Ambassador in Romania Wilfried Gruber.

The interest of the German investors for opportunities in Romania, especially in energy and banking fields was also proved by the participation of Deutsche Bank in the first phase of the Romanian Commercial Bank privatisation, and also by the interest of E.ON group in taking part in the privatisation of the other electricity distributors.

The most important German investment accomplished this year, and at the same time the largest capital subscription in October belongs to E.ON, which took over Electrica Moldova.

According to the National Office for Trade Registry (ONRC), the company for electricity distribution and supplying E.ON Moldova had the largest capital subscription in October, namely over ¤77 M. E.ON invested ¤100 mn to take over the majority share package of the company in Romania, namely 51%.

The group?s international division E.ON Ruhrgas also paid ¤303 mn to take over the majority share package of the Romanian company for natural gas distribution Distrigaz Nord.

Of the total, ¤125mn represent the price for 30% of the Romanian distribution company?s shares, and ¤178 mn were used for the capital increase, which allowed the group to hold 51% of the registered capital.

Moreover, E.ON Ruhrgas will invest in the next seven years approximately ¤200 mn to modernise and extend the Distrigaz Nord natural gas distribution network.

The retail is a market segment which stirred the interest of the German investors, who are present in this field through Metro, Kaufland companies and Tengelmann concern.

The important investments in Romania will come from Kaufland company, part of the Lidl & Schwarz group, which plans to assign over EUR 300 M in the next four years to create a network of stores.

The German chain of discount stores Plus has already opened 12 units in Romania and announces investments of over EUR 200 M for building a network of 120-150 stores, according to the company?s data.

In the first nine month of the year, the Romanian-German trade exchanges reached a volume of ¤6.3 bln, which represents a 17.1 per cent increase as compared to the same period of last year.

In this interval, the German exports in Romania increased 23.6 per cent, reaching ¤3.9 bln, while the Romanian exports in Germany increased 8.3 per cent, to ¤2.5 bln.

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Romania spent 235 million euros for Research and Development activities (R&D) last year; five times less that the investments carried out by the European Union.

In past years, the funds allocated by the government for R&D had a constant ratio in the Gross Domestic Product (GDP) according to a study carried by the European Statistics Institute, Eurostat. Thus, the volume of the funds increased in 2003 by 0.1 percent compared with 2001. The government allocated 235 million euros last year - the same as in 2003 - representing a 0.4 percent ratio in the GDP. Bulgaria allocated 0.51% of the GDP last year, amounting to 99 million euros.
The average in the European Union was 1.9 percent of the GDP, representing the equivalent of approximately 195 billion euros. However, the sums allocated by the European government for R&D recorded a slight decrease in the GDP last year compared 2003 and 2001, that of 0.2 percent and 0.3 percent, respectively. The funds actually increased in value by 1.3 percent.
Hungary allocated the highest GDP ratio for Research and Development out of Central and Eastern European countries: 0.89 percent of the GDP representing 721 million euros. Poland invested 1.13 billion, the equivalent of 0.58 percent of the GDP, while Slovenia financed the domain with 418 million euros, or 1.61 percent of the GDP.

Northern states allocate highest ratio

According to Eurostat, the EU members which granted a special role to the R&D sector were the Northern states. Sweden allocated both the highest GDP ratio and largest sums for research and development - 3.74 percent of the GDP representing 10.4 billion euros. Finland came in second, with 3.51 percent of the GDP allocated representing 5.25 billion euros, while Denmark invested 2.63 percent of the GDP, worth 5.1 million euros.
In terms of value only, Germany invested the largest sums - 55.1 billion euros, accounting for 2.49 percent of the GDP, followed by France - 35.6 billion euros and Great Britain - 30 billion euros.
Eurostat estimates that the United States of America spent 251.5 billion euros (2.59 percent) last year for the Research and Development sector, while Japan invested 11.7 billion euros (3.15 percent) and China 16.4 billion euros (1.31 percent of the GDP).
The European Statistics Institute analyzed the 25 member states of the European Union and the candidate countries - Romania, Croatia and Turkey, as well as the numbers reported by several countries which are not EU members - Iceland, Norway, China, USA and Japan.
In general, R&D activities are conducted by specialized units or centers belonging to companies, universities and state agencies. In the context of commerce, "research and development" refers to future-oriented, longer-term activities in science or technology, using similar techniques for scientific research without pre-determined outcomes, and with broad forecasts of commercial yield.
Statistics regarding organizations devoted to R&D may express the state of an industry, the degree of competition or the lure of scientific progress. Some common measures include: budgets, numbers of patents, or on rates of peer-reviewed publications.

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Polus Transilvania, held by Hungarian TriGranit Development Corporation and businessman Arpad Paszkany is willing to pay up to 8 million euros to amicably settle the suit filed by the University of Agricultural Sciences and Veterinary Medicine (USAMV) for the plot of land in Cluj where the company is supposed to build a shopping complex, sources close to the project said.

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Economy and Trade Minster Ioan Codrut Seres will present a memorandum of understanding regarding Romania's participation in the EU programme called Intelligent Energy - Europe, the Romanian Economy and Trade Ministry (MEC) informs in a release on Friday. Under this memorandum, Romanian companies will be enabled to participate individually or in consortiums with European companies in projects related to the promotion of energy efficiency and rational use of energy, in particular in buildings and industry; the promotion of new and renewable energy sources for electricity, heat, and biofuels; energy aspects of transport, fuel diversification, biofuels and energy efficiency, as well as to the promotion of renewable energy sources and energy efficiency in developing countries. The programme started in 2003 and will continue through 2006, on a total budget of 250 million euros. MEC is running this porogramme in Romania and it is retroactively implementing projects carried out in 2005. An Intelligent Energy Executive Agency (IEEA) is concerned with selecting the companies submitting projects.

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The Canadian mining company European Goldfields Ltd. Announced on Tuesday having signed an agreement with the Romanian mining company General Samara for the setup of a joint company to deal with the exploitation of the gold field Magura Tebii, Romania, AFX reports. Magura Tebii is located in the North-West part of the Brad Sacaramb area, in Transylvania, approximately 35 km north-west from the goldfield in Certej belonging to European Goldfiels. According to the agreement signed on Tuesday, European Goldfields will control 80 percent of the new site, with the condition the feasability study be positive. As regards the Certej site, situated in the southern part of the Apuseni mountains, European Goldfields claims having finished the technical and financial parts of the pre-feasability study. Among the shareholders of the Canadian company is Frank Timis with a share of 18 pct. European Goldfields Romania, subsidiary in Romania of the Canadian company European Goldfields Limited has five ore exploitations in Romania and was setup in June 2000 by the revamping of Gabriel Resources Ltd, a Canadian company involved in the exploitation of the largest gold and siver field in western Romania, in Rosia Montana.

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Turkey attaches great importance to the economic relations with the states in the region, particularly in the energy area, Turkish Energy Minister Hilmi Guler said here on Wednesday at the meeting of the economy ministers from the Black Sea, the Balkans and Central Europe. The talks between Guler and Romanian Minister of Economy and Trade Ioan Codrut Seres focused on a range of concrete projects and aspects of the common economic interests of the regional states. The discussions targeted the Nabucco project for the transport of gas from the Caspian Sea, the construction of an undersea electricity cable as well as projects in energy and natural resources. Seres proposed his Turkish counterpart to initiate projects in nuclear energy, while at the same time looking for solutions to store radioactive waste. "Turkey is a constant commercial partner of Romania. We should focus on the infrastructure projects that are beneficial to both our countries and the region," he stressed. Trade between Romania and Turkey increased eight-fold at the end of September from 1989, with commercial exchanges forecast to reach a record 4 billion dollars by year-end.

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Premier Calin Popescu-Tariceanu stated on Thursday that the Executive has established that the winning bid in the privatisation process of the Romanian Commercial Bank (BCR) is to be announced on December 21. According to the Prime Minister, the privatisation contract will be presented to the Government and, following its approval by the Executive, made public. BCR's privatisation contract is going to be approved by law, the head of the Romanian Executive stressed.

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The most serious problem of the country is not the lack of traffic laws, but the fact that they are not implemented properly, the Civic Alliance said yesterday.
The members of the organization said that they are aware of all the irregularities that are committed daily in Bucharest's traffic, including illegal parking.
"The problem in these cases is the fact that road police agents don't fine the guilty people," said the release from the alliance.
The alliance's members said that the Interior Minister, Vasile Blaga, should tackle the issue.
Earlier this week Prime Minister Calin Popescu Tariceanu met with Blaga and with Transportation Minister Gheorghe Dobre to analyze the ways the traffic can become safer for people.
One of the conclusions of the meeting was that transportation firms have to be checked and Blaga and Dobre signed an agreement in this respect.
Tariceanu asked for an assessment of all the driving schools in the country to see if they are preparing future drivers and applying EU standards.
As a follow-up of the meeting, teams of employees from Car Registry and from the Road Police are to check the minibuses and cars used to transport people, focusing on the technical elements, from December 7 to December 20, according to a press release from the Transportation Ministry.
The teams will work mainly on the national roads and will also carefully verify the cars inside, checking the comfort level and seeing if the speed devices work.
The controls in traffic grew recently after the increase of the number of car accidents.
Last week, 15 people died in a grave accident after the overcrowded minibus they were in crashed into a tree because of the speed.
Statistics show that annually tens of people are wounded and killed in car accidents in Romania.
Dobre said that Romanian legislation abides by the European standards, but the main shortcoming is applying it.
The Civic Alliance said that one recent positive change is the installing of cameras on National Road 1, one the roads where most of the accidents take place.

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The National Anticorruption Department (DNA) has closed the "Swedish bribery" file related to the alleged bribe of 520,000 euros that Swedish company Asea-Brown Boveri (ABB) gave to certain Romanian officials, judicial sources announced yesterday.
The same sources said the anticorruption prosecutors had decided in September not to continue the investigation, which led to the closing of the file.
In March, the former director of ABB, Peter Fallenius, was charged with taking 4.8 million Swedish crowns (520,000 euro) out of his company's accounts. However, Fallenius denied the 520,000 euro embezzlement charge, saying he used the money for bribing Romanian officials in the name of the company, in 1998.
The officials were apparently bribed in connection to an agreement to an older 4 billion dollars debt Romania had to Sweden, according to the media.
However, at the end of April, Fallenius was sentenced to a jail term after Swedish authorities established that he had illegally appropriated money he declared to have used for bribing Romanians. The court decided Fallenius had in fact used the missing money himself.
The case received extensive coverage in the Swedish and the Romanian media. Scandinavian newspaper Svenska Dagbladet said the ABB representative forged tax documents and borrowed money from his own company even though the practice is illegal. The businessman was also accused of failing to declare dividends worth over 7.6 million euros.
Fallenius, worked between 1997 and 1998 as the representative of ABB Electro-Invest LTD and Electroinvest Romania SRL subsidiaries.
The case was also investigated by the National Anticorruption Prosecutor's office (PNA) which called several Romanian officials and politicians as witnesses, including former Finance Ministers Mircea Ciumara and Daniel Daianu, and former Bucharest mayor, Viorel Lis.

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The Interconnection Tariffs of Romtelecom Will Be Reduced as of the 1st of January 2006

The Court of Appeal of Bucharest rejected yesterday Romtelecom's request to suspend, for the duration of the trial, the decision of the National Regulatory Authority for Communications which obliges the operator to decrease its interconnection rates.

In October 2005, ANRC imposed on the fixed incumbent the obligation to reduce the interconnection tariffs in two stages: as of the 1st of January 2006 and as of the 1st of January 2007. Romtelecom sued ANRC for this decision, requesting the measure to be suspended during the trial.

By rejecting the request of Romtelecom regarding the suspension of the ANRC decision, the court confirms the fact that a decrease in the interconnection tariffs is not likely to cause unjustified losses for the telephony provider and that it represents, at the same time, an important step towards development of effective competition in the Romanian communications market.

"Interconnection tariffs are the key to competition and it is ANRC's objective to develop competition, because the Romanian market cannot remain any longer under the dominance of one single operator. The consumers will soon see the advantages of this decision. I am convinced that within 1 year Romanian users will have a wide variety of telephony services to chose from, provided by operators who will fight for each and every user by means of offers and prices but also by means of quality and efficiency", Dan Georgescu, the President of ANRC, declared.

The decision of the court substantiates the ANRC viewpoint, presented and economically justified in front of the Court of Appeal of Bucharest, according to which, in reality, by the decrease of the interconnection tariffs Romtelecom only loses those incomes currently obtained on an unjustified basis, by charging tariffs that are not cost oriented.

By its regulatory measures, ANRC intends to eliminate this inequity that is reflected in the tariffs charged by Romtelecom to its competitors, while at the same time offering the incumbent a stable financial situation.

As of the 1st of January 2006, Romtelecom will lower the interconnection rates as to reach the level established by ANRC through the decision issued in October 2005:

- 0.70% during the peak hours and 30.32% during off-peak hours for interconnection at local level;
- 9.47% during the peak hours and 45.99% during off-peak hours for interconnection at regional level;
- 9.04% during the peak hours and 46.86% during off-peak hours for interconnection at national level.

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Dinu Patriciu, the president of the Rompetrol oil group, stated that he expects the turnover of the company to increase after the takeover of the French fuels distributor Dyneff.

Rompetrol has acquired the French company Dyneff, the biggest independent distributor in France through the largest takeover accomplished by a Romanian company in the European Union.

"The negotiations with Dyneff begun 8-9 months ago," stated Rompetrol's president, Dinu Patriciu. "We plan other acquisitions as well, not only in the European Union," he added, without giving further details. "As an integrated company, we search for the cheapest resources to sell on the most stable markets," he explained.
 "The key to the business is the Petromidia refinery," said Patriciu, pointing out that the company will not sell the company's products in France but import them from Italy and avoid high transport costs. Representatives of the local oil group estimate that Rompetrol will sell double what they do in Romania on the French and Spanish market.
The French fuel distributor was controlled by businessman Antoine Lecea, aged 73, who will now have a seat on the board of Rompetrol France, the name of the company in the second largest economy of the euro zone. Dyneff has 226 gas stations and the takeover has boosted the number of outlets owned by Rompetrol by 70 percent, to 550. Rompetrol has denied any intention of outsourcing the management activities of its retail units, a process initiated by its competitor OMV Petrom. "Without an online investigation, without seals there is no way," stated Patriciu.
The Romanian oil group has also tripled its storage capacity through the acquisition. The storage facilities of the French company total 446,000 cubic meters.
Dyneff last year sold 3.2 million cubic meters of oil products, the equivalent of 66 percent of the Romanian market's total volume, and estimates a turnover of 2.4 billion dollars for this year and an operational profit of 20 million dollars. The company holds a 3.5 percent market share in France, the largest among independent companies. The highest share is owned by Total, Exxon, Shell and BP Amoco totaling 54%, followed by supermarkets - 36 percent, independent operators - 8% and others.
Another benefit of the transaction is a lower company risk, obtained by combining the risk ratings of the East European countries with that of France. 

Rompetrol's turnover to double

The Romanian oil company is the largest Romania private industrial group, holding most of its assets and operations in Romania and South East Europe. Its main activities focus on refining and sale of oil products, as well as exploration, production and other services in the oil industry. Patriciu said that turnover could double next year after the takeover, estimating a value of five billion dollars, stimulated by the acquisition. Moreover, EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) profit is expected to hike by 20-25 percent, while the net income should increase by 10-12 percent. The assets of the company could increase in value by 25 percent.

Rompetrol's headquarters to be moved to Romania

Patriciu announced yesterday that he intends to move the social headquarters of the group from Holland to Romania, but he will do so only after "judicial harassment" ceases. "It is natural for a multinational company like Rompetrol to have its headquarters in the capital city of Romania," stated Patriciu.
Currently, the businessman, along with two American citizens and other persons are being investigated by prosecutors on several counts, including fraud, manipulation of the stock exchange and other alleged offenses. Prosecutors interviewed the Prime Minister, Calin Popescu Tariceanu, as a witness in the stock exchange case and requested the investigation of the accounts owned by several public figures, journalists and politicians. 
Patriciu called on President Traian Basescu and Tariceanu to ensure the Prosecutor's Office demonstrate "adequate behaviour" after several confidential Rompetrol documents forwarded to the prosecutors for the investigation reached the company's competitors.

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The price of an apartment in the Unirii area of downtown Bucharest is similar to that of an apartment in the center of Vienna, according to a study carried out by the SGA consultancy company. According to the report, the price of an apartment in Vienna could amount to 80,000 euros, almost the price of a flat in the Unirii area. "The price hikes for the flats were 250 percent in Bucharest over the past two years," states the report, adding that in most of the large Romanian cities the price has gone up by 150-200 percent. The report also points out that the hike did not occur in any European city over the past 15 years, let alone in such a short time period.
The analysts expect that the next period will bring about a bigger difference between the neighborhoods, especially for flats. Thus, the prices should record a plus/minus 5-8 percent variation for areas like Pantelimon, Berceni, Militari, or Drumul Taberei, depending on the access to mortgage credit. In the central and Northern areas of the Capital, the prices should increase in the mid-term by 15 to 18 percent.
The demand for flats is still high as it represents the sole viable solution for the population with average earnings.
Regarding the new constructions market, the SGA study states that developers should focus on residential areas with accessible prices and anticipate that the luxury market will reach its limit in the next two years. "The new constructions are still focused on luxury," states the report.
The realty analysts consider that the rent on the residential market reached "exorbitant" levels, which only foreign citizens could pay. During the last two years, the residential rental market firmed up in Romania with many new buildings and projects coming up.
According to a study carried out by Regatta real-estate agency, residential rental offers surpassed demand by at least 50% and due to the heavy competition in residential rental market, the quality of new properties on rent underwent an upgrade. Moreover, as long as expats could afford the prevailing prices, Romanian owners had to adopt the standards used abroad.
New residential properties conform to Western standards of large living rooms, sometimes measuring 30-70 square meters (sqm). Windows are wide with metallic blinds on the exterior and fitted with nets to allow sunlight but keep out pests. An increasing number of tenants ask for apartments with an additional room that can be transformed into a study or guest room. Facilities such as centralized AC, heating system, garage, doorman or reception desk aren't luxury anymore, but standard. Modernization and expensive touches have added a punch to the property's rental prospects.

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Rompetrol Rafinare, the most important company member of Rompetrol Group obtained from BRD ? Groupe Societe Generale a credit facility of 65 million dollars, to replace the facility of 45 million dollars, "ACT Media News Agency" reports


The credit will be used by the refinery to import raw material. The new payment facility is more flexible, with multiple possibilities and reimbursement terms, being better suited to the acquisition needs of Rompetrol Rafinare.

Rompetrol NV is the largest Romanian industrial private group, with stocks and assets in Romania and South-East Europe. The main activities of the group are in the domain of refining and marketing/ sale of oil products, with adjacent interests in exploitation, production and other services of the oil industry, such as drilling, constructions, transport, a.s.o.

The Group has over 7,700 employees and a turnover of 1,61 billion dollars in 2004, being one of the largest oil companies in the region and getting a strong position in the Black Sea area.

BRD is the second bank in Romania, with assets over 5.2 billion euros. The bank has over 1.7 million clients and operates a network of over 290 subsidiaries. BRD ? Groupe Society General has the second stock exchange capitalisation at BVB ( 2.5 billion euro at the end of October 2005).

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The European Bank for Reconstruction and Development (EBRD) and the Ministry of Public Finance (MFP) concluded a EUR 145M loan agreement for building a ring-road in the City of Constanta and for other infrastructure development projects in the county.


It will be a EUR-denominated loan of EUR 88.79 M and a local currency denominated one for the equivalent of EUR 56.21M.

The loan will be repaid from the state budget through the Ministry of Transport, Construction and Tourism (MTCT), with a maturity of 16 years, of which the grace period will be four years.

?The most important feature of this loan is that part of it will be drawn in RON, and that is a sign of confidence in the new Romanian currency on the part of EBRD.

I believe this is the first loan Romania borrows in its local currency from an international financier.

It only took us four months from the first discussions to actually signing the agreement, while discussions normally take eight to nine months for any EBRD project?, stated EBRD Transport Department Director Riccardo Puliti.

Puliti said he hoped that another loan agreement - for EUR 24M - could be signed by the end of this year or early next year for CFR Electrica.

The EBRD projects in Romania next year will be in the airport and railways sectors, for which the loans might be awarded without sovereign guarantees.

According to the EBRD Director, the weight of the transport projects in the overall EBRD investment in Romania is around 20 per cent, and is expected to go up given the country?s accession to the EU.

Puliti said that the bank would become very much involved in transport projects in Romania, at least in the next five years.

The ring-road around Cosntanta City is part of Pan-European Road Transport IV and will be 22.9 km long.

The Negoita brothers, who own the Pro Confort group of companies, are to build what none of the big players in the hotel industry have dared, the biggest hotel in Eastern Europe, Capital weekly writes.
On an estate of 31,000 square meters near the Vitan car fair, Ionut and Robert Negoita have planned to erect an 11-storey hotel with 1000 rooms of three, four and five stars. This is not only a plan on paper: they have already started digging the foundations and the hotel is to be ready in March 2007. The two brothers have to spend around 30 million euros for this whim, to which we could add the value of the estate, which is estimated at at least another three million euros. "At the moment, the hotel industry is an extremely profitable business and Bucharest does not have either hotels or conference rooms that are sufficiently big to host international events with thousands of participants. Our purpose is to attract this kind of event," Ionut Negoita says, explaining his strategy, adding that he would be satisfied if the hotel has an occupancy rate of 50%. The old continent only has four other hotels with a capacity above 1000 rooms. The Rossya Hotel in Moscow is the largest in Europe with 2,467 rooms, but it is also the oldest. As its refurbishment would cost too much, there is talk of it being pulled down and replaced by a new one. The second is the Estrel, in Berlin, with 1,152 rooms, followed by the Hilton in London with 1,052 and by another one in Moscow, the Ukraina, with 1,017 rooms. The highest number of units with over 1,000 rooms is in Las Vegas, in the U.S.; these being the hotels near the casinos. The largest hotels in the world have been built in Malaysia and Thailand and are actually resorts. At first sight, a 1,000 room hotel at the end of the town in an area that is more likely known as underdeveloped, seems to be a joke. (...) A large part of the sum necessary for building the hotel will come from the Negoita brothers' other businesses. The carpet import and distribution company Pro Confort, which this year will have a turnover of 8.5 million euros is their first business and is now worth around 7 million euros. "We had an offer from a competitor on the market but we did not want to sell" Ionut Negoita says.

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The volume of commercial exchanges between Romania and Russia is to stand at $3 billion this year, but there is still an unexplored potential between the two countries, commercial representative of the Russian Federation to Romania Igor Sidorov said, " ACT Media News Agency Reports.

''Last year, bilateral commercial exchanges grew by 42.5 percent, reaching $2.3 billion,'' said Sidorov. Romanian exports stood at $181 million and imports stood at about $2.7 billion (third place), registering a balance in favour of Russia. ''The deficit is mainly prompted by the import of energy from the Russian market such as crude oil, oil products, natural gas, which account for 90 percent of the total of imports,'' said the Russian official.

The Russian Federation ranks sixth in the ranking of Romania's commercial partners. According to him, Russian investors still encounter bureaucracy-related problems in Romania and the Economy and Trade Ministry should back them,'' said Sidorov.

Most of them operate in the energy field, dealing with the expansion of the natural gas storage capacity in Romania and transit for Russian natural gas.

At present Transelectrica Romania cooperates with RAO EES Russia under the Black Sea Transmission Planning project, which is aimed at identifying possibilities of cross-border cooperation in the electricity field.

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Germanos announced a commercial co-operation agreement with CosmOTE Romania, for the distribution of the latter?s products and services in the Romanian market through Germanos network.

The agreement is in the same context with those signed with CosmOTE in the rest of the markets operating (i.e. Greece, Bulgaria and FYROM). To this extend, in addition to the distribution of COSMOTE Romania?s products and services, the agreement includes also income from airtime, for both pre-paid and post-paid customers.

Analysts of Marfin expect the impact of aforementioned agreement to be evident on Germanos FY07 results, resulting to a c3% EPS upgrade. "Nevertheless, the long-term impact on our estimates is more material given the high growth prospects of the Romanian market and the direct impact of airtime agreements on the company?s profitability" they note maintaining their Outperform, rating.

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Romanian group Rompetrol's president Dinu Patriciu said the company has bought French independent oil company Dyneff.

Financial terms of the deal were not disclosed.

The transaction will bring Rompetrol's sales, incorporated into 2005 results, to 5 bln usd, up from 2.5 bln, Patriciu said.

Also, Rompetrol will double the number of its petrol stations to 550 as a result of the acquisition of the French group.

Dyneff, which has a 4 pct share of the French oil products market, is targeting sales of 2.5 bln usd in 2005, according to figures from Rompetrol.


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The Czech Chamber of Deputies approved the entry of Romania and Bulgaria to the European Union on Tuesday evening. None of the deputies present voted against, while there was one abstention. 
The two countries are set to join the EU on January 1, 2007. However, the deadline may be postponed if they fail to meet the EU requirements in time. The Czech Senate had already approved the treaty.
Czech Foreign Minister Cyril Svoboda called the agreement historic. He stressed that it was a priority of the Czech Republic for EU enlargement not to be postponed.
Foreign Affairs Minster Mihai Razvan Ungureanu yesterday saluted the signing of the EU treaty by the Czech deputies. This is a positive and encouraging political message, a new proof of the support that the Czech Republic has always shown for Romania's EU accession, said the minister.
The date by which Bulgaria and Romania will join the EU will finally be set in June 2006, after the European Commission issues the last country reports for the two countries.
The European Commission has not recommended any postponement, but it has warned the two countries that if they do not eliminate some serious defects, it will have to delay their accession by a year.
According to the EC October country reports, both Romania and Bulgaria face rampant corruption at all levels, belated reforms of the civil service and judiciary, continuing production of fake products and insufficient control of their borders. Authorities are not prepared to control the EU's agricultural subsidies and EU structural funds, the report said.

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The producer of Carlsberg and Tuborg beers in Romania, United Romanian Breweries Bereprod (URBB), has announced $50 million of investment in the next three years to increase its production capabilities.

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The representatives of Tunisian Coficab company, a manufacturer of automotive wiring have announced the works on the production and office space inside the Arad industrial park will be completed this month. Production would begin next March, they added.

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Amadeus Romania, the domestic branch of the international giant specialising in online reservation solutions, posted 4.1 million RON (1.1 million euro) turnover in the first nine months of the year. The result was lower than the company expected, but its actual target was not revealed.

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The Salaj-based furniture producer Simex Group posted sales of nearly 10 million dollars (7.91 million euros) in the first nine months, an increase of 11% on the same time in 2004.

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Argillon Romania a manufacturer of medium and high-voltage porcelain insulators, part of the German group of the same name, has invested 7 million euros in its facility in Turda, Cluj County. This was aimed at boosting production capacity, with another 2.3 million euros to be spent in realising this goal in 2006.

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Siemens group, one of the biggest industrial producers in the world, intends to open a new facility in Romania and to consolidate its position on the local market, following the strategy for company's development, ACT Media news agency reports.

Siemens started the operations in a new facility specialised in the production of electronic components, in Sibiu (centre) and announced that a new facility will be inaugurated in Timisoara with an 25 million euros investment.

The new facility Siemens Industrial Manufacturing Engineering and Application (SIMEA) in Sibiu is set to produce electronic components and equipments, especially for refrigerators and washing machines.

The facility in Timisoara will be constructed by Siemens VDO Automotive, with final investments of 60 million euros.

The production hall will have 10,000 square metres and the office building - 8,000 square metres.

The production itself will start in October 2006.

Siemens VDO Automotive has already had a research and development centre in Timisoara, with 26 million euros turnover, with an initial investment of seven million euros.

The facility in Sibiu is specialised in production processes, manually executed, and it has at present 60 employees.

At first, the facility will use Hungarian products and, together with the other two facilities in Sibiu, will increase Siemens' competitiveness for the products that request a high level of manual labour.

Besides the favourable economic conditions, another reason for the investment in Sibiu is the existent infrastructure.

Siemens' Romanian subsidiary registered 200 million euros revenues in 2004.

After buying Forte SA company (IT field), Siemens has now local subsidiaries in nine cities, like Craiova (south), Timisoara, Arad (west) and Bucharest and other branches in 32 cities.

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The Japanese company Calsonic Kansei discusses with the Ploiesti Industrial Park administration the possibility of constructing a car part factory in Ploiesti, an investment worth of 100 million euros, daily Economistul reports. The future factory will produce car cockpit modules, a first investment being estimated at 23 million euros. Calsonic produces exhaust systems, cockpit modules, front modules, air conditioning systems and cooling units for engines. The European division of the company has production units in England, the Netherlands, Spain, France and Poland. Its main clients are Audi, BMW, Ford, Honda, Mitsubishi, Nissan, Peugeot, Renault and Volkswagen.

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United Romanian Breweries Bereprod (URBB) or Tuborg Romania will invest some 50 million euros in the next two years to extend its facility in Bucharest, so as to double production in this unit up to 2.3 million hectolitres per year by 2011, according to URBB chairman, Shaine. "We will invest some 50 million euros to extend our facility, with our investment being scheduled to end in 2007," Shachar Shaine said. He added that URBB expects a 40 percent increase in turnover this year, while the company's sales went up approximately 20 percent in 2005. URBB currently has a production capacity of 1.2 million hectolitres, this year reaching the maximum capacity. The company produces the Tuborg, Carlsberg, Skol and Holsten brands, as well as the non-carbonated soft drink Orangina. Of the total output, some 7-8 percent are exported to Bulgaria, Serbia, the Republic of Moldova, Hong Kong, and Tuborg Romania might also export to the United States starting next year. "In 2005 we have recorded the most significant increase in the Carlsberg and Skol sales, although we have recorded high rises for the Tuborg, Holsten and Orangina brands too, the last one selling as estimated," Shaine said. For 2006, URBB intends to invest some 15 million dollars in the new brewery, to build a new logistic centre near the factory, and also in some environment projects. Shaine announced growth of the market in the PET sector in 2006, and also the possibility to extend the Orangina brand, if consumers will send signals they recognize it.

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Chemical company GHCL Ltd has acquired 65 per cent stake in SC Bega Upsom SA, a leading Romanian soda ash manufacturer for $19.50 million, through its overseas subsidiary.

GHCL informed the Bombay Stock Exchange that it would make a public offer to purchase the balance 35 per cent, as per local Romanian regulations.

The company has financed the acquisition through the $80.5 million it had recently raised via foreign currency convertible bonds. With this acquisition, its total soda ash capacity globally would increase by 3,00,000 MTPA to 9,00,000 MTPA.

In addition to acquiring this plant, GHCL and its subsidiary have also entered into a MoU to acquire majority stake in another soda ash plant in Romania.

"This acquisition is a first step towards attaining leading position in the global soda ash industry with a strong presence in the European markets," GHCL Chairman, Mr Sanjay Dalmia said. - PTI

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Financial investment company (SIF) Muntenia has sold on the Stock Exchange 1.4% of drug maker Sicomed through transactions worth over 2.2 million euros, Ziarul financiar writes on Tuesday. "We took advantage of the fact that the market price was higher than the one in the Zentiva offer", said an official of SIF Muntenia, company which owned 12% of the drug maker. SIF Muntenia said it had not taken a final decision on the stake it still owns in Sicomed, the last subscription day within the offer being 8 December. Sicomed posted in H1 2005 an increase in net profit by 66% versus the similar period of 2004, and the H1 turnover rose 15% versus the same period of 2004. Also in H1, Sicomed invested almost 2 million euro in upgrading production technologies to international quality standards.

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Tourism will contribute approximately 2 percent to the formation of Romania's Gross Domestic Product (GDP) in 2006, being estimated to increase to 1.9 percent in 2006, show data released by the National Tourism Authority (ANT). For an estimated GDP of 281.2 billion RON, tourism would contribute 5.5 billion RON. The contribution of tourism to the GDP formation is estimated to increase to 3-4 percent in 2014-2015, after an expected 7.2 billion RON for a GDP of 364.1 billion RON. A significant share of the national tourism revenues is currently generated by Romanian tourists, whose number is expected to advance 2.26 percent in 2006, to 4.1 million. A rise to 5 million is projected for the years 2013-2014.

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Romania can soon overthrow Poland from its position as the greatest automotive market in Central Europe. Romanians buy more and more new automobiles, while Poles buy fewer and fewer, because they prefer the old vehicles which come from the European Union. Poland, Central Europe's most populous country, has been for a several decades the largest auto market in the area. This situation may soon change, with Romania to become the market leader, the Warsaw-based Gazeta Wyborcza daily reports. In the first three quarters of the year, as many as 157,400 new cars were sold in Romania, by 60 percent more than in the same period a year ago, according to the information provided by JATO Dynamics, a well-known company which analyses international auto markets. During this period, the sales of the new automobiles shrank in Poland by 28 percent, from 255,600 to 184,300 vehicles.

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An examination exercise of Romania's trade policy, due to end on November 30, 2005, started on Monday at the hqs. of the World Trade Organization (WTO), in Geneva, with the presentation of a WTO report on Romania's trade policy, the Romanian Economy and Trade Ministry informs. The WTO trade policy examination body analysed Romania's progress regarding the commercial policy, contingent on five parameters, namely the economic environment, the institutional framework, trade policy instruments, trade policies and commercial partners. The reforms Romania has made are part of a far-reaching process aimed at its EU accession. Economic indices such as GDP, deflation and the drop in the fiscal deficit have been improved since the latest examination. The authorities took steps to facilitate direct foreign investments in Romania. The report says that emphasis in foreign trade tends to switch from the export of raw materials and low-VAT products to that of high-VAT ones. Economy and Trade Ministry's directorates streamlined their cooperation with the private sector and the NGOs. In 2005, the Foreign Trade Department, the Export Council and officials of the private environment devised a National Export Strategy and started branding programmes, to be continued in 2006 as well, in high-potential sectors.

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Euroclinic, the only private hospital services provider in Romania, part of the Medisystem Romania group mainly owned by Eureko BV of Netherlands (99 percent), is functioning under a public-private partnership, using the services of 190 doctors from the Bucharest Emergency Hospital, Bursa daily reports . Radu Dop, the hospital's manager said "normalcy in the Romanian public hospital system should resume in no more than ten years." He also added "although we are alone now on the market we want other competitors, as we are not afraid of competition and we are also conscious of the fact competition would do good to the Romanian healthcare system." Medisystem has also developed a network of private healthcare offices, policlinics and diagnostic centres, planning to inaugurate private hospitals also in Transylvania (Northwestern Romania) and Iasi (Northeastern Romania). Although the costs are high for the common people, the manager of the hospital thinks these "are six times smaller compared with the private hospitals in Austria, 10 times smaller compared with the ones in Switzerland and 12 times smaller compared with those in France or the US."

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Motorways are a priority on the agenda of the Ministry of Transport, Construction and Tourism, Minister Gheorghe Dobre is quoted by the Capital magazine as saying on Friday. The Transport Minister announced that there are at present pre-feasibility studies for the entire 4th European corridor, from the western Nadlac checkpoint to the southeastern Black Sea port of Constanta. There are great chances that the funds be provided and all the procedures required for this route be finalised by the end of next year, he added. The year 2006 will see the start of the works on the motorway linking the western cities of Arad and Timisoara as well as on a 49-km bypass to Arad; the construction of a 52-km motorway linking the southeastern cities of Cernavoda and Constanta will begin in 2007, together with a 23-km Constanta bypass that should be completed in 2008. The construction of the motorway linking the southern city of Pitesti with the western Sibiu, Deva, Lugoj and Timisoara will begin in 2007, Dobre said. The works on the Brasov-Bors motorway to be built by American company Bechtel will continue, but at a slower pace and only after the re-negotiation of the contract is completed, the minister stressed. "We have 100 million dollars for this project in the 2006 budget and Bechtel is showing signs it would want to enter legality and give up the 250 million dollars advance payment," Dobre explained.

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The Romanian agriculture is attractive for the foreign investors due to the existing potential of development on medium term, said Catalin Pauna, chief economist with the World Bank Mission in Romania. Pauna participated in a seminar organised by the U.S. Embassy in Bucharest called "Business opportunities for the agriculture and Food Industry" occasioned by a trade and investment mission carried this week by 14 U.S. companies operating in the financial and agricultural fields. The WB official said Romania is among countries reporting significant improvements of the business environment according to a report "Doing Business" done by the World Bank two months ago. "The study, carried out in 100 countries, reveals the fact that Romania has a very dynamic economy," due to the expected EU accession, the chief economist believes. The World Bank currently develops in Romania political reform, institutional consolidation and investment programmes.

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Connex Vodafone expands, as of Tuesday, 3G services to 6 new towns - Sibiu, Oradea, Targu Mures, Arad, Pitesti and Galati, increasing the number of twins with 3G coverage to 14, the company informs. ''Seven months after the introduction of 3G services in Romania and one year after the company won the 3G license, Connex Vodafone 3G services have seen a great success. The high speed for data transfer, video calls and more advantageous phone calls are only some of the direct benefits offered to Conex Vodafone customers. We want to further expand the coverage of 3G network and launch new services on this market, ''said Ken Campbell, marketing manager of Connex Vodafone. Connex Vodafone 3G is a high-capacity network which provides Connex Vodafone users access to a wide range of new services. Except for video calls and fast Internet mobile, 3G users may enjoy television programmes directly on the cellular phone and an attractive offer in the Play portal - music videos, video trailers or clips with A division soccer matches, as well as other entertainment services or news.

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The volume of commercial exchanges between Ukraine and Romania dropped by 35.7% in the first nine months of the year, around 385.7 million euros, according to the head of the Ukrainian Economic Mission of the Embassy of Ukraine, Mykola Taranenko.?The present stage of the evolution of commercial exchanges, which is different from the evolution of the last years, is due to the regional political change of some transnational companies,? Taranenko told Rompres. According to him the Ukrainian export to Romania dropped by 46.5%, to the level of 296.6 million euros, while Romania?s export is on the rise by 98.1% or 89.1 million euros. ?Mention should be made that the volume of bilateral trade has grown lately, first of all because of the growth of Ukrainian export. Last year, the volume of bilateral commercial exchanges reached about one billion dollars. The dynamic must be preserved and for 2006 we foresee an increase of commercial exchange and Ukrainian export According to Romanian statistics, Ukrainian investments amounted to 1457 million dollars, Ukraine holding place 74 in the classification of foreign investors.

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CosmOTE Romania announced the official launch of its commercial wireless operations as the company enters the market through an aggressive tariff policy in an effort to compete with Vodafone and Orange.


CosmOTE Romania would offer the lowest monthly charges to postpaid customers as well as free airtime.

As far as prepaid customers are concerned, CosmOTE will offer low flat charges for calls to all destinations, allowing for up to a 47% discount compared to prevailing competition.

The company?s network includes 10 exclusive CosmOTE shops, 75 RomTelecom shops and 175 commercial partners? shops, including Germanos stores.

The company?s network covers almost 80% of the population with capacity expected to rise to 90% by June 2006.

The Romanian market is still in a growing stage as Vodafone reported 27% subscribers growth in 9M:05 while Orange?s subscribers base grew by 42% in the same period.

At 54%, mobile penetration remains relatively low, and about half the average penetration rate of EU countries.

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Formerly all but bankrupt Romanian mobile telephone operator Cosmorom, recently taken over by the Greek mobile telephone company Cosmote, was re-launched yesterday and re-branded Cosmote Romania. The local operator, which presently has a client base of 50,000, hopes to force an entry on to the local duopoly market with a strategy relying on an aggressive pricing policy and a better targeted services portfolio. Currently, the Romanian market is characterized by a 60 percent penetration of mobile telephones and a large variety of offers despite limited interest from users, said the general director of Cosmote Romania Nikolaos Tsolas. With an 80 percent coverage in terms of access to the population and 55 percent coverage in terms of territory Cosmote aims to be able to reach 90 percent of the population and 70 percent of the country's territory by June 2006.
Applying a flat tariff policy which does not differentiate between networks, Cosmote offers lower monthly access fees than its competitors.
Cosmote recently bought 70 percent of Cosmorom from the Romanian land line telephone operator Romtelecom for 120 million euros and took on the obligation of financing the local operator's re-launch. The remaining 30 percent will stay in the portfolio of Romtelecom. Cosmote plans to invest half a billion euros mostly in technical infrastructure over the next few years.
The operator has already established a sales network including ten exclusive Cosmote shops, 75 exclusive Romtelecom shops and 175 commercial partnerships with a number of selected local and independent dealers across the country (the best known being Germanos).
Asked by Bucharest Daily News if Cosmote was planning to stick to the GSM technology, Tsalos said the company was prepared to bid for a 3G license when the authorities put them on sale.

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Victor Kevehazi

Looking over the main changes in the business environment which occurred this year, Victor Kevehazi, KPMG's Senior Partner in Romania and Moldova, says that ensuring transparency is one of the most important steps still to be taken by the government, as some investors could be confused by changes in legislation.
Kevehazi considers that the flat tax was a good start to this year, although the government should have involved the business community in careful debates on its effects, as well as those of other laws. Kevehazi considers that Romania has all the ingredients to boost its economy but the authorities should focus next year on improving cooperation with the business environment and society in one effort to ensure that the economy will evolve and will be properly developed at the time of EU accession.
The main challenge for 2006, as Kevehazi sees it, is that Romanian producers and manufacturers will have to prepare for the European market, to compete, not only in their own country but in others as well.

This year appears to be favorable for the Romania economy, with significant economic growth and a single digit inflation rate for the first time in 15 years. In your opinion what were the most important events of the year?
I think when we go from one New Year to another, from one Christmas to another, last year started with a governmental change. A new government, coming out with a flat rate tax and changes to corporate tax and to personal tax, was the kick-off of this year. I think we can see the dynamics of both the governmental change, pros and cons, but also the tax changes that occurred and what they bring to Romania.
Romania is coming closer and closer to EU accession, fighting corruption, getting things on board, getting things transparent as much as possible and the flat tax idea for both personal tax and the corporate sector is one of the methods to make business and personal life more tax transparent. So that was a very good starting point.
We have had some hiccups along the way, as instead of having a clear tax strategy with a clear tax and fiscal environment we've had ideas coming into play, ideas put on the table and some of them being implemented by law. This leads to some confusion for investors, as what they thought they had on 1 January and they come to now on 31 December is something else. And it had changed during the year. There are a lot of things we could learn from this. How can we put more stability into an environment in a transparent way, in a professional way so the investors will feel comfortable that this is an environment they can trust, where they can do business, make a profit and pay tax.
People come here to make money and to earn a profit, to do business that generates business, that generates work and that's another salary, another person is employed, one less person on unemployment benefit. That is good.
So we need to find out as much as possible about what measures can be put into place to assure an investor that they have a stable, constant environment, which is reliable, trustworthy, transparent, that the rule of law works, and that you can go through a tender in the most natural fashion without any degree of influence. These are the items businesspersons look for.

Would you say the frequent modifications brought to the Fiscal Code over this year were the government's biggest mistakes?
I wouldn't call them mistakes. I would rather say there is a need to involve the business community in such topics. The business community has its hands on the table, and feet on the ground, performing and applying what the legislative environment is about. We know the problems. What is being done to solve these problems?
When you come out with a new idea of a law - that scares; unless you plan it efficiently and you can demonstrate what the impact is, why it is needed, where the funds are going, how much it is going to cost. Without having balanced information, it is very difficult to assess whether the country needs it.
The government introduced this year, for example, a modification of how people will pay taxes on real estate transactions. There is nothing wrong in introducing capital gains tax on individuals. But it has to be planned efficiently, and be well calculated: what will the costs of implementation be? What is the cost compared to what the income will be? There is s need to look into what the implications will be on inflation, and the monetary, fiscal environment, and then sell it to the public because some people bought assets one year ago, ten years ago, and they didn't know they would have to pay tax.
We are actually paying tax on the past. Not from when the law came out but on a period when the law didn't exist. That is not necessarily fair, but it was never sold to the public: From this day forward, you will pay for any incremental profit! Yes, that is logical. But to impose taxes on a previous period is quite a sensitive matter because it convinces people that the officials do not represent the public.
Is it good to tax people on a past event? I think not! To tax people on a future event? To tell them: if you do this, you will pay tax for it? Perfect! Whatever tax is relevant to the environment, that is correct. To make it more difficult, the government is introducing a modification to the way it is calculated, from January, to a more simple method of calculation. Why didn't we think about it before? Well, we did. We said it before. But we need to have the possibility to debate this. We need the government to listen to the arguments of the business community about the concepts of the law.
If you take the flat tax, the whole concept behind it is to simplify tax. You make it simple for people to calculate it, you don't have confusion. The idea behind the flat tax regime is to simplify. And we haven't seen the simplification yet, but the opposite: it's becoming more difficult.
What we have recommended to the government numerous times is that when an idea comes into play a public committee should be put together, involving people from all backgrounds: business, bankers, government, academics. After a public debate, that committee would make recommendations to the ministry: This is what we the people think should be done for the good of the community. Then the ministry can apply or introduce it into practice.

There are several business associations in Romania, such as the Economic and Social Council, the Foreign Investors' Council, the Association of Businesspersons in Romania; there are a lot of people lobbying for the business environment. Where does the communication fail?
You can't expect a serious debate when a council gets the law on Thursday and the debate is on Friday and the law is 100 pages, nor could you expect that the council will debate a law that has already passed. So it has to be done in the right way.
The councils are representative of various organizations, not technical specialists who could understand a fiscal aspect or concept. They are the body that should see a professional report and then come with professional conclusions, not a hundred pages of a draft law that you have to be a lawyer just to understand what is written there. And you have only 24 hours! You have to have a careful debate. And that debate is lacking because the government does not have time. Laws are passed in a rapid format, by emergency ordinance.

Would you say that in the forthcoming year the government should improve its transparency and the way it develops laws, by switching its policy from drafting the law to debating it first?
Yes, and to cut down as much as possible the barriers and the frictions that exist between the authorities and the business community by allowing the community more control over its own environment, by using its own people. For example, to require companies to provide their tax returns after being audited by their independent external auditors. This will allow the authorities to rely better on the information presented by the companies.

What do you expect the economy's evolution over the next year to be?
I think that we have all the ingredients to have growth. We have the people, we have the environment, we have the technology, we have the interest, we have the money. We all have to work together. This is not for one side, or for one person, or for the government. This is for everybody onboard to be on the same page, to work together to get a better environment, a better economy. We have a long way to go. If we want to catch-up to our neighbors, we need to work constantly together in the same team to get the economy into positive growth on a constant basis.

During a recent meeting of the Employers' Unions from Industry and Trade, businesspersons pointed out that companies should get involved seriously in the development of the economy through viable business plans. The position was also assumed by the chief economist of the National Bank of Romania, Valentin Lazea, who stated that Romania does not lack funds but feasible business plans. How would you comment on that?
A pity that I wasn't invited to that event! I have numerous examples, both internally and from KPMG of where we are progressing and investing in the growth of the economy. Just this year we took on 80 university graduates, to train them and educate them, so that they will be ready to provide professional services to the market in the coming years. That is a large number, and I know that my colleagues from other organizations have taken similar steps. That is a huge investment in the economy: to take on young people and train them. No government is paying for that training, nobody is supporting it, no EU funds are paying for it. It is all private money, internal investments. So I wonder what the unions are talking about! Maybe they have a different view of the companies they are involved in.

Most of the businesses in Romania are concentrated around the large cities, such as Bucharest, Iasi, and Timisoara, especially on the western side of the country, close to the EU border, while other regions are underdeveloped. Why are companies focused on these regions?
Well, companies are here to make money. I know very few companies that are not here to make profit. If there is money to be made in a certain region, I am sure someone will pick up the opportunity. The government's role is to support those areas which require it to. In many countries that is done, either by means of additional benefits for companies which invest there (underdeveloped regions), to help them to set up their businesses, providing training. There are various steps to encourage investors to locate in a specific area. However, I can also say that in many countries the opposite is occurring. There is no governmental support; that is life, there is no business there and people move on. The government must decide: do they want to have a balanced environment of businesses spread out all over the country in all towns or are they stepping aside and letting business decide where to go in the most neutral fashion.

Romania's accession in the European structures will produce massive effects on the economy - it should enhance competitiveness and present more opportunities. Are Romanian companies prepared to cope with the shockwave? What should companies do to succeed on the European market?
Unfortunately, not. The Romanian market will be flooded with products. Those products could be at a lower price than the Romanian products. The quality of the incoming products will be better. So the Romanian producers and manufacturers need to compete, not only in their own country but in others as well. Are they capable of selling outside Romania? Producing, transporting, selling? Do they have the contacts, the people, the marketing, the warehouses, the infrastructure set up, the labeling, the invoicing system, which is completely different, the VAT (Value Added Tax) system , which is also going to be completely different. Are they ready for that?
We have provided advice to numerous companies on how to modify the system to get ready for the new VAT invoicing system. On January 1, 2007, if they are not ready, they are in violation of the law. They cannot sell. You have to comply with the EU legislation on how to sell to another EU company. It is difficult. Czech, Hungarian, and Polish companies went through the same process and many companies there were not ready and thus unable to do business. They also get sued for not complying with the legislation, but that's another issue.
There are a lot of things that need to be done, without having investors physically come to Romania.

And on a final note, what would you like for Christmas?
Two days of no e-mails!

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BenQ Corp. launched operations in the Romanian market, through BenQ Mobile Central and Eastern Europe, set up in October, after the acquisition of the Siemens Mobile Devices division, ACT Media news agency reports.


As a short-term priority in the Romanian market, BenQ targets profitability of mobile phone operations by addressing the above-the-average segment, while later, it plans to focus on increasing its market share.

"Our foremost goal is profitability, above all by gaining a good market position in the high-end segment.

We are looking forward to carry out new tasks in a new corporate environment and are very optimistic for the future.

We will work in the mobile phone markets in 17 Central and Eastern European countries.

Siemens' long-standing experience in the wireless business, combined with BenQ's comprehensive end-user know-how is a great asset in this respect," said Josef Forer, CEO of BenQ Mobile CEE. According to Dorian Radu, head of the Representative Office of BenQ Mobile in Romania, the company is interested in keeping a second position in the market in terms of market share, after in Q2 Siemens claimed 17 percent of the sales in the Romanian mobile phone market. Early next year, BenQ will launch the first co-brand phone, while later on 3G terminals will become part of the Orange and Connex-Vodafone portfolio.

The company's products will also be available in the CosmOTE network as of Q1:06, as the telecom operator is scheduled to be re-launched in the first half of December. "Siemens branded phones will continue to be available in Romania, and our service and sales team will also be the main contact for Siemens phone owners.

In early 2006, we will present new and innovative models, under a BenQ-Siemens combined brand," Radu said.

Under a licence agreement signed with Siemens AG, BenQ Mobile is entitled to use the Siemens brand for 18 months starting October 25, and the Siemens-BenQ combined brand up to five years. BenQ Mobile established its largest European regional centre in Vienna, which became one of Europe's leading mobile telecom hubs.

From Vienna, the new company will coordinate operations in the 17 states in Central and Eastern Europe.

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Gheorghe Dobre, the Minister of Transportation, stated that Bechtel will present a financial statement at the end of each year, detailing expenditure made on the Brasov-Bors highway using the advance given by the Romanian authorities.
This will be a maximum 30% of the total value of the works.
"Bechtel hasn't given up the advance but the form stipulated in the contract at present and which violated Romanian legislation", said Dobre.
The minister explained that use of the 250 million euros, which the American company asked for in advance, will have to be justified earlier than the original date of 2012, when the works are due to be completed.
"We've established that the advance will represent 30% of the annual sum allocated for the construction of the highway and agreed that use of this sum must be justified on 31 December, each year", stated Dobre.
According to the Minister, the final discussion with Bechtel could take place this week.
Dobre said that the contract's renegotiation did not refer to the cost of the works but to some stipulations in the contract's annexes.

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CIROM, the employers union from the cement industry, asked the authorities to establish a single technical solution for highway construction. The employers suggested that both the concrete and asphalt should be used depending on the specific necessities of the highway projects.
"We could choose the optimum solution; rigid (cement concrete) or elastic (asphalt) on medium and long term, without an unjustified elimination of one of these", stated CIROM's president, Mihai Rohan.
Rohan stated that using concrete in highway constructions offers durability to the roads, low cost and traffic safety.
"We should construct in Romania at least a concrete road using the modern technology that we have at the moment and we should see the benefits", said Rohan.
CIROM's president stated that the fabrication techniques must be established by specialists depending on the elements met on a highway's course.
Almost all the infrastructure projects initiated in the last few years in Romania were constructed with asphalt layers.
One of the exceptions is the Bucharest-Fundulea road section. This is a part of the highway that ties Bucharest with Constanta and it was made of cement.
The Romanian cement market increased by eight percent this year due to the reconstruction work created by the floods, so the market is estimated at 300 million euros in sales.
For 2006 the producers forecast a three to ten percent quantity increase.
Rohan said that the cement producers reported difficulties in the July-September period when they tried to cover all the requests. Nevertheless, in the first six months of the year the use of cement stagnated.
"If major infrastructure work will begin we could expect a 10% increase", said Rohan.

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The authorities will increase the sums borrowed from European financial institutions to support the investments in the roads and railway infrastructure.

The Ministry of Transportation (MTCT) will contract international credits worth 1.4 billion euros next year to finance the infrastructure works. Most of the funds were granted by the European Investment Bank (EIB). This year, the ministry has received credits which totaled approximately one billion euros, according to the minister of Transportation, Gheorghe Dobre.
The European Bank will finance the construction of three highway sections on the Pan-European Corridor IV: Constanta - Cernavoda (250 million euros), Pitesti - Sibiu (300 million euros), Lugoj - Timisoara (300 million euros), and that of 20 city rings and the upgrade of the Curtici-Simeria railway. The Pitesti - Sibiu section requires 1.1 billion euros and the EIB's funds will be completed with cohesion funds granted by the European Commission.
Moreover, the European Bank for Reconstruction and Development (EBRD) will sign an agreement with the MTCT for a 145 million euros credit for a city ring around Constanta.
Dobre stated that the construction works for the Comarnic - Brasov highway will begin as soon as 2007 once several projects regarding the traffic on the Bucharest-Brasov route are completed. The minister also said that the Drajna - Fetesti section of the Bucharest - Constanta highway should be completed next year, as should the section between Fetesti and Cernavoda.

New agency to manage EU funds

The government intends to create a new system to manage the European funds, which should enhance the absorption rate, said Prime Minister Calin Popescu Tariceanu.
"God gives to us but He does not arrange everything for us," stated Tariceanu. The PM underlined the fact that we must learn how to manage these funds much earlier, especially to prepare future engineers and economists. Thus, Romania could avoid a crisis in the years to come.
The authorities are currently examining two options to set up Project Management Units (UMP), either by allocating a unit to each minister or by creating a single structure which will manage the projects of various ministers.
The staff employed in these units would be remunerated per day in accordance with the projects they have managed. A day's work could be paid with 100 euros, according to the Prime Minister.
To prepare the local administration for the management of the European funds, the EU will finance Romania with 1.9 million euros through a Phare project developed together with the European Delegation Commission. The project should last approximately 15 months and the sums should be used to prepare the management of structural resources which should be available after the EU accession.
The funds will be allotted through an institution collaboration project called "The Strengthening of the Management Authority Administrative Capacity for the Communitarian Support Program within the Ministry of Finance".
The head of the European Delegation Commission to Bucharest, Jonathan Scheele, stated that this is an important project to ensure Romania's success in the accession process.
"There is the need of good and well prepared projects. A communication strategy is a very important element in order to succeed," stated Scheele.
Istvan Jakab, state secretary in the Ministry of Public Finance, stated that the project is very important given that structural and cohesion funds given to Romania will have three times the value of the pre-accession funds, totaling 16-17 billion euros for the 2007-2013 period.
The structural and cohesion funds are part of community funds which aim at the reduction of gaps between the developments of different regions of a country or between EU members.

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The city of Sibiu (centre) is to get several residential development over the next few year, Business Review magazine reads. Imoinvest, the Cluj-Napoca-based company will invest over the next two years in a project of 7 million euros for a residential complex in Sibiu. The financing for this project will come from company`s own resources and bank loans. Next year Imoinvest will begin the development of a villa complex on a 10-hectare plot, situated at 18 kilometres from Cluj-Napoca. At present, Imoinvest is developing a 132-apartment project in Cluj-Napoca which is to be delivered on the market by the end of 2006. Imoinvest is a part of Imofinance group, along with Imocredit - specialised in financial support operations. Another project that is being developed in Sibiu is the establishment of a residential building, which will also offer commercial and office space, project to be completed by Concefa with an investment of some 5 million euros. The building will have an overall surface of some 14,000 sqm. According to Concefa`s representatives, the company will start another project for apartment buildings, next year, in Sibiu. Concefa`s turnover is estimated at 18 million euros for this this year.

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Four SAPARD financing schemes worth a total of 270 million will be launched next month for companies, individuals and local councils in the rural areas, writes weekly Capital. The four SAPARD components that await the go-ahead from the European Commission have in view: improving the structures for quality, veterinary and phitosanitary control; setting up the groups of farmers, agricultural production methods designed to protect the environment and maintain the rural landscape, and forestry. The SAPARD Agency officials consider that Forestry is the most important measures of the ones that are to be launched.

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Competition will start in the earnest in Romania's market for 3G telephony, where in 2005 local Connex operator was the sole competitor, and Orange unveiled plans to start up in the 3G business. In early 2006, the two companies to join Connex and Orange as providers of 3G phone services will be known. The paper quotes authorities and analysts as saying the fifth mobile phone operator is likely to enter the Romanian market soon. "The tender procedures for the award of the two 3G licences will start this year, which means the tender might be held early in 2006. We hope that both licences will be awarded at this tender," says head of the General Inspectorate for Communications and Information Technology Catalin Marinescu. According to the paper, calculations have been made about the sharing of the market among the competitors. It is known that Cosmorom will request a 3G licence, whereas Zapp has announced it will not run in the tender, so the main concern of the market analyst is finding out the companies that might be interested in the local mobile phone market.

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The Ministry of Environment and Water Management was authorized by the government to attribute the public purchase contract, financed from foreign state loans, needed for the first stage of Watman project. This project has in view the Integrated Computer System for Water Management in the field of accidental pollution or flooding, Rompres informs.The contract of 59 million dollars will be concluded according to the law of public purchases. The payment of the foreign credit and insurance premiums, interest rates, commissions and other costs will be made by the state budget, though MMGA budget, in the limit of amounts provided for this destination every year. The integrated computer system will prevent and reduce the effects of disasters, such as floods, dangerous weather phenomena, accidents at hydro technical constructions, accidental pollution of waters with dangerous substances. Through this system, water resources are better allocated in periods of droughts or in case of accidental pollution, water resource and investment planning in the field on the long run. The reduction of damages and compensations for the people affected by hydrological phenomena as well as saving people?s lives represent another economic-social criterion that lays at the basis of this investment.The new computer system is a strategic investment determined both by Romania?s geo-strategic position, crossed by trans-border rivers and by Romania?s international engagements. The system is included in the general effort at European level concerning flood management.Investments needed to curb damages produced by hydrological phenomena are a priority of the policy carried out by the Ministry of Environment and Water Management and the ?Romanian Waters? National Administration, according to the recommendations of directives of the European Parliament and Council of Europe.

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The Sun Motorway running from Bucharest to the Romanian Black Sea city port of Constanta will be finished at the end of 2008, Romania's Minister of Civil Engineering and Tourism, Gheorghe Dobre, said on Wednesday, on the occasion of an opening ceremony of the passengers' terminal in Constanta. We have found the financing solutions for a final stretch of the Sun Motorway, between Cernavoda and Constanta, for Constanta's belt included, Minister Dobre added. ''We are just holding final talks with the European Investment Bank and the European Bank for Reconstruction and Development, for the financing of the motorway section running from Cernavoda to Constanta, and we are about to come to an agreement on the belt linking Constanta to the Sun Motorway, the financing accords will be probably concluded by end December, with the building sum amounting to roughly 400 million euros, Dobre told Rompres. The building works at Cernavoda will go on during winter and will go farther, towards Constanta, in spring, the minister also said.

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On November 30, the shareholders of the Bucharest Stock Exchange and of the Rasdaq over-the-counter market reached the final decision concerning the merger of the two institutions. ?The Shareholders Meeting approved the merger project today, in the next days the Stock Exchange will obtain CNVM?s approval of the operation and the next step is the entry in the Trade Registrar. We only have to go through some juridical formalities until the completion of the merger,? declared Stere Farmache, general director of the Bucharest Stock Exchange, who added that elections for the new bourse management would be organized in January 2006. With a view to the merger, the Bucharest Stock Exchange was assessed at 8.1 million euros and Rasdaq at some 0.82 million euros. The absorption of Rasdaq will increase the bourse capitalization by 2.17 bn euros, bringing it to some 17.65 bn euros About one third of the 6,000 companies that are currently listed on the unified market will disappear because of scarce trades. Of the remaining issuers, the most liquid ones - about 170 - will be traded on the bourse system and the rest on an alternative platform. Average daily trades are expected to reach some 9.4 million euros.

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Because of the high social security contribution, a Romanian employer must cover total outlays worth 1,900 euros (by 300 euros higher than in the neighbor country Bulgaria), in order to pay an employee a net wage of 1,000 euros. This is why the Romanian workforce is still very costly ? declared Romulus Badea, tax consultant manager with PricewaterhouseCoopers Romania, during the conference ?Radiography of the Romanian fiscality? .However, the total outlays required by a net wage of 1,000 euros reduced substantially from the 2,900 euros registered the year before, as an effect of the introduction of the 16% flat tax on incomes. ?In 1996 the Romanian employees were negotiating their net wages expressed in foreign currency. Now, they negotiate wage packages that include a gross wage expressed in ?lei? plus other benefits in kind,? described Badea the developments on the Romanian labor market. According to the PwC experts, the planned increase of the tax on dividends from 10% to 16% will increase the tax burden on company profits, determining the managers to reinvest gains and avoid the disbursement of dividends.

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Minister of Public Finance Sebastian Vladescu announced that during its last session the government has discussed a memorandum about the stage of the negotiations for the privatization of BCR and voiced hopes that the contract might be signed by year-end. ?We are optimistic that we will be able to sign the contract by year-end, provided that EBRD and IFC remit us the final documents by next weekend,? said Vladescu. Bogdan Olteanu, Minister for the liaison with the Parliament, added that the contract would be given to publicity as soon as it is signed. ?The publication of BCR?s privatization contract will be a premiere in Romania. Our intention is to keep the entire process transparent,? said Olteanu. However, only the price offered by the contract?s winner will be made public. ?Both bidders set this requirement, that the price offered by the defeated contestant remain secret,? said Minister Sebastian Vladescu.

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According to the latest WTO report on Romania?s commercial policy, the Romanian State continues the ill-spending of public money and further exerts a direct influence on economy, whereas State-owned companies are kept alive with budget resources . WTO advises the Romanian authorities to increase economic efficiency and correct the distorted assignment of resources, by the forceful privatization of large public companies from the banking, energy, transports and telecoms sectors. The report points out that next year?s budget has over 1 bn euros ? that is almost 1/10 of the State budget - assigned for loss making State-owned companies and that the processing industry still gets State support in the form of protective customs duties. The average customs tariff charged on products imported to Romania is 17.7%, but for certain products the tariff can be as high as 220%.

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The Bucharest Stock Exchange (BVB) and Rasdaq decided to split the Romanian stock exchange market into two distinct segments, the regulated market and the transacting alternative system, for which the National Securities Commission must agree. The regulated market will transact shares of some 150-200 companies listed at BVB and Rasdaq. BVB could absorb Rasdaq Electronic Stock Exchange at the end of the year or early next year, after the National Securities Commission and the Trade Register agree. The officials of the two stock markets signed the merger and Rasdaq ceased to exist as separate legal entity. Following the merger, BVB will have a new configuration. Two stock markets will exist from now on, the regulated market, transacting shares of companies that meet the high levels of transparency and the alternative market (ATS), transacting securities of companies from the Rasdaq market and of other small companies that want to list shares.

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The activities of industry, retail and services will register over the next three months an upward trend, whereas the activity in the constructions field will drop as against the previous three months, according to estimates expressed in October 2005 by managers of trade companies. The managers' estimates, which were also found in the results of the circumstantial survey conducted in November 2005 emphasized that over the next months an upward trend for the output of the processing industry is expected (circumstantial balance plus 13 percent).

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Romania's exports this October kept close to the 2-million-euro mark of September, the Ministry of Economy and Trade (MEC) reported on Friday. At the same time, imports outgrew exports, further fuelling the trade deficit. October 2005 exports totalled 1.9 billion euros, up 20.1 percent from October 2004. Romania's exports January through October 2005 stood at 18.392 billion euros, up 16.9 percent from the similar period of 2004, while imports touched 24.115 billion euros, having advanced 24.1 percent from 2004. The European Union is the main foreign trade partner of Romania, with 67.8 percent of Romanian exports going to the EU and 62.5 percent of Romania's imports originating in the EU.

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The nine percent decrease of the tax rate, from 25% to 16%, led to the reduction of the direct foreign investments and the slowing down of the industrial production increase rhythm, stated Liviu Voinea, an economic annalist and the director of the Applied Economy Group (GEA).
The GEA official stated that according to the 2005-2006 Global Competition Report, Romania ranks on 116 of the total 117 countries regarding the fiscal burdens.
Regarding the efficiency of the fiscal system, Romanian ranks 104, down 17 places compared with 2004; this being characterized as lacking in transparency and very complex.
"For a reduced fiscal burden, not only the taxation counts but also the macroeconomic climate", said Voinea.
Referring to the effect of the fiscal reform over the budgetary revenues over the first ten months of the year Voinea stated that the total revenues increased by 15%, the real advance being of 6-6.5%.
Voinea said that the increase of the budget collections was based on the 34% increase of the Value Added Tax (VAT) and 14% from the excise tax.
The revenues from the profit tax dropped by approximately 4.5% and the ones connected to the income tax decreased by 15%.
"Probably a series of measures will be taken for the increase of the tax base. Nevertheless, the budgetary deficit will be larger than the one forecasted, taking into account that in the accession perspective the co-financing of the structural funds is necessary", said Voinea.
The GEA official stated that another solution regarding the macroeconomic policies is the resuming of a progressive and simple income taxing system.
"It's about implementing a three level system and with larger differences between these levels so that the persons with small incomes will not lose anything", explained Voinea.
He mentioned that Romania could enter, through profit tax and dividends, from a low tax category to a medium one.

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The NBR announced the increase of the foreign currency reserve by 35.8m euros to 16.73bn euros in November. The expansion, although incomparably lower than the increases of more than one billion euros in midyear, comes at a time when markets were expecting a decline.

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Romania has a low absorption capacity of European funds because it is unable to define large projects, stated the economic analyst Daniel Daianu during a round table at the Chamber of Commerce and Industry of Romania (CCIR). "For 2006, Romania must set as a goal the enhancement of the absorption capacity," said Daianu, adding that Romania should target ten large projects for the following five years instead or promoting several small projects.
Mugur Stet, the spokesman of the National Bank of Romania (BNR), believes that the money is not an issue but more likely the lack of projects. "We design dreams, not projects," said Stet, pointing out that the education system is one of the large projects which should be supported. "The educational system from Romania is now incapable to produce elites," emphasized Stet, adding that Romania could find itself in a position to import highly skilled personnel from abroad.
As for the evolution of the business environment over this year, Daianu, also former minister of Finance, appreciated the open attitude adopted by Romania in regard to exports and imports, as well as the state's intervention in the economy which was reduced by decreasing subsidies and opening the capital account.
The investment grade rating granted to Romania by international agencies is one of the government's achievements for 2005 as it is a favorable element for the local business environment. Also, the banking system's coagulation, the disinflation and the strong economic growth are, according to Daianu, among Romania's successes in 2005.
However, the economic analyst believes that the inflation target could be vulnerable to the massive investments needed by the infrastructure. "You can not have an inflation rate of 2-3 percent and invest in infrastructure," added Daianu, emphasizing the negative effects of the investments on the inflation and on external deficits.
Victor Babiuc, the president of the CCIR, considers that the legislative predictability and continuity are some of the most important aspects unsecured by the government. His opinion was confirmed by the vice president of the Budget-Finance Commission of the Chamber of Deputies, Gratiela Iordache, who believes the critics of the business environment on this matter are justified.
"The fact that the Fiscal Code will be ready two weeks before it comes into effect is negative," said Iordache, adding that the changes to the Code regarding the capital market and taxes affected the business environment. Thus, the capital market is a financing source which is easy to access, cheap and the legislation should encourage the companies to use it.
Regarding the taxes of turnover, Iordache thinks that doubling the tax from 1.5 percent to three percent was uninspired, failing to bring more to the state budget and preventing companies from increasing their capitals.

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Romania's current legislation dealing with public procurement, public-private partnerships (PPPs) and concessions is in the process of being modified (all of these to be included in one law), especially since these are some of the major problems areas identified by the European Union in its recent country report.  The previous rules also had to be modified in light of the new EU directives dealing with public procurement (Directives 2004/17/EC & 2004/18/EC).  At the same time, relating to defense procurement, the acquisition of military hardware is generally exempted across the EU from these directives, as such acquisitions are made on the basis of the relevant national laws (this exemption is based on Article 296 of the EU Treaty), which as resulted in a fragmented system across the EU.  Nonetheless, according to European Court of Justice case law, Article 296 does not permit an automatic exemption for all defense procurement, but in practice, most national authorities make extensive use of the exemption. 
But things will change soon enough, since the EU commenced an official Consultation in 2004 regarding defense procurement, with the result being the publishing of a green paper in September 2004 that recognized certain short-comings of the current system ("This fragmentation poses a major problem for all Member States with defense industries ... [ which ] increases the cost to the taxpayer and damages ... the competitiveness of the European defense industry ....", p. 5) and the need to make the acquisition process transparent and open to non-national players.  In addition, the European Defense Agency (EDA) was set up in 2004, which on November 21, 2005 issued a Code of Conduct relating to Defense Procurement (<http://www.eda.eu.int/news/2005-11-21-1.htm>), with the stated main objectives of this Code of Conduct being, " ... to encourage competition in the European defense equipment market, where contracts are currently exempt from normal EU internal market rules."  In fact, at a meeting of the EDA's Steering Board, EU Defense Ministers decided that the new Code of Conduct would cover contracts worth more than EUR 1 million and would take effect from July 1, 2006.
Practically, this means that Romania's new public procurement legislation, which is intended to come into effect on June 1, 2005, should make specific mention of the EDA's Code of Conduct with respect to defense procurement.  This would be "proactive" behavior which I am quite certain would be highly appreciated by the EU Commission and EU Parliament, especially considering the upcoming EU entry evaluation in April/May 2006 as well as the official decision as to whether Romania will join the EU in 2007 or 2008.  Let us not forget that Romania, within the upcoming three to five years, will also purchase up to 50 jet fighters (meaning a budget expenditure of between EUR 2 to 3 billion), so all defense procurement should be carried out in the most transparent way possible (the last thing that Romania needs is yet another scandal).  In short, Romania needs to show and in fact prove that it belongs to the European Union, meaning that it needs to start evidencing (through actions, not words) that it accepts the implementation of certain fundamental principles ... such as transparency.  In addition, Romania has no local jet fighter industry to protect, so ensuring that its impending acquisition of the jet fighters is carried out through a transparent procedure will be a win-win situation (taxpayers will pay a better price, not to mention that an open procedure should avoid major scandals).  Getting back to the Code of Conduct, the EDA has officially stated that, "[a]ll relevant new defense procurement opportunities will be published on a single online portal operated by the EDA. Fair and equal treatment of all companies will be assured through evaluation of the offers on the basis of transparent and objective standards. The fundamental criterion for the selection of the contractor will be the most economically advantageous solution for a particular requirement, taking into account, among other things, considerations such as compliance, costs (both acquisition and life cycle), and security of supply."  Consequently, current decision makers should ensure that the new public procurement legislation will include language which specifies that defense procurement will be carried out pursuant to the EDA's Code of Conduct.  This is very important, especially since it is expected that the EU (arising from the official Consultation and related questionnaire) will issue an interpretative Communication and approve a Directive on defense procurement in the not-so-distant future (which should be similar in substance to the Code of Conduct).  What is very clear is that Romanian decision-makers need to do as much as possible in the next four months to ensure that Romania is welcomed into the EU in 2007, and consequently the inclusion of such language into the new public procurement law which would ensure defense procurement transparency would be a huge step forward.  And let us not forget that once Romania does join the EU, it will be a member of the EDA and thus should abide by this Code of Conduct (so really no reason at all to wait to implement this code).

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Patrick Gelin, the president of BRD, talks about the Romanian economic environment.

The local banking system will change significantly after BCR and CEC are sold, one of the expected effects being an increase in competitiveness. 
The president of the Romanian Bank for Development (BRD) considers that the development of short and medium term savings will be the main stake in Romania after the privatization of the Romanian Commercial Bank (BCR) and that of the Romanian Savings Bank (CEC).
"Once we know the winners and their plans and strategies we will have a clear image of the evolution of the banking system," stated Patrick Gelin, the BRD president. According to the banking official, the Romanian customer will benefit most from the privatization of the two banks.
"Presently, short term deposits hold the largest share in the overall savings of the Romanian population," said Gelin, pointing out that the situation could be overturned through better visibility of long and mid-term interest rates and the development of the financial market.
According to Gelin, as the inflation rate in Romania approaches the levels of the European Union's members, the local banking market will have an advantage of stability with respect to interest rates and Romanian banks will be able to offer the clients financial facilities in the long term denominated in the national currency.
With a network of 325 branches throughout the country, BCR is one of the most important banks in Romania. It has assets of 7.3 billion euros, and about 4.9 million clients, out of which 90% are individuals. The bank is currently undergoing the final phase of its privatization. The government is negotiating for the takeover of the main share package with the Austrian bank Erste Bank and Millenium - Banco Comercial Portugues.
The value of the transaction for BCR is estimated at 3 - 3.5 billion euros, but the authorities have refused to disclose the values of the two offers. The BCR privatization strategy focuses on price, granting the criterion a 90% weight in the offers' analysis. The other ten percent account for the technical criteria.
The government owns 36.88 percent of BCR's capital and is entitled to redeem 25% plus two shares split between the International Finance Corporation and the European Bank for Reconstruction and Development. The total package up for sale is 61.88% of the bank's shares.
Some reports have suggested that the Romanian authorities want to know the winner of the BCR tender prior to proceeding with the CEC privatization. The investor who buys CEC will have the possibility of taking over up to 75% of the capital but no less than 50% plus one share, according to the bank's privatization strategy adopted by the government. The final binding offers for the privatization of the Romanian Savings Bank (CEC) could be submitted as late as January 2006, after a postponement of the deadline, according to sources close to the government. Because of the preparation stage of the privatization process the initial deadline of November 28 has been deferred.
The National Bank of Greece, Erste Bank, Banca Monte dei Paschi di Siena SpA, Dexia Bank, EFG Eurobank, OTP Bank and the consortium composed of  Raiffeisen International Bank and Raiffeisen Zentralbank Oesterreich Aktiengesellschaft have filed offers for the CEC takeover.

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European Goldfields Limited (TSX:EGU)(AIM:EGU) is pleased to announce that its has entered into a Heads of Agreement with General Samara to create a joint venture for the exploration and potential development of a mining concession in Western Romania referred to as the Magura Tebii prospect.

The Magura Tebii prospect is located in the north-western part of the Neogene Brad Sacaramb Basin in Transylvania, Romania, about 35 km northwest of European Goldfields' existing Certej project. The Magura Tebii prospect is currently held by General Samara, a local Romanian company involved in gold exploration.

The Heads of Agreement provides for an exploration program in three phases to be funded by European Goldfields, with an initial program of eight confirmatory drillholes to test significant mineralisation intersected in channel sampling recently completed by General Samara.

European Goldfields can advance the project to a full feasibility study which, if successfully completed, would result in European Goldfields owning 80% of the Magura Tebii project. European Goldfields can withdraw from the joint venture at any stage if the drilling results do not warrant further exploration.

Disseminated mineralisation in the Magura Tebii perimeter is hosted in a phreato-magmatic, hydrothermally altered polymictic breccia, which also hosts mineralised NW-SE striking quartz veins. The breccias are surrounded by Neogene quartz-amphibole andesites and are cross cut by quartz andesite dykes. Historic workings indicate that the mineralised systems occur over a strike length of some 800 metres in a 300m wide zone. General Samara previously completed four surface trenches spaced approximately 80m apart which were sampled on one metre intervals returning results ranging between 9m @ 2.9ppm Au and 55m @ 2.8ppm Au. Grab sampling by Deva Gold S.A. confirmed the tenure of the mineralisation with values from 2 to 5g/t gold.

Commenting on the agreement, David Reading, Chief Executive Officer of European Goldfields, said: "This JV for Magura Tebii complements our strategy to pursue cost-effective, accretive opportunities in Romania, while continuing to develop our main project at Certej. We look forward to exploring Magura Tebii and working with new partners in Romania".

Update on Exploration in Romania

On 5 July 2005, European Goldfields announced the completion of an in-house pre-feasibility study on its 80%-owned Certej project in the Southern Apuseni Mountains of Romania. All the technical and financial components of a full pre-feasibility study have now been successfully completed. The initial indications from the financial evaluation work show that the project would support the necessary capital investment for the sale of concentrates at realistic, long-term metal prices for gold and silver.

The Certej deposit hosts measured and indicated resources of 31.4 Mt grading 2.1 g/t gold and 11 g/t silver. Further exploration work in Romania is now focused on defining additional resources to add to the open pitable resources at Certej (approximately 22 Mt) and extend the life of mine of the project. European Goldfields has identified a number of satellite targets which comprise open pitable mineralisation within the Certej licence area and in European Goldfields' adjacent Baita-Craciunesti licence area (80%-owned by European Goldfields). In addition, surface dumps are being evaluated for their tonnage grade and metallurgical characteristics.

Following an in-house review of satellites, HQ diamond drilling was undertaken at two of the satellite prospects. A program of 14 drillholes, aimed at defining an open pittable resource, was completed at the Pitigus prospect, located 7 km from the Certej deposit in the Baita-Craciunesti concession. The Pitigus prospect is a moderately east dipping, north striking quartz-calcite-barite vein system with several associated splay veins near surface. Mineralisation is hosted in the veins and in the potassic/argillic altered andesites between the veins over a strike of 300m and an average true width of 12m. Drilling was completed on approximately 80m spaced sections with 30m between holes due to topographical constraints. Intersections from the recent drilling are tabulated below. Four samples of the Pitigus mineralisation have been submitted to Cepromin for preliminary flotation testwork.

Hole/

Channel ID   Type    From (m)  To (m)  Width (m)  Au (g/t)  Ag (g/t)

CRSD055      DDH          20      28          8       1.8         2

CRSD055      DDH          35      37          2       1.9         2

CRSD055      DDH          52      57          5       1.6         1

CRSD056      DDH          16      24          8       3.5         2

CRSD057      DDH          57      75         18       1.0         1

CRSD058      DDH          59      71         12       1.7         3

CRSD059      DDH          14      26         12       2.1         1

CRSD060      DDH           0       3          3       1.9         5

CRSD060      DDH           9      32         23       2.8         3

CRSD061      DDH          69      73          4       1.8         2

CRSD061      DDH          80      86          6       1.1         5

CRSD062      DDH          50      60         10       1.1         1

CRSD063      DDH          27      34          7       1.1         2

CRSD064      DDH          66      71          5       2.2         5

CRSD064      DDH          75      79          4       2.5         4

CRSD065      DDH          22      23          1       1.1         4

CRSD066      DDH          66      73          7       1.2         1

CRSD067      DDH          28      32          4       1.1        10

CRSD068      DDH          55      58          3       1.1         7

TR39001      UGC         115     132         17       2.6         4


Note: Intercepts calculated using a 0.8g/t Au lower cut-off grade, no upper
  grade cut-off and a maximum of 3m consecutive internal waste. The deposit is
  irregular in nature, however drilling has been conducted perpendicular to
  mineralisation wherever possible and as such drilled widths correspond to
  true widths.

Diamond drilling is currently in progress at the Hondol Carol prospect (in the Certej concession) located 0.5 km from the Certej deposit in an effort to define an open pittable resource. Drilling is being completed on five 20m spaced sections with approximately 30m between holes. Mineralisation is hosted in three cross-cutting quartz-barite vein systems and in the strongly potassically altered andesites hosting the veins. Recently completed surface and underground channel sampling was utilised to focus the drilling program. Results to date from the channel sampling and drilling are presented in the table below.

Hole/

Channel ID   Type    From (m)  To (m)  Width (m)  Au (g/t)  Ag (g/t)

CJ40501      UGC           0       9          9       3.2         6

HCSC004      SC           29      42         13       2.4         0

HCSC005      SC            2       9          7       2.3         0

CJSD252      DDH          11      23         12       2.0         9

CJSD252      DDH          47      57         10       1.2         1

CJSD252      DDH          61      73         12       1.1         4

CJSD252      DDH          90      91          1       6.8         7

CJSD2059(i)  DDH          18      44         26       0.9         2


Note: Intercepts calculated using a 0.8g/t Au lower cut-off grade, no upper
  grade cut-off and a maximum of 3m consecutive internal waste. Only
  intercepts greater than 2 g/t Au are quoted, except in holes where no
  intercept is greater than 2g/t. 'Including' results have a minimum composite
  grade of 4 g/t. The deposit is irregular in nature, however drilling has
  been conducted perpendicular to mineralisation wherever possible and as such
  drilled widths correspond to true widths. (i)2m composite assays.

Mineralised dumps in the Certej and Baita Craciunesti concessions were drilled to define further material that would be economic to process at a future Certej operation. An additional 1.2Mt of material has been defined from this work to date. Recent 2m surface channel sampling of dumps in the Baita-Craciunesti concession returned positive results presented below.

Channel ID   Area      From     To    Width (m)    Au (g/t)

MAWC002      Barbura     24     30           6         1.2

   "           "         52     72          20         2.1

TSWC001      Teascu       4     34          30         1.0

TSWC002        "          0     14          14         2.5

TSWC004        "          0     18          18         2.1

TSWC005        "          2     18          16         1.5

TSWC007        "          0     14          14         2.7

TWSC008        "          0     12          12         5.5


Note: Intercepts calculated using a 0.6g/t Au lower cut-off grade, no upper
  grade cut-off and a maximum of 3m consecutive internal waste. The surface
  trenches have been completed across the dumps and are an indication of the
  grade of the dump only.

Future work will focus on defining additional satellites in the Certej and Baita Craciunesti concessions. Additional drilling at Hondol Carol, Pitigus and Teascu will focus on further defining these satellites, with a resource estimate for the Hondol Carol prospect to be completed after the first phase of drilling. Additional flotation testwork for the Teascu prospect is planned after the preliminary testwork gave positive results. Additional dumps in existing concessions will be evaluated for their tonnage and grade.

All drill core was sampled (except where noted) at one metre intervals and assayed at the Gura Rosiei laboratory in Romania, which is managed by SGS Analabs, using a standard fire assay technique and an atomic absorption finish. European Goldfields has implemented a quality assurance and quality control ("QAQC") program to ensure that the analysis of all exploration work is conducted in accordance with the best possible practices. Under the QAQC measures, European Goldfields introduces sample duplicates and repeats, and known gold standards. As a further measure, European Goldfields has five (5) percent of all sample pulps shipped to Ultratrace in Perth Australia for re-analysis and size verification.

About European Goldfields

European Goldfields Limited is a resource company involved in the acquisition, exploration and development of mineral properties in Greece, Romania and the Balkans.

Greece - European Goldfields holds a 65% interest in Hellas Gold S.A. Hellas Gold owns assets in Northern Greece which consist of three deposits within 70-year mining concessions covering a total area of 317 km2. The deposits include the polymetallic projects of Stratoni and Olympias which contain gold, lead, zinc and silver, and the copper-gold porphyry body referred to as Skouries. All three deposits have been well defined with over 200,000 metres of drilling and the completion of feasibility studies and later engineering studies.

The total proven and probable reserves of these assets are 17.2 Moz on a gold equivalent basis (65% attributable equals 11.2 Moz) from a measured and indicated resource base of 21.8 Moz gold equivalent (65% attributable equals 14.2 Moz).

These assets represent some of the largest defined deposits in Europe. The three deposits are located within a 10 km radius of each other, making this effectively a gold and base metals centre. Furthermore, both Stratoni and Olympias were previously in production and have extensive existing mining and plant infrastructure and a ship loading facility on the Aegean Sea.

In September 2005, Hellas Gold resumed production at Stratoni following the award by the Greek state of all necessary environmental and mining permits. Production of ore is expected to reach 170,000 tonnes by the end of the first year of production, steadily increasing to 400,000 tonnes per annum by year five.

Hellas Gold is in the process of applying for similar permits for Olympias and Skouries. Hellas Gold's assets also include potential revenue generating stockpiles and tailings located on the surface.

Romania - European Goldfields holds five mineral properties located within the "Golden Quadrilateral" area of Romania, where it has recently completed an in-house pre-feasibility study underpinning the value of its 80%-owned Certej deposit. The Certej deposit hosts measured and indicated resources of 31.4 Mt grading 2.1 g/t gold and 11 g/t silver for 2.34 Moz of gold equivalent (80% attributable equals 1.88 Moz).

Resources & Reserves Parameters

Patrick Forward, General Manager, Exploration of European Goldfields, was the Qualified Person under Canadian National Instrument 43-101 who reviewed this news release and verified the data disclosed in this news release, including sampling, analytical and test data underlying the information or opinions contained in this news release.

A summary description of the geology, mineral occurrences, nature of mineralisation, rock types, geological controls and dimension of mineralised zones found at the Certej and Baita-Craciunesti properties is included in a report entitled "Technical Review of a Portfolio of Properties in Romania" dated 10 March 2004 prepared by A C A Howe International Limited and filed on SEDAR at www.sedar.com on 11 March 2004 under the category "Technical Report".

The potential quantity and grade of the targets mentioned above is conceptual in nature, there has been insufficient exploration to define a mineral resource on such targets and it is uncertain if further exploration will result in such targets being delineated as a mineral resource.

For additional information on the resource and reserve estimates quoted above, please refer to the Company's Resources & Reserves Declaration at www.egoldfields.com/goldfields/resources.jsp.

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BenQ Mobile representatives in Romania say the merger has driven the new company to the second place on the domestic market. The Taiwanese manufacturer of digital equipment BenQ, which bought the mobile phone division of Siemens this year estimates to sell more than 500,000 phones in Romania in 2005.

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PVC carpentry manufacturer Corina Gealan has become part of the Amvic Group this year, which comprises a number of companies operating on the constructions market.

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French carmaker Renault expects to sell 5,000 Logan units on the Italian market next year. "This is a sales forecast for next year, not a target, as this figure could be exceeded. The sales of Logan will start next January, through the network of Logan dealers," said Roberto Romanini, Logan project manager in Italy.

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The Romanian Savings House (CEC) will launch three debit cards for private persons and legal entities on Wednesday.
CEC will enter the credit cards market from April 2006, according to the company's vice-president Cristian Tudorancea.
"The launching of the cards will be accompanied by the opening of 130 ATM's and approximately 1,000 points of sale," stated Tudorancea.
Technical assistance was provided by HP Romania and the value of the contract was approximately three million euros.
CEC is the sixth largest Romanian bank in terms of the value of its assets.

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Leasing, rental and overdraft are the financing sources preferred by the Small and Medium Enterprises (SME) from the original EU member states, approximately half of them turning to these options.

Leasing or rental is the first choice of the German SMEs, 71% of the companies using the two sources, according to a poll of the General Department for Enterprises and Industry of the European Commission. The Austrian SMEs come in second, 65% using these methods, while 63% of the Swedish SMEs prefer options. Approximately half of the SMEs from the core 15 members of the EU have already used the leasing, overdraft and rental possibilities, while 45% of them have used credits with a maturity of more than three years. More than a third (31%) contracted short term credits, and only six percent of the SME used the risk capital funds.
A large part of the interviewed managers (42 percent) stated that it is more difficult to access a credit line in the present that it was a few years ago due to the large volume of information requested by the banks, said 72% of the interviewed managers.
The bureaucracy and the administrative matters are too complicated, consider more than half of the managers (59%), while almost half of the respondents consider that the procedures are too long and a third consider that the interest rate are too high.
If the interest rates would be reduced, 60 percent of the managers would be encouraged to resort to this type of financing, while more than a third of the managers would be more attracted by banking loans if the procedures would be simplified.
However, the SMEs usually turn to banks to receive financing according to eight out of ten interviewed managers applying for a credit. A quarter of the SMEs used leasing or rental, while only one in ten companies called on public institutions to support their investments.
Although banks are mostly used for financing, the study carried out by the European body points out several differences between member states. Thus, 92 percent of the Austrian company used banking loans, while only 50% of the Finnish companies applied to a bank for a credit.
Companies activating in the services area have the lowest applications number for banking credit, while those operating in the industry require most of the SMEs credits.
The study was carried out on 3,047 managers of Small and Medium Enterprises from the EU member states.

Financing focus to switch to SMEs, say bankers

The Romanian SMEs sector records the highest growth rates, stated Nicoleta Papa, manager of medium sized corporate clients at ING Bank. The bank manager pointed out that whist the corporate sector is mostly covered, the bank was now looking at re-orientation towards SMEs. The bank has already announced that it will open ten new outlets aimed at SMEs' needs.
The trend is also recognized by HVB Bank, whose representative Gabriel Jeflea, corporate banking director, stated it will launch new standardized financing programs for SMEs. According to Jeflea, the bank will support the program by initiating strategic partnerships with guaranteed funds. 
Out of the total credits granted by the Romanian Bank for Development (BRD), two thirds are allocated to SMEs, which proves the importance of the sector, according to the president of the bank, Patrick Gelin. The bank official also pointed out the main difficulties faced by banks during analysis of SMEs' credit requests, such as scant information, lack of estimates on the medium term and the frailty of their own funds. However, Gelin stated that the ratio of high risk credits in the overall balance is only 3.5 percent.
Operational leasing is becoming a real source of financing and a solution for Small and Medium Enterprises (SME) to improve competitiveness and contribute to their success on the European market.
"Operational leasing is a top range solution for the development of SMEs from Romania," stated Gratiela Iordache, the vice president of the Budget-Finances Committee of the Chamber of Deputies, during a seminar on leasing solutions. According to Iordache, SMEs have difficulties in accepting a new financing system, but they should learn to take full advantage of operational leasing.
The official emphasized the flexibility of the system and pointed out that mid and long term financing needs could be ensured by the possibility of deducting leasing premiums by the client of such a service.

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The minimum social capital of commodity exchanges will be one million euros and all stock holders will be legal persons with maximum direct or indirect participations of five percent of the capital. These provisions are included in the law regarding commodity exchanges promulgated by the parliament and sent to the Romanian President for endorsement.
At incorporation, commodity exchanges will have to demand the preliminary approval of the Boarding College of the Romanian Chamber of Industry and Commerce (CCIR) who is authorized to approve, supervise, control and sanction this type of market. According to the draft law, no member of the administration board of a commodity exchange is allowed to have interests of any kind in similar institutions.
Litigations related to the negotiation of an offer of exchange contract will be solved, with the agreement of the parties, by the Arbiter Court of Commodity Exchanges. Otherwise, the litigations fall under the jurisdiction of regular courts. Until the creation of the Arbiter Court, all litigations are to be solved by the International Trade Arbiter Court of the CCIR.
Commodity exchanges are self-regulated organizations incorporated as joint-stock companies. Their current managerial activities would be carried out by an administration board appointed by the shareholders general assembly.
Commodity exchanges will be authorized to administrate any kind of market, under the provisions of specific regulations, including transactions with spot contracts (deals for the purpose of securing a profit or avoiding a loss by reference to fluctuations in exchange rates between currencies), forward contracts (deals for the sale or purchase of a given amount of foreign currency at a future time at a rate of exchange fixed at the contract's signature) and commercial debts.

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Groups could be exempted from creating consolidated financial situations if their cumulated turnover is less than 35 million euros and employ maximum 250 persons.
The new stipulations are the result of a new order issued by the Ministry of Public Finances which should completely integrate the Romanian legislation with that of the EU. "The regulations are not an accounting revolution," stated representatives of the ministry pointing out that the Romanian legislation is 80-90% compliant with the EU norms and all the European regulations should be adopted in Romania by accession time.
According to the new stipulations, any company which has total assets of at least 3.65 million euros and a turnover of at least 7.3 million euros will have to present the fiscal authorities yearly financial situations containing profits and losses, modifications of their capital, treasury flows and explicative notes for the financial situations. Companies which have the above-mentioned indices lower, except companies listed on a stock market, will submit simplified financial situations containing abridged balance sheets, profits and losses and explicative notes.
The main company of a group will be exempted from the obligation to develop consolidated financial situations if the members of that group do not exceed two indicators for their turnover and employees' number at the time of the balance. According to the order issued by the Ministry of Finance, the total assets of the member companies must not exceed 17.52 million euros, the net assets must be 35.04 million euros at most, and all the companies in the group must not employ more than 250 persons over the financial year. Companies listed on the stock exchange are not exempted from the rule, even if their indices would be under the levels set by the authorities. 
The yearly consolidated situations will be developed by the main company of the group in accordance with the seventh Directive of the European Union. To be considered the main company, a firm must have the main shareholders in another company or dominate the respective company, nominated as a branch. The latter must have a board as well as management and censors elected through vote. Other criteria could apply as well, such as the control over the branch after being nominated by a clause or statute.

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 The European Court of Human Rights (ECHR) decided that the Romanian state will pay moral damages worth 5,000 euros to the Masinexportimport Industrial Group SA.
The Romanian company was forced to pay back 800,000 euros received from the former Authority for Privatizations and the State's Participations Administration (APAPS) for damages due to the State Property Fund (FPS) omitting the company in a privatization process.
According to an ECHR statement, Masinexportimport Industrial Group SA was one of the companies that participated in a1998 tender held by the former FPS to sell the main share package owned by the state in the Masini Unelte Bacau company.
Masinexportimport offered the largest sum, although it was under the price solicited by FPS.
The public institution asked the company to make another offer but in June 1998 sold the share package to another Romanian company.
In December 1999 the Bucharest Court of Appeal accepted the request made by Masinexportimport requesting FPS to comply with the initial agreement regarding the sale of the main share package.
The decision remained definitive but FPS did not respect it and the company launched another court appeal.
The Bucharest Tribunal decided in January 2001 that APAPS (the former FPS) will pay to Masinexportimport the RON equivalent of 836,523 euros plus interest as well as the value of the initial shares tendered by FPS and belonging to the Masini Unelte Bacau company.
The High Court of Cassation and Justice (ICCJ) decided that Masinexportimport did not suffer any damages after the shares were sold to another company and must return the 836,523 euros to APAPS.
ECHR decided that ICCJ did not give a correct verdict because the security of the commercial operations principle was violated and Masinexportimport was forced to lose not only the share package but the damages also.

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Electrabel plans to purchase as soon as possible hydro and thermoelectric energy production facilities and Jean Claude Dorcimont, vice-president for Central Europe, said that Romania is a very attractive country for foreign investors because of its good macro economical policies, will join the European Union, has laws that are in keeping with the European criteria and the free energy market began to work, Bursa reports.

"We are searching for projects to get involved in.

We are very interesting in the privatizations offers or investment projects in cogeneration facilities for thermal power and energy.

We would like to take over large scale units, reorganize them, expand them and turn them more efficient.

We are also interested to take over some of the facilities that can produce both thermo and hydro energy," he said.

The Electrabel official named few of the projects his company is interested in:

The thermoelectric energy production facilities at Mintia, Iernut, Bucuresti Sud, Braila, Galati, Palas, which would be correlated to production capacities located on the rivers of, Lotru, Riul Mare, Olt and Bistrita.

The company is not interested in the production of nuclear energy or the one using coal because it does not have the technology and experience such fields require.

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German circuit board maker Ruwel AG has decided to postpone the work on its Romanian plant located in Tetarom industrial park in Cluj-Napoca, scheduled to start in March 2005, for the spring of 2006 as works on the park infrastructure have been delayed.

The company announced at the end of 2004 that it planned to invest 80 mln euro ($93.57 mln) in the construction of a plant in the northwestern city of Cluj-Napoca to produce integrated circuit boards for the automobile industry in Romania.

Ruwel AG is the leading manufacturer of integrated circuit boards in Germany and ranks second in Europe.

The company has production units in Germany and Denmark.

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The trade deficit increased in the first ten months of the year to ¤7.73 bln, up 46% as compared to the same period of 2004, with the value standing at ¤1.14 bln in October, according to the National Statistics Institute (INS).

According to INS, in January - October 2005 FOB exports increased by 16.9 per cent, to ¤18.39 bln, while CIF imports totalled ¤26.12 bln, up 24.1 per cent.

Exports amounted to ¤1.39 bln in October, accounting for a 10.8 per cent increase compared to the corresponding month of the previous year, while imports picked up 26.9 per cent, reaching ¤3.07 bln.

In the export structure, the most dynamic product categories remain the mineral products, transport means and materials, as well as steel and iron products, with exports going up 78.6 per cent, 40.5 per cent and 16.4 per cent respectively.

In terms of value, garment products and textile materials account for the most important export category in the first ten months, totalling EUR 3.54 bln.

As for imports, the same sectors registered significant changes, with increases by 45.8 per cent in mineral products, 43.3 per cent in transport and 31.7 per cent in the steel industry.

Romania?s main trade partners in the first ten months of 2005 remain European Union Member States, accounting for 67.8 per cent of the exports and 62.5 per cent of the total imports.

The trade deficit last year affected Romania?s payment balance, as the current account deficit increased to 7.5 per cent of the GDP.

For the same reason, estimates for this year indicate a new increase in the deficit of the payment balance, to 7.75 per cent of GDP.

BNR Governor Mugur Isarescu has recently announced that imports will outperform exports this year by over ¤9 bln, but that the current account deficit may be contained under the eight per cent of GDP ceiling, considering that transfers from Romanian citizens employed abroad are put at ¤3.5 bln.

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Company managers predicted that from November 2005-January 2006 the economic activity would increase in industry, retail and services, revealed the results of a survey conducted by the National Statistics Institute, which was based on the estimates made by company managers, Bursa reports.

Based on the survey's results, the production in the manufacturing industry will have an up-going trend for the next three months, while the number of the people working in this field will decrease.

At the same time, prices for industrial products will register small increases.

With the beginning of the cold season, activities in the construction field lower and thus production in this sector will decrease over the next three months.

The prices for construction work will increase, while the number of people working in this sector will decrease.

The retail sector will post growth because of the season factor.

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Trelleborg AB said it will construct a new plant for automotive antivibration products in Romania, which is expected to come online at the end of 2006.

The plant is expected to employ approximately 200 and generate sales of at least 300 mln skr by the end of 2009 based on orders already booked.

'It will have the capacity to double this sales figure,' Trelleborg said.

To size of the investment was not disclosed.

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Mol's strategy for Romania includes the take-over of natural gas producer Romgaz Medias, involvement in natural gas transport operations, development of the petrol station network, and officials for the Hungarian group don't rule out the option of acquiring a refinery as well.Asked in a press conference in Budapest on Monday whether Mol was considering new acquisitions in Romania, in the refinery and fuel distribution sector, Mol CEO, Gyorgy Mosonyi, said the group was considering both options. "We are looking at both sectors, but we have not initiated negotiations yet with other companies for taking over new distribution units," Mosonyi said. According to Mol officials, another objective of the group is the acquisition of Romgaz. "The Romgaz privatisation process has already started, as the consultant was chosen, and the next step is devising a privatisation strategy, which we are waiting for the Romanian State to make public. Romgaz is definitely an interesting company for us, it fits well into our portfolio," Mol chairman, Zsolt Hernadi, said. He added that if it takes over Romgaz, Mol plans to expand operations of the company outside Romania's borders.

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The signing ceremony for the Brasov-Bors highway between the National Highway Company and the American company Bechtel.

The American company has accepted a 30% down payment of the value of the works for the next year and agreed to present financial statements at the end of each year until the completion of the highway.
"The results of the re-negotiations are favorable for the government," stated the UDMR (the Democratic Alliance of Hungarians in Romania) Senator Gyorgy Frunda, pointing out that all the illegal provisions have been cancelled and that the contract will be made public next week.

The Bechtel contract for the Brasov-Bors (Transylvania) highway, worth 2.2 billion euros, was granted to the American construction company without a public tender, leading to negative reactions from the European Union. After the 2004 election, the new administration repeatedly expressed its intention to support another infrastructure project; the pan-European Corridor IV, which crosses Romania from Constanta in the east to Timisoara in the west. The government complained that a major irregularity in the original contract was the down payment worth 220 million euros which was to have been made between 2004 and 2007, with use of the funds to be justified only after the completion of works in 2012. The provision did not comply with Romanian law, the government argued, as the legislation states that a company involved in a public works contract should only receive advances for the year in question, and should present an annual expenses statement, explained the Minister Delegate for Public Works, Laszlo Borbely.

"The problem with Bechtel is solved," said Frunda. Representatives of the Ministry of Transportation, Construction and Tourism stated that the American company had accepted a 30% down payment of the value of the works for the next year, and agreed to present a financial statement detailing use of the funds at the end of each year until the completion of the highway. 
"It is not a matter of utility," stated Prime Minister Calin Popescu Tariceanu, emphasizing that the main problem of the contract was the initial stipulation of the down payment, under which Bechtel would only have been obliged to detail the use of the funds at the end of the project, in 2012. "There are other technical issues, which are also the object of re-negotiations," added Tariceanu, who nevertheless expressed confidence that the financing and the construction works will resume in full strength next year.

The UDMR Senator stated that the success of the negotiations will allow the current governing coalition, in which the party is a member to continue to function. A few months ago, Frunda said in public that the failure of the Brasov-Bros highway failure would be a reason for the party to exit the coalition.

The Transylvania highway was among the topics discussed last month during the joint government session between the Romanian and Hungarian governments. The minister of Transportation, Gheorghe Dobre informed his Hungarian counterparts that the deal between the former government and the American company Bechtel breaches both European and Romanian legislation.

Hungary will support the construction of the Transylvania highway, according to the state secretary in the country's ministry of economy and transportation, Gilyan Gyorgy.

The Hungarian minister believes it is in Hungary's best interests for the highway project to continue, as it will lead to significant economic gains for both countries. Hungarian transportation policy provides for linking the country's roads infrastructure with that of Romania.

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The Romanian State sold in two years thirty micro hydro-electric plants, which represents approximately seven percent of the hydro-electric plants planned to be put up for privatisation, ACT Media news agency reports.

The Institute for Research and Hydro-energetic Designs, the Italian company ESPE, Energy Holding and Luxten bought such hydro-electric plants which have a power of no more than 1MWh.

Due to the fact that, last year, a chain of five hydro-electric plants were sold for less than one million euros and the price of the ten micro hydro-electric plants sold in the last two years was of more than 13 million euros, the business seems more and more attractive for investors.

On the whole, the Romanian State got over 20 million euros from the sales of the micro hydro-electric plants.

There are 380 micro hydro-electric plants in Romania which are or will be put up for sale. In order to accede to the European Union in terms of environmental protection, Romania will have to carry out a policy through which the environmental protection costs in the price for electricity and thermal power should become internalised, said State Secretary with the Romanian Ministry of Environment and Water Management Attila Korody. Romania has so far become successfully involved in the know-how transfer for the reduction of the greenhouse gas emissions and for increasing energy efficiency while improving environmental quality.

The quantity of gas emissions that can be reduced under these projects is approximately 8 M CO2 tonnes over 2008-2018, with the said ministry expected to start transfer in 2008. According to its European accession pledges, Romania will include in its national legislation, by January 1, 2007, the provisions in the European directive regarding the devising of a commercial scheme for greenhouse gas emission certificates.

In the field of renewable energy, as part of bilateral cooperation under the Kyoto Protocol, the following joint implementation projects have been agreed on:

The upgrading of four hydro-power aggregates of the Iron Gates 2 station and three hydro-power aggregates at Iron Gates 1 station.

For the promotion of renewable energy sources, the Government may contemplate exemptions from energy taxes, income tax cuts for producers of energy from renewable sources as well as income tax cuts for investment in the production of such energy, Korody said.

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The German company RWE is interested in the Romanian electricity market, considering it as the key of its development in Central and Eastern Europe, ACT Media news agency reports.

"We were established 100 years ago and our expansion on the German market became limited.

Therefore we look for opportunities of growth in Central and Eastern Europe.

We want to invest in Romania as it is a growing market, and the EU accession is a further advantage.

Romania's strategic position and its reserves of oil and natural gas are another advantage," said Bonekamp.

He said that RWE has an advantage over its competitors in the privatization of Electrica Muntenia Sud, being a private investor with experience.

As for the price RWE will offer for the Romanian electricity distributor, Bonekamp didn't specify a sum, but stressed it will be a fair price, followed by many investments.

"We want to pay the correct price. We will not overbid.

If the price is fair and reasonable, we will pay.

If it is overbid, it will subsequently reflect on clients through tariffs," he said.

The German company is also interested in buying the Turceni electricity center.

RWE Energy has a strong position on the electricity and gas market in Central and Eastern Europe, with branches in the Czech Republic, Hungary, Slovakia and Poland.

RWE owns gas, water and electricity distribution companies in Germany, Austria and the Netherlands, and has some 40,000 employees.

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The tax on some alcoholic beverages in Romania will quadruple starting next year. [Getty Images]

Starting next year, a so-called "vice tax" of about one euro will be added to the price of every pack of cigarettes sold in Romania, doubling costs for local smokers. People who enjoy hard liquor will also find themselves paying more for it; the tax on some alcoholic beverages will rise from 0.5 euro to 2 euros per bottle.

These tax hikes are expected to generate between 30m euros to 40m euros monthly, with the revenues going directly into the health system's budget. "It's obvious that smokers and drinkers of alcohol are getting ill more often than the other people, so they should pay more," says Health Minister Eugen Nicolaescu.

Not everybody is 100 per cent optimistic. "This tax won't be efficient if the authorities aren't able to control the cigarettes and alcohol smuggling," said Finance Minister Sebastian Vladescu during a press conference. Among ordinary people, reactions are mixed. "I don't think it's right. I already pay some pretty large amounts each month for health insurance," says Dan Burcica, a 46-year-old smoker.

"Tobacco and alcohol destroy the health, so maybe if the prices are bigger the people will think twice before buying cigarettes or strong drinks," believes Mariana Lucescu, 63, a retired civil servant.

Romania's state-run medical network faces serious financial difficulties. The system currently owes drug and medical product suppliers more than $350m. Scarce funds are affecting the quality of treatment. Especially in the smaller hospitals, patients often have to buy their own drugs, syringes and bandages.

Along with the "vice tax", authorities hope to increase the health budget by requiring more people to pay for health insurance. At present, only about 5 million Romanians are contributing to the system. The 6 million retired people, exempt until now, may soon join them. But only 12,000 of the retirees -- those with pensions of over $275 -- will actually have to reach into their own pockets. All others will see their "contributions" covered by the state.

Health ministry officials are seeking to collect fees from farmers who officially report no revenue, but who own large amounts of land and numerous animals. They will be charged according to the medium-wage health insurance bracket. Also liable to pay will be the approximately 2 million Romanians who work abroad. "They usually go to Romania for their non-urgent medical problems, even if they don't have insurance," says Nicolaescu.

Hospital privatisations could be another source of revenue. The health ministry plans to start the process by turning over local clinics to their communities. "We'll also give some money for funding the hospitals, but if they feel they can't manage the institutions, they could sell them," Nicolaescu explains.

In all, the ministry is launching the most concrete reforms to the healthcare system in the last 15 years. Most Romanians do not appear especially concerned, however. Those with higher-than-average incomes have already started to pay for private health insurances or to rely on private medical facilities. As for the others, they simply hope for good health.

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AES Corp., which is in the race for the privatization of Electrica Muntenia Sud electricity distributor, started procedures for opening a subsidiary in Romania, ACT Media news agency reports.

AES Corp. has opened an office in September and is in the process of registering a subsidiary under the name of AES Romenergia.

It will coordinate the long-term investment plans in Romania, including interest both in the production and in the distribution of electricity.

AES was one of the investors interested in taking over the energy complex Turceni, and even submitted a letter in this respect.

The American group will study other opportunities that the Romanian market offers, such as the production of energy from hydro resources or the participation in the privatisation of other electricity distribution companies. In the region, AES has already been operating in Hungary and the Czech Republic through units for producing electricity, in Ukraine through a distribution company and in Bulgaria it is carrying out a project for building a thermo-electric power station.

The privatisation of Electrica Muntenia Sud might continue with up to five investors, after the submitting of final bids, scheduled for January 31, 2006.

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Alpha Bank stated that it remains optimistic regarding loan expansion in 2006, and plans to open 400 branches in southeast Europe by the end of 2008.

Alpha Bank estimates mortgage lending rates to increase by 25% in 2006, and consumer lending growth of 26% for the whole Greek banking market.

The bank does not expect any material impact on its income statement from an ECB rate hike.

Regarding international expansion, Alpha Bank plans to reach a total of 150 branches in Romania, 135 in Serbia, between 80 to 90 in Bulgaria, and 5 to 10 more in Albania and FYROM by the end of 2008, reaching a total of 400 branches in the southeast Europe region.

Alpha Bank aims for a 10% market share in every market in which it operates.

The bank added that there is no loan quality deterioration seen yet, while it plans to continue its buyback scheme as a means to boost shareholder value.

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Low-brow entertainment and ?non-event? news dominate public-service broadcasting in Romania. Reform is underway, but deplorably slow.

As a leader of the political opposition before the presidential and parliamentary elections of 2004, Traian Basescu was not welcomed on Romanians? television screens. Kept off the air when he was too clever, shown on TV mostly when he said something dull, Basescu was even sent home by a private television studio from a debate when his rival in the presidential run-offs, then-Prime Minister Adrian Nastase, failed to turn up. Despite such experiences, Basescu won the presidential race in December 2004 and it is perhaps such experiences that prompted Basescu, a former sailor, to put media on his reform agenda after he took the country?s helm and to promise an environment friendlier to independent media, especially television.

Subsequent content research carried out by the Bucharest-based media NGO Media Monitoring Agency (AMP) revealed the extent of political bias during the campaign, showing that all of Romania?s major television stations refrained from criticizing leaders of the then government.

It is unbalanced coverage that is the main reason why in recent years the number of Romanians saying they do not trust the broadcast media has increased by 10 percent. The principal factors why both private and public-service operators have behaved in partisan fashion are tough commercial and political pressures, pressures exacerbated under the former government of the Social Democratic Party (PSD). In recent years, programming has become increasingly tabloid in style and ownership has been concentrated in the hands of a few players, many of them unknown. Television has become a tool to protect various political and business interests. These are the main findings of a recent EUMAP report on television launched in Romania on 28 November.

GOOF TELEVISION

Romania has in recent years seen a boom in advertising, with the market growing by 20-25 percent annually. But it would be wrong to assume that this has given a boost to Romania?s many television outlets or given them a greater degree of editorial freedom. The cash from television advertising ? estimated at a net 130 million euros in 2004, according to Zenith Media ? is shared by only a few players. One single station, Pro TV, owned by American investor Central European Media Enterprises (CME), reaps one-third of television ad revenues. Most of the rest is grabbed by two other private stations. That leaves some 150 television stations in the country struggling to survive.

The battle for survival is having an impact on content. Ralu Filip, the president of the main regulator, the National Broadcasting Council (CNA), says that advertising costs, measured by GRP (gross rating point), is low compared to other markets in the region and that the profile of viewers is unattractive to advertisers. The result is that, to pull in advertising, broadcasters are chasing only mass viewership and are not trying to produce quality programming.

This tabloidization of television programming is true not just of private broadcasters, but also of the public-service television broadcaster, TVR, which receives some 75 percent of its budget from license fees and has 100 million euros in turnover. TVR operates four channels: TVR1, the most popular channel in the country with 22 percent of the audience in 2004; a generalist channel, TVR2, that targets the young; TVR International, which airs abroad; and TVR Cultural, a satellite channel airing cultural programs. (TVR runs also four regional studios, in the cities of Cluj, Iasi, Timisoara, and Craiova.) Quality programs tend to be exiled to the lower-ranked public channels, TVR2 and TVR Cultural, while television shows such as ?Suprize, surprize? (Surprises, surprises) occupy prime time on the station?s first channel. The show is an example of low-brow docu-tainment, mixing chintzy variety-show performances with real-life melodrama ? in which, for example, separated relatives are reunited live in the studio ? and its audience share peaks at 30.7 percent, making it one of the most popular TV programs in the country. All major stations, whether they be private broadcasters ? like Pro TV and Antena 1 ? or TVR, compete for ratings primarily by airing telenovelas and light entertainment.

Investigative journalism is rare. The only dedicated investigative programs were both taken off the air in mid-2004, seemingly because their ratings were too law. Both were broadcast by private channels, ?Cutia neagra? (Black Box) by Antena 1 and ?Reporteri incognito? (Incognito Reporters) by Prima TV.

News journalism, in-depth reporting, and quality political or economic programs are almost non-existent on the major stations. The vacuum is being largely replaced by the ?non-events? news, industry slang for issues of no broad public interest such as minor cases of domestic violence, thefts, and car accidents. TVR does little that is distinctive with its public funds. Largely, it imitates its commercial competitors.

However, a distinctive and promising feature in this otherwise bleak media landscape has recently emerged, in the form of dedicated news channels. Chief among them is Realitatea TV, which first entered the market in 2001 but re-launched itself with more success in the autumn of 2004. Realitatea TV is seen as an influential channel, producing some high-quality, in-depth news, and current-affairs programs. The other all-news channels, N 24 and Antena 3, have only small audiences as yet. Still, some of the news programs of the all-news stations have become better known even than those aired by the public-service broadcaster. (A poll conducted in April 2005 by the local market-research company INSOMAR found that TVR1 ranked only fourth as a source of news, after the private channels Pro TV, Antena 1, and Realitatea TV.) The EUMAP report found that it is now largely accepted that hard, investigative journalism cannot be expected from generalist TV channels, which seem likely to continue to air mainly mass-capturing entertainment programs.

REFORMING?

The poor performance of public-service news service highlights a broader crisis in public-service broadcasting over the past decade. Such concerns were the ostensible reason why in early 2005 the new governing coalition set up a parliamentary commission to review the performance of public-service radio and television.

The commission?s report concluded that programs aired by the public-service broadcasters had favored the former government of the Social Democrats. The commission also suspected that the public broadcasters had been involved in illegal financial transactions.

However, there was no follow-up investigation and, in the end, no one was held to account for the public broadcasters? sorry performance. Instead, parliament chose simply to dismiss the supervisory boards of both institutions.

The move was seen by commentators as an attempt to ?replace their [former government] people with ours [current government],? an extension of the tradition of each new government appointing supporters to head public channels. Basescu did not, however, use his powers to appoint one member of the council of administration, saying that TVR desperately needs a real reform, and not only cosmetic changes.

Parliament ? in which Basescu?s Democrat Party, the National Liberal Party (PNL), and the Democrat Union of Hungarians in Romania (UDMR), and the Conservative Party have a weak majority ? has so far not heeded Basescu?s call, removing a change in the law on public-service broadcasting from its list of priorities after the supervisory councils were replaced.

A bill was eventually introduced by Raluca Turcan, the chair of parliament?s culture and media committee, but it failed to pass through parliament. Turcan?s bill had been drawn up in consultation with experts and representatives of a large number of NGOs and civil-society groups. Despite promises by political parties to draft another bill, the bill is still a work in progress.

The reason why Turcan?s bill was scrapped, political insiders say, was an unwillingness to strip the government of its right to nominate its own members to the 13-member governing body of public radio and television, to separate executive and supervisory powers, and to allow representatives of civil society onto the council.

Without new legislation in place, reforming public broadcasting is difficult. Management is, though, making some effort. TVR has tried recently to focus more on hardcore journalism, but its few investigative programs still avoid hot issues such as major corruption cases.

THE BIG BOYS

Political influence is also a concern outside public-service broadcasting. Two powerful media conglomerates ? centered on Pro TV (15.8 percent of audience share) and Antena 1 (12.3 percent) ? dominate the television market.

Both have significant political connections. Antena 1 is owned by the Voiculescu family, headed by Dan Voiculescu, the leader of the Conservative Party, a small but important member of the ruling coalition.

Pro TV is a partnership between CME and Adrian Sirbu, a former prime-ministerial advisor in the early 1990s. One of the most influential stations in Romania (reaching 77 percent of the country?s 22 million people), Pro TV has been sharply criticized for obeying the former government until 2004. Its slavish editorial policy may have been related to the multimillion dollar tax debts that it had accrued. The station has since paid off all its debts.

There may be similar political ties in the new media groups that are emerging as a process of consolidation begins. EUMAP?s research found that television proprietors have made a habit of concealing their identity by registering in tax havens or in Western European countries such as Switzerland where legislation allows for offshore owners to remain anonymous. No Romanian authority knows or checks who owns the capital now being invested in the media market.

In the absence of political action to introduce new legislation, what can the broadcasting regulator, the CNA, itself do to help create an environment friendlier to independent media? For a start, it should, as the EUMAP suggests, oblige applicants for broadcast licenses to reveal the real identity of their shareholders and to ensure that no one owner can control more than 30 percent of the nationwide audience.

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The National Employment Agency does not expect a spectacular rise in the unemployment rate in 2006, so that the number of persons to be made redundant next year could reach 30,000 (a 0.3 percent increase of the unemployment rate). At the moment, 540,000 unemployed are registered in Romania, putting the rate at 5.6 percent, and the announced redundancies will keep the indicator below six percent. Redundancies planned for next year will mainly be operated in the mining sector, with approximately 11,000 persons to be laid off, of whom 3,000 in a first stage, at the beginning of the year. The Bucharest public transport corporation will also lay off 2,300 employees. As for the 2005 redundancies, to the number of 8,700 employees of national corporations and companies answerable to the Ministry of Economy and Commerce (MEC), another 400 people may be added, under a draft Government Resolution. The latter will benefit from provisions of Government Emergency Ordinance 8/2003 on stimulating the restructuring, reorganisation and privatisation of national corporations and state-owned companies, and of trade companies and public corporations answerable to local public administration. According to the National Statistics Institute, the unemployment rate in August was 5.6 percent and inched down to 5.5 percent in September, as against the 6.2 percent reported late last year.

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A World Trade Organisation Secretariat report on the trade policies and practices, issued on Tuesday, notes that Romania has continued to liberalize its trade regime since its latest review in 1999, which contributed to a positive overall economic performance. The report also notes that further liberalization in services should improve efficiency in the economy, including the competitiveness of Romania's exports, especially by reducing costs related to financial services, telecoms, and transport. The report examines all economic indicators and latest trends. Regarding the foreign investments, it says that Romania's annual inflows of foreign direct investment (FDI) jumped from an average of 425.4 million euros over 1990-1998 to about 1,154 million euros over 1999-2002, peaking at 4,209 million euros in 2004. Romania's FDI stock (13,546 million euros in 2004) remains low compared with some Central and Eastern European countries. Romania ranked 62nd of 140 countries; its previous rank was 73rd (2000-02), and its best ever ranking was 51st (1997-99), the report says. It further underlines that the process of integration in the European Union is the most important policy objective, which reinforces participation in the multilateral trading system.

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Tuesday was the second day of continuous depreciation of the European currency, euro vs. the Romanian leu currency, and dealers say that might continue in future, as sales in foreign currencies went up. New Romanian leu (RON) recorded appreciation on Tuesday not only against the European currency but also against the dollar, the Romanian Central Bank (BNR) calculating a rate of 3.6449 RON for one euro, 0.0094 units under the level of the first day of the week. Also, the dollar recorded a sensible depreciation, being evaluated by the Romanian Central Bank at 3.0854 RON, or 0.0373 units under the level of the previous day. Dealers say strengthening of the RON is due to brisk sales of foreign currency, also stimulated by the higher level of interests on the monetary market. If this keeps constant, "the Romanian currency has good chances to record higher appreciation," the paper says. Commercial clients, especially big companies, sell foreign currency in this year-end period, so as to pay their taxes to the state budget. On the other hand, the peak of the demand for foreign currency, characteristic for November, when imports of consumer goods and energy go up, should be close to its end.

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At end-October 2005, broad money (M2) ran at RON 81,098 million, up 1.2 percent (0.3 percent in real terms) on the previous month. In year-on-year comparison, broad money increased by 41.3 percent, or 30.7 percent in real terms.

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The Minister for the relation with the Parliament Bogdan Olteanu announced on Tuesday that the privatization contract for the Banca Comerciala Romana (BCR) will be made public after it is signed. The Minister of Public Finance Sebastian Vladescu said that the sum offered by the other bidder will not be revealed. "Nobody will know which is the price offered by the losing bidder. It is a condition of both bidders that the sum offered by the one who lost to remain unknown," said Vladescu.

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Romania's trade deficit reached 7.73 billion euros in the first ten months of the year, 46% more than in the same period of 2004, according to data from the National Statistics Institute (INS).
In October alone the deficit was 1.14 billion euros.
Data from the same source shows that for the January to October period FOB (freight-on-board) exports climbed 16.9 % up to 18.39 billion euros while CIF (Cost, insurance, freight) imports totaled 26.12 billion euros, representing a 24.1 % increase.
The most dynamic categories of exports remained mineral products, vehicles and accessories and iron and steel products with increases of 78.6 %, 40.5 %, and 16.4 % respectively. For value of exports, textiles and clothing secured the first position in the league table for the first ten months of the year, with a total of 3.54 billion euros.
For imports the same sectors turned out to be the most dynamic: mineral products, transportation and vehicles and iron and steel products with growths of 45.8 %, 43.3 % and 31.7 % respectively.
Romania's main trading partners in the first ten months of 2005 remained the member countries of the European Union with a share of 67.8 % of exports and 62.5 % of imports.
The trade deficit led to the deterioration of Romania's balance of payments last year when the negative balance of the current account reached 7.5 % of gross domestic product (GDP). For the same reason, estimates for this year suggest a new increase of the balance of payments deficit to 7.75 % of GDP.
The governor of the central bank Mugur Isarescu recently announced that imports will exceed exports by nine billion euros, but cash transfers from Romanians working abroad could keep the current account deficit within a limit of 8 % of GDP

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The Ministry of Public Finances (MFP) is to establish the minimum price of cigarettes after discussions with Competition Council representatives, the MFP minister Sebastian Vladescu has stated. The latest version of the Fiscal Code modifications has established that the retail cigarette price established by producers will not be less than 90% of the price of the best sold brand. The Competition Council considers this rule to be anti -competitive. "There is a discussion going on between us and the Competition Council through which we will define the exact position of the parties," stated Vladescu.

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MasterCard announced the opening of a regional office in Romania on Tuesday to coordinate its South-East European activities. The office will be managed by Denisa Mateescu, MasterCard Romania operations director until now. MasterCard Romania will coordinate card operations from Bulgaria, Serbia-Montenegro, Bosnia-Herzegovina, Albania, Macedonia and Romania. The international company has a ten years presence in Romania and its current portfolio totals 3.4 million active cards. Unofficial data indicates MasterCard transactions in Romania totaling approximately five billion euros in the last twelve months.

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In the first nine months of this year, the advertising market in Romania grew by 50 percent exceeding 1.5 million insertions in all media formats, weekly Capital informs, stressing that last year there were as many as 10 million commercials. Non-alcoholic drinks have seen the most advertisements this year. Over January-September 2005 non-alcoholic beverages totalled 155,393 ads, followed by cosmetics (112,836), auto (95,881) and telecommunications (84,495). At the bottom of the list are shampoos with 46,015, furniture with 43,040 and coffee with 40,773 ads. Compared with last year, the ranking of the first places has remained the same, whereas changes occurred in the case of the last positions. Non-alcoholic drinks, cosmetics and cleaning products preferred television channels for their advertisements, constructions and real estate sectors focused on print media advertisings and the car industry advertised on radio stations.

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The output of Romania's electric power stood over January 1-September 30,2005 at 40.004 billion KWh, up by 3.8 percent (1.5 billion kWh) compared with the same period last year, according to figures centralized by the National Statistics Institute. The bulk of electricity was produced in classic electric power stations - 23.3 billion kWh (minus 7.4 percent over 2004) and in hydro-power plants - 15,715 billion kWh (plus 28.1 percent). Cernavoda-based Nuclearelectrica power plant produced as much as 3.984 billion kWh, less by 0.4 percent as against the first nine months of last year. In the first three quarters of 2005, Romania imported as much as 1.807 billion kWh of electric power and exported 3.43 billion kWh. The main resources of primary energy totalled in the first nine months of this year 30.855 tonnes equivalent oil, of which 18.25 million tonnes from domestic output and 12.605 million tonnes from import, according to the figures supplied by the National Statistics Institute.

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Mol's strategy for Romania includes the take-over of natural gas producer Romgaz Medias, involvement in natural gas transport operations, development of the petrol station network, and officials for the Hungarian group don't rule out the option of acquiring a refinery as well.Asked in a press conference in Budapest on Monday whether Mol was considering new acquisitions in Romania, in the refinery and fuel distribution sector, Mol CEO, Gyorgy Mosonyi, said the group was considering both options. "We are looking at both sectors, but we have not initiated negotiations yet with other companies for taking over new distribution units," Mosonyi said. According to Mol officials, another objective of the group is the acquisition of Romgaz. "The Romgaz privatisation process has already started, as the consultant was chosen, and the next step is devising a privatisation strategy, which we are waiting for the Romanian State to make public. Romgaz is definitely an interesting company for us, it fits well into our portfolio," Mol chairman, Zsolt Hernadi, said. He added that if it takes over Romgaz, Mol plans to expand operations of the company outside Romania's borders.

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In order to accede to the European Union in terms of environmental protection, Romania will have to carry out a policy through which the environmental protection costs in the price for electricity and thermal power should become internalised, State Secretary with the Romanian Ministry of Environment and Water Management Attila Korody told on Tuesday in a conference on clean energy in a clean environment. Romania has so far become successfully involved in the know-how transfer for the reduction of the greenhouse gas emissions and for increasing energy efficiency while improving environmental quality. The quantity of gas emissions that can be reduced under these projects is approximately 8 M CO2 tonnes over 2008-2018, with the said ministry expected to start transfer in 2008. According to its European accession pledges, Romania will include in its national legislation, by January 1, 2007, the provisions in the European directive regarding the devising of a commercial scheme for greenhouse gas emission certificates. In the field of renewable energy, as part of bilateral cooperation under the Kyoto Protocol, the following joint implementation projects have been agreed on: the upgrading of four hydro-power aggregates of the Iron Gates 2 station and three hydro-power aggregates at Iron Gates 1 station.

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The Romanian power producer Hidroelectrica is to be paid approximately 14 million euros for a series of small hydro-electric power stations situated on the Doftana and Manaileasa rivers to be sold through tender. At the first tender held on Monday, Hidroelectrica offered a series of units situated on the Doftana river for sale, with a starting price of 7.5 million euros. Several units situated on the Manaileasa river formed the object of a tender yesterday, with a starting price of 1.25 million euros. The company Romelectro bought these assets for 1.125 million euros and is committed to making investments worth 250,000 euros over a period of five years.

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The Ministry of Public Finances is to contract a 250 million euros credit from the European Bank for Investments (EBI) to finance the Cernavoda-Constanta highway construction project.
The Romanian government has approved the ministry's request for the construction of 52.1 kilometers of highway.
The highway will have two lanes and it is part of Pan-European corridor four.
The project's costs are estimated at approximately 354.6 million euros, of which the Romanian state will contribute 104.6 million euros.
The EBI credit will be awarded for 25 years. A six year grace period will apply, and the credit will be reimbursed in 38 half yearly installments, over a 19 year period, starting in 2009.
The Cernavoda-Constanta road section will have 16 bridges and five underpasses.
Work is expected to start in November 2006 and should be finalized within 36 months.
The first part of the highway, with a length of approximately one hundred kilometers from Bucharest to Drajna, was opened for traffic in 2004.
Currently the sections from Drajna to Fetesti (36.8 kilometers) and Fetesti to Cernavoda (17.2 kilometers) are under construction. 
The minister of Public Finance, Sebastian Vladescu, stated that in the summer of 2006 drivers will have the opportunity of traveling from Bucharest to Constanta by highway throughout, if the Drajna-Fetesti section is partially finished and the other two road sections are completed in full.
The EBI became involved in the project at the end of 2003 when it awarded a 200 million euros credit to the Romanian authorities.
In September PM Calin Popescu Tariceanu stated that the Drajna-Fetesti road section could be opened for traffic during 2006, earlier than planned. According to the PM, the authorities will discuss the possibility of ending the project before April 2007.

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The Transylvania highway project will continue as soon as the legal issues are solved with the American constructions company Bechtel, stated Prime Minister Calin Popescu Tariceanu during a press conference held in Cluj.
Tariceanu made clear that the discussions refer to a payment in advance, by the Romanian state, of 250 million dollars that, according to the contract, should be given back by the American party at the end of the contract (over eight years).
The Romanian laws do not allow such an operation and a series of technical issues concerning the costs must be solved, stated the PM.
Tariceanu said that there are strong reasons that show the negotiations with Bechtel will be closed and the contract will be signed, "A thing that will allow the resuming of the financing and the continuation of the work.
"This project, as others, is part of Romania's infrastructure development that will focus on the pan-European four and nine corridors and the Transilvania highway," stated the PM.
Tariceanu said that the Government was legally forced to renegotiate the contract because this did not respect the Romanian laws regarding public acquisitions.
The president of the Democratic Party (PD), Emil Boc, stated that, in the Transilvania highway project, the political and financial help is given.
"The Bechtel negotiations are in an advanced stage and I hope that by the end of the year the contract will be renegotiated so the work will be resumed by 2006. The number of Romanians who will benefit from this highway is 11.5 million from 22 counties," stated Boc.
Three days ago the minister of Transportations, Constructions and Tourism, Gheorghe Dobre, stated that the renegotiation of the Bechtel contract is in an advanced stage but was not finalized yet.

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Managers of retail companies estimate the ascending trend of sales will continue in the following three months, according to data from the national Statistics Institute (INS). This evolution will be fueled by the influence of the seasonal factor, with sales peaking around the winter holidays.
In accordance with the forecasts of surveyed managers; 36 percent of retail companies will enjoy an improved economic situation, 55 percent will stagnate, while only nine percent fear a decrease.
The inquiry was made through the method of short-term balance. This method relies on the evaluation of differences between extreme alternatives, in this case, the number of those who believe sales would grow versus the number of those who believe they will decrease, and reflect the progression tendency of various parameters over a reference period.
The volume of commodities' orders given to suppliers would have a positive short-term balance (+26 percent).
The retailers' preferences continue to focus on the internal market (short-term balance +24 percent) while the volume of imported goods would have a level sensibly similar to that of the previous period.
Employers in the retail sector estimate a slight increase of personnel in the following three months, parallel with an increase of prices.
According to the same survey, the most significant growth in the number of jobs will occur in the transportation sector and human resource, partially compensated by the seasonal decrease of the employment in the constructions' sector. In this field of activity, the diminution is based on a considerable reduction of orders and contracts and on the increase of costs in this period.

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Prime Minister Calin Popescu Tariceanu recommended that the authorities form specialist teams that will draft the projects needed to obtain the structural funds Romania will receive after EU accession.
"God gives to us but He does not arrange everything for us," stated Tariceanu.
The PM underlined the fact that we must learn how to manage these funds much earlier, especially to prepare future engineers and economists. By doing this, Romania will avoid a crisis in the years to come.
Tariceanu attended a meeting at the Cluj-Napoca City Hall where he met with the presidents of the local councils and the mayors of 16 counties, representing the Transylvania region.
The discussions focused on the public administration reform and the priorities regarding Transylvania's development in 2006.
To prepare the local administration, Romania will receive EU funds totaling 1.9 million euros through a Phare project developed together with the European Delegation Commission. The project should last approximately 15 months and the sums should be used to prepare the management of structural resources which should be available after the EU accession.
The funds will be allotted through an institution collaboration project called "The Strengthening of the Management Authority Administrative Capacity for the Communitarian Support Program within the Ministry of Finance".
The head of the European Delegation Commission to Bucharest, Jonathan Scheele, stated that this is an important project to ensure Romania's success in the accession process.
"There is the need of good and well prepared projects. A communication strategy is a very important element in order to succeed," stated Scheele.
Istvan Jakab, state secretary in the Ministry of Public Finance, stated that the project is very important given that structural and cohesion funds given to Romania will have three times the value of the pre-accession funds, totaling 16-17 billion euros for the 2007-2013 periods.
The project has three major components. The first will smooth the coordination between the ministries and improve the National Coordination Committee's actions.
The second and the third refer to assistance given to MFP in its tasks to implement the structural funds and the Cohesion Fund, followed by assistance to the Management Authority for the Technical Assistance Operational Program.
Social and economic cohesion funds should sustain programs in the institutional development area, alongside investments contained by the multi-annual program for social protection, Small and Medium Enterprises (SME) support, human resources, social inclusion and Romania's preparations for the absorption of structural funds.
The structural and cohesion funds are part of community funds which aim at the reduction of gaps between the developments of different regions of a country or between EU members.
Leonard Orban, state secretary in the Ministry of European Integration, stated that Romania will receive around 2.5 billion euros in the first year after accession. The structural funds for the entire 2007-2009 period should be 11 billion euros.
The absorption of structural funds is one of the main concerns of both Romanian and EU officials. Orban stated the country is not ready to spend the funds. "No member state has ever recorded high absorption rates from the moment of accession," said Orban adding that the authorities should be prepared to spend the money in the medium term. "We do not expect super-performance at the accession date," Orban concluded.
Jonathan Scheele, the head of the European Commission Delegation in Bucharest, has also made frequent statements on this issue several times, emphasizing the importance of enhancing the absorption rate for EU funds. "Around four percent of Romania's annual Gross Domestic Product (GDP) will consist of annual non-reimbursement financing for the country's projects, three times larger than the pre-accession assistance offered through the ISPA (Instrument for Structural Policies for Pre-Accession), Phare and SAPARD (Special Accession Program for Agriculture and Rural Development) funds together. It is an enormous sum," said Scheele. The commissioner underlined that, apart from these funds, a series of important sums should be given for the economic development of rural areas.

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The volume of Foreign Direct Investments (FDI) amounted to 2.7 billion euros in the first nine months of the year, which represents a 29% drop compared with the 3.9 billion euros recorded in the similar period of last year. The data, presented by the National Bank of Romania, estimated that the foreign companies invested in September over 800 million euros. The Romanian Agency for Foreign Investments (ARIS) estimated a level for this year of FDI of 3.2-3.8 billion euros. Last year, the FDI totaled 4.1 billion euros, 116% more than in 2003.

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The municipality of Bucharest demanded the government derogation from the law of public acquisitions to cancel the contract with the company that was contracted to repair a tram railway on Calea Giulesti. According to the General Mayor Adriean Videanu, the regulations related to public acquisition have several gaps that allow too many exceptions. RATB, the public company that operates the tramway had been taken in by the company Themeli SA, said Videanu, and considering that the deadline for the works was on November 15 the case could be considered an exceptional situation

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The cable TV subscription can not increase by 15-17 percent as the modifications of the law for the protection of copyrights do not include it. The law stipulates the cable TV operators and the copyright owners should negotiate the percentage of the turnover due for airing protected programs. The current tax for cable TV operators is two percent and the new stipulations annul the limit set by the authorities and allow the two parties to negotiate. An increase by 15 percent of the taxes due was announced Tuesday by the cable TV association as a direct effect of the new law.

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Tyre producer Pirelli gave 7.1 million euros this September in the share capital of Pirelli Tyres Romania, an amount which is to be used for financing the construction of a new tyre facility in Slatina, ACT Media news agency reports.

According to Pirelli officials, the reason for the capital increase by 7 million euros is to finance Pirelli's development in the area, in order to satisfy the growing demand in East-European markets.

Pirelli announced its intention to build a tyre facility in Slatina, where 110 million euros will be invested. The new production facility, which will have 1,500 employees, will be commissioned in 2006.

Ninety per cent of the output will be exported, while the remaining is to be delivered on the local market.

Low labour costs in Romania have attracted other important investment from international companies in the market for automobile components.

Thus, Germany's Continental group has invested 140 million euros in a tyre facility in Timisoara, and Michelin bought in 2001 two tyre facilities - Victoria Floresti and Silvania Zalau - as well as other assets of Tofan group, in a transaction estimated at almost $80 million.

Romania's automotive component industry might grow three times higher in the next years, from a current 1.4 billion euros.

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The World Bank will grant Romania a US$60 million (euro51 million) loan to promote computer and internet use in rural areas, the bank said Wednesday.

The Knowledge Economy project will promote wider access to the Internet and aims to increase computer and Internet access outside cities.

"Currently there is a significant disparity in the availability of IT equipment and access to knowledge between the urban and the rural areas," Communications and Information Technology Minister Zsolt Nagy said.

The project will set up about 200 local community centers with Internet access in targeted disadvantaged communities that will operate as tools for education, business and public communications.

The centers will be based in schools and public libraries, and will also provide services in the area of e-commerce or innovation support for small and medium enterprises.

Since 1990, the World Bank has granted Romania more than US$4.2 billion (euro3.56 billion) in development loans. The current loan is repayable in 17 years, including a 5-year grace period.

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Good Food is set to hit newsstands in Romania on 28 November, becoming the first food and lifestyle magazine to launch in the country.

The market-leading UK title already claims subscribers from Bangladesh to Bosnia but the exciting Romanian version of Good Food heralds the first international edition of the magazine.

The monthly title costs 5.9 RON (£1.10) and will launch as a Christmas special packed with 132 pages. A third of the content will originate from Romania and the title is set to build the profiles of Romanian food experts and chefs.

The UK Good Food launched 16 years ago and acted as a springboard for launching the careers of Jamie Oliver, Gary Rhodes and Rick Stein and almost every other TV chef.

Thanks to BBC Worldwide licensing deals Jamie Oliver's Naked Chef is currently broadcasting in Romania on TVR 2 and 50 Things to Eat Before You Die will soon be shown on the same channel.

The Romanian edition builds on the excellent relationship between BBC Magazines and Media Sport Group who launched Top Gear in Romania this year.

Top Gear has already become the market leader in advertising in Romania and the introduction of Good Food demonstrates the strength of the business partnership. Media Sport Group is currently exploring future projects with BBC Magazines.

James Hewes, BBC Magazines Global Licensing Manager, says: "The explosive growth of the economies in Eastern Europe has created a large and growing middle class whose aspirations increasingly match those of their Western European neighbours.

 "This growth has created a great opportunity for a fantastic mid-market food magazine such as Good Food. Romania, as the second largest country in Eastern Europe, is a natural choice for Good Food's combination of down-to-earth home cooking and exciting new food trends from around the world."

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