March 2006

The FOB exports totalled 3.87 billion euros in the first two months of 2006, up 22.5% versus the same period of 2005, showed data released by the National Institute of Statistics, ACT Media news agency reports.


The biggest share of exports consists in equipment (19.4%), clothing and fabrics (17.7%) steel products (14%), mineral products (crude oil, oil products, ores, coal, cement, salt - 13%), transport means and materials (8.7%), footwear and similar items (5.5%).

Versus the first two months of 2005, the value of exports to EU states (EU-25) rose 16.6%, representing 69.2% in the total of exportsThe main countries of destination for Romanian exports in the said period were:

Italy (19% in total of exports), Germany (15.5%), France (7.3%), Turkey (6.9%), UK (4.8%), Hungary (4.7%), USA (3.4%), Austria (3.2%), Spain (3%), Bulgaria (3%), Greece (2.4%) and the Netherlands (2.3%).

In February 2006, the value of FOB exports stood at 2.1 billion euros, by 27.4% more versus the similar month of 2005.

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The net consolidated profit of Raiffeisen Romania increased last year to ¤51.8 mn, as compared to ¤26.7 mn in 2004, announced Raiffeisen Chairman & CEO Steven von Groningen, Nine o'Clock reports.


The profit is calculated in conformity with international financial reporting standards and includes the results of the other divisions of Raiffeisen Group in Romania ? Raiffeisen Leasing, Raiffeisen Housing Bank and Raiffeisen Capital & Investment.

The return on equity (ROE) after taxes reached 21.8 per cent.

In 2005 the bank invested ¤28 mn in IT systems, in extending the network and in equipment.

The number of local offices rose to 216, as plans target the opening of another 40 units this year.

The main shareholder, Raiffeisen International, announced in its annual report that the Raiffeisen Bank Romania assets went up by 45.2 per cent last year, to ¤3.02 bln, making the institution the third largest in Romania in this respect.

Late last year, the bank had two million individual customers. Credits granted to households amounted to ¤516 mn, up 90 per cent, while deposits picked up 54 per cent, reaching ¤517 mn.

The one million banking card threshold was outdid last year. As for SMEs, credits granted by the bank to such customers amounted to ¤147 mn, up 70 per cent, while deposits rose 66 per cent to ¤254 mn.

The number of corporate customers increased by 20 per cent, to 3,100, in spite of the difficult economic conditions, reads the report.

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HVB Bank doubled its profit last year, registering 40.7 million euros before taxing and the number of the bank's clients doubled on the retail segment, while the Private Banking division, which had been set up two years before, was managing approx. 83 million euros, ACT Media news agency reports.


At the same time, the number of companies that became HVB's clients increased from 1,300 to 1,760; the credits granted to these companies reached 729 million euros, a 39 percent increase against 2004.

Recently, HVB Bank Romania and Tiriac Bank's Boards of Directors approved a merger which is to lead to the setting up of a new bank, named "Tiriac HVB Commercial Bank."

Both institutions have already had the same majority shareholder - Bank Austria Creditanstalt; the combination of bank's operations through merger is made for the first time on the local banking market.

Based on the merger plans, Austria Bank will hold 49.94 percent of the new bank's shares while the businessman Ion Tiriac will control 45.15 percent through two companies that he owns.

Other individual shareholders hold 4.83 percent of the bank's shares.

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The value of foreign direct investments (FDI) in January grew by 199 percent as against the same period last year, reaching 699 million euros, showed figures released by the National Bank of Romania (BNR), ACT Media news agency reports.

According to the Romanian Agency for Foreign Investments, the most important component of foreign direct investments were the loans extended by foreign companies to affiliated structures in Romania worth as many as 384 million euros in January 2006, accounting for 55 percent of the total of investments.

The re-invested profit of foreign companies totaled 178 million euros, namely 25 percent of the overall volume, whereas participations to capital stood at 137 million euros, namely 20 percent of the total.

For this year, the Romanian authorities estimate a level of foreign direct investments of 5.8-6.2 billion euros.

For 2005, the provisional figures of BNR point to foreign direct investments worth 5.2 billion euros, but the experts of the Romanian Agency for Foreign Investments said the revised level will exceed 6 billion euros.

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Adrian Urda, the head of operations of Altex electronics, electrical home appliances and IT&C retailer, says the investment budget earmarked for expansion tops 20 million euros this year.

Italian air operator Club Air this year has started operating 42 regular weekly flights, after the liberalisation of air traffic between Romania and Italy. The strategy change will bolster air traffic between Romania and Italy by 20%, from 150,000 passengers last year.

Romania must increase its budgetary expenses up to 10 per cent of the GDP, in order to benefit from the advantages of the member of the European Union status, according to Jonathan Scheele, the Head of the European Commission Delegation to Bucharest, Nine o'Clock reports.


The European official showed that the share of budgetary expenses in the GDP is lower in Romania than in the EU member states, but also lower than Bulgaria.

?Romania is the last, thus it must increase the expenses from 30 per cent to 35 per cent, and, eventually to 40 per cent of the GDP,? stated Scheele during a visit to Braila.

Romania needs financing sources for paying its contribution to a series of projects, however the European officials showed that the high level of corruption and the low capacity of the administration will burden the absorption of funds.

Analysts claim Romania will have to increase the expenses level in order to attract funds for infrastructure rehabilitation.

According to Scheele, the EU has assigned approx ¤60 mn for projects for education and real estate fields in Braila.

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The business environment in Romania is stable enough to become integrated within the European investment plan and the proof for this is the high level of foreign direct investments (FDI) in 2005 worth over EUR 5 bln which could reach EUR 7 bln or even EUR 8 bln, stated Vice-Mayor Gheorghe Copos, during the seminar organised by BRD and ?Ziarul Financiar? on financing for small and middle-seized enterprises (SMEs), Nine o'Clock reports.


?Unfortunately for BNR, the FDI level increase will lead to RON appreciation, thus, this summer, we could have a RON 3.3 ? 3.4/ EUR exchange rate,? continued Copos.

However, regarding the SMEs, they are not ready for the EU rigours.

?The SMEs represent the engine and the soldiers of the national economy, but if we fail in attracting the best investors, after 2007, approx 20-30 per cent of the SMEs might disappear,? also asserted Copos.

Much more pessimistic on SMEs future once Romania joins EU were the representatives of the National Council of Private Small and Middle-Sized Enterprises from Romania (CNIPMMR), who said the European accession will affect 40-55 per cent of the SMEs.

Florea Parvu CNIPMMR Vice-president accused the commercial banks of operating too high interests.

BNR Spokesman Mugur Stet said the interests within the banking system are normal for the current economic stage of the Romania, but, as from 2007, SMEs with foreign capital will replace the 60 per cent of the local SMEs that will disappear once the likely European integration, a thing that will favour significantly the Romanian economic situation.

Incentives for projects exceeding eur 50 m in the new law of investments

According to Vice-Premier Gheorghe Copos, the new law of investments, which stipulates the assigning of state-funded aid for projects exceeding EUR 50 M, will be finalised and sent for Government?s approval in two weeks.

?This law, which will be finalised in maximum two weeks, will include several facilities which will be assigned to big investors and I refer to the investments which can reach EUR 300 M ? 400 M,? stated Copos.

Among the big investors which will enter the Romanian market this year, Copos mentioned the Japanese company Calsonic Kansei, which will assign over EUR 220 M for auto spare parts plant in Ploiesti and the Austrian company Egger in the wood processing field, which announced investments of EUR 500 M.

Underground economy - eur 20 bln per year

The authorities will not have to increase the VAT or the flat rate tax if they manage to diminish the underground economy that is evaluated at over EUR 20 bln per year, Minister of State George Copos stated.

?We have not discussed in the Government the increase of the VAT. We must diminish the underground economy amounting to more than EUR 20 bln per year. If we manage to do that, we shall not need to increase the VAT or the flat rate tax?, said Copos.

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The most important debt ?owning company ? Termoelectrica ? is about to be cleared of debt worth over 44,000 billion lei ( 1.2 billion euros). The Minister of Finances, Sebastian Vladescu has recently stated that « if we want this company to exist, it is necessary for its debts to disappear ». With the mutual agreement of the ministers in the Tariceanu government, the ministry of economy established an emergency ordinance which « launders » Termoelectrica of all its debts. The draft ordinance is to approved by the government in at most two weeks, according to the same sources. The shares taken over by the Finances, AVAS and ANAF for the three companies belonging to Termoelectrica will go to the Ministry of Economy « for management and valorification », the document states.

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The Minister of Economy and Commerce established the draft energy policy document for the period 2005 ? 2008 to be soon finalised, MEC relates. MEC established a set of measures to reach objectives in the document. These provisions, among others, include transborderly interconnection project, as well as the Nabucco project ( natural gas transit from the Caspian Sea to Western Europe through Romania), interconnection with the Hungarian system at Arad ?Szeged, with Ukraine at Siret-Cernauty, with the Bulgarian system at Giurgiu-Ruse and the PEOP project ( the oil pipeline Constanta ?Trieste), the expansion of underground natural gas deposits capable to cope with periods of peak consumption over cold periods, as well as strengthening of natural gas supply safety for users, the development of national transport grid, natural gas distribution grids and the strengthening of safety in supply and exploitation.

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Raiffeisen Bank Romania registered a net profit of 51.6 million euros in 2005, almost twice the 26.7 million euros reported in 2004, the bank's president Steven an Groningen announced on Thursday. Net revenues from interests increased by 62.6 percent, whereas net revenues from commissions increased by 42 percent. The after-tax profitability of the bank's own capital was 21.8 percent. At the end of 2005, Raiffeisen Bank had almost two million clients.

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According to the National Statistics Institute , Romania's trade deficit stood at 1.4 billion euros in FOB-CIF prices in the first two months of 2006, (compared with 899.9 million euros in the first two months of 2005,) and of 996.6 million euros in FOB/FOB prices, (compared with 587.2 million euros in the first two months of 2005,) The Romanian Central Bank says that in end February 2006 a euro sold for 3.4814 RON (minus 5.3 percent from end 2005) and a dollar for 2.9281 RON (minus 5.8 percent from end 2005.)

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Moody's Rating Agency confirmed on Thursday there are good chances for upgrading Romania's rating, which currently is Ba1 for long-term foreign loans, only one grade below the level investors consider acceptable. The rating is Ba2 for the hard-currency deposits in banks, Ba1 for long-term local hard-currency loans, and Ba1 for long-term local loans in the Romanian leu currency. According to Moody's, the Romanian economy and institutions have seen ascending trends in the past few years, with good prospects of EU accession.

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The National Bank of Romania (BNR) does not plan to overregulate the leasing sector, but to issue norms that ensure market stability, BNR governor Mugur Isarescu said at a seminar on leasing issues, ACT Media news agency reports.


"I assure you we do not plan to overregulate, but to issue norms that should ensure the stability of this market", Isarescu explained to the leasing market representatives.

The central bank governor argued that the leasing operations must be regulated so as to provide sustainable development to this activity.

He believes, however, that the level of the intermediation via non-banking financial institutions and banking institutions is not sufficiently developed in Romania, being well below the European average as well as the average in former communist countries.

The moves that the BNR plans to make are aimed at keeping financial stability as well as fair and non-discriminatory competition, Isarescu stressed.

State Secretary at the Public Finance Ministry, Catalin Doica, said the non-banking financial system has seen a spectacular expansion at the same time with an increase in the bank lending and hence the need to establish regulations that imply monitoring and surveillance.

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 The Lithuanian parliament on Thursday approved pacts granting Bulgaria and Romania European Union membership, according to local news reports reaching here.

So far, 12 of the 25 EU member countries have passed the documents and the remainder are expected to give the green light to them by the end of the year.

Bulgaria and Romania signed the accession pacts on April 25, 2005, to join EU on the scheduled date of Jan. 1, 2007.

Yet the pacts also contain an item, under which the two would-be members are required to meet a commitment to implement reforms within the given period, or their accession will be postponed by one year.

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The increasingly larger number of foreign companies that invest in Romania has generated an enhanced demand for short-term jobs leading to the need for the birth of a new kind of services called staff leasing, a niche product on the labour market, wrote the Capital weekly, ACT Media news agency reports.


Until recently, the Romanian practice did not use this hiring model.

The first company to offer such services was Mansoon Outsoucing, that was introduced on the Romanian human resources market by its Hungarian clients OTP Bank and Magyar Telekom, that turned to it for leasing services when they opened their Romanian subsidiaries.

In Hungary, Mansoon Outsourcing offers human resources services, staff leasing included, for Pannon GSM, Vodafone, Raiffeisen Bank, Budapest Bank and another about 350 clients.

"The profit margin is rather low, it's the amount that counts. From 40 - 50 employees upwards, one starts making profits," said the manager of the Romanian branch of Mansoon Outsourcing, Levente Gönczy.

The outlays for the setting up of the company's Romanian branch stood at 60,000 euros.

In Hungary, the company registered last year revenues of two million euros and expects 4.2 million euros in 2006.

"For Romania, we planned to lease 100 staff this year and to increase this figure to 300 in 2007," said Gönczy.

So far, the company's clients sought call-centre staff and staff specialised in credit back-office activities.

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London, United Kingdom - Brasov will be the first county in Romania to receive an EBRD loan to help finance the rehabilitation of approximately 60 kilometres of regional roads. ¤5 million of the total ¤15 million loan will be syndicated to the Austrian Niederoesterreichische Landesbank-Hypothekenbank.

The financing will introduce performance based multi-year contracting into road maintenance to increase the efficiency of spent funds. Under these contracts remuneration paid to the contractor is based on measured ?end-products? or ?outputs? reflecting ?service quality levels? on the roads. The project includes technical support to improve the county?s road database and to prepare EU Structural Funds applications.

Thomas Maier, EBRD Director Municipal Environment and Infrastructure, said the introduction of performance based contracting will lead to improved service levels in Brasov, the first county in Romania with this type of contracting. This innovative approach is also important in light of the country?s forthcoming EU accession.

Brasov county is an existing client of the Bank as guarantor for the EBRD?s loan to the local water company, Compania Apa. The new project builds on the strong working relationship which has been developed due to the county?s .commitment to increasing efficiency in the delivery of public services.

In October 2005 the Bank signed two loans of ¤15 million each with the city of Brasov and its public transport company. The administration and financial budget of the city are independent of the county.

The EBRD is the largest single investor in Romania having committed more than ¤3.2 billion in over 90 projects to-date. In the municipal and environmental infrastructure sector in Romania alone the Bank has provided 22 loans worth some ¤380 million,. Across its 27 countries of operations the EBRD has invested nearly ¤2 billion in the MEI sector alone.

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BCR has been designated recently the "Best Emerging Market Bank in Romania" by the specialists of the prestigious U.S. business magazine Global Finance, ACT Media news agency reports.

The analysts of the magazine, together with economic analysts, banking consultants and managers of some important international corporations, selected the best banks from 22 countries in Central and Eastern Europe, within a complex survey that referred to the emerging markets worldwide.

"We are honoured by this new international acknowledgement of BCR activity and position as leader of the Romanian financial-banking sector, after receiving last year for the 4th time in the past six years the Excellence Award for "The Best Bank in Romania" granted by UK magazine The Banker," said Nicolae Danila, CEO of BCR.

BCR, the undisputed leader of the Romanian banking system, ended 2005 with special results.

The bank's assets rose 40%, the net profit recorded a record level of 202 million euros, while the profit per employee was 1.5 times bigger than the average in the banking system. BCR launches 21 new products and services last year.

The price-awarding ceremony will take place in September 2006, at Singapore, on the occasion of the Annual Meeting of the World Bank and International Monetary Fund.

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The increasing in 2007 of one of the most important taxes ? the added value tax (VAT) ? or of the flat rate tax would push the inflation rate beyond the four per cent target set by the authorities, by 2% most likely. BNR Governor Mugur Isarescu thinks a 3% VAT increase would fuel inflation rate up by 2%.


Since PM Calin Popescu-Tariceanu has been pleading for a flat rate tax status-quo for the entire duration of his term in office, the VAT will be the tax that shall be increased as of next year, Nine o'Clock reports.

?A prospective VAT increase would pose the biggest risk to next year?s inflation target?, BNR Governor Mugur Isarescu stated.

The percentage by which the inflation rate target will be exceeded practically depends on the percentage of the VAT increase.

?It will all depend a lot on how much the VAT might increase and on price flexibility.

We have calculated the flexibility to be around 60 per cent, meaning that a possible increase of the VAT by three per cent would trigger an increase of inflation by two per cent?, explained Isarescu.

The Association of Business people in Romania however is not happy about the VAT increase, advocating instead for the increase of the flat tax from 16 to 19 per cent from the January 1, 2007.

Both the IMF and the EC have urged Romania to adopt fiscal measures allowing a substantial increase of the budgetary revenue as of next year.

European and IMF experts believe that the broadening of the taxation base will not be enough and they want one of the two main taxes ? the income tax of the VAT ? to be increased.

The Central Bank has an inflation rate target of 5 per cent at the end of the year, with a margin of plus/minus of 1 per cent.

Isarescu said by mid February that he expected a deviation above the upper limit of the variation margin, up to 6.5 per cent.

The Government in February pointed that the central Bank?s forecast indicated a return of inflation to the variation interval announced as a target, in the first half of 2007.

As for the trend of consumer prices this year, the BNR Governor has changed his discourse a little bit, showing that the inflation is indeed within the optimal decrease interval, but that it does present a disinflation trend.

Tax Code bill on Parliament?s table in May

The draft law amending the Tax Code will be put to Parliament in May. Parliamentary debates are expected to last for a month at the most, which means the Tax Code might be published by July 1, at the latest, Finance State Secretary Catalin Doica said.

?We have already discussed with business advisory companies about the changes related to VAT in the Tax Code, and the last discussion on excises and the first about direct taxes took place today (Wednesday),? Doica also said.

The Finance Ministry official also said that the consultations would be followed by the presentation of draft amendments and ?actual discussions with the other less-specialized social partners.?

?The implementation norms of the Tax Code are ready, yet, the final version will only be drawn up after we operate all the changes in the bill of law,? Doica said.

Authorities plan to make the application norms public only after the Tax Code is published in the Official Gazette. Government must pass the Tax Code before it is up for debate by parliament.

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Bacau-based "Aerostar" company, which handles the maintenance and repair of military airplanes of the Romanian Army for last year posted a net profit of 6,8 million RON, up by 10 percent compared to last year.

However, the company's turnover posted a slight decrease compared to 2004, and was of some 102,73 million RON. Overall revenues of the company stood at some 107,35 million RON, up by 6.5 percent compared to same time last year, while expenses increased up to some 99,44 million RON.

Aerostar shareholders decided during the assembly from March 23 to give dividends worth more than 75 percent from the net profit. This year the company wants to give dividends worth 5,8 million RON, down by 13 percent compared to last year. The turnover for this year is estimated at some 98 million RON, down by 5 percent against 2005.

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The International Airport of Iasi started to deserve its name after the first "Austrian Airlines" airplane yesterday landed at Iasi, with 20 passengers on board. "Until April 3, when the official flight will take place, these flights will be technical ones," said Sebastian Tataru, spokes person for the Iasi county administration.

The air carrier will make daily flights from Iasi-Vienna and the passengers then can opt for one of the 130 destinations world wide from the Vienna airport. According to n Austrian Airlines research, the seat load factor should be of 0 percent, which means 30 passengers per flight.

The target can be easily reached considering the significant number of business passengers and tourists that go from Moldova to western Europe. Preliminary calculations indicate 17,000 potential passengers.

"Austrian Airlines" operates since 1959 on the Romanian market and at present has 58 weekly flights from Vienna to Bucharest, Timisoara, Cluj and Iasi. The next stop for the company is Sibiu.

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Aluminum producer ALPROM Slatina announced that it will invest 30 million USD in 2006 to purchase equipment and increase deliveries.

"This year's investment program aims at the upgrading and increasing of production capacities for value added products, for which the demand is high abroad," said Gheorghe Dobra, general manager of ALRO, major shareholder in ALPROM.

He added: "Our strategy is based on the increase in overall production, from 45,000 tonnes up to 120,000 tonnes by 2010." ALPROM began diversifying its portfolio since it was privatized and managed to double production in the past three years.

Last year the company launched a new series of aluminum profiles systems with low weight, which are meant for the manufacture of thermal insulating window frames. ALPROM purchased equipment worth 9 million USD to set up a high capacity oven.

The ALRO - ALPROM - ALUM strategy aims at the increase of production for all the units in the group. Alum will manufacture around 1 million tonnes of alumina per year, and ALRO's production will bf 420,000 tonnes over the next years, compared to 240,000 tonnes last year.

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Bogdan Enache, TNT's country manager, says the simplification of customs procedures has had a positive impact on international courier services, despite the company's lower-than-expected growth last year. In 2005 the operator of international delivery services registered turnover worth 20 million euros, only 14% higher year-on-year, falling short of the 40% officials had estimated earlier in the year.

The Cristalex company, one of the top players on the market of imported spirits, last year posted a 33% growth in turnover, to 8 million euros, in the wake of a marketing and sales reshuffling process.

Cargo Partner Romania, the cargo shipping company this year estimates turnover worth 9.5 million euros, more than 60% higher compared with 2005.

Cluj-based Energobit Group that operates in the field of electrical equipment manufacturing announces an about 45 million-euro turnover for this year, an increase of 12% on 2005. The group concluded 2005 with a 40 million euro turnover, 14% higher than the initial estimates, according to the financial results, which were released yesterday.

Actavis Group Hf agreed to acquire SINDAN for EUR147.5 million (US$175.9 million) in cash. SINDAN is based in Bucharest, Romania and specializes in the production and distribution of pharmaceuticals used in the complex treatment of cancer. The acquisition of Sindan provides Actavis with access to a new therapeutic field and a strong development and manufacturing expertise for oncology products.

The financial advisors in the deal include: JPMorgan Chase & Co Inc for Actavis Group Hf.

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Chinese producer of telecommunications equipment and wireless solutions - ZTE Corporation did not renounce its involvement into the project regarding the launching of POSTelecom operator on the Romanian market, President Director General of the Romanian Posts Dan Mihai Toader said, ACT Media news agency reports.


The Romanian state holds through the Romanian Posts a participation of 80 percent in POSTelecom, but this share could be reduced under conditions in which ZTE Corporation becomes a partner in this project.

Toader stressed that the Posts could be an active partner in this project solely after the operator becomes functional, through the promotion and sale of services through the postal network.

Minister for Communications and Information Technology Zsolt Nagy stated for Rompres there are big chances of launching this operator, a solution in this sense following to be announced in April this year.

MCTI representatives are in an advanced re-negotiation stage of technical and financial commitments as for POSTelecom, focused on the future operator's privatisation, the adoption of viable technical solutions and of a financing solution for this project that does not imply guarantees from the Romanian state - that in fact led to the postponement of this project launched in 2003 still.

Recently, four minority shareholders in POSTelecom retired, namely the Romanian Commercial Bank (BCR) - that accounted for five percent of the company's share capital, the Romanian Industrial Group (GIR) - with ten percent and two financial investment companies (SIFs) - Banat-Crisana and Oltenia - that controlled 2.5 percent each of this operator's stock.

The Romanian Posts is the majority shareholder in the current structure with 80 percent, Pronova SRL Galati - with 10 percent (that acquired GIR shares).

POSTelecom has a subscribed share capital in the amount of 21.682 million lei.

The project on the establishment of a new telecommunications operator on the Romanian market - POSTelecom - was launched in 2003 as an alternative to RomTelecom services, planning to provide different telecommunication services, from fix telephony ones - voice services, more exactly national and international calls using VoIP technology, but also those with added value (calls put on hold, deviation and restriction of calls) - VPN services (private virtual networks) and access to Internet (with solutions adapted to clients' requirements - dial-up, broadband, rented lines), till data transmission services.

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Ranbaxy Laboratories Ltd., India's biggest drugmaker, will buy Romania's Terapia for $324 million, to benefit from higher prices of generic medicines in Europe.

Terapia will be acquired from buyout fund Advent International Corp., Gurgaon, India-based Ranbaxy said today in an e-mailed statement. The purchase will give it access to two factories and 157 drugs to treat ailments related to the heart and the central nervous system as well as the 60 products Terapia plans to introduce in the next two to three years.

Indian drugmakers are expanding in the U.S. and Europe because they can charge higher prices there than at home where competition and government price controls weigh down earnings. Ranbaxy, which lost Germany's Betapharm Arzneimittel GmbH to local rival Dr. Reddy's Laboratories Ltd. in February, said yesterday it will buy the generic unit of GlaxoSmithKline Plc's Allen SpA unit in Italy.

``Terapia should be beneficial for Ranbaxy over the longer term,'' said Mumbai-based Ashit Kothari, who helps manage about $800 million in Indian equities at Lloyd George Asset Management Co. ``The key will be how well Ranbaxy manages to integrate the operations of the Romanian company with itself.''

Ranbaxy's shares, which rose as much as 4 percent today, gained 13.35 rupees, or 3.4 percent, to 411.15 rupees at the 3:30 p.m. close of trading on the Mumbai stock exchange. The stock has gained 13 percent this year.

Profitable

Terapia had sales of about $80 million in 2005 and is ``highly profitable,'' Ranbaxy Chief Executive Officer Singh told reporters on a conference call today. Combining Ranbaxy's Romanian operations with Terapia will form the biggest generic drugmaker in Romania and one of the five biggest drugmakers in that country, he said.

Ranbaxy, which aims to achieve $2 billion of sales by 2007, is seeking acquisitions in Europe after sales in the U.S., which comprised 28 percent of its revenue last year, declined because of competition. Ranbaxy's sales last year fell 2.2 percent, to 52 billion rupees ($1.16 billion), as profit dropped 63 percent to $59 million, the company reported in January.

The Terapia acquisition is Ranbaxy's third purchase this month. Earlier, Ranbaxy said it was buying the assets and the patent rights for a disposable auto-injector made by Senetek Plc for administering medicine for allergic shocks.

Global Acquisitions

Indian drugmakers are seeking to sell copies of drugs worth billions of dollars whose patents are expiring in the U.S. and Europe. They spent $1.6 billion on acquisitions in the past year, up from $265 million a year ago, according data compiled by Bloomberg. Some of the biggest purchases include Dr. Reddy's acquisition of Betapharm for 480 million euros ($577 million) and Matrix Laboratories Ltd.'s purchase of Belgium's Docpharma NV for 214 million euros.

Global drugmakers are also acquiring rivals. Bayer AG, Germany's biggest drug company, on March 23 offered 16.3 billion euros in cash for birth-control pill maker Schering AG, topping a hostile bid by Merck KGaA. Astellas Pharma Inc., Japan's third-largest drugmaker, today agreed to borrow as much as 1 trillion yen ($8.6 billion) for acquisitions, people familiar with the agreement said.

Growing Market

Sales of medicines in Romania rose 18 percent last year and will increase another 15 percent this year to a record, Ziarul Financiar said yesterday, citing Marius Savu, who heads the Association of Medicine Producers and Importers. Sales rose to 1.3 billion euros last year and will probably rise to 1.5 billion euros this year, the newspaper said.

Ranbaxy paid about 12 times the operating profit of Terapia, Singh said. Terapia's operating profit margin was more than 35 percent in 2005, Ranbaxy's Singh said, declining to provide profit numbers.

The Indian drugmaker plans to make Romania its manufacturing hub for its operations in Europe and countries of the former Soviet Union, Singh said. Ranbaxy plans to expand capacity at Terapia's factories to take advantage of lower costs of production.

``There are huge competitive advantages in terms of cost of manufacturing, cost of labor,'' Singh said. There are ``tremendous opportunities for us to leverage this investment and capacities there. We will certainly make more investments there and increase product development.''

The acquisition will be completed in the quarter ending June, Ranbaxy's statement said. Terapia will start contributing to Ranbaxy's earnings with ``immediate effect'', Singh said.

Ranbaxy will pay for the acquisition using the $400 million it raised selling foreign-currency convertible bonds last month, Singh said. The company's shareholders in October approved its proposal to raise as much as $1.5 billion through the sale of bonds or shares overseas.

The company is seeking more acquisitions in Europe and other parts of the world, Singh said, declining to give further details.
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More on pharmaceutical takeover battle here

Turkish Sabanci Holding Co. finalized its unit in Romania, said company officials as the confirmation of the move comes after Turkish media quoted Ymaz Kulcu, general manager of Cimsa, as saying the cement producer was conducting studies for setting up a business unit on the Romanian market and was interested in European expansion as well, ACT Media news agency reports.


In the middle of last year, the head of the Sabanci Administration Council, Guler Sabanci, showed interest in setting up a factory in Romania, during a meeting with the Minister of Economy and Trade, Codrut Seres.

Sabanci Co. was interested in putting some 150 million dollars into such a factory, which was to produce a million tonnes of cement per year, according to Ministry of Finance reports last year.

Turkish Cimsa, the Sabanci cement company, has factories in Spain, Germany and the Middle East.

Sabanci Holding Co. comprises over 70 companies with business in various fields, such as the textiles industry, cement, energy, tobacco and finance.

The Romanian cement market is currently divided between three producers, Lafarge, HeidelbergCement and Holcim, which have nine factories in total.

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The attractive profit rates in the construction industry and the big growth potential of the relevant market in Romania drew an important number of Greek investors, among whom there is also the company Diekat, whose investments have amounted to about six million euros, reads daily Ziarul Financiar, ACT Media news agency reports.


Some of the important projects undertaken by the Greek constructor in 2005 are the modernization of the railway station in Cluj-Napoca (central Romania), the industrial park in Bacau (eastern Romania) as well as a project to expand the landline telephony network for Cosmote Romanian Mobile Telecommunications.

Diekat took over the company producing building equipment and vehicles Inscut SA on the Romanian market.

According to the Greek officials this decision was based on the intention to add services in the field of commercial transports to the ones in the field of constructions.

The above-mentioned company has also become one of the most active operators on the construction market and an important investor in the real estate market in Bucharest.

Diekat initially headed for the local infrastructure programmes, subsequently running private projects.

The strategy of the company of the group Diekat was to develop projects with European funding such as the economic and ecological rehabilitation of the basin of the Teleajen river and the one of the water and natural gas supply and sewerage system provided for in the programme of modernizing the infrastructure of Amara Lake.

Being on the Romanian market since 1995, Diekat group Romania includes the companies Diekat Construct SA and Diekat SA Athens, Greece, the Romanian subsidiary.

Diekat Construct, the most important company in Romania of the Greek group, made business amounting to 10.7 million euros in 2004.

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Producer of building materials Holcim Romania expects its turnover to reach 190 million euros in 2006 although the sales were some 9-10 percent under the company's estimates in the first quarter of 2006, the Ziarul Financiar wrote, ACT Media news agency reports.


"We estimate a growth rate similar to that in 2005, of 14 percent, if not higher," said an official of Holcim Romania Co.

According to him, for the business to be conducted this year the infrastructure projects announced by the Bucharest Mayor are "very important" and he hopes they will "be materialized."

In the beginning of 2006, Holcim Co. announced it will earmark some 70 million euros this year for continuing the projects it started last year, including an investment in Campulung (southern Romania), of 105 million euros until 2008, in building the biggest line for the production of gray cement in Romania.

Holcim's production capacity stands at 2.5 million tonnes, and it is expected to grow by some 500,000 tonnes, with the building of the line in Campulung.

Since its entry into the Romanian market and until the end of last year, Holcim made investment worth about 334 million euros in the cement, concrete and aggregate markets in Romania.

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The City Park Mall of Constanta is the first of a series of real estate investments the Israeli Neocity Group is planning in Romania for 2006-2009, worth around 1 billion euros, company officials told the Business Review. The Constanta mall will be located in the northern part of the city, close to Mamaia resort. The total built area will cover some 55,000 sq m, over two storeys, with some 25,000 sq m of rentable area, company data say. The mall?s car park will accommodate up to 1,000 cars.Besides the mall in Constanta, the company?s projects in Romania include Saftica residential complex, Socet residential projects, near Bucharest, Filan residential project and the Colentina residential complex, the Neocity website reads.

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Building company Energoconstructia expects 50 million euros in turnover in 2006, up 11 percent from 2005, the Ziarul Financiar newspaper says on Tuesday. The rise in turnover is influenced by the inflow of capital from the EU countries aimed at the development of the urban and non-urban infrastructure, the company's deputy general manager Mariana Mihart said, quoted by Rompres. The firm posted 45 million euros in turnover last year, up some 10 percent from a year before, and 880,000 euros in net profit. Energoconstructia Co. erects civil and industrial buildings, makes tubes for the distribution of utilities, rehabilitates roads, makes insulation works, metal structures, offers industrial services.

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The Norwegian group Aker Yards that holds in Romania two shipyards - one located in Tulcea (278 km north-east from Bucharest), the other one in Braila (213 km north-east from Bucharest) - will build in Romania two vessels for Farstad Shipping, under a contract worth 570 million Norwegian krones (over 71 million euros), daily Ziarul Financiar writes on Tuesday.

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Romania ranks 48th in point of business attractiveness for the five years ahead, up from 53rd over 2001-2005, says a report of the Economist Intelligence Unit (EIU) regarding the trends in 82 countries worldwide, the Ziarul Financiar daily reports on Tuesday. Romania advanced five positions, but still is in the second half of the classification led by Denmark and Finland. All the countries in Central and Eastern Europe rank upper than Romania, with the exception of Serbia and Montenegro.

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The cumulated market value of the five financial investment companies ?SIF ? dropped by 180 million euros on Tuesday, when the Chamber of Deputies approved the threshold of 1% for investment groups.The shares of the five SIF companies were suspended from transactions on Bucharest Stock Exchange on Tuesday when their market prices had significantly dropped, reaching values lower than those registered early this year.

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India's largest generic drug maker Ranbaxy Laboratories Ltd. said on Wednesday it had acquired Romania's Terapia for $324 million with the aim of expanding into the fast-growing European drugs market.

Ranbaxy said it would buy 96.7 percent of Terapia from private equity firm Advent International and would fund the acquisition through the $400 million it had raised in February through a foreign currency convertible issue.

"It's a great buy and this would make us the biggest generic maker in Romania," Malvinder Singh, chief executive officer of Ranbaxy, said in a conference call.

"Ranbaxy and Terapia will have the largest marketing force and would cover all the pharmacies and hospitals," he said.

The New Delhi-based drug firm said the acquisition would start to be reflected in its earnings immediately.

News of the acquisition boosted Ranbaxy shares as much as 3 percent to 409.75 rupees in a firm Mumbai market.

With the Terapia acquisition, Ranbaxy has joined a growing list of Indian companies hoping to tap the European market, where drugs worth billions of dollars are expected to go off patent in the next few years.

"For Ranbaxy, Terapia delivers strategic Romanian and pan European synergies helping to unleash new opportunities," Ranbaxy said in a statement.

In February, rival Dr. Reddy's Laboratories Ltd. bought German generic drug maker Betapharm for about $572 million.

Romania is a candidate to join the European Union and the EU Commission, the bloc's executive arm, will make a recommendation in May as to whether it does so in 2007 or 2008.

Terapia had sales of $80 million in 2005 and EBITDA margins of 35 percent, Ranbaxy said.

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Greek mobile and tech retailer Germanos said it will expand its Bulgarian and Romanian operations this year.

Germanos said it will be investing 2 mln eur this year in Bulgaria to expand its network with 15 new outlets, from its current 64.

In Romania the company plans to open another 40 outlets to add to its 101 current.

Overall, Germanos plans to have a total of about 1,500 outlets by 2007 in Greece, Poland, Bulgaria, Romania, Ukraine, Cyprus and the Former Yugoslav Republic of Macedonia.

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Developer Liebrecht & wooD will start work on a class A office compound in north Bucharest, Colliers announced last week. The Victoria Park compound, comprises four low-rise office buildings.

Daewoo Shipbuilding & Marine Engineering Co. said yesterday it delivered the first three vessels built at its eastern Romanian shipyard in Mangalia. More from KoreaHerald.co.kr

Insurance company Grawe Romania announced the volume of gross premiums underwritten last year amounted to 11.5m euros and that net profit exceeded 1.1 million euros.

Several Austrian investors visited the Agricultural Consultancy County Department (OJCA) in Arad to explore the opportunities to invest in the "Farmer" and SAPARD project aimed at turning small households into medium sized ones.

According to Ioan Malaes, head of OJCA, the purpose of the project is to improve the production of meat and milk in Arad. "Their target is that at least 10 percent in the households that at present have up to 5 animals would reach to 30 animals in the next five years," said Ioan Malaes. Austrian experts pledged to make a plan to develop small households into medium sized ones.

The project addresses all farmers that have growth potential. They have to have a certain level of knowledge or be open for training, be entrepreneurs, willing to access the "Farmer" and SAPARD project and be open to working with other people.

An important part in the development of this project is for between10-30 processors join forces to purchase equipment, distribute the products and share knowledge.

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A survey on Romanian tourism published by the World Travel and Tourism Council (WTTC) estimates that this year the industry would generate some 265,000 jobs, which equals to 3.1 percent of the employment market of Romania.

On the long term, employment in the hospitality industry is expected to increase by 49,000 jobs. The estimate was made based on the growth trend that occurred over the past years.

However, if compare the employment in the Romanian tourism sector with the one in other European countries, Romania lags behind Croatia, Montenegro, Bulgaria, Bosnia and Herzegovina.

By the year-end, the number of direct and indirect jobs in the industry is estimated to reach 485,000 percent. The same survey reads that by 2016, the number of employees would reach to 570.000 jobs.

Investments in the hospitability industry this year would reach to 1.5 billion USD Investments include the ones with infrastructure, accommodation facilities, transportation, equipment, tourism companies and governmental agencies. The WTTC survey estimates that tourism will have a 6.2 percent yearly contribution to the capital account investments over the next 10 years.

"Capital investment in tourism is expected to constantly and significantly grow as the economic transition continues," added the WTTC survey. Secondly, Romania occupies a rather modest position in a ranking made for the investments in 174 countries for 2006.

With a percentage of 7.2 in the overall investments in the tourism sector, Romania holds the 138th place on the global list, behind countries such as Bosnia Herzegovina. In the same ranking Bulgaria is on the 56th place, Greece is on the 70th place, Croatia - 99th place and Hungary, 130th place. However, prognosis for investment tourism in Romania places it on the third place, after Montenegro and the Czech Republic.

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Engines and compressors producer "Timpuri Noi" in Bucharest, the sole producer of small and medium sized compressors in Romania is interested to become partner in a real estate deal. "We are not experts in real estate and that is why we are thinking about a partnership, which would result in permanent profits," said Adrian Breazu, general manager of the factory.

Starting with January 2007, environmental regulations would not allow the company to operate in Bucharest, therefore the entire production would be relocated starting with the second half of this year. The production unit covers a 5.5 hectares central site, which is a very interesting opportunity for real estate investors.

Sources on the market said that the investors are highly interested in the plot. One of the interested companies is "Metropolis Real Estate Developers" as well as several foreign investment funds. However the manager of the company said that they would not sell the land this year. According to an independent evaluator, the value of land and exiting buildings is of 17.8 million EUR.

Adrian Breazu also said that the relocation of the production will take about 18 months and finances will be provided through bank loans, shareholders and external collaborators. According to Breazu's statements the company is currently discussing the new location, which is said to be on the Bucharest ring-road.

The company employs 450 people and its production is mainly made of spare parts. The company last year posted loses of 5 million RON, and a turnover of 110 million RON. However, this year the company signed numerous export agreements.

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Actavis achieves a major position in Europe's fast growing oncology industry

REYKJAVIK, Iceland, 28 March 2006 - Actavis Group (ICEX: ACT), the international generic pharmaceuticals company, announced today that it has agreed to acquire Sindan, a leading European generic pharmaceutical company specializing in the manufacturing and distribution of oncology products. The total consideration on a debt-free basis is EUR147.5 million (US$177 million) in cash, and as at the acquisition date Sindan has a cash balance of approximately EUR14 million (US$17 million).

Strategic rationale

The acquisition of Sindan, headquartered in Bucharest, provides Actavis with access to a new therapeutic field and a strong development and manufacturing expertise for oncology products. In addition Actavis will gain a solid platform in the Romanian market from which to achieve future growth. Sindan has grown at a rapid rate in recent years and has seen its revenues almost double between 2002 and 2005.

Key benefits of the transaction include:

* Actavis will gain access to Sindan's marketing and distribution network in 6 countries, with 7 new entries planned in 2006, as well as low cost manufacturing and development facilities from which it can leverage a cost efficient platform to drive future growth and expansion.
* Actavis will immediately have a position in the rapidly growing oncology industry which is expected to be the fastest growing pharma segment over the next three years.
* Actavis will become one of the leading players in the Romanian market, which is expected to grow faster than most other European regions in the coming years.
* There is no overlap between the two companies and Sindan?s strong oncology product portfolio complements Actavis' strengths in oral solid-dose products.
* Following the acquisition, Actavis will have one of the broadest portfolios in the generics sector. Sindan's 31 oncology products will add to Actavis' current portfolio of 600 products.
* The enlarged Group will benefit from products in Sindan's portfolio that can be marketed in Actavis' existing markets and vice versa.

Sindan is expected to have revenues of approximately EUR80 million (US$96 million) in full-year 2006 and EUR100 million (US$120 million) in 2007. The EBITDA margin of Sindan for 2006 is expected to be approximately 22% for 2006 and 23% for 2007.

About Sindan

Pioneered in 1991, following the privatisation of the R&D Department of the Oncology Institute in Bucharest, Sindan employs 224 people and holds a strong position in its domestic market. Sindan's niche oncology products, both oral dosage and injectables, are very competitive in its international markets.

Sindan develops, manufactures and distributes a wide range of oncology compounds and is successfully entering a growing number of export markets including Romania, the UK, Poland, US, Japan, Germany, Italy and Spain. In addition, the Company has traditionally had a strong position in many Central and Eastern European markets and generates sales in Bulgaria, Hungary, Poland, the Czech Republic, Slovakia and Russia. Sindan's Bucharest production facility is approved by MHRA for sales in the European Union and a US FDA inspection is pending.

During the period 2002 to 2005, Sindan's revenues almost doubled, representing a CAGR of 26%. The Company's unaudited accounts for 2005, show revenues of EUR68 million (US$82 million) and EBITDA of EUR17 million (US$20 million).

Financing

The purchase price of EUR147.5 million (US$177 million) will be paid in cash from Actavis' existing committed bank facilities.

JP Morgan acted as sole financial advisor to Actavis.
Outlook

In addition to making further acquisitions to lead the consolidation of a still fragmented industry, Actavis is committed to driving further organic growth through innovative product launches, penetration of new markets and regulatory approvals of new generic pharmaceuticals.

Impact on 2006 guidance

Sindan will be fully integrated into Actavis Group accounts as of 1 April 2006. Sindan is forecasted to achieve revenues of approximately EUR80 million (US$ 96 million) in 2006 and EUR100 million (US$120 million) in 2007. Including the effect of the Sindan acquisition from 1 April 2006, the combined Actavis Group is expected to have revenues for FY 2006 of EUR1.36 billion with an average EBITDA margin of 20%, and revenues for FY 2007 of EUR1.6 billion with an average EBITDA margin of 20%.

Commenting on the acquisition, Mr Robert Wessman, President and CEO of Actavis, said:

"Sindan has a very strong track record and as one of the leading players in its field, represents a strong strategic fit for the Actavis Group. Today's acquisition is a significant development for our business as Sindan provides Actavis with further diversity in our product portfolio and a strong foothold in the fast growing oncology industry. Sindan will now enable Actavis to compete in this market. Sindan will enhance to our growing presence in Europe, and the combination of our two businesses will serve to strengthen our distribution, marketing and low cost manufacturing and development capabilities throughout the region."

Analyst meeting

An analyst meeting will be held today, 28 March 2006 at 16:00 GMT, at Nordica Hotel, for analysts and investors. Power point slides, along with other press material, can be accessed through <http://www.actavis.com/> www.actavis.com, following the meeting.

About Actavis

Actavis Group is an international generic pharmaceutical company, founded in 1956, specialising in the development, manufacture and sale of generic pharmaceuticals. Headquartered in Reykjavik, Actavis has development and manufacturing facilities in Iceland, Bulgaria, Turkey, Malta, Serbia and the USA. Actavis' intellectual property has resulted in Actavis being first to market with generic products when patents expire. Actavis' recent acquisition of Alpharma's generics business places the company among the five leading companies in the generic pharmaceuticals market. Actavis currently has operations in 32 countries with approximately 10 thousand employees.

For further information, please contact:

Actavis Group

Robert Wessman, President & CEO
+354 535 2300
Halldor Kristmannsson, VP of Corporate Communications
+354 535-2300 / +354 840-3425
hkristmannsson@actavis.com hkristmannsson@actavis.com>
Edelman (London)

Nick Barron
+44 207 344 1561/+44 207 344 1581
Financial Dynamics (New York)
Charlie Armitstead
+1 212 850 5691

Sindan

Sindan Group at sindan@sindan.com

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The value of Polish exports to Romania will be of $2 billion in 2006, according to the estimates of the first economic councilor of the Polish Embassy, Tomasz Suprowicz, Bursa reports.

He recently said that the upcoming access into the European Union determined two major companies in the real estate field to come to Romania but did not mention the names of the two companies.

Tomasz Suprowicz said that following the European Union Accession, the economy in Poland grew very dynamic and expressed hopes that the same phenomenon would occur in Romania starting in January 2007.

Poland's GDP was 240.4 billion EUR in 2005, up by 3.2 percent compared to 2004.

Economic growth led to plans to extend exports and investments in Romania, he stated.

According to Tomasz Suprowicz, the balance of bilateral trade was of $768.43 million for Poland.

The Romanian market is currently interested in Polish exporters.

A significant number of Polish companies has expressed interest in the collaboration with Romanian companies in the fields of construction and construction materials.

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The European Commission acknowledges that Romania and Bulgaria have made important progress in the State-funded aid field, but mentioned that the share in the GDP of facilities granted by Romania in 2002-2004 is above the average in EU Member States, Nine o'Clock reports.


The average value of State-funded aid granted by Romania between 2002 and 2004 amounted to EUR 981 M, while in Bulgaria it reached EUR 65 M, according to a news release issued by the Commission.

Romanian authorities granted State-funded aid mainly in the form of tax payment spread (45.4 per cent), tax exemption (29.4 per cent) and non-reimbursable loans (23.7 per cent).

The Commission believes the relatively high share of State aid granted by Romania was mostly triggered by the large-scale reforms in the transition to the market economy, as well as by the privatisation and restructuring of companies facing difficulties.

Romania has also made headway in terms of business operations, according to the Economist Intelligence Unit (EIU).

Specifically, Romania moved up to the 48th position in terms of business environment attractiveness, as compared to the 53rd position held in 2001-2005, in a ranking drawn up by EIU on business developments in 82 states.

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Banca Romaneasca was established in 1993, and provides a wide range of retail and corporate banking services through its national network of 46 branches and agencies. In October 2003, the National Bank of Greece (NBG) Group became the main shareholder of the bank, now owning 87.14 per cent of the share capital aiming to reach 5% market share until December 2007, said Andreas Maragkoudakis, Banca Romaneasca General Manager, Nine o'Clock reports.

Banca Romaneasca had a preliminary net profit of ¤3.6 mn for 2005 and its market share doubled to 1.8 per cent of the local banking market.

At the end of last year, Banca Romaneasca had assets amounting to more than ¤615 mn, showing an increase of more than 177 per cent, as compared to December 2004, said Mr. Maragkoudakis in an interview to Nine o'Clock newspaper.

As compared to 2004, the profitability was lower due to the high volume of investments made toward year-end, as well as to the NBR norms which led to the need to reclassify many credits granted to the individuals and as a consequence, to the increase in the provisions.

Investments of EUE 10 ? 12 M into network expansion nation-wide and a market share of almost 3 per cent are Banca Romaneasca?s aim for this year.

Maragkoudakis said that both BCR privatisation and the near moment of Romania?s accession to the European Union will find the banks as being competitive on the European market, meaning that we will have products and services comparable to those existing in the EU at the moment, either by their characteristics or by their cost.

Thus, introducing new products in order to meet the more and more sophisticated needs of the population and companies will represent a way to get new clients and to extend the capacity of providing bank services to the already existing customers.

Regarding the bank's share in the market, Maragkoudakis said that every percentage point at the market share is a very ambitious target, therefore, the bank will have to grow faster than others with the target being to reach a market share of 5 per cent by December 2007.

As far as the objectives for this year is concerned, Banca Romaneasca plans to expand its territorial network from 46 presently to 95 units at the first quarter of 2007, and to launch the internet banking and mobile banking services.

At the end of this year, the bank will finalize the implementation of a new IT system which is going to support the entire bank?s activity.

With the strong financial support from the parent bank, the National Bank of Greece, on February 2006, Banca Romaneasca increased its share capital by ¤68 mn, reaching over ¤112 mn.

The bank has budgeted for 2006 a profit of ¤8.8 mn and is targeting to increase its market share to 3.6 per cent for retail lending.

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TBI, the financial services arm of Israeli group Kardan, expessed interest in taking over International Leasing Bucharest and two of the three branches, Ziarul financiar wrote, ACT Media news agency reports.


The International Leasing shareholders decided to delist the company from RASDAQ.

The company has branches in Iasi, Brasov and Pitesti and is evaluated at 4.43 million euros.

TBI plans refer to buying the company after it us delisted from the stock market, and the value of a possible transaction is to stand around 4 - 5 million euros.

The TBI Holding official for Romania, Efraim Naimer, said there are some leasing companies he is "checking" and one of these is International Leasing. "Nothing is finalised," he mentioned.

"Listing the company did not serve the initial purposes, namely drawing investors and capital, respectively.

The recent discussions with potential investors showed there is a certain reticence in terms of investing in open companies," reads the report sent by the company to RASDAQ.

According to the latest information, Ioana Necula, director general and founder, owns a 79% stake, while Eugen Voicu owns some 15%, the remainder shares being owned by other minority shareholders.

International Leasing estimates for 2005 a turnover of 11 million euros.

TBI Leasing was set up in 2002 and is part of financial group TBIH Financial Service Group, one of the main operators of the financial market in Central and Eastern Europe.

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More than a half of Romania's 24 million people may fall under a poverty limit if the government raises the price of electricity and gasoline.

Ovidiu Jurca, vice president of the National Trade Unions Bloc, or BNS, also warned against the risk of social unrest if the prices of electricity go up by 80 percent and gasoline by 14 percent, the Bucharest Daily News said.

The government plans to increase the excise tax for electricity and gas as of July 1.

A further 6 to 8 million people will join the 4.5 million who currently earn little over 100 euros (USD120) a month, said Jurca.

"This will be a country of paupers with a prosperous minority of 5 to 10 percent guiding themselves with the 'after me the deluge' principle," Jurca said.

The BNS leader condemned the government, saying it wants to bring the utility tariffs to the level of the European Union, but in certain cases it even went past the EU level, while ignoring the revenues of the population.

Jurca said the government should have used a flat tax until Romania reached the living standard of the EU, instead of overburdening the pocketbooks of the people. Taxes on cigarettes and alcohol are also expected to rise.

He said the unions would raise the issue of the tax hike at Thursday's meeting with Prime Minister Calin Popescu Tariceanu.

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A Directive that was freshly adopted by the European Union and which will have to be transposed into Romanian legislation requires commercial banks to be highly transparent in relation with their clients, providing them complete information about credit costs, ACT Media news agency reports.


The adoption of the EU Directive will result in the amendment of the law on the annual effective interest, imposing a more detailed approach.

The major goal of the Directive is to protect the clients of commercial banks against deceitful or incorrect practices, providing them a consistent reference for comparing various credit offers.

Therefore, the client shall be informed about the terms, costs and obligations arising from a credit contract before the documents are signed.

Among others, the banks will have to inform their clients about the annual interest rate and the total cost of the credit by a representative example, mentioning all the financial data and the considered assumptions.

The Directive suggests a mathematical formula for the consistent calculation of the interest rate on the community banking market.

If the bank offers a lower interest rate over a limited period at the beginning of the credit contract, the advertisement shall also include the annual rate calculated for the entire duration of the contract.

A significant change of the interest rate must be promptly notified to the client in writing; the client shall be also informed about the new amount he has to pay.

The client also needs to be informed about the cost of the insurance policy that must be included in the annual effective interest, if the loan is conditioned on the signing of an insurance policy.

If an insurance policy is compulsory, but the cost thereof cannot be determined in advance, the bank or the broker will have to clearly mention the supplementary cost item.

An absolute novelty is the possibility offered to the client to renounce the credit contract within 14 calendar days after the signing thereof, without the obligation to invoke a particular reason.

The Directive does not apply to credits exceeding 50,000 euros, to on-going credits or to mortgage-secured credits.

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Austria owned at the end of last year 23.4 percent of the capital in the Romanian banking system and 31.6 percent of the whole foreign capital invested in Romanian banks, daily Bursa reported, but data do not include the acquisition of Banca Comerciala Romana (BCR) by Erste Bank, ACT Media news agency reports.

BCR, purchased at the end of 2005, owned 10.8 percent of the initial capital of the Romanian banking system.

Austria is present in Romania through six banks, the most important being Raiffeisen Bank, HVB Bank and Volksbank.

Raiffeisen Bank is the third bank in the Romanian banking system, with a 8.7 percent market share, HVB Bank owns 4.9 percent, while Volksbank owns 1.5 percent.

Greece is second in terms of acquisitions in the Romanian banking system, totaling at the end of last year 13.3 percent of the banking capital and 18 percent of the foreign banking capital.

Alpha Bank owns a 3.8 percent market share in terms of assets, followed by Banca Romaneasca with 1.8 percent and Piraeus Bank with 0.8 percent.

The Romanian capital invested in banks accounted for 24 percent at the end of the last year, but the share will diminish after BCR is privatised, the paper writes.

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The National Union of Romanian Employers (UNPR), Romanian Savings Bank (CEC) and the Romanian Company for Concrete and Prefabricates (SBPR) have launched a low-cost project for housing units addressing average earners. The houses, which will be available through CEC loans, will use modular elements, allowing developers to keep the costs low: EUR 370 per sqm for the turnkey houses. Most of this sum - some EUR 195 per sqm - will go on the structure. The rest will be split between infrastructure, finishing, interior and exterior carpentry, and installations. "It is the first time in Romania that a union of employers has entered into a partnership with a bank to support a housing project. The project mainly addresses the needs of average earners, but also those living abroad who wish to set up a house in the countryside," said Marian Petre Milut, UNPR president, quoted by Rompres. The project's target may also expand to include low-income groups, as the need for a down payment to secure a mortgage will disappear, he added. Data from UNPR show that over the last 14 years some 30,000 houses have been built each year. Eugen Radulescu, president of CEC, said it was likely that loans would become more accessible, which could lead to an increase in house prices as demand grows.

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Growing genetically modified soy, which is tolerant to the active ingredient of the Roundup Ready herbicide, will be banned in Romania starting on January 1, 2007, in keeping with the regulations in force in the European Union. This decision made by Romania was rather a political decision than a decision made on the basis of a risk analysis with a view to accommodating to the European policy in the field considering the prospect of Romania's accession to the EU in 2007, said Charles E Hanrahan, expert in agrarian policies with the Research Department of the Library of US Congress, who paid a visit to Romania and Bulgaria with a view to presenting farm biotechnology. Hanrahan made it clear that an assessment of the risk was made by the bio-security commission which did not find the genetically modified soy as being dangerous for the health of people or the environment. In Romania genetically modified soy has been grown since 2000 and was the only genetically modified crop although this variety resistant to herbicides is not grown at present in the European Union. Before 1989 Romania was a well-known soy grower, with areas of more than 500,000 ha in 1989. It was the main soy producer in Europe. In the last few years it lost this position as the areas under crop were drastically reduced, according to the data supplied by the Ministry of Agriculture, Forestry and Rural Development.

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Renault Nissan Romania estimates 2006 sales of 1,100 units of new model Renault Clio III, launched officially on the Romanian market, according to director general of the company, Nicolas Ianculescu. Clio III represents the new generation of one of the most popular cars in Europe and is part of the small car class, a segment holding a quarter of European sales and 36% of the Romanian car marketIn Romania, Clio III will be sold in parallel with the old Clio Symbol, the most popular imported car, which will undergo a facelift this autumn, said Dora Pasare, official with Renault Nissan Romania. As many as 12,287 Renault Clio units were sold in Romania in 2005, according to the Car Producers and Importers' Association. Renault Nissan Romania sold last year 23,865 Renault cars and commercial vehicles and 2,127 Nissan cars.

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The special offer launched by Cosmote in March has turned the telecommunication market in Romanian upside down. The offer of a 2000 minute bonus in the same network for just 3 euros for the Cosmote prepay card has modified the market tendencies. The other operators were taken by surprise by the advantages offered by the newest company of mobile communications, the special division of the Greek group OTE. The new promotion is devoted to young people open to change and small organization which need cheaper group communication. Connex Vodafone, Orange and Zapp Mobile are directly affected by the Cosmote offer and promise to launch a counterattack which cannot however be too powerful thus modifying the already existing policy. Prices are a special subject in the communications market, representatives of Zapp Mobile considering that Romania registers some of the lowest prices in Europe. Connex Vodafone and Orange have not reacted to the Cosmote success. The results were queues in front of specialized shops and a Cosmote phenomenon in full attack.

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The Hungarian government has announced its intention to invest about 100 million euros in Black Sea ports, Constanta included, the secretary of state in the Ministry of Economy and Trade Horvath Csaba declared on the occasion of Constanta port day organized in Budapest . ?Two thirds of the Hungarian economy is based on exports and depends a lot on transport ways in Europe. The Danube has been a linking way with the north of the continent and we wish to redefine its role, focusing on new commercial relations. At present 20% of Hungarian trade is with partners in Constanta and depends on logistic, infrastructure and transport,? Csaba said.

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The first store in Romania of Swedish group Ikea - big furnoiture producer and distributor - will open in Baneasa area /northern Bucharest/, in the spring of 2007. "This will be the first Ikea store in the Balkans," confirms Hendrik Notmeijer, manager of Ikea Trading Area Balkan, a company based in Bucharest. The store will stretch on 24,000 sqm and will require an investment of 15 million euros, says Michael Lloyd, head of TriNation Management &Development BV, the company that developed the biggest real estate project in Romania, Baneasa Investment. Lloyd added the store will be opened in franchise system and the investor is a foreign firm. According to some sources, the owner of the future store is a UK company.

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Spanish real estate developer and construction company GEA Prasa have announced a EUR 150 million investment in 550 apartments to be located in the Lacul Tei area of Bucharest.

Developer GTC is planning a new residential compound, on a 10-hectare plot in north Bucharest which it bought for some EUR 12.6 million, company representatives announced last week. The 1,300 apartments will be developed in stages over the next five to seven years. GTC is co-owner of the plot, with 80 percent possession of the site.

Neocity Group is to announce that it will start construction works on the City Park Mall retail centre in Constanta, having supplemented the funds necessary for the investment to 50 million euros, from the initial project value of 30 million euros.

The value of foreign direct investment (FDI) rose by 199% in January to 699 million euros, according to provisional data centralised by the National Bank of Romania (NBR) that was published by the Romanian Agency for Foreign Investment (ARIS). Romania attracted 234 million euros in foreign direct investment in the first month of last year.

Dutch Verder has plans to invest around EUR 10-15 million in the Romanian market in the next three years, Mihail Vasilescu, general manager of Verder Romania, told BR last week.

EKR Elektrokontakt Romania, a subsidiary of Germany's Autoelectric GmbH, a producer of car parts and cable systems, will finalise an investment of around 5 million euros this month in order to increase the production capacity of the plant based in Pancota, Arad county.

TBIH, the financial services arm of Kardan, the Israeli group, is interested in taking over the Bucharest-based International Leasing company, and two of the three other branches opened outside Bucharest, market sources told ZIARUL FINANCIAR. International Leasing shareholders late last week decided to delist the company's stock from the RASDAQ.

The winning bidder cannot offer less than EUR 1 billion for Romania's fourth-largest bank Casa de Economii si Consemnatiuni (CEC), local financial daily Ziarul Financiar reported. The deadline for bids was set to 25 April and Hungary's OTP is also vying for the stake of between 50% plus one share and 85% in CEC.

The EUR 1 billion entry bid sounds really interesting, given that in the first round local media reported the highest bid at EUR 300 million. While Romania has signalled several times it wanted more for the package, one billion euros seem awfully lot to ask.

Of the values of CEC, Ziarul Financiar emphasised the bank's network, reputation and services in the retail sector. The bank's properties alone are valued at EUR 600 million. The network of 1,404 branches is without a doubt alluring, but note that a part of the branches resemble a shed rather than a building of a bank. CEC's market share has been eroding, its profit is close to nothing and its IT system is virtually non-existent.

While serious competition can build up for CEC, the bidder deciding to pay the price, will very likely put down the money with trembling hands.

The Romanian state had expected CEC to fetch EUR 650 million before it received the EUR 300 million bid. Since then they increased the stake on offer up a notch to 85% from 75%. Looking at BCR's P/BV (price/book value) pricing, the EUR 1 billion asking price might even seem realistic, but the two banks are by far not in the same league.

When only a 75% package was on sale, we believed EUR 500 million would be large enough to acquire it, but the months-long song and dance and the increase of the package slated for sale could easily result in bids in the EUR 600-700 million range.

CEC is not in the best of shapes, but there's always a bold knight who is willing to marry even an unsightly princess.

Nevertheless, CEC is still the last bank in Romania that could be suitable for building worthwhile positions on in the country.

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Transylvania Bank's manangement decided to propose the shareholders the supplementation of the institution?s share capital by 156 million lei (44.5 million euros), to 392.7 million euros, ACT Media news agency reports.

The operation will be performed by the distribution of free shares and the sale of new stock.

For each share held at registration date, the shareholders will get 0.509 new shares on account of last year?s issue premiums worth 11.4 million euros and of the accounting reserves from profits, worth another 22.9 million euros.

The shareholders will also be entitled to underwrite 0.15 new shares at the price of 0.35 lei per share, for each old share in their possession.

The raised funds will be spent for the bank?s development strategy.

?Our concept is an organic growth at an even faster pace than in the past years and we target a market share of 5.5 ? 6% for the end of 2007 and we also plan to have 300 offices at the end of the current year, so that we?ll spend the money for these goals,? Transylvania Bank president Horia Ciorcila told the press.

He added that a part of the money will be directed towards the companies in the bank?s group, such as the insurance division, that need financing to keep on growing.

The bank?s bourse value is currently 1 bn euros, and although many investors would be interested in a takeover, the institution does not consider a sale at this moment.

?We are not negotiating the sale with anyone, although there were several investors interested in the last period.

I do not think we will sell bank stake in the coming years, because we want to focus on organic growth and our strategy runs till 2008.

Not only that we do not plan a sale, but we are interested ourselves in potential takeovers,? added Ciorcila.

The bank?s plans also include the buyback of shares from the bourse, in order to motivate its employees.

?We haven?t yet fully worked out this program, but several thousand employees whom we want to keep with the institution will benefit by it.

We will buy shares from the Stock Exchange and sell them to the staff for a smaller price.

In exchange, they will not be allowed to sell the stock for a certain period, say three years and if they leave the bank, they will be penalized because they will have to give the stock back,? explained the bank president.

The bank is supposed to acquire from the market 70 million shares that will be cessioned at 0.35 lei per share to the staff, under the program for rendering them loyal to the institution.

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Romania is interested and supports the European policies relating to the development of small and medium-sized companies, Romanian Prime Minister Calin Popescu-Tariceanu said while visiting Brussels, ACT Media news agency reports.


The development of entrepreneurship concerning small and medium-sized companies was one of the main topics debated at the spring European Council held in Brussels on March 23 and 24.

The Prime Minister said this sector has "the highest development potential apt to generate economic growth and jobs."

"As a future EU member state, our duty is to attach importance to this sector," said the Romanian PM.

According to the conclusions of the European Council, by end 2007, the EU member states have to create a single point for the registration of the small and medium-sized companies, making possible the opening of such a firm in one week.

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The Romanian market proved to be attractive for the Greek financial groups Alpha Bank, EFG Eurobank, NBG, Piraeus Bank, Emporiki Bank and Egnatia Bank that plans to expand their operations.The Greek banks account for almost 11.5 percent of the total of bank assets in Romania, namely approximately four billion euros, ACT Media news agency reports.

The Greek groups became more aggressive once the retail market was developed in the last three years after a long period it held a discreet presence.

EFG Eurobank and NBG take part in the privatisation process of the National Savings Bank (CEC) in Romania. NBG competed, without success, in the bidding for the Romanian Commercial Bank (BCR). EFG Eurobank holds, presently, the best position on the local market through its subsidiary, Bancpost, that accounts for 4.5 percent of the market's assets and ranks sixth in the system.

In 2005, Bancpost invested massively in the implementation of a new IT system, in staff restructuring and in its territorial network. Till year-end, the bank's territorial network should reach to approximately 200 units. In parallel, Eurobank started construction of a financial group structure around Bancpost.

Up to now, a leasing company became operational and a consumer credits one - Euroline Retail Service - and a real estate company, EFG Property Services.

In 2005, Bancpost operated a capital increase in excess of 92 million euros to which EFG contributed with 50 million euros.

This money influx allowed it to restart hard currency credit granting in line with Romania's National Bank (BNR) more restrictive norms. Alpha Bank was not involved in big privatisation processes, but is determined to develop on the local market.

In 2005, the Greeks pumped a big amount of capital into Alpha Bank Romania, 126 million euros, propelling it to the third position in the top of the best-capitalized banks, following the Romanian Commercial Bank (BCR) and the Romanian Bank for Development (BRD).

Alpha network will expand from 30 units in 2006 to 150 in 2008. NBG owns Banca Romaneasca (the Romanian Bank) on the local market.

In February, the Greeks increased Banca Romaneasca's capital with more than 60 million euros that now amounts to 111 million euros.

This year, NBG would decide if it is going to give up "Banca Romaneasca" brand and comes with its own name on the market. Piraeus Bank launched in 2005 an aggressive policy of expansion that should translate through investments of 40 million euros this year.

Piraeus entered the local market in 2000 through the acquisition of the Credit Bank Pater.

Piraeus officials hope to succeed to significantly boost their share market, from 0.8 percent at present.

Egnatia and Emporiki, banks with more reduced dimensions, nourish ambitious growing plans on the Romanian market.

Egnatia Bank Romania has approved for 2006 a subordinated credit of seven million euros from the mother bank that is to sustain development of its territorial chain up to nine units, but also the doubling of its assets to 240 million euros.

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Representatives of Austrian companies Schweighofer and Egger announced they will begin this spring the construction of several factories in the area of Radauti, with the first investing stage amounting to ¤300 mn, Nine o'Clock reports.


The owner of Schweighofer Holzindustrie, Gerald Schweighofer, said that, together with the Egger Company, they decided to invest in wood-manufacturing plants in the area of Radauti.

He said that Schweighofer Holzindustrie will inject by the end of the year ¤80 mn in such factory, with over 500 people going to be employed.

He insisted that the investments would not interfere with the owners of sawmills in Suceava County, as the company will only process coniferous species of wood, with 50-60 per cent of the raw materials to be imported from Ukraine.

?We start from the premise that we will import 50-60 per cent of the raw materials,? Schweighofer said, adding that the factory will have a processing capacity of one million cube meters an year.

?The wood will be processed, dried, planed and exported to Japan in proportion of 80 per cent,? Schweighofer also said.

?We will also import wood of hard essence which we will make available to sawmills,? Schweighofer said.

In his turn, the representative of the Egger Company, Kurt Binder, said that, in a first stage, its investment would focus on a particleboard factory.

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The Romanian Agency for Foreign Investments (ARIS) estimates the foreign direct investments (FDI) having entered Romania in 2005 to be revised upward to over ¤6 bln, Nine o'Clock reports.


Recently, the National Bank of Romania (BNR) released the preliminary data on the foreign capital inflows entering the Romanian market last year, respectively showing a 26.9 per cent increase as compared with the preliminary level of FDI registered in 2004.

However, the nominal value of investments disclosed in 2004, respectively ¤4.098 bln, had ultimately been revised upward by BNR and the National Institute of Statistics (INS) to ¤5.183 bln.

Accordingly, taking into account last years? trend of revised growth rates, the prospective total investments in 2005 seem feasible enough to advance from the preliminary ¤5.197 bln to over ¤6 bln.

ARIS estimates the result of the 2005 statistical research to be drafted by BNR and INS and to be released by the authorities by year end will emphasize a revised amount of the foreign direct investments, respectively ¤6 bln, an institution?s press release informed.

Together with the effective shareholders? paid capital, revised data will also comprise credit lines granted by mother companies to their subsidiaries on the domestic market.

In this respect, INS will collect the relevant data on the amount of reinvested profits and on short term headquarters-subsidiary credits.

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The value of Greek investments in Romania exceeds three billion euros, Ambassador of Greece to Bucharest, Thanos Dendoulis, announced in an interview to Ziarul financiar daily, clarifying that official data showed that Greece ranks 9th in the foreign investors' top, according to the country of origin, but their data place it on the third position in this classifying list, ACT Media news agency reports.

Famous brands such as Coca-Cola, Beauty Shop, Marks & Spencer, Nike or Lacoste are brought on the Romanian market by Greek franchisers.

Greeks' presence is the best noted in the telecommunication sector due to the acquisition of RomTelecom by OTE.

Food industry is, in its own turn, well represented through Loulis (baking products), Everest and Gregory's (fast-food) or by Alexandrion brand, market leader on its segment.

Ambassador Dendoulis underlined that the group of six banks with Greek capital present in Romania - among which Alpha Bank, EFG Eurobank and NBG - account together for a market share in excess of 10 percent.

Referring to the telephony operator Cosmote, the Ambassador of Greece mentioned that it is going to invest some 500 million dollars in the upcoming period and is to launch new services especially designed for businessmen.

As well, the Greek official reminded that Greek Diekat Co. invested six million euros in the construction industry.

The volume of commercial exchanges between Romania and Greece attained in 2005 the level of 850 million euros.

Greeks' imports dropped by 6.8 percent, to 475 million euros and the Greek exports to Romania increased by 5.2 percent, to 374 million euros.

Among Romanian goods most sought after in Greece there are minerals, live animals and wood.

The most popular products exported to Romania are tin or iron plates and plastics, textiles and vegetables and fruits.

Foreign investments influx coming from Greece attained a maximum between 2004 and 2005, when more than 300 new companies were decided to enter the Romanian market.

Greek business community numbers at present more than 3,000 companies, of which 1,000 are very active.

Other 25 companies already announced their intention to enter the Romanian market this year.

"Bucharest is already a closed market, so that the majority of greenfield type investments have big chances in the province.

This is the tendency to further follow, especially taking into account that the European Union structural funds are mainly destined to cities, such as Cluj, Timisoara, Iasi or Sibiu. The European money will lead investors all over the country", the Greek official concluded.

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Local company VilaFlor will put some EUR 3 million into a new residential project in north Bucharest, Eurohouse announced last week. Construction work at VillaBlock will start in May.

Local company Provest will start work on a new residential compound near Brasov, an investment estimated to reach some EUR 30 million, the company announced last week.

The Bucharest City Hall is planning underground car parks which will provide around 14,000 parking spaces. Currently 20 projects for underground car parks worth over EUR 320 million are in the pipeline, for which six companies have won tenders, City Hall announced last week.

The number of yacht owners will triple in five years' time, according to representatives of the companies that operate in this segment. The small club of yacht owners currently comprises about 100 persons, including businessmen, politicians, stars, as well as lawyers, managers of multinationals and doctors.

Britain's Ozone Laboratories will triple its production capacity for the pharmaceutical products made at the Fabiol Bucharest plant, as part of its 5.8m- euro investment plan for this year.

The first Golden Tulip-branded hotel will be opened this August outside Bucharest, said Paul Marasoiu, a representative of the Dutch company in Romania. He says the unit will be opened in Prahova Valley, under the Golden Tulip Resort brand.

Electricity for household end-users and industrial end-users is very expensive in Slovakia, Romania and Italy as compared to other European countries, compared to the costs of other goods and services, according to the Office for Statistics of the European Union / UE / Eurostat. .According to the Eurostat data, the price of electricity for household use in Romania, expressed in purchase power standard /PPS/ to 100 kWh is almost double the one paid by the British, the Finnish, the French, the Maltese and the Norwegian.( PPS is a reference tool used in statistics to compare the differences in price level in different states, with one PPS being able to buy the same volume of goods and services in all countries.) Taking into consideration the PPS, Romania is ranked third, after Slovakia and Italy, as regards the costs of electricity for household users ; as for the prices for industrial users Romania is ranked first, with prices four times higher than Norway, France, Finland and more than double as compared to Denmark, the UK, Austria, Latvia, Belgium, the Netherlands, Croatia and Portugal.

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This week the memorandum regarding the building of the pipeline Constanta-Trieste had to be signed ; the project includes five states : Romania, Italy, Serbia and Montenegro, Croatia and Slovenia ; the signing was postponed without mention of the future date. Noteworthy is the importance of the project for the countries in the region. The building of such a pipeline would mean an alternative for Europe to the present oil routes, controlled by Russia, the five states involved in the construction of the oil pipeline being interested in the construction to start as soon as possible, as discussions on the issue had been delayed for two years. The pipeline would mean an alternative to Russian energy sources.

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Russia does not intend to raise the price of the natural gas it supplies to Romania, it will depend on the price of crude oil at world level, economic and commercial counselor of the Russian Embassy in Romania, Igor Sidorov, told Rompres. "At present, the price of natural gas depends on that of crude oil, and if the price of crude is high, so is the price of gas. Russia will not raise the price of natural gas supplied to Romania for other reasons, and your country needs not worry about a possible gas crisis caused by Russia," Sidorov said. He believes that the existence of a Romanian-Russian joint venture which would ship crude cheaply to Romania, as other countries, Germany for example, do, would have been to Romania's advantage.

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According to the aggregate figures reported by the National Bank of Romania, the net profit obtained in 2005 by the Romanian commercial banks and the branches of the foreign banks that operate on the domestic market was 547.7 million euros, by almost one third higher than the 447.5 million euros reported a year before. Commercial banks reaped the bulk of the profits (95%), whereas only 5% went to the branches of the foreign banks in business in Romania. ING Bank Romania accounted for almost half of the 31 million euros collected as net profits by the six foreign bank branches. Of the commercial banks, the institutions with a majority of domestic capital (BCR, Transylvania Bank, Romexterra Bank, Carpatica Bank, Libra Bank, Mindbank and Daewoo Bank) accounted for almost half of the profit reported by this category.

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Although none of the banks in business in Romania has last year succeeded in getting a 1 rating (which stands for an excellent situation), the system is quite solid, with only one bank rated with a 5 (which stands for a highly risky situation), head of the central bank?s Monitoring Department Nicolae Cinteza said. Cinteza added that the assets of the respective institution account for just 0.04% of the entire system and that the only institution rated with a 4 also holds a tiny 0.39% market share. The BNR official said that 14 out of the 33 banks that get BNR ratings scored 2, and 17 institutions ? 3. The rest until the 40 entities that operate on the market are foreign banks? branches. Cinteza also pointed out that even a bank rated with a 5 is not necessarily on the brink of insolvency. In terms of assets, the banks rated with a 2 account for 78% of the market, whereas those rated with a 3 ? for 21% thereof.

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A Directive that was freshly adopted by the European Union and which will have to be transposed into Romanian legislation requires commercial banks to be highly transparent in relation with their clients, providing them complete information about credit costs. The adoption of the EU Directive will result in the amendment of the law on the annual effective interest, imposing a more detailed approach. The major goal of the Directive is to protect the clients of commercial banks against deceitful or incorrect practices, providing them a consistent reference for comparing various credit offers. Therefore, the client shall be informed about the terms, costs and obligations arising from a credit contract before the documents are signed. Among others, the banks will have to inform their clients about the annual interest rate and the total cost of the credit by a representative example, mentioning all the financial data and the considered assumptions.

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American based Bechtel, the constructor of the Brasov-Bors highway, will get the first 100 million euros granted by the public authorities at the end of April, according to the delegate minister for Public Works, Laszlo Borbely.
"The 100 million euros represent, in a small part, a debt towards Bechtel and the largest part of the sum is destined to finance construction works. Depending on the performed works the sum could amount to 300-350 million euros," said Borbely.
The total value of the Brasov-Bors highway contract surpasses two billion euros.
The contract closed with Bechtel in 2003 by the former government was renegotiated, especially regarding the advance for the American constructor.
Bechtel will receive at the beginning of each year, starting 2006, a 30 percent maximum advance of the annual value of the works, a sum that will have to be justified at the end of each year.
Holcim Romania is negotiating a contract with Bechtel for supplying cement needed for the construction of the highway, said Holcim's marketing and sales director, Adrian Porfir.
"I cannot give any numbers without the party's agreement but we are talking about thousands tons of cement for the construction of the Brasov-Bors highway. Referring to the total value, a calculation can be made by using the 60 euro per tone which is the average market price," said Porfir.
In late February Bechtel announced that they will present the Romanian authorities with a new schedule for the Brasov-Bors highway project that will allow the finalization of the road by 2012.
The new objective will be supported by the government with 250 million euros annually.
"We have already lost a year but we are trying to complete the project according to the initial schedule - by the end of 2012. For this we will allot 250 million euros annually," government sources stated.
The government officials do not exclude the possibility for the project to be delayed by a maximum of one year.

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Privatisation of the National Savings Bank (CEC) is to bring to the Romanian state between 800 million and one billion euros, Sorin Vasilescu, Counsellor with the Romanian Agency for Foreign Investments (ARIS), stated on the occasion of a Romanian-Chinese economic forum.


ARIS representative stressed that direct foreign investments predicted in 2006 amount to 5.8 - 6.2 billion euros, of which 2.2 billion euros from the Romanian Commercial Bank's privatisation (despite the privatisation process being finalized at last year-end the respective amounts enter the account ledgers in 2006), 800 million - one billion euros from CEC's privatisation and the remainder of approximately three billion euros could be the so-called "greenfield" investments, starting "from zero".

According to ARIS Counsellor, from 2001 until now, the cumulated value of direct foreign investments has exceeded 20 billion euros, one of the highest levels in South-Eastern Europe, but still far away from investments made in Poland, Hungary or the Czech Republic that succeeded to attract in the same interval around 60 billion euros each.

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Romania is in the focus of attention of the British companies that are interested in delocalising their production units, according to a release sent on Thursday by the Chamber of Commerce and Industry of the Municipality of Bucharest (CCIB).


Romania is in the focus of attention of the British companies that are interested in delocalising their production units. Many people regard Romania as the min entrance to South-Eastern Europe, a market with an extraordinary potential, said Brian Sainsbury, manager of the company PDA Ltd, head of the delegation of the businessmen in Leeds (Great Britain) after the meeting with the managers of CCIB.

CCIB president Stefan D Popa extended the delegation made up of decision-making factors of more than 15 British companies and of the Romanian-British Chamber of Commerce the invitation to get involved in big projects meant to modernize the transport and communications infrastructure.

Considering the development prospects of the capital city by engulfing some neighbouring places in the metropolitan area, the CCIB president said that the finalization of the Danube-Bucharest Canal was a priority, an opinion that was shared by the mayor of Bucharest and the institution of the prefect.

The British delegation includes producers of building materials, metallurgical products, machine building as well as producers in the field of wood processing and the food industry, consulting companies, representatives of some important investment funds.

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HVB Bank Romania and Ion Tiriac Commercial Bank (BCIT) registered 280 million RON in cumulated net profit in 2005, up 62 percent and 12.39 percent respectively from 2004, officials of the group announced.


Tiriac Bank registered a net profit of 61 million RON in 2005 as compared to 54 million RON in 2004 (as a result the corporation tax's diminution and not from exploitation).

HVB Bank registered a net profit of 147 million RON, soaring 62 percent from 2004, according to BCIT's Finance Division Manager, Florin Cubinschi. BCIT's assets amounted to 3.179 billion RON on December 31, 2005, a 29.79 percent increase as against 2004.

BCIT's total revenues in end 2005 stood at 4.139 billion RON, as compared to 3.209 billion RON in end 2004. HVB Bank - member of UniCredit Group, together with BCIT - registered 1.282 billion RON in cash, on December 31, 2005, as compared to 536 million RON on December 31, 2004.

The bank's total liabilities reached 6.312 billion RON at the end of 2005, while in the similar period of the previous year, they amounted to 4.165 billion RON. One euro sold for 3.8 RON in December 2005.

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Holcim Romania estimates at least 14 percent in turnover increase this year, from EUR 166.5 million to EUR 190 million. Holcim owns three cement plants in Romania, in Campulung Muscel, Alesd and Turda, 14 ecological cement stations and four aggregates units.


Holcim Romania are now negotiating with Brasov-Bors highway developer Bechtel, to supply tens of thousands of tons of cement, following bids organized by Bechtel. None of the parties wanted to make such a declaration.

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Romanian leasing market recorded a significant development in 2005, confirming the status of the leasing as a financial product complementary to other banking products and accessible to a large number of business operators, the Romanian Bank Leasing Association (ALB) informs.


Romanian leasing market records significant development in 2005 The total number of agreements concluded in 2005 amounted to 1.04 billion euros, which is 43 percent more when compared with 2004, when it stood at 726 million euros. The wide range of financing granted to the national economy sectors is visible when taking into account the fact that 23 percent (242 million euros) of the total financing targeted industrial equipment, 4 percent (44 million euros) the real estate sector and 73 percent (753 million euros).

The transportation sector, out of which automobiles made up 54 percent of the total (410 million euros), heavy commercial vehicles 30 percent (223 million euros) and light commercial vehicles14 percent (103 million euros) The industrial equipment made up 24 percent of the lease contracts (59 million euros) in the construction field, being followed by metal processing equipment, amounting to 33 million euros (14 percent), as well as by other types of equipment, for the food, textile, IT, stationery and furniture industries, medical equipment, printing and processing equipment, chemical equipment and farm equipment.

Real estate financing was dominated by industrial and commercial buildings, amounting to 77 percent (34 million euros), while the remaining 23 percent (10 million euros) represented the residential sector.

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Pharmaceutical company LaborMed Pharma posted turnover of some ¤19.5 million in 2005, up by 75 percent compared to 2004. The result positions LaborMed Pharma on the 5th place in the ranking of local drug manufacturers, respectively the second place for cardiovascular drugs. The growth in 2005 was three times higher than the average increase of the market, Bursa reports.

Xeni-Camelia Dicu, general manager LaborMed Pharma, said: "2005 was an extremely complex year for our company because we continued to grow all three main fields of activity: research & development of generic drugs, manufacturing and marketing & distribution.

For 2006, the company plans to have sales of ¤30 million.

In order to achieve this target, the company plans to complete all the projects that were started in 2005 and that aim at implementing the EU standards in all their activities.

In the second half of the year, the company plans to bring the opening of a new production facility, which is established in keeping with all EU regulations and will continue with the upgrade of the distribution network.

LaborMed Pharma this year marks its 15th year of presence on the Romanian market having a portfolio of 80 products.

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"Agricola International Bacau" group of companies will invest around ¤8.5 million to upgrade its production capacities, said Gheorghe Antochi, president of the holding, Bursa reports.


The need for this investment was determined by the increasing competition in the food sector, the company's representative added.

"Initially, the investment was estimated at ¤6 million, but, because this was the last year SAPARD funding is available, we decided to add other 2.5 million to it," added Antochi.

Money for the investment will be taken both from own resources and bank loans.

The company wants to have access to SAPARD funding to upgrade the white and red meat slaughter-house, the salami production unit, breeding farm and incubation station.

So far, the group has invested around $53 million.

The company's investment plan aims at increasing the turnover by 4.5 percent, according to the group president.

The group's management estimates for this year a production of 26,500 tonnes of poultry, down by 1,000 tonnes than last year.

According to Antohi, the drop in the poultry production would be compensated by an increase in the meat processing capacity.

"During the first two months of the year we sold more than during the same time last year but at lower prices," added Gheorghe Antochi.

Bird flu cases in Romania had a great impact on poultry breeding. "Profit would have been three times higher if it were not for the bird flu," Antochi added.

For the same reason the group also had to stop exports.

"Agricola International" Bacau last year posted a $100 million turnover, while the profit was of $2 million.

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The deficit of the current account of the balance of payments stood at 391 billion euros in Jan '06, up 70.7 percent from January 2005, the Romanian Central Bank said, ACT Media news agency reports.


The medium and long-term foreign debt of Romania stood at 24.279 billion euros on Jan.31, 2006, down 0.7 percent from Dec. 31, 2005.

The public and publicly guaranteed foreign debt had a negative balance of 11.227 billion euros on Jan.31, 2006, representing 46.2 percent of the medium and long-term foreign debt.

The level was similar with that on Dec. 31, 2005.

The non-publicly guaranteed foreign debt amounted to 12,204 billion euros on Jan. 31, 2006, a level similar to that in December 2005.

The service rate of the medium and long-term foreign debt was of 27 percent in January 2006, compared with 18.2 percent in 2005.

The coverage rose from 6.4 months of import in end 2005, to 7.4 months of import on Jan. 31, 2006.

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As part of its strategy to consolidate its position in the northwestern region of Transylvania, meat processing company Caroli Foods has acquired Maestro Industries, a meat processing firm that operates in the northwestern city of Cluj Napoca.

According to a report in Romanian News Digest, under the agreement Caroli will take on Maestro?s 75 branded products, its production facilities and 200 employees.

The competition watchdog is still to clear the deal.

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Turism, Hoteluri si Restaurante Marea Neagra (Black Sea Tourism, Hotels and Restaurants - THR), the former Eforie company, has put on sale 35 tourism assets for which it is asking at least 18.1 million euros.

The Phoenicia Hotels company, which manages the Phoenicia four-star hotel of Bucharest, intends to create a hotel network, Dinel Saizu, Phoenicia general manager, told ZF.

According to the data issued by ING Life Insurance, the company ended 2005 with a gross profit worth 34.527 million lei, up 75.2 percent as against 2004 when it stood at 19.70 million lei. ING strengthened its position of leader on the Romanian market of life insurance with a market share appraised at 37 percent. Last year, the company registered net revenues worth 391 million lei derived from insurance, up by 27.6 percent over the previous year. At the same time, the overall revenues reached 513.606 million lei, up 24.5 percent over 4512,388 million lei in 2004.

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The Communications and IT Ministry (MCTI) put on sale the specifications for the short-listed investments banks admitted to offer consultancy in the Romanian Post restructuring, Communication and IT Minister Zsolt Nagy told Rompres. Arthur D. Little GmbH, Bearing Point, Ernst & Young + CA IB Corporate GmbH + NM Rothschild& Sons Ltd., ING, McKinsey & Company, Roland Berger Strategy Consultants and British Postal Consultancy Services are the seven short-listed consultancy companies the MCTI assessment Commission chose. Starting this week, the interested companies can buy the specifications and made their offer within a month. The analysis of the offers, the negotiation and signing of the agreement will happen as soon as possible, so that in the second half of May, we may have a consultant to restructure the Romanian Post, Minister Nagy said. The Romanian Post is the state-owned national operator in the postal services with the largest postal service network nationwide, namely about 7,100, of which 1,100 are computer-assisted and almost 550 are included in Virtual Private Network (VPN) offering real time services. Last year, the Romanian Post made a profit worth 14 million euros, and its revenues totalled 7,500 billion lei. The Romanian Post numbers more than 34,000 employees.

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The Government adopted on last Thursday a law draft on the necessary measures for the development works of Henri Coanda International Airport near Bucharest. According to the Government's spokesperson Oana Marinescu, the normative act stipulates that development works at the airport infrastructure could be declared as public utility. Expropriator is the Romanian state through the National Company "Bucharest Henri Coanda Airport" and the necessary land for the airport's modernization is estimated at 600 hectares. Land that should be expropriated is included in the airport's development perimeter and is within the boundaries of Otopeni town and out of Tunari commune boundaries, as approved through general urban planning.

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Real estate investors in Europe are increasingly attracted by the offer on the Romanian market. Both companies and individuals from Italy, Germany, Spain and Great Britain wish to invest in a business that does not require an outstanding managerial effort and the Romanian real estate sector offers such a possibility. The current legislation allows the foreign citizens to buy flats and houses, but not land. Foreigners cannot own land in Romania till 2011-end, according to the Accession Treaty, Chapter 4 - Free circulation of capital. According to this document, the interdiction of getting property rights upon land for the secondary residence by the EU citizens is to be maintained for five years after Romania's EU accession date and, up to December 31, 2013, they will not be able to buy agricultural land, forests and forest land, says Rompres.

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The Romanian tourism will receive structural funds worth approximately 3 billion euros over 2007 - 2013, in line with the National Development Plan adopted by the Government, president of the National Authority for Tourism (ANT) Ovidiu Marian said on last Wednesday, on the occasion of the 2006 Littoral symposium, held in the Black Sea resort of Mamaia (southeastern Romania) by the Romanian Tourism Employers' Federation. These European funds are distributed for the following programs: "The Increase of the Economic Competitiveness" Operational Program - fifth priority, "Romania - An Attractive Destination for Tourism and Business" program which will be allotted 140 million euros, "The Regional Development" Program - third priority, "The Development of Regional and Local Tourism" which will be allotted 667 million euros, and "2007-2013 National Strategic Plan for Rural Development" - third priority, "The Diversification of Rural Economy" subsection which will benefit from 2,200 billion (Rompres).

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Connex Vodafone launched Vodafone Mobile Connect on last Wednesday, the first Vodafone service that provides significant benefits and a high-level usage experience for Romanian businessmen. Vodafone Mobile Connect offers the subscribers of 3G services fast and easy access to the Internet and to the company's applications, like e-mail, Intranet, calendar, phone agenda editor, SMS or data traffic monitoring, with up to 384 kbps speed for data transfer. The service is launched together with a variety of offers which meet various communication needs in the business environment, from Unlimited Mobile Internet & Office package - for the customers with extended needs for communication, to offers of 50 to 500 MB traffic included. According to Rompres, clients who choose Unlimited Mobile Internet & Office package may also add the option that provides them the access to the company's network in roaming, through all the divisions and networks that are Vodafone partners. On December 31, 2005, Connex Vodafone, which is a division of Vodafone Group Plc. had 6.131.839 clients.

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The imported car sales grew by 40.6 percent in February 2006 vs. the same period in 2005, amounting to 17,598 units, statistics of the Association of Car Makers and Importers (APIA) say . The imported cars sales grew by 43.2 percent, to 14,726 units, and those of0 commercial vehicles by 32.4 percent, to 2,696 units, whereas the sales of buses and vans went down by 9.3 percent, to 176 units. Skoda cars sold best (2,358 units) from among the imported cars, especially owing to the successful Octavia Tour and Fabia brands. Renault comes second with its Clio and Megane brands. Volkswagen (selling 1,704 cars), Peugeot (1,326), Opel (1,152), Ford (1,036), Hyundai (660), Chevrolet (653), Toyota (562) and Fiat (511) rank among the top ten imported car brands.

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According to statistics made by MEMRB, 20 manufacturers operate on the Romanian coffee market, the most important being Sinem, Lucoris Motru, Kraft Foods, Alco Real and Coffee Fortuna which together hold 72 percent of the sales in this segment. Bulk coffee whose main distribution channel is small-sized food shop has constantly diminished its market share in favour of the branded coffee. The branded coffee segment has spectacularly risen, especially in terms of the registered sales, the most dynamic segment being ground coffee, instant coffee, 3-in-1 coffee and frappé. Over the last five years, the ground coffee has maintained its share, in terms of volume, relatively constant (73.7 percent), but in terms of value, however, the importance of the segment dropped from 62.2 percent in 2001 to 58.7 percent in 2005.

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The volume of share and bond acquisition undertaken during the first two months by foreigners on the capital market was worth over 967.97 million RON according to data of the National Commission for Assets (CNVM). The sums that entered the market were worth 721.23 million RON, while the sums going out of the market were over 518.29 million RON while the volume of selling on the capital market was 611.33 million RON. During the period under discussion 143 foreign investors entered the market out of which 107 natural persons and 36 legal persons, and left the market 29 investors, out of which no legal person. In February, the sums entering the market were 420.6 million RON, the sums going out of the market were over 265.22 million RON, the volume of acquisitions was 446.06 million RON and the volume of capital market selling was 298.09 million RON. There were 64 foreign investors joining the market out of which 44 legal persons and 12 investors, natural persons left the market.

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The Romanian -Russian trade increased by 51 percent in 2005, while in 2006 it is estimated to amount to 4 billion dollars, said, FOR Rompres, the economic-commercial counselor of Russia's Embassy in Romania, Igor Sidorov.According to him, Russia ranks 5th among Romanian's trade partners, the total value of the bilateral trade amounting to 3.56 billion dollars in 2005.

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Standard & Poor's placed 'BB' rating of Romania's state railway company CFR on negative credit watch due to CFR's delay in reporting 2004 results under international accounting standards. S&P also put the 'B+' rating on the company's freight forwarding unit, CFR Marfa, on credit watch negative, for the same reason. S&P's decision reflected CFR's strong reliance on state aid to cover recurrent negative free cash flow coming from high operating losses and high investment needs, but noted that the state ownership and the government support offset that weakness. Both corporate ratings have a stable outlook, however, depending on its findings, S&P may affirm, lower, or withdraw its ratings on either company.

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An American-Israeli investment fund is in negotiations for the purchase of land located in the Northern area of the Capital City, a transaction estimated at ¤30 mn and aiming at developing in Romania a series of real estate projects, for which it will assign annually up to ¤100 mn, according to a local partner of the fund, Nine o'Clock reports.

?The destination of the piece of land in Bucharest is mixed, there will be developed both the residential and the offices sectors.

At the same time, the investment fund, which entered the Romanian market several months ago, is searching for pieces of land in other important cities, such as Brasov, Constanta or Cluj-Napoca.

The fund does not hold land in Romania yet, however it is having talks with several owners,? stated for Mediafax Bogdan Minoiu, General Manager of Direct TradePoint Romania.

He mentioned that the foreign fund aims at building luxurious flats, offices and shopping centers, and takes into account developments on the logistic segment.

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Legislative provisions applied to custom taxes once Romania is integrated into the European Union, as well as the necessity incurred by the leasing companies to raise their risk provisions, could lead to higher tariffs as for the products acquired in leasing from 2007 onwards, according to leasing companies' representatives, ACT Media news agency reports.

"Once Romania is integrated into the EU, leasing operations are to loose two major advantages.

The first is linked to the custom tariffs imposed by the EU and the second is focused on the Value Added Tax (VAT) that until now was applied solely to the capital component of the leasing rate and, with the accession, it is going to be also applied to the interest rate," Director of HVB Leasing Septimiu Postelnicu told Rompres.

Presently, the leasing market accounts for some 6-7 percent of the total on the Romanian credits' market, amounting to some two billion euros.

"Leasing penetration in the Romanian economy is somewhere seven-fold smaller than in other countries, such as the Czech Republic, Poland and we strive to cover the lagging behind.

These countries benefit of some advantages as for the fiscal treatment and subsidies when compared to other forms of financing," Postelnicu stressed.

According to the Secretary general of the Banking Leasing Association, Adriana Ahciarliu, leasing offers at present several advantages, such as flexibility and a greater accessibility compared with the banks, in the sense there are no rules that impose to the people who require a leasing product to have a certain income level, in contrast with the norms imposed by Romania's National Bank (BNR) to the banks.

As well, the leasing contract stipulates that the leasing companies apply a default in payment of two instalments till the moment when the client could be treated as breaching the contract (60 days compared to 15 days as imposed by BNR).

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Senators have enlarged access to a 5 percent share package in the Romanian Savings House (CEC) destined to the financial institution's employees at the moment of privatization, giving the right to buy to those who had worked there for over five years, but were fired, writes Bursa today.

Meanwhile, the government is preparing the modification of CEC's privatization strategy and wants to increase the share package destined to the strategic investor, from 75 percent to 85 percent of the institution's nominal capital.
A tenth of the money coming from the selling of this package would be destined to the "Property Fund." The rest would be sold though public offer and 5 percent of the shares to CEC employees and 10 percent on the internal capital market or the external one.

Because of this project, the Employers' Union from Romania's Industry-CONPIROM- is accusing the government of changing the rules of the game, during the game, because it is changing the procedures during successive stages of the privatization offers and it is also changing the privatization shares.
"They are selling something else!" said the CONPIROM representative, explaining that "one is 75 percent and the other is 85 percent because, if I am not interested in the first package I become interested in the new package." That is why CONPIROM is requiring
CEC's privatization to begin again from the start.
But CONPIROM's objection is harmless compared with the revolt CEC's privatization brings within the Romanian business environment and even in the academic environment.
Both have rejected CEC's privatization from the beginning.
Gheorghe Stroe, the secretary of Romania's Agency for Economic Development says that BCR's privatization was an irresponsible gesture and the privatization of CEC is another step made down this line.
Stroe says that the Romanian banking system is mastered by the foreign capital that, by taking over BCR, added another 30 percent to the already existing 60 percent.
Stroe said that by selling CEC, the foreign capital will acquire another 5 percent and reach to a 95 percent share.
The official stated that the foreigners are not concerned with Romania's strategic needs and focus their services on commercial criteria.

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An 110 million euro loan granted by the International Bank for Reconstruction and Development (IBRD) for the reform of the Romanian judicial system was approved by the government, ACT Media news agency reports.
 
The reform funding will total 142 million euros, with 110 million euros of it to come from the World Bank loan and 32 million to be assigned from the state budget.
 
The money is going to be used for the infrastructure rehabilitation, the law courts' computerisation and automation; the improvement of the file management and increasing the efficiency of the judicial act.
 
The project targets the structural and institutional independence of justice; rationing and boosting the efficiency of law courts; increasing the judges' responsibility and the responsibility of the judicial system as a whole.
 
The project also aims to improve the budget management in law courts and boost the professionalism of the judiciary and the law court staff.
 
The World Bank loan is extended for 15 years, with five-year period of grace and it is to be repaid in equal annual instalments from the year 2010.
 
The project is due to be finalised on Oct. 1, 2010 and the deadline for using the money from the loan is April 1, 2011.
 
The payment of the public debt service related to the loan, i.e. the loan repayment, the payment of interests, commissions and other relevant costs will be provided from the state budget via the justice ministry's budget.

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The Romanian government approved the draft law on the ratification of the loan agreement between Romania and the European Bank for Reconstruction and Development for the sum of 22.5 million euros earmarked for the implementation of the project on modernizing the railway power network, ACT Media news agency reports.
 
The loan will be paid back in 12 years, with a 4-year grace period.
The project on the modernization of the railway power network includes buying and installing some new electrifying equipment, buying eight vehicles meant to maintain the intervention contact line, hiring some consulting services for supervising the equipment being installed.
 
The modernization of the networks aims at making the railway traffic more efficient in Romania's territory and decreasing the costs for railway drive and maintenance of the electric network of CNCF CFR SA.
 
The project will be financed from the foreign credit with 22.5 million euros and co-financed by the Romanian side, through the agency of the Ministry of Transports, Civil Engineering and Tourism, with 4.2 million euros.
 
Romania's contribution is meant for the payment of charges and taxes in Romania's territory as well as the equivalent value of other local costs that cannot be paid out of the foreign loan.
 
The trading company Electrificare CFR SA, which was set up in 2004 as a branch of CNCF CFR SA, the driving power distributor on the Romanian railway market, is empowered to implement the above-mentioned project.
 
The Ministry of Public Finance signed the loan agreement with the EBRD on behalf of the Romanian side.

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The project on upgrading the Bucharest-Constanta rail route on the 4th Pan-European Transport Corridor, requires investments of ¤665 mn. Works on the project will be started on April 15 and expected to conclude in 2009, Minister of Transport, Construction and Tourism (MTCT) Gheorghe Dobre announced, Nine o'Clock reports.


The 225-km Bucharest-Constanta route will be divided into three sections.

Works on the first segments, Bucharest Nord - Baneasa and Fetesti - Constanta, will total ¤356.3 mn, of which ¤183 mn contributed by the Japanese Bank for International Cooperation (JBIC) and ¤173.3 mn will be allotted by the Romanian Government.

The third segment, Baneasa-Fundulea-Fetesti, requires investments of approx. ¤309 M, of which ¤231.7 M allotted under the ISPA funding scheme and ¤77.3 M from governmental funds.

The rehabilitation projects includes five categories of works: bridge reconstruction, reconstruction of infrastructure and supra-structure of current rails, works on signaling systems, works on the contact line, etc.

Winners of the bids for contract assignment for works funded by JBIC are German, Japanese, Austrian and Romanian companies.

?Presently, the railway infrastructure allows speeds up to 140 km/h.

After upgrading, trains will be able to travel on the Bucharest - Constanta route at 160 km/h, and on certain segments even at 200 km/h,? said Minister Dobre.

For the project to be implemented, approx. 500,000 sq. m. of land will have to be expropriated.

?We need to resort to expropriation measures in order to develop such a project, in particular with respect to geometrical elements of the curves, but also to access ways to the sites,? the MTCT official explained adding that a commission is to be established for negotiations with land owners.

In parallel with the project, MTCT is considering acquisition of high-speed wagons, to be used on the modernised segments.

Thus, by the end of this year, five passenger wagons will be procured, and another 20-25 wagons per year in the next few years.

The price of one such wagon will amount to approx. ¤1.1 mn.

Also, the Transport Minister intends to develop a plan binding the construction companies to carry out maintenance works on the respective segments for five years after completion of works.

On the other hand, according to the MTCT official, vehicle traffic on the Bucharest - Constanta motorway, more precisely the Drajna-Fetesti and Fetesti-Cernavoda segments, will be limited in July on one lane only, with works to be carried on for the other lanes.

Dobre added that the Transport Ministry has already started negotiations to attract funding for rehabilitation of the Curtici-Simeria railway segment of the Fourth Pan-European Corridor, with costs put at approx. ¤1-1.1 bln.

A contract has already been signed with the European Investment Bank (EIB) on a ¤300 mn credit for the project, and plans are ready to cover the balance of the costs for Corridor 4 from cohesion funds.

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The signing of the memorandum of understanding between the five states involved in the project of the oil pipeline connecting Constanta (south-eastern Romania) to Trieste (Italy), scheduled for today, has been postponed until a date to be reset after Slovenia obtains the Parliament's approval, Ziarul Financiar daily informed, ACT Media news agency reports.


The memorandum was supposed to be signed in Trieste by the ministers of industry and energy from Romania, Croatia, Serbia and Montenegro, Slovenia and Italy.

Oil Terminal Constanta's director Mihai Lupu, who should have attended the event in Trieste, said on March 20 that the Slovenian side is making demarches for the memorandum to clear urgently Parliament.

According to the Oil Terminal Constanta director, the drawing up of the design project of the oil pipeline will cost 10 million euros, and Romania will have to pay a total cost of at least 2 billion euros for the pipeline.

"Signing this document means for Romania very big capacities of storage and transport to the western-European market, i.e. some 60 million tonnes of crude oil per year.'' said Oil Terminal director.

The works are scheduled to start in 2006 and be finished in end- 2007.

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The most alarming of the problems currently facing the Romanian economy is undoubtfully the foreign deficit, which is expanding threateningly, and is inflicted upon the people due to the rise in consumer crediting, which fuels imports. Proof in this respect are the economic policies which have struggled lately to slow down, or even to smother the consumer credits contracted from banking and, more recently, non-banking sources, Nine o'Clock reports.


In fact, however, the problem is not with the crediting, and this will be proven by the very likely failure of credit narrowing policies, which will not yield the desired results, writes Ilie Serbanescu with Nine o'Clock.

The reason for the past and, likely, future failure is that for Romanian the respective credit boom is a natural occurrence, hard to counter.

The IMF has estimated that, for a minimal compatibility with development and consumption standards in the European Union, the so-called banking mediation rate, namely the non-governmental crediting (loans that banks grant to individuals and legal entities) as a share in GDP should reach 57 per cent.

Nowdays, in spite of the unprecedented non-governmental credit expansion over the past two years, it hardly reaches 21% of GDP.

Thus, there?s plenty of room to further boost crediting, and no one will be able to prevent exploitation of this potential.

The actual problem is the domestic production, which is globally and structurally unable to keep up with the demand, which in turn is boosted by the credit boom.

If the domestic production was able to keep up, then the credit expansion would be a factor of healthy economic growth, rather than an element inducing imbalance of foreign accounts.

Therefore, the right policy to implement would be to stimulate a global and structurally adequate rise in the domestic output, rather than to discourage or hold back crediting, which is an inadequate approach.

Unfortunately, this wrong approach is still followed, at least because the other one is ruled out, as current international regulations, adopted by Romania through its membership to the IMF, World Bank and World Trade Organisation simply prohibit it.

The rationale of such regulations is that stimulating a country?s domestic production or influencing distinct development of certain fields through tax or credit facilities would distort the domestic and international market and competition and would come against the principle of neutral public finances.

What market is there to stand distorted by some fiscal and monetary measures, aimed at supporting some underdeveloped Romanian companies in coping with the foreign competition, now that the Romanian capital has lost control over key economic sectors, or to stimulate Romanian exports so as to counterbalance skyrocketing imports ? that is rather questionable.

Not to mention the alleged distortion of relationship that these skinflint companies would create on the international market.

It should not be overlooked that the respective rules have been imposed by today?s powers, which however, at the time they created their industrial foundations, resorted extensively to fiscal and credit facilities in order to support their own companies in struggling with the competition.

It would be interesting however to ask the authors of the said rules, how is consumption control for a market distortion and public finance neutrality.

How come supporting production is an instance of market distorting, and consumption smothering is not?

Why is supporting production against the principle of public finance neutrality, when consumption control is not?

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In a market analysis on Romania, Eurobank analysts stated that worsened investor sentiment towards emerging markets and receding expectations of further NBR rate hikes drove the RON to hit a 1-month low near 3.55/EUR early last week.


However, improving sentiment towards EM FX allowed the local currency to recover about half of its losses over the last few sessions and although fresh global tightening worries could again inflict pressure on the local currency, EFG Eurobank analysts view any EUR-RON retracement towards 3.55 or higher levels as an ideal opportunity to re-establish strategic short positions.

(Following last February?s surprise, NBR 100bps hike, they have revised downwards their end-2006 EUR-RON forecast to 3.45 from 3.55 previously).

Romania?s improving growth performance following a temporary slowdown in the second half of last year, continued strong FDI and portfolio inflows and attractive carry underline our positive RON view.

Improved chances of EU membership in 2007 are also likely to continue supporting sentiment towards domestic asset markets with the EU?s Justice Commissioner Frattini commenting last week that Romania has made ??huge progress?? in reforming its justice system.

Progress in fighting corruption has long been considered as one of the key obstacles in Romania?s timely EU entry and given recent positive developments on this front the analysts expect the June 2006 EU Council to give Bulgaria and Romania the green light for EU entry next year.

On the data front, the lower than expected inflation figure in February gives the NBR a good reason not to raise rates at the next meeting on March 27.

However, the analysts still believe that the NBR?s end-year inflation target of 5% +/-1pp remains a challenge and higher domestic rates plus further leu appreciation may be needed to attain the target.

The analysts see risks for higher NBR rates over the next 12 months (policy rate currently at 8.50 percent).

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Banca Transilvania will ask for 35 million euros in cash from its shareholders in order to continue its development process, Ziarul Financiar writes today.
The capital increase will be done by distribution of bonus shares and sale of new shares at a price lower than the quote on the Bucharest Stock Exchange. The capital of the bank will be increased by 45 million euros to approximately 111 million euros.
The money is to be used for the bank's development strategy over the next few years. After all, the bank's chairman and founder, Horia Ciorcila, says that even though many investors are interested, the bank will not be sold over the next few years, because there is still room for growth. Furthermore, the bank is interested in possible acquisitions on the banking market, but cannot find something worth buying.
"Our concept is an organic growth even greater than in the previous years and we plan to achieve a 5.5-6 percent market share by the end of 2007 and 300 branches by the end of this year, for instance, with the money spent for this purpose," Horia Ciorcila told Ziarul Financiar. The bank's market share at the end of the year stood at 3.9 percent, after Transilvania grabbed another slice of 0.5 percent of the banking market.
Shareholders will have the right to subscribe 0.15 new shares at a price of 0.35 RON/share. Out of this price, 0.10 RON are the par value, and 0.25 RON are the issue premium. If the bank sells all the shares, it will boost its capital by 10 million euros, but will actually get some 35 million euros in its accounts.
In addition, the shareholders are to get approximately 0.509 new shares for every share held, as proposed by the board of directors. The increase will be done by including in the share capital the issue premiums from last year's increase, worth 11.4 million euros and by including the accounting reserves made from the net profit, 22.9 million euros.
Ciorcila added that part of the money is to be directed to the companies in the bank's group, such as the insurance company, in need of cash to continue growth.

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Global Finance, one of the largest investment fund trustees in the Balkans, announced that is has raised 197 million euros for a new fund that in the end will have a capitalization of 300 million euros. South Eastern Europe Fund (SEEF) is the eighth private equity fund managed by Global Finance and will seek regional expansion opportunities, providing also support to Romanian entrepreneurs who want to expand their business abroad. The new fund will target Romanian, Bulgarian and Greek markets, seeking a wide array of industries and companies of various sizes. The investment per project will stand between 0.5 million and 50 million euros. With a 10-year long life, the new entity counts among its investors the Harbour Vest Partners Fund, investment bank Goldman Sachs, UBS Brinson, investment fund Adam Streets Partners, the Investments Authority in Abu Dhabi, insurer Standard Life, the European Bank for Reconstruction and Development.

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The absence of the Property Fund from a regular bourse market allows its deeds to be acquired for trifle prices via illegal channels. ?We are trying to identify ways to trade the Fund?s deeds ahead of its listing on the Bucharest Stock Exchange, in order to hinder eventual illegalities,? declared the president of the Fund?s Surveillance Council Nicolae Ivan, who added that the official application for getting the Fund listed will be submitted at CNVM at mid-April. According to Ivan, the Fund?s market value needs first to be certified. There is anyway an inconsistency in here, because the law requires the 114 companies in the Fund?s portfolio to initiate themselves listing procedures, before the Fund?s floatation. President of the Upper House Budget, Finance & Banks Commission Varujan Vosganian suggests that a way to overcome this problem would be to amend the legislation, requiring only the companies with substantial participations in the Property Fund to seek bourse listing.

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ProCredit Bank registered a net profit of over 1.75 million euros in 2005 making up for the losses registered in 2004, the bank's general manager Michael Kowalski announced, ACT Media news agency reports.


The bank's assets reached 128.85 million euros and the volume of deposits grew by 157 percent.

The number of deposits went up by 126 percent, reaching 58.875 and the volume of accounts registered 65.46 million euros.

Term-deposits at ProCredit Bank Romania was by 157 percent higher compared to December 2004, reaching the value of 55.38 million euros.

The ongoing credits totaled 89.40 million euros on December 31, 2005, up 73 percent as against December 2004.

Of the total volume of credits, the bank granted farm credits worth 6.03 million euros, up by 259 percent.

Michael Kowalski announced 30 new units would open this year, from 17 operational units in 2005.

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Of all the banking products available on the domestic market, the Romanians are mostly convinced of the utility of credits, reveals a public survey carried out between February 16 - March 15, 2006 by the e-paper Smartfinancial. The answers at the question ?Which one of the following banking products do you consider is most useful to you?? indicated credits with an overwhelming majority. Thus, 36% of the respondents said they find housing credits most useful, the supporters of consumer credits represent 20% of the respondents whereas credit cards reaped 19% of the votes (although these instruments are used most often to credit personal needs). 11% of the respondents also voiced interest for credits for the purchase f new cars. Of the total of 438 registered respondents, 86% pointed to the credit as the top-useful banking service.

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The Austrian investment fund - Immofinanz is interested in acquiring three new projects on the domestic market which may be office buildings or logistic projects, daily Ziarul Financiar wrote, ACT Media news agency reports.


The Austrian investment fund will buy the Bucharest Corporate Center (BCC) office building this month.

Immofinanz took over the BCC project in a deal amounting to around 26.5 million euros last autumn, according to market estimates.

BCC has a total area of 18,000 sq m of class A office space, of which 13,000 sq m are available for rent.

Total investments were put at roughly 17 million euros.

Tenants include companies such as Generali (insurance) and Petrom (oil).

The Austrians entered the Romanian market in 2004, when they bought Iride Business Park for 63 million euros.

BPD Property Development and Finest Italian-held investors developed Iride.

Immofinanz is not the only Austrian major company on Romania's market.

CA Immo and Europolis, another two Austrian funds, have already acquired their second project in the capital city.

Irish-held companies such as Ballymore Properties, RI Investment Group, or Greek-held firms such as Blue House, have already acquired their first real estate projects in Romania.

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The total leasing market will amount to 2.3 billion euros this year, up by some 15% on 2005, the representatives of the Banking Leasing Association (ALB) say. The total value of the goods financed by leasing amounted to 2.015 billion euros last year, an increase of 39% from 2004 and over twice higher than in 2003.

BitDefender, the security division of the Romanian company Softwin, estimates to reach sales worth 10 million dollars (8.2 million euros) this year on the United States IT market, Cosmin Mares, communication director of Softwin told ZF. "Part of this amount will go to our partners," Mares explained.

American company Axis Mundi is planning its entry into the local tourism sector. The agency is offering thematic itineraries of a week or two in Romania focusing on the Saxon Triangle of Transylvania, in a first phase.

American Cross Lander, the majority shareholder in Aro Campulung, has been sued by the Authority for State Assets Recovery (AVAS) after the American company sold one of Aro?s assets, AVAS announced late last week. Cross Lander may have to pay some $2.7 million in penalties ? the value of the sold asset.

The Authority for State Assets Recovery AVAS will own around one percent of Biofarm shares, following a court decision annulling the Biofarm privatization contract with American Shapiro Bancorp LLC. The court decision was announced last week by AVAS. The state sold more than 3 million shares, representing 40 percent of Biofarm to American Shapiro in 1997.

ING Asigurari de Viata, Romania's biggest life insurance company, last year derived profit before taxes worth almost 10 million euros (34.5 million RON), twice the value reached during the previous year, amid the 40% increase in euros in gross underwritten premiums, to 108 million euros.

The launch of the initial public offering of RomTelecom shares will happen in September at the latest, stated the Minister of Communications Zsolt Nagy yesterday. The deadline initially provided for was June. "I would not say there are delays in the operation because the government's program only said the year 2006," Nagy argued. The official said negotiations with Credit Suisse First Boston for listing consultancy were complete and the two parties would sign the contract next week. At this time, 44.89 percent of the landline telephone operator is still in the property of the Romanian state.

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The possible increase of the euro and dollar interest rate on the international market could lead to the hike of monthly payments to foreign currency credits, according to the Vice President of the National bank of Romania (BNR) Dan Bunea (photo). "At this point, the interest rate for euros is 2.5 percent and a three percent growth is expected. I personally think the hike is imminent and it may not stall at 0.25 percent before reaching 0.5 percent," Bunea said, at a financial seminar organized by Ziarul Financiar and ING. As for the American currency, the reference interest rate is now 4.5 percent and could progress by 0.25 percent or even 0.5 percent, the BNR official added.
Bunea qualified these estimates as certain evolutions and the imminent result of the macroeconomic data form the two monetary areas.
The central bank representative said that the exchange rate of the national currency would have "a certain volatility" on the monetary market, due to the capital inflow and the foreign investments but also because of the evolution of imports. The strong growth of deposit interests, Bunea believes, could compensate the inflation rate.

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The National Bank of Romania (BNR) will gradually draft stipulations for the ordinance which should regulate the activity of non-banking financial institutions (IFN), said BNR's first deputy governor, Florin Georgescu. The first provisions should be finalized by May 4.
"Regulations regarding the access to developing financial brokerage activities as well as accounting activities for the 2006 fiscal year will be established within three months since the ordinance will enter into force," said Georgescu.
During a second phase, the national bank will issue provisions by August regarding the statistic reports the IFN's must submit.
The non-banking financial institutions will be classified in accordance with the BNR registry they will enlist in. Thus, the General Registry will include monitored companies, the Special Registry will include supervised companies while the Record Registry will include the mutual help houses and the pawning houses.
Presently, there are 4,617 IFN companies recorded in the three registries.
BNR will also issue a credit classification for the monitoring and surveillance of the IFN's and will determine the reserves any IFN must have to cover the credit risk.
The central bank will also establish the conditions in which the IFN's will state at the Banking Risks Department (CRB) insolvency cases.
"We do not want to limit the leasing activities but only impose some rules that the financial institutions from this field must respect, in the purpose of protecting clients and obtaining a balance," said Georgescu.
Varujan Vosganian, the Senate's Finance-Budget Commission president, said that the leasing reported a double advance comparing with the insurance sector, in 2005, which means that the rules in this sector are very permissive.

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he project for the rejuvenation of the Bucharest-Constanta railway, which is part of the Corridor IV, involves investments of 655 million euros and the delivery deadline is 2009, Minister of Transportation Gheorghe Dobre said yesterday at a press conference.
Works on the 225 kilometers long Bucharest-Constanta railroad would be split in two phases. At first, the project provides for the renovation of the Bucharest-Baneasa and Constanta-Fetesti segments for a total of 356.3 million euros. 183 million euros come from the Japanese Bank for International Cooperation (JBIC) and 173.3 million euros are funds allocated form the budget.

The second phase, Baneasa-Fundulea-Fetesti, involves and investment of almost 309 million euros, of which 231.7 million euros are ISPA (Instrument for Structural Policies for Pre-Accession) funds and 77.3 million are government resources.
The railroad infrastructure currently allows a maximum speed of 140 kilometers per hour. After the completion of works, trains would be able to reach between 160 and 200 kilometers per hour.

The minister explained that the development of such a big project involved the expropriation of neighboring land for the creation of a 20 meter safety space on the sides of the lines with no permanent constructions.
MTCT started proceedings for the passage of the land plots involved into public ownership. Dobre said that a commission would identify the owners, establish the value of compensations and start negotiations with them. If no agreement is reached, the court will make a counter-expertise and establish compensation.

The Ministry of Transportation (MTCT) also elaborates a project through which a part of the road freight could be taken over by the railroad, Dobre announced. The institution agreed with the railway freight operator on developing a program for the shipping of containers from the Progresul Railway station in Bucharest to Curtici. "The whole of Europe develops strategies to move freight traffic from the road to the railway, because a chaotic development of road traffic creates economic and social problems," commented Dobre. He said that MTCT already started procedures for the attraction of the 1.1 billion euros needed to finance the renovation of the Curtici-Simeria railroad segment.

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The Novotel hotel will be opened this summer in Bucharest and the official inauguration is scheduled for the beginning of the fall, said the hotel's general director, Philippe Drivon.
Novotel is the first direct investment made in Eastern Europe by the French-based Accor.
"The hotel's owner, the Accor group, wants to open the hotel as fast as possible because the Romanian market needs other hotels. We hope the opening will be during summer but I cannot know for sure," said Drivon.
The costs generated by the hotel amounted to 39 million euros and the money came from Accor.

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The banking system needs to abandon its oligopolistic stance and grant credits to Romanian companies, advised Cristian parvan, AOAR's general secretary

Company crediting by banks is still at a low level in Romania compared with other states in the region, which affects competition, stated the representatives of the Association of Businesspersons in Romania (AOAR).
"The crediting problem is one of the most important for the Romanian economy," said Constantin Bostina, vice president of the AOAR. The businesspersons' representative alleged that the government is not showing very much interest in ensuring a favorable crediting policy, private banks are after their own interests and the National Bank of Romania is parallel with the real economy.

"The banking system needs to abandon its oligopolistic stance and grant credits to Romanian companies," advised Cristian Parvan, AOAR's general secretary, adding that companies cannot develop and boost competitiveness without the necessary funding.
According to a poll by the National Fund for Credits' Guarantee for Small and Medium Enterprises (FNGCIMM), approximately 74 percent of Romanian companies carry out investments from their own sources and profits. The fund's president, Aurel Saramet, stated that the poll clearly shows that local banks are not as open to financing as they declare and the situation should prompt the government, the National Bank of Romania and private banks to take appropriate measures.

Moreover, the FNGCIMM official stated that banks' statistical data reveal that only 48 percent of the warranted credits were used for investments, while the rest was used for current activities. Of the remaining 52 percent, 48 percent of the financing was used to maintain companies at a minimum level of activity. "We will try to support, as of this year, only activities that generate added value," said Saramet. Since the beginning of the year, warranties of the fund have amounted to approximately 17 million euros, representing roughly half of last year's total volume. Last year the fund granted warranties worth 38 million euros for credits worth more than 80 million euros.

To support small and medium companies, FNGCIMM will team up with other funds and private banks. "We will conclude a syndication with the Environment Fund (...) We will finance their part for environment investments, respecting terms of the market economy," added Saramet. Another partnership being considered by the fund involves six private banks. "We will finance a part of the credit, the banks will finance the rest and we will warranty the entire credit," said Saramet, without naming the banks. According to the FNGCIMM official, the measure aims to reduce the risk undertaken by the bank The partnership could be up and running within three weeks.

Bankers asked the National Bank of Romania in February to modify the regulation of risks associated with micro-enterprises and local authorities to diminish the cost of credit institutions with financing operations. The recommendations were made to accommodate the Basel II agreement in the banking environment as of January 1, 2007. Under the same requirements, private banks also requested the central bank to modify the regulation of risks associated with micro-enterprises and local authorities to diminish the cost of credit institutions with financing operations. The risk degree associated with credit has a direct influence on costs of commercial banks, as a high-level risk requires higher reserves and a supplementary capital to cover the additional exposure.

The National Agency for Small and Medium Enterprises (ANIMMC) announced that it will grant 12.7 million euros for investments carried out by new companies and SMEs, to increase their volume of activity and enhance competitiveness. Eligible companies must have a maximum turnover of 50 million euros and total assets of 43 million euros. The credit granted to a new company cannot be for more than 10,000 euros and can cover up to 60 percent of the investment's value. For SMEs, financing can reach 50,000 euros.

According to data from the AOAR, the governmental credit accounts for approximately 17 percent of the Gross Domestic Product, while in Bulgaria the ratio is 36 percent and in Hungary it is 45 percent.

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The Romania national airline, Tarom, which belongs to the Ministry of Transportation (MTCT), should not be privatized before restructuring, stated the head of the institution, Minister Gheorghe Dobre, yesterday. "Tarom is a very important objective. The company's position on the transportation market must be consolidated before being put up for privatization," Dobre said.

Romanian authorities initiated a first attempt to privatize the national airline in 2000, but failed because of the absence of interested investors. Later on, MTCT announced that Tarom's privatization would depend on the reduction of financial losses and its transformation into an attractive investment. A restructuring program started six years ago to diminish the company's 60 million dollar debt to external suppliers.

In the next two years, Tarom will focus its activity on niche external destinations, places with important Romanian communities and without significant competition from major international players.
Last week, the Prime Minister Calin Popescu Tariceanu demanded the company's administrators to analyze ways of implementing regional flights to neighboring countries to which there are presently no connections. The head of the government also said he supports the development of a strategy to cover European destinations that will be overcrowded following European integration.

Last year Tarom reached a turnover of 250 million dollars and obtained a three million dollar profit. The company plans to enlarge its aircraft fleet by acquiring two Airbus planes, each with 100 seats. Two more aircrafts of the same type are to be delivered next year, through a contract signed in 2004.

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The Romanian-Polish trade climbed 25 percent in 2005, to 1.5 million dollars, revealed data released from the economic and trade department of the Polish Embassy in Bucharest, ACT Media news agency reports.


The Romanian imports from Poland were almost three times higher than the exports in 2005, amounting to 1.1 billion dollars. Last year, the Romanian exports from Poland totalled 400 million dollars, up 100 million dollars from 2004.

In January 2006, the Romanian exports to Poland rose some ten percent, while the Romanian imports from Poland fell roughly 25 percent on the year-ago period.

In 2004, the bilateral Romanian-Polish trade stood at 1.13 billion dollars, soaring 165 percent from 2003.

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A programme regarding the increase of competitiveness of small and medium-sized enterprises (SMEs) has become operational, with the budget under this programme having been established at 1.2 million RON (1 euro = 3.5 RON), infored the National Agency for SMEs, ACT Media news agency reports.


The aim of the programme is to stimulate Romanian SMEs' competitiveness and their rapid adjustment to the strict requirements determined by market globalisation and the accession of Romania to the European Union, through the implementation and certification of management systems for environmental, health, labour safety and food security quality.

Qualifying for the programme are medium-sized companies, defined as the companies with a staff of between 50 and 249 employees, a net business turnover of up to the lei equivalent of 50 million euros, owning total assets which value is below the lei equivalent of 43 million euros, authorised to operate in the fields of goods and services production or trade in market products and services.

The eligible companies shall also have fully privately owned capital, registered and operating in Romania for at least one year before the submission of the application for financing, and they shall have fully paid their dues to the central and local budget.

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Distrigaz Sud borrowed RON 180 M (around ¤50 mn) from its majority shareholder, the Gaz de France Group, to cover the deficit registered in December 2005 - March 2006, the operation having been green-lighted by the General Assembly of the Shareholders early in the year, Nine o'Clock reports.

?Companies in the gas industry register a major fluctuation of the treasury in the course of a year.

The company sometimes has to borrow money - in the winter, and then places liquidities in the spring and summer?, company officials told Mediafax.

They said that the loan is not an obligation assumed in the privatisation contract, and that it is rather a short maturity loan granted in conditions that are better than those on the market.

According to the preliminary financial statements, Distrigaz Sud posted a loss of up to one per cent of the turnover in 2005, estimated at RON 2.6 bln.

The company?s privatisation contract was signed in October 2003, and it was bought by Gaz de France.

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The Government approved extra money for the budget of the Ministry of Transport, Construction and Tourism (MTCT) worth 110,000 euros, aimed at the accomplishment of Romania's 2005 financial obligations related to the European transport program dubbed Marco Polo, ACT Media news agency reports.

Romania participates in this program based on the Memorandum of Understanding it concluded with the European Community on its participation in Marco Polo program.

Under the Marco Polo Community program, the domestic firms have the possibility to participate, as part of multinational consortia, in the tenders for projects organized annually under the auspices of this program; the winning projects benefit from a Community financing, worth up to 50 percent of their cost.

The projects targeted by Marco Polo program seek to ease traffic congestion and protect the environment.

As a result of Romania's participation in Marco Polo program, the projects proposed for a Community financing can be placed on the Romanian territory too.

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Standard & Poor's affirmed its 'BB+' long-term issuer credit rating on the Romanian capital City of Bucharest, based on sustainable economic development and the city's commitment to containing debt accumulation. The outlook is stable.


"The rating on Bucharest reflects the city's high debt burden, its low financial flexibility, and the need for better transparency," said S& P's credit analyst Felix Ejgel.

"These constraints are mitigated by Bucharest's strategic position as Romania's capital city, its consistently sound operating balances, and steady revenue growth." High infrastructure needs restrict the city's financial flexibility and have led to rapid debt accumulation.

With a ¤500 million bond issued in 2005, the city's direct debt had reached 141% of operating revenues by December 2005.

Bucharest's ambitious infrastructure upgrade program requires more financial resources.

The city, however, has committed not to increase its debt significantly at least until 2008-2009, when the consolidation of districts' revenues and inflows of EU structural funds are expected. The city's debt profile has become more risky after the 2005 bond issue, due to the associated large bullet repayment. In addition, the city is exposed to foreign currency risk, as all its debt is denominated in euros. On the positive side, the city's rating benefits from its position as the administrative and commercial center of the Republic of Romania (foreign currency BBB-/Stable/A-3; local currency BBB/Stable/A-3), which plans to join the EU in 2007. Bucharest's economic growth is expected to remain at about 5%-6% per year for the foreseeable future. An increase in budgetary revenues has helped the city to deliver a consistently solid operating surplus averaging 19% of operating revenues over the past five years.

This good performance is expected to continue over the forecast period, which ends in 2008. "We expect that the city will adhere to its commitment not to undertake significant debt accumulation in 2006-2007," said Mr. Ejgel.

"Combined with gradually growing budget revenues, consolidation of districts' revenues, EU funding, and state support, this should lead to a gradual decrease in the city's high debt burden." If the city's debt grows significantly in 2006-2007, especially if new debt issuance carries bullet repayments, and if the city does not show any signs of implementing a more coherent debt policy, the rating could be lowered.

Conversely, significant outperformance of the economy and budget revenues, together with improvements in management sophistication and transparency could lead to Bucharest's ratings being raised in the medium term.

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The European Commission expressed concerns over the absorption of SAPARD funds in Romania, through the head of EC SAPARD Unit Kaj Mortensen who attended the 10th meeting for the monitoring of SAPARD Programme, ACT Media news agency reports.

"The European Commission is also worried by the future, as Romania must absorb much higher funds after the accession than it does now," Mortensen warned.

The EC official said the European executive admits that the Authority for management and the SAPARD Agency have done efforts and that political and legislative initiatives have been taken, but after the contracts were signed, the pace of absorption slowed down drastically. Mortensen said that the bureaucracy is not the only problem, as the Romanian farmers cannot easily obtain credits.

"It is very important to see progress soon in implementing the projects," said the EC official.

State Secretary with Ministry of Agriculture, Forestry and Rural Development Danut Apetrei, said that many projects have been approved, but much of the 600 million euro funds is still to be absorbed.

The European Commission wants to help Romania by reallocating funds on Measure 2.1 - infrastructure.

The Romanian official said the number of project is high, but the values are reduced, so the processing pace is quite slow because of the specific procedures imposed by SAPARD programme.

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Telecom operator UPC, which bought out in 2005 its competitor Astral, will invest this year in its technical infrastructure in Romania some 25 million euros, ACT Media news agency reports.

The investments will finance "a total upgrade of services" for cable TV, telephony and data, said Richard Anderson, executive director of UPC Romania.

The company has some 1.3 million clients after the Astral takeover in end-2005.

As part of its new investment strategy, the company will implement a new billing system for clients.

Presently, the video, telephony and data services are running each on a separate software platform.

According to Anderson, the company intends to use a single software, which will allow the issue of a single bill for all the services provided.

The company has started recently the rebranding campaign, by combining the logos of UPC and Astral.

The second Bucharest office under the new brand was opened on March 14.

UPC Romania has become after taking over Astral Telecom the biggest telecom company in Romania, by providing services to some 1,3 million clients.U.S. group Liberty Global International, owner of UPC, has invested so far in Romania over500 million dollars (over 400 million euro), according to UPC officials.

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Germanos Telecom Romania, a subsidiary of Greek Germanos Group, the biggest telecommunication retailer in Central and South-Eastern Europe, plans to open 40 new stores in 2006, said the company's officials. Germanos Telecom Romania currently holds 101 stores on the Romanian market, ACT Media news agency reports.

According to the Director General of Germanos store chain, Dimitris Lolis, Germanos achievements in the last ten years of activity in Romania "represent a solid basis for the launching of future developments".

Romania - Dimitris Lolis said - is one of the most important markets for Germanos, that holds 950 stores in seven countries.

Total Germanos sales in Romania amounted in 2005 to 97.9 million euros, compared to 61.5 million euros in 2004.

The gross profit jumped by 60 percent, to 7 million euros.

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The total number of the Romanian Internet users will reach approximately 6 - 6.5 million by the year-end, while 4.75 million users were registered in February, ACT Media news agency reports.

According to the online services provider netBridge, the total number of unique visitors on the Romanian sites was 17.8 million, out of which 13.05 million were foreign users.

Most of them were users from the United States (17 percent) and Great Britain (6 percent).

The number of Internet users increased by 10.82 percent compared to the end of 2005, when there were 4.3 million users of the Romanian Web sites.

According to netBridge officials, during the same period, a 12.4 percent increase of this number was registered, as compared to the end of 2004, due to a significant increase in January 2005.

Manager of the netBridge's Web analysis division Tudor Fratila says that at the end of 2005, the number of Romanian unique visitors increased by 50 percent as against December 2004, and this year's growth rate is expected to be at least equal to the one in 2005.

According to recent surveys conducted by RNC (the Romanian regulatory organization for Internet), 25,000 Romanian Web sites were registered at the end of 2005.According to the latest surveys of the National Regulatory Authority for Communications, 1.9 million Internet connections have been registered in Romania since the end of last June, out of which only 27 percent (approximately 500,000) are broadband connections.

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panish Group for real estate development and construction GEA Prasa plans to build 550 luxury flats in Lacul Tei zone in Bucharest, through an investments in the value of 150 million euros, ACT Media news agency reports.


Works at this building complex in Lacul Tei zone, the first far-reaching real estate project developed by the Spanish group on the Romanian market, are to be launched in spring this year and are programmed to be finalized in 2008. The project is to be developed through GEA-21 company, also registered in Spain and is the property of GEA Prasa.

The new initiative is part of the international expansion policy promoted by the Spanish company that is going to concentrate on the Portuguese market and on the entrance on the East European emerging markets through big urban projects in Poland and in Romania, the release also announced.

Reported to the value of investment, the new real estate development is one of the biggest projects announced on the residential market in Bucharest, but to a less extent when compared to the main building complexes in the field, such as those launched by Baneasa Investments (Baneasa project, north of Bucharest) or TriGranit (Esplanada project, in the central zone of Romania's Capital).

The Spanish group specialized in the field of construction, connected services and real estate development is negotiating, as well the take over of a Romanian construction company.

GEA Prasa is present in Romania through GEA-Prasa International Construct SRL, company established in June 2005.

The company is described by the National Office of the Trade Register data as having a share capital in the value of 6.9 million euros, one of the most significant subscribed capital nationally in November 2005.

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The European Bank for Reconstruction and Development (EBRD) is interested in financing the construction of bridges across the Danube, as well as the completion of the Bucharest - Danube canal, informed a news release of the Bucharest Chamber of Commerce and Industry (CCIB), that quotes James Hyslop, deputy general director of the EBRD office in Bucharest, who met with CCIB president Stefan D. Popa, ACT Media news agency reports.

He brought forward the need of building bridges across the Romanian segment of the Danube, given the fact that the existing ones are separated by inadmissibly long distances - some 600 km - increasing the travel time and costs and implicitly reducing the competitiveness of the commodities traded between the countries in the region.

Encouraging waterway transports, both along the Danube - the Pan-European Corridor VII - and along inland rivers and channels fully complies with the strategic line promoted by the European Union.

The construction of bridges across the Lower Danube (that flows through Romania), concomitantly with the construction of hydro-power plants, as well as the completion of the Bucharest - Danube canal are considered priorities.

The EBRD representative voiced the institution's willingness to analyse these international projects and get involved in a partnership aimed at their accomplishment.

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Turkish group Sabanci Holding has recently finalized its Romanian business unit, company officials told Business Review last week. ?We have completed the establishment of our company Cimsarom in Constanta and we plan to concentrate mainly on marketing white cement,? Sabanci representatives told Business Review.

Romania?s largest oil group Petrom, majority-owned by Austria?s OMV, announced a net profit of EUR 403 million for 2005. ?Petrom has successfully concluded its first post-privatization year. It was a profitable year for the company,? CEO Gheorghe Constantinescu said

Mittal Steel Galati invested $102 million in upgrading its technological equipment last year. With this investment, the company has exceeded the $34 million required by the privatization contract.

The general manager of the Cluj-Napoca-based Terapia pharmaceutical group, Stephen Stead, says the management's objective is to turn the name of the company into a regional brand. To this end, the company will carry on its policy related to its expansion on former Soviet Union markets.

Florin Andrei, the current general manager of Rompetrol Petrochemicals, has been appointed to the company's Board of Directors, to work with Felicia Andrei and Niculi Dumitru. Florin Andrei is also taking over the position of chairman of the company's board of directors.

Quadrant Amroq Beverages (QAB), the bottler of Pepsi for the Romanian market will expand its personnel by some 9%, marketing manager Eusediu Margasoiu said.

German retailer Metro has announced the opening of its first Real hypermarket in Romania. The 7,500sq m hypermarket is located in a shopping centre in Timisoara and offers 30,000 SKUs. The products come from a mixture of local and international sources, and Metro is reported to have stated that "70% of what you can find in store is made in Romania by Romanian firms".

At the opening of the new store on Wednesday, Metro's CEO Dr Hans-Joachim Körber is stated: "The market entry of Real in Romania represents another important step in the selective international expansion of this sales division. We see great potential for our hypermarket concept in this country.

The extremely successful expansion of Metro Cash & Carry illustrates the opportunities offered by this up-and-coming country. This is where our group's great potential for jointly tapping new markets shows. We will continue to utilize this potential also in the future for a fast and sustained growth abroad."

The retailer is currently constructing additional hypermarkets in Romania, reportedly in Constanta, Oradea, Sibiu and Bucharest, at an investment of approximately 15m euro per store. It is understood that Metro aims to operate 15 hypermarkets in the country by 2008.

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ProCredit Bank Romania plans to increase its share capital by 4 million euros until end-March, from the current 16 million euros, said the institution?s general director Michael Kowalski, ACT Media news agency reports.

After the operation, the stake of ProCredit Holding in the local branch will rise from 26% to 32%, Commerzbank?s stake will increase to 21%, whereas the stake of EBRD will remain constant.

The bank targets this year a net profit of over 1.6 million euros, slightly less than the figure registered in 2005, because substantial amounts will be directed towards the development of its office network.

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The GDP estimated for 2005 stands at 287.1 bn RON, up by 4.1% in real terms against 2004, according to data from the National Statistics Institute (INS), ACT Media news agency reports.

This rate is far below the authorities? target of 6%, marking a decilne by half against the 8.3% economic growth rate registered in 2004, mainly due to the floods that severely affected agriculture and industrial restructuring.

While in the first three quarters consumption increased by a steeper rate than investments, the last quarter brought a radical change, with investments rising by over 21% in the last three months of 2005 and consumption slowing down to a growth rate of 6.4% in the same interval.

As a result, investments increased by 13% over the entire year, whereas consumption marked an increase of 8.5% in 2005 against 2004.

The farming output dropped by almost 14% against 2004, after almost 7% of the tillable land was struck by inundations.

After the severe setback in 2005, the share of agriculture of the entire economy decreased to 9% from 13% in 2004.

Industry too had a slack year, with the gross value added in this sector rising by mere 2.5% against 2004, less than half the average rate registered between 2000 - 2004.

INS president Virgil Voinea explains this severe slowdown by the restructuring of the mining sector and the decrease of the lohn production for ready-made clothes and footwear.

Industry currently accounts for 25% of the GDP.

Constructions and services had a considerable contribution to economic growth, with a gross value added of 9.9% and 8.1% respectively.

The growth in the constructions sector was mainly the result of industrial constructions that increased by almost 18%, whereas residential constructions increased by 8%.

The sector of constructions represents 6.5% of the GDP, whereas services account for 49% thereof.

The aggregate end consumption rose by 8.5% in 2005 in comparison with the year before and the effective end consumption of the population?s households increased by 9%.

Commenting on these figures, ABN Amro head analyst Radu Craciun pointed to the surprising slowdown of consumption in the last quarter of 2005, which should have been a typical upward trend season.

?Production is further ailing, so that we cannot speak of the ?cooling down? of economy, as long as the gap that separates it from consumption is not bridged.?

However, noted Raiffeisen Asset Management president Mihail Ion, the consumption slowdown is good news because ?letting economy to expand rapidly on account of consumption would mean to let inflation out of control.

In 2004, the GDP had come to rise even above the non-inflationary level, so that the consumption slowdown is good news.

In the end, this is the compromise to follow and this is also what the cen.bank?s policy pursues: tolerating a smaller economic growth rate in order to keep prices at a moderate level.

Mihail Ion expects the consumption to further decelerate in 2006 to 6 ? 7% and the GDP to implicitly rise slowly by some 4.5%.

Investments, which rose their growth rate from 10.1% in 2004 to 13% in 2005, might have a compensatory effect.

?Industry too might register a comeback and the 4.2% increase of the industrial output in January is a good sign for that,? said Mihail Ion.

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Negotiations for the enlargement of the Central European Free Trade Agreement (CEFTA) will start in Bucharest on April 6, on the occasion of a conference where EU Enlargement Commissioner Olli Rehn (Finland) is expected, Nine o'Clock reports.

The enlargement itself should be completed by the end of the year, PM Calin Popescu-Tariceanu announced at a joint press conference with his Croat counterpart, Ivo Sanader, in Zagreb, Saturday, according to a Government press release.

?Romania holds the Presidency of CEFTA this year and we would like, together with Croatia, to give momentum to this Agreement, to make it modern and to attract a broader regional participation into it?, said the Premier.

He added that the expansion of CEFTA would foster trade and the emergence of new markets for the regional goods.

?We want this free trade agreement to have a broad regional participation that should contribute to the creation of an area of stability and prosperity?, stressed PM Calin Popescu-Tariceanu.

The Croat PM in turn expressed his support for the initiative. According to the Romanian Government, the initiative is seen as an important one by the EU and by the SEE Stability Pact.

EU Enlargement Commissioner Olli Rehn and SEESP Co-ordinator Erhard Busek are expected to Bucharest on April the 6th.

CEFTA currently brings together Romania, Croatia, Bulgaria and Fyrom.

The enlargement would include Albania, Serbia and Montenegro, UNMIK - representing the Province of Kosovo -, R. Moldova and Bosnia and Herzegovina, the delegations of which will be also present in Bucharest.

The Romanian PM assured his Croat counterpart, Ivo Sanader, that Romania would support both Croatia?s plans of accession to the European Union and its Euro-Atlantic integration efforts, both individually and within the Adriatic Charter.

?Romania supports with all strength Croatia?s efforts of integration to the European Union and we are equally willing to share our experience in what concerns the negotiation with the EU.

It is very important that positive examples given by Croatia and other states in the region are followed by countries that do not yet meet the criteria for accession to the NATO PfP,? said the Premier.

Constanta - Trieste oil pipeline memorandum of understanding to be signed this week the ministers of industries and energy from the five countries that are part of the Constanta-Trieste oil pipeline project will sign the memorandum of understanding in Trieste.

By signing the memorandum, Slovenia and Italy will be joining the project officially, alongside Croatia, Serbia and Montenegro and Romania.

With the memorandum being signed, the feasibility study for the project will be also completed with the segments of pipeline to be crossing the territories of these two other countries.

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Last week was quite a cold shower for those relying on OTP's acquisition policy. The dominant Hungarian bank failed two substantial potentials. Following fiascos in Ukraine, this means that a single possibility remained open for OTP, namely CEC in Romania. The bank must now thoroughly revamp its plans with regards to regional growth.

OTP had five major targets on its acquisition map. It was unable to keep the price race in Ukraine at both UkrSibBank and UkrSotsBank and did not make it even to the Top3 in the competition of Vojvodjanska in Serbia. Now it had to call bidding off for Croatia's Splitska banka, as it refused the local central bank's options to either sell its Croatian subsidiary, OTP banka Hrvatska (OBH), or undertake to sell the majority of OBH's branches.

This leaves CEC as the only remaining option.

OTP is now facing a politically extremely sensitive cajolery campaign for CEC, as well as the task of putting its hands on smaller banks. The huge success of the Bulgarian purchase is apparently unrepeatable.

Examining OTP's history of acquisitions, two factors deserve special attention. Firstly, the bank is outstandingly good at transforming large banks. We have seen evidence for this in Hungary and Bulgaria. What OTP must work really hard on is expanding on foreign markets. OTP failed to become a large bank in Slovakia and no positive developments are seen in Croatia, either. If he were alive, Mao Zedong would be envious of OTP' Long March started in Romania, while in Serbia it is attempting to embrace an ?it's-the-numbers-that-pay" strategy, which will either bring success or not.

OTP has arrears in reaching the 10% market share in four countries: Croatia, Slovakia, Romania and Serbia. Apart from this, Ukraine is also on OTP's acquisition map, but here it can purchase nothing bigger than a medium-sized bank.

The picture is the clearest in Slovakia: There is absolutely no chance to buy anything here, and so the wheels of OTP's small subsidiary are turning smoothly and more or less efficiently. While based on its balance sheet total, the unit's market share dropped to 2.8%, at least it managed to move up on the loan scale. Chances for reaching a 10% market share are more than vague, but as an investment, the bank works just fine. In Croatia, the situation is also fairly simple. Based on its balance sheet footing, the unit's market share is 3.4%, which is not bad, but the 10% level is entirely out of reach.

In Romania OTP has embarked on achieving organic growth, independently of the bidding for CEC. OTP strives to build a nationwide branch network on the base of Robank (0.64% market share). The bank's efforts in Romania may be given a boost even by a ?shabby" CEC, but its prospects to develop into a large bank are not exactly rosy, despite the fact that Romania has been a constant darling for OTP for years.

In Serbia, OTP can only shoot for small game and it is yet to be seen what position it could secure itself with a Niska-Panonska-Zepter trio, two of which are not even in the bag. The question arises whether OTP should at all enter Ukraine with a unit of 1-2% market share while it has so many loose ends elsewhere.

OTP cannot be held responsible for every fiasco in the past six months. Among others, it was not its fault that the Croatian central bank started to flex its muscles. However, it may be found at fault in two cases in the past years. It was not brave enough to embark on another project beside DSK and it also failed to establish a substantial position in Romania despite the fact that it expressed interest for BCR already when the CEE banking market was a laughing stock for foreign banks.

While in the medium run OTP is almost certain to remain an independent financial institution, it is becoming more and more evident that it will be unable to shed its ?Eastern European" skin and join the pack of ?European" top dogs. This would have required bolder action.

Following an unsuccessful regional acquisition prowl, OTP has two choices: It will either start to think smaller acquisitions, smaller banks and organic growth in the next 5 years or enter markets (Turkey) that cannot really be connected to the CEE. By all means, OTP's management should reconsider acquisition goals, given that earlier targets have all but one escaped from the crosshair.

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Romania wants to manufacture a vaccine which has been developed in Hungary against the deadly strain of H5N1 avian influenza, Health Minister Eugen Nicolaescu said.
"In six months maxiumum, Romania could produce the first vaccines at the Cantacuzino institute (in Bucharest)," Nicolaescu told reporters after a visit to Budapest.
"Production would be limited this year to a maximum of 500,000 doses but with an investment of eight million euros we will be able to make four to five million doses per year," the minister said, adding that Hungarian experts have offered to help out in Romania.

The vaccine which Hungarian researchers developed against H5N1 bird flu will not be submitted to the European Union's drug authority in order to avoid a lengthy approval process, an official from manufacturers Omnivest told Agence France-Presse in Budapest last week.

"With such a deadly and potentially rapidly evolving disease as bird flu there is no point in going through such a lengthy process to have the vaccine registered," said Zoltan Nemeth, Omnivest's sales director.
"What we want to protect is our technology, with which we could rapidly develop a new vaccine in case the current form of bird flu should mutate," Nemeth said.
The European Medicines Agency (EMEA) in London evaluates and supervises medicinal products throughout the 25-nation EU. An EMEA approval for a drug grants commercial access in the whole of the bloc.
Nemeth said Omnivest preferred that each interested country speedily approve the vaccine via its national drug authority, as was the case in Hungary.

The vaccine would be used to protect people working in close proximity to diseased birds.
In its present form, H5N1 is transmissible amongst birds, and humans can catch it if they are in close contact with birds carrying the virus.
But it cannot be transmitted from human to human. The fear is that the virus may mutate to be able to do this, triggering a global pandemic.
About 40 villages have registered cases of bird flu among fowl in Romania. There have been no cases of humans being contaminated.

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On March 20, the Ministry of Communications and Information Technology (MCTI) will put up for sale the technical requirements for the investment banks shortlisted for consultant in the restructuring of the Romanian Post, declared Minister of Communications and Information Technology Zsolt Nagy. The seven bidders shortlisted by the MCTI assessment commission are Arthur D.Little GmbH, Bearing Point, Ernst & Young + CA IB Corporate GmbH + NM Rothschild & Sons Ltd, ING, McKinsey & Company, Roland Berger Strategy Consultans and British Postal Consultance Services. The Minister mentioned that the procedure for the designation of the consultant for the Post?s privatization will also kick off, taking into account the restructuring program proposed by the designated consultant. Four companies are on the shortlist for privatization consultant.

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The project of the Constanta-Trieste oil pipeline will be signed on March 21 in Trieste. Through the signing, Slovenia and Italy will officially enter this project, reads a release issued by the Romanian government's press office.

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Biodiesel, or "green oil", is a fuel that is not available on the Romanian market yet, although millions of cars fill up from biodiesel stations in many other countries. Portuguese company Martifer, Germany's MAN Ferrostaal, businessman Adrian Porumboiu, vegetable oil producer Argus Constanta and Rompetrol are betting more than 236 million euros on biodiesel, which is derived from agricultural materials.

International firm Enterprise IG has entered into an affiliation agreement with Brandient, a Romanian brand consultancy company. The partnership between the two companies reflects ?the growing attractiveness of the Central European market,? according to company representatives.

Eugen Paturan, the country manager for Romania of Italian home appliance producer Indesit, says the company's sales will maintain at 60 million euros this year, amid a decline of the overall market.

BDG Import, the importer of Corona beer and Evian mineral water, projects 50% turnover growth, to 12 million euros for this year, after it took over the import and distribution of Jack Daniel's, Finlandia Vodka and Southern Comfort brands early this year.

Turbomecanica Bucharest, the only manufacturer of jet and turbojet engines in Eastern Europe has budgeted a net profit of 18 million RON (5.14 million euros) for this year, up 5% compared with the profit in 2005.

Three partners from the Popovici & Asociatii law firm, one of the top ten such firms, own 20% in the Auchan hypermarket business in Romania. Auchan's plans target approximately 500 million euros in medium-term investments in building at least ten hypermarkets in Romania, one of the most dynamic markets.

The total amount of energy resources available to Romania in January 2006 amounted to 3.504 million tonnes of oil equivalent, according to data from the National Statistics Institute (INS), Nine o'Clock reports.

In Jan., Romania had approx. 1.5 million tonnes of natural gas, over one million tonnes of crude, 616,000 tonnes net coal, imported hydropower, nuclear power and electricity - 263,400 tonnes and imported oil products - 78,800 tonnes.

Also, approx. 2.46 million tonnes of coal, 1.98 million tonnes of electricity, hydropower and nuclear power, 1.34 million tonnes of natural gas and 422,000 tonnes of crude were produced.

Romania imported 532,000 tonnes of natural gas, 602,900 tonnes of crude and 266,000 tonnes of coal.

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Romania's Government plans to implement a medium-term financial and public indebtedness strategy, said spokesperson for the Government Oana Marinescu, ACT Media news agency reports.

According to a memorandum approved during a Government meeting, the ministries will have to present the strategy of medium-term priority projects by April 30.

After being examined in point of importance and opportunities together with the Ministry of Public Finance, these projects will be spread out for financing over 2006-2009.

"Thanks to the improvement of Romania's ratings, one estimates that we have an easier access to financing," said the spokesperson for the Government.

Oana Marinescu said that, in 2006, the development banks announced important drops in the costs for the loans granted to Romania.

The domestic and foreign commercial banks also voiced systematically their interest in granting financing for the Government's projects, she said.

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The Executive approved the amount of ¤325 mn from budgetary and European funds, in order to finance five national programmes in the field of tourism, which are to be carried in 2006-2008, announced the president of the National Authority for Tourism, Ovidiu Marian, Nine o'Clock reports.

The first programme aims at the rehabilitation of the skiing section, and the due expenses worth ¤130 mn, of which ¤50 mn in 2006, ¤50 mn in 2007 and ¤30 mn in 2008.

The second programme, worth ¤90 mn, aims at developing the spas.

There will also be assigned financing for programmes such as: the development of tourism infrastructure in high mountainous areas (¤30 mn), the development of a tourism area of the Danube Delta and of several sea resorts (¤60 mn) and for the "Sibiu - 2007 European Cultural Capital" (¤15 mn).

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Indices of industrial output prices in the domestic and foreign markets increased in January by 9.77 per cent as compared to the corresponding period of last year and by 1.42 per cent compared to the previous month, the National Statistics Institute (INS) announced, Nine o'Clock reports.

The highest increase was reported for the extracting industry, i.e. 26.79 per cent compared to the corresponding period of 2005 and 6.63 per cent since the previous month.

In the period under analysis, hydrocarbon extraction increased by 37.3 per cent, and metal ore extraction and processing by 35 per cent.

The processing industry picked up 8.41 per cent, with the most significant increases reported for crude and coal processing - 27.24 per cent, tobacco products and garment industry - 13.3 per cent.

A 9.64 per cent increase was registered in the utilities sector, with the most important rises noted in water treatment and distribution - 26.09 per cent, energy industry - 19 per cent.

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The new management of the Bucharest Stock Exchange (BVB), elected last month, decided to increase the number of active investors in the market no less than 25 times until the end of its term in office, which means that BVB wants to bring one in 70 Romanians to the stock market compared to one in 18,000 at the moment, wrote the Ziarul Financiar daily, ACT Media news agency reports.

According to BVB's goal, by 2010, there will be 300,000 active investors compared with some 12,000 now.

Early last year, the number of active investors on the market had exceeded 10,000 only to drop below 6,000 in the summer months and to exceed 12,000 for the first time at the beginning of 2006.

The targets BVB has set for itself include reaching an average daily traded value of 50 million euros until 2010, compared to 8.7 million euros last year and 14 million euros since the beginning of this year.

According to the BVB management, the total capitalisation of the market should reach 40 billion euros by the end of 2010, from the current 18 billion euros.

The strategic goals of the Bucharest Stock Exchange also include the development of the software and hardware infrastructure, without which it would not be possible to increase the number of active accounts, to create the premises to link the BSE with the technological systems operated by the other European stock exchanges or to promote corporate governance standards.

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Romanian financing company Estima Finance increased its capital by ¤3.4 mln reaching to ¤7.7 mln.

The company plans to use the raised sum to support the company's expansion on retail sectors forecasted for high growth including information technologies (IT) and furniture.

The company had a 10% share in the local consumer credit market in 2005, covering 700 trade locations countrywide, while volume of contracts rose by 4.3 times on the year.

Estima Finance expected contracts to reach above 70 mln euro for 2005.

The company targets to achieve a 13% market share in 2006.

Estima Finance also placed a four-year bond issue in December 2005, in order to diversify its financing sources.

The company issued 150,870 bonds, worth 15.78 mln new Romanian lei (¤4.33 mln).

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Romania's National Agency for Small and Medium-Sized Enterprises and Cooperation (ANIMMC) allocated a budget of 5 mln Romanian lei (¤1.37 mln) for 2006 to support small and medium-sized enterprises (SMEs) in developing their export activities.

The financing is part of a larger programme, to run from 2006 to 2009, earmarked for facilitating SMEs access to the international markets, stimulate communication and partnerships with SMEs in the European Union (EU) countries.

Eligible companies are required to be registered in Romania, to have at least one year of activity prior to applying for the financing, to have entirely private capital, an annual turnover of up to ¤50 mln, less than 249 employees and no debts to the consolidated state budget or local state budgets.

Companies that operate in banking, insurance or investment funds management sectors are not eligible to receive financing under the programme.

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Romania is targeted by one of the most popular mobile phones manufacturer Nokia which intends to make an investment that could exceed 200 million euros, ACT Media news agency reports.

Company's officials said they consider building a plant for manufacturing mobile phones, daily Ziarul financiar reported.

Besides Romania, on the "short list" of the mobile phones producer another country is included, and the final decision on the location of the new Nokia factory will be made next month.

The Finnish group has two investment options: either they come alone, in which case they need a 10-hectare plot for an investment of several tens of millions of euros, or they bring sub-suppliers, which will rise the investment to over 200 million euros.

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The Romanian Government will supply the investment fund Proprietatea Fund with assets worth ¤2 bln, representing stakes in companies listed on the Bucharest Stock Exchange.

The fund will receive a 9.9% stake in savings bank Casa de Economii si Consemnatiuni (CEC), 4% in commercial bank Banca Comerciala Romana (BCR) and 20% in the country's main fixed telephony operator RomTelecom.

Proprietatea Fund, which became active on December 29, 2005 and which has a current share capital of 3.9 bln euro ($4.56 bln), has stakes in a total 114 Romanian companies active in the banking, energy, telecommunications, utility and other industries.

The investment fund was set up by the Romanian cabinet to compensate owners whose seized property cannot be returned.

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The Savings and Loans House (CEC) is currently granting mortgage loans repayable in 35 years, with an interest rate of 9.56 percent per annum, CEC Chairman Eugen Radulescu was quoted by daily Evenimentul zilei, ACT Media news agency reports.

This is the longest repayable time for such loans, compared with 25-30 years in the case of other banks.

CEC is currently undergoing privatisation.

Bidding for CEC are the National Bank of Greece, Monte dei Paschi die Siena, Dexia Bank, EFG Eurobank, OTP Bank and Raiffeisen.

CEC closed 2005 on a profit of some 2 million euros and a market share of 4.3-4.4 percent in terms of assets, according to Radulescu.

CEC plans to invest 100 million RON (1 euro = 3.5 RON) in business, eyeing a net profit of 10-15 million euros.

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An 110 million euro loan granted by the International Bank for Reconstruction and Development (IBRD) for the reform of the Romanian judicial system was approved by the government, ACT Media news agency reports.


The reform funding will total 142 million euros, with 110 million euros of it to come from the World Bank loan and 32 million to be assigned from the state budget.

The money is going to be used for the infrastructure rehabilitation, the law courts' computerisation and automation; the improvement of the file management and increasing the efficiency of the judicial act.

The project targets the structural and institutional independence of justice; rationing and boosting the efficiency of law courts; increasing the judges' responsibility and the responsibility of the judicial system as a whole.

The project also aims to improve the budget management in law courts and boost the professionalism of the judiciary and the law court staff.

The World Bank loan is extended for 15 years, with five-year period of grace and it is to be repaid in equal annual instalments from the year 2010.

The project is due to be finalised on Oct. 1, 2010 and the deadline for using the money from the loan is April 1, 2011.

The payment of the public debt service related to the loan, i.e. the loan repayment, the payment of interests, commissions and other relevant costs will be provided from the state budget via the justice ministry's budget.

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The new management of the Bucharest Stock Exchange, elected last month, has set out to increase the number of active investors on the market by no less than 25 times until the end of its four-year term. The target set by the Bucharest Stock Exchange's Board for 2010 is 300,000 active investors compared with approximately 12,000 at the moment. The targets the Bucharest Stock Exchange has set for itself include reaching an average daily traded value of ¤50 million until 2010, compared with ¤8.7 million last year and ¤14 million since the beginning of the year. The total capitalization of the market should reach, according to the management of the Bucharest Stock Exchange, ¤40 billion by the end of 2010, from the current ¤18 billion.

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Romania's gross industrial output advanced 4,2 percent in January 2006, y/y, revealed data from the National Statistics Institute (INS), ACT Media news agency reports.

Labour productivity was 8 percent higher in January 2006 than in January 2005.

The main primary energy resources totalled 3.504 million tonnes oil equivalent, 2.222 million tonnes of which are from domestic production.

Business investment in 2005 totalled 37.393 billion RON (1 euro = 3.5 RON), up 13.4 percent in real terms from 2004.

The total business turnover of the enterprises with a mainly industrial business went up 6.9 percent in the same period.

In January 2006, the turnover of the companies mainly operating in retail trade (motor vehicle and motorcycle trade excluded) was 32.2 percent over the January 2004 level, with important rises having been recorded in the trade of non-foods (33.8 percent) and trade of foods (30.6 percent).

The turnover of the companies with a main business in wholesale and retail trade, motor vehicles up-keeping and repairing and retail trade of fuels for motor vehicles was by 13.6 percent higher in January 2006, on a rise of 15.3 percent in the turnover of the car fuel retail traders and of 12.5 percent in automobile servicing companies.

Services for the population diminished by 7.6 percent in January 2006, compared with January 2005.

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The contracts with public funds or any public contract that does not endanger the national safety should be transparent, said Vice PM Gheorghe Pogea during the meeting of the Organization for Economic Cooperation of the Black Sea held in Bucharest, ACT Media news agency reports.

Pogea said that contracts involving a certain confidentiality require a common agreement between the state and private companies meant to make them no longer secret.

OMV group agreed to make public Petrom's privatization contract, provided all other privatization contracts are made public.

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The citizens of Romania and Bulgaria will be freely admitted to Finland's labour market as of January 2007, when they are scheduled to join the EU, Finnish parliament unanimously decided, Sofia News Agency reports.

As of May 1, 2006, Finland will also remove restrictions on the free movement of labour for the eight new member countries from Central Europe that joined the bloc in 2004.

The proposal, which was submitted to the Finnish parliament by the government, halts the special transitional arrangements that limit the free mobility of labour from the new EU member states.

Until now Britain, Ireland and Sweden have been the only old EU countries to embrace workers from the new members, and other countries have until the end of April to decide if they too would give up restrictions.

The government argued that the labour markets of countries that did not introduce any transition period (such as Sweden, Great Britain, and Ireland) have not experienced major shocks.

The restrictions on workers from the new member states have included demands for work permits - which some countries limit with quotas - but do not apply to workers from Cyprus or Malta, which also joined the bloc in 2004.

The measures are supposed to be phased out over a seven-year period, with the first of the three phases due to end on April 30, as EU states are not allowed to discriminate against workers on the basis of nationality.

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The Government normative act proposing the capping of the number of shares one can hold in the SIFs has caused intense controversy among brokers and not only, Nine O' Clock reports.

Varujan Vosganian, Chairman of the Budget and Finances Committee said that, in the past four weeks, the uncertainty about that had caused losses of more than EUR 200 M, among entities holding shares in the SIFs.

An equally trenchant position was also voiced by the BVB President, Dan Viorel Paul, who compared the re-introduction of the one per cent threshold with something very similar to ?the nationalisation of private property by the communists?.

?It?s inadmissible that people who happen to possess more than one per cent in the SIFs to have to sell what?s above that threshold.

It is very possible that an inflation of SIF stocks in the market to take the price per share incredibly low?, stated Dan Viorel Paul.

Nevertheless, the estimations regarding the BVB development strategy in the next years are optimistic.

Septimiu Stoica, the new Chairman of the BVB Board, yesterday stated that, during his term in office, the target would be 300,000 investors on the stock exchange, compared to only 12,000 currently, daily trading over EUR 50M and, not least, an increase of the stock exchange capitalisation from EUR 15 Bln. - at the end of 2005 - to EUR 40 Bln.

Stoica explained that such an ambitious forecast on the investors was based on the number of active investors in the stock market in Poland -800,000 - combined with a worst case scenario regarding the developments in the domestic capital market.

BVB?s number one priority is, according to the Board, the listing of new issuers, with consideration given to the listing of 15 large companies that have been recently privatised or in which the state still holds important stakes, 50 successful private companies, the Property Fund about which Stoica said would be listed in a few months? time, as well as the organisation of a high-tech company dedicated market segment.

The Chairman of the BVB Board stated that negotiations were advanced with top companies in the Romanian IT sector for the establishment of a separate segment of BVB to only trade shares in such companies.

According to him, discussions have been conducted with the President of the National Association of the Software Service Industry (ANIS), Florin Talpes, who is also the Managing Director of Softwin.

The General Director of BVB, Stere Farmache, in turn pointed out that those companies were a dynamic segment and they would be exempted from the conditions of minimum history and size.

As for capitalisation, BVB ranks forth in the region, after the stock exchange in Poland, the Czech Republic and Hungary.

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The Italian group Pirelli will inaugurate, in Slatina, end of this year, the largest tyre production capacity in Eastern Europe, an investment worth EUR 100 mln.

The construction of Slatina-based factory is part of Pirelli expansion strategy into the Romanian market, following the achievement of another investment within a joint venture in Romania.
In July last year, the launch of the new tyre cord metal production capacity took place in Slatina, belonging to Cord Romania SRL.

In the framework of the new joint venture, Pirelli owns 80%, whereas the Germans from Continental AF control the balance.

According to official statistics, Italy ranked in first place, at the end of last year, accounting for 16.97 per cent within Romania?s total trade exchanges.
At the same time, nearly 19,000 Romanian - Italian companies were active in Romania, with an invested capital amounting to EUR 766 mln.

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Germany's Metro plans to open 15 Real hypermarkets in Romania in the next two years to cover most of the country's major cities, according Real Hypermarket Romania's CEO, John Rix.

Metro will open its first Real hypermarket in Romania today in the western city of Timisoara, with a retail area of 7,500 sq m. Currently Metro is present in Romania through its Metro Cash & Carry outlets and Praktiker do-it-yourself (DIY) store chain.

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Mittal Steel Galati has invested, in the last four years, $323 mn in technology, according to the privatisation contract of Sidex, the company engaging to invest $175 mn by 2011, Nine o'Clock reports.

Last year, Mittal invested $102.21 mn in technological projects, as compared to $34.7 mn, the sum engaged in the privatisation contract, informed the company.

?Mittal Steel Galati has a serious investment plan which focuses both on increasing the productivity level, as well as the increase of the competitiveness of our products.

Our purpose is to develop the segment of products with high value added within our portfolio and to come in line with the needs of the international markets.

The technological investments prove our commitment and interest in the future of the plant,? said Hans Ludwig Rosenstock, the operations manager of Mittal Steel Galati.

The Competition Council announced the conclusion of the investigation on state assistance for SC Mittal Steel Galati, as the beneficiary paid back by its own will 34.6M RON in subsidies over the maximum ceiling stipulated by the Strategy for downsizing of the iron and steel industry in Romania.

The Competition Council opened in May 2005 an official investigation given suspicions surrounding the assistance exceeding the ceiling stipulated by the Strategy.

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The contracts with public funds or any public contract that does not endanger the national safety should be transparent, said on Wednesday Vice PM Gheorghe Pogea during the meeting of the Organization for Economic Cooperation of the Black Sea held in Bucharest. Pogea said that contracts involving a certain confidentiality require a common agreement between the state and private companies meant to make them no longer secret. OMV group agreed to make public Petrom's privatization contract, provided all other privatization contracts are made public. "We agree to make it public, as long as the other contracts are also made public," said on Tuesday assistant executive manager Werner Schinhan.

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Romania has never exported and does not export natural gas as the national transport system does not allow this, a press release of the Ministry of Economy and Trade informs. Moreover, the quoted source mentions that all companies who want to import natural gas have to comply with certain conditions, as MEC does not want to repeat the situation created in 1999, when Romania imported cheap gas from a company acquiring fuel from Ukraine. Later it was proved that the gas was stolen from the pipelines owned by Gazprom transiting Ukraine. In order to avoid unsafety in natural gas supply, any company wishing to import gas must present confirmation of supply for natural gas from Gazprom/Gazexport Moscow for the importing company, to get supply licence from the National Authority for regulation in the domain of natural gas and to present the selling contracts for imported natural gas on the domestic market in Romania, to prove the insurance of transport capacity reserved ( through the National Transport System), necessary for the natural gas quantities.

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Petrom will achieve investments worth 100 million euros for exploitation and 300 million euros for production activities, announced CEO Gherghe Constantinescu, ACT Media news agency reports.

Moreover, Petrom will continue implementation of seismic 3D technology, will launch a project regarding the construction of a new gas processing unit in Midia, for the improvement of gas quality and will finalise the audit of reservoirs by a third party.

By 2010, the company?s management envisages to establish production to the level of 210,000 barrels equivalent oil/day, in Romania, to develop activities in the Caspian Sea region, to reduce production costs and to reach a deposit replacement rate of 70 percent.

In the refinery sector, this year the process of modernisation will continue in the two refineries, so that necessary rehauling periods should be five years apart, and new units will be launched in Arpechim and Petrobrazi.

The refineries? usage capacity will grow to 95 percent and the position of costs in refining will be improved by 2010.

By 2007 European Union quality standards are expected to be reached.

This year, 40 filling stations will be launched in the country, 75 filling stations will be rebuilt, with new design and standard services and substantial investments will be made for the reconstruction of three main deposits and one GPL filling station.

Sales will grow up to 2.9 million litres/year/filling station by 2010, during this period 250 filling stations to be built in order to reach a market share of 30 percent and to pull down and rebuild ten deposits.

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Following the sixth common meeting of the Council of Ministers which took place on 14 March in Berlin, Germany and France agreed on a common European policy in the domain of energy, the French Embassy to Bucharest reports. In this context, the German Chancellor Angela Merkel and president of France Jacques Chirac tackled issues such as cooperation in the domain of energy policy from the perspective of research and innovation. Both countries agreed to develop on a European level a policy that should deserve this name and that should be profitable to both countries. « It is about delivery safety, competitivity, and environmental issues » Chirac explained. Moreover, the European Council will tackle, during next week, the issue of energy policy, the press release informs.

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Romania's Central Bank (BNR) accumulated 5 billion RON (some 1.4 billion euro) in one-month deposits carrying 8.5 percent per annum interest, Ziarul financiar wrote, ACT Media news agency reports.

BNR accepted slightly over 81 percent of the bids submitted by commercial banks.

Brokers argue this is a quite low level, given that this week previous issues are to be bought back in significant volumes. Short-term interest has gone down, vacillating between 6 and 7 percent per annum.

On the other hand, BNR is said to go high on sterilisation, after one week previously it only attracted a small percentage of the bids submitted by commercial banks.

Ever since early this February, when it increased by one percentage point the intervention rate, to 8.5 percent, BNR has quoted this interest rate at all auctions and observed the weekly frequency announced for attracting deposits.

The acceptance of the bids varied between 20 and 100 percent. This February, BNR drew 12 billion Ron from the market, with the total sterilised amount in early March reaching 7.75 billion euros. BNR is attracting cash in short-term instruments maturing in one and three months.

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The business climate has improved considerably in Romania, witnessed by the attraction of an increasingly higher number of foreign investments, British ambassador to Romania Quinton Quayle told Rompres, ACT Media news agency reports.

There are three things the British investors seek in Romania, namely transparency, efficiency in the public administration and safety, with the last one being decisive for the business climate, Quayle explained.

He stressed the fight against graft has improved over the last year and "the corrupt politicians are becoming increasingly frightened".

Quayle said Britain is the second-largest investor in Romania with investments amounting to 2.5-3 billion euros and nearly 2,000 British-owned companies.

One of the biggest investors is mobile phone company Vodafone, while a new British investment in the information technology sector was announced in the eastern Iasi city last week, that has created some 400 jobs.

The British investors showed interest in other sectors of the economy as well, like the textile industry and farming, Quayle undelined.

He said the foreign investors generally agree with the enactment of the flat tax, but they are dissatisfied with the social taxes, the contributions that employers must give to the state.

Quayle expressed optimism about the monitoring report the European Commission is to make public in May, saying Romania will join the European Union on January 1, 2007.

However, there are still problems in the public administration and the reform should go on, he pointed out.

Romanian statistical figures revealed that the commercial exchanges between Romania and the UK stood last year at 2.133 billion euros, with Romanian imports totalling 1.2 billion euros and exports 933 billion euros.

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Romania will receive EUR 292 million of the 12 Ispa Financing Memoranda signed last week. From the total, EUR 217 million will be EU non-reimbursable funds. The money will be allocated to environmental infrastructure and transport.

Real estate company Europa Group Investments will put around EUR 16 million into the four-star Europa Royale hotel, the company?s CEO for Romania, Serghei Cicala, told Business Review last week. It will be located in the Unirii area, opposite Hanul lui Manuc, he added.

The GDP went up by only 4.1% last year, with the final quarter marking a rebound of the economy towards a pace that matches the analysts' estimates.

THR Marea Neagra will put 20 properties from its portfolio up for sale this April. ?We hope to get a good price for these assets as we intend to invest the money in upgrading work on our remaining properties,? Cornel Munteanu, the firm?s sales manager, told Business Review.

On a market that may go beyond 250 million euros this year, cosmetics retailers are aggressively expanding in Bucharest and in other cities. Ina International, which controls the Ina Center and Privilege store network, the biggest in Romania, budgeted turnover worth up to 13 million euros for 2006, 25% higher than in 2005, stated Eugen Bartha, general manager of the firm.

Immofinanz, the Austrian investment fund, the most aggressive player on the domestic real estate sector, is interested in acquiring three new projects on the domestic market, after having invested more than 130 million euros in four real estate projects so far.

Romania currently ranks third in South-Eastern Europe in terms of presence of foreign banks, after Bulgaria and Albania, according to a report released by the Union of Greek Banks, ACT Media news agency reports.

Foreign banking institutions currently control over 60 per cent of the local banking system, but the privatisation of this sector has not been completed.

After the privatisation is finalised, foreign investors are expected to hold virtually 90 per cent of the assets in the Romanian banking industry.

After privatisation of the ?crown jewel,? i.e. sale to Austria?s Erste Bank of the Romanian Commercial Bank, the Romanian State is preparing for the sale of the National Savings Bank.

The interest shown by foreign investors for acquisition of assets in the Romanian banking system was proved by the price paid for BCR, ¤3.75 billion, but analysts believe the price to be paid for CEC will be a lot lower.

The explanation is simple: CEC eyes a 5% market share at privatisation time, whereas the Romanian Commercial Bank accounts for 26 per cent of the market, having one quarter of the customers in the Romanian banking industry.

The sector will undergo major changes in 2006.

With strategic investors taking lead of the two banks, BCR and CEC, competition is expected to strengthen in the market.

In order to attract new customers, credit institutions will compete in offering attractive interests and reducing bureaucracy. On the other hand, the number of banks operating in Romania will decrease as a result of the HVB - Unicredit - Tiriac Bank merger.

Further to the merger, the Italians in UniCredit will claim a comfortable third place in the domestic market.

But the situation may change if the winner of the CEC privatisation race will be a player already present in the Romanian system.

In this case, acquisition of the 85 per cent of the bank by an institution, which already controls a significant share in the Romanian market, will change the hierarchy of the five largest banks in Romania.

Final binding tenders for the CEC privatisation are to be submitted no later than April 25, with the price criterion accounting for 75 per cent in the score assigned to bidders.

In the last stage of the process, the two or three finalists will only submit financial tenders.

The list of privatisation participants includes six banks: National Bank of Greece, Monte dei Paschi di Siena, Dexia Bank, EFG Eurobank, OTP Bank and Raiffeisen.

Without doubt, apart from the sale of the last banking asset in the State?s portfolio, year 2006 will carry on the 2005 trend of mergers and acquisitions targeting smaller banks.

Virtually, integration to EU structures will lead, apart to the strengthened competition in the Romanian banking market, to a lower number of players in the sector, as some of the banks will be involved in merger or acquisition processes.

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SC Donau Commodities SRL Romania submitted a bid for buying the 68.80513 percent package of the shares of SC Laminorul SA in Braila, ACT Media news agency reports.

This is the sixth procedure taken with a view to privatising the company, informs the Authority for State Assets Realization (AVAS).

Laminorul in Braila is the sole producer of some component parts for the shipbuilding, automotive and train making industry.

The Braila-based company produces chains with bulb for the shipbuilding industry, profiles for electrical machines that are necessary for the automotive facilities and tongs for railway iron sleepers.

The above-mentioned company has a share capital amounting to 29.397 million lei (1 euro=3.5 lei).

Tubman (International) Limited owns 16.28 percent of the shares of Laminorul in Braila, the other shares going to some natural and legal persons.

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"Finansbank Romania's total assets rose in 2005 74% to 341 million euros, 1.25 billion RON respectively, ACT Media news agency reports.

The bank's share capital rose 62% from EUR 18.5 mln to EUR 30 mln.
The clients' deposits increased from EUR 137 mln in 2004 to 202 million euros in 2005.
Finansbank Romania's loan portfolio stands at EUR 225 mln euros, up 97% versus 2004.

The bank's 2005 net profit is almost double versus 2004, having reached 4.2 million euros as compared to the 2004 one.
The bank reached last year a 1% market share, 5% consumer loan market and 7% credit card one.
Finansbank Romania aims in 2006 at extending its network, increasing its customer base and range of products.

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An Aviva release says that Romanian Aviva Life Insurance Co. reported excellent results in 2005, better than analysts expected. The sales increased by 113 percent in 2005 as against 2004. According to accountancy data, the subscribed gross premiums grew by 44.43 percent in 2005 from 2004. The assets amounted to 101,487,433 RON (1 sterling pound - some 5.35 RON), on December 31, 2005, jumping 81.76 percent from 2004 when they stood at 55,834,696 RON. Over 300,000 Romanians have chosen Aviva Life Insurance since October 2000, the year when the company was officially launched on the Romanian market. Aviva reported very good results as regards the investments programmes in 2005. The Suprem programme's price grew by 19.4 percent, in euros. The yield of the Practic Plus programme upped 17 percent.

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Managing director of the Terapia Group Stephen R Stead told a news conference on Tuesday that the Terapia Group, the biggest Romanian medicine producer and also the biggest exporter in the field, has planned sales amounting to over 100 million dollars in 2006, up by 25 percent as against the previous year. Last year Terapia posted sales of 80.4 million dollars, of which 12 million dollars came from exports, said Stead.

In Romania Terapia has a 4.3 percent market share as concerns the value and a 9.4 percent one as regards the volume and in point of generic medicines for the cardiovascular system, which amounted last year to 108 million dollars, the above-mentioned company has a 22.61 market share.

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As the summer timetable comes into force (26 March) Malev plans to double the number of its services to Bucharest and increase frequencies to other Romanian destinations as well. In total, the  Hungarian national carrier operates scheduled services to five cities in the neighbouring country. Its latest route, to Tirgu Mures, opened 16 January 2006.

From 26 March the twice-daily service between Budapest and Bucharest will double to four flights from Monday to Friday, two on Saturday and three on Sunday. Malev also steps up connections to its other Romanian destinations with the onset of the summer timetable. One additional flight a week will be added to both Tirgu Mures and Constanta, taking the number of flights to the Transylvanian city to four per week, and three per week to the Black Sea resort of Constanta. During the summer period Malev will fly to Timisoara, western Romania?s fastest growing city, nine times a week, three more than in the winter timetable. The Cluj-Napoca route jointly operated by Malev and Carpatair Airlines will run twice a day every day of the week.

Malev is unique among foreign airlines in the importance it places on servicing Romanian destinations. In fact, with the additional services starting in late March, the national carrier connects Hungary and five destinations in Romania via 55 scheduled flights a week which, given its extremely convenient connections via its Budapest hub, presents travellers with a direct link with Western Europe.

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The negotiations of the IMF with Romania may be resumed with an aim to continuing the stand-by agreement. The deadline for the finalization may be extended till November this year, said resident representative of the International Monetary Fund Graeme Justice during a meeting with Minister of State Gheorghe Pogea, according to a government release, ACT Media news agency reports.

The meeting was focused on the new Fiscal Code , that must include measures meant to lead to an increase in the budgetary incomes by three or four percent in the next two years.

The IMF annual report, including the conclusions of the consultations that were held in keeping with Article IV of the statutes of the Fund, is to be published on April 26.

The negotiations of the IMF with Romania may be resumed with a view to continuing the stand-by agreement.

The Fund's representative directed people's attention to the fact that Romania would have to take part in jointly financing the projects that will be implemented from the structural and cohesion funds that are its share after the accession.

The Government intends to adopt a Fiscal Code that should not need additional changes after the moment of accession, said Vice-Premier Pogea.

Pogea said that the improvement of the fiscal administration is one of the means by which additional incomes to the state can be obtained, but one must also consider other means of increasing the incomes to the budget such as royalties for exploiting deposits, the charges for using the geological data for natural resources, etc, which might bring up to 0.4 percent of the GDP to the budget, also said the above-mentioned source.

The Minister of State for coordinating activities in economy also said that he agreed to most of the Fund's proposals and that, at the end of the week, he would have a meeting with the managers of the Ministry of Public Finance and with consultants of the Romanian Centre of Economic Policies with a view to discussing the medium-term fiscal and budgetary framework and the possibility to increase public revenue.

Referring to the increase in the price of natural gas in keeping with the negotiations with the EU, Pogea said:

"I want it to be a transparent process, I want us to establish the mechanisms by means of which we shall support the population with low incomes and to introduce a local reference price this year as a measure leading to the removal of subsidies in 2007."

The specifications for the privatisation of the power stations at Turceni and Rovinari have already been presented and the Romgaz estimations with a view to the company being listed with the stock exchange are underway, said the Vice-Premier.

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Alumina producer Alum Tulcea, taken over in 2005 by Alro Slatina (south), plans to proceed with a capital increase in the value of 337 million new lei (¤96 mn) through the issuance of new shares to be offered to the shareholders for subscription, wrote Ziarul financiar, ACT Media news agency reports.


Alum Tulcea is one of the main raw material suppliers for Alro Slatina.

The company's main shareholder, Alro, is to subscribe shares in the value of almost 90 million euros, in line with its participation of 92.75 percent.

Alum is set to issue 56.6 million new shares to be offered for subscription to the shareholders at a price equal to the nominal value of 5.95 lei/share.

Following this operation, Alum's share capital is to amount to 376 million lei (108 million euros).

Alro plans to raise Alum Tulcea's share capital to allow this company to implement the planned investments into new technologies and the investments earmarked for environment protection programmes, Alro Director General Gheorghe Dobra pointed out.

Alro invested in 2005 some 2 million euros into Alum on the basis of the compliance programme with the environment norms as convened with the Agency for Environment Protection.

Alum's investment plan for environment protection amounts to 9 million euros.

Alro took over the majority share package of 68 percent of Alum stock for 7 million euros.

Alro organized a public bid for the buying out of the remaining stock, following the transaction into which it took over the majority package accounting for 92.75 percent.

Alum posted a turnover of 57 million euros on the first nine months of 2005, registering losses of 21.4 million euros.

Stock exchange listed stock of this company is worth approximately 8 million euros.

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Juniper Networks M-series Multiservice Routing Platforms to Increase Reliability and Security and Enable Future Growth

SUNNYVALE, Calif., March 14th, 2006 - Juniper Networks, Inc. (NASDAQ: JNPR) today announced that Euroweb Romania, a leading Internet Service Provider in Central and Eastern Europe, has upgraded its data network with Juniper Networks M-series routing platforms to improve the reliability and security of its network for business and residential customers.

Euroweb is deploying the M-series to perform border routing functions at peer transit points of the network. Euroweb chose to upgrade with the M-series because the existing border routing platforms were no longer capable of protecting its customers from the increasing threat of network-based attacks.

"Romania?s telecommunications market is evolving rapidly. We needed to upgrade our routing infrastructure to improve security and reliability for our customers, but also to ensure our infrastructure could keep pace with future growth and service requirements," said Laurentiu Stan, Euroweb?s General Manager. "The Juniper platforms provide a secure and robust platform to support our current and future services, and we were also able to streamline the number of routing platforms in our network, reducing capital and operational costs."

Juniper Networks M-series multiservice routing platforms are recognized as the industry-leading platform for sophisticated IP routing applications, and have been deployed in the largest IP networks for the past eight years, establishing a track record of stability, reliability, and scalability. The M-series supports the industry?s most comprehensive VPN portfolio, combined with the ability to simultaneously support existing and emerging Layer 2 and Layer 3 services. Constructed with clean separation between the control plane, forwarding plane, and services plane, the M-series multiservice routing systems support multiple services without compromise on a single platform-enhancing revenue opportunities and minimizing operational and capital costs.

"Euroweb provides Romanian businesses and consumers with a range of innovative, secure and reliable voice, data, and VPN services," said Eddie Minshull, executive vice president of worldwide field operations, Juniper Networks. "We are pleased that when they recognized the need to upgrade their core network, they chose Juniper Networks to help build an agile, open and customizable network infrastructure."

About Euroweb Romania

Euroweb Romania is one of the leading ISPs in the country and one of the most important international wholesale data players on the local market. Euroweb?s offer for the Romanian market refers also to the wholesale, business and retail Internet access, VPNs, domain registration, hosting and co-location services as well as next-generation telephony and video-telephony services. Euroweb Romania is a N.A.I.S.P. founding member (the National Association of Internet Service Providers). Last year Euroweb Romania was awarded the "Best ISP of the Year", at BBW IT&C 2005 Awards event. Euroweb organization is ISO 9001:2000 certified by IQNet for its quality management system. For more information please visit www.euroweb.ro

About Juniper Networks, Inc.

Juniper Networks is the leader in enabling secure and assured communications over a single IP network. The company?s purpose-built, high performance IP platforms enable customers to support many different services and applications at scale. Service providers, enterprises, governments and research and education institutions worldwide rely on Juniper Networks to deliver products for building networks that are tailored to the specific needs of their users, services and applications. Juniper Networks? portfolio of proven networking and security solutions supports the complex scale, security and performance requirements of the world?s most demanding networks. Additional information can be found at www.juniper.net.

Juniper Networks and the Juniper Networks logo are registered trademarks of Juniper Networks, Inc. in the United States and other countries. All other trademarks, service marks, registered trademarks, or registered service marks are the property of their respective owners.

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Baneasa will expand its residential portfolio with a new block of flats worth EUR 2.8 million and developed by Axa Development, Colliers, the agency promoting the project, announced last week.

Winmarkt will put some EUR 8.5 million into the Grand Center commercial complex in Ploiesti, the company announced last week. The project, which will connect the Omnia commercial center to the Commercial Galleria through an elevated glass walkway, will be opened this September

Hidroelectrica, the electrical power producer last year derived net income standing at approximately 17 million euros, after about 55.5 million euros from the company"s profit was redirected to cover the record losses posted in 2003. Three years ago, the company registered losses of above 98 million euros due to the drought in the summer months, which threw the Romanian power system into a crisis.

Generali Asigurari will increase its share capital by 5.7 million euros (20 million RON) to nearly 14.3 million euros (50 million RON), by contributions in cash from shareholders. The company shareholders last year performed another capital increase by about 6.6 million euros (over 24 million RON), to approximately 8.5 million euros (30 million RON).

Petrom announced yesterday that it might resume granting dividends to shareholders, with the amount proposed for 2005 being 738 million RON (some 210 million euros), after the company posted a 1.416 billion RON (319 million euro) net profit for the previous year.

Deputy Prime Minister Copos wants to transform Romanian tourism into a national point of interest.

The employers' union for the tourism industry and government authorities must develop a series of immediate priorities to enhance local tourism and boost the sector to the position of a national interest industry, said Deputy Prime Minister Gheorghe Copos.
"The government seeks a real partner to discuss and take action," said Copos. The official analyzed with representatives of tourism companies the state of the industry, bearing in mind Romania's accession in the European Union. Copos stated that the government intends to set a few objectives to revive Romanian tourism.
Thus, the authorities analyzed with representatives of the National Authority for Tourism (ANT) the possibility to implement a national strategy for the development of tourism, as well as ways to attract investors to fund the infrastructure. Fiscal policies, new legal stipulation and environmental impact were also among issues tackled.
The next step, according to the participants, would be a memorandum on the situation of the industry, which will be presented to the government in the near future.
According to ANT officials, tourism's ratio in the Gross Domestic Product could soar to four to five percent this year, about a 100 percent increase compared with last year. 2005 was the first year since 1990 when a surplus of the trade balance in tourism was noted.
Authorities launched an initiative to improve local tourism by putting up for tender beaches on the Black Sea coast. Accordingly, the government will award ten year leases through public tender of approximately 160 hectares of beach, divided into 33 areas. Starting bids should be made at nominal prices of approximately eleven eurocents per square meter in areas with low potential and reach 1.5 euros for popular areas, such as Mamaia. "We seek partners, investors, tourists from the European Union," said the president of the tourism authority, Ovidiu Marian.
The official underscored that a growing number of Romanians should support the local tourism industry and foreign tourists throughout the year, looking to take advantage of the country's strong points: balneary tourism (spa resorts), the Black Sea coast and the Danube Delta.
Nevertheless, the official pointed out that Romania has a notable deficit regarding the services sector in tourism, but authorities could soon change that with a draft law stipulating new selection criteria for the industry's staff. "There is an incompatibility in the price-quality report," said Marian. The present legislation focuses on the facade and facilities of hotels, rather than services. The new law, which would enforce specialized training for employees in the industry, could boost prices, as the costs would increase. However, the tourism official said that competition should force prices downwards.

TUI, ANT commit to long-term cooperation

The tourism agency and the local authority decided to approve a long-term cooperation agreement based on a set of measures that would boost the company's presence on the local market. "The common strategy will be elaborated within a month," said Ciprian Popescu, director of the Danubius agency, TUI's representative in Romania. Popescu estimates that the strategy could be implemented this season, but the incoming sector for the year is almost lost. "We are trying to save next season," said Popescu.
TUI decided in February to annul contracts for local resorts Mamaia and Neptun and country tours for tourists from Sweden, Denmark and Finland. The company's decision was caused by the bird flu, VAT levels and problems that arose last summer.

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The value of French investments in Romania amounts to 3.5 billion euros, said the chief of the economic mission of France's Embassy in Romania, Philippe Boin.

According to the official, the actual value of French investments is higher than the official numbers, which do not take into account all the capital inflows. "Statistics estimate only the foreign direct investments," said Boin.
The official stated that the French investors in Romania targeted various sectors, including the automobile industry (Renault took over local carmaker Dacia in 1999), retail (Cora, Carrefour, Auchan) and the banking sector. Other sectors targeted by the businesspersons are energy, distribution, public services and constructions.
"The French companies had the courage and flair to come to Romania," said Boin, adding that the timing chosen forced companies when the country's economy was not good. Moreover, he emphasized that the French investors have a long term strategy and will not cash-in and leave the country.
Although most of the companies present on the local market are large-sized, Boin revealed that more and more small and medium companies from France are taking interest in the local market, especially in the auto, distribution and agriculture sectors. Regarding the latter, the official acknowledged Romania's potential through the price of the agricultural assets and expressed his discontent with the rather low French presence in the sector.
Nevertheless, the companies are relatively satisfied with their activities in Romania, showed Boin, though the business environment is criticized. "They function better after being criticized," said Boin, pointing out that the critics are not a local feature but encountered worldwide.
Regarding the European Union, Boin said that Romania's accession would be a positive element for the French companies, as an open market supports enhanced trade. 

Renault eager to bid for Daewoo Craiova

The French car producer Renault is interested in taking over Daewoo Automobile Craiova and has asked Romanian authorities to speed up the clarification of the plant's standing. Last September, Renault sent a letter to the privatization authorities demanding access to information regarding the Daewoo plant but received no answer, said in a press conference by Francois Fourmont, general director of Renault's local branch Automobile Dacia. "We are still interested in participating in the tender, but the situation of Daewoo Craiova must be clarified," said the official. He warned that "time is not a neutral variable" and should the situation continue indeterminately the group might lose interest.
Fourmont explained that the takeover of a production unit had to be integrated in the long-term strategy of a manufacturer. "When someone buys a factory he thinks 20 or 30 years ahead," said the director of Dacia.

Renault: Authorities should cut down bureaucracy

President Traian Basescu recently met the management of the French group to discuss the results of the local carmaker Dacia. The management representatives presented the chief of state with development projects, which will be implemented in 2006, as well as in the following years. One of the company's objectives for the year is to expand the fabrication of Logan, its most successful model.
The French representatives emphasized that they need the authorities to speed up bureaucratic processes to ensure that their projects are carried out on time.
Renault also intends to develop a series of projects to fully employ the potential of the Romanian engineers in research and development activities for the automobile industry. The intention was confirmed by presidential adviser Theodor Stolojan, who said yesterday that Renault plans to open a research and development center in Romania. The official also announced that the center could employ approximately 2,000 Romanian engineers.

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George Toma Mucibabici was appointed as chief of the financial consultancy and audit branch of Deloitte in Romania.
Toma is the former president of the Ion Tiriac Bank.
"The experience Mucibabici has in the financial, public and corporate sector are advantages for Deloitte," said Maksim Caslli, Deloitte's office manager partner for the Balkan area.
The main responsibilities of the new president will be to consolidate relations with the most important companies in Romania and represent Deloitte within the business community.

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Romania's economic growth will be 4.6 percent this year, compared to an estimated 4 percent in 2005, according to a report of the Romanian Academic Society (SAR).

Inflation is expected to go above the Romanian National Bank's (BNR) target of 5 percent (plus or minus 1%), to 7.1 percent.

The SAR analysts expect 2006 to be a good year, as they estimate inflation to drop below last year's 8.6 percent, the current account deficit to narrow, and the economy to expand at a normal rate, according to SAR report.

The main difficulties that BNR will face in order to curtail price rises are the increase in the government-administered prices aimed at bringing utility prices to levels close to the ones in the European Union.

Salary rises and the increase in consumer lending are further challenges seen by SAR.

Romania's 2006 current account deficit is projected at 8.2 percent of GDP, compared to an estimated 9.2 percent last year.

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The Ministry of Economy and Trade (MEC) issued a press release stating that companies that want to import natural gas have to comply with several conditions in order to maintain the safety of the deliveries of natural gas, Bursa reports.

Thus, the companies have to present a confirmation issued by Gazprom/Gazexport Moscow, that they are entitled to supply natural gas and to get a distribution license from the Romanian Authority for the Regulation of Natural Gas Sector.

Companies also have to demonstrate that they have contracts with companies in Romania in order to make proof for the existence of transport capacities.

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The European Bank for Reconstruction and Development (EBRD) grants Romania a loan of 145 million euros for the construction of the bypass of the Constanta city (221 km east from Bucharest), ACT Media news agency reports.

The government approved the Bill for the ratification of the Romania-EBRD Loan Agreement signed in Bucharest on December 7, 2005.

The loan will be repaid in 16 years with a four-year period of grace.

The 22.9 km long bypass is part of the Pan-European Corridor IV.

The EBRD-financed project also includes the rehabilitation of ten strategic bridges in the Constanta county and the reconstruction of 120 flood-damaged sectors of roads and bridges.

Romania will co-finance the project with 67.24 million euros that will cover the taxes and dues levied on Romania's territory and other local costs that cannot be paid from the foreign loan.

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Romstal Leasing Co. launched a real estate leasing with five percent downpayment on the market, as an alternative to the real estate credit, that will allow companies to acquire a building or a plot of land without demonstrating their commercial destination, the company announced, ACT Media news agency reports.

The companies that choose a real estate leasing through Romstal benefit for a short period of time for the purchasing of the building or plot of land and the respective real estate does not need to be placed within minimum value brackets, the down payment is five percent, the residual value is negotiable - between 0 and 20 percent - the interest rate is 7.95 percent and the duration of the contract is up to eight years.

Real estate leasing market in Romania hardly started.

According to Romstal, Leasing's estimations, in Romania the real estate leasing accounted in 2005 for some 2-3 percent on the leasing market.

In 2005, Romstal Leasing posted a turnover of 40.7 million euros, up more than 70 percent compared to 2004 and concluded with 65 percent more leasing contracts with a total value of 72 million euros.

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Fitch Ratings changed the Outlook of Netherlands-based The Rompetrol Group N.V.'s ("TRG") Issuer Default Rating of 'B-' (B minus) to Negative from Stable, a move due to ongoing criminal investigations by the Prosecutor General's Office of Romania ("PGO") on TRG's Romanian companies.

According to Fitch analysts, the recent developments in the PGO investigation, including the freeze of an un-pledged 25.9% stake in TRG's key asset, Romania's Rompetrol Rafinare ("RRC"), the second largest refining company in the country, may lead to a more challenging operating and political environment for the group.

TRG owns a direct 51% stake in the publicly listed RRC (or 77% including indirect ownership).

The recent freeze of a portion of TRG's holding in RRC prohibits it from the sale of this stake and thus somewhat limits its financial flexibility.

Nevertheless, according to TRG, it will still be able to receive dividends and to exercise its voting rights related to the 25.9% stake.

As a result, TRG will continue to have management control over its main asset.

Fitch notes that the ongoing investigation represents a credit concern for TRG as it has tarnished the company's reputation and distracted key managers from strategy implementation and day-to-day operations.

Nevertheless, TRG has strengthened its management team and prepared detailed contingency plans in case of any negative developments.

Fitch understands that the investigation has so far had no negative impact on TRG group's liquidity as the lending banks continue to fund the group on a secured basis.

The ongoing investigation of Rompetrol's current and former employees, including TRG's Romanian CEO and the American Deputy CEO, involves a number of charges.

These include non-completion of investment obligations under the terms of the Petromidia and Vega refineries privatisations, failure to pay excise taxes and VAT on certain transactions, and securities market manipulation related to RRC's listing on the Bucharest Stock Exchange.

Notwithstanding the ongoing investigation, in 2005, TRG was able to capitalise on an extremely favourable environment for refiners and positive structural changes in the Romanian fuel market.

In 2005, TRG reported record unaudited consolidated EBITDA of $164 million ($101m in 2004).

Its net debt-to-EBITDA ratio improved to 1.8x at YE05 from 2.8x at YE04.

In 2005, virtually all profits were generated by its Romania-based companies (RRC group).

Following TRG's acquisition of French-based fuel retailer Dyneff in January 2006, the EBITDA split is 88:12 between Romania and France (based on 2005 pro-forma figures), compared to 100% contribution from Romania previously.

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Fixed-line operator Romtelecom will postpone investment in the next generation network (NGN) until the investment climate in Romania is suitable for further investments, but will still put more than 100 million euro into upgrading the access network this year, said James Hubley, general manager of the company, quoted in Business Review, ACT Media news agency reports.


He said that the interconnection fees imposed by the ANRC are 20 percent below company costs and also drew attention to an investment in wireless equipment worth ¤38 million made by the company four years ago, which will be lost.

Encouraged by the government, Romtelecom developed a fixed-line telephony project in the rural areas of Alba, Cluj and Buzau, based on wireless technology, serving around 21,000 clients.

The same radio frequency is used now for 3G telephony, with licenses for 3G received by Connex-Vodafone and other operators.

Connex-Vodafone puts pressure on Romtelecom to make the frequency available.

Hubley said that at that time a temporary partial use of the frequency agreement was signed, and that the issue would be settled with the operator that receives the license.

Turning to Romtelecom's evolution this year, Hubley said that he expects the number of fixed lines to decrease compared with 2005, when the total number was about 380,000.

"This is the declared objective of the ANRC.

This attitude seems strange as I see that there is no strategic thinking about infrastructure investments, as fixed-line telephony has only a 20 percent penetration of the population," he said.

In 2005, Romtelecom reduced its investments by 34 percent and had a net profit of ¤233.7 million and income of ¤927 million.

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Bucharest will get another facelift this April, when construction work on the EUR 700 million Sema Parc real estate project begins. River Invest will develop the project, comprising 660,000 sqm of office buildings, commercial area and residential units on the site of the current Semanatoarea factory, near the Dambovita quay.

Romanian carmaker Dacia finished last year with EUR 57 million in net profit and its turnover more than doubled, after posting around EUR 73 million in losses in 2004, the company announced last week.

Banca Comerciala Romana (BCR) made EUR 202 million net profit last year, 25 percent more than the 2004 figure, EUR 162 million, Nicola Danila, BCR?s executive chairman, announced last week. The dynamics of the profit, calculated in lei according to Romanian accounting standards, was 15.6 percent.

Unilever South-Central Europe (USCE), the consumer goods company producing Rama margarine, Dero detergents and Knorr sauces, is transferring all its businesses to Ploiesti. Thus, the margarine production lines in Targu-Mures, as well as the Otopeni-based sauce and spice lines will be relocated to Ploiesti, where the detergents are already manufactured.

The gross profit of ING Romania amounted to 17 million euros last year, while the bank's assets went up by 45.7% to 1.8 billion euros, placing the bank fourth in the ranking of the Romanian banking system, the deputy chief executive of this institution Misu Negritoiu said yesterday.

Australian investor South Pacific Group will invest 70 million euros in building 500 "smart houses" in Tunari village, near the Romanian capital, Business Review reports. "Smart house" is a new concept on the residential market: all the facilities in such a house are connected to a computer control system that can be accessed from any part of the house.

The works at this villa compound, named Sydney Residence are to start this spring and the first houses are expected to be available in the first half of 2007. Sydney Residence covers a 36,000 sqm area and will have four types of houses with built surfaces between 170 sqm and 240 sqm. Prices for such villas are between 139,000 euros and 227,000 euros, without VAT, these figures including kitchen and fully equipped bathroom as well as air conditioning.

Energy costs will be reduced by the use of modern installation systems.South Pacific Group also intends to open another three residential compounds in the next year and around 400 apartments in Bucharest, in the Cotroceni neighbourhood, on a plot that is already in the company's portfolio. The Romanian real estate market is the second the Australian company has entered, besides its home country.

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The enforcement of the law package on the reform of the healthcare sector is the main goal of the Romanian Health Ministry this year. Other key-elements on the institution's agenda for 2006 are the plans to build eight regional and 20 county emergency hospitals, Minister Eugen Nicolaescu declared in an interview for the Eurolider magazine. The new legal provisions referring to the healthcare system will be enforced starting June 1, 2006, said Nicolaescu. The law package for which the government assumed responsibility pursues two major goals: the start of the infrastructure projects and to ensure the permanent supply of free and subsidised drugs.

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The hydro technical complex made of Constanta Port and Danube Black Sea Canal will attract investments of 425 million euros in the next 10 years based on projects for the development of infrastructure for storage, ship transport and operation, the general director of the National Company of Constanta Ports, Mircea Banias declared in Budapest on Friday. There he attended a meeting of representatives of naval transport companies of Hungary. ?In 2013 Constanta port will be able to cope not only with EU exigencies but also with European needs for the transit of raw materials to the continent and of goods toward markets of Asia, Africa and America,? Banias said,quoted by Rompres.

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The Foreign Trade Department of the Ministry of Economy and Trade announces the opening of an import contingent in Romania for certain kinds of chicken meat coming from EU. The price contingent of 6,000 tons for the import of chicken meat coming from EU, with duties of 45% is valid until 15 August 2006. The maximum quantity allocated by economic operators on the occasion of presenting a certificate request for import cannot exceed 20 tons. Economic operators interested in that can get more information from the OMEC text no. 167/2006 on the site of the Foreign Trade Department www.dce.gov.ro, ?legislative frame? section.

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Premier Calin Popescu-Tariceanu stated on Friday, March 10, at the end of a meeting with the Ministry of Agriculture, Forestry and Rural Development (MAPDR) leadership, that he is confident Romania will not get red flags at this Chapter, Agriculture. He said that agriculture had been the field with the biggest number of delays together with Justice and Internal Affairs, but it succeeded to recoup the lost time.?I trust we are not going to be penalized with red pennons as for the agriculture field. I express my hope that by further working in the same way we are not going to remain with red pennons at this chapter following the accession date", the Romanian Premier said.

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Bucharest Stock Exchange (BVB) and Vienna Stock Exchange (WBAG) have signed a framework agreement on the authorization of BVB indexes' trading and a cooperation agreement on "New Europe Blue Chips Index" (NTX), BVB informs. The framework licence agreement is aimed at the establishment of cooperation between the two stock exchanges in view of BVB development and implementation of a licence system policy for the Bucharest exchange's current and future indices, as well as for these licences' trading.

Bucharest Stock Exchange advantages resulting from the signing of this agreement are know-how transfer of international standards in the indices' licence area, the achievement of a marketing and sales strategy at international level for BVB indices, through WBAG and BVB, as well as immediate access to BVB through WBAG to the current chain of its clients for licences (more than 60 famous international clients, among which ABN Amro, Deutsche Bank, Erste Bank, JP Morgan, Merrill Lynch, Nomura, Societe Generale, UBS Investment Bank).

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Inflation could reach 7,3 percent in 2006, likely to be reduced in the case of quick appreciation of the leu towards the end of the year, Florin Citu, director of research of financial market with ING Romania stated on Monday, in a press conference.

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As Romania's accession to the European Union is getting nearer and as the local economic environment is getting more stable and more transparent, the country is seen more and more as an opportunity for investment, especially in the real estate field.
Michael Atwell, Partner - Capital Markets Group for Cushman & Wakefield, told journalists attending the press tour in Warsaw that Romania is likely to register a huge development in the following years, because it is one of the largest countries in the region. Moreover, there is currently a trend in the real estate field to move eastwards, as many businesspeople complain "there is nothing more to buy" in Poland, Czech Republic and Hungary.

While Poland is getting closer to the old EU members as far as risk for investment, economic growth and development are concerned, Romania is currently at the level Poland was a few years ago, according to Atwell. This means the risk is higher and the Gross Domestic Product (GDP) is far lower than the GDP of the old EU members. On the other hand, the labor force is cheaper and there is still plenty of room for foreign investment. Latest statistics provided by Cushman & Wakefield show that Romania has the highest number of companies that want to open offices here in Eastern Europe. Eighteen companies are planning to open branches in Bucharest in the next five years, comparing to twelve companies in the Bulgarian capital, Sofia, nine in Bratislava, the capital of Slovakia, eleven in the Latvian capital, Riga, and six in the capital of Estonia, Tallinn, according to statistics.

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Ranbaxy Laboratories Ltd and Lupin Laboratories Ltd have been short-listed in the race to acquire Romanian generics drugmaker Terapia SA, Financial Express reported, citing market sources.

The valuations offered by these companies are said to be in the region of 200 mln usd, and the due diligence process has been initiated, the newspaper said.

The deal is expected to be finalised by the end of this month, it said.

Terapia is owned by Advent International, a Boston-based global private equity investor, which acquired the company in August 2003 for 44 mln usd.

A Ranbaxy spokesperson was quoted as saying: 'We cannot comment on speculations. However, acquisitions will be an active business strategy and one of the key growth drivers to expand our

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The investors interested in the privatization of the Savings Bank ? CEC will bid for 85% of the bank?s stake, announced Bogdan Olteanu, Minister-delegate for Parliament liaison and member in the Privatization Commission, ACT Media news agency reports.

?The strategy for CEC?s privatization will be amended by March 15 under a government resolution and the draft privatization contract plus all the necessary documents will be remitted to the contestants by April 10 at the latest,? said Olteanu.

The current strategy provides the sale of as much as 75% of the Savings Bank?s stake, yet no less than 50% plus one share.

According to the new strategy, a maximum of 5% of the stake can be sold to the bank?s staff and up to 10% can be listed on the Stock Exchange.

The final binding offers need to be submitted by April 25 at the latest, added Olteanu.

The best two bids automatically qualify for the final stage, but three bidders might be selected if the difference between the score of the third-ranked investor and the first one is less than 10%.

In the selection of the binding offers, the price accounts for 75% of the score grid.

In the last stage of the process, the finalists will only bid prices.

Six banks are currently vying for CEC: the National Bank of Greece, Monte dei Paschi di Siena, Dexia Bank, EFG Eurobank, OTP Bank and Raiffeisen.

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The National Bank of Romania (BNR), the National Securities Commission (CNVM) and the Insurance Surveillance Commission (CSA) signed a tripartite protocol of cooperation with a view to the promotion of the financial system's stability, on the whole and its components, informed BNR, ACT Media news agency reports.

At the same time, the three bodies adopted the Regulations regarding the organization and unfolding of tripartite meetings at level of managers between BNR, CNVM and CSA.

The first tripartite cooperation protocol in the field of financial system surveillance, between the National Bank of Romania, the National Securities Commission, and the Insurance Surveillance Commission was signed on April 3,2002.

This agreement had important positive effects when it comes to the information and experience exchange between the signatory bodies.

The new documents aim to strengthen cooperation between the three bodies without being detrimental to their prerogatives and autonomy.

Provisions are set which stipulate the approach in a coherent and efficient way of the intersectoral problems and practical arrangements of collaboration.

The current protocol, unlike the previous one, defines more accurately the principles according to which the cooperation between the three signatories will unfold, namely the precise delimitation of responsibilities between the three bodies, transparency and cooperation in the process of drawing up legislative initiatives and of the specific provisions and continuous exchange of information under confidentiality terms.

The protocol stipulates at the same time the creation of interinstitutional working groups and the drawing up of their functioning procedures.

To this end, the setting up of five standing technical committees was decided, due to cover the issue of fields of interests for the three authorities, respectively the Committee of Financial Stability, the Committee of Surveillance and Control, Regulation Committee, Committee Payment System and Committee of Financial Statistics.

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The British tobacco maker Gallaher reported a 34 per cent sales increase in Romania in 2005, a 3.2 per cent market share achievement based on the good performance of St George, Ronson si LD cigarettes on the local market, according to the company?s financial release.

Gallaher opened a production plant in Romania at the end of 2004. In the following year, the company boasted sales of 175.8 bln units, up 3 per cent, due to favorable market shares in countries such as Russia, Kazakhstan and Spain. It also improved earnings in Ukraine, Poland, the Czech Republic, Slovakia, Lithuania and Hungary.

The company?s sales rose lat year 1.2 % up to 8.2 bln pounds compared to 8.1 bln pounds in 2004.

According to Reuters, Gallaher will face some challenges in 2006 in the wake of low profits across Europe where the sales declined by 6.1% during 2005, but also due to higher taxes in Austria, Spain, and Germany and to emerging smoking bans.

The company is aware that the smoking ban in British pubs will decrease the market share with 5 per cent by the second half of 2007 when the interdiction will cease. In 2005, the British market share maintained to 38.6 per cent as in 2004.

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The exports of small and medium enterprises (SME) will benefit this year from 1.4 million euros in financial support through a national multi-annual program for 2006 to 2009. Supported by the National Agency for Small and Medium Enterprises (ANIMMC), the program will facilitate the access of Romanian companies on external markets by promoting their products and services, stimulating communication and business partnerships.
According to an ANIMMC press release, to be eligible for the program companies must have fully private social capital, no debts to the local or central budgets, have a net annual turnover of less than 50 million euros and total assets under 43 million euros.
The value of the unredeemable allocation to a beneficiary represents 90 percent of the value of each eligible expenditure carried out, within the limit of 5,100 euros.

The ANIMMC will also allocate in 2006 about 880,000 euros for the support of the development and modernization of the market services and products for SMEs. The main objective of this program is to facilitate the acquisition by companies of tools, machinery and installations for commodities traffic, in order to improve economic and technical performance.
Individuals, authorized family associations and companies that have activities in the trade of market goods and services are eligible unless they are under judicial reorganization, liquidation, bankruptcy or temporary suspension of activity. They also must have a turnover of less than 50 million euros and total assets of less than 43 million euros, according to the last financial statement.
The financial allocation can be granted for expenditures with the acquisition of machines, tools and installations destined to commodity traffic.

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The Romanian population?s interest in natural food products is growing, according to a market research study.

Most of the population living in urban areas between the ages of 18 and 55 intend to buy food products with low chemical content and high nutrient potential.

The urban population pays more attention to food products, focusing on natural ones, without chemical content, aware of the significant role that nourishment has in determining health. Thus, more Romanians are willing to trade certain food habits or even renounce them.
According to a Mercury Research study, most of the Romanian population consumes fruits and vegetables (97 percent), dairy products (96 percent), meat (95 percent), farinaceous food (percent) or fish (66 percent) at least once per week. Canned products and all kinds of pre-cooked products are acquired by a quarter of the population.
The study also shows that the criteria used by individuals to select food products include contents. Thus, the main factors weighed when buying food are artificial colorants, preservatives and artificial sweeteners or additives. Eighty-six percent of those interviewed avoid products with artificial colorants.
When buying fruits and vegetables, 88 percent of city-dwellers prefer natural products, without chemical fertilizer, but most of the consumers (72%) search for local products.

Besides food additives, an important determinant is the nutrient content of food products. Thus, 73 percent of respondents would prefer their products to have a high content of calcium and other vitamins, while 44 percent choose products rich in fiber. Other criteria in selecting food include fat content, calories and salt.
The interest for these factors is showed by those between 30 and 55 years old, while the younger population is not interested in such aspects.
On the other hand, half of the interviewed people stated that they had changed their diet in the past year. Ninety percent of those who changed their diets cited improved health as the primary reason for the modification. Nevertheless, 45 percent were also concerned with their appearance. The modifications regarded mainly an increased consumption of several healthier products.

Compared with last year, 88 percent of the interviewed persons stated that they eat more fruit and vegetables, while dairy and fish products have increased in significance in the weekly menu. Moreover, those who modified their food habits are seeking to buy natural food products, without additives and with a low fat content.
The market research study was carried out on an echelon of 500 persons from urban areas, aged between 18 and 55. Mercury Research estimates a 4.4 percent margin of error, with a reliability level of 95 percent.

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Erste Bank president Andreas Treichl declared that the Austrian group has taken over a high-ranking profitable Romanian bank after the 2005 financial outcomes of the Romanian Commercial Bank were made public, ACT Media news agency reports quoted by Reporter.gr.

"BCR's financial outcomes for 2005, reported in conformity with Romanian accountancy standards prove that Erste has taken over one of the top-profitable Romanian banks," Treichl told news agency Rompres.
Treichl considers that the high growth rate of retail loans reflects the growth potential of Romanian economy.
The increase of the population's deposits on the other hand proves that the Romanian population has certain liquidities and the improvement of the Romanians' confidence in the banking system, said the Erste president.
"We consider that, helped by Erste's synergy and know-how as well as by Romania's EU accession, BCR will consolidate is leading position on the Romanian banking market," said Andreas Treichl.

BCR executive Nicolae Danila announced that the bank's net profit in 2005 was 202 million euros, whereas its balance attained nine billion euros (up 40 percent compared to 2004).
Credits disbursed to the clients represented 4.4 billion euros, up 50 percent against 2004, whereas deposits totaled six billion euros (up 31 percent 2004 figures).

BCR's own capital attained 1.1 billion euros in 2005. Operation costs increased by 19.4 percent reaching 1.3 billion RON due to the 29.7 percent increase of amortization costs and the 18.3 percent increase of staff outlays.
Retail credits attained the equivalent of 1.7 billion euros. The net loss from provisions reduced in 2005 to 63.4 million RON (17.6 million euros), as a result of the improvement of the credit portfolio; the share of non-performatory credits reduced from 2.5 percent to 1.8 percent, whereas backlog debts reduced to less than 0.5 percent.

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Pirelli&C Real Estate, the real estate division of the Italian tire producer, will invest about 20 percent of its portfolio outside Italy, one of the destinations being Romania, said the company's president, Puri Negri, quoted by Il Sole 24 Ore. "The 20 percent figure is a minimum level and we hope there will be more than that. We are targeting Romania, Turkey, Croatia and Hungary," said the Pirelli official. He announced that at least one deal would be closed in 2006 and more would follow next year.

The real estate portfolio of the group could increase to 12 or even 13 billion euros, up from 10.3 billion euros at the end of 2005. The Pirelli&C representative said the portfolio of the joint venture, recently created in partnership with the Polish branch of UniCredito (Pekao), would significantly increase over the current 120,000 square meters of residential space. "In the case of Pekao, we are talking about an initial series of transactions with banks controlled by UniCredito," Negri said.
In Italy, Pirelli&C would expand in traditional sectors like office space and residential space, but also in retail, tourism and logistic parks.

In 2005, Pirelli opened a joint venture in Romania with the German company Continental for the production of metallic wire. The Italian group owns 80 percent of the Slatina-based production facility.
Pirelli will open the largest tire production facility in Eastern Europe by the end of the year, revealed Italian Minister of Productive Activities Claudio Scajola at the end of February. The estimated value of the investment is a few hundred million euros and is part of the company's strategy to expand on the Romanian market.

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A Romanian saleswoman arranges clothes at her stand in Bucharest's Piata Sudului marketplace. Like other countries in the region, Romania has endured a difficult transition as it struggles to dismantle the legacy of communism and build a market economy. [Getty Images]

The fall of communism in Eastern Europe, followed by the dismantling of the Council of Mutual Economic Assistance in 1991, brought economic chaos and a collapse of trade flows for the countries in the former Soviet bloc. By the mid-1990s, an increasing number of those countries had embarked on a transition from central planning to market systems, undertaking reforms aimed at facilitating their reintegration into the global economy.

Since 1995, trade in the post-communist East European economies, including the former Soviet Union, has grown at a faster pace than any other region in the world, says a World Bank report, noting that exports have tripled and imports have increased two and one-half times over that period. One of the main findings of the study, released on 31 January, is that most of the countries in that region are better integrated into the global economy today than at any other time since the Russian Revolution.

The 440-page report, "From Disintegration to Reintegration: Eastern Europe and the Former Soviet Union in International Trade", analyses trade developments in 27 transition countries since the collapse of communism. The region includes eight new EU member states (the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia), seven Southeast European (SEE) countries -- Albania, Bosnia and Herzegovina (BiH), Bulgaria, Croatia, Macedonia, Romania and Serbia Montenegro -- and the 12-nation Commonwealth of Independent States (CIS). All these countries, except BiH, Serbia-Montenegro and eight of the CIS nations, are now members of the WTO.

Most of these countries are benefiting from their reintegration into the world trading system, say the authors of the report, while cautioning that national governments should step up domestic reforms to take full advantage of greater liberalisation.

Another key finding of the study is that the different nature and pace of reforms implemented by countries in the region has led to a sharp split.

"There is an emerging bipolarity in the region," Harry Broadman, World Bank Economic Advisor and the report's lead author, said as the study was released. "One group tends toward trade with the advanced countries of Western Europe and enjoys relatively high incomes. The other group is considerably poorer and is tending to pull back towards a Russia-centric sphere. Most of its economies are still dominated by commodity trade, and they risk missing out on participating in the modern international division of labour."

The first group largely comprises the eight new EU member nations (EU-8) and the second those in the CIS. Most of the seven SEE countries are viewed as being somewhere in between these two blocs, while aligning themselves with the former.

This situation is illustrated by the global pattern of merchandise export penetration for the SEE countries between 1993 and 2003. The SEE exported more to the then 15-nation EU market than it did to the region's market. As in the case of the CIS, however, the share of exports from the SEE countries to the Latin America and Caribbean markets increased substantially. During the same 10-year period, SEE export shares in North America (the United States, Canada, and Mexico), South Asia and East Asia declined.

As for intraregional merchandise exports, the 1993-2003 period marked a major shift for the SEE countries -- a significant decline in their exports to the CIS and an increase in exports sold in the EU-8 countries.

Since 1995, trade in the post-communist East European economies, including the former Soviet Union, has grown at a faster pace than any other region in the world, according to the World Bank. [Getty Images]

In terms of the global pattern of merchandise import sourcing for the SEE countries, the group again falls somewhere in between the EU-8 and the CIS blocs. The largest shares of global imports destined for the SEE countries were accounted for by EU-15 producers. As for intraregional merchandise imports, the situation again changed significantly for the SEE economies between 1993 and 2003. While in the earlier stage, most of their intraregional imports originated in the EU-8 market, by the end of the 10-year period, the SEE market itself had become the primary source. Meanwhile, the share of SEE intraregional imports purchased from the CIS declined.

"Indeed, while the overall group of SEE countries is increasingly gravitating toward the Euro-centric pole, in fact they are doing so at different rates," the report says. "Consequently, at this point, along some dimensions the SEE countries form a 'middle ground' between the two poles."

For example, Bulgaria, Croatia and Romania have adopted liberal trade policies, but have lagged behind in encouraging greater competition in domestic markets, strengthening governance and implementing other trade-related structural reforms. The growth in their imports and exports has not been matched by an equally strong increase in productivity and national incomes, the World Bank experts note.

Other SEE countries, such as BiH, Macedonia and Serbia-Montenegro, still exhibit trade patterns more along the lines of CIS economies, they add.

According to the study, specific reform measures can stop and possibly reverse the two-bloc division of the region.

"Virtually all the countries in the Region still need to pursue further trade policy reforms, such as reducing tariffs, lowering disincentives to export, pursuing WTO accession, and rationalising the myriad of existing regional trade agreements," said Broadman. "But the bigger and largely unfinished trade agenda concerns behind-the-border reforms. Success here means unleashing domestic businesses to compete with one another, instituting strong incentives for governance, enhancing trade facilitation infrastructure, and opening up services to international trade and investment."

The trade policy measures the SEE governments need to implement in the short term, according to the Bank experts, include binding all tariffs at applied levels and eliminating remaining non-tariff barriers, as well as policies that create anti-export bias. Other recommended actions, which need to be supported by donor technical assistance, are rationalisation, consolidation and modernisation of the existing 29 bilateral free trade agreements, as well as strengthening of regional co-operation in the area of trade and transport facilitation.

On the domestic front, the SEE governments are urged to implement a number of reforms, such as increasing the removal of economic and policy barriers to entry and exit; strengthening competition policy agencies' competencies and resources; ensuring that public procurement is transparent and open to foreign competition; and improving judicial and legal institutions' capacity to protect property rights and enhance public administration reform to reduce corruption.

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The Government approved the National Program aiming at decreasing costs for the energy that is distributed to private consumers. This goal would be achieved through the increase of energy efficiency programs and the use of renewable sources for 2006, Bursa reports.

The purpose of the program is to achieve a 15-25 percent decrease of the prices paid by private consumers and the increase of comfort and safety in supplying heat and hot water.

The program deals with renewable sources such as the solar and geo-thermal energy.

Local authorities that would invest in equipment for renewable energy receive financing from the state budget in the excess of 30 percent from the overall value of the projects.

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The deposits with credit institutions will further hold the first position in the Romanians? savings preferences and are expected to top 13.5 billion euros in 2008, as compared to 10 bn euros in 2006, according to a study conducted by UniCredit analysts, covering several East European states (Romania, Bulgaria, Poland, Croatia and the Czech Republic), ACT Media news agency reports.

However, the growth rate of the population?s deposits will only be half the figure registered in the last three years, when bank deposits increased by more than two thirds.

The reason for the slacking trend is considered to be the increase to 16% of the tax on such facilities.

Savings outside an institutional framework rank second in the Romanians? preferences and are expected to rise by 30% till 2008, from the current level of less than 3 bn euros.

The bourse-listed stock held by the population comes third in the preference for financial investments and is expected to rise by 27.5% until 2008, when it might reach a value of some 3.5 bn euros.

The population?s shares with companies that are not listed on the bourse currently amount to 0.75 bn euros and are expected to inch up by just 12% till 2008.

Mutual funds are seen as the most dynamic market, with the population?s placements in equities expected to double by 2008, reaching a total of 131 million euros.

The population?s assets in insurance policies will also rise by some 70%, from 555 million euros this year to 942 million euros in 2008.

It should be noted that Romania is the only surveyed state where investments in pension funds are not yet allowed, whereas in the rest of the countries, they are placed even ahead of investments in stock in the population?s preferences.

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Romania will receive 71.2 million euros from the EU's Solidarity Fund for combating the effects of the floods that affected Romania in 2005 as out of this sum, 18.8 million euros will be spent on remedying the damage produced by the floods in April-May 2005 and 52.4 million euros for the floods in July-August 2005, ACT Media news agency reports.

The total sum allocated to Romania was approved by the European Commission, as response to the applications submitted by the Government in July and September 2005, through minister delegate for the Control of Implementing the Programmes with International Financing and monitoring of EU Laws Application, Cristian David.

The April-May 2005 floods that affected Romania caused damage of 489,529,837 euros and the July-August 2005 ones - 1,049,681,003 euros.

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Prime Minister Calin Popescu Tariceanu stated in an interview to Rompres that currently the privatisation of Romgaz would not be ?a high priority.? The Head of the Executive pointed out that for 2006 both the Authority for State Asset Resolution (AVAS) and the Bureau for State Shareholding Management within the Ministry of Economy and Commerce (MEC) will have much more ambitious privatisation objectives, Creditinfo Romania informs.

?AVAS has to sell out, or substantially reduce its portfolio,? the Prime Minister announced.

In turn, Minister of Economy and Commerce Codrut Seres stated, according to ?Gardianul? daily that Romgaz will be privatised within two years, on the Stock Exchange.

?The Romgaz listing with the Bucharest Stock Exchange and an international stock exchange seems to me the natural approach on the privatisation of this company,? Seres said.

He also reiterated that the Romgaz privatisation will not be similar to the Petrom one, that is, it will not involve a sale to a strategic investor.

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Dutch-based company Verder, a processor and distributor of industrial products and plastic materials, plans to expand activities in Romania by expanding its storage facilities from Bucharest and Cluj, from 350 sqm to up to 1,000 sqm over the next three years, Bursa reports.

Andries Verder, head of the Verder group said that the company plans to invest between 5 to 10 million euro over the next three years, based on the market evolution during this period.

Presently, the company only operates in Romania distribution units for products that are manufactured in Germany, USA and other countries.

Mihail Vasilescu, general manager of Verder Romania said that the company plans to open production facilities in the country.

The next step in the development of the business in Romania will be the opening of a warehouse at Timisoara.

Imports Verder Romania made last year stood at some 1.6 million EUR, according to Vasilescu.

In 2006, the company's imports target to raise some 2 - 2.1 million euro.

The Verder group plans to get European financing for environment protection and waste water treatment plants, as the company is involved in the re-equipping of the SEB, Turceni and Rovinari power plants.

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The case of Dubai Ports World, the United Arab Emirates company that should have taken over the management of the largest six U.S. maritime ports, had a parliamentary commission not rejected their application, was treated completely improperly, U.S. congressman Peter King, chairman of the House Homeland Security Committee, told BBC. Dubai Ports World is also in business in Romania, running the Constanta Port largest terminal, that accounts for 75% of the Black Sea transit containers traffic. The rental contract signed in December 2003 with the Constanta Port Administration is effective till 2021. In October 2003, companies from Italy, Spain, Malta, Romania and Dubai participated in the bid for the selection of the operator of Terminal Mall 2 S of the Constanta South Port.

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The norms for the enforcement of the Law on non-banking financial institutions might establish a ceiling for the indebtedness of natural persons, vice-governor of the National Bank of Romania Florin Gerogescu declared recently. ?The non-banking financial institutions will probably enter under the incidence of the Credit Office. I do not know what the norms will look like, but a ceiling for the population?s indebtedness will have to be set in place,? Georgescu told an economic seminar. For the banks, the prudential norms establish a maximum indebtedness degree of 40% of a client?s incomes, in other words the monthly installment plus the interests paid by an individual cannot exceed 40% of the aggregate incomes of the family. ?The establishment of a ceiling for the population?s indebtedness under the norms for the carrying into effect of the ordinance on non-banking financial institutions fits into the tendency to restrict credits raised by natural persons, which means that less than half of the applicants will be able to get leasing financing,? said the president of the Romanian Leasing Companies Association Bogdan Apahidean.

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The investors interested in the privatization of the Savings Bank ? CEC will bid for 85% of the bank?s stake, announced Bogdan Olteanu, Minister-delegate for Parliament liaison and member in the Privatization Commission. ?The strategy for CEC?s privatization will be amended by March 15 under a government resolution and the draft privatization contract plus all the necessary documents will be remitted to the contestants by April 10 at the latest,? said Olteanu.

The current strategy provides the sale of as much as 75% of the Savings Bank?s stake, yet no less than 50% plus one share. According to the new strategy, a maximum of 5% of the stake can be sold to the bank?s staff and up to 10% can be listed on the Stock Exchange. The final binding offers need to be submitted by April 25 at the latest, added Olteanu.

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The banks operating in Romania will face increasingly tighter competition and their greatest challenge will be to adapt to continuous changes, reveals a study titled ?Business 2010: Financial services? carried out by the Economist Intelligence Unit, upon the request of Germany?s SAP. According to the study, 33% of the respondents consider the permanent adaptation to changes as the greatest challenge for the banks till 2010. For 21% of the respondents, to capitalize on the diversifying opportunities offered by emerging markets is also one of the major challenges banks will experience in the next five years. 18% of the participants in the poll assert that another ?test? the banks will have to pass by 2010 is a dynamic adoption of innovative solutions. Other important elements that concern the financial institutions are the preservation of the old clients and gaining over new ones, cost control, the yield of investments in technology, the observance of corporate governance rules, the management of human resources and the keeping of skilled staff.

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ProCredit Bank Romania got the long-term BB+ rating from Fitch Ratings for the bonds the bank issued over March 9-22. This was the first public bond offer of the aforementioned bank. The issue, which is worth 35 million lei (1 euro=3.5 lei), is made up of 70,000 first rank bonds, with a face value of 500 lei, a three-year maturity and an 85 percent fixed interest a year.

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THERE are significant prospects French car maker Renault will manufacture Europe?s cheapest car, the Logan, in SA, a move that could improve vehicle affordability and boost the country?s vehicle production base.

SA?s perceived vehicle affordability problem has been investigated by the trade and industry department and by the Competition Commission, but this has not resulted in prices being cut.

Renault SA?s MD, Roland Bouchara, said on Friday that the country was now definitely being considered as one of the future host countries for assembly of the Logan, dubbed the ?¤5000? (about R37000) car.

?There is a real chance that it could be made in SA, although we cannot say at this stage that there is a good chance,? said Bouchara in an interview.

The Logan would be made available in SA regardless of whether or not it would be assembled here, said Bouchara. This means that the vehicle could also be imported.

The Logan was developed initially for the Romanian market, where there is demand for a low-cost sedan, but it has also sparked substantial demand in Europe.

More than 30000 Logans have been ordered since its launch in September 2004.

The car is being assembled in Romania and Russia, with production starting last month in Morocco.

India will start making right-hand drive Logans next year.

Doris Roberts, spokeswoman of Renault SA, which is SA?s largest car importer, said the group would have to assess whether there was sufficient global demand for right-hand drive Logans to justify production in SA in addition to India.

It was possible, however, that some of the Logan family of cars could be made in India and others in SA, she said.

The company has doubled sales of Logans over the past two years, selling 19500 last year.

Bouchara said that if the Logan became available in SA, the company could double sales again in the next three years.

Renault was now just behind BMW with a 5% share of the market, Bouchara said. It hoped to double its market share by 2009. Aggressive expansion of its dealership network from 40 three years ago to nearly 70 this year supported growth in sales.

Renault SA, which is 49% owned by the listed Imperial group, will launch a campaign this week to ?rectify? the perception that its vehicle parts are more expensive that those of local car manufacturers.

A Malcolm Kinsey report comparing the cost of Renault?s parts, including labour, shows that Renault was among the top three most affordable, said Bouchara.

He said Renault had not increased the prices of any of its vehicles in the past three years.

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Greek closed-end investment fund Dias Invest intends to pump over 15 million euros into emerging markets from Southern and Eastern Europe. Poland, Turkey, Romania, Serbia and Bulgaria will take priority, according to information, which appeared in the Greek press.

SIF Banat-Crisana will propose its shareholders to increase the share capital and distribute bonus shares. It is the first of the SIFs (Financial Investment Companies) that proposes to distribute bonus shares to all its shareholders.

Foreign investments (FDI) attracted in the first month of this year stand at 105.6 million euros, 26% more than in the same month of last year, according to data provided by the National Trade Registry Office (ONRC).

Reinert will open its first meat processing plant in Romania, with an investment of EUR 15 million. The company?s representatives attributed their interest in Romania to the growing demand for pork products.

Finansbank Romania's total assets increased by 74 percent at the end of December 2005 as compared to December 2004, reaching EUR 341 million.

Nestle Romania registered more than EUR 80 million in turnover last year, a 25 percent increase compared to 2004. ?For cereal bars, last year the turnover was EUR 4 million,? said Romeo Cazanescu, the firm?s country business manager of breakfast cereals.

The pace of investments targeting the automobile industry will maintain and even speed up in the medium term, with production relocations from Western European countries to generate a steady turnover growth, which is likely to amount to 9 billion euros or, according to a more upbeat projection, to even 12 billion euros around 2010, the Association of Romanian Carmakers (ACAROM) predicts.

Romania has an approx. 60 per cent mobile telephony coverage rate and a total 13.5 million users, but the market is currently witnessing a ?revolution? of mobile services in the context of fierce competition. While the two leading operators, Orange - market leader in terms of customer number - and Connex Vodafone are competing over leadership, the newly re-launched Cosmote starts a ?revolution? in the mobile telephony market, with an admitted objective of becoming market leaders through pricing policies.

Thus, Cosmote launched as of this month an offer through which both new and current customers of the operator are offered 2,000 minutes in the network, if they activate a EUR 3 extra-option by the end of March. The amount is deducted from the initial credit value. Virtually, the owner of a Cosmote card may talk over 33 hours a month with other customers in the network, for 12 months after activation. The Cosmote card has managed to shatter the drowsy mobile telephony market, as the operator targets lower-income customers.

The advantage ensured by the card is that buyers do not sign a contract, do not receive invoices and can give up the offering at any time, as soon as they stop paying the three EUR. The queuing in stores prove the psychological effect of the Greek operator?s offer. According to company officials, Cosmote dealers? inventories need daily refills, with buyers? interest particularly high since the option can only be activated by the end of the month. The step made by Cosmote took the market by surprise, although telecom analysts were expecting the operator to launch a new offer, in order to increase their customer portfolio. The results of the spectacular offer made by Cosmote will only be seen in one year?s time, when the customers who now purchase prepaid cards are to decide whether to subscribe and remain in the Greek operator?s database.

On the other hand, Cosmote?s attack will definitely not go unanswered by competitors Orange and Connex-Vodafone. In the meantime, the leading players? offers have also improved and they are expected to keep doing so in order to increase the number of customers. Orange has recently announced that its customer portfolio exceeds seven million users, while Connex -Vodafone announced over 6.2 million users for itself. Another operator in the local market, Zapp, plans to round off its customer portfolio at 300,000 users.

Cosmote, ex-Cosmorom, is the first subsidiary of Cosmote group to take over the Group?s corporate brand and identity. The investment plan includes investments of EUR 450 M in infrastructure development and increasing coverage rates.

At present, the Cosmote service is available to 80 per cent of the population and covers 55 per cent of the national territory. By the end of June 2006, company officials target coverage of over 70 per cent of the territory, i.e. 90 per cent of the population. Cosmote Greece holds 70 per cent of the Cosmote Romania stock, with the remaining 30 per cent held by RomTelecom. Both RomTelecom and Cosmote are controlled by Greece?s OTE group.

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One third of the city?s major roads, two more flyovers to be built - one in Bucharest, another one in Doamna Ghica area - while in 22 central crossroads works are to be launched for parking construction, all as of March 15.

The ?one billion Euro? construction site announced by the municipality late last year is opening on March 15. This is also when works ?delayed? last year are to be resumed, primarily the asphalting of the main boulevards.

?On March 15 we are to resume works that were started last year and were not finalised. These include areas Charles de Gaulle Square, Poligrafiei Blvd., 13 Septembrie Ave and Splaiul Independentei,? head of the Street Administration Agency Elena Ghineraru announced.

Also to be resumed are works on Tudor Vladimirescu Blvd. (currently closed for traffic), Geniului Blvd., 11 Iunie and Soseaua Chitilei, the head of the municipal street authority added. But the said works actually mean the beginning of a nightmare for the Bucharest traffic.

?We have published the announcement for the bids on this year?s works, in the Official Gazette. There are 35 boulevards, grouped into 17 packages. I believe actual works on these boulevards will start on May 15,? Ghineraru also said.

Works on the 35 boulevards will start at the same time, with the investment value expected to total close to ROL 3,000 bln.

Apart from these, the Municipality organised bids on March 9 for another 70 boulevards included in the repair programme. ?Repairs on these 70 boulevards will very likely start on May 1. (...) This year Bucharest will be a construction site. But we can?t have a beautiful Bucharest without sacrifices,? the official concluded.

And these are the works planned by the Street Administration alone.

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Prime Minister Calin Popescu Tariceanu met yesterday with the director of the World Bank (WB) for the Southern and Central European Region, Anand Seth, as well as Owaise Saadat, the chief of the World Bank Office to Romania.
The three officials talked about projects developed by the World Bank in Romania.
Seth showed that the financial institution accepted the Romanian authorities request for developing a program that will manage situations regarding bird flu.

Tariceanu said that the Romanian government wants to assure a rapid and efficient management of these situations.
The Romanian authorities and the World Bank discussed closing the PAL 2 agreement and the completion of a new Pal 3 Program that would allow the finalization of Romania's reforms.

The way in which this program will be constructed will be finalized in future meetings.
The PM appreciated the constant support the World Bank has granted Romania and expressed the hope that this cooperation will continue.
According to a study issued in October 2005 by the World Bank, Romania would have to register an eight percent economic increase in order to eliminate poverty by 2015.

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Polish Senate gave its consent for the ratification of Bulgaria and Romania?s Accession Treaty, RIA Novosti reports. The decision was supported by 426 MPs, one voted ?against? and one abstained.
?We eagerly expect the day when Bulgaria and Romania will join the EU?, Chair of parliamentary European Union Affairs Committee Karol Karski stated. He pointed out there were no reasons to postpone the membership of the two countries.

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Romania's economy is estimated to rise by 4.6% this year, compared to an estimated 4% in 2005, while inflation is expected to go above the central bank's target figure at 7.1%, revealed a study conducted by the independent think-tank, Romanian Academic Society (SAR).

SARS analysts expect 2006 to be a good year, as they estimate inflation to slow, the current account deficit to decline and the economy to rise at a normal rate.

Consumer price inflation set at 8.6% last year.

The main difficulties that BNR will have in order to curtail price growth this year are:

Government-administered price increases to bring utility prices to levels close to the EU, salary raises and consumer lending hikes.

Romania's 2006 current account deficit is projected at 8.2% of GDP, compared to an estimated 9.2% last year, while the budget gap is forecasted at 0.8% of GDP, according to the study.

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CEC posted a net profit of ¤2 mn in 2005, although the bank?s management stated that the results will improve, as the target for this year is to increase the 4.3 per cent share to 5 per cent. The owner of the bank will be announced this summer.

CEC plans this year investments worth some ¤100 mn for the extension of the IT system in all units and for launching new products and banking services.

The deadline for the final bid offers for CEC is April 25 inclusive.

The list of participants in CEC privatisation contains six banks:

National Bank of Greece, Monte dei Paschi di Siena, Dexia Bank, EFG Eurobank, OTP Bank and Raiffeisen.

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The Romanian National Agency for Small and Medium-Sized Enterprises and Cooperation (ANIMMC) approved an 8 mln Romanian lei (2.19 mln euro) financing plan to support small and medium- sized enterprises (SMEs) operating in the country.

According to the programme clauses, ANIMMC gives individual non-refundable funds to solvent SMEs equal to 75% of their 2005 profit but not more than 100,000 lei (¤27,500).

The recipients are obliged to invest the funds in new assets which they have to operate for a minimum of five years.

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The revenues to the budget derived in February 2006 rose 31 percent compared to the same period in 2005, standing at 6.8 billion lei, according to the figures supplied by the assessment department of the revenues to the consolidated general budget within the Public Finance Ministry (MFP), ACT Media news agency reports.

Revenues to the state budget stood at 4.4 billion lei, up 42 percent as against the same period of 2005.

In the aforementioned period, revenues derived from the tax on profit grew most with 82.14 percent, followed by the revenues derived from VAT - 51.81 percent, tax on income - 38.45 percent, from excises - 23.2 percent and from customs duties - 6 percent.

Earnings derived from the tax on wages dropped by 42 percent.

The revenues derived from the health insurance budget increased by 23.16 percent, those derived from the budget of state social insurance grew by 12 percent and revenues derived from unemployment insurance budget went up 3.49 percent.

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Deutsche Bank, Merrill Lynch, Morgan Stanley, Nomura Securities, Dexia Kommunalkredit, Cheyne Capital, 3i plc and YFM are ready to bid for the management contract at Proprietatea Fund [Restitution Fund], according to the fund's interim manager Nicolae Ivan. The fund manager will be selected in May or June, Ivan estimates.

The tender book is going to be drafted by a consultant that is being selected now. The government intended to list Restitution Fund, whose assets are estimated at ¤3.9 billion, on the local stock exchange in Q1, but it realized that the deadline is unrealistic and postponed such plans until all the details are fixed. Raiffeisen's brokerage arm will manage the listing.

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Inflation declined to 8.5 percent y/y in February, slowing down from the highest level since last August in the previous month, according to data released by the National Statistics Bureau.

Inflation rose 0.2 percent in February, down from January's 1 percent.

Rising household consumption and hikes in energy prices pushed up inflation in the emerging economy in recent months, prompting the central bank (BNR) to raise its rate to 8.5 percent.

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Romanian natural gas producer Romgaz is looking to create a joint venture with Turkish and Egyptian companies to operate as a natural trader of gas delivered to Egypt.

The gas would be transported through the Nabucco gas pipeline, Codrut Seres, minister of Economy and Commerce, said Thursday.

Romania hopes to participate in the construction of the Pan-Arabian gas pipeline that would connect Egypt to Turkey, and later on to inter-connect with the Nabucco pipeline.

"This joint venture will be in charge of the construction of the pipeline, the gas trade and the pipeline operation," Egyptian Minister of Petroleum Sameh Fahmy said in Cairo.

Romgaz would provide pipeline construction expertise, Seres said.

Completion of the Nabucco project is scheduled 2010, and the project would not result in the suspension of imports from the Russian Federation, as Gazprom is to remain one of Romania's leading suppliers.

The project will include a natural gas transit corridor from the Caspian Sea to Western Europe, which is one a top priority project for the European Union, according media reports.

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Although the services sector still lags behind European standards, the Romanian beaches are full during the season.

Tourism's ratio in the Gross Domestic Product could soar to four to five percent this year, about a 100 percent increase compared with last year. 2005 was the first year since 1990 when a surplus of the trade balance in tourism was noted.
Authorities will award ten year leases through public tender of approximately 160 hectares of beach along the Black Sea's coast. According to the management of the Romanian seaside, the documentation for tenders is complete and task books will be announced today. The seaside is divided into 33 areas and the surface of each zone will be clearly stated in the relevant task book. Starting bids should be made at nominal prices of approximately eleven eurocents per square meter in areas with low potential and reach 1.5 euros for popular areas, such as Mamaia. Authorities have already concluded plans to separate similar bids.
The financial offer will have a weight of 60 percent in the bid, other criteria being turnover, owned properties and classification. Investors will have to allow free access to at least 20 percent of the beach. A breach in this clause would result in the cancellation of the lease contract. Investors will provide cleaning services, while authorities are still searching for solutions to securing lifeguard services.
Moreover, operators will have to allow free circulation to tourists, clean the beaches daily, maintain facilities in proper condition, ensure protection on beaches and in the water and remove dangerous objects.
Marian expects foreign tourism companies to bid for the local beaches, especially German investors. "We seek partners, investors, tourists from the European Union," said the president of the tourism authority. According to the official, authorities have already allocated 60 million euros to rebuild the infrastructure of the seaside and the Danube Delta.
The deadline to submit offers is April 2. Authorities will open the offers on the next day in the presence of investors.

Services upgrade expected to lure more tourists

"Romania is a safe destination," said the president of the National Authority for Tourism, Ovidiu Marian, at the International Tourism Fair in Berlin. The official underscored that a growing number of Romanians should support the local tourism industry and foreign tourists throughout the year, looking to take advantage of the country's strong points: balneary tourism (spa resorts), the Black Sea coast and the Danube Delta.
Nevertheless, the official pointed out that Romania has a notable deficit regarding the services sector in tourism, but authorities could soon change that with a draft law that stipulates new selection criteria for the industry's staff. "There is an incompatibility in the price-quality report," said Marian. The present legislation focuses on the facade and facilities of hotels, rather than services. The new law, which would enforce specialized training for employees in the industry, could boost prices, as the costs would increase. However, the tourism official said that competition should force prices downwards.

Infrastructure waves off tourists

"Romania is not a top destination for TUI," said TUI spokeswoman Stefanie Rother, pointing out that Bulgaria is the most popular destination in Eastern Europe. According to Rother, Bulgaria is preferred by tourists as the infrastructure developed faster over recent years and the number of hotels has increased significantly. Other destinations preferred by tourists serviced by TUI are Greece, Egypt, Great Britain and the Canary Islands.
All-inclusive packages are increasingly wanted, said Rother, especially by families. The option allows tourists to accurately estimate the overall costs of the vacation. Balneary resorts are also becoming increasingly more popular, quickly becoming top destinations.

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Representatives of the Bucharest Stock Exchange (BVB) and of Wiener Borse (Vienna Stock Exchange - VSX) recently signed a principle agreement for the licenses to trade BVB indexes and the New Europe Blue Chips Index (NTI), according to a BVB press release. "A stock exchange must have a license to trade BVB indexes. All capital market products and information belong to BVB and there is depends on the existence of a contract," explained the general director of BVB Stere Farmache.
The principle agreement is intended to establish cooperation between the two capital markets in view of the development and implementation of a policy regarding the license system for current and future indexes of BVB.

The BVB director forecast the launch of new indexes, such as the BET-Fi (reflecting the evolution of five financial investment companies), as industrial sectors diversify and the representation of listed companies increases.
Through the agreement, the local capital market operator would benefit from an expertise transfer regarding international standards in licensing and the elaboration of an international sales and marketing strategy. Another advantage is the access of BVB to the client network of VSX made of over 60 renowned customers, including ABN AMRO, Deutsche Bank, Erste Bank, JP Morgan, Merrill Lynch, Societe Generale.
According to Farmache, this agreement constitutes the base of the creation of structured products on the BVB.
The NTI index was launched by VSX at the end of September 2005 and reflects the evolution of 30 companies considered as "very safe" investments (blue chips) from the capital markets of Bucharest, Budapest, Ljubljana, Prague, Vienna, Warsaw and Zagreb.

The index was designed as a tradable product but also as active support for derivate and structured products.
According to a joint press release of the capital market operators of Bucharest and Vienna, the shares of IT retailer Flamingo International will be included in the ROTX (Romanian Traded Index) listed on VSX. The ROTX Committee is also monitoring the shares of Compa Sibiu and Biofarm Bucharest in view of the inclusion in the index. At the same time, Antibiotice Bucharest could be excluded. Now, ROTX includes the shares of Transilvania Bank, BRD Societe Generale, Carpatica Bank, Petrom, Rompetrol Rafinare, Impact and Antibiotice Bucharest.

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After EU accession, salaries will increase, first of all being those in upper management positions, believes Othmar Hill, the chairman of the Austrian recruitment and HR consulting firm Hill International, cited by Ziarul Financiar.
"Foreign companies are starting to realize Romania means a 22 million person market and when investors enter a market the strongest need they have is for managers," Hill told Ziarul Financiar.

This would be one of the reasons why managers will be the first professional category to see a jump in income, an element that will push fewer and fewer managers to seek careers outside Romania.
"I don't think more than 3 percent of them will choose to work abroad in the future, especially since the development prospects of the local market are extremely promising, which - I believe, will make people stay and those that left come back," Hill says.

Another argument against manager migration would be, in his opinion, the fact that relocation is an inconvenient process that entails losing one's social network, and that not many people are willing to start from scratch in a new place.
At the same time, Hill adds, the migration will be not be strongly felt from the opposite direction, either, because expats are quite a costly solution. What seems more likely, however, is that foreign companies entering the domestic market will send business mentors, project managers, financial managers and HR managers to help develop the business for a while.
The number of Romanian managers, he says, will increase once more businesses emerge, which has an extremely beneficial effect for any economy.

"The managers are the ones actually running the world, not the politicians. They are truly "globalized," while politicians are more obtuse, because their future prospects are usually restricted to three years," Hill says.
However, he believes that the weak points of Romanian managers, and of Eastern European managers in general, reside in the leadership department. Many of them, he says, actually expect to be understood without taking too much trouble to impose their will on their subordinates.

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 Meanwhile, three of the country's pipe producers are complaining that market economy status for Ukraine has not prevented the European Commission from adopting anti-dumping measures against their companies.
Earlier this week, the EC accused the three companies of unfair competition, and imposed a 27% customs duty that will come into force next month. Representatives of the Ukr-Trub-Prom concern are asking the government to defend their interests in Europe. On Friday, they said that the duties imposed on Ukrainian pipes are higher than analogous tariffs on Russian and Romanian pipe products.

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South-Korean producer of electronic and home appliance LG Electronics aims to double this year its sales in Romania, which virtually means a EUR 100 M turnover. ?We are optimistic regarding the future evolution of LG Electronics. With good market conditions we hope to double our sales for 2006, continuing thus our steady growth on the local market. Basically, with 250 per cent increase over 2004 we are proud to say we achieved EUR 50 M in 2005. It was a good year for us,? LG Electronics CEO, Han Khyu told Nine O?Clock.

According to the CEO, LG Electronics Romania witnessed a significant growth on the Romanian market in a relatively short time, with the company targeting to increase its market share to 20 per cent in the sector. ?LG Electronics Romania?s current business goal is to become the number one premium brand in the home appliance and electronics market by 2007. For 2007 we expect to reach some 20 per cent market share,? the LG CEO pointed out.

For this year, the Korean producer intends to launch new mobile phone models, including the launch of 3G handsets on the Romanian market in the third quarter of 2006. ?We are planning to introduce LG 3G terminals for the main operators on the Romanian market, since we foresee steady development for this segment, with more and more 3G clients for the main operators? Han Khyu stated.

LG Electronics has just launched two brand new stylish mobile phones, S5200 and S5100, on the Romanian market, after the models were exhibited at the 3GSM World Congress in Barcelona. ?The launching comes as a confirmation of our commitment to bring on the local market products that are also launched in other European countries,? Han Khyu said. For 2006 LG aims to achieve an approx. 5 per cent market share in mobile phones, on a very competitive and dynamic local market.

LG entered the Romanian mobile phone market in October 2005 with eight new models, reaching a 1 per cent market share within three months.

LG Electronics plans to launch new products on the home appliance market as well, starting with the first quarter of 2006 when the Romanian market will meet SolarDOM, the world?s first counter-top light-wave oven to combine conventional oven and microwave oven technologies.

According to the market demand, LG Electronics will launch new, innovative products so as to meet customers? high demand.

As for the Digital Display and Digital Media departments, Han Khyu stated that ?In 2005 we had the first position in terms of market share for LCD monitors, since June. For 2006, LG Romania aims to regain this top position. Also, we are proud to announce that our company has secured market leadership in Optical Storage, a position that we intend to maintain in 2006?.

According to the official, the company goal is to offer Romanians the chance to keep up with the newest technologies LG launches in European countries and the United States. ?In this respect, in the Digital Display department this year we are introducing better time response LCD monitors.?

The LG CEO also pointed out that apart from launching new products, the company is actually focusing on end users. ?Our consumer-oriented strategy is supported by our plan of reorganising our national service centre network, as we aim at leadership in after-sales service.? Han Khyu emphasised.

The best selling LG products in Romania are TV sets, air conditioning systems, vacuum cleaners and microwave ovens. The local branch of the South-Korean company, LG Electronics Romania, was set up in early 2004.

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Romanians invest 70 percent less money in open investment funds than investors from the EU new entrants, according to an article on Gandul daily, ACT Media news agency reports.

In 2005, Romanians bought mutual funds worth ¤5 on average, while Hungarians invested some ¤450 in such funds, Czechs ¤350 and Poles 250 euros.

"Only 0.2 percent of the Romanians' investment portfolio resulted in units of the mutual funds," officials of the Collective Investments National Union told a seminar held by FinMedia.

The Romanians' little interest in open funds was reflected in the increase in the net assets by 15.5 percent in 2005, but specialists are optimistic when referring to the growing potential of the relevant market.

Their expectations are based on the fact that "more and more banks launch companies managing investment funds, especially diversified investment funds," the Ziarul Financiar wrote.

There were some 26 mutual funds operating on the Romanian market in 2005, with their assets estimated to exceed 200 million euros late this year, "against the background of the rise in the number of the companies managing investment funds and against the background of the listing of new issuers on the capital market," the newspaper wrote.

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There were 10-most important and successful sectors of the Romanian economy last year, namely banking services, leasing, trade in consumer goods, trade in electronics and electrical appliances, in pharmaceuticals, franchises, the information technology sector, construction, road transports of goods and passengers and the trade in vehicles, according to an analysis carried by Capital weekly, ACT Media news agency reports.

Each of these markets conducted billions of euros worth of businesses in 2005 and each market grew significantly.

In 2006, however, things look set to change, experts argue.

Possible new regulations and constraints set by the state, coupled with early signs of the consumers' saturation or the fact that the population's incomes and the state revenues do not increase fast enough compared to the needs are as many reasons for some of the sectors to expect insignificant growth, or stagnation and even slight decrease of their 2006 turnover, Capital wrote.

Eight of the ten areas analysed by the publication are worth more than one billion euros, while the remaining ones are very close to this amount and stand chances to overpass it this year or the next.

These sectors saw combined deals worth 67 billion euros last year, with the banking services market being the leader at some 37 billion euros worth of assets.

Road transport, the auto market and the leasing market are to shrink this year, analysts said.

Banking services skyrocketed to 36 billion euros worth of assets at end-2005.

Assets climbed 59 percent last year compared to 2004, while lending went up 62 percent and deposits 47 percent. According to 2006 forecasts, the value and number of loans will grow, while deposits are likely to see a decline mostly due to the low interest rates. The consumer goods sold last year amounted to some 4-5 billion euros.

The electronics and electrical appliances will reach one billion euros this year, Capital wrote.

The 2005 increase will continue this year, but because of the restrictions introduced by the National Bank to the consumer credit, the pace will be slower, the weekly adds. The IT&C market, which totalled some 4.5 billion euros last year, might get close to five billion euros this year and to 5.4 billion euros in 2007, therefore placing Romania among the leading countries in the Balkans, alongside Greece.

The franchises might be the business of the future.

The turnover of the companies dealing in this area totalled 950 million euros last year, marking a 30 percent rise from 2004.

According to CHR Consulting, the turnover in the franchise sector will keep on surging by about 30 percent a year.

The construction market looks set to reach seven billion euros this year, up from six billion euros in 2005, marking a 15-20 percent expansion, Capital wrote.

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Slovenia wants to intensify its economic cooperation with Romania, Branko Marinic, the President of Slovenia - Romania Parliamentary Group of Friendship from the National Assembly of the Republic of Slovenia, told Rompres, ACT Media news agency reports.

"Our countries have a traditional affinity and nourish the wish to cooperate to the largest extent possible to be able to use to a maximum the opportunities deemed to arise once Romania becomes a European Union member", the Slovene guest said.

He leads a Slovene Parliament's delegation that visits Bucharest.

Branko Marinic also said that the economic relations between the two countries could be improved, first of all in the construction, financial, agricultural fields and consumer goods industries.

At the same time, the parliamentarian from Ljubljana stressed that Slovenia wants to further support Romania's European integration efforts through its accumulated experience on its own path toward the European Union.

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Two Romanian investors are going to develop a commercial gallery, in the southern part of Bucharest, entailing investments that could reach beyond 20 million euros. The project, called Vitantis Shopping Center, will encompass a total area of around 30,000 square metres, according to Activ Consulting real estate firm, the exclusive broker of this project.

The shares of Rompetrol Refinery Constanta dropped on Thursday by 7.43% on Bucharest Stock Exchange, the value of transactions totaling 6.27 million new lei (RON), the closing price being 0.0935 RON/share. At the preceding session the shares of the company were suspended from transactions when the Prosecution placed a safety seal on 25.8% of shares issued by Rompetrol Refinery. Stock exchange regulations say that in case of major events, which can influence the price of shares, the latter could be suspended from transactions in order to inform all participants. The price of shares listed with the Exchange dropped on Thursday by 2.57% on the average, while the shares of financial investment companies registered a depreciation of 2.63% on the average.

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Austrian SW Umwelttechnik will invest some EUR 30 million in three factories in Romania over the next five years, the company recently announced. The Austrian company, which specializes in the production of environmental protection technology, has already started construction work on a first facility worth some EUR 2 million in Timis county.

First Data International, part of First Data Corp. announced in a news release that Credisson International will use First Data to provide a full range of processing services to support the company's MasterCard card portfolio.

Credisson, which the Cetelem Group acquired in May 2005, holds a 20 percent share of the consumer credit market in Romania. First Data International will provide an extensive range of card production, personalization, authorization and processing services for Credisson, as well as call center services, risk monitoring, dispute management and POS terminal account handling services.

"Central Europe is a key focus for our growth in Europe," said Stefan Klestil, senior vice president and head of First Data's operations in Central Europe. "I am especially proud that our new office in Bucharest was able to leverage our operations and delivery capability across the region to the benefit of such an important multinational client."

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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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Romanian-Hungarian trade reached two billion euros in 2005, up 28.5 percent compared with 2004, said the delegate minister for industry and commerce, Iuliu Winkler.
Exports to Hungary reached 922.6 million euros, having a 4.15 percent share in the total goods sold abroad.
The value of imports coming from Hungary reached 1.08 billion euros, surpassing by 29.5 percent the level reported in 2004.
Gyorgy Gilyan, the state secretary in Hungary's Ministry of Economy and Transportations, said that Romania is Hungary's number one trade partner, excepting the EU countries.

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The government increased the budget granted to the Ministry of Public Finance (MFP), by approximately 3.4 million euros.
MFP will use the money to support litigations between Romania and different companies that are judged by the International Arbitrage Court in Washington.
The Court has registered until now four litigations in which Romania is a part and the sums required for the state's legal counseling amount to 3.7 million euros.
MFP will have to issue legal representation mandates in two cases involving Rompetrol and Spyridon Roussalis.

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The real estate investments carried out in the country between 1998 and 2005 are at the lowest level in Central and Eastern Europe excepting Bulgaria, states a study developed by CB Richard Ellis Romania. Thus, the sums spent in Romania account for only three percent out of the total 14.3 billion euros provisioned by investors for the region. "The efficiency rate is dropping fast," states the study, pointing out that the rate for office buildings decreased from 12 percent at the end of 2004 to 8.5 percent. The office space sector continues to remain dominant on the local real estate market, according to the study.

The rent of office space will remain at 18 to 20 euros per square meter in 2006, while the efficiency of investments will reduce from ten percent to eight or nine percent, analysts from the real estate market have estimated. "We believe rents will stall. There is not enough quality office space and customers will refuse to pay more than in other European countries for less valuable services," said Regatta Rentals Department Director Mihaela Raducanu. Commercial Department manager Catalina Jigman from Eurisko shares the same opinion.

The main investor in Romania is the Austrian group Immofinanz, which acquired several properties in the Czech Republic, Hungary and Romania. At this point, the main investors on the market are the real estate divisions of large financial institutions, banks, insurers and other multi-nationals.

In early January, British TV station Channel 4 quoting a study carried out by PriceWaterhouseCoopers (PWC), estimated the efficiency rate for real estate investments in Romania over the next ten years at 414 percent. European Union accession was seen as the main factor boosting the economic perspective for real estate investments. Second place in the classification was taken by Poland, which is expected to offer a 393 percent efficiency rate.

Last year, real estate investments in the region totaled 5.8 billion euros, accounting for a 39 percent hike. A third of the sum was invested by five companies.
Since 1998, most of the funds have been allocated to Poland - 40 percent, followed by the Czech Republic and Hungary.

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The Romanian Savings House (CEC) wants to regain the market share had in 2004 of more than five percent, by extending the IT in all its branches and launching new banking products and services, said the bank's president, Eugen Radulescu.
"Presently we held 4.3 to 4.4 percent of the banking market and total assets of 1.6 billion euros," said Radulescu.
The official said that preliminary data show for 2005 that CEC's net profit amounts is of two billion euros, under the level reported in 2004.

Radulescu said that the smaller profit is the result of reducing interests to the sums invested by the institution in state securities in the first months of 2005.
"In the first months of 2005 CEC lost 2.8 million euros. Slowly, the situation improved and we have closed 2005 on profit," said Radulescu.

The official said that CEC wants to increase the number of credits given to legal entities to 15 percent of its portfolio credit comparing with the current five.
CEC and American-based Transfer Rapid LLC created a service for fast money transfers on the USA - Romania direction.
"We expect 30 million euros transfers this year," said Radulescu.

The government decided to start the privatization process for CEC.
Some of the banks that want to buy the bank are the National Bank of Greece, Monte dei Paschi di Siena, Dexia Bank, EFG Eurobank, OTP Bank and Raiffeisen.
The privatization strategy allows CEC employees to buy a maximum five percent share in CEC while 10 percent of the financial institution's shares will be listed on the Bucharest Stock Exchange.

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UniCredit Romania posted ¤1.24 mn in net profit for 2005, a 48 percent rise compared to last year while the bank's total active assets reached ¤550 million, a 74 percent growth compared to ¤317 million in 2004.

The bank's total net incomes reached ¤38.6 million, a 45 percent growth compared to 2004.

The total of loans granted to individuals and companies increased 60 percent compared to 2004, up to ¤308 million.

The deposits' total value rose 33 percent, reaching ¤245 million.

Last year, UniCredit reached 50 units from 34 at the beginning of the year.

The main shareholder of UniCredit is UniCredit Group, owning 99.94 percent.

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Amonil Slobozia posted a gross profit of 7.2 million RON, which is eight times higher than in 2004 and a turnover increased by 29 percent, Bursa reports.

Thus, the company closed the latest financial year with 339 million RON.

The overall revenues of Amonil were at some 345.7 million RON, up by 26 percent compared to 2004.

Last year, 80 percent in the company's revenues came from the export activities.

However, the company's expenses rose by 21 percent and reached 331 million RON.

The company operated a personnel cut, from 1018 to 942 people.

The company is listed in the second tier of the Bucharest Stock Exchange and has a capitalization of 106.8 million RON.

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The National Council for Small and Medium Private Enterprises in Romania (CNIPMMR) proposed a series of changes to the law project for the modification of the law regarding commercial companies, initiated by the Ministry of Justice.
Ovidiu Nicolaescu, CNIPMMR's president, said that the institution he represents disagrees with the law provision that forces stock companies to have a minimum of five shareholders in its structure.
Nicolaescu said that such companies should have a minimum of two shareholders because this would encourage the creation of multiple new share companies.
The official stated that the future law should also introduce the managers' status, outlining an obligation of loyalty towards the company they work for, and the adoption of the business judgment rule, which would offer more safety to business operations.
The present law for commercial companies forces Small and Medium Enterprises (SME's) to have three managers.
Nicolaescu believes this provision stops the creation of new SME's because of the costs associated with employing the three managers.
CNIMMPR judges that the Ministry of Justice should include in the law new provisions that would clearly illustrate the difference between share companies that are SME's and the large companies.
Mariana Pietreanu, the general enterprise statistics director at the National Statistics Institute (INS), showed that 70 percent of the companies working in the constructions sector are SME's and these should benefit from a legal environment that supports them.
According to a survey conducted by INS on managers active in the constructions sector, construction activities will maintain the descending trend reported in the winter of 2005.
For the following three months, construction managers believe that the production coming from this sector will decrease and the number of employees will also diminish.
Costin Lianu, the general director of the General Department for Promoting Exports (within the Ministry of Economy and Commerce), said that this institution lately has started promoting Romanian products and will initiate programs to support Romanian companies in exports.

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A third of Bucharest's roads will be repaired in the coming years.

With a third of the large roads to be repaired and with works planned for parking lots in 22 crossroads, the traffic in Bucharest will soon be almost frozen.
General Mayor Adriean Videanu warned drivers about the works that will block the traffic in the next couple of years.
"I have warned and I publicly admit it will be a very difficult two-year period for traffic in Bucharest," he said yesterday, adding that City Hall is looking for alternative ways to ease the traffic problem.
However, he promised drivers they will not be sorry after the repairs are over.
"But I have to say that there is no other way. We will suffer for a while, but afterwards the horizon will brighten up," he said.
The works announced by City Hall at the end of last year will start in the middle of March and the costs will add up to one billion euros.
On March 15 City Hall will initiate all works that were begun last year, including areas such as Charles de Gaulle Square, Poligrafiei Boulevard, 13 September Boulevard and others, according to the Street Administration's director, Elena Ghineraru.
Two more passageways will be built, one in the Basarab area and in Doamna Ghica, towards the city's outskirts.
Works on Tudor Vladimirescu Boulevard, which is closed to traffic at the moment, as well as on Geniului Boulevard and of the Chitila Street will begin at the middle of this month.
Ghineraru said yesterday City Hall made the auctions public for repairs planned to be made this year.
"There are 35 boulevards, auctioned in 17 packages," Ghineraru said.
The works on all 35 boulevards will take place simultaneously, which will seriously hinder traffic in Bucharest.
Moreover, besides these boulevards, City Hall will also organize auctions for other 70 streets, where works will not be initiated before the beginning of May.
Half of the access ways in and out of Bucharest will be closed, as the main periphery arteries also need repairs. Moreover, almost none of the city's neighborhoods will escape works, as they will be carried out in Berceni, Rahova, Drumul Taberei, Chitila, Bucurestii Noi, Colentina, Pantelimon and Dristor.
Downtown Bucharest will also be a challenge for drivers, as the main streets will be renewed starting this spring.
Authorities urged drivers to leave their cars at home and use the public transport as often as possible in order to ease the works.
"They should be patient with us. You can't drive comfortably if you don't have patience for the streets to be properly repaired," said Ghineraru.
She added that it is important for the citizens of Bucharest to understand the necessity of these works.
"This year, Bucharest will be a construction site. We can't have a beautiful Bucharest without sacrifices," Ghineraru concluded.
Her point of view is shared by Videanu, who earlier last month said all the city's 359 streets will be completely upgraded in the next two years.
"It will be rather difficult to drive in Bucharest," he said back then.
Last year, about eight months after he was elected, Videanu announced the big plans for Bucharest's infrastructure. He said both the street infrastructure and the underground one will be repaired simultaneously. "I cannot do things half way," he said.
Nevertheless, he has admitted many times that the citizens of Bucharest will have a lot to endure.
"And I have to give you bad news: in the next two years, the traffic will be even worse than now," he said last December.

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Rompetrol Rafinare (Petromidia) shares saw their lowest closing price of the last six months yesterday, after the seizing of part of the shares held by the Rompetrol Group in Petromidia, Ziarul Financiar writes.
"The appeal prosecutors filed to challenge the decision of the judges on March 3 to deny the request to arrest businessman Dinu Patriciu, Rompetrol group chairman, is being tried today. As with previous proposed arrests, this led to an increase in sell orders on the market.

Petromidia shares fell to a minimum of 0.0910 RON/share and ended the day at 0.0935 RON/share, down more than 7 percent from the previous day. Rompetrol Rafinare lost 20 million euros of its market value yesterday, with the decline since the beginning of February, when the investigation in the Rompetrol case gained momentum, amounting to 175 million euros.
The scandal in which the company and its management are involved is making more and more foreign investors stay away from Petromidia shares. Foreign investors are calling the shots on the Bucharest Stock Exchange, but the market is now mostly dominated by speculators who are trying to profit from the heavy fluctuations.

Furthermore, brokers say that the trend of the Petromidia shares has nothing to do with the company's business, and is really unpredictable. This is why few brokers are venturing to make forecasts, especially since the trend of the shares is influenced by the ongoing investigations.

"It is very hard to say where Petromidia shares will go from here, particularly because I did not understand much of why the prosecutors demand shares to be seized. I think they should fluctuate around the current price. I think investors have already grown accustomed to hearing nothing good about Petromidia," the trading manager of one of the leading brokerage firms on the market commented yesterday. Brokers are also complaining about the procrastination of the probe, which makes the market nervous. Dinu Patriciu was officially charged a year ago, and has been called to the Prosecutor's Office 20 times since then, while prosecutors have issued two requests for arrest."

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Rompetrol Rafinare Co. will appeal against the lien on 5.46 million shares held by majority shareholder Rompetrol Group NV (the Netherlands), the company said in a press release published on the site of the Bucharest Stock Exchange, ACT Media news agency reports.

The independent register of shareholders informed Rompetrol Rafinare Co. that, at the request of the Prosecutor's Office of the Supreme Court of Cassation and Justice - Directorate of Investigation of Crimes and Terrorism, it applied an ordinance issued by the prosecutors regarding the lien on the shares.

According to Rompetrol Rafinare Co. the prosecutors did not tell the company about the lien and the reasons why it was ordered.

Rompetrol Rafinare Co. considers the measure illegal and ungrounded, and it will appeal against it because the evidence in the file shows no damage was involved.

The measure can have a negative effect on the stock exchange liquidity of the Rompetrol shares and on the funding of the company's development programmes, Rompetrol Rafinare Co. said.

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The European Union asked member states to work together to ensure steady and secure energy supplies while the European Commission stated in a green paper on energy that the EU's joint bargaining power would be second only to the US and let it get better deals, ACT Media news agency reports.

EC president Jose Manuel Barroso said that "political will" was now needed.

The vision of a more unified power market may stumble, however, as nations including France, Spain, Italy and Germany fight to control key providers.

"We are in a new energy century, demand is rising, Europe's reserves are declining, there is underinvestment and the climate is changing," Mr. Barroso said in Brussels.

"We must have an approach which matches the new reality."

Mr. Barroso said that it was vital EU leaders abandoned their 25 "different and uncoordinated" energy policies and spoke with one clear voice.

However, energy is still regarded by many member governments as vital to national security.

This attitude was reinforced over the winter, when a spat between Russia and Ukraine led to supplies being compromised in a number of European nations.

At the same time, attempts to shake up the European energy market have encountered resistance, with France and Spain attempting to block takeovers of domestic power firms by foreign rivals.

As a result, the European Commission has now recommended the appointment of a single energy regulator and the setting up of a single European power grid.

The EU also should look at forming an energy pact with Russia, it said.

Mr. Barroso said that he had been invited to Moscow by Russian President Vladimir Putin to discuss energy security.

"I believe that we are in interdependence," he explained.

Of course we need the flow of energy resources from Russia, namely gas.

I believe it is also in the interest of Russia to have a stable market."

The EU imports more than 40% of the gas it uses.

About half of that comes from Russia via pipeline through Ukraine.

Speaking to the European Parliament in October, UK Prime Minister Tony Blair said Europe would soon be importing 90% of oil and gas and needed to "up its game considerably".

Mr. Barroso said Europe should look at all forms of energy production, including nuclear, in order to ensure that half of its supplies were from low carbon sources with 20 years.

"We must respond better to sharp emergency oil and gas shocks," he said.

"There should be no taboos in this debate."

Another of the problems that have been hampering supplies and affecting prices is a lack of infrastructure and storage facilties.

The EC said that companies and governments need to spend about 1 trillion euros on updating and expanding its infrastructure.

One of the countries that has complained loudest about the problems with pipelines and an unliberalised energy market has been the UK. Consumers have had to endure a steep rise in gas and electricity prices, while companies complain that they are still shouldering most of the burden.

The UK is currently reviewing its national energy policy and Energy Minister Malcolm Wicks called the European plans "an ambitious agenda for action".

"The publication of the Green Paper is timely as we continue our own national energy debate," he said.

The Commission's recommendations were part of its green paper on a Secure, Competitive and Sustainable Energy Policy for Europe.

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The Romanian Commercial Bank (BCR) posted a net profit of 202 million euros for 2005, BCR Executive President, Nicolae Danila, said, ACT Media news agency reports.

He said the year 2005 was exceptional for BCR.

"2005 was the best year of the BCR, when its position as a market leader was consolidated and its profitability increased," Danila said.

The bank's balance sheet reached 9 billion euros in 2005, up 40 percent from 2004, and its deposits stood at 6 billion euros last year, up 31 percent from 2004.

BCR's own capital stood at 1.1 billion euros in 2005.

The BCR will further remain a Romanian bank, Erste Bank President Andreas Treichl said.

In the next 12 months, Erste does not plan to interfere with the bank's managing board.

Treichl said the current BCR managing board won't be hampered to take further care of the bank's customers, nor will BCR break off the relations with customers in the ensuing months.

The BCR's position on the market will not change, stressed the BCR president.

Treichl also emphasized that the name of BCR will be maintained as brand as it is already known and successful.

He said BCR is likely to account for 20 percent of Erste's portfolio in the next few months and estimates the process of BCR's takeover will end in mid-May 2006, sooner than previously announced.

The long-term strategy of Erste Bank will focus on consolidation and expansion, whereas the profit is estimated to grow 20 percent each year in the next four years.

''The net profit of Erste Group will increase by at least 20 percent annually over 2005-2009, and in 2009 we expect the net profit to register a 20-percent-increase compared to the previous years," Treichel said.

The Erste Bank president deems the chances that Erste be bought by another important financial group at this moment are slim, after it purchased BCR.

Erste Bank bought in November 2005 a 61.88 percent stake in BCR for 3.75 billion euros, in a transaction considered by an Austrian bank the biggest in Central and Eastern Europe.

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It has been reported that Auchan plans to invest 500m euro in its Romanian operations.  The retailer entered the market through land purchases in 2005, and is planning to construct two hypermarkets a year in cities with a population exceeding 250,000.
 
Auchan is also investing in shopping centres, and its first 50,000sq m centre is scheduled to open by the end of 2006. Auchan has reportedly invested 55m euro in the construction of the Bucharest shopping centre.

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The General Prosecutor?s Office confirmed the distraint on Rompetrol Rafinare shares, and according to the spokesperson of the General Prosecutor?s Office Robert Cazanciuc, the distraint was levied not only on Rompetrol Rafinare shares owned by Rompetrol Group NV but on shares owned at the same company by Dinu Patriciu, Rompetrol Group CEO and two of his American partners Phil Stevenson and Colin Hart, ACT Media news agency reports.

The Prosecutor?s Office investigated several possible offenses that might have been undertaken by the Rompetrol leadership and proposed, without success, the arrest of the businessman Dinu Patriciu and of two of his American partners.

The Rompetrol Group NV is owned by Dinu Patriciu by 80%, who holds the position of CEO, the rest of 20% belonging to Phil Stephenson who holds the position of vice-chairman.

The main activities of the group are refining and oil products marketing.

The turnover exceeded $2bn last year.

Among the companies who are part of the Rompetrol Group NV is Rompetrol Rafinare Romania with two refineries: Petromidia Navodari and Vega Ploiesti.

The Prosecutor?s Office spokesperson explained that distraint was levied on the shares of the parent company as the latter seems to be involved in the case in which Dinu Patriciu, Phil Stephenson and Colin Hart are included.

The three are investigated in the Rompetrol case for fraud, capital market manipulation, money laundering and association to offenses.

Recently, the Bucharest Tribunal has rejected the prosecutors? request for detention of the three.

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CEZ, Enel, Gaz de France International, Iberdrola and RWE Energy AG have been selected for submitting improved binding bids for buying the majority stake in grid Electrica Muntenia Sud, ACT Media news agency reports.

In the period ahead, the negotiating commission is to convey to the five selected investors all the necessary data for preparing the improved binding offers.

Eight investors presented their bids for 67.5 percent of Electrica Muntenia Sud shares (51 percent of the existing shares to which the difference resulted from the capital increase is added):

AES Southern Europe Holdings BV SUA, CEZ from the Czech Republic, Italy's Enel, Austria's EVN AG, Gaz de France International, Spain's Iberdrola, RWE Energy from Germany and Union Fenosa from Spain.

On the basis of the presented bids and in conformity with the privatisation strategy approved by the Romanian government, the commission that coordinates the privatisation decided to continue the process, by requiring improved binding bids from the selected investors.

Electrica Muntenia Sud distributes and supplies electricity to Bucharest and the southern counties of Ilfov and Giurgiu.

The company's share capital on July 28, 2005, was 191.309 million RON, having 1.118 billion RON turnover and 1.075 million clients.

The company has 775 km of high voltage lines, 13,493 km of medium voltage lines and 31,081 low voltage lines.

Electrica Muntenia Sud's privatisation implies the privatisation of 67.5 percent of the company's share capital, by an individual investor or by a consortium of investors through the acquisition of 50 percent of the shares and a capital increase up to 67.5 percent.

The buyer will have the right to choose, offering the European Bank for Reconstruction and Development and the International Monetary Fund the possibility to buy up to five percent of Electrica Muntenia Sud's share capital.

The shares that will remain in company's portfolio after privatisation can be offered to its investor in order to buy them partially or entirely.

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The Romanian Government adopted a national programme designed to reduce the energy costs for population by increasing the energy efficiency and using regenerated energy in 2006, ACT Media news agency reports.

As Romanian Minister of Economy and Trade Codrut Seres said, the programme will unfold through the Romanian Agency for Energy Conservation (ARCE) and refers to a 30% allocation of funds for some projects of the local authorities with the aim of reducing the energy costs, with emphasis on regenerated resources.

Seres deems that, currently, the bills are loaded with the bad energy efficiency.

The diminution in the bills for heating will be of 15-25 percent. The programme aims to increase energy efficiency by reducing losses of water and heat from the transport and distribution networks, to upgrade transport networks, to introduce meter systems for energy measurement and the system of distribution through two pipelines and to use regenerated energy.

The programme alleviates important investment at local level, including the attraction of foreign non-repayable funds under the form of foreign credits, to stimulate public-private partnership.

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Romania's largest oil group Petrom, majority owned by Austria's OMV, is preparing to buy two filling stations networks, one in Romania and one in Bulgaria, for a total of 30 mln euro to 50 mln euro, according to a "Dnevnik a.m." report.

Each network will include between 10 and 20 filling stations.

OMV transferred to Petrom earlier this year its 178 filling stations and its entire wholesale business in Romania, Bulgaria and Serbia and Montenegro, without replacing the OMV's brand.

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The Ministry of Culture will allot some EUR 19.5 million to renovating the National Opera building, ministry representatives announced last week. The Romanian state has loaned some EUR 250 million from international financial institutions for the restoration of cultural buildings nationwide, and the Opera building?s facelift is part of this plan.

Publicis will promote the Claritine brand in Romania, through strategy, creation, media, BTL and PR. Claritine is the first brand to change its status, from medicine under prescription to OTC, Schering Plough Romania, the production company, announced last week. Some 3.3 million units of Claritine are sold each year in Romania.

Mutual funds attracted 76.5 million RON (over 21 million euros) in investments last year, which accounts for some 60% of asset growth of the overall market in 2005, according to the statistics released by the National Union of Collective Placement Bodies (UNOPC).

Car battery producer Rombat posted some EUR 94 million in turnover for last year, a 10.3 percent increase versus 2004. The increase is mainly due to car producer Dacia, for which Rombat is the sole supplier.

The Suceava-based company, due to enter the PET beer sector, is one of the few independent firms on the beer market. Bermas Suceava this year plans to reach a net income worth 3.58 million RON (1.02 million euros calculated at an average exchange rate of 3.5 RON/EUR), only 0.5% higher compared with last year's figure.

Teraplast GP, one of the main domestic PVC producers, will invest around 4.8 million euros to erect a new PVC profile plant in Brasov this year. Construction works will start this month and will be finalised in July.

According to a release issued by the Government on Tuesday, Prime Minister Calin Popescu-Tariceanu agreed with Vice-Premier Gheorghe Pogea and Minister of Economy and Trade Ioan-Codrut Seres on privatising the power stations at Turceni and Rovinari (southern Romania).

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The Romanian Government on Wednesday adopted a national programme designed to reduce the energy costs for population by increasing the energy efficiency and using regenerated energy in 2006, said Romanian Minister fore Economy and Trade Codrut Seres . The programme will unfold through the Romanian Agency for Energy Conservation (ARCE) and refers to a 30-percent allocation of funds for some projects of the local authorities with the aim of reducing the energy costs, with emphasis on regenerated resources.

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Greek Minister of Transport and Communications Mihailis Liapis met in Athens his Romanian counterpart Zsolt Nagy in order to discuss the plans of mobile phone operator Cosmote to invest 900 million euros in the telecommunications and IT field in Romania, in the next three years. Cosmote has already invested one billion euros in Romania, in the fixed telephony sector (represented by RomTelecom) and it also intends to make direct investments worth 500 million euros, Liapis said,quoted by Rompres.

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The value of mutual funds' assets is expected to grow as the number of investment administration companies (SAI) increases and new issuers are listed on the capital market, said Dan Nicu, president of the National Union of the Organization for Collective Investment (UNOPC). According to the union's data, the total assets managed by SAI totaled last December 120.7 million euros. "A series of legislative changes slowed down SAI activities," said Nicu referring to last year's performance. However, the official approximates that the market's growth rate will outpace that of 2005.
Another problem faced by SAI management is the low number of investment instruments for sums supplied by customers.
"Recent years have led to significant hikes of the capital market, but the number of issuers remained practically the same," added the UNOPC president. Nicu also pointed out that state titles were completely missing, which makes the fund managers' job a lot harder.

At the end of 2005, the UNOPC numbers showed that 26 mutual funds were present on the local market. Monetary funds lost over last year more than 26 percent, half of their market share, according to UNOPC data. The market was won over by the other categories. At the same time, the Index of Mutual Funds recorded in December an appreciation of 0.95 percent, thus soaring above the 0.5 percent inflation rate. Overall in 2005, the index recorded an increase of 16.2 percent, while the average increase over the past three years amounts to 53.6 percent.

The value of net capital that entered the Romanian market of mutual funds in the first month of the year was 8.1 million euros, 13.9 percent more than in the last month of 2004, according to data from the UNOPC. The most significant inflows were on the diversified funds segment (5.67 million euros) and shares-based funds (4.11 million euros). All categories of mutual funds registered growth of their net assets at an average rate of 8.8 percent.

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Proprietatea Fund will appoin its legal councilor over the next weeks.

The Fund's Surveillance Council started the competition for appointing a legal consultant to the largest Romanian investment fund.
Law firms must submit offers by March 15 in the tender held by the Proprietatea Fund (PF) for an international legal consultant that will choose the fund's future manager, said PF's director, Nicolae Ivan. The future administrator must be experienced in managing investment funds of several hundred million euros.

The financial institution will be appointed after a tender initiated by the Ministry of Public Finance through the Fund's Surveillance Council. The audit company that will work with the Property Fund is KPMG. "For KPMG it is an important responsibility to be handling the audit of the Property Fund," said Victor Kevehazi, Senior Partner of KPMG in Romania. "This major project is very important for Romania, because it represents an attempt by the authorities to bring to a conclusion the long-running problem of compensation for those whose properties were expropriated by the communist regime. It is essential that this issue finally be resolved, primarily, of course, in the interests of justice for the victims of communism, but also to create greater stability and transparency in today's business environment. The Property Fund includes some complex issues which is why a firm like KPMG, which has a worldwide reputation for professionalism and integrity needs to be involved. Transparency is a must in this project. We look forward to the challenge of handling this project," Kevehazi concluded.

The company's competitors were Ernst & Young, PricewaterhouseCoopers and Deloitte.
Ivan said that the Fund has attracted the interest of well-known law firms such as Berwin Leighton Paisner LLP, Crowell Moring, Clifford Chance, Eversheads LLP, the Latern Corporation Limited, Shearman & Sterling LLP, Freshfields Bruckhaus Deringer, Allen & Overy and Salans. The financial offer submitted will have the largest bearing on the final score.
The legal consultant will issue the task book for the fund's manager and will hold the tender for appointing the company that will manage PF in the future.
It will also hold conferences through which PF's launching will be made public and legal consulting will be offered in all discussions held by the Fund.
Ivan estimated that by mid April the National Real Estate Commission (CNVM) will be notified of the Fund's listing on the Bucharest Stock Exchange (BVB). "We do not know what CNVM's answer will be. We are trying to do our job as best as possible. We are optimistic," said Ivan. The official added there are no aspects that would jeopardize their goal.
The fund has a social capital of approximately 3.9 billion euros and its shares are expected to be listed on the Bucharest Stock Exchange and on an international stock market.

Independent directors for Surveillance Commission

Robert Musneci, president of the American Chamber of Commerce in Romania and James Currie, director on the Royal Bank of Scotland executive board, will become independent directors in the Surveillance Council of the Proprietatea Fund.
The Fund's director, Nicolae Ivan, said that this measure is meant to increase the institution's transparency.
The Proprietatea Fund was created to compensate owners of houses nationalized during the communist regime in Romania and which cannot be returned in whole. The Fund owns shares in approximately 100 companies, including the Romanian Savings Bank, Romanian Commercial Bank, oil group Petrom, power company Electrica, gas distributor Distrigaz, phone company RomTelecom, air transport company Tarom and others. Debts held by the Romanian authorities in 14 states, including Iraq, Ukraine, Sudan, Syria, Mozambique, Libya, Nigeria, Cuba and North Korea will also be transferred to the fund.
The Romanian Savings House (CEC) won the tender for the management of the commercial operations of the Proprietatea Fund.

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Ziarul Financiar writes that the Romanian Commercial Bank posted a 202 million euro profit last year, an increase of approximately 25 percent over the 2004 results, which amounted to 162 million euros, BCR's chairman Nicolae Danila said yesterday.

The BCR official said the profit dynamics, calculated in RON under the Romanian accounting standards was of 15.6 percent.
"We achieved, through a strong development of the business volume and through careful risk management, a record net profit for the banks in Romania, that is 202 million euros, a value that accounts for 35 percent of the profit made by the entire banking system," Danila stated.

The bank's assets amounted to more than 9 billion euros at the end of last year, which equals a 25.7 percent market share. The increase in assets compared with 2004 was 40 percent. A similar growth this year would take the bank's assets to 12.6 billion euros. "We will attain an asset growth at least equal to the one in 2005 this year," Danila said. The bank chairman went on to say that non-governmental lending played a decisive role in the growth, as it stood at 4.4 billion euros, 50 percent over the level in 2004.
BCR customers' deposits amounted to 6 billion euros at the end of last year, accounting for a 31 percent growth.
The bank also posted 1.1 billion euros in equity capitals, a return on equity of 18.8 percent and a return on assets of 2.3 percent.

Danila added the bank had significantly improved productivity per employee by 42 percent in terms of assets and 54 percent in terms of loans.
BCR's market share of non-governmental lending stands at 26.4 percent- 24.8 percent for the corporate segment and 29.5 percent on the retail segment.

Also in terms of market share, BCR announced a figure of 28.6 percent for deposits, 23.9 percent for equity capitals and 42.1 percent for medium and long-term non-governmental loans.
Moreover, Danila estimates the dynamics of the banking system will come close to the level announced by BCR, but the market leader will see higher growth for some positions in the balance sheet. In the opinion of BCR's chairman, the growth of the bank will be sustained by attracting new funding from the foreign markets, worth 300-400 million euros, as well as from the domestic market through the launch of bonds in RON.

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Nine businessmen, who are on the list of the richest Romanians own hotels worth 700 million euros, which means 9 percent of the Romanian accommodation capacity, Capital weekly writes.

How did these business people manage to accumulate these fantastic portfolios? Some through privatizations that are still being talked about, but not always in good terms. Others through consistent carefully planned investments or through spectacular transactions that have amazed the other players on the market. Not one of the "how to become a hotel mogul" story resembles another, just like not one of the nine businessmen resembles another.

In the last but not least position, is Fathi Taher, who controls 555 rooms, 402 of them in the most luxurious hotel in Bucharest, JW Marriott, which has recently been appraised at 150 million euros. Number eight with 644 rooms is Viorel Paunescu, who owns Intercontinental and Lido in Bucharest and has a wealth of 750 million dollars. The seventh place is occupied by George Copos - especially since he has become a member of the government - who has 951 rooms evaluated by Capital magazine at 96 million euros. Towards the middle of this ranking, in sixth place, is Iosif Armas who has 1247 two star rooms at a market value of 13 million euros.

Gabriel Popoviciu and Radu Dimofte are in fifth place and if they sold their 1102 rooms, they would get 90 million euros. In fourth and the most promising candidate in view of the investments planned for the following five years is Radu Enache, the owner of the Continental chain (1,700 rooms assessed at 65-70 million dollars). La creme de la creme follows: businessman Mohammad Murad owns over 2,000 rooms, most of them on the Black Sea shore, at a wealth of 65 to 70 million dollars is in third place. A surprise second is Timisoara businessman Josef Goschy with 2,520 rooms in 25 hotels throughout the country.
First place belongs to Viorel Micula whose 3,180 rooms and 16 accommodation units are worth only 32 million dollars.

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The air transportation market in Romania is one of the most dynamic in the Central and Eastern Europe, said the Lufthansa regional manager Stephan Semsch. "It has a very good growth rate, superior to other countries in the region," said Semsch, adding that the reservation volume recorded last year soared 25 percent, thus placing Romania in third place. Poland ranked first in the region, followed by the Czech Republic.
Semsch added that this sector has had an amazing development over the past years, making air travel accessible with both traditional and low-cost companies. Presently, five to six percent of the region's population is traveling frequently on the airplane. "That is proof of the region's potential," said Semsch.

The volume of reservations in the CEE boost by 15 percent last year, upheld by the development of the low-cost operators, carry approximately four to five million people yearly. According to the Lufthansa officials, the low-cost operators are highly active in Poland, the Czech Republic and Hungary and Romania presents an ever-growing interest in Romnia. The EU accession and the liberalization of the air transport market account for the most significant motivations.

"The Romania air transportation sector is regulated but not completely liberalized," said Semsch, pointing out that the situation has an important part in the high ticket prices. "Compared with the region, Romania is in the superior echelon of the tariffs margin," added Semsch.
Nevertheless, prices for air transportation decreased significantly throughout Europe, stimulated by low-cost companies and growing competition.
Lufthansa ranks first in CEE for reservation volume, with a share of 14 percent. The next place is taken by LOT, Czech Airlines and Malev.

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The National Bank of Romania (BNR) will continue to use interest as the main instrument for fighting inflation and the intervention rate for sterilization operations could reach 10%, believes the president of the Romanian Commercial Bank Nicolae Danila.
BNR's administration board decided on February to increase the monetary policy interest rate by one percent from 7.5% to 8.5%.

Danila said that the RON should appreciate and indicated a 3.4 RON/euro exchange rate.
The official expects fluctuations of the exchange rate and believes that BNR might support the RON to reach a rate of 3.6 RON against the euro.

"I'm not talking about a tunnel (referring to the 3.4-3.6 RON/euro exchange rate) but we will see how BNR will support the exchange rate through less intense actions compared with 2004," said Danila.
The BCR official believes that non-government credit will increase and showed its reserves regarding the limiting of the foreign exchange credit, noting that the present economic evolutions still attract foreign direct investments.
Danila stated that the Central European Bank will increase at least two times its interest.

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Portugal's parliament approved late on Wednesday Bulgaria and Romania's EU accession treaty.

216 MPs supported the treaty, 12 MPs from the Portuguese Communist Party and another two from the Green party abstained.

Bulgaria's Bulgaria's Parliamentary Spokesman Georgi Pirinski attended the voting.

On March 3 the Portuguese parliament finished the discussions of the project resolution. All statements then were in favor of ratifying the treaty.

Portugal is the thirteenth country to complete the ratification procedure of Bulgaria and Romania's accord with the EU.

Sofia is hoping that all member states will ratify its EU accession treaty before the European Commission monitoring report in the spring of 2006, fearing a delay in its accession due to a delay in the ratifications.

If the notification of the ratification in all member states is not completed by 31 December 2006, the accession treaty will not enter into force and it will have to be renegotiated.

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The shareholders of the retailer IT&C Flamingo International, the first company in this field to be listed with the Stock Exchange, approved an increase in the company's share capital by almost 31.7 million lei, that is, more than 9 million euros, ACT Media news agency reports.

The company will issue subscription rights that will make it possible for the shareholders to subscribe the new shares.

The shareholders will also be able to sell these rights to other investors.

The total value of the shares issue will amount to 138.5 million lei (about 39.6 million euros).

The above-mentioned company will use the money collected by this increase in the capital to finance the acquisition of the retailer of electronic and home appliances Flanco International.

By a protocol concluded in advance the Flanco shareholders pledged to subscribe about 2/3 of the shares issue of Flamingo.

The shareholders must buy rights preferably from the market as they are not Flamingo shareholders.

Following this operation the Flanco shareholders are to hold about 25-30 percent of Flamingo and Dragos Ciuca, majority shareholder and founder of the company, will decrease his participation to about 40 percent.

In early January, Flamingo International and Flanco Holding signed the agreement on entirely buying Flanco International within a deal of about 37 million euros.

The last quotation for Flamingo shares was 0.418 lei/share.

The capitalization of the company came up to 62.7 million euros.

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Dacia, the Romanian subsidiary of Renault, has posted a net profit of EUR57m for 2005, after five straight years of losses, according to Les Echos.

The report said the result can be attributed to the success of the Logan, the low-cost Renault model that Dacia produces, launched in September 2004.

In 2005, the Romanian company invoiced 164,406 vehicles, a 71% increase on 2004, and manufactured 172,021 (+82%), including 146,456 Logans.

The company's turnover was EUR1.2bn (EUR348m from exports), more than double that of 2004, Les Echos added.

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Some 54 companies have bought so far the specifications to bid for the building of the Basarab passageway in Bucharest, said general mayor Adriean Videanu, ACT Media news agency reports.

The deadline for bids submission is March 31.

Referring to the plan to have the Victoria governmental Palace and the Parliament Palace connected, Videanu said that is a necessity and a study has already been made regarding the traffic crossing Bucharest from north to south.

It is an extremely important access way that, practically, along with Bucharest's main ring road, will ease the traffic in Bucharest, the general mayor said.

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The Renault-Nissan Alliance will no longer be interested in participating in a tender for taking over the Daewoo plant in Craiova (southern Romania), if the latter does not clarify its situation soon, Dacia general manager Francois Fourmont told a news conference.

According to new agency Rompres, the Dacia official said that the situation of Daewoo Craiova has not changed for several months. He said Renault-Nissan sent a letter of intent to the privatisation office, asking for access to information in order to decide whether it enters or not a possible tender held by the Romanian state.

Dacia vice-president, Constantin Stroe, had said in January that Daewoo Automobile Craiova could have a new owner before the end of the first quarter of this year. Two competitors, Ford and Renault-Nissan, had announced their intention to become involved in Daewoo Craiova's take over, Stroe had also said. In early 2005, KPMG priced at EUR32m the 51% package of Daewoo's shares, which the ministry of economy and trade wanted to take it over, and the liquidation value at around EUR70m.

The ministry of economy and trade holds 49% of the shares of Daewoo Craiova. Economy minister Codrut Seres said he hopes the plant in Craiova will continue to manufacture cars and will not lay off the small number of employees in Craiova. He said the company could be sold only if the new investor commits itself to keep 20-30% of the production capacity working and to launch a new product in a year or two.

In the 2005 Romanian sales charts, Daewoo ranked third, with 20,528 cars sold (8% market share), down from second for the first time behind Renault. The Daewoo Matiz and Cielo ranked second and third by model, with 13,087 and 6,302 cars sold in 2005, Rompres said.

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Government tax receipts advanced 23 percent in nominal terms, January-February 2006, compared with January-February 2005, according to an article in daily Ziarul financiar, ACT Media news agency reports.

February witnessed a rising trend in direct tax receipts, making up for a 15-20 percent decrease in their value in January compared with the first two months of 2005.

Profit tax receipts, due for the last quarter of 2005, were almost 15 percent higher in January-February 2006 than in the similar period of 2005.

Wage and income tax receipts were also bigger by 10 percent than in January-February 2005.

The rise is ascribable to an increase in the taxes levied on incomes derived from bank deposit interest, real estate transactions, share trade and dividends, from 1 and 10 percent to 16 percent.

The Value-Added Tax (VAT) contributed most of the tax receipts, or 45 percent of the total, which was collected by52 percent more than in the first two months of 2005.

Overall, both direct and indirect taxes went up an aggregate 27.5 percent.

Healthcare insurance contributions also recorded a similar development.

On the other hand, the rises in the collection of pension contributions and unemployment contributions were modest, of 11 percent and 3.9 percent, respectively, as a result of a cut by 2 percent in the size of the contributions performed in February.

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The Craiova-based electric locomotives producer Electroputere will be restructured by the consolidation of production activities according to the principles of economic efficiency, ACT Media news agency reports.

The process, which is due for completion by the end of June at the latest, also implies the layoff of 600 employees, who will each receive between 20 and 24 severance pays, depending on their length of service, informed the State Assets Realization Authority (AVAS).

In order to select the best privatisation solution, AVAS president Razvan Orasanu will discuss with representatives of all investors that have ever expressed interest in Electroputere SA: the Greek DAB, Sweden's Bombardier and Germany's Siemens.

The Austrian holding A-TEC Industries AG is to submit to AVAS this week a firm letter of intent to participate in the privatisation process.

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Air Madrid will include Bucharest in its flights schedule, beginning March 27.
Two weekly flights will have Bucharest as a destination and will have a stopover in Barcelona.
Flights are scheduled for Monday and Saturday and ticket prices will start from 147 euros plus relevant taxes.
The airline company will schedule flights to Rome, Paris, Milan, Frankfurt and Lisbon.
Air Madrid wants to expand the number of European destinations and connect them to its Latin American network.
The company has regular flights to Buenos Aires, San José, Panama, Bogotá, Cartagena, Lima, Santiago, and Mexico City.

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The Authority for the Recovery of State Assets (AVAS) blocked accounts belonging to 1,195 companies that have debts amounting to 22.1 million euros.
Among the debtors whose counts were blocked are Contrasimex B (Ploiesti County), CMC International Impex, Bio Medical Group- Bucharest, and Bidepa Security.
AVAS showed that the measure came after all other measures regarding debts recovery were used.
The debts will be taken over by AVAS from the National Health Insurance House and three banks: Bancorex, the Romanian Commercial Bank and Banca Agricola.
The sums will be directed to the Unique National Fund for Social Health Insurance and the decrease of Romania's internal debt.

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Romania is likely the country with the most HIV/AIDS cases in south-eastern Europe and this is mostly a result of the medical errors committed in the past, especially during the communist rule, according to Health Minister Eugen Nicolaescu yesterday.
"Now we pay with significant resources for the mistakes that were did mostly during the communist rule, mistakes that led to the infecting of over 10,000 people, most of them children, in medical units or through various medical maneuvers," the minister said.
His comments came at the opening of the regional consultation on worldwide access to HIV/AIDS prevention, treatment and care in southeast Europe, organized in Bucharest yesterday and today.
According to the minister, the whole region is going through a transition period, when many priorities must be dealt with quickly.
"Under these circumstances, problems such as HIV/AIDS may find a place in our agenda of priorities more difficultly. The fact that we do not yet have major HIV/AIDS epidemics in our countries is not, however, a reason to avoid dealing with the issue with the utmost seriousness," Nicolaescu added.
Romania, although it does not face a major epidemic, is probably one of the countries most affected by HIV/AIDS in southeast Europe, allocating over 45 million dollars every year only for access to specific therapy.
Estimates show that the National HIV/AIDS Program received over 65 million dollars last year from local and international partners.
"We want to believe we have learned something from the past and this is why we set up a strong national strategy in the field and we rely on its application based on a wide national and international partnership gathering several ministries, non-governmental organizations and organizations of people that are infected," Nicolaescu added.
Recent assessments show however that large investment will be needed in the future, especially in prevention programs to contain the spread of the disease.
"We are aware that efforts regarding treatment and care must be completed with offering a wider access to prevention services. Otherwise, we are likely to face a new wave of the epidemic very soon," the minister said.
HIV/AIDS is quickly increasing in Eastern Europe and central Asia, as over 270,000 people were infected last year, bringing the number of people infected with the virus in this part of the world to 1.6 million, according to the executive director of UNAIDS, Deborah Landey, who is also in Bucharest.
At the end of September last year, nearly 11,000 Romanians were reportedly infected with HIV or had AIDS.

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Hungarian banking group OTP aims to acquire a 10% share of the Romanian banking market as it bids for a majority stake in Romania's savings bank Casa de Economii si Consemnatiuni (CEC).

The possible acquisition is to help OTP reach its goal as CEC currently holds 5% of the local market.

CEC's privatisation was launched in August 2005.

OTP Bank competes for CEC along with National Bank of Greece (NBG), Monte dei Paschi di Siena, Dexia Bank, EFG Eurobank and Raiffeisen.

OTP owns majority stakes in Romania's RoBank, Slovakia's IRB Bank, Bulgaria's DSK, Croatia's Nova Banka and Niska Banka in Serbia and Montenegro.

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Nestle Romania company reported more than 80 million euros in turnover in 2005, a 25 percent increase on the previous year, the company announced, ACT Media news agency reports.

"In 2006, we shall continue to offer our consumers ever varied and finest quality products," Nestle Romania managing director Paul Nuber said.

Sales of breakfast cereals climbed 40 percent from 2004, while the pet food division grew 10 percent, the company official said.

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Aluminium maker Alro Slatina plans to invest this year approximately $25 million to upgrade production lines, ACT Media news agency reports.

The company plans to purchase electrical equipment, namely seven new groups of 45kA and 1,300 V,'' while the investments for the upgrade aim to increase the safety of the production lines' functioning.

Until 2010, Alro Slatina plans to implement a range of investment programmes worth about $700 million of which more than a quarter will be technological investments or environmental ones, and around $500 million will target the increase in the production facilities.

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Romania's economic growth has the potential to reach 4.5 percent in 2006, up from 4 percent in 2005, yet below the 6-percent official mark, according to a recent study of the Economist Intelligence Unit (EIU), ACT Media news agency reports.

Based on the study results, investment is expected to remain strong in 2006, with new and modernised production facilities to be commissioned and big public investment projects expected to attract related business.

The EIU analysts forecasted that private consumption will slow down on tightened tax and monetary policies, and that all the macroeconomic indicators suggest the current consumption boom boosted by imports cannot be sustained in the long run.

According to the EIU, if consumption slows down, economic growth would rise at a quicker pace, but the growth would be unbalanced.

"It is too early to think about a slowdown in consumption, although this would be welcome.

There is a long way to travel before we can generate such effects through monetary and tax policies," said ABN Amro Chief Analyst Radu Craciun.

"It remains to be seen whether the Government manages to follow restrictive wage policies in order to help the monetary policy," said Raiffeisen Asset Management chairman Mihail Ion.

According to the Raiffeisen official, Romania's industrial output and exports will be further affected in 2006 by the appreciation of the local currency and the rise in utility prices, and that is why the 4.5 percent economic growth may seem realistic.

Romania's economic growth should pick up to 5.2 percent in real terms in 2007 on highly performing investment and exports.

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Romania has serious difficulty with regards to its capability of absorbing the structural funds, which must be fully completed by the time Romania becomes a member of the European Union, ACT Media news agency reports.

This was one of the conclusions emerging from the talks held between Romania's former chief negotiator with EU Vasile Puscas and Jacques Myard, rapporteur of the French National Assembly, on Romania's preparation with a view to joining the EU.

The French official remarked the progress made by Romania in the field of justice and institutions within the process preparing the accession to the EU.

The French rapporteur directed attention to the special importance attached to Romania's evolution after the moment of the accession to the EU, especially to Romania's capability of coping with the institutional, economic and other kinds of challenges in the Union.

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The local print market gained a prestigious new international license last week, when the Romanian version of Time Out was launched. Ancor Publishing, the company that acquired the license from Time Out London,will be printing Time Out Bucharest every two weeks. The circulation of the glossy will be 20,000 and the title has 96 pages, in an A4 format. For the moment, it will be on sale only in Bucharest.

Bavaria Leasing will seek financing from foreign financial institutions as it is finding it more and more difficult to take out loans from banks in Romania.

Six months were enough for the ranking of the top ten banks to see spectacular changes: BCR and BRD continued to grow, leaving the second tier far behind, the new bank about to emerge - HVB/Tiriac/ UniCredit is challenging the third position, ahead of Raiffeisen, ING climbs from 7 to 5, CEC falls again, Transilvania climbs one more place and ABN Amro drops six places to 10.

The Romanian government has agreed to write off 40 percent of the $1.7 billion debt owed by Iraq, which must now pay only $977 million. The debt comes from Iraq's purchases of Romanian industrial equipment, transportation machinery and weapons before December 1989, to be repaid within 23 years.

The transition report for 2005 of the European Bank for Reconstruction and Development (EBRD) released last week showed a positive trend for Romania, but criticized the provisions of the labor code, as being ?rigid and imposing excessive restrictions, acting as an obstacle to the development of the private sector.?

The general manager of Praktiker, the home improvement store network, raised its expansion target for the Romanian market, now that the network could to reach at least 14 stores by the end of this year.

Trans Courier Service, an international express courier service provider, authorised service contractor for UPS, will make investments to expand its fleet by up to 50%, depending on the answer Romania will get from the European Commission in April.

With Romanians being more and more sensitive to flowers, the sales of garden and indoor plants rose 14 percent averagely in the past few years in Romania. "Almost 182 million cut flowers of all varieties were sold in Romania in 2005, compared with 164 million cut flowers in 2004," counselor with the Ministry of Agriculture, Forests and Rural Development Paula Craioveanu told Rompres. Sixty-one percent of these flowers were imported and only the remaining 39 percent came from the domestic production. "If 96 million cut flowers were imported in 2004, worth 12.1 million euros, as many as 112 million cut flowers, worth 14 million euros, came from abroad in 2005," Craioveanu said.

The Netherlands, Italy, Hungary and Thailand are the countries wherefrom Romanian traders brought the biggest number of flowers, with roses and exotic flowers accounting for most of the imports. But, according to specialists of the Agriculture Ministry, flower growing is a good business in Romania, although the production costs are much higher than the price of imported flowers. Flowers were grown on 370 ha in 2005 in Romania, an area as large as in 2004, but if in 2004 the production stood at 60 million cut flowers, in 2005 it rose to 72 million flowers. Flowers were grown on 160 ha in greenhouses in the past four years, with the production standing at 68-70 million cut flowers.

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Negotiations for the Esplanada real estate project to be developed in downtown Bucharest will close at end-March this year, Minister-delegate for Public Works and Physical Planning Laszlo Borbely told Rompres. The negotiations are conducted between the Transport Ministry, the owner of the plot of land where the project is to be developed, and TriGranit, the company to which the project was awarded at a tender for public-private partnership and which will provide up to 800 million euros for the project. There will be 10-storey and 20-storey buildings for offices, tourist accommodation and housing with high comfort standards and adequate equipping. Commercial services and activities will be provided in low-rising terraced buildings designed to be organically integrated with green areas and pedestrian precincts.

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Investment in Romania's healthcare system will reach 960 million euros in the following three years, Health Minister Eugen Nicolaescu told a news conference in Targu Mures, quoted by the Rompres local correspondent.."The overall amount for healthcare infrastructure projects, including hospital building and equipping, will stand at 960 millions euros, and this includes equipping the hospitals to some 80 percent of the requirements," the minister added. Nicolaescu also announced having reached an agreement with Prime Minister Calin Popescu Tariceanu over completing Decree 7/2006 regarding rural infrastructure to include the rehabilitation and further development of doctor's offices and pharmacies in the rural areas of Romania.He also said that the decree regarding the privatisation of doctor's offices will be kept on hold until the best solutions are worked out.

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The trade deficit for agricultural products in 2005 reached 1.34 billion euros, up 27 percent compared to 2004, although Romania has the highest agricultural potential in the region, being the fifth in Europe in terms of arable land. The negative balance was due to the massive imports of pork meat, cigarettes and tobacco, sugar and chicken meat, most of these sectors having reduced their output over the past ten years. According to Rompres, the imbalance is caused both by the lack of competitiveness of the Romanian products, but also by the incapacity to ensure the local consumption. Romania's pig farms halved over the past 10 years, the number of pigs currently standing at 5 million, of which 4 million are bred in individual farms.

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The new 64 fixed telephony operators doubled their market share in six months from 4.56 percent, in June 2005, to 9.8 percent, in December 2005.The competition on the fixed telephony market led to the cut in tariffs for international calls. Thus, 46.6 percent of the individuals and 56.5 percent of the companies would seriously take into consideration the idea of subscribing to another operator than Romtelecom. Romtelecom's monopoly on the local fixed telephony market ended in January 2003; at the end of the year, there where only 9,000 telephone lines installed by other operators than Romtelecom (0.2 percent of the market).

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The Renault Nissan alliance will no longer be interested in participating in the tender for taking over the Daewoo works of Craiova if it lasts too long, the general manager of Dacia company, Fracois Fourmont said at a press conference on Tuesday. ?The solution of the Daewoo Craiova case between the Romanian government and Daewoo creditors is a subject which does not concern us. If the situation lasts too much we will no longer be interests in participating in the tender?, Fourmont said. He pointed to the fact that the situation of Daewoo Craiova had been unchanged for months and that Renault Nissan had sent a letter of intention to the Privatization Office, manifesting the wish to have access to information in case of a tender organized by the Romanian state.

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According to centralised data with the National Statistics Institute (INS), females are making up 51.24 percent of Romania's population, with a ratio of 95 females to 100 males. Out of the 11,080,331 Romanian women, 6,187,381 are living in city areas and 4,892,950 in rural areas.

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Of the 8 electricity distributors in Romania, 4 have been privatised so far. Also, Electrica Muntenia Sud, which includes Bucharest and Ilfov county, is in an advanced stage in the privatisation process. There are 5 companies left in the race to take over this company: CEZ from the Czech Republic, Enel from Italy, Gaz de France, Iberdrola from Spain and RWE Energie from Germany. Also interested were AES Corporation from the US, EVN from Austria and Union Fenosa from Spain. The privatisation of Electrica Muntenia Sud entails an individual investor or a consortium taking over 50% of the shares, followed by an increase of the registered capital to bring their participation up to 67.5%. The company has over one million customers.

The majority share packages in two of the companies that have been privatised so far, namely Electrica Banat, covering western Romania, and Electrica Dobrogea, providing electricity to the south-east of the country, have been purchased by Italian group ENEL for 112 million Euros. It executive manager, Fulvio Conti, told us why the company had decided to invest in Romania.

" ENEL belives in this country, because it has a growing economy which is soon to join the EU. Romania is like home to ENEL, so it is our home too. We believe that we can bring our experience and our technical capacity to derive economic and developmental benefits for us, and to transfer part of these benefits to our clients." Executive manger Fulvio Conti also told us about ENEL?s projects in Romania:

"We want to consolidate our position in the electricity distribution field, by taking over the majority package in Electrica Muntenia Sud. Then, as soon as the government finalises the privatisation projects for the electricity, nuclear, hydroelectric and thermal plants, we want to participate in these privatisation processes, because we want to own production units in Romania as well. The economy is growing, the country is buzzing and there are many clear ideas and programs. On the other hand, Romania is a country of many contradictions, a country of rich and poor people. There is still a section of the population that deserves to develop economically and this is a great opportunity for the development of the Romanian economy, a process in which ENEL intends to be an active player."

ENEL has 4 million employees and 2.5 million customers in Romania. Its executive manager told us that this year the company will invest 65 million Euros in distribution networks, and another 300 million in the following 4 years. The other electricity distributors, Electrica Molova and Electrica Oltenia, covering the east and the south-west parts of the country respectively, have been taken over by the German group EON Energie, which paid 100 million Euros. The company has 1.3 million customers. This year, the German group will invest 10 million euros for infrastructure development. According to Walter Hohlenfelder, a CEO member of E.ON Energie, the German group is mainly interested in the acquisition of firms from the energy sector. Also, 51% of the Electrica Oltenia?s shares have been purchased by the Czech Group CEZ, for the sum of 115 million euros. ?This is the first step our firm made in Romania, but it is definitely not the last one?, CEZ president, Martin Roman, said.

Data provided by the Courier Operators Association in Romania reveals that ?the courier services market is bound to soar in 2006, with turnover bound to reach 130 million euros, that is 30% higher than the previous year?. Moreover, this growth rate will remain steady, the Association officials stated. The growth can be explained by the emergence of new firms on the market, as well as by the enhancement of the business volume of existing companies, which reported a 20% increase in their shipping volume in 2005. ?Courier services are very good indicators of the general trend being followed by a country?s economy? the Couriers Operators Associations officials also said.

In Romania, the courier market is divided in three main sectors, which courier companies specialize in: we have firms specializing in deliveries across Bucharest, that is, immediate or next-day deliveries; firms specializing in deliveries to cities across the country; and firms dealing with international deliveries. At present, firms dealing with nation-wide and international deliveries have an equal share of the market, which means that a series multinational companies - DHL, TNT, UPS and Fed Ex ? make up 50 percent of the market. Firms with predominantly Romanian capital dominating the market are Fan Courier and Cargus. As for courier services in Bucharest, the main competitors are Fan Courier and Cargus, as well as such firms as Alo Courier, Concorde, Pegasus.

According to the Courier Operators association, in 2005, the large majority of firms invested in their car fleets and in their network of agencies. Association representatives explain that ?Once competition started to intensify, investments in quality services also started to occur, alongside investments in standardization and staff training, as productivity and the quality of services are bound to make the difference on the market in the near future?. The market has also grown because courier firms have started to take over some of the clients of the National Post, on the fast mail segment -Prioripost.

The Romanian Post managed to maintain its unique sales outlets in terms of infrastructure and the range of its operational network, thus enabling the National Post to charge competitive rates in rural areas. Recent market studies reveal that clients using fast courier services are usually banks, consultancy and insurance firms, mobile telephony providers, as well as firms making car imports. In the foreseeable future, courier firms are likely to make logistics and storage part of their range of services. A list of postal services providers can be found on the site of the National Communications Regulation Authority at www.anrc.ro.

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A significant fall in the production of both flat and container glass in Romania was recorded in 1998, with a number of manufacturers still trying to find ways to fund the modernisation of their plants. Conversely exports of both tableware and glassfibre rose.

During 1998 Romanian glass manufacturers took steps to improve technology and increase their export levels. Exports of tableware and glassfibre in particular increased.

In Romania in 1998 total production of drawn flat glass reached 23,229,000 [m.sup.2]; rolled flat glass production reached 5170 [m.sup.2]. Production of simple and processed glass sheets represented an export value of US$15.9 million. Total glass produced for the year was 158,743 tons, of which container glassware represented 125,599 tons and tableware accounted for 21,635 tons. Total exports were worth US$85.6 million and glass yams had an export value of US$8.9 million.

Flat glass

The dramatic fall in the production of drawn glass sheets is largely due to the poor situation in the residential construction market and the increasing trend towards the replacement of the drawn glass sheets with imported float glass sheets. One Romanian float glass factory currently being modernised has still not resumed production of its 150 tons/day. Imports of white or coloured reflective float glass sheets are on the increase, as are imports of automotive glasses.

Glass packaging

There has also been a decline in the production of container glass, mainly as a result of increased competition from plastic containers. In addition, due to a lack of technical resources, three production units have halted and funds are being sought to finance their modernisation.

Tableware

A spectacular increase in exports has been recorded for tableware, and particularly in handmade tableware production. More than 30 private factories have been set up for the production of mouth blown items and this has lead to a new wave of artistic creation and diversified exports. At the Cer-Glass Exhibition which took place in May in Bucharest, organised by Romexpo, these new businesses were able to present their work to foreign visitors.

The exhibition of the Chamber of Commerce of Suceava organised at Suceava in June also demonstrated the progress that has been made in exports by the new organisation - Centrala Industriala a Sticlei si Ceramicii Fine SA Gura Humorului.

Glassfibre

Significant progress has been made in exports of glass fibre and of rovings in particular, where a peak of US$8.9 million was reached, due to efforts made to adapt to the new requirements of the European market.

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After the ROTX last year, the Vienna Stock Exchange launched the second index that also grounds on Romanian stock called the South-East Europe Traded Index (SETX), which should reflect the evolution of South-East European markets and considers the most important shares on the Romanian, Slovenian, Bulgarian and Croat stock exchanges, ACT Media news agency reports.

Of the four countries, the Romanian companies account for the highest share of the SETX, that is 39.9% of the calculation formula that includes blue chips Petrom, BRD, Transylvania Bank and Rompetrol Refinery.

The companies? shares are determined according to the bourse capitalization.

The index is calculated retroactively, from its starting value established at 1,000 points for January 3, 2005 it reached about 1,370 points on March 2, pointing to a 37% value increase over the last 14 months of the companies in the region covered by the index.

The SETX will be calculated in real time, both in euros and dollars, between 9.00 and 15.00 p.m.

The launch of the index will allow financial institutions to launch financial instruments based on it, boosting the interest of foreign investors for the Romanian market.

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The delegate minister for parliamentary relations, Bogdan Olteanu, said the CEC's privatization strategy will be changed by the end of this month.

The government will change CEC's privatization plan and continue with the process of choosing the future majority shareholder of the bank.

Investors interested in the privatization of the Romanian Savings House (CEC) must submit offers for the 85 percent share package by 25 April, said the delegate minister for parliamentary relations, Bogdan Olteanu.
"CEC's privatization strategy will be modified by March 25, through a government resolution, and the privatization contract project will be transmitted to the competitors, together with other documents, by April 10, at the latest," said Olteanu, who is also a member of CEC's privatization commission.

The new strategy would allow CEC employees to buy a maximum 5 percent share in CEC while 10 percent of the financial institution's shares will be listed on the Bucharest Stock Exchange (BVB).
The prior strategy referred to selling a maximum 75 percent of the bank's shares and no less than 50 percent plus one share.
Sources close to the privatization said that the two best offers will automatically qualify for the final stage, but three competitors might make the cut if the latter has a score close to the other offers.

The pecuniary bid holds 75 percent in the scoring framework and the final stage of the privatization will consist of only price offers.
At the end of last week, the privatization commission rejected the proposal of postponing the selling of CEC for another two years.

The commission decided to start drafting the initial sale contract and sending offers to interested investors.
The delays in privatizing CEC were justified by the need to increase the bank's value, either by capitalization or by ceasing share packages to the European Bank for Reconstruction and Development and to the International Finance Corporation.
Some of the banks that want to buy the bank are the National Bank of Greece, Monte dei Paschi di Siena, Dexia Bank, EFG Eurobank, OTP Bank and Raiffeisen.

Dow Jones showed that Raiffeisen will likely submit an offer after analyzing the entire operation.
Another possible investor is Erste Bank, which won the privatization competition for Romania's largest bank, the Romanian Commercial Bank (BCR).

Prime Minister Calin Popescu Tariceanu stated in January that the government might delay the privatization of the last state-owned bank and adopt the strategy that was utilized in the privatization of BCR.
Two years ago, the government relinquished BCR shares to the European Bank for Reconstruction and Development and to the International Finance Corporation.

The bank was sold in December to Austrian Erste Bank for a price of 3.75 billion euros.
Thus, the government is considering applying the same strategy for CEC in an attempt to increase the bank's attractiveness.
According to analysts, the first offers for the bank indicated a price of approximately 300 million euros for the main share package of the bank.

CEC should also carry out investments of approximately 100 million euros in upgrading the bank's IT system, according to Radulescu. "The investments make sense if we increase the volume of activity, but a part is necessary as well to maintain the large bank structure," added the president of the institution.
A delay in the privatization of CEC is an error, according to a report by Bank Austria Creditanstaldt (BA-CA). The report states that the saturation of the banking market will decrease the attractiveness of the financial institution.

"The general euphoria created by the successful privatization of the Romanian Commercial Bank and by the imminent finalization of the privatization processes in the banking sector did not last long," warns the BA-CA report.
CEC has the largest territorial network in Romania, owning 1,400 units.
The bank was present mostly in the savings sector until last year, providing their clients a guarantee on all deposits. In the actives sector, the bank focused on the monetary market, investing in placements in the National Bank and state titles.
The strategy generated a constant drop of the market share and negatively affected financial results.

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The Romanian Automobile Club (ACR) disagrees with the ecological tax on second-hand car imports, arguing that this measure could favor interest groups and come against free competition.
ACR issued a statement in which it shows that the lobby performed by vehicle importers to the government and prime minister to limit imports on this sector will impose "artificial fiscal barriers."

"To avoid the natural protests that would come after limiting the right of sell cars freely and against the free market principles within EU, the interest groups found an ecological escape," shows the ACR statement.
The institution believes that the government should not intervene between sellers and buyers but should base the car trade on competition grounds.

ACR said that imports of second hand cars should increase because importers would be forced to quit heavy-handed practices that go against competition rules.
Another positive effect would be that car prices should decrease compared to present listing, believed by ACR to be very large.
Imported cars older than three years that do not comply with the Euro 3 pollution regulations cannot be registered in Romania.

Association of Vehicles Producers and Importers (APIA) issued a study that showed the average age of auto parks in the Western European countries is of 3.5 years while the vehicles registered in Romania have a 12 year average use rate.
APIA said that one of the possibilities is to sort vehicles depending on their technical status and pollution levels.
The sales of new vehicles on the Romanian market advanced in 2005 by 48.5 percent to 215,532 units. APIA estimated that in 2006 the sales should increase by five to 10 percent but some producers and importers said that the sales might stagnate or drop lower.

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Romanian tourism market will register an annual growth rate of 7.9 percent between 2007 and 2016, ranking fourth in a world classification made by World Travel and Tourism Council (WTTC). The first three are Montenegro, China and India.

"The tourism sector registers new growth records but what is really interesting is the way in which small countries under development like Montenegro, Romania, Namibia and Brunei manage to use tourism as instruments for the development of the economy in general," said the WTTC President Jean-Claude Baumgarten. These countries understood the importance of foreign visitors and made strategic decisions for the exploitation of the tourism's economic potential he added. WTTC believe that in Romania tourism will generate this year revenues of seven billion dollars. The traveling industry will advance by 9.2 percent in 2006 and 7.9 percent between 2007 and 2016. This market, along with additional sectors with direct and indirect impact would contribute 4.8 percent to the gross domestic product (GDP). Out of 174 countries, Romanian tourism ranked 162nd in real terms and fourth at annual growth.

The years 2004 and 2006 represent important periods for the tourism industry because traveling remained an important part of day-to-day life despite hurricanes, tsunamis, terrorism and the hike of the oil price, said the WTTC official.  
The National Tourism Authority (ANT) expects an increase of the number of local tourists ho choose to spend their holidays in Romania. This choice would be encouraged by a better promotion of local destinations, an operation in which the authority invested one million dollars, said ANT President Ovidiu Marian. The official explained that the measures adopted by the Romanian authorities would greatly reduce the psychological effects of the bird flu.

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The French car producer Renault is interested in taking over Daewoo Automobile Craiova and has asked Romanian authorities to speed up the clarification of the plant's standing. Last September, Renault sent a letter to the privatization authorities demanding access to information on the Daewoo plant but received no answer, said Francois Fourmont, the general director of Renault's local branch Automobile Dacia, in a press conference. "We are still interested in participating in the tender, but the situation of Daewoo Craiova must be clarified," said the official. He warned that "time is not a neutral variable" and should the situation continue indeterminately the group might lose interest.

Fourmont explained that the takeover of a production unit had to be integrated in the long-term strategy of a manufacturer. "When someone buys a factory he thinks 20 or 30 years ahead," said the director of Dacia.
On February 22, representatives of the Ministry of Economy and Commerce (MEC) announced that the remaining points of disagreement regarding the conditions for the return of Daewoo Automobile to the property of the state would be clarified within two weeks. Daewoo Automobile Romania was founded in 1994 as a joint venture of Automobile Craiova and the South Korean manufacturer. General Motors took over Daewoo, in September 2002 when it went bankrupt but the plant of Craiova was not included in the transaction.

The Office for State Participations and Industry Privatization (OPSPI) is authorized to negotiate the return of the 51 percent stake of Automobile Craiova owned by the South Korean party to the state. According to the press General Motors, Ford and Renault Nissan were some of the investors potentially interested in acquiring the plant.
On the same occasion, the Renault representative affirmed that the group had no interest in the takeover of ARO Campulung. This is for two reasons, explained the vice president of Dacia, Constantin Stroe. Before acquiring an industrial site, one must have an adequate product that can be developed in it. "The Campulung facility does not correspond to our needs or our standards," Stroe added.

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The rusty buildings will make way for a 700 million euros real estate project

The industrial platforms in Bucharest will have to relocate their activities within three years from the EU accession date to make room for urban development programs, said the vice-mayor of Bucharest, Ludovic Orban.

"The process is very complicated and it involves the abandonment of the industrial zones and demolition works," stated Orban. He attended the launch of a new real estate project, worth 700 million euros. The mammoth project will spread across 42 hectares of land, which is presently occupied by the local harvester maker Semanatoarea. "We are targeting three locations for relocation: Brasov and two other, at approximately 70 kilometers from Bucharest," said Ion Radulea, president of River Invest and MYO-O, which own Semanatoarea.
The project, which includes office space, commercial buildings and residential locations, will have a total constructed surface of 659,000 square meters and should be completed in 2015. The vice-mayor of Bucharest welcomed the project, located in downtown Bucharest on the Dambovita bank, in a press conference and stated the authorities' support for it. According to the official, another industrial area in the capital city could be transformed into a real estate project, while a third industrial platform will cease its activities soon.

Authorities acknowledge poor housing

Bucharest has an extremely low quality of housing, especially compared with other European capital cities, said Orban, pointing out that the residential developments so far were chaotic and the prices very high and unjustified. "Practically, we developed mushrooms," said Orban, referring to the fact that once somebody would build a house on a lake's bank hundreds would follow, without considering that there are no streets, no water nor sewage, schools, fire departments and other basic requirements.
"We need such projects," said Orban talking about the new real estate project, which will provide 1,200 dwellings. The new apartments will have a space of 80 to 260 square meters, available to buy for a price of 1,000 to 1,200 euros per square meter, depending on features.
To finance the project, the developers are negotiating several banking credits for 500 million euros, to secure 70 percent of the necessary funds. The negotiations are carried out with two Romanian banks and a foreign one. The investments efficiency is presently of 8.5 percent yearly, but the developers estimate that it could drop over the next years.
The first stage of the project features the construction of commercial and residential spaces, which could be completed by 2010.
"We live in old blocs, with a poor aspect, without parking spaces, parks or playgrounds for children," added the vice-mayor. However, he noted, the prices for apartments are very high as the demand is larger than the offer, mainly because there are no large-scale residential projects. Nevertheless, Bucharest could witness in the upcoming years an explosive development of the residential market, concluded Orban.

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Greece is strongly interested in making big investments in the telecommunications as well as other sectors of Romania, Greek Transport and Communications Minister Mihalis Liapis told his Romanian counterpart Zsolt Nagy, currentlyon an official visit to Athens,on Tuesday.

Speaking to reporters after the meeting, the Greek minister said Hellenic Telecommunications Organization (OTE) has invested around one billion euros (1.2 billion U.S. dollars) in Romania, while it planned to invest another 500 million euros (605 million dollars) for modernizing Romtelecom.

Liapis said Cosmote, the largest mobile service provider in Greece, was also expected to invest around 400 million euros (484 million dollars) in its subsidiary in Romania, Cosmorom.

The Greek minister also informed his Romanian counterpart over OTE's plans to list Romtelecom's shares in international stock markets.

He asked for the Romanian government's assistance to facilitateOTE and Cosmote's investment programs.

The two ministers also discussed the situation in the electronic communications sectors of both Greece and Romania, in the context of a new regulatory framework in the EU and ahead of Romania's entry in the European Union.

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The EU has granted billions of euros in aid meant to reduce gaps between member states and candidate countries, including Romania. [Getty Images]

Only about half of Romanians have access to running water or waste collection systems. About 45 per cent of public roads are unpaved, and most paved roads are in bad condition, as are hundreds of road and rail bridges. For many of the country's half million unemployed, working abroad appears to be the only solution. As for those wishing to to open or expand a small business, bank loans are often very difficult to obtain.

These are some of the problems that EU pre-accession funds are meant to address. Brussels has granted some 3.8 billion euros for development projects in Romania. Infrastructure, environmental protection, business environment, and social services are among the areas Brussels is willing to finance.

But despite the enormous need, Romanian institutions, companies, NGOs, and individuals haven't managed to put together enough eligible projects. In some cases, the three main EU-financed programmes -- ISPA, PHARE and SAPARD -- spent as little as 10 per cent to 20 per cent of the available money for Romania. Bucharest officials have repeatedly had to ask for the terms to be extended while they seek to boost absorption capacity.

"The biggest problem is the lack of the ability to elaborate projects," the daily Evenimentul Zilei quoted Deputy Finance Minister Nicolae Ivan as saying. He added that many ideas are found ineligible because their promoters can't prove they own the funds needed for co-financing (usually 25 per cent of the total).

The government has been taking steps to address the problem. Earlier this year, Prime Minister Calin Popescu-Tariceanu's centre-right cabinet held an extraordinary meeting on improving absorption levels. "Before accession, we have to deal with up to 800m euros per year. After becoming an EU member, Romania will receive 2.5 billion to 4 billion euros per year. If we have big problems now, imagine what could happen then," Deputy European Accession Minister Leonard Orban told journalists.

To prevent the situation from becoming catastrophic, the government is hiring about 8,500 new personnel for the public institutions that deal with EU grants. "It's a necessary decision in order to decentralise management of the cohesion funds," Tariceanu said. The new jobs are in various ministries, including agriculture, environment, transportation, commerce and internal affairs, as well as their local branches.

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Petrom, a member of the Austrian group OMV, intends to make new acquisitions on the petrol stations market, according to its strategy to expand as a brand in Southeastern Europe, Ziarul Financiar writes.

Sources on the market told Ziarul Financiar that Petrom was preparing two acquisitions of filling station networks, held by international companies. "One of the acquisitions will be made in Romania soon and targets a fuel station chain held by an international company, which is not a player the size of LukOil, OMV, MOL or Agip. The other one targets a takeover of petrol stations in Bulgaria," the quoted sources specified. They added that the networks targeted by Petrom comprised 10-20 stations. Under the circumstances, the cumulated value of the two acquisitions is estimated at 30-50 million euros, considering the market price of a petrol station and the latest transactions in the market.

Petrom sources say the petroleum company has a number of acquisition projects in the pipeline at present, and is focusing on the consolidation of the core business, petroleum and gases, on the markets where it is operating. "As a principle, Petrom does not reveal details about projects unless they are completed. As announced, Petrom will focus on its core business, in order to improve its efficiency and, accordingly, will give up some of its operations, motels included. The transaction does not entail only an intention to sell on the part of the company, but also finding buyers so that we could ensure the best conditions both for Petrom and the motels," Petrom's officials commented on the information.

Petrom recently took over the subsidiaries of OMV in Romania, Bulgaria, Serbia and Montenegro, totalling 178 filling stations in the three countries, in a 234 million-euro deal. The funding of Petrom's operation is partly covered by the capital inflow from OMV and partly self-funded. OMV's capital contribution was 830 million euros at the time it took over a 51 percent share in Petrom in 2004, in a transaction worth 1.5 billion euros.

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According to a legislation amendment adopted last week by the Lower House Budget, finance & banks Commission, the 1% ownership limit put forward for the Financial Investment Societies (SIFs) will no longer refer to one person, but to a group of persons acting in concert, ACT Media news agency reports.

The Commission discussed a bill for the approval of the Government?s Ordinance no. 41/2005 regarding the settlement of specific financial measures, one of which is the ownership limit with the SIFs and the impact thereof on the capital market and investors.

The concerted action refers to the situation when two or several investors act on the basis of an understanding, seeking to obtain a controlling or majority position with a company, by purchasing stock with the respective entity from the secondary capital market.

In its initial version, the ordinance only established an ownership limit of 1% with the SIFs? share capital, without any mention as to whether the shareholder can hold this participation alone, or jointly with other persons.

Anyway, if the shareholders exceed this limit, they are required to notify within a three-day term the SIF, the National Commission for Transferable Securities (CNVM) and the Bucharest Stock Exchange and also sell the stock in excess in a three-month term.

The National Brokers Association ? ANSVM considers that the amendment proposed by the Lower House expert commission could affect the bourse market and implicitly the activity of its members.

?According to this amendment, the 1% ownership limit no longer refers to individual persons, but to groups of persons who act in concert, but this is to the market?s disadvantage because it discourages investments.

Moreover, the requirement that the persons who acted in concert should sell the stock that exceeds this limit means that the law is applied retroactively.

The investors cannot be punished for having legally acquired these shares at a time when the law allowed it, said ANSVM.

?We consider the Lower House plenum should more carefully analyze the consequences of this amendment and publicly call on them to send the bill back to the Budget, finance & banks Commission.

In its current form, the amendment cannot be considered a positive measure, because it restricts the access to the capital market,? declared the Association?s president Dan Paul.

ANSVM considers that if the lawmakers? purpose is to separate the persons who act in concert from the rest, they should also establish a different ownership threshold for them, increasing it to 5%, as provides the Government?s Ordinance no.24/1993, which outlines the legal framework for stock subscription with the SIFs.

If the amendment becomes effective, the groups of investors who acquired substantial SIF stakes might be forced to sell the bulk of them, so that one could expect large amounts of SIF shares to change hands in the market in the near future. According to market information, the stakes higher than 1% are concentrated in the hands of several businessmen and of the SIF managers who succeeded in keeping their positions exactly due to these stakes.

The brokers also suggested that the owners of large SIF stakes will find ways to shun the legal provisions, just as they did when the ownership threshold was 0.1% and none of the investors with stakes in excess could be forced to sell.

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The shares of banks in Romania are among the most stable on Bucharest Stock Exchange (BVB), given the evolutions in the past month, ACT Media news agency.

According to the financial results posted by Banca Transilvania (BT), its shares settled around 1.5 RON/share and no longer recorded significant oscillations, even amid a steep decline of BVB.

Over the past month, the closing quotations of the BT shares stood at 1.46 - 1.51 RON/share.

The liquidity continues to be high, the BT shares having remained the most traded ones last week, with 13.5% of total transactions on BVB. The BRD - Societe Generale shares have shown lately a stabilization tendency, the trading price oscillating around 19 RON/share.

Unlike Banca Transilvania, where the daily oscillations exceeded quite rarely 1% in the past month, the BRD shares recorded variations of 2% or even 3% daily.

These shares oscillated in February between a low of 17,8 RON/share and a high of 2 RON/share, going up 9,2% versus end-January. Since the start of 2006, the banks' shares have increased 33,8%.

The Banca Carpatica shares had a positive evolution in the first part of February by reaching a high of 0,66 RON/share.

Afterwards, they recorded some corrections and returned to the quotations recorded in end-January. Since the start of the year, Carpatica shares have risen 7,7%.

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Romania has increased the state stake on offer in CEC, its fourth-largest bank, a major bidder said on Tuesday, in a move analysts said was aimed at tearing up existing bids by European Union-based banks, Reuters reported.

This week, the centrist government decided to continue with the sale of CEC, after considering putting off the process over the past two months to squeeze out a better price from bidders.

Local media had speculated that bidders were not eager to pay more than EUR 300 million for CEC, which has a book value of up to EUR 250 million.

Earlier today it was reported that Romania set the deadline for binding bids to 25 April 25, and Raiffeisen International Bank spokesman Michael Palzer said they were also informed that ?the stake that is up for sale has been increased to 85%", adding that the bank would file a bid.

Romania originally offered between 50% plus one share and 75% in CEC, which has almost half of all bank branches in the country of 22 million population.

Analysts estimated the sale, which could be one of the few remaining opportunities to acquire a big retail bank in fast-growing east Europe, could fetch as much as USD 650 million.

The decision to raise the stake should boost CEC's attractiveness, because it would make it easier to buy the entire bank and not just a majority stake, they said.

"The increase will boost foreign interest in the bank," independent economic analyst Florin Petria said.

"The (government) assessment has put pressure on bidders in the past two months. The government was trying to signal it was ready to put the sale on hold unless it got the right price."

Last October, seven EU banks filed non-binding bids for CEC: Hungary's OTP Bank, Franco-Belgian group Dexia, the National Bank of Greece and EFG Eurobank, Austria's Raiffeisen and Erste Bank and Italy's BMPS.

Other analysts said bidders were unlikely to drop out of the race.

"I can't see why the banks that had bid for the 75% stake wouldn't bid for 85% ... Romania is clearly an attractive market for them," said Tim Beck, a London-based Fitch ratings analyst.

CEC is still popular among the poorest Romanians, pensioners and farmers and boasts an almost exclusive branch network in the under-banked countryside.

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Greek Minister of Transportation and Communications, Mihalis Liapis, and Romanian Minister for IT and Communications, Zsolt Nagy, met in Athens and discussed Hellenic Telecommunications (OTE) and Cosmote's plans of ¤900 mln investments in Romanian telecommunications and IT, which will be implemented over the next 3 years.

Liapis said that OTE has already invested ¤1 bln in Romania through its fixed line unit, Romtelecom, and plans some ¤500 mln more in direct investment.

Additionally, Cosmote plans to invest ¤400 mln in its recently-launched Romania mobile unit, Cosmote Romania, which was previously known as Cosmorom.

The ministers also discussed Romtelecom's planned initial public offering.

Romtelecom is expected to be floated on the Bucharest Stock Exchange in the first half of the year, and may also seek secondary listings on other international exchanges, including London.

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European Commissioner for economy and financial affairs Joaquin Almunia said that despite low workforce costs, Romania cannot compete European states in absence of productivity increases adding that a considerable foreign deficit and other macroeconomic imbalances are currently the main weaknesses of Romanian economy, ACT Media news agency reports.

Bringing in line Romanian with EU wages must ground on productivity gains in absence of which economic competitiveness will reduce, warned the European official, who added that a considerable foreign deficit and other macroeconomic imbalances are currently the main weaknesses of Romanian economy and that wage rises were the main inflationist element that have pushed prices up lately.

He said that Romania should find self-financing alternatives to foreign investments reiterating that the recent tax reform has thinned budget resources and budget revenues by about 1% of the GDP, causing difficulties in the management of the fiscal and monetary policies.

However, Minister of Finance Sebastian Vladescu said that despite some economic problems, Romania is not in a situation of crisis.

The recent IMF report on compliance with Article IV, ?had a rather somber than optimistic tone,? said Vladescu, who expects the EU report that will be issued in May to stress that Romanian economy still faces certain problems, but that these were correctly identified and that the authorities have agreed upon the necessary policies for solving them.

The implementation of these policies and especially the achievement of the desired results are (?) strictly the responsibility of the Romanian government, the Ministry of Public Finance, the National Bank and in this respect, we consistently pursue our policies,? said Vladescu.

The FinMin is confident that Romania can perfectly support the costs of co-financing after accession and that there will be no problem with projects co-financing from structural funds or the payment of all the obligations incumbent on the State after accession.

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Australian investor South Pacific Group will put EUR 70 million into building 500 ?smart houses? in Tunari County, company representatives said. The first residential project developed by the group will be a 102-villa compound worth EUR 20 million, Regatta, the agency promoting the project, announced last week.

Fixed line operator Romtelecom will postpone investment in the next generation network (NGN) until the investment climate in Romania is suitable for further investments, but will still put more than EUR 100 million into upgrading the access network this year, said James Hubley, general manager of the company.

The government is selling 67.5 percent of the company's stock through the privatization process of Electrica Muntenia Sud, following the pattern of previous sales that have proven successful.
"Taking into account the high competitiveness and the quality of the submitted offers, we expect the transaction for 67.5 percent of the company to soar past 750 million euros," states a release from the power distributor. The privatization commission selected five international investors for the final bid, including Czech CEZ, Italian Enel and French Gaz de France. The local power distributor attracted the interest of eight companies- from countries including U.S.A., Austria, Spain, and Germany.
The Czech company already holds 51 percent of Electrica Oltenia, while Enel owns the Electrica Dobrogea and Banat branches.

The privatization strategy stipulates that the winner of the tender will acquire immediately fifty percent of the stock, subsequently increasing Electrica's social capital to boost its stake to 67.5 percent.
The privatization of the power distributor raised protests from authorities in Bucharest. "Electrica Sud is being privatized, but it is not normal for us to lose the power distribution network," said the city's General Mayor Adriean Videanu. The official argued that the municipality is a "captive user," depending on suppliers of utilities such as Electrica and Distrigaz. This situation is caused by an anomaly: distribution networks belong to the suppliers despite being a part of the public domain, he said.

According to the mayor, the sale of the distributors "as a whole" is not in the interest of the city's inhabitants, who will have to buy electricity at exaggerated prices. "An important part of the price of power is distribution. If things would be as they should be, that is, if we controlled the networks, prices could be controlled," said Videanu.
Thus, the municipality of Bucharest will demand of the national government permission to take over the Bucharest power distribution network, said Videanu. The mayor threatened to go to the courts if the privatization process continues in this form.
Electrica Muntenia Sud has a social capital of 55.1 million euros and recorded at the end of 2004 a turnover of 316.9 million euros, according to audited financial results developed in accordance with Romanian accounting standards.

Government to keep control of gas market

Authorities have decided against the privatization of the national gas producer and supplier, Romgaz, keeping at least a 51 percent share of the company. However, the government announced that the re-organization of Romgaz will carry on, in accordance with proposals submitted by a consultant within six months. The decision to abandon privatization was made after a report of the Ministry of Economy and Trade showed that such a move would have been unfavorable for Romania.
Romgaz is the main gas producer in Romania and holds the largest quantities of gas stored in Romania.

President Traian Basescu discussed the sale of the gas producer with members of the government at the beginning of the year and established that the employed method should carefully consider all the effects on the market. Prime Minister Calin Popescu Tariceanu stated at the time that Romania should benefit from its own natural gas deposits.
Authorities will not privatize gas providers in such a manner as to make the population dependent on one investor for natural gas, said Economy and Trade Minister Codrut Seres. His point of view was supported by Tariceanu and Basescu.
Seres believes that Romgaz could be privatized through the stock market, a policy which has been adopted by other companies. The minister did not offer further details, as the strategy should be developed by the consultant. "I do not want to steal glory from the consultant," stated Seres.

The consultant to the Romanian government is a consortium created by Credits Suisse First Boston, Linklaters and FRAI.

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Supermarket operator Kaufland Romania wants to expand its store chain to 50 new stores. "We intend that, during a first stage, to reach 50 new stores in the following four years," said the company's general director, Gunter Grieb.
The main locations where Kaufland wants to expand are cities with more than 150,000 inhabitants. The constructed surface of a store varies between 3,500 and 5,000 square meters. Average investments required when opening a new outlet is of eight to 10 million euros, according to Kaufland's representatives. Presently, the company's total investments in Romania surpass 150 million euros.

Grieb said that new Kaufland stores will be opened this year in Baia Mare, Targu Mures, Galati and Suceava. Future locations should be Bistrita, Constanta, Hunedoara, Satu Mare, Targoviste and Zalau.
The company already owns five stores in Bucharest, Ploiesti, Ramnicu Valcea, Alba Iulia and Timisoara.
"We hope that by the end of the year we will finalize the construction of the two and three modules located in Ploiesti," said Grieb.

Kaufland owns more than 650 stores in Germany, the Czech Republic, Poland and Croatia. Kaufland is part of the Schwarz group that reported for 2005 a 40 billion euros turnover.

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The passage of the National Trade Registry (ONRC) from the custody of the Ministry of Justice to the Romanian Chamber of Commerce and Industry (CCIR) would result in the increase of taxes and tariffs, according to ONRC general director Eugen Ghiulea. Another consequence would be the time needed for the incorporation of a company. "Through this measure the ONRC will become disorganized and unable to coordinate territorial offices. ONRC will no longer be a unitary system for county trade registries," Ghiulea explained.
A draft law for the modification of the ONRC status has been submitted to the Parliament. The Legal Commission of the Chamber of Deputies will discuss it this week.

The ONRC warned that the situation existing before the supervision of the Justice Ministry, when important differences existed between the taxes and tariffs collected by the various territorial offices, would resume. "Although the law stipulates uniform tariffs, there were counties with tariffs much higher than provided," said Ghiulea.
According to an analysis carried out by the institution in 36 countries, the trade registry is subordinated to the Justice Ministry in 18 countries and to other ministry in 14. In only two cases the trade registry was subordinated to Chambers of Commerce but, unlike in Romania, they were public institutions. "Practically, this measure will transfer public funds to a private organization. The money will go the budget of the CCIR and the ONRC will be unable to pursue modernization investments," Ghiulea claimed.

The ONRC official believes the real stake of the change in the institution's status is the important income it produces. ONRC revenues increased in the last years and the surplus became significant. In 2005, the institution recorded 26.7 million euros in revenues, over 24 million in the previous year. The surplus attained 4.7 million euros in 2005, and almost six million euros the year before that. Ghiulea said the revenues were used for the modernization of the IT systems.
The ONRC was transferred from the administration of the Chamber of Commerce to that of the Justice Ministry at the end of 2002.
The draft law for the change of the ONRC status already obtained the favorable recommendation of the Industry and Services Commission.

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The draft law for public acquisitions does not provide a transparent framework and holds back the development of the local companies' competitiveness, say the representatives of the Romanian Businesspersons' Association (AOAR).
The opportunity to increase the transparency of contracting authorities should not be wasted on countless exceptions which the law could not possibly fully cover, AOAR says in a press release.
The clauses that businesspeople reject include the possibility to contract public goods and services for one year with the option to expand the initial contract to four years.

AOAR qualifies as "unjustifiable" the provision according to which the contracting authority that cannot provide the exact description of the object of the acquisition can decide to reduce the list of potential suppliers, after discussions with them.
The businesspersons' representatives support the existence of several electronic public acquisition systems, including the use of the services provided by the commodities exchanges, in view of a more open competition environment. "Expanding electronic tender procedures would help the promotion and development of the informational society and insure a more efficient management of public funds," businesspeople say in the press release.

The representatives of AOAR say the creation of several centers of public acquisitions acting as "professional brokers" would be appropriate. This would give insure the correctness of procedures and equal treatment to all offer makers.
The modification of the law regarding public acquisitions made the object of a public debate organized by the Chamber of Commerce and Industry at the end of January.

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Hungary's fifth private railway company plans to start operations in the near future, with projects including the transport of waste for recycling from Germany to Romania on commission by Deutsche Bahn, the company's managing director told the business daily Vilaggazdasag on Monday.
Train Hungary has already signed a contract with Deutsche Bahn, in line with which the German railway company will use Train Hungary's services for two years if they are proven satisfactory during a one-month trial period, Erno Filep told the paper.

Train Hungary's other large venture will be transporting stone and sand for a railway construction projects, Filep said. For this job, the company expects help from Slovakia and Romania because there is a shortage of rolling stock in Hungary. Train Hungary owns only one diesel train and nine containers but needs about 80 extra carriages for this project, Filep said. Excess rolling stock owned by National railways company MAV and its subsidiary MAV Cargo are in poor condition and had to be withdrawn from service, he added.

According to Filep, Hungarian private railway companies need to join hands in order to defend themselves from competition from Germany and Romania.

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The stronger purchasing power and a novel promotion campaign for Maggi culinary product brand have brought Nestle Romania food company turnover worth above 80 million euros.

The market of individual investment accounts, a type of personalised mutual funds for the richest investors on the Bucharest Stock Exchange, reached almost 9 million euros at the beginning of this year. The amount is three times higher than it was in mid last year.

Businessman Fathi Taher, whose name is linked to the creation of Bucharest's Marriott hotel, has said he plans to invest in a four-star hotel in Predeal, on the land plot owned by the Trei Brazi company. According to the RASDAQ electronic stock exchange website, Taher owns 19.86% in Trei Brazi SA Predeal.

Catalin Mahu, owner of "La Mama" restaurant chain, says vertical integration achieved through investments in a food plant will highly benefit the company he owns. "Our investment in this plant aims to manufacture food products containing no additives, which would only be sold in our restaurants. This adds value to the service provided to our customers," Catalin Mahu said.

According to a legislation amendment adopted on Wednesday by the Lower House Budget, finance & banks Commission, the 1% ownership limit set forth for the Financial Investment Societies (SIFs) will no longer refer to one person, but to a group of persons acting in concert. The Commission discussed this week a bill for the approval of the Government?s Ordinance no. 41/2005 regarding the settlement of specific financial measures, one of which is the ownership limit with the SIFs and the impact thereof on the capital market and investors. The concerted action refers to the situation when two or several investors act on the basis of an understanding, seeking to obtain a controlling or majority position with a company, by purchasing stock with the respective entity from the secondary capital market.

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The guarantee ceiling for bank deposits has increased constantly since the coming into being of the Bank Deposits Guarantee Fund. Thus the ceiling was 10,000 in 2005, it should reach 15,000 euros in 2006 and 20,000 euros in 2007. The banks? contributions to the Fund will halve down in 2006 and 2007 and the necessary resources left uncovered will be supplied via stand-by financing lines that the Fund will sign with each separate bank, the institution?s director Alexandru Matei said.

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A stress-test study on the Romanian banking market carried out by Shkelqim Cani, senior adviser with the ?Convergence? program, placed four small-sized banks in the insolvency risk class. ?Convergence? is a WB program dedicated to the improvement of the financial environment in Central and East European states. The four banks identified as vulnerable account for an aggregate of just 0.8% of the total secured bank deposits. The four have a poor capitalization, a low solvency degree, a high credit risk and a low profitability. Another three banks were found ?instable,? with the recommendation that they should be kept under observation.

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Erste Bank will try to acquire the remaining BCR stock in order to get full control over the bank, but for this, it needs the agreement of all parties involved, Erste Bank president Andreas Treichl declared this week in Vienna. ?If the other shareholders ? that is the employees who hold 8% of the stake and the Financial Investment Societies that control 30% - allow us, that is, if they are ready to sell and we can agree upon a convenient price, we will definitely increase our participation to 100%,? said Treichl. Since the minor shareholders are unlikely to accept a price below the 7.65 euros/share paid by Erste to the Romanian State, the Austrians should need another 2.3 bn euros to pay for the rest of 38% the BCR stock.

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VAT will not be modified in 2006, but one of the main taxes may be increased as of January 2007, the Minister of Public Finance Sebastian Vladescu told Rompres.Vladescu added that the EU accession will require additional funds, therefore one of the main taxes might increase as of January 2007 for the payment of contribution and for project co-financing.

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The value of the investments in the private sector increased by 25 percent in 2005 as compared with 2004 according to some estimates, Vice-Premier Gheorghe Pogea told Rompres on Friday."It is probably the most significant increase of the investments in the private sector over the past 8-10 years," Pogea added.

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Austrian based A-TEC is interested in taking over Electroputere Craiova if the latter would solve issues regarding its 30 million euros debt, small production and the large number of employees.
Razvan Orasanu, president of the Authority for the Recovery of State Assets (AVAS), met with A-TEC's president, Mirko Kovats.
The AVAS board will analyze the situation of Electroputere which is working at 30% of its capacity and needs restructuring and a capital inflow.

The Romanian company has 3,000 employees.
A-TEC Industries AG reported for 2005 a 1.1 billion turnover after developing activities in most of the Central and Eastern Europe countries.
The Romanian state holds 62.8% of the Electroputere shares.
The company was created in 1949 and is an electronics producer.

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The Employers? Confederation of Industries, Services and Trade (CPISC) has recently undertaken over 200 contacts with Chinese companies in the sectors of production and energy transport, oil and gas, defence industry, mining, food industry, ACT Media news agency reports.

On the occasion of a visit to Beijing, the CPISC representatives visited several industrial units and started a stable collaboration with important organizations in different domains and Chinese provinces.

At the same time, the Protocol of Collaboration between the CPISC and the Association of Entrepreneurs in the Hebei province was signed, at the Romanian Embassy in Beijing.

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Cyprus-based Bluehouse Accession Property, a real estate company that invests in EU accession hopefuls such as Romania and Bulgaria, announced plans to raise GBP 100 M (USD175.6 M) and float on the Alternative Investment Market of the London Stock Exchange, or AIM.

The company intends to use the proceeds of the placing to develop new and existing projects.

Deutsche Ban has been nominated adviser to Bluehouse's placing, while Evolution Securities - co-lead managers.

With its steady economic growth, upcoming accession to the European Union and more businesses due to step on its market, Bulgaria has experienced high demand for quality property over the last few years.

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The 2006 transfers and subsidies granted by the government for some of the mining companies under the authority of the Romanian Ministry of Economy and Commerce (MEC) will be increased by up to 311.45 new lei, according to a law issued by the Executive, ACT Media news agency reports.

The money will come mainly from the exemption from paying of these companies' current debts to the state budget, to the state social security budget, to the Single National Fund and Social Security and Health Insurance budgets and also to the unemployment welfare budget for the January 1 - December 3, 2005 interval, the debts for the deductions at source making the only exception.

The law, passed during the February 16 meeting of the Government, also stipulates exemption from payment of those interests, penalties and extra payments for delays the said companies have to pay.

The adoption of these financial measures having a reparatory effect for the mining companies under the MEC authority was prompted by the subsidies from the state budget for 2005 not covering the differences between the production costs for the coal and the regulated tariffs imposed to these companies.

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World Vision Romania is working with local authorities in Romania to set up an action plan for flood disaster mitigation in each World Vision Romania community by the end of April. World Vision Romania also aims to have a relief data-base will be functioning by end of March.

Several meetings with local authorities and World Vision Romania revealed that there was an urgent need to assist local authorities with disaster mitigation techniques, particularly as spring is approaching and melting snows can be cause for potentially serious flooding in the country.

'People possess very little or no information at all concerning flood intervention plans. This was revealed by several interviews with local officials in the three counties where World Vision Romania has an USAID intervention and rehabilitation project', said Mr. Eugen Borlea, World Vision Romania ERDM Manager.

'What was even more surprising was that local authority including the Mayor, Vice-Mayors and Counsellors do not have comprehensive have knowledge on these issues', he added

Furthermore, local authorities acknowledge that 80 percent of the equipment they currently have for response situations is inadequate.

The first Disaster Management Training was held last week for 32 official representatives from Word Vision's five partnership communes in Iasi County. The training was to ensure the proper and thorough intervention is given during flooding situations.

'In most of the communities hit by 2005 floods the cause of the floods still hasn't even been identified. We need to improve things, and World Vision's training sessions on flood mitigation are bringing a clearer understanding of responsibilities and organisation in the event of flooding', said a training participant from Nanesti County Council. 'World Vision brings practical help, and there is an urgent need for this', he added.

During the training, internationally recognised SPHERE Manuals, which include practical rules and regulation regarding natural disaster procedures was presented to all participants. These are urgently needed as current local authority manuals have little practical advice for emergency situations.

Four training sessions on flood mitigation using the SPHERE manual have already taken place in Timis, Olt and Vrancea counties, with more than 45 formal leaders in these counties participating.

As a direct result of this first Management Disaster training, the Inspectorate for Emergency Situation has requested that this training take place in all communes of Iasi County. This training will be repeated in Olt and in Timis as part of USAID funded Flood Mitigation and Rehabilitation Project before the end of March

Local governmental representatives in Iasi County will also request general meeting with Iasi Mayors asking World Vision to implement a study of the readiness of the communities' preparedness in case of disaster to all participants of the training. This kind of trainings will also be replicated in Olt and Timis Counties.

Additionally, one training session with all World Vision Romania zone managers, Gifts-in-Kind responsible and members of the Relief Intervention team in WVR took place mid February. The information is going to be spread at all seven Area development Programs in Romania.

The aim is to have an Operational Plan for Disasters in place adapted from 'Sphere' Manual in all counties where World Vision Romania is working. Chapters dealing with rapid village assessment, code of conduct, water and food standards have already been adopted in all operational plans designed in Timis, Olt and Vrancea counties.

World Vision Romania's intervention within the USAID Rehabilitation Projects is not limited to trainings. More than 150 families in Olt and Vrancea Counties also received construction materials totalling US$80,000 .Two hundred and eighty - five families in Timis, Vrancea and Olt counties received basic food for winter, based on the initial assessment World Vision Romania staff made together with the local informal initiative groups formed within each area of project intervention.

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Petrom company, the biggest producer of crude oil and gas in South-Eastern Europe, will commission in the first four months of 2006 a new installation for the hydrotreatment of vacuum gas oil at its Arpechim refinery, on an investment of about 42 million euros.

The new installation would allow the making of low-sulfur products that will meet the relevant European standards and significantly reduce pollutants. "The modernisation of Petrom's refineries is performed at a brisk pace and we estimate to invest approximately 1 billion euro to this end by 2010.

The new installation for the hydrotreating of the vacuum gas oil at Arpechim is the result of a viable investment programme," said a member of the Petrom Executive Committee Jeffrey Rinker in charge with the refining and petrochemicals business of Petrom. The installation is used in the making of fuels and petrochemicals.

With a capacity of 1.2 million tones a year, the new installation will reduce the sulfur content to at most 500 ppm by weight (parts by million) and facilitate the making of low-sulfur petrol, diesel fuel and naphtha. Petrom owns two refineries - Petrobrazi and Arpechim - with a total refining capacity of 8 million tons a year.

Arpechim is the sole maker of petrochemicals in Romania and the country's sole supplier of ethylene. Both refineries are producing fuels that comply with the relevant European quality and environmental standards. Petrom, the biggest Romanian oil and gas company, is operating in the fields of oil exploration, production and refining as well as in petrochemicals manufacturing.

Its oil and gas reserves are estimated at 1 billion barrels oil equivalent.

The company also owns 600 fuelling stations. Petrom reported 2004 EBIDTA earnings before interest, depreciation, taxes and amortisations of 2,143 million euros. In December 2004, European oil and gas leader OMV of Austria took over control of 51 percent in the shares in Petrom.

OMV is operating in the fields of gas refining, marketing, exploration, production and distribution in 27 countries on five continents.

Other shareholders in Petrom, besides OMV, is the Romanian Government, with a 40.74% stake, the European Bank for Reconstruction and Development (EBRD), with 2.03 percent, and minority shareholders, together controlling 6.23 percent of the shares.

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The Romanian government's privatisation committee has decided to go on with the privatisation of the country's fourth-largest bank Casa de Economii si Consemnatiuni (CEC), local Ziarul Financiar reported on Friday.

Romania's Finance Ministry announced in mid-January that the privatisation committee for CEC was still discussing the bank's sale strategy. Local media, however, reported that the sell-off might be put off by two years if a business plan drafted by the bank's management persuades the committee that CEC can develop without a strategic investor.

Late in 2005, seven banks filed non-binding bids for CEC, including Hungary's OTP, French-Belgian bank Dexia, Greek banks National Bank of Greece and EFG Eurobank, Austria's Raiffeisen and Erste Bank, and Italy's BMPS.

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Loans for residences will become cheaper starting this summer, following the coming into being of Romania's first mortgage credit banks, ACT Media news agency reports.

Due to lower institutional costs with mortgage credits, specialised banks might reduce the charges for such financing instruments, said analysts of the banking market.

Renowned financial institutions like Raiffeisen, Imocredit (the mortgage department of Imofinance) or Domenia Credit are expected to enter son on the mortgage banks market.

Foreign specialised financial groups are also preparing for this move.

The necessary legislative framework was established after President Traian Basescu promulgated the law package on mortgage bonds and mortgage credit banks.

Specifically, the legislation allows the setting up of mortgage credit banks, so that the refunding of the residential credit system through bond issues secured through the mortgage on the future residence also becomes possible.

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Cyprus-based real estate company Bluehouse Accession Property announced plans to raise ¤146 million to fund development projects mainly in Romania and Bulgaria.

Bluehouse intends to offer shares by private placing to institutional investors and then float on the Alternative Investment Market of the London Stock Exchange, or AIM.

Deutsche Bank is the global co-ordinator and book-runner to the Bluehouse?s placing.

Bluehouse Accession Property has recently bought office buildings in Romania, in Bucharest, Craiova, Brasov and Bacau.

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Cosmote Romania, the former mobile phone operator Cosmorom, had nearly 50,000 clients at the end of last year, out of whom 30,000 are new clients gained in the first three weeks since Cosmote was launched on the market, Cosmote Romania managing director Nikolaos Tsolas said, ACT Media news agency reports.

Cosmote Romania launched its commercial offer in the first week of December.

The company continues making investments for the development and expansion of its network nationwide being set to reach 90 percent of the Romanian population and 70 percent of the country's area by this June.

Cosmote managers announced they will launch a new offer on the Romanian market for the pre-paid services, the first extra-option having minutes included.

The offer includes 2,000 minutes a month on Cosmote card to any phone number in its network for just three euros a month.

Cosmote Romania currently employs 400 staff and their number is set to climb to 600 by the end of this June.

Cosmote Group, which is listed on the Athens and London Stock Exchanges, recorded a 10 percent growth of its net revenues from services in the fourth quarter of 2005 compared to 2004.

The company has more than 4.5 million clients in Greece and some 7.9 million clients in Southeastern Europe.

Cosmote is operating in Bulgaria, Albania and Fyrom by the companies GloBul, AMC and Cosmofon respectively.

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BNR governor Mugur Isarescu said speculative capital is not a threat.

The National Bank of Romania (BNR) does not anticipate an upward trend of speculative capital, which would require the authorities to activate safeguard clauses, stated the governor of the central bank, Mugur Isarescu.

"Just like the atomic bomb," said Isarescu during an economic roundtable, "they (safeguard clauses) were introduced and exist to keep them from being applied." BNR presented the clauses last April, before the liberalization of the capital account. "The hard part is over," he said.
The central bank estimated last year that it could activate at least one of the clauses if large, short-term capital inflows pressure foreign exchange markets causing significant disturbance of the monetary and exchange rate policies, said Isarescu. Among the four safeguard clauses, BNR announced withholding a part of the foreign currency inflow, used by any resident or non-resident to be exchanged and transformed into a deposit in the national currency, leu. The same stipulation applies for foreign currency sums created by exchanging lei deposits, which are to be transferred abroad. The central bank can choose to retain the funds at any time during such operations.
Moreover, BNR could levy a tax on foreign currency transactions representing a capital inflow that would generate buy/sale operations with foreign currency to open or close lei deposits in the local credit institutions.
Another measure could impose maturity restrictions for deposits resulted from capital inflows or outflows. BNR has also considered the possibility of instating mandatory minimum reserves for lei deposits, resulting from foreign currency conversion.

BNR ready to fight inflation

The central bank is prepared to use all available instruments to fight inflation, including the interest rate, liquidity sterilization and operations on the foreign exchange market, stated BNR's vice governor, Cristian Popa, quoted by Reuters. The official said that the inflation rate could exceed the upper error margin of the central bank's five percent estimate. The hike in prices might be reduced in 2007, when the inflation rate could meet BNR's expectations of three to five percent. For this year, BNR believes that the inflation rate will amount to 6.5 percent.
The central bank increased the intervention rate to 8.5 percent, but the rate remains real-negative, given the 8.6 percent inflation rate obtained last year.
Another instrument to control inflation is the appreciation of the RON. However, appreciation affects the trade balance as the competitiveness of exports is decreasing. Nevertheless, Popa stated that a strong national currency must be joined by a growth of productivity and a cautious wages policy to counter its effects, especially regarding the trade balance.
Isarescu stated that the Guaranteeing Fund for Banking Deposits will have to change its policy and become an independent body which should indicate the evolution of the banking market. Thus, the fund, created to reimburse clients of insolvent banks, should develop and publish studies as the payments are over and Romania entered a period which should include significant steps, such as EU accession and all its consequences. Therefore, the fund should assume a new role, said the governor of the central bank.

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Pambac Bacau, a producer operating in the milling and bakery industry, forecasts turnover will rise by 28%, to 40 million euros this year, in particular due to solid flour and pasta sales. The sales increase will be sustained by 25% higher marketing budgets compared to 2005. Last year the company reported turnover worth 32 million euros, equal to the figure, in euros, reached in 2004.

The information campaign for Economic and Social Cohesion programme (Phare ESC), was one of the biggest campaigns developed so far in Romania with the EU financial support. Over 2.200 projects for a total of approximately 400 million Euro received funding through EU Phare ESC in various areas: business infrastructure, tourism and transport infrastructure, social services, training for the unemployed and employed people, support for SMEs, projects rehabilitating schools and buildings. Launched in November 2005, the campaign consisted in broadcasting ten short documentaries presenting concrete examples of projects financed by EU funds and Romanian budget in the whole country. The films were broadcast on seven national TV channels and in TAROM flights.?

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According to the Minister-Delegate for Trade, Iuliu Winkler, the Romanian foreign trade went up more than 22.5 percent in this January from January 2005, out of which the exports climbed 16.9 percent and the imports more than 26.9 percent.

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Energy Financing Team (EFT), one of the most important electric power traders in the Central and South-Eastern Europe which has recently entered the Romanian market, estimates it will reach sales worth around 20 million euros during its first year of direct operations on this market, ACT Media news agency reports.


"As we have not got the supplying licence on the Romanian electrical power wholesale market, we haven't signed any contract with Romanian consumers yet, but we hope do that some time soon," stated Nenad Savic, communications manager with EFT Ltd.

"The total value of contracts we are currently negotiating is below the level of 20 million euros," he added. The company has been brokering power exports from Romania since 2001, purchasing power from producers such as Hidroelectrica or Termoelectrica. Ever since it arrived on the market, the trader has stated its interest in developing production facilities on the domestic market. "In Romania, we are particularly interested in two hydropower stations, and our engineers are conducting preliminary research and assessing these projects," said Savic.

Hydropower stations are currently the cheapest production facilities on the electric power market.

The Romanian market of electric power producers continues to be dominated by state-owned companies such as Termoelectrica, Hidroelectrica, Nuclearelectrica or Oltenia-based major energy complexes. The opening of the power market, offering major consumers the possibility of choosing the best power supplier in terms of cost efficiency, is a major business opportunity for electric power traders, but also poses a risk for electric power distribution companies, seeing their customer portfolios shrink.

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The sales of sports drinks on the Romanian market increased to 5.2 million liters in 2005, according to a study of consultant for food and drinks industry Zenith International. "The sports drink category now encompasses a whole spectrum of different products - from advanced specialist sports nutrition for body builders and serious athletes to lighter products for everyday consumers," commented Zenith Senior Market Analyst Sophie Carkeek.

According to Zenith International data total non-alcoholic beverages sales on the Romanian market attained 2.37 billion liters last year, with a growth potential of 2.54 billion liters in 2006 and three billion liters in 2009.
The global sports drinks market raced ahead by 10 percent in 2005 to 9,700 million liters. The fastest growing region in 2005 was Eastern Europe, up 19 percent in 2004, but this was from a very small base.

Growth was driven by new brands, brand and flavor extensions and novel product concepts as well as greater focus on the role of exercise in health and wellbeing. North America accounted for 49 percent of total sports drink consumption in 2005 and looks set to hold on to its global market lead to 2010. Gatorade, the leading global sports drink brand and category pioneer, was launched here in the early 1970s and remains the region's top brand.

According to a survey of the market research company MEMRB, beverages had the largest share last year with almost half of the consumer goods market market, as far as both value and volume are concerned. Within this trend, the importance of non-alcoholic drinks increased in volume over that of alcoholic segment to a ratio of 52.6 percent to 47.4 percent. From the point of view of the value, alcoholic drinks still hold 60 percent of the market.

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Romanian-French company, Jules Verne Imobiliare, will start the construction of a block of apartments that will be located in the center of Bucharest and worth ten million euros, said the company's general director, Gheorghe Doholici.
"The works will start this spring and the term for finishing construction is the last trimester in 2007," said Doholici.
The block will be constructed on a 1,500 square meter terrain that is located at the intersection of Matei Basarab with Delea Noua streets. It will have two underground levels, a ground floor and nine stories. The area of an apartment will vary between 40 and 200 square meters. The underground levels will have 64 parking lot spaces while the ground floor will be used for office spaces.

The price of an apartment will start from 1,300 euros per square meter, without the value-added tax.
French based Companie Industrielle et Financiere d'Entreprises (CIFE) holds 70 percent of the company's shares.
Nevertheless, a CB Richard Ellis study showed that developers will switch their focus to Bucharest's peripheral areas as the options to buy a dwelling are still reduced.

"In Bucharest the options are an apartment in an old block and a new apartment, which is expensive," stated CRBE analysts.
The study shows that developers will speed up the construction of new residential areas, which will meet present standards and will provide decent living conditions at competitive prices.

Thus, several sectors of the Capital presently believed to have little or no importance will host modern buildings with parking spaces and storage rooms, said CRBE analysts. The real estate projects will have green spaces, gym and fitness rooms, commercial spaces, and security. Fitted with quality finishes, the apartments should have parquet, individual heating units, insulating glass, modern plumbing and other modern amenities.

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The usual hunt of taxis on the Capital's streets during the night might soon have an alternative, as the city hall yesterday proposed for the private transport companies to assure night transportation in Bucharest on 19 routes, yesterday said the head of the Transport Commission inside the General Council, Stefan Pirpiliu.

The night mini-buses, also known by locals as maxi-taxis, will come every half hour and will connect the city's outskirts crossing the downtown area. During the day, maxi-taxis are not allowed to cross the center of the city because of the traffic.
"This way we will have a cheep and efficient alternative for public transportation during the night," said Pirpiliu.
The initiative of the local authorities came after citizens in Bucharest filed numerous requests for night transportation to be made available in the Capital.

Before 1990 Bucharest had night routes, but they were assured by public transport buses. They were removed despite citizen's disapproval because of the high costs, Pirpiliu explained. He pointed out that high costs still remain an impediment for public transport means to be available during the night even now.

Those interested to express their opinion on this subject can use the phone number made available by City Hall. By dialing 0800.800.771 the citizens living in Bucharest may share their opinions and suggest routes for the night transportation.
The city hall's initiative will be discussed next week with the private companies and will afterwards be open to public debate.

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 The law for setting up companies, no. 31/1990, is about to change and the draft law is available for public debate on the websites of both the ministry of justice, www.just.ro, and of the Executive, www.gov.ro.

Major changes concern the ability of persons to register a company online, for share companies to have only two shareholders and to build electronic archives, and aim to bring the law in line with the OECD recommendations regarding corporate governance.

Deputy PM George Copos met Wednesday in three separate rounds representatives of Romanian employers associations, of foreign investors, and of the chambers for trade and industry.

All their proposals and those filed with the ministry of justice by any interested party will be debated in a public session on March 9.

Copos regards bringing the law up to current standards as one of his priorities, a Government press release said.

Shareholders will be better protected, since the draft law changes to 30 days the time lapse between calling and having a general shareholders? meeting, from 15 days before. Also, decisions will be easier to make, since the qualifying number of votes went down both for calling a valid meeting and for taking a vote.

Also, shareholders may delegate other shareholders to cast their vote.

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The European Union will fund the construction of a harbor located in Midia Navodari, stated Agriculture Minister Gheorghe Flutur. According to the official, the fishing harbor will spread across ten hectares and will have a waterfront of 350 to 400 meters. "This year (...) we will dredge the waterfront," said Flutur, adding that all the necessary authorization will be issued in time.

Flutur said Romania's first fishing dock will harbor the 16-ship fishing fleet and will be followed shortly by the construction of several facilities that will accommodate the country's first fish trade market.
Data from the Ministry of Agriculture show that Romania has a sea-fishing potential of 20,000 tons per year. Presently, only 1,800 tons of fish are sold. "We must encourage the development of the fishing fleet and a civilized fish trade market," said Flutur.

Constanta's prefect, Danut Culetu, stated that the location was already visited by representatives of the European Union. Fishing facilities and processing centers are eligible to receive EU funds, which could be used to improve and upgrade them. Furthermore, enhancing the sector is a requirement for EU accession.

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Among the future projects that Gaz de France runs in Romania include their aim to get involved in Romania's energy industry in the long run, stated the president of the company Jean François Cirelli at the meeting held in Bucharest with Romanian Premier Calin Popescu Tariceanu, ACT Media news agency reports.

Tariceanu emphasized that Romania paid high importance to the development of alternative sources of energy such as nuclear energy or coal.

Jean François Cirelli transferred PM Tariceanu a message of support and encouragement for Romania's EU integration on behalf of the French Prime Minister Dominique de Villepin.

Tariceanu stressed that Romania did not expect its EU membership be a proof of friendship of member countries, but an expression of Romania's capacity of fulfilling its commitments taken before the European partners.

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Tension runs high on the fixed-line telephony market as after RCS& RDS accusations against RomTelecom of having reduced the capacity for collocation, the main fixed-line phone operator got into conflict with Connex-Vodafone as well.

According to the General Inspectorate for Communications and Information Technology (IGCTI), RomTelecom uses the frequency awarded to the mobile phone operator for 3G communications services without having a licence to do so.

Given the circumstances, the Ministry of Communications and Information Technology (MCTI) stated that Connex-Vodafone will postpone the release of 3G mobile communications services in Buzau County, pending RomTelecom freeing the frequency band.

According to MCTI, the frequency in question is part of the band won by Connex-Vodafone at a tender for 3G mobile communications licences held in 2004.

Yet, the frequency band is used by RomTelecom in the counties of Alba, Cluj and Buzau on a temporary licence under a project for the supply of wireless fixed-line communications services.

MCTI Minister Zsolt Nagy met with RomTelecom, Connex-Vodafone and IGCTI officials to identify a solution that would lead to the rapid resolution of the problems having emerged in Buzau County following the launch of 3G services by the mobile communications operator in the 1,973.75 MHz band.

Talks conducted with Connex-Vodafone agreeing to postpone the launch of 3G service in Buzau County to allow RomTelecom time to work out a solution that would also apply in Alba County.

RomTelecom is in turn calling on IGCTI asking to draw up an official document that will cancel the disconnection of its customers in Buzau County.

Specifically, the 200 customers from the villages of Zoresti and Ciobanopaia, who were disconnected on Feb 27, 2006, under a warrant of the IGCTI issued on RomTelecom, would be reconnected only based on an official document that will repeal the warrant for the closing down of the wireless equipment having provided communications service to them.

All the divergences emerged on a background of a long ongoing dispute between fixed-line communications competitors that has received wide media coverage.

The main competitor of RomTelecom, RCS&RDS, which portfolio has increased to 350,000 customers, has recently accused RomTelecom of obstructing collocation of other operators with the national fixed-line phone grid.

Given the circumstances, RomTelecom Director General James Hubley threatened, upon revealing the 2005 financial results of Romtelecom, he will freeze EUR-500-M investments earmarked for the following years, claiming that the market position of his company is negatively affected by the decisions of the National Communications Regulatory Authority (ANRC).

Hubley added that the company will still invest EUR 100 M in 2006 in keeping infrastructure at a functioning level.

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KD Investments Romania, part of the Slovene financial group KD, is about to launch this year four mutual funds, ACT Media news agency reports.


The company currently manages a single fund - KD Maximus - oriented towards stock placement.

As such, KD is to offer five mutual funds, Certinvest being presently the administrator with the highest number of mutual funds - four.

"We are to launch this year four new mutual funds because we can cover all risk degrees that might be requested by the respective investors," Deputy Director General of KD Investments Cosmin Paunescu explained.

He stressed this is a monetary fund that will include an investment component of up to 20 percent into stock, a diversified one that will invest approx. 50 percent of its assets into stock and also a fund that will invest into other mutual funds active on the market, especially into diversified and stock ones and, finally, a fund that will follow the BET Index of the Stock Exchange.

Competition on mutual funds market grew bitter in 2005, following the entrance of some new banks and the launching of new funds by the existing administrators.

The funds' assets exceeded in the first month of the year the threshold of 100 million euros, more than half of this amount being managed by investment companies run by banks.

KD Investments stakes at least on doubling the assets under its administration through the launching of new funds.

The only fund managed by KD deals with assets in the value of approx. 4 million euros, of which more than half are owned by foreign investors the group succeeded to attract to Romania.

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Romania's trade deficit rose to ¤637.7 million in January, compared with ¤382.9 million in January 2005, according to data released by the National Institute for Statistics.

Exports rose 16.9% against January 2005, to ¤1.769 billion, while imports rose 26.9% to ¤2.407 billion.

Italy was Romania's main export market in January 2006, accounting for 18.6% of exports, followed by Germany with 15.6% and France with 7.6%.

Italy was also the main source of imports, accounting for 14.6% of the total, followed by Germany with 13.7% and Russia with 10.3%.

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The total value of transactions registered by RASDAQ market on Bucharest Stock Exchange (BVB) reached 65 million lei in almost 1,000 transactions in February.

Based on RASDAQ data, the market capitalization reached 8.7 million lei.

The most transacted companies in February were Grivita Bucharest, with 19,5 million lei, Comcereal Constanta with 9 million lei, ARDAF with 5.3 million lei, Eurom Bank with 3.3 million lei, Mittal Steel Romania with 2.8 million lei, Albalact with 2.35 million lei and Intercontinental hotel chain with 2.1 million lei.

In terms of transactions number, Vega Rompetrol was first with 780 transactions, followed by ARDAF with 587 transactions, Intercontinental with 373 transactions, Petrom Aviation with 279 transactions, Decebal Dva with 274 transactions and Braiconf Braila with 198 transactions.

In terms of stock exchange capitalisation, Asirom Insurances came first with 148 million dollars (4.98 percent of the market), followed by Celco Constanta with 100 million dollars (3.37 percent), Astra with 74.9 million dollars (2.52 percent), Eurom Bank Bank with 71.87 million dollars (2.42 percent).

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By Raymond A Breden

One of the questions that I am frequently asked in my capacity as Chairman of the British Romanian Chamber of Commerce (BRCC) Advisory Board in Romania is if I had one wish that could be granted, what would it be? I hasten to add that the question is asked in the context of one wish regarding a change in the tax laws (Fiscal Code) that apply in Romania!

Of course there are a number of things that could be changed, but from the BRCC perspective it is important that any change to the Fiscal Code is of benefit not only to our members but also to businesses in general in Romania. Because tax is my special field of expertise - I have worked as a tax advisor for 37 years (for the British tax authorities, in industry, and now for a leading firm of international consultants in Bucharest as Director of Taxation Services) - it would be very easy to propose a change that was very technical in nature but would only affect a few companies. I have therefore chosen something that I think would be of benefit to the vast majority of companies in Romania, both foreign and Romanian owned.

At the moment, companies in Romania are required to calculate their profits each quarter and pay tax accordingly, and at the end of the year they file their tax return. Ask any finance controller in any company in Romania what they think about this and most will tell you that it is very time consuming and bureaucratic. And not just for the finance controllers. It is the same for the tax inspectors who have to check these quarterly calculations.

What I would like to see is a change whereby companies estimated their quarterly tax payments, and at the end of the year file their return showing tax for the year. An adjustment would then be made, with the company paying any shortfall due or receiving repayment of tax overpaid. Of course the company would have to pay interest on any shortfall, but would also receive interest on any overpayment. This is fair both to Government and to taxpayers alike.

Such a system could be introduced in 2007, and 2008 would be the first year in which the new system would be fully operational.  Obviously there would have to be new legislation, but the concept is straightforward and with proper consultation procedures between Government and all interested parties sensible legislation could be introduced.
Apart from reducing the workload of finance controllers and tax inspectors, why is this proposal good for Romania? The answer is that economic growth would be enhanced because companies' resources would be made available for profit making activities, hence generating more tax revenue for the Government. The State will benefit because it could use its resources more efficiently, because the time previously spent in administering quarterly returns could then be spent on other more productive activities and thus public administration could be improved.

The system that I have outlined is already working in most European Union member states, including some 2004 Accession states; Czech Republic, Slovakia, Hungary and Slovenia. It is also in operation in the longer established member states, including the United Kingdom, the country from which I am from. The general view in all countries that apply this system is that it works well.

With Romania having high hopes of accession in 2007 there is of course a further angle to all of this. The benefits of accession are well documented and will not be repeated here, but sometimes the fact that the European Union is an open market and can be fiercely competitive is forgotten. Romanian companies need to be able to compete with foreign companies. Most foreign companies are already enjoying the benefits of a simplified tax payments system and can therefore concentrate more of their resources on developing their businesses and making profits. This is good for the company and good for the state. Do we really want Romanian companies to fall behind?

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According to a press release issued by the Ministry of Environment and Water Management , Romania's environment sectoral programme takes into account projects worth approximately 4 billion euros. This amount is for six categories (corresponding to six prior protected areas) that have in view the improvement of access to public utilities as well as improvements in environmental quality and the protection of nature.

Under this programme, 2.440 billion euros of cohesion fund are earmarked for the expansion and modernisation of water infrastructure in Romania; 760 million euros from the European Fund for Rural Development are contributed towards waste management systems and the rehabilitation of waste collecting facilities, 250 million euros for implementing infrastructures for the prevention of natural hazards in vulnerable areas, including the Black Sea coast and the areas prone to flooding and erosion, 150 million euros for the protection of nature and 160 million euros for technical assistance for the actual application of these projects; also from the Cohesion Fund, 200 million euros are invested in improving the public heating systems of towns and cities.

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The last transaction session in the Sibiu Monetary- Financial and Commodities Exchange of February 2006, experienced the coming back of RRC securities ( Rompetrol Rafinare), a press release of the BMFMS states. Rompetrol securities came back after two sessions when they were absent with a strong urge to grow, on Monday going up by 14.15, 14.60 percent respectively, The appreciation quite consistent offered speculators excellent long rates, going up to 60 percent for March and 62 percent for June on Tuesday.

Thus, transactions with Rompetrol Rafinare shares during the Tuesday session at BVB ( Bucharest Stock Exchange) amounted to 2.31 million euros, the price going up by 11.58 percent, and at closing the price was 0.1060 RON/share. As it is evident, Rompetrol Rafinare shares caught up in a spectacular way, being, on Tuesday, the first in transaction value and second as price appreciation, after Sinteza Oradea shares which grew by 15 percent, the maximum admitted by the stock exchange regulation for one session. Another company in the Rompetrol group ? Rompetrol Well Services registered an appreciation of price of 7.17 percent, being ranked fifth as growth level.

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Daniel Catanas, the man in charge of running the Romanian operation of the Austrian Wienerberger brick producer, announces a new wave of investments in the plants over the following years. Wienerberger intends to open another two or three plants over the next five years, adding to the two production facilities already operating on the market.

Interbrew Romania, the domestic branch of InBev, the world's biggest brewer, last year reported turnover worth 140 million euros, 35% higher in terms of value from 2004, due in part to the total volume of sold beer rising by 18%, three times more than the beer market.

Travel agency Paralela 45, one of the top five players in the travel market, posted 18 million-euro turnover in 2005, an increase of some 25% from the previous year, says chairman Alin Burcea.

Liberal Varujan Vosganian stated that the Proprietatea Fund listing could be delayed as new regulations could come into effect.

Some of the shares allocated to the fund are not listed on the stock market and the government could not ensure complete transparency. The operation could be delayed by more than a year.
Only 60 of the 114 companies whose shares were allocated to the Proprietatea Fund are listed on the stock exchange. The fund was created to indemnify the owners of houses abusively confiscated during the communist regime prior to 1989. The largest companies, such as the National Lottery Company, the National Printing House and the public utilities companies are not present on the stock exchange. "To list all these companies and ensure the market has the proper absorption capacity it will take more than a year," stated the president of the Budget-Finance Commission of Parliament, Varujan Vosganian.
Moreover, most of the companies included in the fund are small or insignificant. "Agromec, two or three restaurants, a self-service canteen where you can exchange food for meal tickets," said Vosganian, pointing out that the listing costs are not justified. "Such a formula is not adequate," stated the official, adding that the members of the commission will propose to the Ministry of Public Finances new stipulations for the Proprietatea Fund. Thus, the listing deadline could be changed and a minimum number of shares will be set. Authorities could also regulate ways to change titles for money before the Proprietatea Fund is listed. According to Vosganian, the owned titles could be ceased through transactions that would become valid when the fund is listed.
The government could issue an emergency ordinance to enforce the new stipulations, said Vosganian.
"We must avoid all risks," said Vosganian, emphasizing that the listing should be carried out in such a manner as to ensure that the public will be informed and trust the fund. Moreover, the fund's shares should have a value close to the nominal one on the stock exchange, thus indemnifications would be adequate.

Half of share requests to be solved this year

Vosganian announced that more than half of the shares requested for the Proprietatea Fund will be solved by yearend. The procedure will continue the listing process and the rest of the shares will be granted to solicitants as their requests are approved.
Presently, the government has allocated ten percent of the capital's shares to 14,000 people. The titles' values total 400 million euros.

"The procedures are complicated and the government is discontented with the way in which the local administration is carrying out the procedures," said Vosganian. According to preliminary estimates, 140,000-180,000 such requests are in various procedural stages.
The fund has a social capital of approximately 3.9 billion euros and its shares will be listed on the Bucharest Stock Exchange and on an international stock market. Besides the 114 companies, the fund will also keep debts held by the Romanian authorities in Iraq, Ukraine, Sudan, Syria, Mozambique, Libya, Nigeria, Cuba, North Korea and another eight countries which will be transferred to the fund.

The shares of the fund will be distributed through the national network of the Romanian Savings House. The government selected Raiffeisen Capital & Investment to broker listing operations.
The fund will be operational for a period of ten years and its duration could be extended if necessary.
The Association of Owners Abusively Dispossessed by the State (APDAS) contested the project at a meeting of the Group for Social Dialogue (GDS). Former owners of nationalized houses consider the "Proprietatea" solution to be unacceptable and unconstitutional. "Let anyone tell me if they agree to receive in exchange for property not cash, but a risk. That is the government's offer: a risk, shares with a certain stock value, which today can have a value and tomorrow not," said lawyer Valentina Topor.

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Cluj, Constanta, Arad and Ploiesti are the leading cities as far as cost of living is concerned, namely prices of food, public transportation, local taxes, movie theaters and so on, Capital weekly writes.

If we add up the various prices, they can show us, quite clearly, how expensive or how cheap a city is. Most of the time, the costs for products and services is strongly connected to the standard of living. Thus it can be explained why the first places in the ranking made by Capital, after analyzing 23 average prices for the 15 cities in Romania, are cities with an active economic life. Cluj, Constanta, Arad and Ploiesti have all been favored for their geographical positions and have attracted, in the last 15 years, investments which have been felt from the labor market to the real estate market. On the other hand, the cities in the lower positions (Iasi, Pitesti, Craiova, Braila and Galati) are all situated outside the Carpathian Mountains and some of them are placed at a great distance from the western border, outside the great transportation routes. They also do not compensate these disadvantages through a development of the local infrastructure or through an exceptionally trained labor force. This prevents investors from crowding in and, despite presences like Daewoo, Mittal or Renault, economic development remains low.

It has to be mentioned that Bucharest has not been included in the list for reasons that are easy to understand. However, applying the same rules, we were surprised to learn that it would not have been first, but second, and a small distance from third, just ahead of Constanta. Concerning towns with less than 150,000 inhabitants, the basic rule would have been for the average prices to decrease at the same rate as the population. This is not true in every case. In some situations, the lack of powerful competition on the retail market or supplementary expenses for transportation made certain products more expensive than in Bucharest or Cluj. Geographical position and the degree of economic development play an important role in small towns such as Mangalia, Sinaia and Sebes.

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Mittal Steel Roman Co. posted 28.3 million RON in net profit in 2005, after having reported losses of 4.4 million RON in 2004, ACT Media news agency reports.

In 2005, Mittal Roman Co.'s turnover rose to 775 million RON, from 513 million RON in 2004, and the total expenditure jumped 30 percent, to 827 million RON from 615 million RON in 2004.

In 2005, the company upgraded a furnace, bought five new cranes, non-destructive testing equipment and lab test devices.

The company received in 2005 for the oil group Shell the quality certificate for un-welded tubes, being authorized to supply Oil Country Tubular Goods for extraction at Shell's standards. Following the certification, Mittal Steel Roman Co. received orders from several firms. (One euro sells for around 3.5 lei).

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NBG, in its review about Romania's status towards EU Accession, found that the government has enhanced its efforts to satisfy the required criteria. Up until now, a set of laws has been introduced to help improve court efficiency and transparency, though more remains to be done and has also intensified the fight against corruption. However, to adopt the remaining necessary legislation on time, the full implementation of the related reforms will require more time, but NBG doesn't think EC will postpone the country?s entry to the EU by one year, despite the ?pause? in relations with the IMF.

NBG expects economic growth to accelerate significantly in 2006, on the back of more dynamic investment activity, and favourable base effects following the flood-induced slowdown in 2005.

Furthermore, there is a need for a further monetary and fiscal tightening to temper investor uncertainty over a wide current account deficit, expressed NBG adding that should this materialise, talks on the stalled IMF SBA could resume, thus signalling to the EU that the authorities are committed to maintaining macroeconomic and financial stability.

The fiscal performance in 2005 was better than expected with preliminary data showing a deficit of 0.8 per cent of GDP, 0.4 percentage points of GDP lower than in 2004.

More importantly, this outcome was in line with the IMF?s suggested target (0.74 per cent of GDP) and below the government?s target (1 per cent of GDP).

In the first eleven months of 2005, the current account deficit widened to 8 per cent of GDP against 7.2 per cent of GDP a year ago.

Import growth surged to 24.2 per cent y-o-y in EUR terms, reflecting, inter alia, strong credit-induced consumption demand and the high energy bill.

Exports also grew at a strong pace of 17.4 per cent y-o-y (in EUR terms), despite the sharp appreciation of the CPI-based real effective exchange rate (16 per cent y-o-y in 2005) and rising competition from Chinese and Turkish textiles in the EU market.

In view of the seasonal surge of public and private consumption and oil imports in December, NBG estimates the current account deficit to have widened to 9.1% of GDP in 2005 against 8% of GDP in 2004.

Strong FDI inflows are estimated to have covered around 75 per cent of the deficit and the remainder was covered by banks? borrowing from abroad.

For 2006, NBG projects the current account deficit to widen further, despite tighter credit conditions and a more restrictive fiscal policy.

NBG forecasts a current account deficit of 10.3% of GDP in 2006 compared with their estimate of 9% of GDP at end-2005.

The main drivers of this deterioration will be the significant economic rebound, and the implicit nominal peg of the RON to the EUR, which will lead to a further real appreciation of the RON of about 6 per cent.

It is worth noting that the NBR, in its efforts to curb lending growth, especially in foreign currency, raised the minimum reserve requirement ratio for banks? foreign currency liabilities from 30 to 35% on January 1st and will increase it further to 40 per cent on March 24th.

The NBR is likely to adopt further administrative measures, especially targeting retail credit, which boomed by 89.5% y-o-y in November from 64.5% a year ago.

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Foreign investors' trade in Romanian stock listed on the Bucharest Stock Exchange (BVB) reached ¤141.4 million in Jan 2006, almost twice their January 2005 trade, ACT Media news agency reports.

Most of the foreign investors trading on the BVB were from the Netherlands, Austria and the UK, all of whom invested 77.2 million euros in Romanian stock in January 2006, up from 18.4 million euros one year before.

Share acquisitions by Western European investors reached 80.2 million euros in January 2006, which was 57 percent of the monthly trade.

Eastern European buyers of BVB shares were no longer among the first ten foreign traders, which withdrew 19.2 million euros from the bourse, meaning 23.3 percent of the sales value.

The most attractive shares to foreign investors were those in the financial investment companies (SIFs), Banca Romana pentru Dezvoltare (BRD) and Banca Transilvania.

Non-residents bought SIF-traded securities to the tune of 48 million euros, and withdrew 43.8 million euros.

Shares in the oil companies used to be a close contender to the shares in the financial and banking companies in 2005, whereas in January 2006, shares in pharmaceuticals companies (Biofarrm, Antibiotice and Sicomed) outperformed them, drawing funds of 39.4 million euros, compared with 26.7 million euros attracted by the oil stock.

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French group Alcatel, provider of telecom solutions and technology expects to post in 2006 revenues higher by 15 percent over last year, siad Gianni Bestetti , vice-president of Alcatel, ACT Media news agency reports.

However, the company's official did not reveal the value of last year's turnover obtained in Romania.

According to the previously published figures, the division from Romania derived in 2004 revenues worth about 100 million euros, whereas the growth announced for last year was of 20 percent.

Bestetti said the Romanian telecommunications market raised on average by 15-20 percent a year over the past 3-4 years.

Alcatel is optimistic about the future of telecommunications in the technologies based on IP (Internet), said Bestetti.

Currently, 4 out of 5 Greenfield projects in which Alcatel is involved use IP-based technology.

The Alcatel official stressed he did not know whether mobile telephony operators would adopt this technology very quickly in Romania, but in exchange, he said, alternative telecommunications operators could move faster.

All the equipment supplied by Alcatel in Romania use technology based on IP and is up to customers how they want to use it.

Due to the migration to the IP-based technology, the software has rising importance for telecommunications industry.

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Azomures, being on the verge of bankruptcy, has forced the Head of the ?Alternativa 2002? Union in Azomures Targu-Mures Maria Dandarau to resort to governmental assistance asking the relevant ministry to take measures to prevent the winding up of the works.

Currently, only one plant operates, the Ammonia Plant, with the NPK and Acid IV plants shut down and the Nitrate Plant operating at low capacity.

Dandarau stated she had reasons to believe that there are interests involved in discontinuing the domestic chemical fertiliser production, so as to raise imports, attributing, thus, the indifference in protecting the domestic fertiliser production (since agriculture needs this product), there are always problems in this industry.

Dandarau warned that apart from the social problem caused by the closing of the fertiliser producers, the most important problem will be faced by agriculture.

In this respect, the union leader requests that the Agriculture Ministry got involved in identifying a solution for Azomures not to be closed down.

Executive manager of SC Azomures SA Angela Podina stated that the appeal of the ?Alternativa 2002? Union to public authorities is ?natural.?

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The State Assets Realization Authority (AVAS) published the preliminary list of the five commercial companies to be put up for privatisation in the forthcoming months, ACT Media news agency reports.

The five are the Iasi-based Antibiotice SA, the Brasov-based Rulmentul SA, Agromec SA - located in Buzias (Timis county), Fortisim SA, located in the commune of Voluntari (Ilfov county) and the Craiova-based Transport Utilaj Constructii SA.

Producer of essential pharmaceuticals Antibiotice SA has a share capital of 454.897 billion ROL, of which AVAS controls 53.017 percent.

Rulmentul SA, specialised in the manufacturing of bearings, gears and driving systems, has a share capital of 329.185 billion ROL, of which AVAS controls 50.892 percent.

Agromec SA, specialised in services for farming mechanization, chemical treatment and phytosanitary protection, has a share capital of 1.975 billion ROL of which AVAS controls 39.999 percent.

Next on the list is fodder plants cultivator Fortisim SA, which has a share capital of 4.560 billion ROL of which AVAS holds 34.765 percent.

Road freight company Transport Utilaj Constructii SA has a share capital of 11.049 billion ROL, of which AVAS controls 47.285 percent.

The investors can file letters of intent at the AVAS seat. The preliminary public notice will be followed by separate privatisation announcements for each company, including all the information interested investors would need in order to participate in the privatisation process.

(The euro trades at about 35,000 ROL)

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Finansbank Romania's total assets rose in 2005 74% to 341 million euros, 1.25 billion RON respectively, ACT Media news agency reports.

The bank's share capital rose 62% from 18.5 million euros to 30 million euros.

The clients' deposits increased from 137 million euros in 2004 to 202 million euros in 2005.

Finansbank Romania's loan portfolio stands at 225 million euros, up 97% versus 2004.

The bank's 2005 net profit is almost double versus 2004, having reached 4.2 million euros as compared to the 2004 one.

The bank reached last year a 1% market share, 5% consumer loan market and 7% credit card one.

Finansbank Romania aims in 2006 at extending its network, increasing its customer base and range of products.

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According to the statements made during his visit to Bucharest, by the Italian Minister for Productive Activities, Claudio Scaloja, Pirelli is ready to boost investment in Romania.In the footsteps of 40 million euros worth investments in a metallic cord factory in Romania Pirelli is going to add in 2006 some hundreds of millions of euros in the biggest tyre factory in the zone.Till this year-end, the Italian Pirelli Group is to inaugurate in Slatina (199 km. west of Bucharest) the biggest tyre production unit in Eastern Europe. The invested amount will hit some hundreds of millions of euros.

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According to LG Electronics CEO Han Khyu , the South Korean producer of electronics and home appliances LG Electronics aims to double this year its sales in Romania, which virtually means a turnover worth 100 million euros. "LG Electronics Romania's current business goal is to become the number one premium brand in the home appliance and electronics market by 2007.

For 2007 we expect to reach some 20 percent market share," the LG CEO pointed out.This year, the South Korean producer plans to launch new mobile phone models, including the launch of 3G handsets on the Romanian market in the third quarter of 2006. "We are planning to introduce LG 3G terminals for the main operators on the Romanian market, since we foresee steady development for this segment, with more and more 3G clients for the main operators" Han Khyu stated.

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Less than three months before the beginning of the summer season, Romanian tourism loses a few thousand potential visitors. The TUI group, one of the largest operators in the world, announced that it cancelled all charter flights to Romania of TUI division Scandinavia. 8000 tourists from Germany and northern countries were supposed to spend summer holiday in Romania. The 8000 cancelled accommodations represent a third of the total number of tourists TUI intended to bring this year in Romania. 90% of accommodations were on the littoral and 10% for circuits like the Danube Delta.

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The appearance of the bird flu has not brought significant drops in chicken meat sales, Carrefour sources declared. Chicken meat sales were on the rise in September 2005, exceeding by 41% the level of 2004 sales within Carrefour stores, before the first bird flu suspicions in Tulcea county. In October, chicken meat sales registered a slight drop of 1%, while in November and December chicken meat sales registered volumes 18-19% higher than in November and December of 2004. In January 2006, sales dropped again by 5%. By mid February six the Ministry of Agriculture and Rural Development registered confirmed bird flu sources.

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Telecommunications attracted the largest direct investment volume in 2005 ? about 22.56% of total, in the conditions in which the volume of direct investments in Romania was about 3.48 billion euros in the first ten months of 2005, according to data presented by the minister of communications and IT, Zsolt Nagy at the seminar ?Elecotrnic communications and IT?.

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The Emergency Hospital Bagdasar-Arseni has the only Gamma Knife equipment in south-eastern Europe. Initially it was brought for the Neurosurgery Center inaugurated in 2004. The equipment is used to treat deep brain affections, tumors, and vascular malformations of the brain which cannot be treated otherwise. Gamma Knife cannot be used for malignant tumors. The mentioned department also has a digital angiograph, used to cerebral vascular accidents.

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Several commercial banks prepare for the launch of chip-cards this year. The Romanian Commercial Bank (BCR) made the first step in April 2005 when it became the first credit institution that accepted such cards. Four months ago, Procredit Bank Romania was the first local bank to issue chip-cards, said Visa International representative Catalin Cretu, yesterday in press conference.

These enhanced payment instruments allow the development of fidelity programs, superior transaction security and far greater data storage capacity as compared to the traditional magnetic strip cards. Another advantage of the chip technology is allowing transactions without necessarily contacting the issuing bank for the authorization of the operation. This results in reduced telecommunication costs for the banks while maintaining a high security level.
According to Visa International, there were over 175 million chip-cards at the end of 2005.
Data provided by the National Bank of Romania (BNR) Romania counted over 7.17 million active credit cards at the end of last year, of which 155,611 in foreign currencies. These figures represent an advance of more than 24.5 percent compared with December 2004.

The Romanian market counted over 3.6 million Visa cards at the end of last year, with which more than 60 million transactions were carried out, totaling 4.87 million dollars, said Cretu. "The value of transactions increased in 2005 by 131 percent over the year before. We can say the Romanian market has attained the critical mass on the number of cards," said the Visa representative. He added that another positive evolution was the fact that cards were no longer used almost exclusively to withdraw cash from ATMs as it had been until recently.

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Credisson, a consumer lending company, managed by Cetelem, which is controlled by French group BNP Paribas, will release personal loans worth up to 3,000 RON for a three-year period at most, according to a company release.

Romaero, a company specialising in aircraft production and maintenance, expects this year's turnover to reach approximately 16.5 million euros, twice as high as the level registered in 2004, when the company started deriving profit, according to with company data.

The general manager of Tabco Campofrio, one of the biggest charcuterie producers on the Romanian market, says the company will invest over 10 million euros during the next three years, particularly to develop production farms.

Petrom, the largest petroleum and gas producer in South Eastern Europe, is investing in the modernisation of its own refineries in order to produce better quality products. Part of this modernisation process, a new vacuum distillate hydro-treating unit is being commissioned in Arpechim.

This picture provided by Renault is the first showing the real shape of the new Logan.

The new Steppe model could be available in fall at a price of approximately 6,800 euros for the base model.
"It means that we are not dealing with a simple enterprise, which will mount various Renault models, but we have a model that was conceived and built entirely in Romania and around which an whole auto mobile industry articulates," said Prime Minister Calin Popescu Tariceanu. The Executive chief was present at yesterday's event, which is part of a large-scale project to diversify the body range of the Logan, produced at the local factory in Pitesti. Dacia was taken over by Renault in 1999, through what President Traian Basescu referred to recently as the most successful privatization of a state-owned business.

"I believe that the latest developments in the automobile industry brought a decisive contribution to the economic growth in Romania, taking into account that there a lot of companies which settled in Romania and began production," added the Prime Minister.
The local carmaker announced that it will launch by yearend, most likely in October, two hatchback versions of the Logan, featuring five and seven seats. Renault could present the model earlier, at the Paris Auto Show, which will take place in September.

Estimates for the current year rate sales at a couple thousand units. The company's representatives stated that the new versions could enjoy success as great as that of the Logan Diesel, for which the initial estimate showed a 30 percent share of sales, but now could be more than 50 percent. Logan's success story generated last year the largest sales in Dacia's history. The carmaker sold 163,899 vehicles on both the international and local markets, representing a 70 percent climb compared with the previous year.

The new car model will receive the same motors as the present Logan, except for the diesel version, which will have a variety producing 85-brake horsepower. The bodywork is similar, apart from the taillights.
Recently, Renault's officials discussed with the government the possibility of acquiring another local carmaker, the troubled Daewoo Craiova. According to French daily La Tribune, Renault would need to expand its production facilities to meet the growing demand.

Renault intends to launch 26 new models by the end of 2009, as part of the Contract 2009 development plan presented recently by the president of the French group, Carlos Ghosn. The automobile maker intends to launch two new models this year, eight models in 2007, seven in 2008 and nine in 2009.
These will be completely new models or new generations of already existing models. Between 1998 and 2005 the French company launched an average of four new models each year.
By yearend, Renault intends to sell the Dacia Logan model on 50 international markets.

Romanian production of auto vehicles and subunits could reach six billion euros in 2008, three times more than the level recorded last year. "The effects of the factors that have sustained last year's increase in the market will diminish," advised the president of the Association of Producers and Importers of Automobiles (APIA), Brent Valmar. The official believes that the market will increase by an average of five to ten percent in 2006, mainly because of improved access to credit. Auto sales rose by approximately 50 percent last year, but analysts expect 2007 to a better year despite the slowdown expected for this year by the APIA representatives.

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The Executive Committee of Bucharest's Chamber of Commerce and Industry (CCIB) established a new strategy for supporting Romanian businesses located in less commercially exploited areas.
CCIB identified such areas for Romanian companies in Eastern Europe and in South Africa.
The participants at debates decided that the Romanian commercial missions should be launched in international fairs and other similar events that gather a large number of foreign companies.

The members of the Executive Committee required CCIB to increase its services towards the Bucharest businesspersons and to mediate more meetings with foreign businesspersons.
Starting in 2005, CCIB began functioning as a separate entity after separating from the Chamber of Commerce and Industry of Romania (CCIR).

The decision was adopted in the meeting of the Chamber of Commerce and Industry of Romania and Bucharest (CCIRB) on July 2005 and CCIB was acknowledged by the government. Through the re-organization of the CCIRB, the CCIB became a member of the CCIR, along with all other territorial chambers of commerce. County Chambers of Commerce has 50% of the votes in the leading board of the CCIR.
Other members are employers' unions, traders and professional associations.

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The Greek-owned telecommunication operator, RomTelecom, announced the company?s Board decision to cease planned investments worth approximately ¤500 mln in infrastructure due to the unfavourable and unfair domestic business environment.

The Company?s capital expenditures declined last year to ¤92.5 mln, respectively by more than a third due to the suspension of the next generation network project (NGN), while for 2006, RomTelecom?s investments in NGN are put on hold, the only viable investments this year worth slightly in excess of ¤100 mln being directed towards modernising the access network.

?The current state of the NGN program is closely linked to Government?s and its subordinated institutions, namely the National Communications Regulating Authority (ANRC), attitudes towards the issue.

Hardly is this the type of climate in which to invest ¤0.5 bln in next generation network,? said James Hubley, RomTelecom?s General Manager announcing company?s 2005 financial operating results.

The company lost in 2005 approximately 380,000 fixed telephony lines to its competitors, disclosing an un-audited number of 3.96 M units and the tendency is likely to continue this year also, according to RomTelecom?s officials.

"This is an odd strategy and ANRC proves no strategic thinking in relation with infrastructure investments, especially when less than 20 per cent of the population has access to digital fixed telephone lines?, Hubley underscored.

Moreover, he pinpointed the lack of coherence in the strategy approach towards the rural customers too, referring to a loss of ¤38 M incurred by the company from an implemented project started four years ago in Alba, Cluj and Buzau counties that currently has no positive perspectives.

?Moving customers from a company to another does not contribute to the enhancement of competition and improvements in infrastructure?, Hubley underlined.

In 2002, RomTelecom acquired a wireless technology to be implemented within the fixed telephony services in the rural areas of the abovementioned three counties in a deal worth ¤38 M.

Still, the same frequency spectrum used by RomTelecom?s technology in this project had been won in early 2005 by MobiFon, the ex-owner of Connex in an auction to grant the first 3G frequency.

Therefore, Connex-Vodafone currently request its purchased right to exclusively exploit the frequency spectrum.

However, RomTelecom claimed that four years ago, when deciding to make the ¤38 M investment in the wireless technology, its representatives consulted with the Romanian authorities, who urged them to proceed with the project, accordingly promising them partition utilisation rights of the spectrum frequency after granting the 3G licence frequency.

The parties signed at that time an agreement of temporary use of the frequency that currently makes no allowance for RomTelecom to be compensated on investment?s prejudices.

?RomTelecom developed a fixed telephony project in the rural areas of the three counties, powered by a wireless technology.

Currently, the same radio frequency is destined to 3G telephony, one of the utilisation licences having been sold to Mobifon.

At that time, an agreement of temporary frequency partition use was signed.

Currently, Connex-Vodafone asks RomTelecom to leave the frequency,? company?s General Manager explained.

However, telephone disconnections have already started in the rural area of Buzau where 200 telephone posts have been only yesterday cut off, some other 21,000 being set to share the same fate.

?Actually, as Connex-Vodafone will extend its 3G services we will be out of this business and the 21,000 subscribers to benefit from this project?s implementation will no longer have access to telecommunication services, ? Hubley added.

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Cimsa, the Sabanci owned cement company, studied investment opportunities in Romania and plan to expand in Europe in 2006.

One of the leading business conglomerates in Turkey, Sabanci Holding, which is active in the cement sector, will carry out studies in Romania to establish a factory in the country.

Highlighting that they operate a depot and packing service in Gazi Magosa (Famagusta) and that the Free Trading Zone purchased a company in Northern Cyprus, Kulcu said Cimsa also modernized its factories in Mersin and Kayseri, at a total cost of $35 million.

Cimsa is strong in the cement sector and the former crisis did not affect their financial tables, Kulcu said. The company, he added, has also maintained high performance with high productivity despite market conditions.

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The southern branch of pan-European railway Corridor IV will cost approximately 2.44 billion euros while the total costs of the entire 1,357-km-long corridor is set at some 7 billion euros, according to data released by the Ministry of Transport, Construction and Tourism (MTCT), ACT Media news agency reports.

The southern branch comprises the Arad-Timisoara-Drobeta Turnu Severin-Craiova-Calafat route.

A breakdown by segments show the 108-km Craiova-Calafat portion is estimated to cost 538 million euros and its construction is scheduled for 2010, whereas the 267-km Arad-Drobeta Turnu Severin portion is estimated to cost 1.11 billion euros and its construction is scheduled for 2015, and the Drobeta Turnu Severin- Craiova portion would cost 793 million euros and would be ready in 2015.

The northern branch of the same corridor covers 686 km, crossing Romania from the western town of Curtici to the eastern Black Sea city of Constanta.

Its total costs are put at 4.5 billion euros.

The highest speed average on Romania's railways is 160 km/h, currently possible only on the Bucharest-Campina route, which was modernised in 2004 under a project worth some 200 million euros.

Usual speed averages are 45 km/h, but 160 km/h would be common from 2015 on, after works on both branches of pan-European railway Corridor IV have been completed.

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Anchor Grup, the company that developed and operates Bucharest Mall and Plaza Romania, will enter in 2006 the residential segment with a project near Bucharest Mall, ACT Media news agency reports.
 
The new residential centre will provide 500 flats, said the general manager of Anchor Grup, Ibrahim Paksoy, the project's value being appraised at 35 million euros.

Anchor Grup, a company held by Turkish group FIBA, has already under construction a project for offices which will attracts investments worth 25 million euros.

Anchor Plaza, situated close to Plaza Romania commercial centre will be inaugurated at the end of September 2006 and will have 13 storeys with a surface for rent of 30,000 square metres.

Anchor Grup has developed its first real estate project on the Romanian market in 1999 when it delivered Bucharest Mall, the first mall of the local market.

Ever since, Anchor Grup carried out a similar project, Plaza Romania, finalized in 2004.

The two commercial centres involved investments worth over 100 million euros.

Anchor Grup was involved at the beginning of 2005 in one of the biggest financing on the real estate market, contracting a loan worth 124 million euros from Austria Creditanstalt and HVB Bank Romania.

The developer's plans aim the opening of commercial centres nationwide, mainly in the big cities.

Since the opening of the first commercial centre - Bucharest Mall in 1999 - Anchor Grup has registered losses year on year, according to the figures supplied by the Ministry for Public Finance.

As turnover has started growing every year, the company's financial resulted have improved, and as of 2003 Anchor Grup has started to switch to profit.

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Fixed-line telephone operator in Romania RomTelecom, part of the Greek OTE Group, posted overall operational earnings of 925.7 million euros in 2005 compared to 839 million euros a year ago, registering an annual growth of 10.3 percent, according to results announced by OTE Group, ACT Media news agency reports.

Romtelecom Division posted operational revenues of 235 milion euros in Q4 2005, from 220.7 million euros in Q4 2004, up 6.5 percent.

OTE revenues increase was motivated by results obtained by the fixed-line telephone operator in Romania, RomTelecom Division and the one in Greece, as well as by earnings' growth in the field of cell phones.

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