October 2005

The International Monetary Fund has failed to reach a new agreement with Romania due to disagreements over the country's taxation, spending and monetary policies, officials said Monday.

"The IMF program with Romania is now off track," said Emmanuel Van der Mensbrugghe, who is the fund's chief negotiator for Romania.

He urged the government to raise taxes to compensate for the introduction of the flat tax, which is set at 16 percent, down from 25 percent business income tax and a progressive 18 to 40 percent personal income tax.

"More government revenue is needed to provide for more resources for education, health and infrastructure," he told reporters after several days of negotiations with Romanian officials. He said the country's finances could be under more pressure in 2007, when Romania is scheduled to join the European Union and would have additional expenses.

Van der Mensbrugghe said the fund also disagreed with the proposed budget for 2006, saying the government should spend less on wages and more on items such as infrastructure, goods and services.

The IMF also urged stronger measures to cut inflation, saying the current rate of about 8.5 percent and the appreciation of the local currency due to incoming foreign capital threaten the country's businesses, which become less competitive.

Exporters have complained in recent months that they have lost money because of a 15 percent appreciation of the leu in the past year and rising utility and labor costs.

"To promote sustained economic growth Romania has to bring down inflation to that of its competitors and trading partners in the European Union," which is about 2.5 percent, said van der Mensbrugghe.

Romania does not need to borrow money from the IMF as the country has vast foreign currency reserves, he said, but failing to sign an agreement with the fund could affect the decisions of potential investors or lenders.

The country has set a 0.5 percent budget deficit target for next year and wants to reduce inflation to about 5.5 percent.

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Ispat Sidex Galati, Orange Romania and MobiFon were the most profitable large companies in 2004, according to the national list of private companies presented last week by the National Council of Private SMEs in Romania (CNIPMMR).

The first classified, at large companies, Ispat Sidex Galati, Orange Romania and MobiFon posted profits up to ROL 13,745.8 bln., ROL 9.748 bln. and ROL 8.150 bln respectively.

The most profitable large businesses made profits totaling over ROL 30,000 bln.

Last year, the largest medium companies, according to CNIPMMR criteria used in working out the top, were BCR Leasing, located in Bucharest, with a gross profit of ROL 211.2 bln.

The second position was awarded to Datatim, with ROL 201.4 bln., while Hungastro Sfantu Gheorghe lost one position as against one year ago, ranking third, with a gross profit of ROL 178.5 bln.

The first positions among small companies were awarded to Fortum Engineering Romania, based in Bucharest, with a gross profit amounting to ROL 187.2 bln in 2004, Metal Galati, with a gross profit of ROL 182.9 bln and Winmarkt Bucharest, which retains the position held in the previous edition of the top, with ROL 157.4 bln.

Vest Trade & Consulting, based in Bucharest, ranked the first among micro-enterprises, with a gross profit amounting to over ROL 235 bln., followed by two companies also from Bucharest 0 TFM and Francredit, with a gross profit amounting to ROL 234.2 bln. and to 204.9 bln. respectively.

?Small and medium sized companies account for 85% of the private sector in Romania.

This top shows the performance degree of this sector in 2004,? according to Ovidiu Nicolescu, CNIPMMR president.

In working out the classification, the criteria considered were gross profit, average number of employees and turnover, liabilities to the public budgets not exceeding 10% of the turnover.

Retail is the only field identified by managers as having growth potential in terms of staff over the last three months of the year, according to the context survey conducted by National Institute of Statistics covering October - December.

The managers of companies active in industrial sectors kept their expectations regarding downsizing, despite expectations of an increase in their economic situation.

The answers indicated that companies in industry continue restructuring and renovating activities, their growth prospects being moderate as against the previous periods.

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Fitch Ratings placed Romania-based Banca Comerciala Romana's ("BCR") Long-term 'BB+', Short-term 'B' and Support '3' ratings on Rating Watch Positive.

The Individual rating is affirmed at 'C/D'.

This action follows the announcement that Banco Comercial Portugues ("BCP", 'A+') and Erste Bank der oesterreichischen Sparkassen ("Erste", 'A') were selected for the final round of bidding for a majority stake in BCR.

Fitch recognised that BCR would be an attractive strategic acquisition for both BCP and Erste.

Any potential impact on the ratings of either BCP or Erste will be reviewed once the successful bidder is known and full details are available.

"Both BCP and Erste are highly rated banks and the potential support from either of them for BCR is likely to have a positive effect on BCR's ratings," said Tim Beck of Fitch's Financial Institutions Group.

"Given Romania's large population and low banking penetration, BCR's privatisation has attracted interest from a number of Western banks looking to invest into Romania." added Mr. Beck.

"The market has attractive growth prospects, and BCR, with its large franchise, is well placed to benefit from this."

The Romanian state currently owns 36.88% of BCR.

IFC and EBRD each owns 12.5% plus one share.

The Romanian state has the option of redeeming the shares owned by IFC and EBRD in order to obtain a majority stake that can be sold to a strategic investor.

It seems likely that this full 61.9% stake will be sold to BCP or Erste.

The remaining shares are owned by employees of BCR (8%) and five private Romanian investment companies (30.12%).

BCR is the largest bank in Romania and accounts for approximately 26% of the banking system's assets.

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MobiFon, operator of mobile phone network Connex, launched the first GSM service offer under the name Vodafone, after the British group Vodafone signed an agreement with Telemobil regarding intellectual property rights on the brand.

For the beginning, the giant British company preferred co-branding, joining Vodafone with Connex logo.

According to the company representatives, the re-branding process may take up to nine months.

This means that starting mid next year they will renounce Connex, and the company will continue activities under Vodafone brand.

The Vodafone brand was registered in Romania in 1995 by Telemobil company, which operates the mobile phone service Zapp.

Subsequently, the British company Vodafone, the largest mobile phone operator worldwide, addressed the court for receiving the right to use the brand in Romania.

During a first litigation started by Vodafone in 2003, the application was rejected.

In the fall of 2004, Vodafone started a new lawsuit, asking both for the brand annulment, and for having Telemobil deprived of the right to use this brand any longer.

The annulment application was rejected by the first court, whereas the application regarding deprival of the use right was accepted, the court considering that Telemobil has not used Vodafone brand for five years consecutively.

Early this October, High Court of Cassation and Justice had the lawsuit Vodafone - Telemobil suspended in relation to the intellectual property rights on Vodafone brand, considering the application to be moved to another court, chosen by Telemobil.

The moving application remained to be analysed by the High Court of Justice and Cassation on November 10.

The new offer launched by the operator, called Vodafone Family, addresses family groups from two to six members.

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The activities from industry, retail trade and services will follow an upward trend in the next three months, whereas the activity from constructions will drop as against the previous thee months, according to estimates made in October by companies' managers.

According to the National Statistics Institute, the findings of the survey conducted in October emphasize an upward trend for the next three months for the production volume of the processing industry (seasonal balance plus 16 percent), and for the volume of contracts and orders (seasonal balance plus 10 percent).

Companies' managers predict that in the next three months the upward trend in sales of goods specific to this period (seasonal balance plus 10 percent) will maintain.

According to managers' forecasts, the economic situation will be better say 45 percent of respondents, 43 percent say it will be relatively the same and only 12 percent of respondents fear it will be worse. Employers estimate for the next three months a growth in the number of employees in the retail trade (seasonal balance plus 14 percent).

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The Romanian legislation does not clearly make the difference between the operational and financial leasing and this could be the source of major difficulties in the implementation of the leasing legislation ? attorney-at-law Laura Luputi, David & Baias partner, told the National Leasing Conference this Wednesday.

Another participant in the event, PricewaterhouseCoopers tax manager Richard Grotendorst, pointed out that in Romania, the accounting and fiscal approach are treated equally, whereas it should be recommendable to lay more importance on the first aspect. Grotendorst added that the establishment of the operational or fiscal character of the leasing contract is important for the settlement of problems such as: the economic impact of the leasing type for each particular contract, the duration of the leasing contract, the net amount payable on account of the leasing section, what happens when the leasing contract runs to end, what is the residual value of the asset or what happens if the contract is interrupted.

The upcoming EU accession will require Romania to operate some major changes in the legislation on indirect taxes ? declared on the same occasion Daniel Anghel, manager of the PricewaterhouseCoopers Indirect Tax Department.

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Increasing the budget deficit at this moment would be a great mistake ? declared on Thursday Minister of Finance Sebastian Vladescu, who participated in the debates over the Education budget in the joint expert commissions of the two Houses.

The Education commissions rejected the draft budget and pressed for the supplementation to 5% of the GDP of the Education budget. In the given context, the commission members also suggested the eventual increase of the budget deficit.

?We won?t increase the budget deficit because we have a problem with the macroeconomic balance. I admit that we have the narrowest budget deficit of all European states, Bulgaria excepted (the neighbor country even registers a surplus), but setting at jeopardy this highly important and painstakingly attained balance, just one year before our EU accession, for 0.2-0.3% of the GDP, would be a great mistake,? said Vladescu.

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Although Romania succeeded this year in receiving the most appreciative EC country report so far, the Commission warns that the risk that the country?s accession is delayed by one year remains actual, in the first place because of the still widespread institutional corruption, which threatens the smooth functioning of EU mechanisms and policies.

In the next days, EU Enlargement Commissioner Olli Rehn will remit the Romanian government a warning letter with the still sensitive sectors and the steps to be taken until the final verdict on the eventual activation of the safeguard clause is delivered in March ? April 2006.

As far as economic issues are concerned, the Commission notes that Romania still has a long way to go as regards the combat of money laundering, the liberalization of the labor market and the improvement of the social dialogue, the adoption of the acquis communautaire in the customs sector, the strengthening of the administrative capacity, the reduction of the number of uninsured cars, the recovery of illegally disbursed State aids, mentioning at the same time, as reasons for serious concern, the combat of corruption and fraud, the issue of direct payments to the farming sector, the absorption of European funding and the control of community spending, public procurements, the combat of products? counterfeit and trafficking, the implementation of data-processing equipment in the VAT-collecting system, the management of structural instruments.

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The activities from industry, retail trade and services are expected to have an upward trend in the next three months, whereas the activity from constructions will drop compared to the previous thee months, according to estimates made in October by companies' managers, ACT Media news agency reports.

The findings of a survey conducted by the National Statistics Institute revealed an upward trend for the next three months for the production volume of the processing industry (seasonal balance plus 16%), and for the volume of contracts and orders (seasonal balance plus 10%).

Companies' managers predicted that in the next three months the upward trend in sales of goods specific to this period (seasonal balance plus 10 percent) will maintain. According to managers' forecasts, 45% of the respondents expressed that the economic situation will be better, 43% said it will be relatively the same and only 12 percent of respondents expressed fear that it will worsen. Employers estimated for the next three months a growth in the number of employees in the retail trade (seasonal balance plus 14%). Retail sale prices will go upward in the next three months (seasonal balance plus 31%).

Regarding the growth pace, it won't speed up more than the current one, said 62% of the respondents.

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The EU will provide Romania 1.155 million euros in financial assistance in 2006, but since the Commission has identified serious drawbacks in Romania?s capacity to use up such resources, it warned that the funding might be blocked until accession, ACT Media news agency reports.

Corruption is also a threat to the correct implementation of EU funding policies and of the programs with community financing.

The EC urged Romania to intensify its efforts for creating institutions capable to implement direct support schemes (as in the case of farmers), disburse allowances in correlation with the market and absorb the rural development funds established under the Joint Farming Policy.

The failure to fulfill these commitments automatically results in penalties.

The Commission will have to lock up EU funding if a new member state does not provide enough guarantees for the efficient spending of the money.

Actions are needed to strengthen the administrative capacity in ministries and other central, local and regional organizations, inclusively in relation with the Social European Fund, as well as for the management of the future program ?Competitiveness.?

The Unique Plan of Action for the improvement of the management of EU funds must be promptly implemented.

The co-funding mechanisms still need to be clarified and guaranteed, especially at local level.

Romania still has difficulties in setting the adequate administrative capacity in place, managing and controlling the enforcement of programs of the Structural Funds type and of the measures for the Cohesion Funds.

In conformity with convergence criteria, EDIS needs to get in charge by the end of December 2005, allowing the Commission?s specialized services to perform the assessment audit in the first half of 2006.

The observance of deadlines will allow Romania to obtain the approval of the PHARE program by Q3 2006.

The internal audit schemes for the PHARE, SAPARD and ISPA programs need to be improved, after the Court of Accounts was authorized to perform an external audit.

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The president of Alpha Bank's subsidiary in Romania, Alpha Bank Romania, Mr. Yiabanas stated that the subsidiary bank is expected to report a 30% increase in FY05 earnings.

He also mentioned that some of the targets set for the period until the end of 2008, including the expansion of the network to 125 branches (from 25 currently) and capturing a market share of 7%.

Mr. Yiabanas also stressed that, given the very high prices required to buy a bank in Romania (he specifically mentioned BCR and CEC), Alpha Bank considers building up its own network as the best and cheaper option to pursue growth in the country.

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The British Parliament will discuss the ratification of Bulgaria and Romania?s EU accession treaty on second reading this week, British Ambassador to Bucharest Quinton Quayle said in an interview with Romanian newspaper Evenimentul Zilei .

?The ratification process started on October 11 on first reading ahead of the EU monitoring report on Bulgaria. The second reading, which is crucial, will be held this week. The Parliament will pass it because the political forces have agreed on that?, HE Ambassador Quinton Quayle said.

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Oil group Rompetrol president Dinu Patriciu said supplementary payments were not illegal.

The UN's report of the Independent Inquiry Committee pledges to investigate from some of the 2,200 companies cited and countries with prominent politicians of colluding with Saddam's regime to bilk the humanitarian operation of $1.8 billion in kickbacks and illicit surcharges.
The report, created by former U.S. Federal Reserve chairman Paul Volcker, noted as involved in the program the Romanian oil group Rompetrol. The president of the oil group, Dinu Patriciu, denied during a press conference the allegations regarding bribes to the Iraqi authorities in exchange for oil. Rompetrol, also listed in the report with unauthorized payments, had indeed acquired oil from Iraq, after closing a four million barrel contract, said Patriciu. The company received the first shipment of Iraqi oil, of two million barrels, which proved inadequate for the Romanian refinery Petromidia. Therefore, the next shipment was exchanged with Texaco, which in turn provided a type of oil which could be processed by Petromidia. Regarding unauthorized payments, Patriciu stated the sums represented supplementary payments, required in any deal, made to the local agent, for insurance, lawyers, consultancy services and others, including maintaining Rompetrol equipment and offices in Iraq.
Patriciu said he had no doubts the contracts were legal and the payments were carried through Raiffeisen and HVB.
During the oil-for-food program, Rompetrol's management was American. When Patriciu took over the company, he said he severed the Iraq link because of poor crude quality and too much bureaucracy.
Patriciu said he will publish all the documents regarding this matter, to prove the company has no connection with the bribery allegations. The president of the Romanian oil group has also said he would sue any one who makes allegations without proof.
According to Patriciu, the same data was published last year in a C.I.A. (Central Intelligence Agency) report, which did not accuse the Romanian oil group in any way.
The largest contract closed within the U.N. program with a Romanian company was signed with Upetrom 1 Mai Ploiesti, worth 19.7 million dollars. The contract concerned oil equipment, such as drilling installations, probe heads, accessories and others.
Another company involved was Romtek Special Industries, which signed a 3.9 million dollars contract for pipes and maintenance equipment.
Alongside the above-mentioned, 10 other Romanian companies were included in the report, including Petrotub Roman, PCC Sterom, Black Sea Technochim, General Turbo and others.

Romanian state companies to be investigated

The Minister of Foreign Affairs, Mihai Ungureanu, stated on Sunday that the Volcker report does not include Romanian companies or citizens, except for Bulf Drilling and Oil Servicii.  The company was connected by the report with a transaction of the American oil company Texaco. The minister admitted several Romanian companies are listed on an annex of the report, which includes all the companies, part of the U.N. program.
According to Ungureanu, the Volcker report is not an instrument for investigation, but an analysis of the procedures used during the program. However, the minister considers that the report's conclusion is that the U.N. is responsible for the lack of transparency in the program.
The Ministry of Economy and Trade announced it will verify if there were state companies involved in the oil for food program and in illegal payments towards the former Iraqi regime led by Saddam Hussein.
According to the prosecutors of the High Court of Cassation and Justice, the investigations on charges related to the U.N. program were initiated in Romania in 2003.

Report alleges companies worldwide bribed Iraqi officials

The oil for food program allowed Iraq to sell limited and then unlimited quantities of oil, provided most of the money went to buy humanitarian goods to help ordinary Iraqi's cope with U.N. sanctions.
Countries that opposed the sanctions - like Russia - were given priority, the report found.
Switzerland said it has launched a criminal investigation focusing on four people connected to the oil-for-food program, whom authorities did not immediately identify further. Swiss authorities already have fined a Geneva-based oil-trading company $40,000 (¤32,000) for paying kickbacks under the program, but have not identified the company.
France will study the report carefully and "wants full light to be shed on the embezzlement that took place in the framework of the oil-for-food program," Foreign Ministry spokesman Jean-Baptiste Mattei said. French judges are investigating 10 French officials and business leaders on suspicion they received oil allocations as kickbacks. "The Iraqi government had a beneficial policy for the French companies and individuals involved in the oil for food program," states the report.
Among them is former U.N. ambassador Jean-Bernard Merimee, who held the post from 1991-95, and according to the report received more than $165,000 (¤135,000) in commissions from oil allocations awarded to him by the Iraqi regime.
The report also said former Interior Minister Charles Pasqua, now a senator, was awarded 11 million barrels of oil, an allegation he denied Friday in an AP interview.
"I never received anything," Pasqua said, adding that he believed somebody used his name without his knowledge. "It is obvious to me that the Americans want to implicate France."
In Australia, Prime Minister John Howard said he doubted the Australian Wheat Board, which was the single largest supplier of humanitarian goods under the program, would have knowingly made improper payments. The report said the board, which sold $2.3 billion (¤1.9 billion) of wheat to Iraq, had made "side payments" for transportation of the grain to a Jordanian company that was part-owned by Saddam Hussein's government.
Andrew Lindberg, managing director of the wheat board's successor AWB, said "we didn't know that the money, that we believed we were paying for transport, was being diverted to the regime."
An Italian politician also named in the scandal, Roberto Formigoni, said he received "neither a drop of oil, nor a single cent."
British lawmaker George Galloway, who founded a charity aimed at fighting the U.N. sanctions against Iraq, said "there is a witch hunt going on" and accused a U.S. senator of falsifying evidence against him.
The reports said Saddam's government had given lucrative allocations for 18 million barrels of oil to Galloway, directly and through his business associate Fawaz Zureikat, to support his campaign for the lifting of sanctions on Iraq.
Galloway denied the charges, similar to those leveled at him by a U.S. Senate investigative subcommittee. "There has been manipulation of evidence, and there's the manipulation of prisoners at the mercy of the American administration," added Galloway
Galloway said U.S. Senator Norm Coleman, who has accused him of lying to U.S. legislators about his dealings with Saddam, falsified the testimony of former Iraqi Prime Minister Tariq Aziz.
"Tariq Aziz never implicated me in any oil-for-food trading; he never claimed to have discussed any such thing with me," Galloway said after meeting Aziz's lawyers in Paris.
Galloway was expelled from Prime Minister Tony Blair's Labour Party for urging British soldiers not to fight in the Iraq war but won re-election to Parliament this year under the banner of an anti-war party he founded.

Indian foreign minister denies benefiting from oil-for-food program

India's foreign minister said allegations of his involvement were "baseless and untrue."  The ruling Congress party also separately denied that it was in "any way involved in the oil-for-food program" and said it had been "unfairly and incorrectly" named in a report by an independent inquiry headed by former U.S. Federal Reserve Chairman Paul Volcker.
External Affairs Minister K. Natwar Singh said in a statement that the charges against him and the Congress party were part of a campaign to defame the party. "This is obviously part of the continuing campaign to malign the Congress party and its senior leaders and functionaries," Singh said. He did not say who was behind the alleged campaign.

Russia skeptical about report on corruption

Russian politicians and business leaders have issued a scathing response to the report, saying some documents implicating Russian companies and individuals were fake. "On a number of occasions, the documents shown to us were forged, in particular, they contained fake signatures of Russian officials," Foreign Minister Sergey Lavrov was quoted as saying by Russian news agencies.
"Russian companies received almost one-third of oil sales under the program," worth some $19 billion (¤16 billion), the 623-page report said. Between March 2001 and December 2002, Russian companies alone paid $52 million (¤43 million) in illicit surcharges to Saddam's government, the report alleges.
Among Russian individuals, the report targeted Alexander Voloshin, who at the time was the Kremlin chief of staff, and Vladimir Zhirinovsky, the firebrand ultranationalist lawmaker. Both have denied wrongdoing.
Anatoly Chubais, the chief executive of the UES power grid where Voloshin now serves as board chairman, criticized the commission for naming Voloshin in its final report, asserting that the commission it had checked his signature on oil contracts and found it was a fake.

EU says world must learn lessons of oil-for-food scandal

The European Union expressed regret Friday over abuses documented by a report into the U.N. oil-for-food program and said the world had to learn from the mistakes it uncovered.
"It's regrettable that a program that was established to improve the ordinary life of Iraqis gave rise to wrongdoing," said EU spokeswoman Emma Udwin. "The international community must now draw the lessons from this."
She welcomed the report drawn up by former U.S. Federal Reserve chairman Paul Volcker for bringing "clarity" to the program and praised reforms already instigated by the U.N. in the wake of the oil for food scandal. Some of those accused in the report may face investigation in their homeland, but the EU's executive European Commission is not involved in dealing with the fall out from the scandal. "This is something managed by the U.N. and we're not involved in oil-for-food in any way," Udwin said.

U.N. demands sanctions against firms in Volcker report

The general secretary of the United Nations, Kofi Annan, requested the U.N. member states to pursue legal actions against companies which used bribe to enter the oil for food program. Annan stated the report pointed out a vast system of illegalities and expressed his hopes that the national authorities will take the necessary measures to avoid such actions from repeating. The U.S. State Department spokesman, Sean McCormack, underlined that the Volcker report shows an urgent need to reform the Organization.

Volvo confirms payments to Iraqi authorities under oil-for-food program

Sweden's Volvo AB admitted making payments through an agent to Iraqi authorities saying it did not consider that bribery. "We did business with an authority in Iraq. The same authority tells our agent that you have to pay a fee to do any business at all," chief executive Leif Johansson was quoted as telling the Swedish news agency TT.  "It was something considered a tax which should be made in order to carry out businesses in Iraq. We call that the 'ten percent system', which could not be considered a bribe," said Volvo spokesman Marten Wikforss.
The report said that Volvo's Brussels-based unit for construction equipment paid $317,000 in extra fees to Iraq on a $6.4 million contract. "Our agent has told the U.N. that we paid this money to the regime," Wikforss said. "We have to assume that is correct."
Swedish prosecutors also said they would review the U.N. report to determine whether any of the Swedish companies listed, including Volvo and engineering company Atlas Copco AB, had broken national laws.
Foreign Minister Leila Freivalds said it was "completely unacceptable" if Swedish companies had paid bribes. "These are very serious accusations," Freivalds told the TT news agency. "We don't expect Swedish companies to participate in bribery."
Swedish General Prosecutor Christer van der Kwast stated the authorities could begin a preliminary investigation on 15 companies involved in the report.

Siemens, Lukoil deny allegations

Germany's Siemens AG said it found no evidence of kickbacks allegedly paid by its French, Turkish and Middle East subsidiaries. A DaimlerChrysler statement said the company was "aware" of the report, but declined to comment further. Anglo-Swedish pharmaceutical company Astra Zeneca also denied alleged wrongdoing.
The report also implicated Lukoil Asia Pacific, a company the report called a subsidiary of Russia's No. 1 producer, Lukoil. Lukoil's spokesman, Dmitry Dolgov, said he had never heard of the company, adding that investigators had worked with Iraqi documents, which could have been forged. Dolgov noted that investigator Robert Parton resigned from Volcker's committee in April, reportedly because he believed it ignored evidence critical of U.N. Secretary-General Kofi Annan. "This creates the impression that this report is aimed at distracting attention from the oversights of U.N. officials and laying the blame with certain companies," Dolgov said.

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The payment of 300.6 million euros and 10.1 million dollars of public debt servicing for the last two months of the year will be made from the incomes that resulted from privatizations, according to an emergency ordinance approved on Thursday by the government. 300 million euros will be used for the reimbursement of the Eurobonds loan launched by Romania at the beginning of 2001 and an installment of 614,000 euros will be given as part of the repayment of a loan given by the International Bank for Reconstruction and Development (IBRD).

The money will be also used to pay off two credits given by IBRD which total 8.2 million dollars. 1.8 million dollars will go towards payment of the internal public debt. The foreign currency to be used by government is the result of 200.5 million euros that came from the debts recovered by the Ministry of Public Finance and which were converted into shares.

The rest comes from the privatization activity that followed the stipulations of the Government Emergency Ordinance on the privatization and recovery of state assets. According to a statement by the National Agency of Fiscal Administration at the end of May, the debts owed to the state budget, amounted to 2.3 billion euros. The debts owed by 441 large contributors amount to 956 million euros while 75,901 small and medium companies owe 1.3 billion euros.

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Brothers Ioan and Viorel Micula, the main shareholders of food producer European Drinks, filed a case against the Romanian state at the International Centre for Settlement of Investment Disputes (ICSID). According to Ioan Micula, the legal action is a reaction to the decision of Romanian authorities to eliminate fiscal facilities granted to European Drinks for investments in disfavored areas.

The two shareholders, who also have Swedish citizenship, claim that the Romanian authorities did not respect its engagements regarding the mutual protection of investments stipulated by the bilateral agreement between Romania and Sweden. "We demand Romanian authorities to stop discriminations against us. As Swedish citizens our investments can be considered Swedish investments in Romania," stated Ioan Micula. Micula did not want to reveal the value of the compensation claimed, specifying they depend on the loss caused by the elimination of facilities, which in their turn depended on the value of the investment. Sources close to the situation estimate the compensation could amount to a few hundred million dollars.

This is the third case filed against the Romanian authorities at the ICSID, after that of the American company Noble Ventures over the cancellation of the Resita steel works privatization and the one filed by the duty-free network operator EDF, who lost a 20-year contract when duty free outlets were banned from airports in 2002. EDF claims the chief of staff of former prime minister Adrian Nastase had asked for a $2.5 million bribe to maintain the agreement.

According to Florentin Tuca, from the law firm Tuca&Asociatii, who co-represented Romania in the litigation with Noble Ventures, a case the Romanian state won, the court must be constituted by January at the end of the 90-day term from the registration of the Micula brothers' complaint.

Tuca said this kind of lawsuit could take anything between four and six years but there were cases when they dragged on for ten years.

European Drinks is one of the largest private companies in the country and one of the largest producers of food and beverages on the market.

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The financial rating agency, Fitch Ratings, confirmed on Friday the ratings given to Unicredit Romania but revised downward the ratings given to the bank's main shareholder, UniCredito Italiano. The ratings were confirmed to BBB Minus on long term and F3 on short term.

The Italian bank UniCredito does not intend to pressure the minor shareholders of HVB (the bank it's about to take over), according to the bank's executive director, Alessandro Profumo, quoted by Reuters. "The owners that did not put their shares in the transaction will continue to remain minor HVB shareholders," stated Profumo.

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The merger of Forte Business Services (FBS) and a former Romanian branch of Siemens Business Services was certified by the National Office of the Trade Register. The new entity will represent from October 1 the interests of Siemens Business Services in Romania under the brand name "Forte - a Siemens company".

FBS general director Markus Kaiser stated that besides IT infrastructure and additional services, Forte will focus on developing its Business Solutions Unit. FBS has about 300 employees and a network of 10 subsidiaries in Romania.

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The structure of the Bucharest Stock Exchange after the merger with Rasdaq could include 231 companies, as well as a further 703 companies on the alternative listing system to which 877 could be added while approximately 2000 companies will be un-listed.

The list is part of a program issued by the National Movable Values Commission (CNVM) involving a series of measures applied to BVB or Rasdaq Electronic Exchange (BER) transactioned companies, to promote the reorganization of the movable values market. The new structure of the exchange aims to create a settled market and an alternative listing system (ALS), designed for companies which do not fulfill the criteria for listing on the main market. Both electronic markets will be structured in two sectors which are "spot" (shares and bonds) and derivatives (futures and options).

Of the total companies that will be listed on the main market, 62 come from BVB and 169 come from Rasdaq. The CNVM rules say that the shares of a company can be listed on a settled market if the issuer has an anticipated capitalization of at least one million euros in RON equivalent. The 2,000 companies that will be eliminated will also be erased from the CNVM database.

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The government has approved the privatization contract for the Midia thermo-electric plant, under which Rompetrol Group will takeover 56.57% of the company's nominal capital, according to a government statement.

The contract will be closed between the Ministry of Economy and Commerce, through the Office for State Participation and Industry Privatization and the consortium formed of Rompetrol Rafinarie SA and the Rompetrol Group NV Holland. The Ministry of Economy recently announced that it will propose to the government that Midia shares be sold to the Rompetrol Group , but the privatization contract will be valid only after the clarification of the company's financial situation, in order to avoid the risk of selling a company whose assets are state property.

At the beginning of the year the consortium formed of Rompetrol Rafinare (Petromidia) and the Rompetrol Group-Holland, won the tender for the sale of the 56.57% of Midia's shares held by the Ministry of Economy and Commerce.

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The share of Romanian companies which used the internet to obtain information from public authorities was above the average level in the European Union in 2004, a survey of the Statistical Office of the European Community (Eurostat) suggests. The study shows that 56% of Romanian companies connected to the Internet have used it to get information from the web sites of public authorities, compared to a 51% average in the EU. 

The highest degree of Internet use for obtaining information from public institutions was registered in Sweden with 94% and the lowest in Great Britain with only 36%.

The implementation of an effective communication system between authorities and the business environment through the internet, called e-Government, is one of the objectives of the Lisbon Agenda.

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Milk processors complain about poor communication with the Ministry of Agriculture.
The Romanian milk processing industry risks disappearance after Romania's accession to the European Union, participants at the annual meeting of the Milk Industry Specialists' Association (ASIL) concluded on Friday.

70 members of ASIL discussed the problems faced by milk and dairy producers. ASIL representatives stated that no communication whatsoever exists between the association and the Ministry of Agriculture (MA). Milk producers and processors complained that the parts of the accession treaty related to their sector were signed by the MA without them being consulted. General Director of Covalact Ioan Balan declared that the treaty was drawn up by people from the MA who have no connection at all with the realities of the industry.

As a result, after EU accession, local milk processors would either run out of milk or import it, the Covalact director said. Balan added that at the time of accession 90 percent of the processors of milk who are active now will disappear. He claims that because of the poor quality of Romanian milk, foreign processors are already planning to import the milk they process.

The Covalact official complained about the taxes producers had to pay to have the company's products distributed in a retail network, which result in higher prices for milk products. Recently, retailers practically took control of the dairy industry, he added.

According to Balan, to avoid bankruptcy small milk processors should focus on investing in one single product.

In 2004, in Romania 1.2 million small producers produced three million tons of milk out of which only 1.2 million tons were processed. By comparison, Balan gave the example of the Netherlands where 25,000 farmers produced four times the amount of milk produced in Romania.

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Mobifon, the operator of mobile telephone network Connex controlled by Vodafone, launched its first services offer under the dual brand name Connex-Vodafone on Friday. The re-branding became possible after the settlement of the litigation which had brought the company into conflict with its competitor Telemobil, which operates the Zapp mobile telephone network and which registered the brand name Vodafone in 1995, before the entry on to the Romanian market of the British company Vodafone. 

After the acquisition of Mobifone by Vodafone, the British group took Telemobil to court in 2003 and filed a demand for the right to use the name in Romania. The Court rejected the request. At the end of 2004, Vodafone started a new suit demanding the cancellation of the brand name and the withdrawal of Telemobil's right to use it. The cancellation demand was rejected but the Court accepted the company's second request to preclude Telemobil from using the Vodafone brand. The court made this decision because Telemobil had not used the brand in five consecutive years since its registration.

Vodafone announced Friday that the litigation had recently ended "amicably". Asked by press representatives how much the amicable settlement of the litigation had cost, the president of Mobifon Ted Lattimore refused to answer. Sources from the market stated that negotiations did not take place in Bucharest but in London, between Vodafone and Inquam, the majority shareholder of Telemobil.

Lattimore added that by mid-2006 the activity of Mobifon would be fully integrated to that of Vodafone.
This was probably Lattimore's last public appearance as president of Connex, as starting from November 1, this position will be taken up by Romanian Liliana Solomon.

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The bonds issued by Rompetrol Rafinare regarding the transformation of the budgetary debts of the company, existing at 30 September 2003, will be listed in the Bucharest Stock Exchange (BVB) five days after they will be registered in the National Movable Values Commission (CNVM).

This settlement is included in the legal act approved by CNVM and which must be published in the Official Monitor. Fifteen days after the CNVM decision will come into force, Rompetrol will depose the shares prospectus for its approval. The shares will have a nominal value of 25 euros.

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The leasing companies that are members of the Association of Leasing Companies of Romania (ASLR) achieved a total volume of contracts of 860.5 million euros in the first nine months of the year, accounting for some 84 percent of the volume in 2004, the association data show.

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The interests on RON loans have barely gone down, due to pressure from the NBR, which blocked the foreign currency lending and cut the interest at which commercial banks can invest their liquidity surplus to 1%, that bankers are starting to talk about interest raising prospects.

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Israeli-held New Pharm plans to develop a chain of drugstore-type pharmacies on the Romanian market. The drugstores sell three times more products than a regular pharmacy and take up at least three times the space of such a pharmacy.

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Timisoara-based shipping company Dunca Expeditii forecasts turnover growth of 50% for 2005, to 15 million euros. "This development of the turnover from the 10.5 million euros we logged in 2004 is due to the increase in the vehicle stock, to the higher number of kilometres travelled, as well as to the higher fuel prices, which have directly impacted this indicator," stated Dunca Romeo Dan, general manager of Dunca Expeditii.

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The Army, thanks to the allocated funds, will be able to fulfill the major objectives it has assumed for 2006, Defence Minister Teodor Atanasiu said on Thursday, after debate in the Romanian Parliament on the 2006 budget.

Nevertheless, the senators and deputies of the defence committees showed readiness to back up an additional budget for the Defence Ministry, Atanasiu added. ''Due to the funds we are allocated for 2006, we will be able to meet the major NATO objectives assumed for next year.

On the other hand, we naturally have to give up insignificant objectives,'' Minister Atanasiu said. Initially, the Army had planned its actions starting from a budget accounting for 2.38 percent of GDP, later, however it had to plan the next year goals on the basis of a budget worth 1.97 percent of GDP, namely about 200 million dollars, Minister Atanasiu also said.

Asked wherefrom money could come to be added to the Army budget, Minister Atanasiu answered that the only solution could be taxes, duties and excises, additional revenues to the state budget. ''I don't think money will be taken from education, healthcare, transport or another ministry and will be allocated to the Defence,'' Minister Atanasiu said.

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From the refinery at Petrobrazi, an hour from Bucharest, the risks and opportunities of OMV's ¤1.5bn ($1.8bn) takeover of Petrom are immediately striking. 

The acrid odour, rusting pipelines and acres of idle equipment testify to years of under-investment. Just down the road, at one of hundreds of local collection stations, a pump sends oil from nearby wells to the refinery. The solitary black machine dates from 1912 ? six years before the collapse of the Austro-Hungarian empire.

When OMV bought control last year of Petrom, Romania's state energy group, it represented an exceptional chance to join the senior ranks of the world's oil league. The deal catapulted OMV, an integrated group controlled by the Austrian government and Abu Dhabi interests, from a provincial player into the second division of world energy groups alongside European rivals, such as Statoil or Norsk Hydro.

While Exxon, BP or Shell may be much bigger, OMV's share price, buoyed by soaring energy prices and growth prospects in its Danube region, has outshone them all. Adding Petrom's production to OMV's total has swelled output. Reserves have surged thanks to an estimated 1bn barrels of Romanian oil still waiting to be pumped. Beyond Romania, Petrom's interests extend to the Caspian Sea and Kazakhstan. 

Such riches this month prompted OMV to raise many medium-term targets. Production should reach 500,000 barrels of oil equivalent per day by 2010 from 340,000 boe/d today. Refining capacity should also hit 500,000 boe/d and up to double that if further acquisitions prove successful ? OMV's shopping list includes Serbia's refining interests, due to be privatised next year. Meanwhile, gas marketing is forecast to reach 20bn cubic metres from 14bn cu m at present 

But to achieve these goals, OMV's management must release Petrom's potential. Petrobrazi, Romania's biggest refinery, says it all. The vast site has a notional capacity of 4.5m tonnes a year, but produces just 3.6-3.9m tonnes because of assorted bottlenecks. The plant, dating from 1934, employs 3,000 people to handle less than half the oil processed by just 800 at OMV's home refinery near Vienna. With 51,000 staff, Petrom has six-times more employees than its new parent.

The Austrians are going two main ways to meet such problems. This month, Wolfgang Ruttenstorfer, chief executive, said investment in Romania would be doubled to ¤3bn in the next five years. Money will go on modernising decrepit equipment, improving health and safety and eliminating bottlenecks.

Improving Petrom's ability to replace its oil and gas reserves, and to lower its production costs, are top priorities. Mr Ruttenstorfer believes new technology should help Petrom raise its replacement rate from just 10-15 per cent today to 70 per cent by 2010. Other spending will ensure that capacity utilisation at refineries like Petrobrazi can be increased from 75 per cent to about 95 per cent

Cash will also be allocated to slim down Petrom's bloated workforce ? although neither Mr Ruttenstorfer or his Romanian colleagues will talk numbers in public. The aim is to lower Petrom's average price per lifted barrel to about $9 from about $12.40 today.

Meanwhile, management practices are being modernised at what was once a showcase Communist company with the arrival of teams from Austria. If all goes to plan, Petrom could eventually gain group-wide responsibility for south-eastern Europe. 

But, OMV could have some problems on the way. Petrom's reserves are currently being audited by Degolya McNaughton, a specialist US consultancy, with a report on the 300-odd fields due next year. If the findings suggest, as possible, that Petrom has more than the 1bn barrels assumed during the takeover, it would be a major filiip for OMV.

But any upgrading could also complicate relations with the Bucharest government, which is facing increasing public discontent about surging energy prices and windfall energy profits. 

Last month, Traian Basescu, Romania's president, jumped on the populist bandwagon, suggesting the terms of the Petrom sale should be reviewed.

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Almog CDAI Ltd. and partners will build a 13,000-sq.m. commercial center in downtown Bucharest, at an investment of ¤20 million. Almog is negotiating with a US company to market the project.

Almog also bought two adjacent structures with 2,400 sq.m. altogether, slated for vacating, in northern Bucharest. The company plans to renovate the buildings and convert them into offices. The cost of the project is estimated at ¤2.5 million.

Almog has been operating in Romania for five years. Its projects include a four-storey residential building in Bucharest with five-room duplexes, which will be offered for sale at ¤350,000 each. Almog invested an estimated ¤2 million in the project.

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

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

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

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

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

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

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

The two remaining pillars, one for mandatory payments and one optional privately administered component, are currently under review for redefinition and improvement for the protection of supplementary pension funds.
Administrative competence will be further enhanced by the integration of the pension system into the national computer to eradicate voids in the legislative structure from cases which exceed national boundaries, aimed primarily at migrant workers and their family members.

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

This included the introduction of a minimum insurance calculation based on groups of professions to be paid by employer and employees, and a fund for the guarantee of employees claims in case of employer insolvency.
There are restrictions on the amount that can be yielded on private pensions with law restricting investments to protect the insurer. The major investment possibilities are with a maximum 5% of real estate assets and 50% of securities, like bank accounts, leaving little room for manoeuvre.

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

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

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

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

The returning labour have caused a public issue in using a system to which they did not contribute, there have been further complaints from those that can afford private healthcare whilst still being forced to pay into the state system.
The current system is very state bureaucratised and subsidised, whilst the belief that the increase of market influence and the incentive of service provision will improve the system was contradicted by the pre-electoral message, which projected that contributions will have to increase.

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

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Bulgarian businessmen have shared with Romanian colleagues their experience in the attraction of foreign investments.

At a pioneer forum held for two days in Bucharest, Bulgarian-Romanian Trade and Industry Chamber invited more than a hundred Romanian top managers, local administration representatives and journalists.

Key issues of discussion pinpointed on lower tax and social security burden, preferential approach to top-certified investors in Bulgaria and the implementation of Bulgaria's law on promotion of foreign investments, the Chamber's CEO Eleonora Ivanova said.

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Under a plan to overhaul its air force Romania has turned to Israel for assistance. The East European country prefers to buy the most advanced fighter jets available on the market yet the price tag for the newest F-16 is likely to pierce a hole in Bucharest?s pocket.

Romania has therefore decided to purchase older versions of the renowned American-made jet from the Israel Defense Forces, which is also replacing its F-16 A and F-16 B fleets with F-16 I jets.

The IDF has set up a special committee to coordinate the various stages of what seems to be a complicated deal that will cost Romania an estimated USD 150 million.

Under the deal, Israeli contractor Elbit Systems will oversee the upgrading and maintenance of the fleet sold to Romania. Elbit is known to having updated MiG 21 fighters for the Romania air force in the past.

Other Israeli companies will also be contracted to upgrade Romania?s old fleet with advanced Israeli-made systems.

Israel is hoping that the successful deal will open the gate for more deals with other countries. This is no straightforward business however. Israel needs Washington?s approval for selling F-16 jets and other American-made military platforms.
 
The deal with Romania was approved by the American government and Lockheed Martin, the U.S. aircraft manufacturer, with no hurdles since Romania is a NATO member.
 
The U.S. refused to allow Israeli companies to upgrade fighter jets for the Venezuelan army in light of the political tension between Washington and Caracas.

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The United States has approved a $150 million deal between Israel and Romania. Israel will be selling modified F-16i and F-16b fighter jets to the Romanian air force to replace outdated MIG-21s.

The US-built fighter jets were used by the Israel Air Force, which is upgrading to the F-16a fighter craft, too expensive an aircraft for Romania.

Such a deal requires US approval since the planes were manufactured by America?s Lockheed Martin.

America approved the deal since Romania is a NATO member. Another deal between Israel and Venezuela involving fighter jets was vetoed by America due to tensions between those countries.

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A delegation of judges from the Romanian Supreme Court and Court of Appeal visited the World Intellectual Property Organization (WIPO) this week as part of a three-part Colloquium organized by WIPO, the European Patent Academy in Munich and the Swiss Federal Institute of Intellectual Property in Berne from October 17 to 28, 2005.

According to a press release by WIPO, the Colloquium which involved visits to all three participating organizations, is an opportunity for judges to enhance their knowledge of recent international developments in the protection of intellectual property rights and to deepen their practical knowledge and expertise in handling intellectual property cases.

Dr. Kamil Idris, WIPO director general, commenting on the visit, applauded the Romanian Government?s commitment to the effective and strategic use of the intellectual property system to promote economic development in that country and reaffirmed WIPO?s continued support of Romania in the field of intellectual property.

He further underlined the importance for all countries of underpinning their intellectual property systems with effective enforcement mechanisms. This, he said, was a key factor in combating the global problems of counterfeiting and piracy which undermined the efforts of countries to promote economic growth.

Opening the Geneva segment of the Colloquium from October 24 to 27, 2005 which brought together eight senior judges from the Romanian Supreme Court and Court of Appeal , Wolfgang Starein, director of WIPO?s Enforcement and Special Projects Division said, "As countries are making strides towards economic development, it is essential to be well equipped for the protection of intellectual property rights, consumer protection and that of the entire economy against increasingly sophisticated counterfeiting and piracy. It is well established that a sound intellectual property regime with effective enforcement mechanisms contribute to encouraging local and foreign investments."

Starein also highlighted the decisive role played by the judiciary in intellectual property enforcement and in combating counterfeiting and piracy, particularly in terms of providing a clear orientation in and by court decisions based on well-developed and structured criteria.

Ambassador Doru Romulus Costea, permanent representative of Romania to the United Nations in Geneva, said that the colloquium, the second of its kind, was part of the important process of reforming and upgrading the Romanian judicial system. He said that the Romanian authorities were paying increasing attention to improving the environment for intellectual property protection in his country and that having implemented a national intellectual property strategy and adopted specific laws, enforcement was a natural priority.

He said "implementation will contribute to the strengthening of the relationship between Intellectual Property and development and to meeting EU integration criteria in this respect." Ambassador Costea noted that WIPO?s cooperation with Romania was "dynamic and growing" and thanked WIPO for co-organizing the colloquium.

During their visit to WIPO, the delegation of judges was briefed on WIPO's overall mandate and functions, international developments in the field of intellectual property, technical cooperation activities particularly with countries that are moving towards market reform, and work in the areas of legislative reform, arbitration and mediation, and the Internet domain name process.

They also heard presentations and exchanged views on a range of issues relating to intellectual property rights and their enforcement. In today's information and knowledge-driven societies, the intellectual property system has a key role to play in converting knowledge and information into tangible economic assets. This has highlighted the need to address questions relating to enforcement and protection of intellectual property rights.

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 By mid-December, 2005, Romania?s largest tractor company Tractorul SA Brasov would come under the banner of India?s largest tractor maker Mahindra & Mahindra Limited. M&M is now the sole negotiator to acquire 100% of the company after it beat a local Romanian consortium Myo.

The Romanian acquisition, however, will come with its share of challenges. Tractorul was producing around 60,000-70,000 tractors at one stage. After the breakup of Soviet Union, there was a disintegration of operations. Last year Tractorul produced only 5,000 tractors bringing in revenues of just 50 million Euros. Ramping up operations of the Romanian facility, catering to the diverse European markets, where technical innovation is the key to success, and competing head on with the global tractor majors will be one of its biggest challenges ever faced by the Indian tractor major in its global foray.

Last November it acquired an 80% stake in Jiangling Tractor Company, China for around $8 million. M&M has had two tractor assembly units in the US since 1994. It also has a vehicle assembly facility in Brisbane, Australia to cater to the region?s requirement.

But it?s the Jiangling and Tractorul acquisitions that will make M&M a full-fledged tractor major with a breadth of range needed to operate across geographies. Because nations that allow large farm holdings typically require higher horse power tractors as against countries like India which predominantly require smaller horse power tractors because of smaller farm holdings. Though the 60hp and above tractors are a small segment, contributing to just 17% of the total tractor sales in India, such high powered tractors form a majority of the market in Europe where M&M has virtually no presence.

M&M has, by far been a strong player in the 30hp-50hp category, which is reflective of the fact that this segment accounts for nearly 70% of India?s 2.6 lakh annual tractor sales. The Jiangling buyout gives it a presence in the sub 30hp category. Now with Tractorul, which is a player in the 60-120hp range, M&M will have a product portfolio spanning the entire range, from sub 30hp to 120hp.

The Tractorul facility coupled with the Jiangling and Indian facilities will give M&M an annual production capacity of over a lakh units, making it one of the world?s largest tractor maker, in the same league as global tractor majors like John Deere, New Holland, Same-Deutz Fahr and AGCO.

M&M?s president, Farm Equipment Sector, A Choudhari, recounts a recent exchange programme introduced by the world?s largest tractor maker John Deere in the US only for Mahindra tractor owners. Mahindra tractor users could exchange their tractors for a new John Deere tractor. ?The programme was a failure as our users did not want to change?, quips Mr Choudhari. M&M believes this indicates a recognition of its capabilities as a tractor major.

M&M would ideally like to replicate its undisputable leadership in the domestic market in other markets of the world. In the period April-August 2005, M&M has sold 29,283 tractors, posting a 39% growth and a 32% marketshare. Chennai-based TAFE is the second largest player with a 23% marketshare after the acquisition of Eicher?s tractor business. However, so far it has only the US market to showcase. In the US, M&M sold 8,481 tractors in 2004-05 (a 12% growth over previous year) raking in a $128 million in revenues and a 5% market share. Its China operations are less than a year old. M&M exported 940 tractors in 2004-05, the highest in the SAARC region.

But with a presence in some of the world?s biggest markets like China, India and the US market M&M has made its intentions clear. How it tackles the challenges in the local markets will now decide which tag suits it the best: ?Global tractor major? or ?India?s largest tractor maker with presence in global markets?. Tags that are subtle but very powerful differentiators.

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European Bank for Reconstruction and Development

Bra?ov, a major Romanian city located in the heart of the country, will significantly improve its urban and public transport using a ¤30 million loan from the EBRD. Bra?ov, with its rich historic heritage and picturesque landscape, has for many years been a major tourist destination.

The Bank?s loan is being divided equally between the City of Bra?ov and Regia Autonoma de Transport Bra?ov, a public Romanian transport company which is under the City?s authority. It is the first time the Bank has lent directly to a municipal transport company in Romania without a guarantee from the city. A portion of the loan will be syndicated to international commercial banks.

The City of Bra?ov will use its portion of the EBRD loan to upgrade key roads and further improve transport management across the city, while the Company will rationalise transport services and acquire around 100 new buses.

Thomas Maier, Director for the EBRD?s Municipal and Environmental Infrastructure team, said this important project will improve urban transport in Bra?ov benefiting both the city?s residents and its many tourists. Furthermore, it will provide a demonstration effect showing how other municipal companies open to reform can gain access to long-term finance without municipal or sovereign guarantees, he added.

Since having supported improvements in many Romanian cities? water and waste-water systems over the past decade, the EBRD is now turning its eye to the urban transport sector across the country. Since June this year the Bank has provided Arad and Sibiu with loans that are helping to improve their urban transport infrastructure.

The EBRD is the largest investor in Romania having committed more than ¤2.5billion in 130 projects.

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Deutsche Bank AG, Germany's biggest bank, said third-quarter profit increased 46 percent to a record after a surge in trading revenue and the highest fees from underwriting and giving mergers advice in almost three years.

Net income rose to 991 million euros ($1.2 billion), or 1.89 euros a share, from 680 million euros, or 1.28 euros, a year earlier, the bank said in a statement on its Web site today. Profit beat the 839 million-euro median estimate of 18 analysts surveyed by Bloomberg. Revenue gained 31 percent to 6.62 billion euros.

Deutsche Bank is benefiting from a boom in trading that led to the most profitable third quarter ever for Wall Street firms. Chief Executive Officer Josef Ackermann last month said the Frankfurt- based company ``will do everything'' to improve in investment banking, its biggest and most lucrative business.

``Trading revenue was very strong,'' said Michael Rohr, who helps manage about $7.9 billion in equities, including Deutsche Bank shares, for AMB Generali Asset Management in Cologne. ``They've reorganized the business and it's running quite nicely.''

Ackermann last year picked Anshu Jain, 42, and Michael Cohrs, 49, to run investment banking, putting Jain in charge of turning around the lagging equity sales and trading unit. Cohrs is responsible for the underwriting and mergers advisory business.

Derivatives Demand

Deutsche Bank, which makes less from betting with its own money than its competitors, reported a 56 percent increase in sales and trading revenue to 2.9 billion euros, placing it third in the quarter behind Goldman Sachs Group Inc. and Citigroup Inc. Deutsche Bank, which generated 44 percent of revenue from sales and trading, was the No. 1 trader in the first half of the year.

Debt sales and trading rose 29 percent to a record 1.9 billion euros, boosted by credit derivatives and currency trading. Sales and trading of equity products more than doubled to 1 billion euros because of ``high levels of client demand'' for derivatives, improving stock markets and an increase it share sales.

The Standard & Poor's 500 Index and Germany's benchmark DAX Index had their biggest third-quarter advance since 1997.

``In our core markets, we saw increased customer activity against a backdrop of rising confidence in the world's financial markets,'' Ackermann, 57, said in the statement. ``We now look forward with confidence to a successful conclusion to 2005 and to continued success in 2006.''

Deutsche Bank toppled JPMorgan Chase & Co. as the best trading firm in the derivatives market, according to Risk Magazine's annual poll of dealers and brokers, published last month. Deutsche Bank won with 11.8 percent of the votes, compared with JPMorgan's 10.3 percent and 9.6 percent for third-place UBS AG.

`Investment Banking Year'

Shares of Deutsche Bank rose 21 cents, or 0.3 percent to 76.06 euros at 1:57 p.m. in Frankfurt after rising as much as 1.7 percent in earlier trading. Twenty-four of the 30 stocks on Germany's DAX Index fell today, pushing the benchmark to a two-month low.

``The shares should be 2 or 3 percent higher,'' said Philipp Musil, a fund manager at Vienna-based Constantia Privatbank AG, which oversees $12 billion, including Deutsche Bank stock. ``The results were perfect. 2005 is an investment banking year. UBS and Credit Suisse will also have good performances.''

UBS AG, Europe's biggest bank, may report its biggest quarterly gain in profit in 1 1/2 years on Nov. 1 because of higher fees from investment banking and managing money for the rich, according to the median estimate of nine analysts surveyed by Bloomberg. Credit Suisse reports earnings on Nov. 2

Equity Underwriting

Pretax profit at the corporate and investment banking unit, which contributed 67 percent to earnings, more than doubled to 1.3 billion euros. Revenue from advising on mergers and debt and equity underwriting increased 25 percent to 571 million euros.

Deutsche Bank climbed to No. 1 among European equity underwriters in the third quarter from 12th a year ago, according to data compiled by Bloomberg. The biggest equity offering managed by the bank during the quarter was the company's own sale of 1.4 billion euros of shares in DaimlerChrysler AG.

``There's extremely good momentum going on right now for investment banks,'' said Guy de Blonay, who manages about $250 million of financial stocks, including Deutsche Bank shares, at New Star Asset Management in London. ``The market was looking for some good numbers and extremely good numbers came out.''

Ackermann is relying on the securities unit to meet a pledge to bring the bank's pretax return on equity, excluding costs for job cuts and gains from asset sales, to 25 percent this year from 16 percent in 2004. The return was 26 percent in the third quarter.

Costs Increase

Costs increased 17 percent to 4.7 billion euros in the quarter as compensation expenses climbed and the company booked a 156 million-euro charge to pay for job cuts. Deutsche Bank's cost base, which excludes the charge, rose 13 percent to 4.5 billion euros.

The bank said it's sticking to its original forecast of 1.3 billion of costs related to 5,200 job cuts. It still has about 285 million euros in planned charges outstanding, according to Chief Financial Officer Clemens Boersig's presentation today. The bank said it had cut 4,600 jobs by the end of the third quarter.

``Our strategy is clear, our growth momentum is strong and our management of costs, risks and capital remains tight,'' Ackermann said. ``We are confident that, if business and market conditions remain stable, we will deliver on our published financial target.''

Deutsche Bank is trying to build its consumer banking business by expanding in faster-growing markets, including Asia and eastern Europe. The company last week agreed to buy 9.9 percent of Huaxia Bank Co., China's fourth-largest publicly traded lender. A day later, it announced plans to resume consumer banking in India to take advantage of a credit boom in the nation of 1.1 billion.

Share Buybacks

Pretax profit from consumer banking, which contributed 12 percent to earnings, fell 4.9 percent to 232 million euros in the quarter as loan-loss provisions rose, the company said.

Deutsche Bank, which this week fell out of a biding race for Romanian lender Banca Comerciala Romana SA, repurchased fewer shares than usual during the quarter, meaning it may be saving money for acquisitions, analysts said.

``The suspicion is they're definitely looking for acquisitions and that's the real reason they're holding on to the capital,'' said Jon Peace, an analyst at Fox-Pitt, Kelton Ltd. in London who rates the stock ``in line.'' ``That's a little bit of a risk.''

Deutsche Bank bought back 2.5 million shares in the quarter, compared with an average of 11.4 million shares in the four previous quarters, according to data on the bank's Web site.

Pretax profit at the bank's asset and wealth management division, which sold its struggling U.K. fund unit in July to Aberdeen Asset Management, rose 50 percent to 177 million euros.

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A Romanian couple has conned thousands of eBay bidders out of a quarter-of-a-million pounds, a court has heard.

Internet users logging on to the auction site were tempted by the pair living in east London to bid for a variety of items such as cars, electrical items, tickets for sporting events, and parachute trousers.

They received an e-mail telling them that they had been outbid but that they had a "second chance" to obtain similar or identical items if they wired money to Britain.

But the items did not exist and a share of the money was pocketed by the swindlers, Nicolae Cretanu, 30, and his wife Adriana, 23, before the rest was forwarded to their bosses in their home country, the court heard.

The pair duped thousands of victims from around the world into paying more than £250,000 for fictitious goods between 2003 and 2005.

A variety of aliases were used in the e-mails, but they were caught after suspicious officials from a money transfer company, Western Union, contacted the police.

They had been helped by an accomplice, George Titar, 26 of Warner Close, Stratford, east London. All three will be sentenced at London?s Middlesex Guildhall Crown Court today.

Detectives described the scam as a "well planned" and "sophisticated" fraud.

The Cretanus, of Cann Hall Road, Forest Gate, and Titar, had pleaded guilty to conspiracy to obtain property by deception and money laundering earlier this year.

The racket had been investigated by Scotland Yard?s specialist economic crime unit.

Earlier this month the Metropolitan Police launched an awareness campaign to counter the threat of internet fraudsters.

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Canadian rail and aerospace group Bombardier Inc has been awarded a 110 mln eur contract to supply 20 trains to Bucharest's underground railway operator Metrorex, said a spokesman for the group.

The first units will be delivered in March 2006.

The Romanian company also has an option to buy an additional 13 trains.

Metrorex decided on renewing its rolling stock, many of its trains dating from the 1980s, rather than upgrading.

The Canadian group wants to increase its presence in the country by supplying tram cars and electric trains.

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Shares in BCP fell sharply on Thursday after the Portuguese lender surprised investors by being named as one of two remaining bidders in the battle for control of BCR, Romania's largest bank.

The Romanian government on Wednesday selected BCP and Erste Bank of Austria as the two leading bidders for a 62 per cent stake in BCR. The two medium-sized banks beat five rival offers from a field that included some of Europe's largest financial institutions such as BNP Paribas, Deutsche Bank and Banca Intesa.

BCR, which has a 25 per cent share of the Romanian market, is one of the last banks to be privatised in eastern Europe, a region where demand for financial services is expected to grow quickly in the next decade. However, the intense interest in BCR has prompted concern among investors that the participants would bid up the price excessively.

The Romanian government did not announce the level of the winning bids. However, investment bankers estimated that Erste and BCP would have had to offer at least ¤2.5bn-¤3bn ($3bn-$3.6bn) for the 62 per cent shareholding in order to be selected. A price of ¤3bn would value BCR at almost four times its book value. Both Erste and BCP declined to comment.

Observers reacted with some surprise to the news of the finalists, particularly to the choice of BCP, which has operations in Poland and Greece but no other substantial investments in the region.

Erste and BCP will have to raise additional capital if successful in the final stage of the auction, which starts next week and is expected to last until the end of November.

Shares in BCP fell 5 per cent to ¤2.10 as analysts and investors responded to the prospect of a large rights issue. BCP said UBS, the investment bank, had agreed to underwrite any capital increase. Shares in Erste, which has spent the last few weeks preparing investors for the possibility of a capital increase, closed up 1.9 per cent at ¤41.90.

Erste has long pursued an aggressive strategy in central and eastern Europe, acquiring or building market share in the Czech Republic, Slovakia, Hungary, Croatia and Slovenia. A win in the battle for BCR would fill out its geographical footprint and cement its place as a leading commercial and retail bank in the region.

An Erste victory would also reshape the approaching privatisation of Romanias Casa de Economii si Consemnatiuni (CEC), the country's fourth-largest bank with ¤1.3bn in assets. Erste was one of seven banks to submit non-binding bids for CEC on October 21 and was seen as a leading contender, along with its Austrian rival Raiffeisen.

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Danone Romania plans to expand production capacity of dairy products and recently started the production of biscuits on the Romanian market.

The only factory that the French producer has in Romania will receive investments of approximately 2.2 million euros.
The program is developed together with SAPARD and refers to the installing of a waste water treatment station.

Danone is present on the Romanian market since 1996 and has already invested approximately 30 million euros.

For 2004, Danone reported a turnover of 48 million euros and held a market share of approximately 50% of dairy products.

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Canadian company Enbridge, the largest oil pipeline operator in North America, is interested in investment opportunities in Romania and neighboring countries, stated Enbridge vice-president for Europe and Middle East, Ian McFeely. The company has reserved medium-term liquidities totaling one billion euros for investment in acquisitions or participations in oil and gas pipeline projects.

"If we find the right project with the right return on investment, we can sign a 500 million euro check as soon as tomorrow," said McFeely. He said his company wanted to invest anywhere between 800 million and one billion euros over the next two to three years. These financial reserves come from loans already secured.

The strategic areas in which Enbridge is targeting such opportunities are South America and Europe, especially Eastern Europe.

The company's official specified that Enbridge was an oil storage and transportation operator and was not interested in investing in anything related to production and marketing. He added that the company had analyzed greenfield projects in the region such as the Nabucco gas pipeline and the Constanta-Trieste oil pipeline. Enbridge could be interested in operating the system but also in its management, said McFeely.

The Canadian company's official appreciates that, unlike in North America, there is a reluctance in entrusting private operators with oil and natural gas transportation systems in Europe because it is considered to be of strategic value.
At this point the company is a 25% partner in the Spanish oil transport system.

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Generali Asigurari estimates it won't register losses this year because its revenues were higher than expenditures, stated the general director of the company Tudor Moldovan yesterday. In 2004 the company had a total loss of 1.3 million euros.

Moldovan explained the evolution of the company should be considered in the context of a tough financial environment at the end of 2004 and the beginning of 2005 and a situation the local businesses never faced before: the leu's appreciation. For this year, Generali forecast a net profit of 110,000 euros.

Generali also launched yesterday its new health insurance policy for the corporate segment in partnership with the private clinic, Diagnosis.

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The assets of Porsche Bank Romania, the first credit institution specializing in the financing of cars, reached the level of 29 million euros at the end of September while the loans account balance rose to nine million euros, the bank's vice-president, Sorana Baciu, stated.

Regarding the financial results, Baciu stated that the bank will close 2005 with losses, and the revenues level will equal expenditures in 2006. In 2007, it should report profit. 

The credit institution became operational a year ago after it received the functioning authorization from the National Bank of Romania.

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Estima Finance, a consumer credit institution, intends to launch a bond issue totaling five million dollars by the end of the year to finance its current activities and new projects.

Diana Todoran, the company's financial director, stated that this is the first credit institution that is launching a bonds issue. "The details of the issue will be presented soon. This is just one of our projects for the end of this year," stated Todoran. Estima's executive director, Mihnea Mocanu, stated that the institution will increase its nominal capital by four million dollars, to approximately nine million dollars.

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Mobile telephone operator Orange Romania reached a total of 6.2 million customers at the end of September, 42.3% more than at the same time last year. According to a company press release, the registered growth is smaller, nevertheless, than that recorded at the end of June when the increase was 44.6% compared to the same month in 2004.

The document does not provide data about the financial results of the operator. The company started its activity in 1996 under the name of MobilRom but was re-branded in 2002. The main competitors of Orange on the local market are Connex, operated by Vodafone, Zapp and Cosmorom.

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The Administration Council of Astral Telecom was replaced with a single manager, a position assigned to Richard Scott Anderson on October 14. Anderson is the current general director of UPC Romania.

The owner of UPC, the Dutch company UGC Europe BV acquired 93.4% of Astral stock from eight Romanians (23.36%) and five foreign investment funds (70.04%).

The value of the transaction was $407.1 million in which a $12 million Astral debt is included. At the time of the transaction, UPC Romania had 390,000 clients while Astral had 890,000 clients for voice, video and data services.

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The Ministry of Communications and Information Technology (MCTI) has called for  consultancy services from banks with an international reputation for the privatization of the National Radio-Communications Company (SNR), according to an MCTI statement.

The interested banks must have experience in the successful privatization of state companies in the communications and broadcasting sector with a turnover of minimum 100 million dollars.

Another criterion is experience in financial consultancy on mergers and acquisitions, especially in Central and Eastern Europe.
The consultants can associate but this must be mentioned in the letter of intent.

The project will be developed in accordance with current privatization laws and the deadline for sending the letters of intent is 9 November. The documents will be analyzed by the MTCT commissions and all the interested parties will be notified on the results of the pre-qualification process.

The eligible companies will be invited to obtain the offer book which will show the entire selection process and the consultancy services required for the privatization process.
Established in 1991, after the reorganization of RomTelecom, SNR is the main provider of radio-communications services in Romania.

The company ensures transmission support for the public phone network, and for mobile phone networks, data transfer and the internet. In 2004, the National Radio-Communications Company reported a turnover of 59 million euros and a gross profit of 6.3 million euros.

The fixed and variable expenditures for the consultancy services offered by the chosen bank will be paid entirely by MTCT.

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Romania's trade deficit reached 6.59 billion euros in the first nine months of 2005, a level twice as high as that recorded in the same period of last year, according to the National Statistics Institute (INS). In September 2005 alone, the value of the trade deficit reached 776.5 million euros.

According to the INS, between January and September 2005, exports increased by 17.6%, up to 16.4 billion euros, while imports rose by 23.7% to 23 billion euros.

In September the value of exports was two billion euros, 21.6% higher than in the same month of the previous year, while imports progressed by 26.2% over the same reference period, to 2.8 billion euros.

The most dynamic exports remained raw materials, iron and steel and vehicles, with increase rates of 79.6%, 19.5% and 37.1% respectively. For imports, the same sectors registered significant changes with increase rates of 46.8% for raw materials, 31.8% for vehicles and 31.8% for metallurgy products.

In the first nine months of the year, Romania's main trading partners remained the countries of the European Union which had a 67.7% share of exports and 75.7% of imports. According to data from customs registers, three quarters of the total amount of imports were final destination.

The trade deficit led to the deterioration of Romania's balance of payments last year, as the current account deficit reached 7.5% of Gross Domestic Product (GDP). For the same reason, estimates for this year anticipate a current account deficit of 7.75% of GDP.

The governor of the central bank Mugur Isarescu recently announced that this year imports would top exports by nine billion euros and the current account deficit could reach eight percent of GDP, a figure which took into account 3.5 billion euros transferred by Romanians working abroad.

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KPMG, the domestic unit of the giant providing audit, tax and advisory services, posted 30% higher revenues in the fiscal year ended on September 30, 2005 as compared to the corresponding period of last year, according to the company's officials. "KPMG in Romania's revenues have also increased considerably," stated Victor Kevehazi, a Senior Partner of KPMG in Romania.

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Mobile telephony operator Orange Romania, 96.8% held by France Telecom, posted third quarter revenues of 229 million euros, with the number of customers climbing to 6.22 million by September, 30, 2005.

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Imsat Bucharest, an industrial automation company, estimates turnover will reach 44 million euros this year, up 35% on last year. "This growth is due to the numerous contracts we have signed over the last few years," says Stefan Varfalvi, Imsat chairman.

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The biggest bank in Romania has attracted financial bids of 1.7-1.8bn euros to 3.2bn euros from the seven investors, which shows that BCR was appraised at 2.7-2.8bn euros to 5.17bn euros, sources familiar with the privatisation process told Ziarul Financiar. The cumulated value of the submitted bids amounted to 17bn euros.

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Following the announcement made by the BCR Privatization Commission about the election of the two banks which have reached the final stage of discussions, a ?dead horse? appeared in the competition, clearly announcing the winner, bank specialists say.

The commission announced the two finalists: Banco Comercial Portugues of Portugal and Erste Bank of Austria. Market sources consider the decision has already been made about Erste Bank which is unlikely to lose the competition for 61% of BCR shares, considering the considerable financial differences between Erste Bank and Millennium BCP.

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The Hidroelectrica company has postponed with 15 days the deadline for the submission of the tender documents for the sale of a group of small hydro power plants, Managing Director Traian Oprea said on Monday. Oprea explained that very many requests had been received to postpone the deadline for tendering so the company accepted it and also moved the bid date back by 15 days.

The original tendering deadline was October 21st and the sale of the assets in connection with the group of small hydro power plants in the Doftana river basin, Prahova county, was to take place on October 31st, and of the assets pertaining to two other groups in Valcea county - three units along the Manaileasa River plus two other mini-hydro-power plants on River Horezu on November 1st. The asking price for all those assets is 9,5 million euros.

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Premier Calin Popescu Tariceanu stated on Thursday, after the joint Romanian ? Hungarian governmental meeting that the project of gold exploitation in Rosia Montana is a private one and its completion does not depend on a governmental decision.

The head of government said that the authorities in Bucharest offered Hungary all the information on the Rosia Montana project. In the joint meeting in Bucharest, the Romanian party made a presentation on the application of Espoo procedure in the Rosia Montana case. T

his project of open mining exploitation undertaken by the Canadian company Rosia Montana Gold Corporation comes under the force of the Convention for environment impact assessment in transborderly context, adopted in Espoo in February 25, 1991. The convention, ratified both by Romania and Hungary forces the countries of origin to include in their decision-making process the states that could also be affected.

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SC Rafo SA Onesti did not restructure its company prior to privatisation in order to increase its attraction to investors, the auditing report presented by the Chairman of the Court of Auditors in Romania Dan Drossu Saguna showed in a press conference.

According to the report, at the end of August 2000, the company had a social capital of 207.6 billion ROL where the state owned 59.99 pct. Rafo Onesti had a turnover of 641.7 billion ROL as well as gross result of tax year unfavourable of 1.001 billion ROL and 2,709 employees.

SC Imperial Oil SA Bacau Canyon Servicos Lda ( Portugal) associated on the basis of agreement signed in July 2001 presented their tender for shares owned by the state in the company, offering 0,173 dollars/share, 861,909 dollars for the 4,982 shares, through full payment within 90 days. The buyer agrees to invest 63,375,000 dollars in technology and modernisation and 16,944,000 dollars in the next five years.

Following the negotiations, a share price reached 0.301 dollars and the whole package 1,500,000 dollars, with payment within 60 days, the investment volume being the same. The final tender included a provision showing that the refinery will function at least at 80 pct. capacity, namely it would produce 160,000 tonnes of oil/month within 90 days since contract signing date.

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The trade deficit reached 6.59 billion euros over the first nine months of the year, and 776.5 million euros in September. Exports in September 2005 reached 2.066 billion euros, up 21.6 percent as against September 2004. Exports over January-September 2005 amounted to 16.46 billion euros, up 17.6 percent as against the similar period of 2004.

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GfK MACON has thoroughly revised and completed the digital maps of Romania for its new expanded European map archive. The most important addition is the six-digit postcode map, the first of its kind.

Simultaneously, on an administrative level over 3,100 communities have been re-digitalized and their boundaries adjusted to reflect the 2005 territorial status. The Romania Edition has been supplemented to include numerous topographical map layers, from elevation to the transport network and infrastructure.

Romania's six-digit postcode system posed a special challenge to the cartographers. The subdivision, which is unusually fine for a country of that size, allows the Romanian post service to assign separate postcodes to individual blocks of buildings in the large cities. Accordingly, an immense amount of research was required for the establishment of the inner-city postcode districts, because some of the territorial classifications had to be copied out individually from existing area maps. For reasons of better statistical handling, the districts in 40 cities were condensed into the first four postcode digits. The degree of detail in the maps is very fine. The basic material used for digitalization consisted of paper maps with a scale of 1: 50,000 (metres; this is adequate to approximately 1: 31,000 in miles).

As a result, the six-digit postcode map of Romania now shows more than 14,000 units, 194 delivery districts in Bucharest alone. By way of comparison: Berlin, which covers an area four times as big, has 190 postcodes.

The new edition also features bilingual names for all map objects: all geographical names are given in international lettering as well as special Romanian characters. This bilingual aspect, component of all new map editions, is part of GfK MACON`s philosophy.

"By doing so, we are adapting our maps to suit the requirements of our increasingly international customer base," explains Wolfram Scholz, Managing Director of GfK MACON and responsible for product development.

The revised maps of Romania 2005, including all administrative and postal districts, are available for immediate delivery.

More information and prices under: http://www.gfk-macon.com/romania

About GfK MACON GmbH

GfK MACON has been a provider of Geomarketing solutions since 1991. The company develops geographic information systems (GIS) for use in Marketing and Sales, offers consulting services on all aspects of Area Planning and maintains the world's largest collection of digital postal and administrative maps. GfK MACON is the German market leaders with the Business GIS RegioGraph and DISTRICT.

GfK MACON is part of the international GfK network. GfK is currently represented in 63 countries with over 130 subsidiaries and a workforce of more than 7,600. The company takes 5th place in the worldwide ranking of market research institutes.

More information about GfK MACON: www.gfk-macon.com/about_us.htm

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Petrom will acquire stake in SC Rafiserv Petrobrazi SA and SC Rafiserv Arpechim SA which provide services for the Petrobrazi and Arpechim refineries, ACT Media news agency reports.

The acquisition of the two companies will help to the improvement of the maintainance activity in refineries, according to the modernisation and efficiency-enhancement programme underway till 2010.

Petrom will acquire 89.83% of the social capital of SC Rafiserv Petrobrazi SA and 98.85% of the social capital of SC Rafiserv Arpechim SA.

The two companies provide work out services, among which, repair, maintainance for the two refineries of Petrom, and their employees were formerly employed by Petrom.

The Competition Council announced that the change of shareholders structure was not notified for SC Rafiserv Arpechim SA and SC Rafiserv Petrobrazi SA, as SC Petrom SA Bucuresti got control over the two companies through signing the Contracts of Shares Sale-Purchase on September 28, 2005.

The deadline to notify the Competition Council ( 30 days since contract signing date ? according to the Competition Law no.21/1996, republished) ends on 28 Octomber 2005.

Petrom is a Romanian oil and gas company, with oil and natural gas deposits of one billion barrel equivalent of oil (bep), refining capacity of 8 million tonnes and almost 600 filling stations.

The sales turnover amounted to 2.14 billion euros in 2004 with EBITDA worth 28 million euros.

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FRANKFURT (AFX) - Deutsche Bank AG has lost the bid for a majority stake in Romania's largest bank, Banca Comerciala Romana, a spokesman for the German banking giant said, confirming an earlier press report.

The Wall Street Journal earlier today cited Romanian authorities as saying Austria's Erste Bank Group and Portugal's Banco Comercial Portugues outbid five banks and will face off for the right to buy 61.88 pct in BCR.

The spokesman for Deutsche Bank said Romania's privatisation authority contacted the bank and said it did not qualify for the shortlist.

According to Romania's finance minister Sebastian Vladescu, direct negotiations with Erste Bank and BCP are to begin next week.

The two banks are understood to have bid more than 3 bln eur each for the stake in BCR, while Deutsche Bank's offer was at only 2.2 bln.

Other bidders were Belgium's Dexia SA, National Bank of Greece SA, Italy's Banca Intesa SpA and France's BNP Paribas SA, according to the Journal.

newsdesk@afxnews.com     dp/ms/har

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The Reader's Digest Association, Inc. (NYSE: RDA - News) today launched a new edition of Reader's Digest magazine in Romania. The edition becomes the magazine's 49th worldwide, in its 20th language. At the same time, the company announced new book publishing businesses in Bosnia and Serbia, its fifth and sixth new country launches in the past two years.

Thomas D. Gardner, President of Reader's Digest International, said the decision to publish the magazine in Romania followed successful launches of the company's book and music publishing businesses in that country, beginning 18 months ago.

"We chose Romania for the newest edition of Reader's Digest because we see the conditions for a great fit with our magazine," Gardner said in remarks prepared for local ceremonies to celebrate the launch. "Romanians have a passion for reading, expressed in their famous love of books and magazines."

The first issue of the Romanian Reader's Digest went on newsstands today. It features an in-depth survey about the aspirations of Romanian youth ahead of European Union integration, an exclusive U.S. Reader's Digest report on survivors of Hurricane Katrina, and a story on the threat of avian flu, which has been identified in Romania.

The Romanian edition will have an initial print run of 150,000 copies and will target an audience aged 30-55.

RDA today also announced the launch of its new book publishing businesses in Bosnia and Serbia. Its first book is "Discovering the Wonders of the World," a strong-selling title in neighboring countries, said Lubos Beniak, Managing Director of RDA's Central Europe Region. The company now operates in nine Central European countries and publishes in eight languages.

RDA began its book publishing business in Romania in April 2004, at the time marking the company's first new-country venture in nearly a decade. The local entity is called Editura Reader's Digest. RDA's books published in Romania so far include "Discovering the Wonders of the World," "Great Mysteries of the Past" and "Curing Everyday Ailments the Natural Way." It also has begun offering musical collections, beginning with "150 Best Loved Melodies."

The publishing ventures in Bosnia and Serbia are being operated in cooperation with the Slovenian publishing house Mladinska knjiga, which also partners with RDA in Slovenia and Croatia. Mladinska knjiga is the leading publisher in Slovenia, a distinction it has held for more than 60 years dating to the time of the former Yugoslav federation. The company publishes more than 400 book titles a year with print runs of almost 2 million copies.

The Reader's Digest Association, Inc. is a global publisher and direct marketer of products that inform, entertain and inspire people of all ages and cultures around the world. RDA markets products in more than 60 countries worldwide. Its most recent launches were in Croatia, Romania, Slovenia and Ukraine. The company had revenues of $2.4 billion for the fiscal year ended June 30, 2005. Global headquarters are located at Pleasantville, NY. For further information, please visit http://www.rd.com/investors.

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In the first nine months of this year, Otelinox Targoviste, a producer of special steel, controlled by Korean company Samsung, logged losses standing at 7.38 million RON (more than 2 million euros).

This result comes amid 25% lower sales as compared to the same period last year. In the first three quarters of 2004, Otelinox generated net income worth 11.3 million RON (2.75 million euros).

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Bancpost posted nine-month profits of 12 million euros, with the total assets of the bank coming to 1.5bn euros at the end of September. This figure is about twice that registered a year ago.

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Two years before EU accession with only two major privatizations left, Romania is anticipating a new wave of French SMEs investing in the country. Philippe Boin, economic and commercial counselor with the French Embassy, gave Business Review his view on some top issues for the country.

What was the level of French investment last year?

We have estimated EUR 3 billion in investments up to the moment, including the last investment of Gaz de France in Distrigaz. It is difficult to evaluate because, in terms of statistics, not everybody is speaking about the same thing. Renault Dacia invested around EUR 700 million last year, Orange invested around EUR 1 billion, so, if you add all this maybe you come to a bigger amount. There is an underestimation of foreign investments. ARIS statistics take into account a company?s equity, which is a narrow minded approach. You would have to take into account profits re-invested, and investments financed through loans from local banks and from parent companies, which could also secure loans from their home countries. On the other hand, many companies go through the Netherlands to invest elsewhere, as it is a tax-haven country. Many French companies ? such as Renault ? and American and British companies are currently using this scheme.

What are the country?s weak points in the eyes of French investors?

Romania is still a country in transition, with both its economy and society evolving. The administration still has to be built up, as the country doesn?t have proper civil services yet. Romania is now facing a justice crisis. Overall there is administrative weakness, and justice is at a critical point. As a result, the administration is too weak and inefficient and has to be built up. The tax system and health system must also be mentioned in this category and all these points show weakness in competitiveness. Romania also has to build up its infrastructure and make all the necessary environmental investments.

What were the most attractive areas for French investors last year?

Lately there has been a special interest in distribution, with Carrefour and with incoming Mr. Bricolage. The energy sector has become interesting of late with the privatization of Distrigaz South, which began last year and was finished this year. Gaz de France is still interested in Muntenia South, and we would like to have an integration of gas and electricity, like E.ON Ruhrgaz. More and more SMEs have followed multi-nationals and invested here, as was the case with small car equipment companies following Renault. French SMEs have shown increased interest in mechanical industries, steel industries and electricity. Groups of 10-15 such companies? representatives are visiting Romania and establishing contacts, not necessarily to invest, but initially to set up trading relations. The next step would probably be to invest here.

Has any new major French investment been announced for the near future?

BNP Paribas, Credit Agricole and the French-Belgian bank Dexia have announced their interest in CEC. Carrefour and Bricostore plan further development with Mr. Bricolage. Accor plans to build another 20 hotels. Lafarge and Saint Gobain have announced they will further invest. Agriculture is still the weak point for French investors. We have Danone here, but apart from that, no other major investors. We should put more investments in the agro business in the years to come, as well investing in relation to the hypermarkets. We need more providers of food products, companies able to provide fresh and quality products on a daily basis. It could lead to a similar evolution as in the Western countries and could create a demand for agriculture in itself. We hope to have more and more French investments in this high-potential field, which is still weak.

How will French investments in Romania evolve after EU accession?

It is difficult to predict. The first question is the country?s ability to attract greenfield investments, like Saint Gobain. Currently, we are seeing big foreign investments through privatization. In 2007, the privatizations will be over. The country will probably be able to attract greenfield investments and also investments from SMEs. These small companies will see Romania as part of the domestic market, after accession. Taking into account the experience of the 10 new member states, which saw a decrease of foreign direct investments after EU accession, Romania will likely face a similar situation. Up to now, the current account deficit has been financed through privatization receipts, but this will not last forever. Romania should be concerned about financing the current account deficit two years from now.

Is Romania safer for investors this year than last year, when you said it had room for improvement?

The key element is the integration process. Every year, the situation is improving so this year Romania is a safer place than it was last year. For the moment, the justice system is still the weak point. There is still corruption in administration and in the justice system, which adds risk to the situation. But with the new government, with the strong will to fight corruption, everything is improving. In terms of the economy, the macroeconomic situation has improved. Romania is seeing economic growth and inflation, although still high, is decreasing. The environment is more predictable for a company planning to invest. There is one point where things are more volatile, and that is the evolution of the leu against the euro. From the second half of 2004, the leu has not been as stable as it was. The situation is complex with a lot of pressure to increase the value of the leu, so it is less predictable. But it is a transition situation known among new member states such as Poland and the Czech Republic. Less safety comes from that. Since the beginning of 2004, the leu has seen a 25 percent increase in real terms against the euro, so for investors who have to sell to the European market, it is less predictable and less safe. There is a loss of competition and also an impact on exports towards European market. One of the key problems is inflation, which is still high at 10 percent. Officials must win the fight against inflation ? the problem is how they do it.

Author: Corina Saceanu

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The European Commissioner for enlargement of the European Union Olli Rehn emphasised the importance of the fight against corruption. The fact that there was no high corruption sentence so far, in spite of the information which was accessible to everyone, is a cause of concern both for Romania and Bulgaria, the European Commissioner said.

He hailed the progress undertaken by Romania in strengthening the National Anti-Corruption Prosecutors? Office but he added that there was a need for concrete examples to prove that corruption phenomenon was not acceptable. Other major deficiencies, such as veterinary safety and border control could affect the functioning of the European market and the Union security, drawing sanctions against Romania and Bulgaria in case they were not settled.

The two countries risk to lose billions of euros ( 1.l55 million euros for Romania in 2006 and 545 million euros for Bulgaria) if the right agencies and payment mechanisms for agricultural and regional subsidies are not created. But nothing is lost yet, Olli Rehn. The likelihood of accession in 2007 is not lost, but in order that the objective may be reached much effort is required on the part of both countries.

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The Austrians are leaders inthe number of insurance companies on the Romanian market with six such companies, and intend to buy others, daily Ziarul Financiar informs on Wednesday. The Austrians entered the Romanian market in 1996 and are by far the most diligent investors on the insurance market in Romania. Last year, the insurance companies with Austrian capital posted a total turnover of 163 million euros and a cumulated market share of 20 percent.

The leading Austrian investor on the Romanian market is Wiener Stadtische, controller of Omniasig and Unita. The Austrian investors say Romania has a huge potential in insurances, due to its number of inhabitants and the future EU accession. Omniasig reported profit in the first semester of the year, but Agras and its controller Unita registered losses.

Uniqa entered the Romanian market in summer, when it bought a 27 percent stake of Astra Insurances for 10 million euros. Grawe Group, a life insurance company, opened a branch in Romania in October 2000, and bought early this year Sara Merkur, a company established with Austrian capital.

Representatives of Grawe said that the merger will be finalised by the end of the year. Grawe general manager Peter Kasyk said Grawe keeps an eye on the local insurance companies and might buy something in the next two years.

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The Romanian banking system is ready to implement the Basel II accord, National Bank of Romania (BNR) official Ion Dragulin said on the occasion of the Southeast European Forum in Croatia. The forum is being organized by Euromoney.
The BNR representative said the central bank already had an implementation strategy for Basel II starting from 2007.

Dragulin said BNR had prepared a form which commercial banks should fill in providing a variety of data. This form would provide the central bank valuable information to better calibrate the future regulations.

The official specified that the strategy only provides a general framework and some options regarding the most important aspects of the implementation program, allowing the authorities to make choices. The implementation of Basel II can succeed if the strategy relies on inter-departmental workgroups collaborating with the authorities and commercial banks.

Dragulin said bank representatives claim that the central bank's demands on Basel II would be very difficult to meet. "Bankers must make a more consistent analysis rather than just present the balance sheet," admitted the BNR official. However, he added, the participation of the banks in the workgroups and along with other institutions such as the National Securities Commission (CNVM) and the Ministry of Public Finance (MFP) could improve the chances of internalizing the analysis process. "Everybody will deal with the new regulations for about a year, we will all learn as the Basel II agreement application norms are prepared," said Dragulin.

Basel II is planned to come into force in the EU on January 1, 2007 and imposes a minimum level of social capital depending on the operational risk.

The agreement proposes three versions: standard, basic and advanced. The first version is based on regulations imposed by the authorities and the others rely on internal norms and procedures, endorsed by the authorities. The application of the agreement involves the unification of the result report method by the introduction of International Financial Reporting Standards (IFRS).

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Erste Bank der Oesterreichischen Sparkassen AG, Austria's No. 2 lender, and Banco Comercial Portugues SA made the top two offers for Romania's biggest bank Banca Comerciala Romana SA, the government said.

Erste and Banco Comercial Portugues, Portugal's biggest publicly traded bank, beat cash offers from five other banks, including Germany's Deutsche Bank AG and France's BNP Paribas, Romania's asset-selling agency said in an e-mailed statement today in Bucharest. No detail of the size of the offers was given.

``We appreciate the quality of the offers we've received because this emphasizes the interest of all the investors that bid to take over the bank,'' Romanian Finance Minister Sebastian Vladescu said in the statement. ``Only the two banks that made the biggest offers are invited in the final phase.''

The sale of the bank, also known as BCR, is part of Romania's plans to overhaul its banking industry before it joins the European Union as soon as 2007. The 61.9 percent stake on sale may cost bidders $2 billion to $3 billion, the Wall Street Journal and newspaper Ziarul Financiar reported last week, citing unidentified people familiar with the transaction.

Final talks with Erste and Banco Comercial Portugues will start next week, the government's Asset Resolution Agency said in its statement today without elaborating. Romania has said it will seek ``the best price possible'' from the two highest bids without specifying how much income it expects from the sale.

Erste, Banco Comercial Portugues, Deutsche, BNP Paribas, Italy's Banca Intesa SpA, Belgium's Dexia SA and the National Bank of Greece SA all made binding bids for BCR on Oct. 17.

Banco Comercial Portugues or Erste will be required to buy Romania's entire 36.9 percent stake in the bank plus the 25 percent and two shares jointly owned by the European Bank for Reconstruction and Development and the World Bank's International Finance Corp.

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Dansan Steel of Denmark submitted the purchasing offer for a 68.31% stake of Laminorul Braila, the State Assets Realisation Authority (AVAS) informed, ACT Media news agency reports.

Laminorul has a social capital of 29.5 million lei and produces primary and semi-manufactured iron materials.

Only the companies that did not prejudice the financial situation of other privatised companies, by not fulfilling the commitments assumed in the privatisation contracts concluded, can participate in the privatisation of Laminorul Roman.

Laminorul was offered to privatisation three times in 2005, but did not receive a valid offer.

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Tax authorities have frozen a railway company's assets, including Bucharest's main train station, due to unpaid taxes, a government official said Wednesday.

The CFR railway company is still allowed to use its assets, but tax authorities can sell them to recover the debts, said Sebastian Bodu, who heads the National Agency for Fiscal Administration.

"Sometimes this could be a form of privatization," he said, adding that he would sell the train station if someone would offer to buy it but keep its function as a station.

Bodu said his agency also froze assets belonging to the national utility company Termoelectrica and several soccer clubs, which have also failed to pay their taxes on time.

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The privatisation of the Romanian Post National Company (CNPR) will take at least two years, said Peter Jansen, Managing partner of The Bucharest Consulting Group, a local partner of the American consultancy The Boston Consulting Group, ACT Media news agency reports.

The restructuring process of the Romanian Post National Company's privatisation is expected to be completed by 2008.

The two companies, along with German consultancy firm Horvath&Partners and Romanian public relations company Mmd Public Relations, submitted a joint letter of intent in offering their strategic consultancy services in the process of Romanian Post's restructuring.

The Ministry of Communications and Information Technology (MCTI) received other 22 letters of intent from several international companies, among which Arthur D.Little GmbH, McKinsey&Company, PricewaterhouseCoopers or Roland Berger Strategy Consultants.

As for the Stock Exchange listing of a part of the Romanian Post's stock - an intention expressed by MCTI - Jansen said it was a good idea because the listing supposes a better control upon the way the company is managed and a higher degree of transparency.

However, BVB listing could occur in 2006.

The deadline for letters of intent submission was October 12 and MCTI is expected to announce soon the shortlist of the companies that submitted bids.

The Bucharest Consulting Group is also interested in participating in the privatisation process of the National Radiocommunications Society (SNR), he added.

SNR's privatisation is due to take place at the end of next year.

The Boston Consulting Group, one of the most important companies in the field of strategic consultancy, have offered its consultancy services for postal companies' restructuring in 14 countries, including Hungary and Poland.

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The Steelwork Industrial Complex Ispat Sidex Galati came first among Romanian companies considering the posted gross profit, in the 2004 classification of the most profitable businesses in Romania, according to a report prepared by the National Council of Small and Medium Enterprises, ACT Media news agency reports.

Sidex posted last year a gross profit of approximately ¤339 mln, where as the following company in the classification, Orange Romania, posted approximately ¤241 mln.

In 2000, Ispat Sidex incurred losses of ¤100 M, and this makes the steelworks' comeback much more amazing.

The next positions from the 2004 classification were taken by MobiFon and Mittal Steel Hunedoara.

Although the main mobile telephony operators in Romania, Orange and MobiFon, lost the first two positions in the classification of the 2003 companies, the two companies managed to register significant profit increases in 2004.

The classification of the first ten companies now includes Roman Brasov (gross profit of EUR 89 M), Lafarge Romcim (gross profit EUR 54 M), World Trade Centre (EUR 39 M) and Holcim Romania (EUR 31 M).

The auto importer Porsche Romania fell to the 9th place, after it had come in third in 2003, while the retailer Metro Cash&Carry lost two positions, from the 5th place in the previous year.

These companies' profits in 2004 reached the next values:

Porsche - EUR 34 mln, Metro - EUR 44 mln.

Metro had doubled its profit as opposed to 2003, when it registered only EUR 22 mln.

The highest turnover last year was posted by Petrom (EUR 2.1 bln), Ispat Sidex (EUR 1.69 bln), Petromidia (EUR 1.15 bln), Metro Cash&Carry (EUR 1.025 bln), Romtelecom (EUR 822 mln), Rafo Onesti (EUR 634 mln), Orange (EUR 607 mln), Dacia-Renault (EUR 592 mln), Connex (EUR 565 mln) and Distrigaz Sud (EUR 535 mln).

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Due to the increase in residential construction works, the Romanian subsidiary of the Finnish group Ruukki, specialized in importing metallic roof tiles, forecasts an 80% increase in 2005 turnover, Ziarul financiar report on Tuesday.

The company's officials estimate that the metallic roof tile market is worth some 70 million euros yearly. This market the price for one sqm of roof tile has gone up by some 10%. Ruukki's main competitors in terms of rof tiles in Romania are Lindab (Sweden) and Magaprofil (Belgium). Ruukki is present in 22 countries and last year posted 430 million euros in turnover.

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K Tech - Ultra PRO posted 19.5 million dollars in turnover on the third quarter of this year, up 29 percent compared to the same period previous year, when it stood at 15.1 million dollars, a company's release informs.

In the first half of 2005 K Tech - Ultra PRO Group's turnover stood at 38 million dollars and for the entire year it predicts a total turnover of approximately 88 million dollars. "Our sales reach steadily a level over the market's growth and this reflects first of all the company's attitude towards its customers. Our most important trump card is the building of a mutually advantageous partnership between the company and its customers, a partnership based on trust and quality services", Alina Fughina, director general of K Tech - Ultra PRO Group stated.

In the last two years, K Tech - Ultra PRO Group expanded its retail chain and presence in Romania. In 2003, it opened 30 stores and in 2004 their number jumped at 56 Ultra PRO Computers outlets. At the moment, the group runs 70 Ultra PRO Computers outlets all over the country and is aiming at attaining 85 million dollars in turnover till year-end.

K Tech - Ultra PRO Group is one of the most important retail chains on the Romanian IT market, running activities both on retail segment (through Ultra PRO Computers) and distribution (through K Tech Electronics). In 2004, K Tech - Ultra PRO Group posted 66.5 million dollars in turnover, up 42.09 percent compared to 2003.

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IKEA Swedish Group, a furniture producer through local branch in Romania "Swedwood", intends to invest some 35 million euros in a new factory in Suceava northern county, daily Economistul informs on Tuesday.

The new factory will produce furniture components and will offer 350 jobs for the county locals as of 2007. "Swedwood" Romania already owns a factory in Suceava, where it produces furniture only for export under IKEA brand.

The company is part of "Swedwood international", an industrial group established in 1991, with 33 production units in 11 countries and over 9,500 employees.

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The Dutch giant operating in the milky products industry Campina Arla began negotiations for the taking over of the major stake of Covalact Sfantu Gheorghe, daily Ziarul Financiar informs on Tuesday.

Covalact has a partnership with Campina Arla, and now negotiates the selling of the major stake, said general manager Ioan Balan. The Sfantu Gheorghe-based milky products producer delivers a part of its production to the Dutch company.

 The two sides invested in 2003 1.5 million euros, each participating with half a million, and the rest was financing from the Dutch state. Covalact was privatised in 1994, and now ten shareholders own 80 percent of its capital.

Covalact currently implements a SAPARD programme for the modernisation of the milk collection and transport network as well as for the reception and storage facilities, worth of 1.7 million euros. The company reported 10.4 million euros and a net profit of 542,000 euros in 2004. Balan said that the company expects a 15 percent increase in turnover and a similar net profit. Covalact, offering 16 types of products, owns a 2 percent market share.

The Romanian milk market produces some 5 billion litres, of which only 1.2 billion litres are process in the industry. The French companies Lactalis and Yoplait voiced their interest in buying profile producers on the Romanian market.

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Romania has fulfilled in general its commitments and requirements resulted from the accession negotiations in the fields of payments and free movement of capital and it is expected to be able to implement the acquis resulted from the accession process. It also fulfilled commitments and requirements resulted from negotiations in the field of payment systems. It is necessary to boost efforts in the field of money laundering, where the upgrading and substantial consolidation of alignment standards to the Financial Action Force is further necessary, according to the European Commission comprehensive monitoring Report on Romania released on Tuesday in Strasbourg.

In the field of payment systems, Romania concluded its process of alignment with the Community acquis meant to ensure an adequate functioning of a mechanism outside the justice system that could settle disputes among banks and customers. As for the rules governing the payments abroad, in euro, the adoption of penalties for those who do not observe them is necessary.

Through the adoption, in September 2005, of amendments to the Law on prevention and sanctioning of money laundering, Romania fully aligned with Directive II Against Money Laundering, the report shows.

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Romania continues to comply with the criterion of being a functioning market economy and the vigorous implementation of the structural reform programme adopted by the country's government will enable Romania to cope with the competitive pressure and market forces within the European Union, the European Commission said in the 2005 Monitoring Report on Romania made public on Tuesday at a plenary sitting of the Strasbourg-based European Parliament.


According to the European Commission's assessment, Romania has generally succeeded to maintain its macroeconomic stability, although the economic policies have proved less prudent and generated a range of concerns with respect to the sustainability of the stability registered over the last period. Romania has continued to implement its structural reform programme, although the efforts have not been equally firm in all areas, the report stresses.

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This report assesses Romania?s preparations for membership. It identifies the remaining gaps in policies, legislation and its implementation and identifies the steps to be taken. The report contains three main parts.
? The first part briefly describes political developments and assesses the state of affairs as regards the political issues which were identified as in need of further improvement in the 2004 report.
? The second part briefly describes economic developments and assesses the economic issues which were identified as in need of further improvements in the 2004 report.
? The third part gives an overview of where Romania stands in implementing all commitments and requirements arising from the accession negotiations for each acquis chapter, both in terms of legislation and implementation. In Annex 1 an appreciation is given of the specific commitments undertaken and requirements accepted by Romania at the conclusion of the accession negotiations on 14 December 2004 in the field of competition policy.
This report reflects the situation as of 30 September 2005.

The entire report- in the pdf version - is available here

14:23 - 25 October 2005 - The final offers for the privatization of the Romanian Savings Bank (CEC) will be submitted by November 28, the privatization commission decided that all 7 bidders meet the conditions to continue to the second stage of the sale process.


The seven financial institutions that submitted offers for taking over CEC majority stake are Banca Monte dei Paschi di Siena SpA, Dexia Bank, EFG Eurobank, Erste Bank, National Bank of Greece, OTP Bank, Raiffeisen Zentralbank Oesterreich Aktiengesellschaft in a consortium with Raiffeisen International Bank - Holding AG.

French bank Societe Generale was the only bidder that withdrew from the race, after being selected to participate in the privatization subsequent to submitting the letters of intent.

On the other side, the privatization commission together with the privatization adviser established the calendar of actions in the second stage of the process and it was stipulated that on November 28, the final offers would be submitted, after the seven bidders would have another week of access in the data room and after technical talks with each bidder as concerns the technical preliminary bid.

Sources close to the transaction claimed the price is to represent between 70% and 90% of the score for choosing the investors.

If the score between the first placed and the second placed institution indicates a difference less than 10%, the privatization commission will ask the two competitors to improve their offers.

CEC is the sixth largest bank in Romania depending on assets and holds the largest branch network of approximately 1,400 units.

The bank ended the first nine months with a net profit of ¤870,000, a result supported by the increase in credits balance.

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South-East Europe is making good progress in terms of economic development and the development of the banking market. With loans and deposits growing at an annual rate of about 30 per cent in recent years, south-east Europe's banking market has been much more dynamic than that of the euro area, but also more dynamic than the banking market of the new EU member states.

In this context, nearly all countries in the region are experiencing a sharp upturn, but Romania and Bulgaria in particular. After many years of weak growth, recent years have seen a reduction in the pronounced backwardness in terms of a low market penetration of banking services. Aside from the positive economic developments, this is largely attributable to the privatisation of the banking market and to the success in solving the problems associated with the bad loans carried over from previous years.

The entire study made by Bank Austria Creditanstalt in the pdf version is available here or here

Dacia sales rose 85 percent over the first three quarters of the year compared with the same period in 2004. The local carmaker, acquired by French group Renault in 1999, recorded increased sales mainly due to the success of the Logan on all the markets where it is sold.

The model was launched last September and it is now produced in factories in Romania, Russia, Morocco and Columbia. The revenues of the Renault group increase by 2.9 percent in the first nine months of the year, amounting to 30.8 billion euros. T

he group's sales advanced by 3.4 percent in the first nine months of the year compared with the same period last year, to around two million euros.

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In Short:

Eight SE European countries will today sign an agreement with the EU to create a regional energy market in line with EU energy legislation. This is a first step towards integrating the sector into the internal energy market.

RELATED:    * Geopolitics of EU energy supply

Brief News:

The EU and eight countries in South-East Europe (SEE) will today (25 October 2005) meet in Athens to sign the Energy Community Treaty, which foresees the liberalisation of the region's power and gas markets by 2008.

The ultimate aim of the project is the integration of Albania, Bosnia, Bulgaria, Croatia, Macedonia, Romania, Serbia, Kosovo and Turkey into the EU's internal energy market. Moreover, the World Bank estimates that the treaty will trigger investments of around 21 billion euro in the next 15 years into the region's energy infrastructure, thereby boosting the countries' economies.

The agreement builds on the 'Athens Memoranda', signed in 2002 and 2003, which gave political backing for the idea to open the region's electricity and gas markets. Within this framework, SEE governments should adopt EU energy directives and environmental standards. In particular, it obliges governments to create electricity regulators and transmission system operators and to open up the power and gas markets for commercial customers (see EurActiv 23 July 2004).

The Athens process is consistent with the countries' objective of joining the EU as soon as possible and presents them with the opportunity to become part of the EU single market in the area of electricity and gas as a first step towards that goal.

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The authorities announced plans to change the laws regulating exchange offices due to the fact that these agencies frequently misled customers by listing their commission for exchange in places with low visibility or illegibly written. The new laws will force the exchange agencies to list the final rate, with commission included.

"It is not important whether the commission is listed or not," said Catalin Teodorescu, the president of the National Agency for Consumer Protection, adding that the final price paid by the customer was more important. Until now, the agencies had to mention the commission but this provision will be scrapped.

Thus, starting with the second half of November, the exchange agencies must print the rates with letters measuring 80 millimeters by 10 millimeters. The distance between words must be at least 20 millimeters. The prices must be listed both on the inside and outside of the agency. Both prices for buy and sale must be written on a monochrome panel which does not have any other inscriptions.

The same provisions apply for all types of currencies exchanged at a particular agency. 
The exchange agencies must be authorized by the National Bank of Romania and have a single object of activity.

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Hungarian group MOL's Romanian holdings could top 300 million euros in turnover this year compared with 2004 after the group finalizes the integration of the British-Dutch company Shell.

The director of MOL Business Development Department, Sorina Baltatu, stated that the group's turnover for this year in Romania will include the reports of all the MOL branches and the turnover MOL Ro Commerce SRL (formerly Shell Romania) over the April-December 2005 period.

"Regarding the results obtained until now we can estimate that over 2005, MOL's turnover in Romania will surpass 300 million euros," stated Baltatu.

According to the data offered by the Ministry of Public Finances, Shell Romania registered in 2004 a 156.8 million euro turnover while MOL Romania reported a turnover of proximately 151 million euros.

In November 2004, the Hungarian oil group purchased the 59 gas stations controlled by Shell Romania, thus boosting the number of stations owned by the group to over 130, putting MOL third in the domestic gas station market after OMV and Rompetrol.

Royal Dutch Shell and MOL have signed a sale and purchase agreement for the sale of Shell Romania, excluding Shell Gas Romania. Following the transaction, MOL would see its market share almost double from a current 6%. MOL general director Gyorgy Mosonyi yesterday said during a press conference that the Romanian market is growing and the group will keep investing in buying and building new gas stations.

The Shell network includes 59 retail service stations spread across Romania and its aviation, lubricants, commercial and marine businesses.

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The Snack Attack fast food chain intends to double over the next three years the number of stores in Bucharest and expand to other Romanian towns starting 2007, the company's sales director, Madalina Constantin, stated.

"On Monday we've opened the tenth Snack Attack store in Bucharest, near the Latin Market, the investment totaling 30,000 euros. The short-term plans refer to the opening of another five units over the next 12 months and the contract discussions with the owners of the spaces have already begun," stated Constantin.

The investment for a store varies between 25,000 and 40,000 euros.

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The National Agency for Cadastre and Real Estate Publicity (ANCPI) organized a tender for the computerization of land records and the creation of a digital database for Bucharest. The selected company will have to transfer the documents from paper to digital format.

The delivery term for the service is 16 weeks from the date of signing of the contract. The deadline for clarifications is November 4 and offers can be filed till November 11.

The project will be financed from the budget of the institution and through a loan from the World Bank.

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The Authority for the Recovery of State Assets (AVAS) received three offers from potential Romanian and Hungarian investors for the privatization of the five spin-offs of the former Nitramonia Fagaras.

The offers were submitted yesterday at the AVAS headquarters by a consortium formed of Somes Dej and Sada Cluj-Napoca companies and from Angrosem Timisoara and Nitrogenmuvek Rt. from Hungary.

To participate in the privatization, the interested parties should have reported over the last financial year a turnover of at least 1.5 million euros and possess at least five years of experience in selling chemical fertilizers or explosives.
AVAS has also resumed the privatization process of Haber Hateg after the last attempt of privatizing the beer company failed because of the low financial offers.

The tender for the 51.7% share package of the company's nominal capital will be held on November 4 at the AVAS headquarters.

The potential investors are required to submit a written declaration saying they do not benefit from subsidies on energy and water.

At the previous tender, AVAS received two offers from Brau Union Romania and Brau Distribution SRL.

Another privatization under way is the Midia power unit. The Ministry of Economy and Commerce (MEC) will ask the Rompetrol group to buy the shares of the Midia company but the privatization contract will be available only after the situation over the company's assets is clarified.

At the beginning of the year the consortium formed of Rompetrol Rafinare and the Rompetrol Group-Holland won the tender for the purchase of the 56.57% share package owned by MEC in Midia Navodari Thermal Electric Plant.

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Telecommunication group Mobifon, the owner of mobile telephony operator Connex, plans to have 40 stores by April 2006, 17 more than the company already has.

The information was given yesterday by the sales director of the company's distribution network, Dragos Bunescu, during the opening of the 23rd Connex store at Bucharest City Mall.

The budget for each store can go up to 200,000 euros, depending on the location, the space and the employed personnel. Bunescu said three more store will be opened in Baia Mare, Tulcea and Deva soon.

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Euro Techno Group, a Volkswagen dealer, will today open a three million euros showroom in Pitesti, fitted with a service unit. The facility will be extended next year to cover a total surface area of 8,500 square meters.

The service units currently have a mechanics workshop, elevators, technical inspections stations, a tinsmithing unit, painting shop and parts deposit.

According to data from the Association of Automobiles Producers and Importers, Volkswagen sales amounted to 8,045 units after three quarters.

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The Hellenic Foreign Trade Board in Athens in cooperation with the Office for Economic & Commercial Affairs of the Greek Embassy in Bucharest have organized a conference on the Greek-Romanian business environment, bringing together seventeen Greek business services companies and the Romanian authorities. Participants spoke in a press conference about Greek investments and trade relations with Romania.One of the Romanian officials invited was Sorin Vasilescu, first councilor in the Agency for Foreign Investments (ARIS).

According to the data provided by Vasilescu, there are approximately 300 Greek companies in Romania, which own more than 500 million euros in nominal capital. Vasilescu also referred to the fact that Romania is considered by ARIS to be one of the markets with a high absorption rate for businesses developed by the Greek investors, as well as being open to foreign markets. However, Charalambos Kounalakis, First Counselor in the Economic & Commercial Affairs department of the Greek Embassy in Romania said that Vasilescu's figures only took account of the initial investment and did not include Greek investment coming, for instance, via Cyprus, Luxembourg, Ireland or the Netherlands.

The Greek Embassy's economic section, taking into account total invested capital has calculated that Greek investments total about 3 billion EUROS, placing the country third in the league table of Romania's top foreign investors. The Embassy estimates that there are around 3000 Greek companies active in Romania. Romanian statistics place Greece 13th, with investments estimated at approximately 318 million USD.

The Greek official stated that bilateral commercial exchanges between Romania and Greece in the first seven months of 2005 totalled 434.5 million euros. Greek investment is mainly in sectors such as telecommunications (Romtelecom), banking (6 banks), food (Alexandrion), construction (Proodeftiki) and in other important companies.

The value of Romanian exports to Greece was 250.4 million euros in the first eight months of the year while Greek exports to Romania were worth 184.2 million euros. The statistics show that Greek exports increased by 2.91% while Romanian exports decreased by 16.8%, compared with 2004.

Contacted by Bucharest Daily News Vasilescu stated that the numbers he made public at the press conference came from the National Trade Register Office (ONRC), from a report on Greek commercial activity in Romania.

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The members of the Permanent Bureaus of the two chambers of Parliament decided yesterday that the budget for next year would be discussed within two weeks by the various commissions of the legislative bodies. Afterwards the amendments proposed by the deputies and senators would be discussed by the plenum of the Parliament.

The president of the Senate Nicolae Vacaroiu said the date for the final vote on next year's budget will depend on the number of amendments introduced by the parliamentarians. Vacaroiu reminded that last year between 400 and 500 amendments were filed by the senators and deputies. The Senate's president said that the budget draft would be distributed to all parliamentarians sometime in the first part of the week and the amendments would be suggested. All amendments must be filed by Monday so that these can be discussed by the commissions of the Parliament for thee days. After that the budget drafts will be discussed by the Budget-Finance Commissions with the representatives of the Ministry of Public Finances (MPF), Vacaroiu said.

The spokesman of the Liberal-Democrat governing alliance (PNL-PD) Eugen Nicolaescu stated yesterday after the meeting of the National Coalition Council (CNC) that the general amendments to the budget, related to the government's policies would only be made by parliamentary groups. The amendments regarding improvement of activity in certain parliamentary constituencies will be made by the members of Parliament within the stipulated terms.

Nicolaescu added that on the basis of the decided agenda, representatives of the Liberals and Democrats in the Permanent Bureaus will demand that the budgets of the two chambers be frozen at the level of 2005.

The budget draft for 2006 was also presented by the MPF to the representatives of the International Monetary Fund (IMF), announced Minister Sebastian Vladescu last week. The experts of the international institution will analyze the revenues and expenditures for next year after the draft is discussed with the Romanian side.

The IMF started on Thursday the last set of negotiations with Romanian authorities in view of the continuation of the stand-by agreement. Discussions took place both at the MPF and at the Romanian National Bank (BNR).
Recently, Vladescu stated that the agreement will be abandoned if no compromise is reached with the IMF representatives and Romania would apply its own macroeconomic policies to stimulate the growth of the gross domestic product.

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Shares in financial investment companies (SIFs) continue to set new price records. Their rise was this time driven by the speculations on the price at which Banca Comerciala Romana, the leader of the Romanian banking system, will sell. SIF shares gained more than 3% yesterday, with the buying pressure put on these shares pushing almost every seller to withdraw their orders during the session.

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On Wednesday, 26th October, Microsoft will present its ?Most Innovative Product Award 2005? to the Exact Group, B.V. and its Romanian General Manager, Petre Maran, at an official event at the Intercontinental Hotel in Bucharest. Also attending this event will be the Ambassadors from The Netherlands, the Regional and Country Managers of Microsoft, and other notable dignitaries. Business Community leaders (including the readers of Morning News Brief) are invited to attend.

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The third largest player on the cable market, Galati-based company Cony-Sat, will be floated on the Bucharest Stock Exchange (BSE) through a public stock sale offering.

Cony-Sat is owned by businessman Catalin Chelu, one of the top investors on the BSE, where he holds, in line with market data, investments worth more than 100 million euros.

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The four Bucharest-based Carrefour hypermarkets increased by almost 80 percent their sales, grossing 293 million euros over the first nine months of the year, as against the same period last year. French Hyparlo Group, operating the Carrefour supermarkets in Romania, invested over 140 million euros over here.

Carrefour will be able to operate 20-25 stores on the Romanian market in the long run. At present, Carrefour stores are under construction in Bucharest (in Baneasa area) and in Constanta (south-eastern Romania). One more Carrefour hypermarket is scheduled to open this week in Ploiesti (south). The French investors aim, in a first stage, at covering the main Romanian cities and the medium ones, later on.

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Greek-based group Athens Medical Group, owner of the Medsana clinics in Romania, has an investment plan of some EUR 50 million over the medium term for the establishment of a private hospital and the expansion of the medical center network across Romania, according to the group?s president Georgios Apostolopoulos.

?In order to begin the development of the new hospital we are waiting for the private health insurance system to develop more and become clearer. Before starting investment in a hospital on our own we plan to open a smaller clinic. We are currently in negotiations to close a partnership with the Municipal hospital in Bucharest and we plan to open a clinic within the hospital,? said Apostolopoulos.

?We cannot give more specific details on this project because we are still negotiating the floor space we will occupy there. After that we will know how many beds we will have. Ideally, the clinic should have around 20.? According to the company?s representatives, the hospital should be built over the next two or three years.

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BSR Europe and diamond merchants Benjamin Steinmetz are furthering their collaboration, having jointly bought land in Romania and Bulgaria, weekly Business Review reports in its latest issue. In one transaction they bought a 35,000-sqm plot in Romania, zoned for 1,500 housing units, for 13.75 million euros. Proceeds from the project are estimated at 120 million euros, Company sources confirmed.

The land in question is in one of Bucharest's central regions and will be used for the development of apartment buildings. "We plan to develop buildings of around 16 storeys, but our plans might change in this respect, depending on what the authorities allow us to build. We will develop one building at a time with apartments of around 80 sqm floor space, aimed at people with average to above average means.

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Given that Romania will derive billions of euros from turning private some of her important institutions, including Banca Comericala Romana (BCR) and the CEC Savings and Loans House, and will receive EU structural funds of up to 4 percent of her Gross Domestic Product (GDP), the creation of an institutional vehicle is necessary that will draw up major projects for the country, said Economics Ph.D Daniel Daianu, a former finance minister in the 1990s.

The new body advocated by Daianu would be called the Infrastructure Development Company (CDI) and would also be concerned with conducting economic analyses to detect the lowest works costs, monitoring project implementation, drawing private funds and designing a strategy for the optimal utilisation of existing funds.

CDI would be an administrator for projects which worth exceeds 10 millions euros and, in exceptional cases, even projects worth between 5 and 10 million euros that are deemed priorities, says Daianu.

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Companies will pay 2.8 billion euros to meet the EC directive on International Plant Protection Convention (IPPC), through an integrated approach of the required steps viewing pollution prevention, reduction and control as well as the establishing of the measures due for issuing integrated environment permits, Romanian Environment Minister Sulfina Barbu said.

As many as 207 of a total of 716 industrial installations, due to get adjusted according to the said EC directive, submitted so far the documentation to get an authorization, and 18 were issued integrated permits, the deadline for getting authorization and conformation being short, Minister Barbu stressed.

Of the 2.8 billion euros, 700 million should be spent to have authorized 521 installations that must meet the directive until the EU accession date, and two billion euros for the 195 installations that got transition periods.

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LG Electronics brings to Romania eight mobile phones internationally appreciated for their elegant design and state-of-the-art technology, reads a company's release.

LG Electronics will bring to Romania B2100, C1100, C2100, C3300, C3310, F2400, F2410 and M4410. The new range reaffirms LG commitment of investing in technologic power and of providing premium products.

"LG Electronics last year sold 4 million mobile phones worldwide and thus became the world's leader in terms of WCDMA phones. Ever since we have continue to grow. In the coming years we will consolidate our presence on the GSM/GPRS/EDGE markets and will focus our efforts for transforming LG phones in a premium brand on the mobile phone market of Romania," said Han Q, LG Electronics Romania president. The said mobile phones will be available as of end-October.

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EAGLE IV, an armoured vehicle exhibited by one of the most important producers of military hardware in Romanian, the Mizil-based MFA company, was considered the star of the international fair of military hardware and defence technologies - EXPOMIL 2005, the 4th edition of which took place , October 20-23 in Bucharest, daily Ziua reports on Monday.

Seen not only as the attraction of the MFA Mizil stand, but also of the entire show EXPOMIL 2005, EAGLE IV is an armoured warfare vehicle made by GENERAL DYNAMICS-MOWAG AG, the Swiss partner of the Romanian company.

Weighing up 7.6 tones, with a capacity of approximately 2,400 kilograms and a 250 HP engine, EAGLE IV is the best performing vehicle in the light armoured category, according to specialists. EAGLE IV is built on a Swiss MOWAG chassis - a double-axle platform run by a six-cylinder direct-injection Diesel engine (all the four tyres being permanently controlled by a five-gear box and an intermediary gearbox as well).

A true jewel of military hardware, EAGLE IV is equipped with a RCWS security alarm that represents a state-of-the-art, remotely controlled technical solution, as well as for the protection of equipment and aiming at targets.

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The arms exports made by National Company Romarm have reached this year an amount ranging between 45 to 50 million dollars, Pavel Mitiu, Romarm General Manager stated .

Mitiu added that Romarm sales' volume doubled since 2004. These contracts figures include all types of small arms produced by the company.

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The recent report drawn up by the World Bank Group puts Romania on the 78th place among the 155 countries examined from the viewpoint of the business climate and of the creation of jobs, ahead of Greece and Croatia, Florin Ioan Rosu adviser to vice-premier Gheorghe Copos said on Monday.

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Some 6,072 new companies with foreign participation were incorporated in Romania in the first eight months of 2005, with the total value of the registered capital reaching some 35.64 billion new lei ($1.9 billion or 1.57 billion euros), according to data issued by the National Institute for Statistics (INS).

Some 105 joint companies were incorporated in August, on a total value of the registered capital of 1.07 million new lei ($377.405 or 312.360 euros). Most of the foreign investors in August came from Italy - 22 investors, Turkey - 13 investors, Germany - 9, Hungary - 7 and 6 each from France, the US and Republic of Moldova.

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Seven competitors continued the race for BCR, submitting their binding bids for the 61.8825% stake put up for sale, announced the Commission in charge of the bank?s privatization, ACT Media news agency reports.

The seven are Germany?s Deutsche Bank AG, Erste Bank AG of Austria, the Belgian Dexia SA, Banco Comercial Portugues SA, the National Bank of Greece SA, Italy?s Banca Intesa SpA and the French BNP Paribas SA.

The Belgian-Dutch financial services company Fortis NV and the Belgian bank KBC Group NV decided to quit the competition.

The bids were required to include a plan for the bank?s development, a legal plan concerning the bank?s management scheme and the relation with the staff, plus the financial offer.

The technical bids were to be opened on Thursday and submitted for assessment to the Privatization Commission that will then invite two contestants for final negotiations.

The authorities in charge consider that the number and serious potential of the bidding banks reflect the high international interest incited by the privatization deal, as well as the efficiency and transparency of the due-diligence process.

In the last two months and a half, BCR has provided all interested investors access to the relevant information in its four data rooms and organized visits to the central office and local branches.

Some of the most prestigious European financial institutions eye BCR's stake acquisition in what is expected to be one of the tightest bank privatization deals in recent times.

For Romania, the privatization of BCR is a major step towards the country?s EU accession, whereas for Western banks, the takeover of BCR is one of the last opportunities to grow into a significant position in Eastern Europe, a region where the demand for financial services is expected to rocket as incomes and the living standard get closer to EU levels.

The investment banks estimate that the offers for the 62% BCR stake might reach 3.5 bn euros, which implicitly means that the price for the entire BCR group stands at some 5.6 bn euros.

The high interest in the privatization deal is yet another proof of the Western banks? appetite for emerging markets.

In 2002, many international banks were recovering after the Argentinean predicament and the losses caused by the Asian crisis.

Whoever takes over BCR will acquire a market share of 25%, but will also have to make significant efforts for the institution?s modernization, restructuring and diversification.

One of the drawbacks about BCR is the institution?s running several different IT systems, the integration of which has started just recently.

The new owner will also have to deal with thorny problem of oversized staff, as BCR currently employs 11,000 persons.

The almost simultaneous privatization of BCR and CEC is expected to have a significant impact on the Romanian banking system.

As much as 55% of bank assets are currently under the control of foreign banks, but after the completion of the privatization deals, this share will rise to 90%, one of the highest in Europe, said Fitch Ratings agency.

This, and the presence of large multinational banks like Societe Generale, Raiffeisen Bank and HVB, will render the Romanian market highly competitive.

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Win a bug-finding contest, stagger away drunk on the achievement. Literally.

Romanian anti-virus vendor BitDefender is giving interested Linux users an incentive to filling out bug reports as it tests out its latest release: Free beer.

The winner of the Crash and Win beta contest will nab 1,000 German beers for finding the most bugs in the upcoming Linux-based BitDefender Mail Protection for Enterprise.

Less importantly, depending on your priorities, the winner will also get an Apple iPod and docking station, and a trip to the company's its Bucharest headquarters. Not only to they get to meet the product's development team, they've even tossed in a visit with Count Dracula. Seems it's the spirit of the season and the promotion.

It's a task that could rouse even Homer Simpson from the bar stool.

Alexandru Balan, BitDefender product manager, summed up the idea with one statement: "We thought getting him drunk would be appropriate punishment for the man."

But seriously folks, he added: "Beta testing is an important part of what makes our products great and we appreciate the effort of these guys in no small way."

The contest is open to beta testers who use the software with any distribution of Linux on any Message Transfer Agent.

Beta registration for the Linux-based enterprise offering began earlier this month, though the software won't be available for download until Nov. 15. A panel of judges from BitDefender will grade every bug report that comes to the company on a scale from 1 to 3; the person with the biggest bug score at the end of the beta run, Jan. 15, 2006, wins the beer and other stuff. Preliminary results will be handed out at that time, with the final rankings available Jan. 20, 2006.

Prizes for second- and third-place finishers will be provided, as well as one lucky recipient who will be subsequently known as the "Official BitDefender Crash Test Dummy" for the most original reported bug that crashes the application. 50 runners-up will get T-shirts and parting gifts.

Interested users and beer aficionados can sign up for the contest here.

BitDefender officials were not available to comment on why perfectly acceptable beer from countries outside Germany were discriminated from the contest.

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Turned out to be sole bidder for 80% stake.

Mahindra & Mahindra (M&M), the country?s largest tractor company, is expected to complete the acquisition of Romanian tractor firm SC Tractorul UTB SA in two months.

Confirming this, Romania?s Commerce Minister Ioan-Codrut Seres said, ?M&M is in final talks with our privatisation department on various clauses of the agreement?the level of investment and the number of workers to be employed.?

M&M, which bid for 80 per cent in Tractorul three months ago, emerged the sole bidder for the Rs 250 crore Romanian firm. The company produces 15,000 tractors a year at its facility in Brasov and has an additional capacity of 18,000 engines.

When contacted, the official spokesperson for M&M declined to divulge details. ?All I can say is that we have put in a bid,? she said.

The Romanian government had put Tractorul on the block again after Italy?s Landini backtracked from its initial offer.

The acquisition would help M&M to foray in the European markets ?something the company has been trying to do for the past three years, sources said. In 1992, it had made an abortive attempt to acquire Finland-based Valtra.

M&M had recently entered China by forming a joint venture, Mahindra (China) Tractor Company. The joint venture?s Nanchang plant has a capacity to manufacture 12,000 tractors a year. The company will cater to the Chinese market as well export to the US, Australia and India. M&M has set a target of becoming the fourth largest tractor manufacturer in the world over the next five years. source

Romanian software company TotalSoft estimates its turnover to reach 11 mln euro in 2006 amidst plans to expand to the Balkan region, according to a Romanian News Digest report.

The company plans to establish a new subsidiary in Moldova in 2006 to distribute its software technology in the country as well as to Ukraine and Turkey.

TotalSoft opened a subsidiary in Belgrade in order to cover the market in the countries of former Yugoslavia, Albania and Bulgaria.

TotalSoft targets a turnover of $7.5 mln for 2005, up 15% compared to 2004.

The Greek-based private equity and venture capital management firm Global Finance bought a majority stake in TotalSoft in April 2005.

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Shri Kamal Nath, Union Minister of Commerce and Industry, today indicated that there had been a huge increase of nearly 355% in India?s trade with Romania in the last three years and with Romania likely to become the member of the European Union (EU) by the year 2007, the country now offers even more attractive trade and investment opportunities for Indian business. The Minister said this when the Romanian Minister of Economy & Commerce, Mr. Ioan Coudrut Seres, called on him here this evening. Both the Ministers underlined that the emergence and deepening of democracy in Romania had brought the two countries closer in basic values and aspirations and this was throwing up significant new opportunities for mutually beneficial cooperation.

Bilateral trade has grown from US $ 59.80 million in 2001-02 to US $ 272.56 million in 2004-05. India?s Imports from Romania were valued at US $ 166.55 million and India?s exports to Romania were at US $ 106.01 million. Both the Ministers noted with satisfaction that India and Romania had identified information technology, pharmaceuticals, energy, metallurgy and heavy industries, as sectors for special focus as in these fields the two countries could share their expertise with each other.

Shri Kamal Nath noted that several Indian and Indian origin investments had recently come to Romania in such diverse sectors like steel, textiles, packaging, property development and tourism and recalled that at his meeting with Prime Minister Dr. Manmohan Singh in Moscow on 9th May, 2005, the President Basescue had encouraged Indian investment to come to Romania.

Several significant Indian investments in Romania are already in the pipeline. Lohia Group (Petking) would be investing $ 100 million in a PET film plant to be located at Constanta; Asmita S.A. will increase its investment in property development in Bucharest to $ 97 million by end 2006; Mahindra & Mahindra is a serious bidder for ?Tractorul? Brasov; Apollo Hospitals may bid for Fundeni Hospital, Bucharest; and Mahindra Holidays was planning to invest in several tourism destinations in Romania, including at Eforie Nord on the Black Sea as well as a new Project at Fagaras in the Carpathians.

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The proposal of Mahindra and Mahindra for the Romanian government's stake in tractor company Tractorul has been accepted, Romania's Commerce Minister Ioan Codrut Seres said on Monday.

"M&M's proposal has been accepted and all formalities will be completed by mid-December," he told reporters on the sidelines of a CII conferencein New Delhi.

He said the other player in fray for the stake had lost the race to M&M.

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The economics ministers of Slovenia and Romania, Andrej Vizjak and Ioan-Codrut Seres, on Friday, 21 October signed a memorandum of understanding between the two ministries. The accord is expected to replace and upgrade the current agreement on cooperation.

According to Seres, the memorandum is an excellent basis for future cooperation, in particular in energy, trade and investments.

Vizjak noted that bilateral trade accords expired when Slovenia joined the EU, so they are being transformed into memoranda of understanding to boost cooperation.

The economies of Slovenia and Romania are complementary in many fields, so it is necessary that the governments promote cooperation, Seres added.

Seres also thanked Slovenia for support in Romania's efforts to join the EU, and asked for further cooperation to help Romanian institution to adapt to EU standards.

The pair moreover attended in Ljubljana a business conference, which was organised by the Slovenian Chamber of Commerce and Industry of Slovenia (CCIS).

Seres told businessmen gathered there that the two countries are far from utilising all the potentials, and invited Slovenian companies to take part in the last phase of privatisation, especially in energy and defence.

The Romanian minister also noted that Romania introduced a flat 16% corporate income tax, which is expected to accelerate economic growth.

CCIS president Jozko Cuk was confident that increasing numbers of Slovenian companies would come to Romania; about 20 currently have operations there.

Cuk is also convinced that bilateral trade will increase once Romania joins the EU.

Bilateral trade last year amounted to nearly EUR 200m, with Slovenia's exports at EUR 115m and imports at EUR 84m.

In the first six months of this year, trade topped EUR 117m.

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About 30,000 futures and options contracts were traded at the Sibiu Financial and Commodity Exchange (BMFMS) in the first three days of the week, giving hopes that the limit of 100,000 contracts a month will be soon exceeded, ACT Media news agency reports.

Pricewaterhouse Coopers, the company that assessed BMFMS for the merger with the Bucharest Stock Exchange, had estimated that the institution would reach 11,000 contracts a day by 2010, but now the estimations for the entire year were corrected to 500,000 contracts (up by 50% against the assessment report).

BMFMS intends to launch three new futures contracts on the market with the bourse-listed Sicomed Bucharest, SSSIF Broker Cluj and Sinteza Oradea.

It will also introduce 9 and 12-month maturities for the most liquid six contracts.

Open positions also followed a steep upward evolution, getting close to 63,000, out of which 20% will mature in March 2006.

There are signs that investment funds are also present on the market, as the number of orders for stakes larger than 500 contracts rises.

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The number of broadband Internet access providers is getting bigger and bigger as the fight between local companies over the cost of services and the kilobyte per second speed hots up. The value of the Romanian broadband Internet market is estimated at around EUR 70 million for 2004 and the heated activity in the market will surely fuel ever increasing revenues.

Recently, the Ministry of Communications and Information Technology (MCTI) in collaboration with the National Regulatory Authority for Communications (ANRC) announced their intention to devise a national strategy for the development of broadband access.

In the first week of October, the ministry completed negotiations with the World Bank (WB) for a $60 million loan for implementing the ?Knowledge-Based Economy? project. ?This is the first time the WB has financed such a complex project. If it has the expected success, the model will be implemented by the WB in other parts of the world too,? said Zsolt Nagy, the IT&C minister. The Romanian government will also contribute $9.4 million.

?The value of the Romanian broadband Internet market is hard to estimate. By multiplying the number of users, which was around 290,000 in 2004, with a medium tariff, around EUR 20, over 12 months, we get an estimated value of EUR 70 million for 2004, and a two-figure increase is expected for 2005,? Nicolae Oaca, a telecommunications consultant, told Business Review.

According to Dan Cristian Georgescu, the president of the ANRC, broadband Internet access in 2004 had a significant evolution starting from only 196,106 connections at the end of 2003, and reaching 382,783 internet broadband connections by December 2004. This represented over 39 percent of the total 980,364 Internet connections. By this month, 1,128 companies have been authorized by the ANRC to provide all types of Internet access.

The main players on the Internet cable access market are Romtelecom, RDS and Astral, while on the wireless market mobile telephony operators Orange, Connex and Zapp set the pace.

The way ahead is wireless

The sector considered by specialists to be the future of the electronic communications is wireless broadband Internet access, which is provided in Romania mainly by mobile telephony operators like Connex, Orange and Zapp.

Connex provides its clients with wireless broadband Internet access through the 3G, WiFi and Fixed Wireless technologies covering all Romanian territory, according to Dragos Dobre, product manager, VPN and security for Connex. Besides broadband Internet access, the company also offers virtual private network services.

Connex entered the Romanian market in 1999 when it started to offer both telephony and Internet services. In 2004 the company had income reaching $686.3 million for all the services offered. For 3G services Connex uses UMTS technology, while access to the Connex NetZone is possible in specific areas using Wi-Fi technology.

Zapp has been offering wireless broadband Internet access since its arrival on the Romanian market in December, 2001 and in October 2004 it launched the Zapp Internet Express service. Based on the CDMA2000 1xEV-DO (Evolution Data Optimized) technology, it currently covers 87 percent of Romanian territory, according to Cuneyt Turktan, president of the Zapp board.

In July 2005 the company also launched a prepaid broadband Internet access service for clients of the Zapp hot spots, situated mainly in Bucharest and on the coast. The company is the latest to enter the market and has already surpassed its competitors for the number of hot spots where it provides wireless Internet access.

The company?s prices for broadband Internet access start from $2 per hour?s access and reach $50 for 40 hours? access or $39 for a full month?s subscription.

?Zapp invested more than $50 million in the expansion and modernization of its network in 2004, including the introduction of the CDMA2000 1xEV-DO platform,? Turktan told Business Review. ?The company mainly appeals to clients with complex communication needs, who are usually in the business field, who rate mobile Internet and e-mail among their priorities.?

Orange, the mobile telephony operator with the most customers in Romania, has offered coverage of wireless broadband Internet access through services like EDGE, Wirefree Zone and Wirefree Broadband since the second half of 2004, and is soon to do so through 3G technology too, according to Carmen Nistor, senior product manager for Orange Romania.

Orange?s development strategy includes expanding EDGE?s cover to all the important cities of the country by the end of 2005, and 70 percent of the population in the next two years, Nistor said.

For business customers, Orange offers the Wirefree Broadband service in areas in Bucharest and Timisoara, including web hosting and e-mail services, too.

The National Radiocommunications Company (SNR) will soon enter the market as it has recently started testing WiMAX technology, which will enable operators to develop new services for residential customers and companies, according to company sources. SNR?s first broadband services will be launched in Romania in the first trimester of 2006. In order to check the new technology in a normal traffic regime, the operator will set up six WiMAX base stations in Cluj, Timis and Suceava. The future tests will include laptop cards and portable equipment. The services include combined voice, data and streaming video packages. Founded in 1991, SNR is the main radiocommunications supplier in Romania. The company offers transmission support for public telephony, mobile telephony networks, data transfer and the Internet.

Wireline Internet - a three-horse race

There are three major players in the cable access market, Romtelecom, Astral and RCS&RDS, which cover large areas of the country and have the biggest number of clients, and a few smaller companies that cover only specific areas in Bucharest or elsewhere.

The market is also divided between companies that work with business customers and those who are more interested in residential users.

Romtelecom, the oldest telephony operator in Romania, entered the broadband Internet market pretty late. ?Romtelecom began to make an impact on the Internet and data market in 2005, after managing to overcome a difficult period, financially speaking, and making the first investments in the improvement of the network,? Vasile Voicu, Romtelecom?s data&Internet division manager, told Business Review.

The company mainly uses ADSL technology for the broadband Internet access services it offers in Bucharest, Cluj, Brasov, Timisoara, Oradea, Constanta and Sibiu. IP FIX offers nationwide Internet access with transfer speeds ranging from 64 kbps to 2 Mbps.

Romtelecom addresses both business and residential customers with different services for each, with prices starting from EUR 35 per month.

Referring to the business sector, Voicu said that Romtelecom has about 7,000 clients for Internet services, and registered a major growth rhythm, starting from 1,000 business customers in March 2005, including Raiffeisen Bank, BancPost, Finansbank, the Senate and the Chamber of Deputies.

According to previous declarations by Panagis Vourloumis, chairman of the board and CEO of OTE Group, the main shareholder of Romtelecom, the company will invest around EUR 0.5 billion in the next four years to launch Next Generation Network (NGN) services, which will allow the transmission of several broadband services besides Internet, like video on demand and interactive games.

With a market share of 20 percent, RCS & RDS, the telecommunication services provider, offers services in more than 100 cities in Romania through an optical fiber infrastructure, both to business and residential customers, according to Ovidiu Ghiman, commercial director of the company. It currently has more than 150,000 business and residential customers for broadband Internet access, 250,000 for telephony services and more than 1.2 million for cable and satellite services. The company provides a complete range of broadband services with television, telephony and internet access offered through the same infrastructure.

?In recent years the group has invested more than $100 million in network infrastructure and the development of the services offered: cable and satellite television, Internet and data communications and fixed telephony,? Ghiman told Business Review.

Astral Telecom, a supplier of electronic communication integrated services in Romania, has an offer similar to that of RCS&RDS with television, telephone and Internet access offered on the same infrastructure network.

The company was recently taken over by UPC, an American company that ranks third on the Romanian cable providers market, for some EUR 350 million, according to media sources. Cresciano Limited with 34.35 percent, the American financial giant AIG through Dixon Investments Overseas Limited with 25.69 percent, Bridgecom Holdings Limited with 6.16 percent and Wordfield Limited with 7.16 percent are among the Astral shareholders who are going to exit the business gradually.

The company?s Internet services are available in 100 of the most important locations in Romania.

Deck Internet is one of the companies that provide broadband Internet access to both business and residential customers from three neighborhoods in Bucharest: Drumul Taberei, Berceni and Pajura. According to Cristian Dragoi, the executive manager of Deck Internet, the prices for the offered services depend on the speed guaranteed for the data transmission, which ranges from 512 kbps to 32 kbps. Besides Internet access, the company also offers e-mail accounts for its customers and telephone services.

Deck Internet entered the market in 1993, and currently has about 6,000 customers, out of which 300 are business customers.

Dial Telecom is one of the companies that provide broadband Internet services exclusively to business customers in Bucharest and surrounding areas. Beside Internet access, the company also offers varied telephone services.

?Dial Telecom started to provide broadband services in 2002, with a customer number growth rate of 300 percent in 2004, which should go up to 80 percent in 2005. We have close to 200 customers for broadband Internet access, all of them companies,? Calin Nistor, senior director business of development and marketing for the company, told Business Review.

According to him, the company had a turnover of EUR 2.3 million in 2004 and expects more than EUR 4.5 million for 2005, while broadband Internet access service accounted for 15 to 20 percent of turnover.

Among Dial Telecom?s clients are Commerzbank, Unicredit, Certinvest, Steilmann, Stoica & Asociatii, Danescu & Danescu & Asociatii, Merck Sharp & Dohme, Texaco Lubricants, Renault Trucks and General Electric.

?The total amount of investments is close to EUR 1 million. Since we offer convergent services over the same network it is difficult to allocate investments only for broadband services,? Nistor said.

With working centers in Bucharest, Iasi, Timisoara, Bacau and Cluj, Euroweb Romania is a company oriented mainly towards the national and multinational business customer sector, with about 90 percent company clients out of a total of 1,500 for broadband Internet access.

More than 90 percent of its customers are living in the districts? capitals, but the company also offers its services to more remote areas.

?We have a customer residing in the Danube Delta, who receives from us voice and broadband Internet access services,? Catalin Scarlat, marketing and business development director of Euroweb Romania, told Business Review. Besides broadband Internet access the company also offers voice and video telephony services, as well as virtual private networks and web design.

Euroweb Romania started as a Wholesale Data Carrier and currently has more than 1,500 broadband Internet access customers, with a growth rate of about 300-400 new clients per year, according to Scarlat. In 2004 the turnover of the company was $9.1 million, out of which 20 percent was derived from the broadband Internet access service, while the estimated value for 2005 is $11.7 million with an increase of 30 percent for broadband services.

?Since the first year of activity, the company has invested in infrastructure from $1.5 million to $6.3 million forecast for 2006, depending on the development phase of its telecommunication network,? said Scarlat.

With 68 employees, GTS Telecom has operated on the Romanian market since 1993 under different names and is part of GTS Central Europe, which owns and operates five alternative carriers in the Czech Republic, Poland, Romania, Slovakia and Hungary.

?GTS Telecom Romania had a turnover of EUR 10.57 million in 2004 and has invested, along with the operational costs, close to EUR 20 million up to now,? Dan Mihaescu, GTS Telecom?s country manager, told Business Review. The company offers telephony and optical fiber, wireless and ADSL broadband Internet access services. According to Mihaescu, it doesn?t have standard prices for its services, as it adapts to the individual needs of its clients.

GTS Telecom is the result of the merger between the companies KPNQwest Romania and GTS Romania. In 1993, at that time under the EUnet brand-name, the company was one of the first commercial Internet service providers in Romania. After KPNQwest NV was formed as a joint venture in 1999, EUnet integrated itself into the new structure. In October 2001, KPNQwest NV acquired the GTS-Ebone network together with its operations in Central Europe.

In 2002 the stand alone Strategic Business Unit KPNQwest-Ebone Central Europe became GTS Central Europe. In August 2002 the group was acquired by Antel Holdings Ltd.

UPC Romania is another cable television operator that started out by offering television services and has since expanded to include broadband Internet access. ?The broadband Internet access service became operational in September 2004 with a pilot project in Timisoara, and in the spring of 2005 we expanded in Cluj and Ploiesti too. UPC has currently more than 6,000 broadband Internet customers,? Andreea Nastase, PR manager of UPC Romania, told Business Review. Currently Internet access does not account for a significant part of the company?s income, but this is expected to change in the future, she added.

According to the PR manager the company has invested around EUR 2 million in Internet access services.

?Knowledge based economy?s? main objective is to ensure access to information in digital format, to reduce the knowledge differences in the IT&C domain and to stimulate competition in the business environment, through at least 200 electronic networks of local communities (RECL).

According to Florin Bejan, the communications state secretary of MCTI, the project will be developed in rural areas and small cities of fewer than 30,000 inhabitants. The winners of the bid to build the first nine pilot RECLs were Orange Romania and an association between Romsys and Access Net and the total value of the contracts is close to $1.1 million.

The MCTI is also preparing to implement the Power Line Communications (PLC) system in rural areas. The PLC system provides electronic communication services using as support the low and medium electrical power network, which supports voice, video and data transmissions from greater than 10 MB per second to 200 MB per second, depending on the equipment used.

According to Georgescu, the value of the data transmission services and Internet access in Romania was around EUR 136 million in December 2004, with a high potential for increase ? during this period there where 248 active providers of broadband Internet access out of 515 Internet access providers.

?The broadband Internet services market has an important growth potential, as 53.76 percent households in Romania are connected to the fixed telephony network and so to the twisted metallic pair local loop, through which DSL services are provided,? Georgescu said.

Regarding the measures taken by the Romanian authorities, Oaca said that the recently announced collaboration between the MCTI and ANRC to initiate a national strategy for the development of broadband access is encouraging, but said that other states are already finding ways to finance such projects and that the Romanian government should follow suit. ?We could say that Romania does not have even a ?narrow band,? and I refer here to the rural areas that don?t even have telephone services,? he added.

The main providers of broadband Internet services for residential users are CATV operators, as the total number of cable connections is 17 times larger than at end-2003.

Referring to technological trends, Oaca said that wireless access seems to have an advantage over wire line connections, but a separation between the two will be made gradually, regarding clients. Wire line allows bigger transmission capacities and will address mainly the ?fixed part? of the society ? headquarters of companies and households. Wireless access will address individuals.

Oaca said prices for broadband Internet access seem pretty high for today?s Romania. ?For instance, in April 2005 Romtelecom launched broadband services based on ADSL technology with a 1,024 kbps transmission speed for EUR 79 per month, while in May 2005, Ozone, a French company covering Paris with wireless technology, offered 2 Mbps for EUR 17 per month,? said Oaca. The high prices will restrict the services to a smaller potential client base: companies and high-income individuals. This year a trend of reducing the broadband access tariffs has appeared, which is an encouraging sign for the development of the market, he added.

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OTP Bank Rt. has submitted a preliminary, non-binding offer for the purchase of a majority stake in Romanian Casa de Economii si Consemnatiuni S.A. (CEC) to the Ministry of Public Finance of the Republic of Romania, the bank announced on Friday. OTP placed its indicative offer after its acquisition workgroup, together with advisors Ernst & Young and Martonyi, Kajtár, Baker & McKenzie, concluded investigations into the business activities of the Bank.

The OTP Bank Group considers CEC?s privatization as a key step in its presence in Central and Eastern Europe, OTP Bank?s Deputy CEO László Wolf said.

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Truck maker Roman Brasov came out fifth in the ranking of the most profitable companies in 2004, after having posted a 360.7 million RON (89 million euro) gross profit at the end of last year.

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Orkla Foods Romania (OFR), a branch of Norwegian giant Orkla Foods (which posts annual turnover worth more than 4 billion euros), in the first eight months of the year registered 21% higher turnover, fuelled both by the company's traditional products (margarine) and by the new categories (jam and liver pate).

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Societe Generale, the second-largest French banking group, withdrew from the race for taking over CEC (Romania's Savings Bank), dropping the plans to submit a preliminary bid, despite showing its interest in a letter sent to the privatisation committee on August 31.

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German company Praktiker, which operates a ?do-it-yourself? stores network, will open two new units by the end of the year, in Craiova and Arad, each representing a EUR 7-8 million investment, according to market sources.

Following these inaugurations, Praktiker will have a total number of 11 units in Romania. The company?s medium term development strategy includes opening 15 units in Romania.

Present in Romania from 2002, Praktiker, owned by the German Metro Group, is already present in Bucharest, Ploiesti, Brasov, Timisoara, Cluj-Napoca, Bacau, Oradea and Constanta. Last year, the seven units generated more than EUR 63 million in sales, a EUR 45 million increase compared to 2003.

Metro announced they would take into consideration some solutions for the future of Praktiker, even the sale. Sources close to the company said last week that Metro is negotiating with representatives of the private investment fund Permira from the UK to sell Praktiker.

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Metro Cash & Carry Romania will close its Otopeni unit in November, transferring all the commercial operations in the new Baneasa unit, company representatives announced.

The Otopeni outlet was the German group?s first unit in Romania, and opened in 1996. Apart from the Otopeni store, the company has three more in Bucharest, and 19 distribution centers in various cities. The newest Metro units were opened in Timisoara, in September and in Arad, last week.

 Each Metro outlet requires an investment of some EUR 15 million. Metro also owns the Praktiker network. They plan to expand their activities by opening Real hypermarkets.

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by Dan Visoiu
October 2005

The Romania of 2005 is still the economic and political laggard of the former communist (European) bloc. After 15 years, it is an economy that resembles more a Latin American banana republic than a future EU member state, and a political system where politicians have ill regard for the interests of citizens. This is the truth, not a subjective and unjustified opinion. And the sooner this is officially recognised and accepted, the greater the chances that Romania will finally begin to enact the necessary reforms which would significantly bridge the gap with its future EU neighbours.

But at the moment, it is quite clear that decision makers simply have not come up with any short, medium or long-term economic policies and plans. Romanian decision makers, at least post-1989, have never prepared nor implemented an overall economic policy that would address the country's economic transition and redress the resulting problems. Everything has been done by the ?seat-of-the-pants?, that is after the initial ?we?re not going to sell our country? period, the early 1990s.

These two major economic philosophies have resulted in Romania not approaching anything like its economic potential, as evidenced by the two or so million Romanians who are working abroad (with most of them working illegally). Politically, at present parliamentarians simply are not accountable to the Romanian electorate because they are not directly elected (rather, they are appointed based on party lists). Consequently, we cannot speak of Romania being a real democracy, since the will and interests of the electorate are not directly represented.

Romania and Romanians have to ask themselves one very important question. Where does the country and its population want to go? This may sound simple but the answer could determine Romania?s course for the next two to three generations.

The overwhelming majority of Romanians would like to live in a country with a solid economy, a country in which the average person has a decent standard of living and is not forced to leave for work (as is the current situation with over two million work-eligible Romanians). Consequently, there is only one way that Romania would be able to achieve this ? by attracting foreign direct investment (FDI) at a rate of a minimum of 5-7 billion euros annually, for the next five to ten years. And what does Romania specifically need to do in order to attract these funds? Well, it is not as difficult as it may seem. Here are the key reforms and projects that need implementing:

(1) FISCAL REFORM: the flat tax was the first major step, but now the state must implement a coherent fiscal system which encourages economic growth and expansion (the current system simply attempts to patch up and plug chronically recurring financial holes);

(2) LABOUR: let?s be realistic, Romania ? at least for the next 10 to 15 years ? will be attractive to manufacturers ? and not service providers ? due to its relatively cheap labour. Two things have therefore to happen. The social contributions have to be lowered from the current 49.5 per cent to no more than 25 per cent (a drastic change, but this is what real reform is all about); secondly, a flexible labour code ? at least one as flexible as Hungary?s ? needs to be adopted since at present it is difficult to fire an employee even if the employee was caught stealing! It is better to have the majority of work-eligible people subject to a flexible labour code instead of a huge percentage (those currently working abroad illegally) having no rights at all;

(3) INFRASTRUCTURE: freeways, freeways, freeways! This haggling about which freeway to build first is nonsense. By setting up a freeway company (which would own the land on which the freeways would be built as well as the concession/use rights) which would in turn issue long-term bonds, the state would be able to raise at least 10 billion euros without any detriment to the actual budget, so it is not difficult to finance such ?grand? projects.
Romania?s party-list system is not democratic, for a number of reasons. Firstly, this system does not allow the electorate to hold politicians directly accountable, since voters cast their votes for parties and not particular persons. Consequently there is never any direct interaction between a politician and his would-be constituents. As a result, a politician never acts in the best interests of those he represents; and in any event, if a particular politician is not performing up to the expectations of constituents, voters still cannot get rid of him during the next elections (since, again, voters may only vote for parties and not specific candidates.)

Worse, parliamentarians are able to switch parties after their appointment, meaning that, for example, if a certain party received 100 seats in the Chamber of Deputies (on the basis of votes obtained from the electorate), then during any certain term this particular party may in fact hold less than these 100 seats if any appointed person decides to switch parties. In essence, Romania has an absurd system whereby a parliamentarian could hold a seat on behalf of a party which was not even initially chosen by voters! This means that a Romanians vote is in fact meaningless, since the possibility exists that such a voter may have chosen a particular party who is no longer represented (due to the appointed parliamentarian switching parties and continuing to keep his seat).

Romania needs to implement the direct vote (at least for 75 per cent of all eligible Chamber of Deputies and Senate seats), so that voters may directly elect their representatives and thereby finally make politicians accountable to their electorate. Also, since Romania is and will be a transitioning country for years to come, term limits need to be implemented in order to ensure that every decade or so a sizable new political class with new ideas and experience will come to power. Constant fresh political blood is the key to Romania?s political future. This would undoubtedly do away with career politicians who are menaces to countries and societies the world over.

Dan Visoiu is a BAC Investment Bank managing partner and a founder of Romania Think Tank (RTT)

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By Ernst & Young

Florin Citu
October 2005

Q My company has been doing business with a firm that has gone bankrupt. We are preparing to take the debtor to court. I have two questions. First, do you think we have any realistic chance of being paid the money we are owed? If the court case is strung out for years then we would be prepared to cut our losses and just forget about the whole thing, rather than pump unspecified amounts of time and money into trying to get back what is owed. Second, as we issued the company with a number of (unpaid) invoices, we are now being told that we owe VAT on money we never received from this company. We would appreciate any advice with this.
Name and address withheld

A It is quite difficult to determine on the basis of this information your chances of recovering the money. Generally speaking, this depends on the solvency of the debtor and the claims of other creditors. There is a priority for payments in case bankruptcy proceedings are initiated against a company, such as:
1. any expenses related to the bankruptcy procedures, including expenses required for preservation and administration of assets in debtor?s patrimony, as well as wage payments for personnel involved in the bankruptcy proceedings;
2. loans, along with related interests and expenses, granted by credit institutions after the initiation of bankruptcy proceedings, as well as debts resulting from the continuation of the debtor?s activity after the beginning of bankruptcy proceedings;
3. debts resulting from labour relations, for a maximum six months prior to the opening of bankruptcy proceedings;
4. State Budget debts;
5. amounts owed by the debtor to third parties on the basis of obligations of support, allowances for minors or obligations of payment of regular amounts for providing means of subsistence;
6. bank loans, along with other related interests and expenses, debts resulting from sales of goods, supply of services, etc;
7. other unsecured debts;
8. subordinated debts.
With regard to the second part of your question, VAT is due to the State Budget when the fiscal authorities become entitled to request the VAT payment. The VAT becomes chargeable on the date of delivery of goods or on the date of supply of services, barring certain exceptions. Since you issued the invoices and your goods/services were actually delivered, the VAT became chargeable. Hence, the related output VAT is due to the State Budget even if the invoices were not paid.
However, the tax base of VAT can be adjusted (and consequently the VAT itself) in case the value of goods or services delivered is not collected due to bankruptcy. The adjustment for VAT is allowed from the date on which bankruptcy is declared. The Fiscal Code specifies that the date of declaring bankruptcy is the date of the final court decision on closure of bankruptcy proceedings.
In your case, you will have to pay the VAT (otherwise penalties and interest could apply) and subsequently make the necessary adjustment when the final court decision on closure of bankruptcy proceedings for your debtor is issued.

Q I am considering employing three new people who would each earn 400 euros net. Could you tell me exactly what taxes I would need to pay? My company is not a micro enterprise.
B. K., Bucharest

A Since we don?t have all the details about your company (number of employees, CAEN code), we presume your company has less than 75 employees. In that case, the taxes and social security contributions for one employee earning a net monthly salary of EUR 400 (gross EUR 565.44) would be as follows:
For the employee*:
- Income Tax @ 16% ? RON 242 / EUR 69.12
- Social Security Contribution @ 9.5% ? RON 188 / EUR 53.69
- Health Fund Contribution @ 6.5% ? RON 129 / EUR 36.74
- Unemployment Contribution @ 1% ? RON 20 / EUR 5.65
For the company*:
- Social Security Contribution @ 22% ? RON 435 / EUR 124.34
- Health Fund Contribution @ 7% ? RON 138 / EUR 39.56
- Unemployment Contribution @ 3% ? RON 59 / EUR 16.96
- Risk and Accidents Fund Contribution @ 0.776% ? RON 15 / EUR 4.39
- Labour Inspectorate Commission @ 0.75% ? RON 15 / EUR 4.24
(* Based on an exchange rate of 3.5 RON/EUR)
For three new employees each earning a monthly net salary of EUR 400, the cost per month to your company is around EUR 2,264 (calculated as gross salaries plus company?s contributions multiplied by 3).

Q I am a foreigner living in Romania and understand that there is a law regarding new ID cards for people like me. I have not yet applied for one, though I do have the old green legitimatia. Is it acceptable to wait until my legitimatia nears expiry and then apply for one, or should I be applying for one straight away. What could happen if I do not apply for one?
Steven Holden, Bucharest

A In principle, the old residence permits for foreigners (green legitimatia) issued by the Authority for Foreigners in Bucharest were valid till 1st March 2005 and should have been changed for new plastic ID cards by this date.
In practice, however, it appears that the old residence permits are valid till the date of expiry. If you apply for extending stay in Romania, the Authority for Foreigners will automatically give you a new format residence permit.
The application for extending your stay in Romania should be made at least 30 days before the expiry of your residence permit. Any delay in submitting the application could lead to a fine of RON 100 to RON 500.
Normally, it takes 30 days from the date of application to receive the residence permit, extended by another 15 days in case of supplementary verification. But the term may be longer for the new format residence permit because these are printed in Germany.
Separately, in case your old legitimatia expires and you apply for a new residence permit, but it is not made available to you by the previous permit?s expiry date, a proof of your application should be made available to you. However, you may face certain difficulties in case you leave Romania and return in this period without having a valid permit.

These responses do not in any way constitute professional advice and Ernst & Young Romania will not be held liable for any action taken on the basis of these answers. As Romania?s fiscal legislation undergoes frequent change, readers are advised to contact Laura Damian, Manager, on Tel: 402.4000 or email laura.damian@ro.ey.com to find out more about the services Ernst & Young can provide.

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The Competition Council will examine, at the end of November, the chewing gum producer Wrigley Romania-Produse Zaharoase SRL and 30 distribution companies, under an investigation on a possible violation of the competition law.

The distribution company Interbrands Marketing & Distribution SRL, the largest company of its type in Romania, put forward in 2004 to the Competition Council a complaint against the chewing gum producer after it requested an exemption from the competition law on purchase and distribution contracts with a series of economic agents.

The investigation intends to evaluate the effects these contracts had over the competition in this area. The controls made by the Competition Council will refer to the entire distribution chain.

According with the procedures, the various parties involved will receive the investigation report a minimum 30 days after the hearings.

Wrigley is the main player on the Romanian chewing gum market, having a share of more than 90%.

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Romanian companies Romarm and Elprof signed an agreement on Friday with the French companies Renault Trucks and Thales for the construction of a light armoured carrier to replace old models used by the Romanian army. Romarm's general director, Pavel Matiu, stated that the new models will be adapted to the requirements of modern armies, with series production expected to start in 2007.

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The members of the Romanian Employers General Union ? UGIR 1903 complain that as an effect of the increase to 16% of the tax on profits and dividends, Romanian fiscality will rise from the current 24.4% to about 29.44%, rendering the domestic business environment unattractive.

Employers? organizations complain that Romanian fiscality will be thus sensibly higher than in neighbor states, like Bulgaria ? where this indicator is 27.1%, Slovakia ? 19%, Latvia ? 23.56% or Russia ? 20.83%. ?We will rapidly become unattractive to foreign investors,? warned UGIR-1903 chairman Ioan Cezar Coraci, who also complains that the draft Tax Code does not include macroeconomic policy elements capable to produce economic growth.

?Far from funneling more money to the budget, the tax increase will hinder economic growth. The businesspeople will find alternative methods to place their money, in order to not to pay more to the budget,? pictured Coraci the future on the occasion of an UGIR-1903 reunion this week. UGIR-1903 also insists that the current unlimited deductibility of subscription taxes to trade chambers, employers and trade union organizations be maintained.

?The limitation of the deductible amount to 2,000 euros a year would hinder our joining international employers organizations that provide us access to market information,? declared Mihai Pasculescu, vice-chairman of the Light Industry Employers Federation.

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Savings Bank president Eugen Radulescu this Tuesday stepped in the limelight to announce that thanks to the rocketing credits in ?lei?, which advance by a monthly average of 50 million euros, the institution has succeeded in covering the gap of 2.7 million euros registered at mid-year and that it is even expected to post almost 4 million euros in gross profits by year-end.

Radulescu specified that at the end of September, the credits disbursed by the institution to natural persons totaled 1.5 bn RON (some 428 million euros) and that they are likely to top 2 bn RON by year-end. Although CEC bidders assert that the bank?s modernization needs investments worth hundreds of million euros, Radulescu assures that CEC?s future owner will only need to invest some 10 million euros to refurbish the institution plus another 10 ? 20 million euros in the IT system.

Radulescu also announced that the bank?s restructuring is almost completed; the process focused on three components - corporate, retail and IT support, requiring investments worth 29 million euros. As many as 1,400 employees were laid-off so far, receiving each the equivalent of 10 average wages per economy (that is an aggregate of 90 million lei). Following the massive reduction of accounting staff from 200 to 20, in March 2006, CEC will have a single accounting center where eight people will calculate the wages for the entire institution - said Eugen Radulescu.

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The current account of the balance of payments recorded in the first eight months a deficit of 3.248 billion euros, by 48.6% higher than in the similar period of 2004, Romania's central Bank informs.

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India and Romania on Sunday agreed to strengthen the proposals and projects in the oil and gas sector to push forward the understanding reached between the two countries during the visit of petroleum Minister Mani Shankar Aiyar in July, this year.

This was decided at a meeting between the delegations of the two countries led by Aiyar and Romanian Minister of economy and commerce Ioan C Seres, an official release said.

The two countries will identify specific areas of cooperation in hydrocarbon sector, it said.

Aiyar proposed that Indian companies could look for possible ventures in exploration and production in the black sea region while Romanian companies could participate in the upstream activities in general and in the Bay of Bengal in particular.

Romanian Minister extended an invitation to the Indian oil companies to invest in his country, which could provide a gateway for their entry into European Union market.

A detailed presentation was made about the Indian hydrocarbon sector and was apprised of the fact that several refinery projects, including grass root refineries and expansion projects, are being implemented to maintain a positive balance of refining capacity in the country, vis-a-vis the demand for petroleum products and for upgrading fuel quality to euro iii and iv levels.

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The Romanian Government has rejected current bids for a 51.71% stake in Haber brewery. Bids from Brau Union Romania and Brau Distributie failed to match at least 50% of the starting price, Romania?s privatisation agency AVAS said yesterday (20 October).

The starting price for the stake has been set at ROL5.39m (US$1.8m) a spokesman for AVAS told local reporters.

In a statement, the agency said: ?AVAS will analyse the Haber situation and will decide in the near future which method it will use to privatise the company.?

Last year, Haber brewery, located in Hateg, western Romania, posted a net profit of ROL840,000, a slight increase on the ROL830,000 registered in 2003.

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Greece's National Bank and Eurobank are expected to submit non-binding bids today for Romania's CEC Bank, according to Euro2day newswire.

CEC is Romania's fourth largest bank and today is the last day for submission of non-binding bids.

Romania's finance ministry has asked for non-binding bids to be followed by binding bids, to be submitted by the end of November.

National Bank, the largest Greek bank in lending terms, has aleady submitted a binding bid for another Romanian bank, Banca Comerciala Romana (BCR), and the results of that tender are expected to be released on Oct 25.

At 2.40 pm local time, National Bank was up 0.85 pct to 30.98 eur, Eurobank was 0.24 pct higher at 24.76 eur, outperforming the ASE general index, which was down 0.79 pct to 3,240.59 points.

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12:52 - 21 October 2005 - Romanian banks extended loans of 4.39 billion RON for home acquisitions, in the period January to end-August 2005, according to a recent study of Romania's Central Bank (BNR), ACT Media news agency.

The home loans denominated in the local currency set at 0.363 billion RON at end-August 2005, 8.3% of the total, while the forex loans for the same purpose were 1.147 billion euros, the equivalent of 4.027 billion RON, 91.7% of the total.

Loans for home acquisitions went up 48.4% August 2004 - August 2005, which was lower that the 64.3% rise January 2004-January 2005.

Home and mortgage loans denominated in lei varied some 16% in January through August 2005, while the weight of forex loans in the total of the loans for the destination went down from 97.9%, in early 2005, to 80.4% at end of August.

Source: ACT Media News Agency and reporter.gr

Utility services and modular, or "component," offerings are trends that are emerging as the outsourcing industry reaches a new level of maturity, according to industry insiders gathering at OutsourceWorld in New York.

Now that a wide variety of users and providers have attained hard-won experience in outsourcing, particularly in offshore contracts, services are moving to a new level of sophistication, said vendors and consultants here at the show.

Offshoring has moved well beyond the top multinational companies, which have been outsourcing globally for decades, according to Peter Bendor-Samuel, chief executive officer of outsourcing consultants the Everest Group. "We have moved well beyond the Global 1000," he said in a keynote address at the conference, which ended Wednesday (19-Oct-05).

The trend will continue, other conference speakers agreed.

There are currently about 1 million IT and BPO (business process outsourcing) jobs being fulfilled on an offshore basis, but that could increase to 6 million or 8 million over the next 10 years, said Allen Weinberg, principal and North American leader of McKinsey & Co.'s offshoring practice.

Both service providers and users have become more sophisticated in how they manage offshore service relationships, conference panelists said. On the customer side, companies are beginning to move away from vast, multiyear contracts because they have found that such deals are extremely hard to manage.

"Among other things, at the end of a five-year contract you realize the world is not the same as when you started, technology has moved on, and costs have come down," Bendor-Samuel said.

Costs have come down as providers in large countries such as India and China have bulked up, and as more specialized providers in Eastern European countries and other locations have stepped in to take a slice of the outsourcing pie, he noted. As a result, companies are moving toward more well-defined, limited-scope deals.

One example of this trend is the move toward component, or modular, services, especially in the financial arena.

"Financial companies are increasingly coming to us to provide componentized services, for example, helping them get a particularly sophisticated product to market quickly," said Wendy Watson, managing director of State Street Investment Manager Solutions, a branch of State Street Corp.

Banks are under increasing pressure to get to market with the latest investment opportunities in, for example, derivatives--which can be very complicated, she noted.

"Companies that may not have the necessary technology or expertise to bring out such a product come to a provider like us," Watson said. Bond company Pacific Investment Management Co. LLC, for example, is experiencing a doubling of its transactions, but the complexity of these transactions is increasing fourfold as its financial products get complicated, Watson said. This is where a provider of specialized or modular services can step in, she said.

Specialty services offered for particular vertical markets are also becoming popular, other speakers at the conference noted.

"Cross-company outsourcing, companies coming together for scale, is a model that is increasingly being adopted," said Peter Watkins, head of U.S. financial services for Electronic Data Systems Corp (EDS).

Watkins pointed to the insurance sector as an example of an industry where companies have found they can bring down the cost of, for example, administering policies, by outsourcing administration to providers who offer so-called utility services. Cost savings can decline from about US$30 per policy to less than $10 per policy, Watkins said.

Particular countries or regions can also offer specialized services or opportunities, according to Watkins and other speakers. "Best-shoring" is a trend among users who look outside of traditional outsourcing centers in locations such as India to find niche specialties, or simply to find providers in the same time zone as their in-house workforce, he said,

Companies such as GE Corp., for example, have vast offshore operations in India but also have looked to near-shore, second-tier outsourcing providers in Mexico, he said.

Some industry insiders at the conference advised users to first pick the country or region that seems to offer a fit in terms of specialization, or language and culture, and only then pick the specific provider. "I always say, pick the country first, " said Shailendra Palvia, managing director for the Center for Global Outsourcing.

Romanian service providers, for example, are offering expertise in a wide variety of languages, proximity to various European markets, and a skilled workforce honed by a university system that has a strong background in mathematics and engineering, said Costin Lianu, general director of export promotion for the Romanian Ministry of Economy and Commerce, in an interview on the sidelines of the conference.

At the conference exhibition, providers from major outsourcing destinations in India, China and the Philippines were represented, but there was a also a strong showing of smaller companies from Eastern Europe, South America and other regions.

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DEUTSCHE Bank, Germany?s largest, is leading the hotly contested race to buy a majority stake in one of central Europe?s most sought-after banks, Banca Comerciala Romana (BCR), the Romanian commercial bank.

BCR has been valued at between v3bn ($3.6bn, £2bn) and v5bn and the sale of the 62% stake is expected to fetch between v2.5bn and v3bn. The Romanian government has indicated that the eventual buyer will be judged 90% on price. Deutsche is thought to have submitted the highest bid, sources close to the process say.

Six other banks from across Europe have submitted bids for BCR, including Italy?s Banca Intesa, Austria?s Erste Bank, French bank BNP Paribas, Greece?s NCB, Belgium?s Dexia and BCP of Portugal.

Two bidders are expected to be chosen this week to go through to the final round. Either Erste Bank or Intesa is most likely to go through as the second bidder while BNP Paribas and BCP are regarded as outsiders.

Before the process, which began last Monday, all seven banks publicly agreed to be disciplined with their bids. But it is thought Deutsche Bank has broken ranks and put in a much fuller bid.

Deutsche has made its intention to buy BCR clear from the beginning and is determined not to be left behind in the race to establish a foothold in central and eastern Europe banking.

BCR has drawn high interest as western banks try to capitalise on Romania?s under-penetrated and potentially lucrative market. Romania has a population of 22m and a converging economy that is scheduled to join the European Union in 2007.

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Bulgarians no longer want to close the nuclear power plant in the northern town of Kozloduy and besides are even building another one in the northern town of Belene between the towns of Zimnica and Turnu Magurele but on the other side of the Danube River. The plant in Belene will start working in 5-6 years.

Bulgarians want to kill two birds with one stone - to remain a leading energy exporter in south-eastern Europe and not raise the price of electricity on the interior market. At the same time Romania is taking pains over the completion of unit 2 of Chernavoda power plant and plans to put into operation unit 3.

Bulgaria will try not to close the four reactors of Kozloduy nuclear power plant, Alyosha Parvanov, director of the plant stated at EuroLider conference on Thursday. ?The closure of the four reactors (which are still working out of the six reactors of the plant) was a political decision. We hope it is overridden?, Alyosha Parvanov stated. He stated that EUR 87 million have recently been invested in reactor 3 and 4, which are to be closed over the next years, and in reactor 5 and 6 - EUR 200 million. The closure of unit 3 and 4 scheduled to take place next year will weed Bulgaria out of its position of main exporter of electricity to the Balkan region. In addition, as a result the price of electricity in Bulgaria can rise by 56%, according to what was said during yesterday?s debates in Parliament in Sofia. Many people share the stand of Alyosha Parvanov. On Thursday Deputy Minister of Energy stated for a private Bulgarian radio that new talks with the EU are possible in an attempt to expand the deadline for the closure of the reactors.

Meanwhile Bulgarians are drafting the construction of another nuclear power plant in the northern town of Belene. The Bulgarian National Electric Company will sign the contract for the beginning of the construction works on January 26th 2006 and unit 1 will be put into operation five years later. The project envisages the construction of a 2,000- MW reactor and the investment amounts to EUR 2,4 billion. ?We want to remain a leading electricity exporter in central and Eastern Europe?, Georgi Halev, a representative of a Bulgarian company working in the nuclear sector, stated at EuroLider conference.

If Bulgarians are speeding the construction of a new nuclear power plant, Romanians are much more sluggish. Unit 2 of Chernavoda nuclear power plant will be ready no sooner than March 2007, more than 10 years after the launch of unit 1 of the plant. ?By the opening of this unit in 2007 Nuclearelectrica (Romanian company-producer of nuclear energy - editor?s note) will cover 16% of the energy needs of Romania, Dragos Popescu, investment director of the company stated. If reactor 3 is put into operation by 2015, it will cover 22% of Romania?s energy needs.


?Reactor 3 of Chernavoda plant will be unique on global scale - this will be the first entirely private-owned plant in the world?, Giovanni Villabruna, manager of the Italian Ansaldo Group, one of the executors of the project for the construction of the plant in Chernavoda, stated.

Giovanni Villabruna stated that Romania is forced to switch to nuclear energy since thermal power plants are aging and cause pollution. A new redirection to nuclear energy is seen worldwide, representative of the International Atomic Energy Agency (IAEA), said in Vienna. He said that the rise in the price of oil has predetermined this redirection to forms of cheaper energy. At present power plants are mainly constructed in Asia. In Europe only Romania (reactor 2) and Finland are building nuclear power plants. France is drafting a project for 2007.

After Italy gave up nuclear energy in 1987 as an emotional reaction to Chernobyl tragedy, the country is now reconsidering the issue of nuclear energy, Giovanni Villabruna said.

However, the price of nuclear energy is also rising. If by 2002 the price of uranium had not changed for 15 years, it has tripled ever since reaching USD 75 per kilogram against the background of the depleting reserves of this material. So far Romania does not have such problems since it has its own sources, Dragos Popescu said. Another global issue is the rise in the price of construction of new plants, which in turn boosts the price of nuclear energy. The construction price of the plant in Finland is EUR 1,920 per kwh.

NPPs are being Opened and Closed

By 2050 the price of electricity in the world will double against the background of the expected increase in the living standard of many citizens round the world and the rise in population. In 2004 five new NPPs were built with a total capacity of 4,8 GWh and another five were closed with a capacity of 1,4 GWh.

Nuclear energy holds a 16% share of the overall energy produced in the world, which has not changed since 1996. In 2004 26 NPPs were being built, 18 of which in Asia. In 2020 China will produce 32-40 GWh (at present it produces 6,5) and India - 25 GWh (versus 2,5 GWh at the moment). The big problem will be the aging of these plants. At present 200 of the altogether 440 NPPs are older than 20 years and in six years the number of these plants will reach 400.

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Romanian wheat might be traded on the futures ring of the Chicago Board of Trade (CBOT) starting from 2010, daily Bursa quotes CBOT economic adviser on contract development Fred Seamon as saying on Thursday.

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EXPOMIL 2005 is an activity necessary and useful for informing the army, but does not represent a spectacular event meant to occasion the signing of contracts, State Secretary with Ministry of National Defence Ioan Ion told Rompres on Thursday.

"EXPOMIL 2005 shows us that Romania is perceived for its real value, as a real partner within NATO," the State Secretary said. The fourth international exhibition of military technique and equipment EXPOMIL gathers over October 20-23 at ROMEXPO Bucharest Exhibition Centre some 156 exhibitors, of which 69 are foreign.

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Rompetrol Rafinare was the most transacted issuer on BSE (Bucharest Stock Exchange) on Thursday, as a 1% stake was transferred on the deal market.

This issuer covered for more than 40% in the overall liquidity in both sessions.

?There were few buy orders for Rompetrol when the stock exchange opened.

At RON 12.1/share, the market was unbalanced, as the buy orders dominated.

The transaction on the deal market occurred at the half of the session.

A significant stake was offered, representing some 1% in Rompetrol?s capital.

According to sources close to the matter, there is a 5% stake in Rompetrol to be gradually sold.

It is possible that it comes from investors involved in the company, who have significant shares?, declared deputy general manager with SSIF Broker brokerage company Adrian Ceuca.

The transfer of the 275.1 mn shares in Rompetrol summed up RON 31.3 mn, representing 43% in the total operations on the market.

The largest part of the liquidity for Rompetrol Rafinare was conducted on the deal market (of the special transactions), with 243.1 mn shares worth RON 27.4 mn transferred in only one operation.

The transactions on the regular market summed up RON 3.8 mn, generated from the transfer of 38.5 mn shares.

Rompetrol?s quota increased by 0.8%, up to RON 12/share, the growth as compared to the end of last week being of 3.4%.

The operations conducted with Petrom shares reached RON 7.4 mn, while the quota decreased by 1.1%, down to 43.4 bani/share.

The operations with the shares in the five SIF reached RON 20.2 mn, and the BET-FI index increased by 1.6%.

The most significant operations were conducted with shares in SIF Moldova ? RON 6.8 mn and SIF Oltenia ? RON 5.3 mn. These two companies posted the most important increases in their quotas as well, by 1.7% - up to RON 1.84/share and by 2.4% - up to RON 2.15/share, respectively.

Banca Transilvania closed up by 0.95%, at RON 1.13/share, recording a liquidity of RON 6.08 mn.

BRD - Groupe Societe Generale posted transfers worth RON 2.4 mn. The quota went down by 1.5%, at RON 13.1/share.

The overall liquidity on BSE was of RON 72.7 mn, a similar level to the one posed in the previous session.

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Piraeus Bank posted over ¤3.2 million in the 8-month profit, twice higher versus the figure posted in the same period of 2004, announced the bank's officials, ACT Media news agency reports.

The bank estimates its assets will reach ¤510 million by December 31, versus ¤450 million euros on 31 August.

Piraeus also announced a reduction in interest rates for RON loans as of October 20.

Piraeus Bank Romania has a network of 23 branches situated in the main cities of the country.

The bank's expansion programme aims at developing at least 50 by end- 2006.

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Gabriel Resources, the Canadian company that owns 80 percent of Rosia Montana Gold Corporation (RMGC), plans to invest $770 million during the entire duration of the project, estimated at around 20 years from becoming operational, the company's President and CEO Alan Hill told weekly Business Review. To date around 150 million USD has been invested in the controversial project.

The gold mine from Rosia Montana could become operational in 2009, if the company gets approval for the Environmental Impact Assessment (EIA), finishes the archaeological discharge programs and buys the terrain, according to Hill. If the project fails to become operational, GR would lose about $200 million. To get the EIA, the company will hire a team of independent foreign and Romanian consultants in the last half of 2005 and expects to petition the Romanian authorities in H1 2006. Of the archaeological issues, Hill said that $8 million had been spent saving the archaeological relics so far, the same magazine reads on.

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For 2006, MMGA obtained a growth of 10 pct of the budget allocated against 2005, Sulfina Barbu, Minister of the Environment announced on Wednesday. « The 5600 billion ROL allocated to the MMGA will be distributed on priority projects.

This sum, the MMGA official resumed, stands for 50 pct. of what the ministry had proposed on programmes and projects. Despite this, Sulfina Barbu appreciates that the necessary means will be found to apply projects already started and a new resettlement of the budget will supplement the funds.

The MMGA priorities for 2006 concern both the environment sector and the waters one. Practically, focus will be placed on the strengthening of the institutional capacity, investments in the national and regional network of laboratories accredited in the environment protection domain, co-financing of those projects under way and which had already obtaine the EU approval (FARE and LIFE), ecological reconstruction in the Danube Delta, and equipment and logistics for the National Environment Guards.

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Romania imported, during the first seven months of the year, fuels and lubricants worth 2.4 billion euros, up with 47.1 pct against the same period of last year, according to the National Statistics Institute. The greatest growth was registered in oil and oil products ? 56.6 pct., worth 1.49 billion euros, followed by gas and industrial products obtained from gas ? 522 million euros ( up with 42.9 pct.) coal, coke ? 341.4 million euros ( up with 25 pct.) and electrical energy ? 48 million euros ( up with 12.9 pct.).

For the same period, fuel and lubricants export was worth 1.29 billion euros, up with 71.6 pct. against the same period of last year. The largest value for export was registered in oil products ? 1.1. billion euros, up with 71.4 pct. against the same period last year.

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The British company Europa Oil & Gas ( Holdings) PLC announced on Tuesday, that it signed a building contract for Bilca Gas Development in Romania, a release of the British company reported. The contract was agreed between the Romanian companies Condmag SA, Brasov and Inspet SA, Ploiesti. The workings comprise production facilities and export lines for a complex of three gas deposits ( Bilca Est, Bilca Vest and Fratauti) placed in the area EIII-1 Brodina, where Europa Oil owns a share of 28.75 pct.

The workings will start immediately, being estimated to be finalised at the beginning of 2006. « The project is about to increase our production in 2006, while the exploitation workings we undertake in Romania in parralel are estimated to increase our reserves and resources for next year », the Europa Oil executive director Paul Barrett stated. The area EIII- 1 Brodina comprises a fourth potential well ( Costisa-Radauti-1) for which permission to exploit is to obtained at the beginning of this month. The leadership of Europa Oil estimates the works to take place in 2006.

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Oil price will rise in 2006, being estimated to reach 100 dollars/barrel, the Rompetrol CEO Dinu Patriciu stated on Wednesday, during the regional forum of the Leaders of the New Europe, organised in Bucharest. « I think the price on barrel will reach 80 ? 100dollars to the end of 2006, as it has doubled this year and global economy proved to take such growth » Dinu Patriciu said.

This explains why, although analysts estimate an average price of 45 ? 65 dollars /barrel, the evolution showed that every time the fluctuation of the barrel price was underestimated by 25 pct. « For Romania, in the conditions of price rise, obtaining superior products from inferior quality resource, through technologies is a chance to be known as a regional leader in this domain » Patriciu said. After the new evolutions regarding environment protection, over 80 pct. of the refineries on a global scale prefered to change raw material, than to invest technologically, to obtain out of oil with high levels of sulphur superior products such as gasoline, diesel and plastics. « Rompetrol had these investments, which contributed to the efficient growth of the company » Patriciu mentioned.

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The five Financial Investment Companies (SIFs) trading value reached on Tuesday, October 18, 1.4 billion euros, up more than 5% compared to the previous day, ACT Media news agency reports.

SIFs stocks' quotations have been boosted by the seven binding bids submitted in BCR's (Romanian Commercial Bank) privatization process, where SIFs hold a share package of 30 percent, Ziarul financiar daily reports.

BET-FI Index that follows SIFs evolution attained on Tuesday a new historical peak, hauling other shares traded on the market.

BET Index concluded the day inching up another 2 percent, especially due to the increase of Transylvania Bank and BRD (Romanian Bank for Development) shares' value that reached on their turn a new historical peak, joined by Petrom and Petromidia, as well. SIF Oltenia and SIF Moldova posted the biggest jump in their trading value, with almost 6 percent each.

SIF Oltenia consolidated its most expensive position among SIFs.

SIF Muntenia increased 4.6 percent, whereas the other two SIFs (Transylvania, Banat-Crisana) - 3.4 percent each.

In a single day, SIFs market value advanced by 70 million euros. Goldman Sachs analysts assessed BCR between 3.8 and 5.8 billion euros worth.

But the total value of the bank is going to be provided by the amount an investor is ready to pay.

At a value of 4 billion euros, the share package owned by each SIF in BCR could amount at 240 million euros, therefore more than two thirds of each SIF's value, under conditions in which they also own other important share packages, the newspaper also writes. The prospect of BCR's privatisation at a good price also boosted the value of other banks' shares on Bucharest Stock Exchange (BVB).

In analysts' opinion, BCR's selling price is going to play a key-role in the evaluation of all BVB listed banks. Transylvania Bank shares closed Tuesday session up 2.7 percent as against the previous day, following a strong upward trend in the recent weeks. In less than three weeks, the bank's overall value jumped by more than 10 percent.

Transylvania Bank could be the following target for foreign banks that aim at entering the Romanian market, especially those set to loose the BCR's race.

Investors also stake on the free shares the bank could distribute again in the spring next year, but also on a new eventual share capital increase.

In addition, BRD stock reached a new historical peak, going beyond 2.5 billion euros.

Petromidia closed at the highest quotation reached in the last six months.

But Petrom gained only 1.4%, an evolution that contradicts the general trend on the market.

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The volume of stock and bonds acquisitions made by foreigners in the Romanian capital market was in excess of 1.9 billion new lei (RON) in the first nine months of the year, according to data released by the National Securities Commission (CNVM), ACT Media news agency reports.

The amounts invested in the market reached 1.317 billion RON and those exiting it in the same period were in excess of 1.093 billion RON.

The trading volume on the capital market attained 1.56 billion RON.

Over January-September, 575 foreign investors entered the Romanian capital market, out of which 247 legal entities and 132 investors, out of which eight legal entities, exited the market. In September, the amounts entering the market reached at 318.31 million RON and those that exited the market were in excess of 239.66 million RON.

Buy volume totalled 362.13 million RON and sell volume on the capital market was of 260.47 million RON.

Some 67 foreign investors entered the Romanian capital market, out of which 14 legal entities and 29 investors exited the market, out of which no legal entity.

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The committee for the privatisation of Banca Comerciala Romana (BCR), started the procedures for opening the bidding documents submitted for the acquisition of a 61.88% stake in BCR and signing the documents for the participation in the BCR privatisation race, the State Assets Realisation Authority (AVAS) informed, according to ACT Media news agency reports.

Seven out of nine bidders initially announced for the take-over of BCR lodged bids:

Intesa, Deutsche Bank, Erste Bank, the National Bank of Greece, Banco Comercial Portugues, Dexia and BNP Paribas.

Fortis and KBC withdrew.

BCR's assets stand at ¤7.3 billion, with 344 offices in Romania.

The BCR shares expected to be taken over are valued at an average 5.5 billion euros.

The privatisation committee will unveil the list of the companies having met the conditions.

The committee will open the technical bids on October 20, 2005.

After these bids are analysed, the financial bids will follow and the name of the two banks having recorded the best scores to compete for the take-over proper will be made public.

According to AVAS, the price will count 90 percent in the final decision, and technical offer 10 percent.

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The U.N. oil-for-food program's many threads continue to unravel, and the latest leads to the Washington area. Yesterday, New York prosecutors announced that Reston-based Midway Trading, an oil-trading company, told the New York State Supreme Court that it gave $440,000 to the Saddam Hussein's regime in connection with the U.N. oil-for-food program.

The company has already pled guilty to first-degree grand larceny, prosecutors said. Now it emerges that the company paid the money in connection to $42 million worth of Iraqi crude it won rights to purchase from a Romanian company called Bulf Oil in late 2000 under the U.N. oil-for-food program and then falsely told the UN it paid no kickbacks. No doubt the money went straight to a Saddam relative or member of the inner circle. The number of American firms that did the same is unknown; next week's Volcker Committee report on private companies in the oil-for-food scandal will reveal at least some of them.

What kind of company brings oil-for-food a few miles from Washington? So far, the only answer is a shadowy one. There is no directory listing for a Midway Trading in the Reston area and in the past ten years there is no mention of the company in any major Virginia or Washington newspaper. Yesterday we called the only listed company in Reston called "Midway" for comment -- Midway Oil Holdings, Inc., an offshore holding company with offices in Switzerland and Greece -- but the calls went unanswered, as did an email.

All of this confirms that the reach of the oil-for-food scandal is long, uncertain and shadowy. Mike Holtzman, spokesman for the Volcker Commission, would not comment yesterday, but Manhattan District Attorney Robert Morgenthau got to the point. "The oil-for-food program was set up as a way for the Iraqi people to receive humanitarian goods and not to line the pockets of the ruling party," he said. Midway will now have to pay $250,000 in fines for its offense. That is a tiny amount considering the suffering and tyranny it helped perpetuate.

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Romanian Minister of Economy and Trade Codrut Seres announced that Hidroelectrica puts on sale three chains of micro-hydro power stations in Romania, ACT Media news agency reports.

Minister Codrut Seres emphasized that this did not mean the privatisation of the company, but a sale of assets whose maintenance was very costly for Hidroelectrica.

Already some of these micro-hydro power stations are 20 years old, but the investments have not been finalized, a situation that makes necessary that private investors and the establishment of some joint companies are needed.

Codrut Seres assured that Hidroelectrica restructuring will not lead to redundancies, but on the contrary, new workplaces are going to be created because the micro-hydro-power stations earmarked for sale do not have at the moment qualified staff.

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SOFIA (AFX) - The European Commission has approved a shortlist of six bidders to tender for a Bulgarian government contract to build a new bridge to Romania over the Danube, the transport ministry said Wednesday.

First on the list is a consortium of German-based Bilfinger-Berger AG and Belgian NV Besix SA.

A joint venture of French Bouygues Travaux Publics, Bulgarian Transstroy Varna PLC and Italian Rizzani De Eccher comes second, followed by a joint venture of German Zublin AG, Austrian Alpine Mayreder Bau GmbH and French Eiffel Construction Metallique.

Spanish FCC Construction SA is the fourth shortlisted bidder, followed by two more joint ventures - of German Hochtief Construction AG and Spanish Obrascon Huarte Lain SA, and French Vinci CGP, Bulgarian Glavbolgarstroy AD and Moststroy AD, a ministry statement said.

The shortlisted companies have 90 days to submit their bids for the tender procedure.

The project will connect the Bulgarian city of Vidin, in the northwest of the country, and the Romanian city of Kalafat, the second such bridge over the Danube river.

"It will consist of four car traffic roadways and a railroad, together with their adjacent infrastructure...and cost 226 mln eur," the statement added.

The Bulgarian government will contribute 60.8 mln euros to the project. A European Union pre-accession programme ISPA will donate 70 mln euros, German Kreditanstalt fuer Wiederaufbau (KfW) 20 mln euros, and the French Agency for Development five million euros.

The government will also receive a further loan of 70 mln euros from the European Investment Bank to make up the rest of the amount.

The transport ministry plans to choose a bidder and sign the building contract by mid-2006. The company will then have 38 months to complete construction and have the bridge ready in 2009.

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Romanian regulator, the ANRC, has reported that the number of telephony subscribers to alternative fixed line networks rose by approximately 300% in the first half of 2005 to reach 165,349 at the end of June, representing a market share of 3.86%. Overall, the alternative telcos reported 185,323 subscribers; the total number of subscribers to fixed telephone services in the country reached 4,350,807, the vast majority ? 4,165,484 ? served by incumbent RomTelecom.

At the end of June 2005, the ANRC reported 63 alternative providers operating in the electronic communications market, 24 of which offered services to business and residential users through their own networks. 42 of the alternative companies offered telephony services, via other providers' networks, to 19,974 subscribers. The number of companies providing fixed-mobile services increased from 17 at the end of 2004 to 24 at mid-2005.

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MOSCOW, October 19 (RIA Novosti) - Russian oil giant Lukoil's refining unit in Romania has secured a long-term $82 million loan from the International Financial Corporation (IFC) to pay for upgrading expenditures in 2003 and 2004, Lukoil said in a press release Wednesday.

The loan will be paid to Petrotel Lukoil in two tranches. The IFC will provide $35 million from its own funds, and will obtain the remaining $47 million from a syndicate of private banks led by the Dutch bank ING.

"Engaging the IFC as a creditor and a fundraiser will make it possible for Lukoil to obtain 'long' money on competitive terms, something not available on the banking market," the press release said.

Petrotel Lukoil's 2003-2004 upgrading program, through which 18 old facilities were renovated and three new ones constructed, was aimed at improving the refinery's industrial efficiency and environmental safety. As a result, the degree of oil refining was extended by 7 percent points, to 95%, and the emission of pollutants was halved.

Before the end of 2005, the refinery will shift to Euro-3 and Euro-4 production standards, Lukoil's press release said.

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By Patrick Cockburn

Published: 20 October 2005

Oct. 19 2005

Press Release - International Finance Corporation

The International Finance Corporation, the private sector arm of the World Bank Group, will provide a ¤14 million loan to Compania de Navigatie Fluviala Romana Navrom S.A. (Navrom), Romania's largest private sector river shipping company. Navrom is majority owned by Transport Trade Services S.A., a large, privately owned Romanian freight forwarder and transport company. IFC?s financing will be used to upgrade Navrom's fleet of pusher boats, improve efficiency, reduce operating costs, and help Navrom meet EU environmental requirements.

?IFC is delighted to help a leading Romanian transportation company expand its business and improve its quality of service. Our investment provides long-term financing, which is still difficult for Romania?s local companies to obtain,? said Francisco Tourreilles, IFC's Director of Infrastructure.

Shahbaz Mavaddat, IFC?s Director for Southern Europe and Central Asia, added, ?IFC?s loan underlines our strong commitment to support the development of Romania?s private sector as the country moves toward accession to the European Union.?

Road traffic congestion in Germany and Austria is reaching volume levels, making sea and river transport an increasingly attractive alternative. Established in 1890, Navrom is the principal user of the port of Constanta and is Romania?s largest river shipping company. This former state-owned shipping company is a major owner of ships on the Danube, with over 400 barges and pushers. Its primary business is the efficient transport of bulk cargo. Navrom?s parent company, TTS (Transport Trade Services) S.A, was founded in 1997 and has grown into one of Romania?s largest logistics companies.

The mission of IFC is to promote sustainable private sector investment in developing and transition countries, helping to reduce poverty and improve people?s lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. From its founding in 1956 through FY05, IFC has committed more than $49 billion of its own funds and arranged $24 billion in syndications for 3,319 companies in 140 developing countries.

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Europa Oil & Gas has signed the construction contract for the Bilca Gas Development in Romania.

The contract was awarded to Condmag SA, Brasov and Inspet SA, Ploiesti, both large Romanian contractors. The installation comprises the production facilities, flowlines and export lines for a complex of three gas fields (Bilca East, Bilca West and Fratauti) situated in the EIII-1 Brodina Block, in which Europa holds a 28.75 per cent. interest. The work will commence immediately and the facilities are expected to be completed in early 2006.

The Bilca and Fratauti gas discoveries were drilled between May 2004 and March 2005 and flowed at rates between 6.3 mmscfpd (approximately 1,000 boepd) and 12.7 mmcfgpd (approximately 2,000 boepd) respectively.

The Brodina Block contains a further Bilca 'look-a-like' prospect (Costisa-Radauti-1) for which drilling consent was obtained from the Romanian government earlier this month. The Directors anticipate that this well will be drilled in 2006. In addition, work will continue to identify further prospects on the Block with a seismic survey planned for early 2006.

Paul Barrett, Managing Director of Europa, said:
"The continued progress on this project demonstrates our commitment to the program we set out in our AIM prospectus. This project is on track to increase our production substantially in 2006 whilst the parallel exploration work in Romania is expected to increase our reserves and resources further over the coming year."

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16:31 - 19 October 2005 - The Romanian companies improved their profitability and reduced the level of debts in 2004 as compared to the previous year, and this trend is expected to continue in 2005, according to a report by the National Prognosis Commission (CNP), ACT Media news agency reports.


Two thirds of the Romanian companies reported profits in 2004, most of them operating in industry, trade and constructions.

More companies with a turnover larger than 9 million euros and over 250 employees derived profits in 2004 compared to 2003, when only 69 percent reported profits.

The number of SMEs that reported losses tripled in 2004, reaching 77,000.

Microenterprises were profitable in 2004.

The rate of profitability doubled in 2004, from 3 to 5.7 percent.

The private sector was the most profitable with 6.6 percent, while state companies reported only 1 percent profit of their turnover.

CNP President Ion Ghizdeanu said that three factors will contribute to increasing the companies' profitability in 2005.

The introduction of the flat tax, which helped the companies capitalise, the investment in new technologies and production facilities, as well as the more accessible crediting which allows companies to make loans and invest in production.

Source: ACT Media News Agency and reporter.gr

The privatisation of all 16 subsidiaries of weapons manufacturer and exporter ROMARM might take between nine and 18 months, the national company's director Pavel Matiu told a news conference on last Wednesday. The subsidiaries had been put up for privatisation last year, he explained, adding that letters of intent were received for all of them, being aimed at association, asset purchase or full acquisition.

World-renowned weapons firms like Glock, Steyer or Rheinmetal are among the companies interested in ROMARM subsidiaries. There is also a request from a foreign company to set up a joint venture at Electromecanica plant based in the southern Ploiesti city, by establishing a centre to make last generation anti-tank rockets, Matiu announced. There is also a U.S. group of firms interested in the privatisation of four ROMARM subsidiaries, he added.

The procedures for the privatisation of the 16 subsidiaries are complex, since the Romanian side wants the transactions to be transparent and at the same time to get a good price, the director cautioned. "We do not want to get rid of these subsidiaries at all costs," Matiu said, adding that the offers of those who think ROMARM is a "field of scrap iron" will not be considered.

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Montana, the American dealer of Tractorul UTB SA Brasov-based company (north of Bucharest), has recently concluded a contract for one thousand tractors to be exported annually to the U.S. during the next five years, Adevarul daily reports on Thursday. The contract can be extended for three more years.

"This is the second important export contract we have signed this year, after the one concluded for 1,200 units to be exported to Turkey. What is important is that the new products we have been manufacturing in Brasov are demanded on the foreign market. We also negotiate now with some other foreign partners," the daily quoted Titus Serban, general manager of the company, as saying.

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Czech Zentiva Company has finalised the acquisition of a 51-percent majority stake in the Bucharest-based Sicomed medicine maker and took over Venona Holdings Limited, its majority shareholder and investment vehicle. To finalise the transaction, Zentiva paid $102 million and $1.8 million to recover Venoma's balance sheet.

The operation is aimed at bringing the investment vehicle's activity to an end. Zentiva also informed it would launch a public bid to take over the remaining 49 percent of Sicomed shares, at a price at least equal to that paid for Venoma ($0.47 for each share). Zentiva will pay $200 million to fully take over Sicomed.

Sicomed's take over by Zentiva represents the most important strategic investment of a foreign company on the Romanian pharmaceuticals market. Financial investment companies SIF Muntenia, with 12 percent of the shares, and SIF Oltenia, with 10.14 percent of the shares, are the most important minority shareholders in Sicomed.

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Romania's textile production needs an annual average growth rate of 3.4 percent, and the textile export of five percent, by 2010, says a National Export Strategy. In 2004, the Romanian textile industry accounted for 5.5 percent of GDP, 9.9 percent of the industrial production and 34 percent of the exports. Exports in the field stood at 6.07 billion dollars in 2004, compared with 2.913 billion dollars in 1999.

Over 8,900 companies are active in this sector, employing more than 450,000 people, or 34 percent of the workforce in Romania. Most Romanian companies work in a forwardly processing system, they offer labour and equipment, and the clients come with raw materials, design and marketing. Two thirds of Romania's exports go to EU countries. In 2004, the first five biggest trade partners of Romania were Italy, Germany, France, the UK and Turkey, with 50 percent of the total exports. January through July 2005, Romania's textile exports stood at 2.4 billion euros, down 0.3 percent on the year-ago period.

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Romania's National Bank is not responsible for the exchange rate level, merely for the exchange rate regime, meaning the exchange rate free floating linked to a certain foreign currency or to a currency basket, National Bank Vicegovernor Eugen Dijmarescu stated on Tuesday in an interview given to Rompres.

Dijmarescu underscored that, although BNR announces an exchange rate daily, the bank does not set up the rate because it is only one operator on the market together with other 40 banks, financial institutions, investment funds and tens of thousand of customers of the respective currency market. "The central bank does not have counter-attack resources to use without boosting costs some other part.

Moreover, currency market dimension increased considerably together with the consolidation of the market economy and the attractiveness degree of the Romanian market in its NATO post-accession interval and till the moment of its European Union integration, and later to the euro-zone", BNR Vicegovernor explained.

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Aluminium alloy producer Alprom Slatina will invest $9 million this year in new equipment.

?Investments are meant to increase sales of high value added products and reduce the electricity consumption.

Alprom will produce panels.

There is a large deficit on this market worldwide at the moment, and our meeting international standards will help us achieve the objective of increasing the output to 120,000 tons per year,? Marian Nastase, deputy chairman of the Alro board said.

Aluminium producer Alro Slatina, controlled by Marco Industries group, holds majority stakes in Alum Tulcea and Alprom Slatina.

The main sale markets are the European Union, Turkey and Balkan states.

Alprom also exports to the USA, Israel, South Korea and Saudi Arabia.

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The structure of the issuers listed on the Stock Exchange after the merger with Rasdaq market will be regulated through an instruction from the National Securities Commission (CNVM).

?The two stock exchanges sent us a list with the companies that are currently floated and with their characteristics.

There are issuers who fulfill the admittance terms on the regulated market, while the other ones will be floated on an alternative transacting system?, declared Miclea at the Capital Market Forum, organized by Finmedia.

The merger between the two markets is expected to finalise at the end of the year.

Miclea mentioned that for some companies, there were no transfers from the moment they were listed or that the transactions have been sporadic.

According to the representative with CNVM, the instruction project will be presented next week and that debates with the representatives of the capital market are scheduled afterwards.

The regulation 13/2004 regarding issuers and the operations with securities stipulates that the shares in a commercial company can be floated on a regulated market if the company has an anticipated capitalization of RON equivalent of EUR 1 mn at least.

If the capitalization cannot be anticipated, the value of the capital and of reserves, including the company?s profits or losses during the latest financial year has to be of RON equivalent of EUR 1 mn at least.

The company must have been operational in the past three years prior to the request for admittance on the stock exchange and it also must have established and reported the financial statuses due for the same interval.

The new architecture of the Bucharest Stock Exchange will include the regulated market and an alternative transitioning system (ATS), meant for the companies that do not fulfill the criteria to be listed on the main market.

Both markets will include two segments, namely cash (shares and bonds) and derivates (futures and options).

?We hope to have all the documents needed for the authorization of the Main Depository and of the market operator resulting from the merger between BSE and Rasdaq.

The authorization of the two institutions is a very significant element, representing a commitment assumed in regards to EU,? added Miclea.

Siminel Andrei, president of the Brokers Association, estimates that the number of the issuers to be floated on the regulated market will range between 200 and 300, while the number of the companies included in the alternative transacting system will be approximately 1,900.

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Global software major Wipro Ltd will be opening its first overseas BPO facility in Romania as a near shore centre in eastern Europe.

"The new BPO facility will be located in Romania to expand our language capabilities for voice, transaction processing and level one and level two (L1 & L2) support services for infrastructure management," Wipro CFO Suresh C. Senapaty told IANS here Wednesday.

Wipro forayed into IT-enabled services, including the BPO segment, in 2002 by acquiring Spectramind and merging it with its global IT services business unit subsequently.

With Europe accounting for about 33 percent of its global IT business revenue during the second quarter (July-September) of the current fiscal (2005-06), the company has decided to locate its service offerings in the lower end of the value chain closer to the growing number of customers in Europe.

According to Wipro chairman Azim H. Premji, while onsite and offshore locations operate as per customer requirements, near shore centres are meant to accelerate growth and raise the comfort level of clients located in geographic regions.

"For instance, in the US market, which generates the lion's share of our revenues, we have four-five facilities spread from east to west," Premji said while announcing the financial results for the second quarter.

"Similarly, we have been scaling up our presence in western Europe with centres in Germany, Sweden, Finland and Britain (outside London). So is the case in Japan (near Tokyo), China (Shanghai and Beijing) and in the Gulf (Sharjah and Dubai).

"We believe it's a win-win situation for our customers as well as the company to be located nearer to them in providing IT-enabled and BPO services which rank under L1 and L2 service lines."

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LaDorna Group, one of the major players in the dairy industry, estimates it will reach turnover worth 100 million euros in 2007, as it plans to enter new market segments and to expand its raw material collecting system, ACT Media news agency.

This year, following investments worth more than 5 million euros, the group started operating two new production facilities, LaDorna Agri, producing yoghurt and cheese, and Lactate Dobrogene, focused on feta cheese and pressed cheese.

LaDorna group, owning nine production units in Moldova and Dobrogea, this year expects a turnover worth 45 million euros, 32 percent higher than in 2004.

LaDorna also completed investments worth more than 14 million euros in the implementation of 120 euro-farms, with 50 percent of the investment covered from Sapard funds.

The 120 units joined another 50 farms finalised in 2004.

Net benefits for a farmer joining the euro-farms programme initiated by LaDorna stand at 500 euros/months and these will get to 1,400 euros per month when the farms are paid off after an average period of 6 years.

Romania negotiated with Europe an annual milk production rate of 3 billion litres, but, at this moment, the milk industry only processes about 1.2 billion litres.

LaDorna also started exports of bio products this year, mainly to Greece and the Netherlands.

Source: ACT Media News Agency and reporter.gr

15:20 - 19 October 2005 - Cement producer Holcim Romania plans to invest around 105 million euros into upgrading production facilities over the next three years, ACT Media news agency reports.

The largest cement line in Romania, at Campulung Muscel will replace three existing ones and will have a capacity of 4,000 tonnes of clinker.

The other major project included in this investment project is the construction of a new mixing bed and storage facilities for raw materials, having a capacity of 28,000 tonnes each.

Holcim was among the first companies to invest in the cement industry of Eastern Europe after 1989 and is present in over 70 countries.

In Romania, Holcim operates three cement plants, 12 concrete mixing stations and four aggregate facilities.

Source: ACT Media News Agency and reporter.gr

Romanian tourism is suffering severe losses because of the bird flu, it appeared Wednesday.

Representatives of different tourism agencies and firms reported that losses worth over a few million euros have been registered following the first confirmed bird flu cases. Hotels in the Danube delta are deserted and cruise boats have remained moored to the banks for over a week, hotelier Daniel Damian said at meeting in the southern town of Tulcea.

The industry has written a letter to Prime Minister Calin Tariceanu demanding subsidies and tax breaks to compensate them for their losses.

New cases of suspected bird flu emerged in Romania Tuesday as the country teamed up with neighbouring Moldova and Ukraine to fight a disease that is spreading fear and has already hit the tourism industry hard.

The deadly Asian strain of avian influenza, H5N1, was confirmed to be Romania on Saturday, two days after tests showed it had spread to Turkey. The same strain has killed 60 people in Asia over the past three years.

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Information-Communication Minister Chin Dae-je signed a memorandum of understanding (MOU) with his Romanian counterpart in Seoul on Tuesday (Oct. 18) to promote bilateral cooperation in information technology (IT).

Signing the revised version of the MOU exchanged in 1991 between the two countries, the two ministers agreed to strengthen cooperation in more fields including IT policy and regulations, broadband network, digital media broadcast (DMB) and mobile communication.

Minister Chin introduced Korea's state-of-the-art infrastructure for the ultra high-speed Internet and the government's IT 839 policy, proposing close cooperation in the advanced IT sectors, including DMB and WiBro.

Romania has been focusing on expanding its infrastructure of the IT industry recently and its growth potential is high. Its year-on-year market growth rate in 2004 posted 20.2 percent.

?The MOU is expected to serve as a good chance for South Korea to advance into European IT markets, using Romania as a foothold,? an official at the ministry said.

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The committee for the privatisation of Banca Comerciala Romana (BCR) has opened the sealed bids submitted by seven bidders.

Dexia, Erste Bank AG, BNP Paribas, Banco ComercialPortuguese, Deutsche Bank AG, the National Bank of Greece and Banca Intesa.

According to the privatisation legislation in force, the committee verified the bids lodged for the acquisition of a 61.8825% stake in BCR.

When the committee has finished the verification, it will unveil the list of the bidders that have fulfilled the knock-out conditions.

On October 20, the committee will open the technical bids, after which the financial bids will follow.

The committee will then announce the name of two banks that will start actual negotiations for the take over of the stake in BCR, in two weeks? time.

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Stock exchange does not reflect the state of the economy, says expertThe present-day capital market reflects the structure of the economy in 1989, stated brokerage company Intercapital Invest director Razvan Pasol. Most of the listed companies represent the industry while most of the capitalization occurs in the financial services and raw materials sectors. This is the result of the "mass privatization program" carried out in 1995 under which each person over 18 was awarded a voucher that could be exchanged for a share stock in one of the companies put up for privatization.

The National Securities Commission (CNVM) official Daniel Miclea revealed that for many companies, few or no transactions had been carried out since their listing on the stock exchange.

CNVM will soon regulate the new structure of the capital market after the merger of the Bucharest Stock Exchange (BVB) with the Romanian Securities market (Rasdaq). Miclea said there were listed companies that did not yet comply with the entry conditions for the unified capital market. These companies will be listed on an alternative trading system.

One of the rulings regarding listed companies and securities transactions stipulates that the shares of a company are acceptable on a regulated capital market if that business has an anticipated capitalization of at least one million euros. If the capitalization cannot be estimated, the value of the capital and reserves, including profit or loss in that financial year, must be at least one million euros.

Another condition for admittance on the regulated stock exchange is that a company must function for at least three years prior to its listing.

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The national price of thermal energy will be increased by 20%, from November 1, from 24.8 euros to 29.7 euros per giga-calorie, according to a statement by the National Authority for Energy Settlement (ANRE).

Two new payment methods will be introduced, similar to those used for the payment of electrical energy.

Consumers will have the possibility of choosing a tariff representing only the costs of thermal energy or paying for both hot water and heating costs in the same bill.

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Net assets of mutual funds reached 105.6 million euros at the end of the third quarter, according to data from the National Union of Collective Investment Organizations (UNOPC). The value is close to that for the whole of last year, recorded at 114.6 million euros. The mutual funds sector as a whole registered 11.7% growth in the first nine months of the year, taking into account a cumulated monthly inflation rate of 5.9%.

At the end of September the number of investors reached 68,494 out of which 1,228 were legal entities. In the same month the assets of local mutual funds rose by 10.7% over the previous month as three new ones entered the market. In August, monetary funds lost almost six percent of the market share while securities funds grew by five percent.

Dorin Danescu, general director of Omniasig's investment division SIRA, estimates that securities will continue to grow to comprise 50% of the mutual funds market by the end of the year as fixed income instruments have few investment opportunities and monetary funds cannot go past the inflation rate after the reduction of deposit interest rates.

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Petrom yesterday inaugurated its first fuel station under the new brand name of PetromV. The oil group controlled by Austrian OMV will use the new brand for all newly constructed stations through which it plans to impose a new concept and provide additional services besides those normally offered by a gas station. Consequently, in each PetromV station there will be a Viva store, also available in OMV's own network, restaurants and children's playgrounds.

The first PetromV gas station is operated through the Full Agency system which consists of allowing a selected partner to administer the station on behalf of Petrom, for a commission. The Full Agency system, announced by OMV's president Wolfgang Ruttenstorfer will gradually be extended to the whole distribution network of Petrom.
According to the company's officials, total investments to set up a fuel station amount to one million euros. By yearend, approximately 20 stations will function under the PetromV name while in five years from now their number is expected to reach 250.

The modification of the distribution network management system and the new distribution concept is part of the new measures announced by OMV after the takeover of the Romanian oil producer last year. At the same time Petrom gave up most of its suppliers of non-oil products, maintaining only 30 out of the initial 300. Petrom General Director Gheorghe Constantinescu stated in August that the main performance indexes of the company were still well under the European average and that the re-structuring program was meant to catch up with the European competition in preparation for accession.

The investment plan recently announced by OMV involves a total volume of three billion euros by 2010, out of which 500 million euros represent marketing activities.

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Best Western forecasts higher turnover.

Best Western hotels in Romania are hoping that this year's turnover will reach 12 million euros, 20% higher than in 2004. The hotel chain has also developed a series of expansion plans for 2006.

"We are having discussions with several units and we oriented our strategy towards the affiliation of new hotels that are under construction. The most interesting step for the near future is in Brasov where I think we will affiliate a hotel in 2006", stated Malin Malineanu, the general director of New Concept Travel, the company that represents Best Western in Romania. More than 4,000 hotels are affiliated to the Best Western International chain worldwide.

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UniCredit Romania has opened two new branches in Satu Mare and Focsani. The bank now owns 40 units throughout the country of which 13 are in Bucharest.

The opening of the new branches is part of the bank's strategy of expanding at a national level by covering the regions with high economic potential.Rasvan Radu, the executive president of UniCredit Romania stated that by the end of the year ten other branches will be launched as part of the financial institution's plan to develop into a national bank.

UniCredit has been operating in Romania since 1997 and the bank owned 426 million euros worth of assets at the end of the first semester of this year.

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Winmarkt will invest over five million euros in the modernization and the extension of a commercial center in Galati and the renovation of a store in Bistrita. According to a company press release both commercial centers will open in December.

Winmarkt will allocate four million euros to the Galati project and one million to that in Bistrita. The group also announced the completion next year of the Ploiesti project Winmarkt Grand Center. Winmarkt currently owns 16 commercial complexes totaling 115,000 square meters located in 13 Romanian cities.

By the end of 2008 the company intends to extend its network to 25 commercial centers. In the first six months of the year it had a turnover of over three million euros and a net profit of 1.93 million euros.

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The total value of transactions taking place in 2005 at the Bucharest Stock Exchange (BSE) is approaching the EUR 2 bln figure, which is more than the average for the past years of EUR 5 to 600 M, declared Sergiu Oprescu President of BSE, while participating at the Capital Market Forum. Oprescu declared that for the BSE 2005 is a reference year in its evolution because the stock exchange has become a joint-stock company and because it celebrates 10 years since its re-opening in Romania. Also, by the year end, the merger with the Rasdaq Electronic Stock Exchange is due to be finalised. This will imply higher liquidity, reduced operating costs, better information system and a more active presence on the international market, Oprescu said.

The National Commission of Securities (CNVM) is currently preparing the structure of issuing companies that will be listed by the new institution, declared Daniela Miclea Manager of the Authorisation and Regulation section of CNVM. The new stock exchange wil have a regulated market and an alternative trading system (ATS), for companies that do not meet all listing criteria. Up to 300 companies will be present on the regulated market and 1,900 in the ATS.

The merger will create an institution capable to interconnect with European ones, added Siminel Andrei, President of the Romanian Brokers Association. He said that a common stock exchange with Chisinau is also in sight, but that the market in the Repulic of Moldova has to mature. The political factor still has a role in the Moldavian market, Andrei stated, adding that on the other side the Romanian market is still not where it should be. Romanian companies have so far obtained financing from banks, and currently there is need for a more powerful capital market to finance and support local companies and implicitly improve the living standard of people working for them.

In the view of Razvan Pasol, the Manager of Intercapital Invest brokerage company, The Romanian market also needs to be more homogenous. He pointed to the fact that 25 companies involved in the raw materials business represent 61.8 per cent of the BSE capitalisation, and that the industrial, services and technological sectors are not well represented having only 6, 5 and 17 per cent respectively. Pasol mentioned that the most profitable sectors in terms of risk and return rate, are so far financial services, pharmaceuticals and consumer goods. ?The growth perspectives in Romania would justify bigger percentages? Pasol concluded.

Proprietatea Fund shares to be listed by mid 2006

The shares of the Proprietatea Fund will be listed by May or June next year, according to Nicolae Ivan, state secretary Within the Ministry of Public Finance. He indicated that the state will decide in the first half of 2006 the winner of the public tender for administrating Proprietatea Fund. The fund will take the form of a joint stock company, and is destined to offer compensations to the former owners of nationalised houses that cannot be given back in kind. Proprietatea Fund will hold stakes at 100 different companies, among which BCR, CEC, Petrom, Electrica, Distrigaz, Romtelecom, CFR, Tarom and Alro, and additionally will have part of the claims Romania has to different states. Total value of stock is EUR 4.5 bln.

Gains on capital market to be taxed 16 pc

The gains obtained on the capital market will most likely be subjected to the unique taxation quota of 16 per cent, declared Varujan Vosganian, President of the Budget and Finance Commission of the Senate. The decision to raise the level of this tax from 1 per cent to 16 was taken due to the fact that huge gains of some individuals were only symbolically taxed, while the low level of fiscality has not so far attracted more investors on the market. Romania has a lot of taxes under the average level of the EU, but has severe problems like those related to infrastructure and with floods affected areas said Vosganian. In his opinion the capital market has a lot of potential and should be able to develop the demand and offer, and welcome more investors.

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Forex transactions in Romania has increased from an average of EUR 200 M in early 2004 to a current over EUR 500 M, and peaks of 700 - 900 M were recorded some days, Vice-Governor of Romania?s Central Bank (BNR) Eugen Dijmarescu told Rompres news agency in a recent interview. ?Whereas forex transactions related to foreign trade payments were 40 percent of the total monthly forex operations in Bucharest, their weight has declined to only 20 percent now, which obviously indicates that the forex market is strongly determined by purely financial flows,? the BNR official stated.

Dijmarescu pointed out again that BNR no longer has any task in establishing the exchange rates but it has not hesitated about stepping in to keep the exchange rates within reasonable limits, when it was needed, so that the activities of Romanian exporters may not be damaged.

?The fact that exports this year have advanced, with all the strengthening of the local currency, was possible also thanks to the market interventions of BNR to moderate too strong pressure on the appreciation of the local currency,? he said.

Dijmarescu also insisted that Romanian exporters should improve productivity and product quality, as the exchange rate is liberalised and can no longer be an asset for them.

?I am expecting the attractiveness of the local currency to keep high in 2006, not only because Romania will be closer to entering the EU, but also because the free circulation of capital will be full in the following 12 months: access of non-residents to state securities will be liberalised, as well as the access of residents to operations with monetary instruments on foreign markets, including operations with derivatives in and outside Romania denominated in lei and foreign currency. The leu is expected thus to be sought after and the forex inflows for lei purchases are expected to go up,? the deputy governor said. Unconnected to the matter at hand, Dijmarescu pointed out that BNR has provided for some facilities for the local companies which activity depends exclusively on imports and exports.

?There are some companies which business is overwhelmingly dependent on imports and exports. For such companies, the National Bank has already designed some foerx payment facilities (including the right to pay and be paid foreign currency in agreement with the parties to their business contracts; exemption from limitations in forex loans) and encouraged credit institutions to offer contracts to cover exchange rate spread risks,? Dijmarescu also said.

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The number of clients for the land line services provided by alternative operators has increased by around 300 per cent in the first half of this year, vs. the level registered by the end of 2004, to 185,323 subscribers, according to a report of the National Regulatory Authority in Communications.

On June 30, there were 243 authorised providers of land telephony services, of whom 64 active. The total number of subscribers served by them, through their own network or through the networks of other providers, was 4.35 million, down around 1 per cent vs. the level reported by the end of the past year. ?The growth of the number of alternative firms has not compensated the number of subscribers who have left RomTelecom, and thus we have witnessed a fall of the number of subscribers,? explained ANRC president, Dan Cristian Georgescu, on Tuesday, at the International Broadband Communications conference.

Two years after the liberalisation of the land telephony market, RomTelecom was holding, by the middle of the year, a market share of 96.2 per cent, the balance representing the total share of the alternative operators. According to the same report, there were 60 authorised providers on the mobile telephony market, four of them active. The number of those who used the mobile telephony services was 11.3 million, the penetration rate of the mobile telephony being 52.5 per cent of the total population.

?If in the case of the land telephony we have noticed a fall of the number of subscribers, the number of users of the mobile telecommunications has increased by around 11.4 per cent in the same period,? Georgescu said.

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Libra Bank will close 2005 with USD 100 M assets, higher than the initial estimations; the increase as opposed to December 2004 is more than 125 per cent, the Libra Bank president, Axel Hummel, stated on Tuesday.

?The bank?s development registered this year exceeds the most optimistic provisions and reflects the efforts made for creating tailor-made services and products,? Hummel said. The former general manager of ProCredit Romania, Hummel took over Libra Bank?s management in May this year. He had previously worked for Citibank Germany, Commerzbank and KPMG Consulting AG.

According to the bank?s data, the assets? volume amounted at the end of September to USD 81.2 M, result which assures a 0.2 - 0.3 per cent market quota.

The credits? portfolio has been registering a significant increase every year. Thus, the loans reached USD 6.44 M in 2003, increased to USD 18.05 M in December 2004 and rose to USD 46.2 M at the end of this year?s first nine months. The deposits? dynamic also registered a positive trend, as the deposits made by the bank?s clients amounted to USD 61.1 M after this year?s first nine months, in comparison with USD 27.38 M at the end of last year and with USD 15.9 M in December 2003.

Hummel said the bank is currently focussing its development efforts on the market segments represented by the liberal professions, such as doctors, jurists or chemists, small and medium companies and the retail segment. For 2006, the credit institution?s management wants to open 16 branches, to enter the credits? segment, to introduce an IT system and to assign an increased attention to the IMM segment.

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The private pension system will become operational next summer and should allow contributors to set up a separate account to enable them to receive higher pension with lower contribution.

The private pension system would have two tiers: one in which both employer and employee can contribute and another in which the employee can opt for contributing even if the company does not want to participate. The premiums would be deductible.
According to Mihai Seitan, the president of the National Pensions and Social Insurance Department (CNPAS), in the second system a part of the contribution to the public pension system would be managed by a private company. Thus, pensioners can avail both the mandatory public pension and the optional private pension.

The number of participants in private pension funds could increase to a third of the working population. According to modifications proposed by Minister of Labor Gheorghe Barbu, contribution to the funds could be mandatory for employees aged 35 years and above.

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Employers in Romania will get a 0.5 percent cut in payroll taxes, the government decided on Tuesday.

Beginning on Jan. 1, 2006, employers will pay a 2.5 percent contribution for unemployment benefits, down from 3 percent, according to a government decree approved Tuesday.

"The changes reflect the (government's) commitments to tax relief," said Labor Minister Gheorghe Barbu.

The government is under pressure to reduce payroll taxes, which now stand at 49.5 percent, among the highest in the region. It already announced plans to continue to cut payroll taxes in the following years.

However, the International Monetary Fund is pressuring Romania to limit its budget deficit under control and reduce inflation.

The government said earlier this month that it wants to cut the budget deficit from 1 percent to 0.5 percent and inflation from an estimated 8 percent to 5.5 percent.

Romania already cut income taxes this year, when it introduced a flat tax of 16 percent, which replaces corporate income taxes of 25 percent and a progressive rate tax of 18 percent to 40 percent for individuals.

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0913 GMT [Dow Jones]
UBS says Banca Intesa's (BIN.MI) dividend policy, with its 6.2% yield, would not be affected by a purchase of Banca Comerciala Romana (BCR.YY). Says Intesa's Tier-1 ratio would remain above 7% for prices up to EUR3.8B for all of BCR, which would be 3.5 times book value. Intesa is one of many banks bidding for BCR. UBS keeps buy rating and EUR4.6 target on Intesa. Intesa +0.1% to EUR3.85. (CRE)

The region of Flanders, Belgium will finance eight projects in Romania worth 700,000 euros, in the development of rural tourism, environmental protection, assistance for EU accession, the development of an emergency regional plan and health care, the Romanian Ministry of Economy and Trade announced, according to ACT Media news agency reports.

The projects are included in a protocol signed during the Joint Commission on Economic Cooperation meetings between Romania and Flanders, Belgium.

The Belgian authorities examine the possibility of funding another project, the ninth one, worth some 200,000 euros.

Participants in the Flanders-Romania Joint Commission negotiated programmes for priority fields of the two sides, such as economy, foreign trade, environment, agriculture, transports, infrastructure, health care, communications, culture, education and tourism.

In the period ahead several projects will start on non-repayable funds received from the Flanders Autonomous Region, their value amounting to 900,000 euros.

It is also important for Romania to be backed by Belgium in the accession to the European Union, first of all by ratifying the Accession Treaty.

Trade between Romania and Belgium last year amounted to 767.4 million euros, up by 36.8 percent from 2003.

Exports amounted to 374.2 million euros and imports to 393.2 million euros.

Commercial exchanges between Romania and Belgium in the first eight months of this year were worth 544.8 million euros, rsing by 13.5 percent since last August.

The main Romanian exports were textiles, electrical machinery and equipment, vehicles, plastics, rubber, furniture, metal products, foodstuffs and wood.

Imports from Belgium include textiles, chemical products, machinery, electrical appliances, vehicles, live animals, foodstuffs. As many as 1,392 Belgian joint ventures were registered in Romania at end-August, having an overall invested capital of 64.8 million euros in direct investment.

This places Belgium 19th in this respect.

The investments were made in industry, professional services, retail trade, wholesale trade, tourism, agriculture, construction and transports. The largest Belgian joint ventures are Orange Romania SA, Victoria Business Plazza SA, BMT Romania SRL, Romtex Trade SRL, Coilprofil SRL, Transbitum SA, Victoria Invest Romania SRL, Megaprofil SRL, East European Partner Ltd SRL, Martens SA.

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The 2006 health care budget has been put at 4.9 percent of gross domestic product (GDP), up from 3.4 percent of GDP this year.

The Health Ministry has been allotted by 15 percent more than in 2005 compared to the non-revised budget, minister Eugen Nicolaescu said. He announced that the budget of the Health Insurance National Office will increase by about 8 percent next year, while the Budget Law will stipulate that all the amounts collected by the Health Insurance Single National Fund will continue being distributed for the health care system alone.

The 4.9 percent of GDP will be supplemented by the National Health Fund estimated at some 200,000,000 euros. The funding of health care will be three-pronged - from the state budget, the national fund and the national special health care budget, the minister explained.

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The largest investment fund in the technological investment field in Eastern Europe, MCI, foresees for the next few years investments of almost 50 million euros in this region, five to ten percent of them in Romania, Capital weekly reports.

The members of a MCI delegation who came to Romania to visit last week the Romanian capital stressed their fund's real interest in the Romanian IT sector. MCI official Michael Scherrer stated investments will be made in the web, biotechnology and software applications, and President of MCI, Tomasz Czechowicz, said the research conducted on the Romanian IT market until now offered positive results.

"We currently have more possibilities related to our implication in local projects," said Czechowics, also adding that the evaluation process will continue. The MCI officials voiced hope research operations in Romania will be pursued very rapidly, especially as there is no deadline.

Foreign strategic investments are also being made in mobile telephony, such as VODAFONE, that has taken over from TELESYSTEM INTERNATIONAL WIRELESS in Canada for 3.5 billion dollars its stake in MOBIFON /Connex/, and OSKAR MOBILE from the Czech Republic. FRANCE TELECOM bought some 23 percent of ORANGE ROMANIA from different shareholders for around 523 million dollars.

The company now holds 96.63 percent of ORANGE ROMANIA. COSMOTE, a Greek operator of mobile telephony, took over 70 percent of COSMOROM.

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The payments made by Sapard agency in 2005 were 176 million euros, that is 85% of all funds of 208 million euros, which should be spent until the end of the year, an agency press release shows. The total number of contracts concluded with beneficiaries is 1,719 projects of 680 million euros.

The payments made for investments made through contracted projects is 380 million euros. Of them 208 projects are within Measure 1.1 and are worth 123 million euros. Projects contracted through Measure 1.1 provide the setting up of centers for collecting and processing dairy products, for processing meat, eggs or fish. Financing is offered for the erection of vegetable and fruit storehouses and for wine.

For measure 3.1 Investments in farm exploitations, 501 projects were contracted for 49 million euros and another 43 projects are being concluded. Projects within this measure have in view the purchase of farm equipment, setting up animal farms, poultry or vegetal farms, etc.

For Measure 3.4 ? Development and diversification of economic activities, which should generate multiple and alternate activities, 403 projects have been contracted until now.

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This year's flooding produced losses of some 298 million euros to the Romanian roads network, while the rehabilitation of railway infrastructure will need funds of some 182 million euros, Romanian Minister of Transport, Construction and Tourism Gheorghe Dobre stated on last Wednesday.

For the reconstruction of road and railway infrastructure 74 million euros were assigned from the state budget, the rest being supported by credits from international financial institutions. The foreign financing sources for the rehabilitation of road infrastructure were the Council of Europe Development Bank (CEDB) - 29.54 million euros, the European Bank for Reconstruction and Development (EBRD) - 45 million and the ISPA programme - 18.3 million. The European Investment Bank (EIB) is to assign Romania a loan worth 91.05 million euros.

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Chevrolet Spark la Chevrolet and Dacia Logan are the cheapest top 10 cars on display at the ongoing Bucharest International Car Show (SIAB), Cotidianul daily reports on Thursday.

The classification of the cars with prices below 10,000 euro, taxes excluded, is topped by Chevrolet. The Chevrolet Spark costs 5,176 euro (taxes excluded). The basic version, called, is powered by a 0.8-litre petrol engine that generate 51 HP.

The most expensive version of Chevrolet Spark costs 7,016 euro (taxes excluded) and is powered by a 1-litre engine that develops 65 HP. The VAT-free price for the basic version of Dacia Logan, Ambiance, is 5,235 euro. This variant has a 1.4 MPI petrol engine that generates 75 HP. The most expensive Logan variant has a 1.5 dCI diesel engine that develops 65 HP and costs 8,670 euro (taxes included). Kia Picanto ranks the 3rd in this classification, with a bbasic price of 6,263 euro (taxes excluded).

The 1.1-litre version is powered by a DOHC LX engine that develops 65 HP. The car's top speed is 154 kmph. The most expensive variant of Picanto costs 8,096 euro (taxes excluded). The next in rankings are Opel, Fiat and Toyota, with prices starting from 7,000 euro. The member carmakers of German group Volkswagen, Skoda and Seat, have set a pricing policy starting at 8,000 euro (taxes excluded).

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The booming real estate sector's secret is out. Companies in the real estate field draw a line at the middle of the year and reported increasing turnovers, larger transactions and spectacular increases, the Business Review reports in its latest issue. "By the year end, Eurisko estimates a 3.6 million euro turnover. For the first six months of the year, land transactions and the residential for sale departments were the most active.

The reason is the development of the real estate market, where the aforementioned segments are in high demand," the Business Review cites Eurisko general manager Andrei Panculescu as saying. DTZ posted a 100 percent increase in its turnover during the half-year, compared to same period last year. A large contribution was made by the investment, industrial and valuation departments.

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The region of Flanders, Belgium will finance eight projects in Romania worth 700,000 euros, in the development of rural tourism, environmental protection, assistance for EU accession, the development of an emergency regional plan and health care, the Romanian Ministry of Economy and Trade announced in a release on Monday.

The projects are included in a protocol signed at the works of the Joint Commission on Economic Cooperation between Romania and Flanders, Belgium, it adds. The Belgian authorities are looking into the possibility of funding another project, the ninth one, worth some 200,000 euros.

"Participants in the Flanders-Romania Joint Commission negotiated programmes for priority fields of the two sides, namely economy, foreign trade, environment, agriculture, transports, infrastructure, health care, communications, culture, education and tourism. In the period ahead several projects will start on non-repayable funds received from the Flanders Autonomous Region, their value amounting to 900,000 euros.

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EU Commission's PHARE Management Committee approved, in Brussels, on October 14, the PHARE projects submitted by the Romanian Finance Ministry (MFP) for the PHARE 2005 programme extending Romania 396.9 million euros in non repayable financial assistance, MFP informs in a press release.

The EU Commission also approved the earmarking of an additional 24.6 million euros for backing up specific measures to rehabilitate the infrastructure afflicted by the floods having hit Romania this year and to prevent the effects of such mishaps.

The EU Commission has drawn up the PHARE 2005 financial proposal in cooperation with the Romanian Finance Ministry (the National Coordinator of the non-repayable financial assistance) based on the technical documents submitted by Romania.

This financial proposal also provides for the budget expected for the last PHARE programming exercise IN 2006 worth about 439 million euros.

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The value of non-governmental credits reached, at the end of August 2005, 52,352 m.RON with an average monthly growth rate of 2.9 pct since the beginning of the year, according to the National Bank of Romania.

The BNR study on « Recent evolution of non-governmental credit » estimates a level of financial intermediary of 21 pct. up against 2004 and 11.7 pct. up against 2000. Out of the 52,352 m.RON, 21,269 m.RON represent credits in national currency, 40 pct.respectively.

 The euro component of the non-governmental credit is 31,083 m.RON, 8,853 m.euro, 60 pct. respectively. The credit granted to the population reached 18,090 m.RON in August, with a monthly variation of 7.1 pct. and annual variation of 79 pct. In January, the credit to the population, according to the Monetary Report, registered a monthly variation of 0.5 pct.In January, the component in lei stood for 54,1 pct. of the total, as compared to the euro component, of 45,9 pct. In August, the credit granted to the population decreased to 50,3 pct., getting to almost the same value as the credit in hard currency which rose to 49.7 pct.

Out of the total, 13,306 m.RON stand for the net value of the consummer credit granted to the population, and 4,390 m.RON, that of mortgage financing, real estate respectively, granted to the population.

According to BNR, five banks of the system own almost 80 pct. of the credits granted to natural persons. At the level of August, the consummer credit reached 74 pct., the same value being registered in December 2003.

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Romania's IT market is estimated to grow at an annual pace of 10% and exceed $1.3 bln in 2009, with the number of people employed in the IT industry expected to go up to 37,850 in 2009, from a current 30,620, ACT Media news agency reports.

This means that over 7,200 new jobs in the IT industry will be created in the next five years, according to the findings of a recent study conducted by International Data Corp. (IDC).

Employment with software companies is currently 52% of the total jobs in the IT&C industry, a percentage expected to reach 63% in 2009, while spending for computer software is 15% of the total IT outlays.

There are 1,450 companies currently operating in Romania's IT sector that contributed $122 M to the budget in rates and taxes.

The study indicates that the IT field is still the engine for local economic development in South-Eastern Europe, having provided 124,000 jobs and $778 M in Government tax receipts.

Approximately 50% of the total number of employees in South-Eastern Europe's IT industry are working in software development and distribution, software internal services and outsourcing, whereas approximately 50% of the total receipts collected from taxes levied on the IT sector was generated by software-related services. According to the same study, more than half of the jobs and the tax receipts were generated by the activities of Microsoft.

The Ministry of Communications and Information Technology met with IT&C company officials, where they agreed that keeping the tax exemptions is necessary, as this is arguably an advantage to secure competitiveness of local IT companies, particularly in the prospect of Romania's entering the European Union and switching to the standards of the single European market.

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Imports are expected to outnumber by more than 9 billion euros exports' value this year, ACT Media news agency reports.

With regards to the current account deficit, this may fall within 8 percent of GDP, considering the transfers conducted by Romanians living abroad which are estimated at 3.5 billion euros, according to Romania's National Bank (BNR) governor Mugur Isarescu.

According to the initial forecast for this year, export increase was estimated at 15.7 percent, resulting in a total value of 25.1 billion euros, and imports' rise was 22.3 percent, resulting in a total value of 33.2 billion euros.

During January-August, Romania's foreign trade registered an imbalance worth 5.8 billion euros.

International reserves exceeded, after nine months, the equivalent of import value over 6.1 months, a level that could be regarded as a surplus, in spite of a similar situation being registered in other countries of the region, as well, according to Governor Isarescu.

On the other side, Isarescu drew the attention to the fact that having only 4.9 percent GDP growth over the first half of the year and 1.4 percent growth in industrial production, over the first eight months, may jeopardise the economic growth overall target.

Based on the forecasts that had substantiated the construction of budget in 2006, foreign trade would continue next year to have an adverse influence on GDP.

Thus, exports are expected to advance to 28.75 billion euros, and imports to 37.95 billion euros. Current account deficit is estimated to increase from 4.46 billion euros in 2004 to 6.32 billion euros in 2005 and to slightly decrease to 6.3 billion euros over next year.

The operational loss registered by BNR following sterilisation operations might not be covered this year by favourable differences resulting from reserve revaluation, on the ground of RON appreciation.

Based on the annual report released by the central bank, the operational losses registered last year by BNR amounted to RON 2 billion, up by 89 percent compared to the negative results in 2003.

The negative result was covered by the favourable differences resulted from revaluation.

The BNR official expressed hopes that the institution would restart making profit over the next years, explaining that the contribution of the central bank was limited in all developed countries, accounting to 0.1 -0.4% of GDP, where it exists.

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Samsung Corporation, Korea's largest general trading company, plans to increase its investment in Romanian infrastructure projects, the company said yesterday.

The company, an affiliate of Samsung Group, the country's largest conglomerate, said it is poised to invest in several government projects, including electronic government in the former communist state.

In an effort to create momentum for infrastructure investment in Romania, Chung Woo-taik, president of the company's trading division, will meet with Romanian President Traian Basescu in Seoul today.

Samsung said Chung plans to present a blueprint to the president, aiming to win support from Romania's government.

Basescu makes a two-day visit to Korea starting today in celebration of the 15th anniversary of the Korea-Romania relationship. Samsung has been persistently tapping Romania as a lucrative business partner in Eastern Europe for the past eight years.

In October 1997, Samsung Deutschland GmbH, the company's local operation in Europe, took over S.C. Otelinox S.A. Inc., with the acquisition of a 51 percent stake for $37 million.

Otelinox was a state-run enterprise churning out low value-added stainless steel products, posting an operating profit of only $500,000, when Samsung stepped into the company's plant in Targoviste, South Romania.

The acquired company was established in 1974 with two production units of cold rolled stainless steel strips and hot rolled small wire rod, which have been commissioned to two Japanese steel companies.

Otelinox, however, has been financially distressed following the collapse of the former communist regime in 1989.

With the completion of the privatization, Samsung funneled its corporate resources into high value-added products such as stainless steel board, shedding the production units of less market-oriented products.

Samsung also introduced market-based business approaches to the company which had been controlled by the Soviet-styled bureaucratic authorities.

A capitalistic accounting system based on profits and losses instead of propaganda and catchwords were applied to the company's ledgers so as to boost financial efficiency.

Local employees were also empowered with more responsibilities, almost tripling the annual output per employee of 42 tons in 1997 to 117 tons in 2003.

In addition to the restructuring, Samsung launched a package of renovation projects, aimed at upgrading facilities and training local staff in a bid to improve the quality of the products.

Furthermore, the Samsung's existing overseas marketing network helped boost the sales of Otelinox's new products.

Following the acquistion, Samsung's German subsidiary became in charge of marketing Otelinox's products, enabling the company to diversify delivery to Western Europe, Asia and even North America. Prior to 1997, the company's clients were mostly domestic and East European companies.

Currently a quarter of Otelinox' revenue comes from the Asian market, which was almost impossible for the small company to achieve without Samsung's global marketing network.

Despite the successful revamp of the lackluster state-owned company into a promising manufacturer in the untapped Eastern European market, Samsung geared up for another major investment plan in 2002.

With an investment of $20 million, the company completed a new manufacturing plant designed to produce ultra-thin stainless steel strips, which made Otelinox the sole producer of ultra-thin stainless steel products among the former communist European countries.

The new product list includes major components for auto parts, precision equipments and quality electronics.

Thanks to the new precision steel mill, Otelinox has achieved sales of about $35 million in 2003 and a profit of more than $7 million.

The company was awarded by the Romanian government as one of the most profitable firms in the country in 2000 and appraised as a successful privatized company among foreign-invested corporations.

Samsung is currently operating several successful overseas business units other than Otelinox such as FUBU, a New York-based sportswear company, and an oil-drilling joint venture in China.

The company's operating profit increased nearly 18 percent to 128.5 billion won ($122.9 million) during the first six months of the year, compared to a year earlier.

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Most Romanian SMSEs expect their profit to rise in 2005 in comparison with the previous year, on the background of an increasing amount of sales - reads a survey carried out by the National Council of Private Small and Medium-sized Enterprises.

According to the survey, more than 81% of the respondent companies expect their profits to be higher or at least equal to those posted the year before. 60% of the interviewed companies also expect higher amounts of sales and of orders as well.

When questioned about the quality of the business environment, 45% of the companies complained that it obstructs their activity and performances, but in a somewhat contradictory approach, 52% of the respondents voiced their optimism about the favorable evolution of the economic environment.

Over 68% of the SMSEs identified the burdensome taxation as the major difficulty that affects their activity, 66% said red-tape was the major plague they had to struggle with, 42% complained over reduced access to credits and 41% over delays in bill payments.

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Fortis has today informed the Romanian authorities that it is no longer interested to participate in the process to select a candidate for the privatisation of Banca Comerciala Romana.

In view of the further bidding process, Fortis will not make any further comment on its decision.

Fortis is an integrated financial services provider active in the fields of banking and insurance. With a market capitalization of EUR 31.3 billion (30/09/2005) and around 55,000 employees, Fortis ranks in the top 20 of European financial institutions. In its home market, the Benelux countries, Fortis occupies a leading position which it aims to develop and bolster.

Fortis is drawing on the expertise it has acquired in its home market to realize its European ambitions via growth platforms. Fortis also operates successfully worldwide in selected activities. In specific countries in Europe and Asia it effectively exploits its know-how and experience in bancassurance. Fortis is listed on the exchanges of Amsterdam, Brussels and Luxembourg and has a sponsored ADR programme in the United States. More information is available on www.fortis.com

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Of all nine candidates for BCR, the Belgian KBC and Austria?s Erste Bank seem in the best position, because they would have no difficulties in providing the about 3.4 bn euros which should pay the 62% BCR stake put up for sale, according to a report by the British KBW financial institution, ACT Media news agency reports.

From this amount, EBRD and the World Bank?s IFC would reap an aggregate of 1,375 bn euros.

With such a high number of contestants, it?s crystal clear that BCR will not be a bargain.

According to KBW's analysis, they assume a selling price 4.6 times higher than the bank?s accounting value, that is an estimated 5.5 bn euros, so that the stake of 62% would represent 3.4 bn euros.

The analysis was conducted based on a set of macroeconomic parameters and BCR?s future profit evolution used as references for the price prediction.

Whereas BCR?s profit is expected to attain 247 million euros this year, in 2006 it will reach 297 million euros and will double in 2008 (406 million euros).

The bank?s current accounting value of 1,19 bn euros will also rise, reaching 1.4 bn euros in 2006 and 1.9 bn euros in 2008, under the assumption of an average yearly inflation of 4.3% in the next years.

Any of the nine contestants has a chance to acquire BCR, but Erste Bank is most likely to strike the deal, given the Austrian bank?s size and rating, its successful operations in Central and Eastern Europe, as well as its strategy and managerial experience in the area.

KBW worked on two takeover scenarios, one where the entire amount is financed by stock issue, the other with mixed financing, where money is also obtained from the sale of assets.

If the stock issue is the variant accepted in the end, Erste Bank is in the main position, having also the shareholders? blessing for the move.

In the second scenario, large competitors are favored, and Belgium?s KBC would have the highest chances, followed by Deutsche Bank.

The shareholders of Portugal?s BCP or Dexia might not so easily accept to support the BCR deal whereas the Greek NGB or Italy?s Intesa seem rather unwilling to raise money from capital market.

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National Bank, Greece's largest bank in lending terms, is expected to submit a 'surprise' binding bid today for the 61.9 pct of Romania's BCR, according to financial daily 'Kathimerini'.

Today is the last day to submit a binding bid for the bank.

BCR is Romania's largest lender with a 26 pct market share of lending and 341 branches around the country.

The report said the value of the bank is estimated at 3.8-5.8 bln eur, making the value of the 61.9 pct stake at 2.3-3.6 bln eur.

Brokers say that the privatization of BCR and CEC are seen as the last opportunities to penetrate the Romanian market through acquisitions rather than organic development.

After National Banks recent disposal of treasury stock and the sale of its US unit Atlantic Bank, analysts estimate that the bank's excess capital will be about 920 mln eur at the end of 2005.

National Bank is short listed together with eight other banks for BCRs privatization. The other short listed candidates are Erste Bank, Deutsche Bank, BNP Paribas, Dexia, Fortis, KBC Group, Banca Intesa and Banco Comercial Portugues.

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Seven foreign banks placed binding bids Monday for a 61.88 percent stake in the Romanian Commercial Bank, trying to establish a foothold in a rapidly expanding market that has seen successful bank privatizations in the past.

The bidders include Germany's Deutsche Bank AG, Erste Bank AG of Austria, Belgium's Dexia SA, Banco Comercial Portugues SA, National Bank of Greece SA, Italy's Banca Intesa SpA and France's BNP Paribas SA, the country's privatization agency said.

BCR is Romania's largest bank, managing assets worth some euro7 billion (US$8.54 billion), or 26 percent of the assets held by the country's banking system. Last year, it reported a net profit of euro161 million (US$196 million) under International Financial Reporting Standards.

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FRANKFURT (AFX) - Deutsche Bank AG has submitted a bid for Romania's Banca Comerciala Romana (BCR), a spokesman for the company said, confirming an ealier press report.

Wall Street Journal Europe earlier reported Deutsche Bank has bid 2.5 bln eur for the soon-to-be privatised bank.

The spokesman declined to comment on the amount of the bid.

Deutsche Bank is thought to be the favourite to acquire BCR, with Belgium's Fortis NV, Italy's Unicredito Italiano SpA and several other parties also interested.

The Romanian government is reducing its stake in BCR to 20 pct from 45 and is looking for a 'strategic investor' to buy up to 51 pct of the bank, which has nearly 4 mln customers.

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1115 GMT [Dow Jones] National Bank of Greece (NBG) +0.1% at EUR32.02.
High-ranking official at bank tells Dow Jones that National will submit a binding bid for a 61.88% stake in Romania's largest commercial bank BCR (BCR.YY).

The move had been expected, says Eurobank analyst. National has a strong presence in Balkans. The bank also said on October 11 it would part use the $400M it raised last week from the sale of US unit Atlantic Bank to finance acquisitions in south east Europe. BCR was an obvious candidate, analyst says. (PCT)

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Although the European Union accession treaty does not provide for granting state aid to steel mills after the end of 2008, the prospects of the Romanian steel industry look very good indeed, thanks to foreign investments. The authorities in Bucharest said repeatedly that they would no longer grant any aid to steel mills as of January the 1st 2005. The iron and steel works industry which Romania is counting on in the run up to its entry into to the single European market, is now being restructured. The Minister of the Economy and Trade, Codrut Seres, said:

"We aim to have a Romanian iron and steel industry in which companies should be aligned to the EU standards from a point of view of their economic-financial and technical performance. These companies have made a number of investments which amount to about 430 million dollars in terms of technological investments, and another 138 million dollars in terms of environmental investments."

Petre Ianc, a director general in the Ministry of Economy and Trade spoke to us about several provisions of the European Union agreement.
"In 2008, the Romanian iron and steel industry will be able to produce about 9 million tonnes of liquid steel and will have a lamination capacity of around 9 million tonnes. Considering that some 6 million tonnes of liquid steel and 4.5 million tonnes of laminated products are being produced in Romania today, output is expected to grow by 3 million tonnes of steel by the end of 2008."

The biggest steel mill in Romania is Mittal Steel Galati, in the east of the country, taken over by an Anglo-Indian group in 2001. It is worth mentioning that before being privatised, the steel mill was suffering daily losses of 1 million dollars, but in 2004 it made a 429 million dollar profit. The turnover of Mittal Steel Galati stood last year at 2.1 billion dollars and is expected to reach 3 billion this year. The Mittal Steel Group also owns the works in Hunedoara, namely the former Siderurgica south-west works; in Iasi it owns the former TEPRO plant, and in Roman, the former Petrotub factory, which it took over in 2003.

Another international group which owns steel factories in Romania is Tenaris, the biggest producer of pipes in the world. Tenaris bought the Donasid steel works in Calarasi, on the Danube. It already held the Silcotub factory in Zalau and Tubinox in Bucharest. Moreover, the Russian group Mechel controls two factories in Romania, namely Mechel Campia Turzii (the former Industria Sarmei Campia Turzii) and Mechel Targoviste, the former Special Steels Works. The steel mill in Resita and the pipe producer Artrom Slatina are also controlled by a group from the Russian federation, TMK. In turn, Otelinox Targoviste is owned by the German branch of a big South-Korean consortium, its marketing director Ion Popa told us:

"It was privatised in 1997, and its majority holder is Samsung Deutschland. We make un-oxidable steel plates and straps, carbon steel rods and steel for reinforced concrete. We export 95% of the un-oxidable steel products we make, mainly to Germany, Italy, Turkey, China, but also to the United States and Sweden. You can find our products everywhere in the world. As for the reinforced concrete, we focus mainly on the domestic market. The privatisation of our company has been considered one of the most successful in Romania, with 20 million dollars in investments having been made by our share holder. The people are happy, the salaries are acceptable, and lately, we have even taken on new workers."

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As regards the super and hyper market network in Romania, the main share is held by foreign investors, in particular, German and French. It is also worth mentioning that, in recent years, Romanian supermarket networks have also been developed, such as Altex, Domo, Flanco and Flamingo, specializing in selling electronic and household appliances. Firms like Mobexpert and Elvila, operating as furniture companies, are also on the market. The uncontested leader of the specialised Romanian market is the German group ?Metro?, with last year?s turnover standing at more than 1 billion euros. The group owns 22 cash and carry centres in Romania, four being located in Bucharest and the rest of them in cities as Brasov, Timisoara, Constantsa, Bacau, Craiova and Galati.

Before the end of the year, Metro will inaugurate two additional such centres in Bucharest and Arad. The Metro group also owns 8 do-it-yourself Praktiker centers in Romania, two in Bucharest and the other six located in Ploiesti, Timisoara, Brasov, Bacau, Cluj-Napoca and Oradea. Each Metro center means an investment of about 15 million euros, with about 11 million euros representing the cost of building a Praktiker center. The second largest company in terms of the value of sales is Selgros Cash & Carry, that has recently enhanced its expansion plans on the Romanian market, from 15 to 20 centres.

By the end of the year, Selgros will have 11 stores in Romania, 3 in Bucharest and the others located in Arad, Brasov, Targu Mures, Constanta, Timisoara, Oradea, Cluj Napoca and Craiova. The company had a turnover of 250 million euros last year, 50% more than in 2003. Selgros has been present in Romania since 2001, with the Rewe and Otto Hamburg groups holding equal shares in the firm. In Romania, Rewe also controls the supermarket chains Billa, XXL Megadiscount and Penny Market. Romania currently has 6 hypermarkets, 4 belonging to Carefour (3 in Bucharest and 1 on Brasov), and 2 belonging to Cora, located in Bucharest.

In fact, Cora opened its second hypermarket last week. Carrefour?s goal on the Romanian market is to build 20 hyperstores, an investment of more than 500 million euros. The German group Tengelmann say they are opening their first 15 shops in Romania in mid November. Only 3 of them will be located in Bucharest. In the next 4 years, the group will open 120 shops in Romania, in line with its business plan. Another German company which will start operating in Romania is Kaufland.

The biggest shopping areas, however, are the malls in Iasi, eastern Romania, and in Bucharest: these include Plaza Romania, Bucharest Mall, Jollie Ville, Unirea Shopping Centre and starting this month, City Mall, in the south of the city. Recently, the French group Flash Consulting Invest announced the start of construction works for a mall in Pitesti, under the Euromall brand. Pitesti is also a town boasting another large French investment, this time through the Renault group. Moreover, the Flash Consulting Invest will build another mall in Galati. Here?s Bernard Braka, from the French company:

"This is a major investment which will hopefully pave the way for similar projects in Romania. The French and the Romanians have similar mentalities. Many Romanians speak French, and Romania is an extraordinary place to invest in. Europe will be closer to Romania, and from my point of view we are all European citizens, also thanks to the Euromall. That is why we have a soft spot for this country".

The Dutch company Anador has also announced the opening of a large shopping centre in downtown Bucharest, on the former location of a tram depot. Here?s the general manager of the centre, Lucian Ghelehrter:

"This is an urban recycling project, in which industrial halls are turned into commercial centres. Luckily, we are not alone in this adventure, which in the beginning was regarded with a certain lack of trust. Gradually, however, people have come to believe that it is a good idea that will catch on in Bucharest. It would be a lie to say that this type of project is unique in the world. Places like this exist in London, in Paris, in Vienna, so it?s not unique. But it is a first in Bucharest and others may soon follow."

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The event of the year in 2005 for the Romanian insurance market has undoubtedly been the take-over of Omniasig by the Austrian group Wiener Staedtische from THIB Financial Services, a firm registered in Holland, but with Israeli shareholders. The estimated value of the transaction stood at 64 million euros. As a result of this transaction, Wiener Staedtische is now ranked 1st in the insurance companies standings, based on the value of the subscribed premiums for this year?s first semester, totalling some 130.7 million euros. The Austrian group entered the Romanian market in 2001 and holds two other insurance companies - Unita and Agras. Having purchased Omniasig, Christian Brandstetter, a member of the Wiener Staedtische Managing Board, offered us the details regarding Wiener?s Romanian investment:

? Why Romania? If we take into account the insurance potential, the number of the inhabitants and the country?s dimensions, Romania is a very attractive country. And, what?s more, Romania has witnessed a positive economic development, and it also has its special ties with Austria. We should also mention the high quality of staff training in Romania. That is why your country is one of our main markets. Besides, we are extremely glad that Romania will join the EU. That will certainly trigger a particular economic boost, which is bound to support the insurance market in Romania. We have at present almost 1.2 million clients in your country, and our strategy has focussed on a continual increase in the number of clients; we also want to be leaders in the fields of services, profitability and growth. Taking over Omniasig meant a special growth for us.?

Quite recently, another Austrian firm, UNIQA, entered the Romanian market, buying 27% of Astra?s social capital, a company seeded 5th in Romania. In the wake of this transaction, UNIQA is present in some 13 European countries.Ranked 2nd, according to the value of the subscribed premiums, is the Allianz Tsiriac Insurance company, with a turnover of 110.5 million euros. The largest transaction on the insurance market had, up until this date, been the Allianz German group?s purchase of 51% of the shares in the Tsiriac Insurance company in 2000. Here is what Cristian Constantinescu, the President of the Allianz Tsiriac Insurance Company, told us:

??We have succeeded in communicating to our potential clients a serious attitude regarding the services we provide, as well as the idea of financial stability. And I think that this has been our great advantage. There are many companies pursuing such a policy: to acquire a market share at all costs. We have been following what Allianz has been doing, since this has been our policy since 1994. Our policy and Allianz?s have converged perfectly, translating into profitable development. The word profitable has been our buzz word all along. Yes, we are growing, but we are growing in a profitable manner. We aren?t only growing for growth?s sake.??

Seeded 3rd in the standings is Asirom, a company reporting a turnover of 98.4 million euros from subscribed premiums, during this year?s first semester. Specialists say that this year the value of the insurance premiums of the 42 companies will exceed 1 billion euros, with turnover for 2004 standing at 880 million euros. Up until 2010, the estimated annual growth rate on the insurance market will range between 15 and 20 %.

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Real estate experts say that in the next 2 - 3 years, residential and industrial developments as well as storage facilities will attract the largest volume of investments in the real estate field. In recent years the main growth area has been the construction of offices as well as super and hyper markets. The same experts say that the Romanian real estate market has witnessed a normal evolution, because development always starts with investors coming to the country and continues with these investors building office buildings, and then residential buildings for their employees, ending with the building of commercial spaces.

Next comes the industrial and storage sectors. The real estate market in Romania is particularly attractive due to the fact that the recovery of the money invested, in case of leasing services, can take place in between 7 and 8 years. And a constant characteristic of the market is the increase in prices, across almost all segments. For several years now, famous international developers have been drawn to the Romanian market, such as Europolis, Immofinanz, CA Immo, Meinl European Land, Kardan and Africa Israel Investments.

Large scale projects have been announced by other companies such as TriGranit, Heitman LLC, Appolo Real Estate Advisor and European Future Group. At the moment, Bucharest is home to several important real estate projects, worth some 3.5 billion Euros, as Kurt Neushitzer, representing the German company ValueRoi, told us. We discussed the real estate market in Romania a little further with the manager of Colliers International Romania, Bogdan Georgescu. This is what he told us about the market in residential areas:

"This is a growing market, with apartments in very big demand, both medium quality and luxury apartments. The supply of such properties is still rather restricted, but it is growing thanks to the entry of big real estate developers from Romania and abroad onto the market. As far as prices are concerned, works of medium quality cost about 1,000 euros per square metre. Prices are bound to grow, however, by 10 to 15% this year, according to our estimations. We are expecting a similar increase next year. Considering that demand is growing, but the supply is still restricted, it is normal for prices to go up."

In the residential areas in northern and central Bucharest, apartment rents range from 700 to 4500 euros per month. House rents stand between 2200 and 7000 euros per month, depending on the surface area involved and the quality of the property. Bogdan Georgescu also told us about the office buildings? market.

"The office buildings market is growing as well; there is quite a big demand from international and domestic companies in Romania. The supply is also growing thanks to the international developers who are getting more and more interested in the Romanian market. Prices have been constant in the last two years, at the level of those in central and Eastern Europe. In effect, it is the same regional companies who are present in Romania, and the construction costs are comparable, so that prices can be maintained at a constant level".

Class A offices (namely, those at the top end of the spectrum) cost about 2000 euros for a square metre per month plus VAT, while rent is 18 euros for a square metre per month. The Colliers representative gave us details about the market for industrial spaces.

"This market is still underdeveloped, the natural consequence of the development of the retail market, as we call it. Basically, storage is the consequence of growing sales and we are expecting it to grow a lot. Production areas are in particular demand in the south and east of Bucharest, while storage areas are more developed in the western part of the city, on the Bucharest-Pitesti highway, though we believe they will also develop in the north-western part of Bucharest. The situation is slightly different as far as prices are concerned as compared to the other segments of the real estate market. Demand is still in a latent stage and is not very active, but project developers are speculating on the general tendency in central and eastern Europe, where the demand for storage space is growing. Big projects are being developed in Romania as well. In my opinion, prices for industrial spaces will drop slightly in the following 2 or 3 years".

Rents for industrial spaces are lower, from 4 to 6 euros for a square metre per month. Prices for construction and farm land have gone up a lot in the last few years, reaching as much as 2500 euros per square metre in Primaverii Street, one of the most desirable areas in Bucharest. In the western part of the city, land prices stand at between 25 to 30 euros per square metre, 300% higher than 3 years ago. Average prices for farm land have gone up from 200 euros per hectare to 700 euros. The highest prices can be found in the plain area in southern and western Romania. In the west, the area where foreign investors, especially Italians, have purchased significant areas of land, prices have reached even 2000 euros per hectare.

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The Central Bank proposed the privatization commission of the Romanian Savings Bank (CEC) the weight of the price in the process to select the investors is below 90%, namely the level forecasted in case of the Romanian Commercial Bank (BCR), stated BNR governor Mugur Is?rescu.

He said that in the CEC case, the state must monitor other criteria to select the bank, considering the credit institution has an extended network in the rural environment and Romania needs financing in this area.

"One of Romania?s most important problems is the rural economy, which will affect us in the upcoming ten years.

We do no longer have a bank network in the rural environment.

I spoke with the Premier, with the president and I believe we must look what banks know how to make a rural financing", said Is?rescu.

BNR governor showed that subsequent to the finalization of BCR privatization and of the electricity companies, Romania would receive funds of a couple billion euro.

He said that the utilization of the money to reduce the public debt will create a problem, triggering a new pressure upon the exchange rate.

BCR as well as CEC are in the process of a privatization process.

The final offers for BCR are expected by October 17 and for CEC's privatization nine banks submitted letter of intent.

BCR?s privatization commission settled that in September, the offered price would represent 90% of the evaluation chart for selecting the competitors and only 10% of the score will take into account the technical criteria.

According to the commission, setting these weights was a sign of the state's aim to get a higher price and ensure the objectivity of the selection process.

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Liberty Global Now the Largest Broadband Cable Operator in Romania

DENVER, Oct. 14 /PRNewswire-FirstCall/ -- Liberty Global, Inc. ("Liberty Global") (Nasdaq: LBTYA - News, LBTYB - News, LBTYK - News) today announced that UPC Romania SA, a subsidiary of UPC Holding B.V., following the approval by the Romanian competition authorities last week, has completed the acquisition of 100% of Astral Telecom SA ("Astral"), for a cash purchase price of approximately $407 million. Astral is one of Romania's largest broadband telecommunications operators, serving approximately 890,000 video, voice and data revenue generating units (RGUs) as of June 30, 2005, and was acquired from a group of Romanian entrepreneurs and foreign investors including AIG New Europe Fund. Liberty Global already operates in other parts of the country through UPC Romania with over 390,000 RGUs, as of June 30, 2005.

Mike Fries, President and Chief Executive Officer of Liberty Global said: "We are pleased to have completed this important transaction on schedule. Astral has a major presence in the Romanian capital city of Bucharest, and has upgraded over 50% of its network to support advanced broadband voice and data services. We can now quickly devote our energy and resources towards the integration of our Romanian operations and the creation of a platform for further growth and innovation. Romania is now one of our largest markets in Central & Eastern Europe and we expect it to rapidly develop as one of our showcase operations. I have full confidence in the combined management team to achieve this goal."

About Liberty Global, Inc.

Liberty Global owns interests in broadband distribution and content companies operating outside the continental United States, principally in Europe, Asia, and the Americas. Through its subsidiaries and affiliates, Liberty Global is the largest broadband cable operator outside the U.S. in terms of subscribers. Based on the Company's consolidated operating statistics at June 30, 2005 (other than NTL Ireland which we consolidate but do not control), Liberty Global's networks passed approximately 23.5 million homes and served approximately 14.9 million revenue generating units, including approximately 10.7 million video subscribers, 2.5 million broadband Internet subscribers and 1.8 million telephone subscribers.

Forward-Looking Statements: Except for historical information contained herein, this press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward looking statements involve certain risks and uncertainties that could cause actual results to differ materially from those expressed or implied by these statements, including Astral's ability to continue financial and operational growth at historic levels, the Company's ability to successfully operate and integrate the Astral system, continued use by subscribers and potential subscribers of the Astral services, and the Company's ability to achieve expected operational efficiencies and economies of scale. These forward-looking statements speak only as of the date of this release. The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

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15:51 - 14 October 2005 - The Central Bank proposed the privatization commission of the Romanian Savings Bank (CEC) the weight of the price in the process to select the investors is below 90%, namely the level forecasted in case of the Romanian Commercial Bank (BCR), stated BNR governor Mugur Is?rescu.


He said that in the CEC case, the state must monitor other criteria to select the bank, considering the credit institution has an extended network in the rural environment and Romania needs financing in this area.

"One of Romania?s most important problems is the rural economy, which will affect us in the upcoming ten years.

We do no longer have a bank network in the rural environment.

I spoke with the Premier, with the president and I believe we must look what banks know how to make a rural financing", said Is?rescu.

BNR governor showed that subsequent to the finalization of BCR privatization and of the electricity companies, Romania would receive funds of a couple billion euro.

He said that the utilization of the money to reduce the public debt will create a problem, triggering a new pressure upon the exchange rate.

BCR as well as CEC are in the process of a privatization process.

The final offers for BCR are expected by October 17 and for CEC's privatization nine banks submitted letter of intent.

BCR?s privatization commission settled that in September, the offered price would represent 90% of the evaluation chart for selecting the competitors and only 10% of the score will take into account the technical criteria.

According to the commission, setting these weights was a sign of the state's aim to get a higher price and ensure the objectivity of the selection process.

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LISBON (AFX) - Portugal's biggest private bank, Millennium BCP, will make a bid to buy a 61.9 pct stake in Romania's market leader Banca Comerciala Romana, the bank's chief executive officer said.

Millennium BCP will bid for BCR, which is being partly privatised by the Romanian government, alone and without resort to a capital increase, Paulo Teixeira Pinto told a news conference.

'The bank has a financial structure that enables it to make this bid,' he said, adding the proposal will be delivered to BCR on Monday.

He gave no financial details but analysts estimate BCR is worth 3.8-5.8 bln usd.

Germany's biggest bank, Deutsche Bank AG, is thought to be the favourite to acquire BCR, with Belgium's Fortis NV and Italy' Unicredito also interested.

The Romanian government is reducing its stake in BCR to 20 pct from 45 and is looking for a 'strategic investor' to buy up to 51 pct of the bank, which has nearly 4 mln customers.

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Romania has won at the International Court of Arbitration in Washington, the case brought by the American company Noble Ventures that contested the Romanian state actions in the privatization process of Resita Steel Plant (CSR).

The Arbitrary Court of International Centre for Settlement of Investment Disputes (ICSID) has dismissed in totality the action and compensation claims formulated by the American company Noble Ventures Inc.

In the sentence pronounced on October 12th 2005, the Court decided in unanimity that Romania had not infringed the obligations deriving from the Bilateral Treaty on investment protection between Romania and USA and it is not responsible for the failure of the Noble Ventures investment in Resita Steel Plant (CSR).

On the contrary, the decision pronounced by the court stipulates the infringement of some obligations assumed by the investor through the shares? sale and purchase contract. The Court has noticed that that the Romanian state?s actions have observed the treaty provisions regarding the obligation to assure the investment protection and security as well as the obligation to use a correct and fair treatment towards the investor.

Romania keeps its firm commitment to assure a fair safe and stable environment for foreign investments and will continue to observe integrally the obligations that fall on its responsibility further to the international treaties that it has joined.

Background information

Resita Steel Plant (CSR) was privatized on June 5th 2000, the majority of shares? package being purchased by Noble Ventures Company of USA. On January 15th 2003, the shares? sale and purchase contract for Resita Steel Plant (CSR), signed with Noble Ventures was rightfully canceled because the investor did not pay two successive rates of the purchasing price of the plant shares.

In 2001, Noble Ventures has submitted an arbitration application on the basis of ICSID Convention of August 2001, following the Treaty on the mutual encouraging and protection of investment signed between Romania and the USA that took effect in January 15th 1994. Noble Ventures claimed that it suffered an unfair, arbitrary and discriminatory treatment, because Resita Steel Plant (CSR) would have not benefited of the restructuring of budgetary debts to the state claimed to have been promised through the privatization contract and its investment in CSR was expropriated. Noble Ventures requested compensations amounting to 447 million USD.

For further details, please contact AVAS (Authority for State Assets Recovery) that represented the Romanian state in this case.  

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From a hydrological point of view, 2005 was characterised by extremely high river levels, causing frequent danger of flooding, beginning with February.

The most important floods were registered between April-August 2005, when significant rises occurred in most rivers, some of them reaching historic levels, flooding large areas of land and causing losses of human lives and important damage. The floods were caused by heavy rain registering 150-300 millimetres, torrential most times. The floods affected most of the hydrographical basins.

The flash floods in 2005 have been classified as historic ones, having been justified by the value of the main parameter. Although we are only in October 2005, certain preliminary conclusions can already been drawn according to specialists, regarding the features of hydrologic developments this year. The floods in 2005 took place March through September, affecting most of Romania's rivers.

Through the scale and area covered, the phenomenon can be rated as exceptional. In most river basins where flash floods occurred, the said parameters reached highest-ever values. For instance, the flash flood on Timis and Bega rivers reached the highest volume ever reported for these rivers, namely 669 million cubic metres, three times and five times respectively, higher than the volume of flash floods in 1966 and 1970.

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TRANSELECTRICA and TRANSGAZ will become the first utility companies listed on the Bucharest Stock Exchange (BVB) under a government programme called "A Strong Market," weekly Saptamana Financiara informs.

TRANSELECTRICA will be listed on December 15, 2005. The State has increased from 5 to 10 percent the package to be floated on the Stock Exchange, with estimates showing a gain of about 100 million RON. The funds will be used to upgrade the electricity transport infrastructure, Economy and Trade Minister Codrut Seres explains.

TRANSGAZ has already started listing procedures and officials hope the company to be traded on the BVB by late this year. The Economy and Trade Ministry's strategy also expect 5 percent of ROMGAZ shares, 10 percent of TRANSELECTRICA TRANSILVANIA NORD CLUJ and 10 percent of the ELECTRICA MUNTENIA shares to be listed by end-2006.

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Oil Terminal Constanta, the largest maritime port operator in Romania, forecasts a 10 million euro profit in 2005, quite double compared to 2004, daily Ziarul Financiar reports on Wednesday.

Oil Terminal also expects a 140 million euro turnover, up 40 percent compared to 2004 and to early 2005 estimations. The traffic forecasted was exceeded each month, says general manager Mihai Lupu. Traffic with oil products reached 1.6 million tonnes in September, a record level for the company.

Petromidia Refinery remains the main client for Oil Terminal, with 25 percent of total traffic. Other important clients are Petrom, LukOil and Rafo oil operators. The company targets investment of 2.8 million euros in 2005, with focus on environmental sector. Oil Terminal is the largest maritime operator with activity in receiving, storing, treating and shipping crude oil, oil products and liquid chemical products.

The company, declared economic agent of strategic interest, operates the oil tanks and pipes, the pumping stations and other equipment for oil delivery through Black Sea ports. The Ministry of Economy and Trade is the main shareholder of the company with 69.6 percent.

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The six projects with impact on the environment presented by the Bulgarian officials to the Romanian party cannot appease officials in Bucharest in the domain of population safety, Sulfina Barbu, Minister of Environment and Waters Management stated, on the occasion of the meeting with her Bulgarian counterpart Dzhevdet Chakarov, Minister of Environment and Waters in Bulgaria.

« Between 2003 and 2005, Romanian specialists took part in the assessment of the environment impact of the Belene power station. The projects presented exemplify good practice, which makes us appreciate that, if the Bulgarian party complies with the project assessment, there will be no danger, under the provisions of the Espoo protocol » Sulfina Barbu added.

All six projects are under study with the specialised commissions in the Bulgarian government, none of them using the CANDU technology, similar to the one in Cernavoda.

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The British ? Romanian Chamber of Trade organized on Thursday a meeting of British investors with the General Director of the British Industry Confederation, Sir Digby Jones who is on a two-day visit in Romania.

His visit has two dimensions ? promoting British Romanian business interests, especially with a view to Romanian accession to EU in 2007 and the presentation of future relations with Great Britain in point of reforms which Romania should make to meet the aim proposed in the Lisbon strategy of 2000.

The British Romanian Chamber of Trade is a non-profit organization set up in 1998. It has 100 members with the mission of promoting trade and investments between Great Britain and Romania. The objectives of the Chamber of Trade include supporting members through activities which can lead to improving the investment climate in both Romanian and British markets.

The Director-General for the Confederation of British Industry (CBI), Sir Digby Jones, spock about Romania's economic performance before and after EU accession and the requirements for a strengthened business climate at the launch of the report on "Romania and the Lisbon Agenda".

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BNR governor Mugur Isarescu foresees for 2006 an inflation rate of 6%. ?In 4-5 years Romania should reach an inflation of 2.4% and for 2006 the rate will be 6%, in conditions when this year inflation was a correction one,? the BNR governor declared on Thursday in the joint budget, finance banks commissions of the Senate and Chamber of Deputies.

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Investors interested in taking over a stake of 67.5 percent in Electrica Muntenia Sud stock must submit final tenders by December, ACT Media news agency reports.

The Ministry of Economy and Commerce will select two bidders to carry on the final negotiation process.

Ten companies submitted letters of interest for the acquisition of Electrica Muntenia Sud by the September 15 deadline.

These include both groups which have taken part in various stages of the electricity privatisation process in Romania, such as AES Corporation USA, CEZ - Czech Republic, Enel SpA - Italy, E.ON Energie AG - Germany and Union Fenosa International - Spain, or other European corporations. The list also includes companies EVN AG - Austria, Gaz de France - France, RWE Energy AG - Germany, EnBW Energie AG - Germany, and Iberdrola SA - Spain, which participate for the first time in a privatisation process in Romania. Seres said that the selection of two investors for negotiations, instead of one, as was the case in previous privatisation procedures, will encourage competition for the acquisition of the electricity utility which services the Capital and the Giurgiu and Ilfov counties.

Interested investors will be able to take over 50 percent of the company's current share capital, and will allot funds for a subsequent capital increase through which the buyer's stake will go up to 67.5 percent.

Thermal power subsidies channelled into investments.

The Minister of Economy announced that thermal power subsidies would be lowered, and the funds channelled to investment programmes, which will allow for an increase of the national energy system efficiency.

According to the Minister, a decision in this respect will most likely be taken next week.

Also, an increase in the thermal power tariff (most probably by 20 percent from the current ROL 980,000 per giga-calorie) will also be discussed next week. Regarding the situation of Termoelectrica, Seres stated that the 0.5 percent tax on assets can be seen as a "tax on poverty" if applied to State-run companies with high annual losses.

Minister of State for coordinating economic activities Gheorghe Pogea added that this Fiscal Code modification might be waived for companies with very high annual losses.

ELCEN could take over RADET. ELCEN, the largest producer of electricity and thermal power through thermal power plants, could take over the Thermal Power Distribution Corporation (RADET) unless the latter pays its ROL 7,000 bln debt.

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Petromidia Refinery currently undergoes 24 modernisation projects, along with the general revision, with the total value of works reaching 30 million dollars, ACT Media news agency reports.

The modernisation projects are part of the investment plan of 200 million dollars, which is to be finalised by 2007.

These technological upgrades will contribute to an output increase of 10 percent and to quality improvement.

Since October 1, Petromidia is closed for general revision and modernisation works, the operations being planned according to legal norms and international practices.

Some 42 companies, of which 6 are foreign, will be involved in these mechanical, electrical and civil engineering works.

Some 800 equipments under pressure and 5,500 technological pipes and utilities will be controlled and verified.

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Rompetrol Rafinare Company was placed on the first position in the trading value top, with RON 12 mn (EUR 3.3 mn) operations, covering more than a quarter of the total liquidity registered at the Bucharest Stock Exchange (BVB).

A consistent sale order was placed at the middle of the trading session, representing half of the total volume of transfers developed by Rompetrol.

The operation was concluded at the price of 12.1 bani per share.

The quotation decreased afterwards, stated the director of operations of Prime Transaction brokerage company, Alin Brendea.

He added that big investors entered the market, most probably foreign ones.

Rompetrol quotation increased by 1.7%, up to 12 bani per share, 99.8 mn shares being transferred.

The most consistent operation was of 37 mn shares, at the value of 12.1 bani.

The transaction rose a total of RON 4.47 mn.

Rompetrol Rafinare opened on an upward trend, the first operation being made at 12 bani per share- the value registered at the end of the trading session.

Rompetrol decreased on Tuesday by 0.8%, down to 11.8 bani per share.

The transfers made with the 23.6 mn shares totalized RON 2.8 mn.

Operations developed by the five SIFs totalized on Wednesday RON 16.7 mn.

BET-FI index increased by 1.44%, up to 35,193.13 points, reaching a new historical maximum value.

The growth is of 103.55% compared to the end of 2004.

The most significant transactions were made with SIF Oltenia ? 4.9 mn shares and with SIF Moldova ? RON 3.8 mn.

Banca Transilvania closed the session at 1.08 lei per share, increasing by 1.9%, according to a RON 4.6 mn liquidity.

BRD-Groupe Societe Generale reported operations of RON 2.6 mn, according to increasing the price by 1.6%, up to 13.1 RON/share.

Investors bought Petrom shares of RON 3.1 mn value.

On price level, the company registered a correction of 0.9%, to 45.5 bani per share.

The total value of the operations developed at BVB was of RON 44.6 mn.

BET-C index - that shows market?s general trend ? increased by 0.83%, and the BET index ? calculated according to the most liquid companies- increased by 1.17%.

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Slovenian KD Group will enter the Romanian insurances market in January 2006, by opening a company selling exclusively life insurances.

?In a first stage, the company will have a share capital of EUR 3.5 mn.

Afterwards, the capital will increase up to EUR 7 mn ? EUR 8 mn, as investments for the development of the territorial network will be needed?, declared general manager of KD Investments Romania Ion Mincu Radulescu.

The company?s portfolio will include both classic life insurances and policies with united-link investment component, with the investors being able to choose between premiums in RON or foreign currency.

The representative with KD Investment added that the company intended to expand on the capital market by establishing a real estate company - KD Capital Management in March.

KD Investments Romania manages the KD Maximus mutual fund, launched in July 2004.

The value of the assets is EUR 2.5 mn and the profitability of the investments units reached some 21% in the first nine months of the year.

R?dulescu said that the KD Optimus fund would be operational as of early November, with the investments to be conducted mainly in instruments with fixed income.

KD Group has operations in Slovenia, Slovakia, Serbia and Montenegro, Croatia, Bulgaria, Bosnia and Herzegovina, Luxemburg and Romania, and it has majority stakes in several companies providing financial services (insurances, brokerage on the capital market, consultancy).

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11:40 - 13 October 2005 - Romania's accession to the European Union will enable the local capital market compete with other European markets, stated BVB Director General Stere Farmache in the framework of the approval of the capital market development strategy by the local community of stock brokers in 2003 and the current moves of the Bucharest Stock Exchange (BVB) aimed at consolidating the stock exchange market, ACT Media news agency reports.


It is believed that 2007, the year of Romania's accession to the EU, the Bucharest Stock Exchange (BVB) will be able to compete for the first place among the European stock exchanges. The merger between the BVB and the Rasdaq over-the-counter electronic exchange (BER) is thought to lead to the establishment in Romania of a single, strong and efficient stock market that is attractive and more accessible to the issuing companies and investors.

At the first stage, emphasis was given to the technical integration of the BVB and BER, which currently allows transaction and post-transaction operations to be performed using a single electronic trading platform.

The operational merger is virtually complete, while it is expected to be legally sanctioned in early 2006.

The BVB official reckons that Romania has become a more attractive country to foreign investors over the past year.

Romania's economy following positive trends, the stabilisation in macroeconomic indicators, as well as the prospects for the EU accession of Romania are just some of the factors having generated increased interest of foreign investors in Romanian assets, financial assets included, said Farmache.

Statistics in the first eight months of 2005 showed non-residents having invested 356 million euros in the Romanian stock market, up 80 percent from the previous year.

These funds were provided by investors already operating in the Romanian capital market and new investors.

Source: ACT Media News Agency and reporter.gr

National Insurance agreed to acquire Alpha Insurance Romania, Alpha Bank?s insurance subsidiary in Romania.

National Insurance will also acquire 95% of Alpha Insurance Brokers.

The acquisition price is estimated at ¤2.7m for Alpha Insurance Romania and ¤2.45m for the 95% stake in Alpha Insurance brokers.

The terms of the agreement also include a 5-year commercial agreement between National Insurance and Alpha Bank Romania for the provision of insurance services through Alpha Bank Romania?s network.

The acquisition of Alpha Insurance Romania gives the opportunity to National Insurance to enter the highly under developed Romanian insurance market, while the commercial agreement gives access to a banking network in the country.

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The rate of arrears recovery for this year has so far exceeded estimates by 16% the president of the Budget-Finance Commission of the Senate Varujan Vosganian stated after a meeting with Sebastian Bodu, the president of the National Agency for Fiscal Administration (ANAF).

Vosganian said it was probable that the arrears recovery should exceed the estimated level by 20% by the end of the year, representing an extra 2.778 billion euros for the state budget for 2006. Vosganian explained that the sum would equal 0.3% of gross domestic product (GDP) for next year. Vosganian said these funds could compensate the budget deficit of the Ministry of Education.

The senator added that for the 2006 budget "a few more resources" have been identified, originating in the modifications made to the Fiscal Code.

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The new deadline for the sale of repairing plant Urex Rovinari has been set for November 10, according to the representative of the legal administrator of the plant Mariana Somnea. She said the asking price for the tender will be 8.48 million euros, according to a decision from the Creditor's Assembly.

Urex was sold in September to a local company for 2.11 million euros following a tender starting at the asking price of one million euros. The Creditor's Assembly canceled the transaction claiming the Ministry of Public Finances had to recover a 19.78 million euro debt from the plant.

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The Competition Council (CC) authorized in the 2001-2004 period state aid of almost 670 million euros, consisting facilities for the payment of budget arrears, according to a release of the institution. Of the total value approved by the CC, the sum actually granted was 152 million euros.

As a result of the monitoring activity of the conditions in which the state aid was granted, the CC found that 33 aid decisions have not been applied because the beneficiaries did not fulfill the prerequisites while 39 other aid decisions have been carried out. The grant of state aid to 12 companies is in process, six decisions have been revoked for incompliance with the conditions imposed and another decision is under investigation by the CC.

The Competition Council decided, after investigating businesses in disfavored areas, that 31 companies must return the state aid received over the maximum legal intensity stipulated by the regulations regarding the regional state aid, along with interests due.

The intensity of the state aid represents its total volume expressed as percentage of the projects eligible costs. The state support measures granted to the 31 companies consisted of the exemption from the payment of profits tax. The value of the funds to be recovered by the state amounts to 928,000 euros, plus interests.

According to a release of the Council, the beneficiaries of state support who surpassed the maximum legal intensity are small and medium enterprises (SMEs) from the counties of Bacau, Bihor, Bistrita, Caras, Covasna, Gorj, Prahova, Suceava and Salaj.
The Competition Council specifies that it will continue to monitor the companies who benefit from state aid until reaching the maximum legal level of intensity.

In September, the government decided through an emergency ordinance that companies illegally granted state aids will be forced to pay interest to the state for the period during which the money was in their possession. The interest rate should be established each year and the recovered funds would be transferred to the state or local budget. The ruling stipulated that the illegal aid would be suspended and recovered by decision of the Competition Council or of the institution that granted the aid.

The decisions are writs of execution and result in forced executions. The Authority for the Recovery of State Assets (AVAS) would apply its own recovery procedure.

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Several Electrica company branches and the phone operator Romtelecom have informed cable companies from many country areas that access for installing new cables on the pylons owned by the two state companies is restricted for technical reasons.

The two companies that are presently supplying pylons for most of the cable companies stated that the contracts with the TV cable operators will not be extended, not will the modernization of their network by adding new cables be allowed.
According to the operations director of the Cable Communication Association (ACC), Constantin Harasim, this problem exists throughout the country.

Ralu Filip, president of the National Audio-Visual Council (CNA), referred several times to the fact that Electrica and RomTelecom had announced their intention to launch a court petition against the cable companies if they do not comply with the requirement to add new cables to the pylons, thus threatening the public's access to cable TV programs.
Electrica representatives stated that access to the pylons will be accepted for the company's branches which have not yet been privatized.

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The developer of the Europe House office building, GTC, increased its share in its Central and Eastern Europe branches by taking over shares owned by ADRI International, according to Warsaw Business Journal.

In Romania, the company sold the first building it owned on the Romanian market and which is presently the headquarters of phone operator Orange. The company announced its intention to expand in the Romanian market both in the office and residential sectors. 

After this transaction, GTC will increase the share owned in its branches from approximately 30% to 95-97%.

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Carpat Beton company, the cement division of the HeidelbergCement group in Romania, has opened the 12th cement station in Craiova. The new station is equipped with a recycling system for cement residues and a technology that allows zero emissions of dust and noise.

The Romanian branch director, Mihnea Stoian, stated that the new branch will satisfy the market's demand for this region. The station has a capacity of 60 cubic meters per hour and is the thirteenth station opened in Romania. The company's plans include the opening of two new working points in Constanta and Cluj.

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talian companies expressed their interest to create in agricultural and food production facilities in Romania and expand their projects in the furniture area, according to Prime Minister Calin Popescu Tariceanu. The Romanian official met the representatives of the Cofindustria Italian employers union.

Tariceanu encouraged the Italian businesspersons to invest in Romania, saying they could benefit from sufficient raw materials for the furniture industry, while the agricultural and food markets could turn highly profitable since 80 percent of the products sold in Romania are imported.

The PM and the Cofindustria representatives agreed to set up a meeting between the Italian and Romanian companies as soon as possible, to evaluate business opportunities.

Italian companies represent the sixth largest investor in Romania, 17,435 companies spent 730.7 million euros by July 31, 2005, in various projects.

Trade between Romania and Italy totaled 5.4 billion euros at the end of July.
Foreign companies brought to Romania direct investment of about 1.8 billion euros in the first seven months of the year, which represent a 21% increase over the level of the year before, according to data provided by the National Bank of Romania.

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The Romanian Savings House (CEC) announced that, beginning with October, it will cash the Connex subscribers bills through the agencies that post the Connex brand.

To shorten the duration of the operations performed at the CEC's offices, the bank's branches were endowed with bar code readers that scan the bill and register the data electronically. On the agreements signed until now, CEC is cashing Orange, CosmoRom and Telemobil (Zapp) bills, as well as those of other major companies.

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Turkish group Arcelik, the owner of the Arctic Gaesti fridge factory, is analyzing the possibility of opening a washing machine factory in Romania, stated Gunduz Ozdemir, the group's general director.

The group could supplement the Arctic product range with other home appliances, which would comply with European standards. "After we launch a project in Russia, we will decide which is the profitable market for investments," stated Ozdemir.

In approximately one month, Arctic Gaesti will inaugurate a new production facility to produce 300,000 fridges per year, the total investment rising to 5 million euros.

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The development strategy of the Romanian oil company controlled by Austrian OMV involves investment of about three million euros during the next five years. Petrom's strategic objectives involve the stabilization of crude production and the increase of the degree of utilization of refineries, according to a press release.

For exploitation and production activity Petrom will allocate 300 million euros each year for the stabilization of daily production to a level of 210,000 barrels and the modernization of operations to ensure cost control.

The company's representatives say the development of the group targets the expansion of exploitation and production activity in the Caspian Sea region. This would result in a reserve replacement rate of 70% by 2010.

For the processing sector, the group plans to increase the utilization rate of the two refineries owned by Petrom  to 95%, over the level of 75% registered in the first half of the year. For this the company has also allocated a 300 million euros budget.
Other objectives of Petrom are the centralization of the system of acquisitions and maintenance, the implementation of a system of information in real time in crude production, and the unification of the management of the two refineries.

The oil producer intends to continue investment in the distribution sector where it intends to expand its network with 250 new fuel stations to a market share of 30%.

According to the press release, the company hopes to secure a competitive position on external markets by exporting to neighboring markets such as Turkey and Bulgaria.

The natural gas division will get a more important share in the company's portfolio as
according to a PricewaterhouseCoopers (PWC) press release, Austrian oil group OMV won the "Privatization of the Year" award in South-East Europe, for the takeover of Romanian oil group Petrom in an 831 million euros transaction.
OMV has announced it intends to increase its natural gas and oil production 50% by 2010, through new exploration facilities in North Africa, the Black Sea, Pakistan, Russia and the Caspian Sea. The company aims to attain a reserve replacement rate of 160%. "It is not the growth we have recorded in the past three years but a profitable development pace," said Wolfgang Ruttenstorfer, OMV's executive director.

Romanian oil company Petrom, the largest operator on the market, registered a net loss of 246 million euros last year, though increased turnover by 22%, to 2.4 million euros, according to a company statement.
The OMV official announced it intends to roll with the high development rate of Eastern Europe, a strategy which paid off when applied in the Danube area.

OMV has forecast 1.7 billion euros yearly investments from 2006, 0.4 billion more than it presently spends.
The strategy aims to push OMV to the lead of the second rank of integrated companies, following the most important oil groups in the world.

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President Traian Basescu has requested oil companies not to take advantage of the fact that the government has imposed the lowest possible excises on the industry, in view of EU requirements.

President Traian Basescu stated that the evolution of fuel prices will depend on the talks between the leaders of the four largest oil companies from Romania (Petrom-OMV, Lukoil, Rafo, Rompetrol) and the presidency. However, Basescu gave assurances that there will be no more sudden rises in fuel prices from day to day.

This month, Traian Basescu requested the main oil groups to develop a common pricing policy, which should consider the fact that Romania has its own oil resources, and develop a strategy based on it.

The presidency did not publish the oil companies' proposals, but according to a Rompetrol press release, the company forwarded three suggestions to reduce fuel prices by 8-9 percent. One of the solutions presented included the administration of the Midia - Constanta oil pipes by the Rompetrol oil group, which could eliminate supplementary costs generated by losses and oil thefts. Moreover, Dinu Patriciu, the Rompetrol president, said that an important effect would be a potential decrease in energy transport and distribution costs, from the current 10.9 euros per megawatt in Romania to the 2-2.5 euros per megawatt, which is the average price in the European Union.

A third solution identified by Rompetrol involves better balance of diesel and gas excise duties, as well as application of harsher terms for fiscal warehouses. Patriciu considers the measures could be a way to clamp down on fiscal evasion and counterfeiting of oil products while encouraging legitimate producers.

"The local oil extraction industry covers 80 percent of needs," said Basescu. "No country with its own resources mocks its citizens," he added, referring to the recent fluctuations of fuel prices. Moreover, the President emphasized Petrom was developed into an integrated company so it could avoid international fluctuations.

The chief of state added that the integrated company concept had led to the reorganization of the oil companies. "Now we have three large companies which import crude and instead of exporting most of the processed products they fight on the internal market," said Basescu.

According to Basescu, the oil companies should cooperate with the government to maintain fuel prices at a minimum level. "As long as the government has decided to keep the excise (for oil products) at the minimum level imposed by the European Union, morality imposes oil companies not to increase their profits," said the president, requesting the companies not to take advantage of the fact that the authorities had not imposed the highest excise levels.

Fuel prices mostly affect the electricity, heating, construction, iron and steel, transport and chemicals sectors. The added value obtained by these areas of the economy declines by at least one percent for every ten percent increase in fuel prices. With the exception of crude processing, fuel prices inflict losses on the entire economy.

The talks between the president and the leaders of the oil companies were scheduled soon after Petrom increased fuel prices several times within a week. At the time, Petrom justified its actions by the fluctuations on the international oil market, determined by Hurricane Katrina. Its statement drew the attention of media and analysts, who pointed out that 80% of Romania's fuel needs are supplied from internal production.

Moreover, the presidency has asked the Competition Council to launch an investigation into the local oil market, which was quick to respond. The results are still pending. The presidency had also demanded the Ministry of Economy and Trade to forward the Petrom privatization contract.

The first reaction of the oil companies was to reduce fuel prices three times consecutively, almost to the original levels. A press conference organized by Petrom-OMV attempted to justify the prices movements by the international market, apparently neglecting Romania's internal resources.

The local oil company was sold to Austrian oil group OMV in what became the Privatization of the Year in 2004. The privatization process was criticized by some analysts and the opposition, as unfavorable to the Romanian government. Following the Petrom buyoff, OMV tripled its oil and natural gas reserves, while the privatization method of the local oil group left the government with two powerless representatives in the Petrom board of administration and the Austrian group OMV with complete control over the company.

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The European division of Israeli company BSR Engineering & Development and an Israeli businessman are to invest 136 million euros in the development of two residential areas in Romania and Bulgaria, according to Globes.

BSR Europe and Benjamin Steinmetz, a businessman active in the diamonds trade, have together bought the first plot of Romanian land, with a surface area of 35,000 square meters, on which the 1,500 apartments will be built.
The value of the transaction was 13.7 million euros and the total value of the projects developed in Romania is expected to be 120 million euros.

The two investors have also bought more than 18,000 square meters of land in Bulgaria's capital, Sofia, an investment estimated at 2.5 million euros.

The land will be used for the construction of 400 houses and the total investments made in Bulgaria are expected to reach 16 billion euros.

The Israeli construction company and Benjamin Steinmetz have also collaborated in two real estate projects in Latvia.
The development strategy of BSR Europe involves a bonds issue totaling 500.5 million euros. The funds will be used for investments in the company's expansion to Central and Eastern Europe.

BSR Engineering & Development was created in 1963 and is the developer of several office and luxury residential complexes, both in Israel and in other foreign countries. In the last ten years the group has been involved in several projects whose value exceeds 1.25 billion dollars.

BSR is the group's division that operates in six countries from Central and Eastern Europe (the Czech Republic, Slovakia, Hungary, Bulgaria, Poland and Romania). The company is also active in the USA, where it is currently developing a project involving 750 condominium units with a total investment of 267 million euros located in Philadelphia.

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Funds allotted from the State Budget to the Agriculture Ministry for next year are 22 per cent higher than in 2004, Minister Gheorghe Flutur announced. The institution requested RON 3.8 bln (ROL 38,000 bln), but the Executive decided to allot RON 2.8 bln to the Agriculture next year. ?This is a reasonable amount, and we hope foreign funds will add to this,? Flutur said.

The Minister will allot RON 700M (ROL 7,000 bln) to the ?Farmer? programme, of which RON 450M (ROL 4,500 bln) to the animal breeding sector and RON 250M (ROL 2,500 bln) to the vegetable sector. Also, ROL 110M (ROL 1,100 bln) will be earmarked to subsidies. Approx. RON 90M (ROL 900 bln) are allotted for the establishment of an intervention system for the grain market. The Ministry will also channel RON 14M (ROL 140 bln) into supporting the export of products such as grains, wine and meat.

As for the farming support forms, the ?aid by yield? system will be replaced with the ?aid by area / animal capita.? Amounts allotted in this respect will reach RON 630M (ROL 6,300 bln), accounting for 23 per cent of the budget. The land improvement sector will benefit from RON 220M (ROL 2,200 bln), while vine and wine programmes will be financed with RON 250M (ROL 2,500 bln). The Ministry will also grant funds for consolidation of the institutional framework needed for the EU accession, in the amount of RON 500M, of which RON 310M to the Agency for Agriculture Intervention and Payments.

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This year?s flooding produced losses of EUR 298 M to the roads network, while the rehabilitation of railway infrastructure will need funds of EUR 182 M, on Wednesday stated the Minister of Transport, Construction and Tourism Gheorghe Dobre.

For the reconstruction of road and railway infrastructure EUR 74 M were assigned from the state budget, the rest of the sums being supported by credits from international financial institutions. The foreign financing sources for the rehabilitation of road infrastructure were the Council of Europe Development Bank (CEDB) - EUR 29.54 M, the European Bank for Reconstruction and Development (EBRD) - EUR 45 M and the ISPA programme - EUR 18.3 M. The European Investment Bank (EIB) is to assign Romania a loan worth EUR 91.05 M.

The local authorities have contracted total external funds worth EUR 55.72 M. Of the total funds needed for the reconstruction of the railway infrastructure, EUR 34 M come from the State budgets, EUR 21.6 from the CEDB, EUR 16.95 M from ISPA non-payable funds, while EIB will assign a loan worth EUR 92.93 M. The local component to the external financing is EUR 16.44 M. This year?s flooding has affected 750 km of roads within 504 sectors of national roads and 204 bridges. Of the damaged bridges, 190 needed minor repairs, 10 suffered important damage and were temporarily closed down and four of them, i.e. the bridge in Maracineni (Buzau), Mioveni (Arges), Gatajesti (Valcea) and Bucov (Prahova) became inoperative and were not repaired as of yet. The flash floods also affected 152 sectors of railway network, totalling 59.7 km, 23 bridges and seven footbridges. Of the 23 bridges, two of them were suspended - Putna Seaca (Vrancea) and Vidra (Giurgiu). Regarding the budgetary funds assigned to the ministry, Dobre expressed his satisfaction with their size. ?The budget is satisfactory, is significantly higher that the budget for 2005. On the other hand, we have an increase of 40 per cent in the external credits,? mentioned Dobre.

EUR 59 M for road and railway reconstruction in three counties

The road and railway infrastructure in counties Giurgiu, Vrancea and Bacau, affected by floods this summer, will be reconstructed under an ISPA project amounting to a total EUR 59 M, the Ministry for Public Finances announced. Of the total amount, EUR 49 M will account for the ISPA assistance, with the balance funded by the State Budget. According to the FinMin release, the document is being analysed by the European Commission, to be approved and signed by year-end.

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ExpoMil, the exhibition dedicated to the arms industry will open next Thursday at Romexpo, having as co-organiser the small arms producer - National Company Romarm. Companies from US, Japan, Israel, Turkey and fifteen European countries will take part at the event, and the Romanian arms manufacturers are looking to conclude partnerships. The industry will undergo a major restructuring in the following years and there is need to find foreign partners willing to invest and to participate in privatisations, said Aurel Cazacu, Director of the Defence Industry division within the Economy Ministry. He said that private companies need to have a greater share in the Romanian arms industry so that modern arms will be produced.

Currently all 16 branches of Romarm are up for privatisation, and captured the interest of powerful foreign companies like Rheinmetall, Steyr, Glock and Day&Zimmermann. Concluding privatisation contracts may take between 10 and 18 months said Pavel Mitiu, General Manager of Romarm, adding that not all foreign investors want to fully take over the branches of Romarm. Some companies would like to conclude partnerships, others to create joint - ventures, others to acquire part of the assets Cazacu explained.

Glock to produce up to 6 models at Cugir

Austrian small arms manufactures Glock will produce four to six models of 9mm pistols at the Cugir factory in Hunedoara County declared Pavel Mitiu. The Austrian company will allow the brand of Cugir to appear on the arms together with its own. Glock was present for approximately four years on the Romanian market and in April this year decided to open a production line at Cugir. So far, the company invested in technology and personnel training, and started production of pistol parts, said Mitiu without disclosing any figures. He mentioned that soon production of the models will be transferred 100 per cent to Cugir.

Kalashnikov license issue to be discussed in Moscow

The Kalashnikov license issue will be discussed in November, in Moscow by a mixed Romanian - Russian commission, Pavel Mitiu also stated during the press conference. He explained that following the Warsaw Treaty, Romania, along with other countries, acquired licenses for small arms production but brought successive modifications to the mechanisms along the years. Mitiu indicated that there is no reason to pay for the Kalashnikov license, since the gun is not the same anymore. In the end the Romarm General Manager said that a clear answer is very difficult to obtain, and that there will be discussions in regard to the ?purity of the patent? for the arms produced in Romania.

At ExpoMil, 156 companies will take part, 44 per cent of which will come from abroad. Military delegations from Armenia, Austria, Czech Republic, China, Croatia, United Arab Emirates, Switzerland, France, Germany, Great Britain, Holland, Portugal, Togo, South Africa, Bosnia Herzegovina and Ukraine will also take part. Some of the products on display will be armoured vehicles, tanks, anti aircraft as well as anti hail rockets, electronic warheads, explosives and small arms. The exhibition will be open on October 20-23, with the first two days reserved for specialists. On Saturday a live demonstration will take place at the Mihai Bravu army training range.

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Germany?s Kaufland Company, part of Lid&Schwartz, is aiming to become a leader on the Romanian food retail market, after it opens today its first local shop, a discount hypermarket in Bucharest City. ?We will compete directly with Billa, Carrefour, Metro, Selgros and all the other companies that are already operating or will enter the Romanian market in the future. The EUR one bln Metro Cash & Carry Romania reported in 2004 is a possible value for us as well. In fact, we have recorded comparable figures in the Czech Republic,? says Kaufland Romania Director General Gunter Grieb. The plans of the company reads the opening of 40 shops in the following three-four years, 5-10 of which will be in Bucharest City. By the end of the current year, Kaufland will have opened five more shops - one each in Ramnicu Valcea, Timisoara, Alba Iulia, Baia Mare and Ploiesti. The expansion pace set by Kaufland is 15-20 shops a year, with each such shop covering 3-4,000 square metres on average and entailing an investment of between EUR 8 and 10 M.

The German company has targeted the cities of over 100,000 people all over Romania. ?Kaufland?s total investment in Romania in three-four years will exceed EUR 300 M, which will include the funds needed to build a central warehouse in Ploiesti,? Grieb said.

A warehouse covering 10,000 square metres, is already operational but it will be further expanded to 25,000 square metres in the second part of 2006. The shop to open today in the Bucur Obor area of Bucharest covers 22,000 square metres and it entailed an investment of EUR 11 M. The sales area is 4,500 square metres, to which 2,000 square metres of shopping arcades are added.

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Daewoo Shipbuilding & Marine Engineering Co., the world's second-largest shipbuilder, said it will bid for Santierul Naval 2 Mai Mangalia, a Romanian government-owned shipyard, to expand capacity in the country.

"Daewoo Shipbuilding plans to make a bid next week," Ahn Wook-hyeon, a Daewoo Shipbuilding spokesman, said in Seoul yesterday. He expects the starting bid to be around $4.2 million. Mr. Ahn would not say what Daewoo Shipbuilding's offer will be.

Daewoo Shipbuilding plans to use the Romanian company to help build ship parts for its Romanian unit Daewoo Mangalia Heavy Industries SA., which it formed in 1997. Daewoo and other shipyards in Korea are winning record orders as global trade spurs demand for transport.

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Connex will have a new Chief Executive Officer, Liliana Solomon, starting November 1, 2005, as announced today by Paul Donovan, Regional CEO of Vodafone OVS (Other Vodafone Subsidiaries). Also, Paul Donovan announced that Ted Lattimore will be leaving Connex in December 2005, after almost 6 years leading the company as President & Chief Operating Officer.

"Ted's dynamic leadership on the ground in Romania from early 2000 has been a very instrumental catalyst in achieving the tremendous growth in customers and the strong financial results at Connex. Under Ted's direction Connex not only grew from 1 million to over 5 million customers in 5 and a half years but year in and year out Connex is recognised as one of the most outstanding and most admired companies in Romania and beyond its borders", said Paul Donovan.

"Connex has always been about Romania and the future of Romania. I am proud of the success of Connex and the respect Connex achieved with millions of people in the country. The future for Connex and our customers now includes becoming part of Vodafone; the largest mobile community in the world. It is with great pride that I hand over the leadership of the company to make Vodafone in Romania an equally distinct success story within Vodafone world wide; for tomorrow and forever", said Ted Lattimore.

Ted Lattimore will return to Canada where he plans to actively participate in the Vancouver preparations for the Olympic Winter Games of 2010.

Liliana Solomon is appointed Chief Executive Officer (CEO) for Connex, effective November 1, 2005.

Liliana will work with Ted and the Vodafone Group to ensure that she is fully conversant with the Vodafone strategies and the business priorities at Connex.

The Romanian born Liliana Solomon joins Connex from Cable and Wireless where she combined the roles of Chief Financial Controller for C&W UK and Chief Financial Officer for their international operations. Previously she was the Chief Financial Officer at T-Mobile UK, responsible for the day-to-day GSM operations.

Over her career she has gained significant experience in mobile operations specifically and the telecoms industry in general, both as a financial leader and as a general manager. Whilst with T-Mobile she lived and worked in Germany and prior to that she worked as Executive Vice President Controlling and Business Management for Deutsche Telekom. Liliana completed her MBA at INSEAD in France.

Connex is the first video mobile telephony network in Romania and had 5.250.621 customers, as of June 30, 2005. Connex is a trademark of MobiFon S.A., a subsidiary of Vodafone Group Plc. Vodafone is the world's largest mobile community with equity interests in 27 countries and Partner Networks in a further 14 countries. Providing a full range of mobile telecommunications services, including voice and data communications, Vodafone currently serves 165 million proportionate customers worldwide.

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Lebanon's largest bank grabbed 12.5 percent of Misr Romanian Bank in an initial public offering (IPO) and expects to buy the rest of the medium-size bank in the coming weeks in a $101 million deal, the bank's vice chairman and general manager told The Daily Star. "We will make an offer to purchase all the outstanding shares of Misr Romania," Saad Azhari said. "Judging from indications that we have from the current owners, we will end up controlling most of the shares of the bank."

Azhari also said that Arope Insurance, in which BLOM controls a majority stake, was the only Lebanese firm to win pre-approval to operate in Syria's recently-opened insurance market.

Two weeks ago, BLOM secured a "promise of sale" from state-owned Bank Misr to buy its 33.26 percent of Misr Romania. In the IPO, which put 30 percent of the bank up for sale and closed on Sunday, BLOM purchased 6.26 million shares at 10 Egyptian pounds ($1.73) per share, amounting to 12.5 percent of total shares.

BLOM is now assured of controlling about 45.7 percent of the bank, with the remaining shares held by banks and individual investors in Egypt and Romania, including Romania's Banca Comerciala Romana, Raiffeisen Bank and Banca Romana Pentru Dezvoltare.

Within the next few days, the bank's shares will be listed on the Cairo and Alexandria Stock Exchange, after which BLOM can make a tender for the bank's remaining shares.

If BLOM does not purchase 67 percent of the bank, it can cancel the agreement it made for the 33-percent stake.

Expansion into Egypt, which is currently selling off state assets, is part of BLOM's effort to become a regional player in the banking industry.

Al-Iktisad Wal Aamal magazine in September ranked BLOM third among the top 100 Arab banks in terms of return on average assets. BLOM has $10.8 billion in assets and reported profits of $60.16 million for the first half of 2005.

Medium-sized Misr Romanian Bank has eight branches in Egypt and one branch and four offices in Romania. Its customer deposits up to June of this year stand at $550 million while assets are about $650 million. Egypt has recently taken measures to liberalize it's banking sector by making its central bank independent, lowering the corporate tax rate, and floating its currency.

Azhari also said BLOM's insurance arm, Arope, joined two Syrian companies and groups from Kuwait, the U.A.E., and one Gulf consortium in winning pre-approval to enter the Syrian insurance market.

Fateh Bekdache, Arope's general manager, said he is expecting to open branches in Aleppo and Damascus if the company receives a license from the Syrian government.

"I'm optimistic that we'll get a license by around June of next year," Bekdache said.

Bekdache added that Arope hopes to follow BLOM in its regional expansion.

"The bank is in Jordan and soon Egypt and we are exploring those possibilities," he said.

Blom Bank's GDR closed unchanged at $48 today on the Beirut Stock Exchange.

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Libra Bank and brokerage company Vanguard have recently launched a credit line dedicated to investments in securities traded on the Romanian capital market.

The product is dedicated to active investors on the capital market, clients of Vanguard company, holding already a shares portfolio.

Smart offers to active investors the possibility to obtain important gains by taking advantage of the opportunities on the capital market.

Smart is the first product of this type on the Romanian market, including also a service for monitoring and administrating the credit?s utilization in real time.

For obtaining the credit line, the seker must use as guarantee the shares held in the portfolio at Vanguard.

Regarding the maximum crediting limit, it will be established depending on a balanced value of the shares portfolio haled and established as guarantee in favor of the bank.

Once the bank has granted the credit line, the solicitor can submit trading orders towards Vanguard based on the non-used sums within this credit line.

The discounting process of the operations is executed on a settled date.

Vanguard is one of the most important brokerage companies in Romania.

Libra Bank is part of the American investment group New Century Holdings (NCH).

So far, NCH has invested in Romania over USD 300 mn. in the electro-technical industry, construction materials, milling devices, financial-bank and capital services as well as real estate properties.

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In 2006, taxes to the local budget will increase by seven percent over 2005, according to a decision made by municipality counselors yesterday.

The General Counsel of Bucharest (CGMB) approved in yesterday's session the first draft law regarding the unification of local taxes in Bucharest. The initiators of the project say it is the first "Fiscal Code of Bucharest". The fiscal project stipulates that the population of the city will pay the same tax level in all similar areas of Bucharest. The document divides the city into fiscal areas different from the administrative sectors. Thus, the capital is split in four fiscal areas (A, B, C and D) whose map can be consulted on the Internet site of the municipality.

The representatives of the authorities said next year's taxes will grow by an average of seven percent to cover the inflation rate. They said the sector mayors had given their approval to the project.
There are 58 different taxes divided into three categories of local taxes: on buildings, on land and on shows.
For automobiles with an engine capacity of over 2,000 cubic centimeters, the tax will be 12 RON per 500 cubic centimeters (3.35 euros/500cc) and for buses, coaches and microbuses, the tax will be 24 RON per 500 cubic centimeters (6.7 euros/500cc). For other vehicles weighing up to 12 tons, owners will have to pay 28 RON per 500 cubic centimeters (7.81 euros/500cc) and for tractors, 16 RON per 500 cubic centimeters (4.46 euros/500cc). The city hall representatives explained these taxes were meant to discourage the use of polluting vehicles in Bucharest.

The tax paid to obtain an urban certificate for constructing buildings of up to 150 square meters was increased a few times up to 40 RON (11.16 euros). The municipality officials explained that these taxes were unjustifiably low as compared to the value of the service provided when the transportation to the institution delivering the document was more expensive than the document itself.

The decision also regulates in a unitary manner the tax for the temporary use of public spaces. Until now these taxes were charged differently from sector to sector and it was even possible to pay a different tax for the use of two spots located on the same street but in different sectors. The new ruling creates two new taxes, concerning the temporary use of public space: the tax on picture shooting and professional photography of 72 RON (20 euros) per square meter in Zone A and the tax on the use of public space for open air shows, festivals and promotional activities of 24 RON (7 euros) per square meter in Zone A.

The bonus for the payment in advance for the whole year 2006, before March 15, of the tax on buildings, land plots and of the automobile tax for individuals is seven percent.
Another tax local authorities increased ten times is on interventions for road asphalt cover by utilities suppliers. The city hall hopes to cover this way the cost of maintenance for the road network.

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All five Financial Investment Companies (SIF) dominated the operations held yesterday in the Bucharest Stock Exchange (BVB), covering more than 60% of the total market liquidity.

The operations director of CA IB brokerage stated that the SIF titles were bought mostly by foreign investors, but Romanian buyers also reacted. He said foreign funds continued to enter the Romanian capital market, a fact proved by the high liquidity level.

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The Romanian Bank for Development (BRD) reduced variable interest for RON credits used for the acquisition of Dacia, Renault and Nissan vehicles from 20% to 8.9% and extended the maximum reimbursement period from five to eight years.

The variable interest for the credits destined to the purchasing of other vehicle brands was lowered from 21% to 9.9%. During the Bucharest International Car Salon (SIAB), BRD offered auto credits with maximum three months of free full car insurance.

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Romania should invest ten million euros in each of Romania's 3,000 communes in order to develop them at the minimum standards imposed by EU, according to representatives of the National County Councils Union in Romania (UNCJR).

The institution inaugurated on Friday in Brussels the bureaus for attracting European funds, where young people from each of Romania's counties will learn about the financial mechanism through which funds meant for the development of communes and towns can be attracted.

Liviu Dragnea, the president of UNCJR stated that between 2007 and 2013, Romania will access structural funds of more than 30 billion euros. "In order to bring this money in the country we must have trained people," stated Dragnea.
Dragnea said Romania was competing against several European regions that have a tradition of accessing structural funds.
"It will be a tough but not impossible competition because we have already taken the first step for this money: we are here (in Brussels). If you are not in Brussels you do not exist," said Dragnea.

EU accession represents the main condition for Romania to access these funds. If the money is obtained, it will be used for massive investments in the rural areas.

Dragnea said there was a need for specialists who knew exactly the county's problems and could present in Brussels eligible projects.

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Transavia Alba Iulia will invest 2.5 million euros in modernization and new technologies for the Combined Fodder Factory in Santimbru.

The factory will increase its production capacity to 500 tons per hour and to 150,000 fodder tons per year. The new technology will offer international standards for the fodder quality and will comply with the EU requirements on public health and environment protection.

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Tax on revenues of employees in the software development domain could lead to the relocation of the companies to countries states such as Moldova and Ukraine, said Varujan Pambuccian, the president of the Deputies' Commission for Information Technology and Communications (IT&C).

"This measure (tax exemption for software programmers) diminished the business appetite for Moldova and Ukraine," said Pambuccian during a Microsoft conference in Bucharest. The deputy feels the tax exemption should be maintained to encourage new investors and prevent IT&C externalization to countries with cheaper labor, thus increasing the unemployment rate.

The deputy said several companies are reconsidering their investment plans after the tax exemption was withdrawn. "Siemens had just started construction, and could have moved its quarters, while Infineon expressed restraints," he added. Infineon was considering an investment in a research center in Bucharest, a joint program with the Politechnica University of Bucharest.

The Association for Information Technology and Communications (ATIC) requested the postponement of tax on income from creating software programs. This measure is requested until Romania will be forced to adopt this measure due to the alignment of legislation with the EU. In a letter to the Minister of Public Finances, ATIC said the elimination of this facility is "without an economic impact that would justify it".

According to ATIC estimates, the elimination of tax incentive should have a negative impact for 6,000 and 8,000 employees and should lead to insignificant collections to the state budget. The association appreciated that in Romania the annual consumption of Information Technology and Communications is only 2.7% of the Gross Domestic Product (GDP) or 88 dollars per capita, compared with 9% (more than 3,500 dollars) in the US.

The tax exemption for software developers was introduced in mid-2001 and was designed to further stimulate the IT&C sector in Romania. Recently, the minister of Public Finances, Sebastian Vladescu, presented the government with a series of propositions to modify the Fiscal Code, which should come into effect next year. One of the proposals regarded the annulment of the programmers' exemption. However, negative signals from businesspersons forced the minister to reconsider his proposal.

The business environment reacted negatively to the government's most recent stipulations for the Fiscal Code, which prompted the authorities to reassess their position. "I promise a new and improved version of the Fiscal Code will include the proposals of the businesspersons," said Vice Prime Minister Gheorghe Pogea during a meeting on economic matters. The Vice Prime Minister added that he expected the process to be difficult, as it must meet both the profit objective of companies and the government's intention to collect more funds for the budget.
Pogea assured the representatives of Small and Medium Enterprises (SMEs) that any measure that does not stimulate the business environment will be excluded from the draft law.

The new provisions would also increase cigarette and alcohol excises, dues on corporal immobilizations and a 16% tax for title transfers and earnings from property transfer or inheritance, besides others. Moreover, several fiscal facilities could be annulled, such as facilities for agriculture cooperation and the special regime of international sea transport. According to the ministry, these provisions are not compliant with EU regulations.

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The Technological and Industrial Park of Timisoara (PITT) has been leased at 25%, the level estimated for the whole of 2005, stated the president of the Timis County Council Constantin Ostaficiuc. 3.4 hectares out of the available 12 are occupied by four investors.

The PITT is a joint project of Timis County Council and the Timis Agency for Economic Development. The park, financed through a PHARE program with 3.7 million euros, is intended to support the development of small and medium enterprises in the IT, telecommunications, electronics, tools and equipment sectors.

In July, Ostaficiuc complained of the low interest of investors in the PITT and promised the County Council will change strategy and expand the range of activities which could be developed in the park. Timis authorities said more facilities would be granted, especially for the Information Technology (IT) sector, a reduction in land prices, currently four euros per square meter, as well as a reduction in the minimum surface of land that can be rented. "Restrictions will remain only for polluting activities," said Ostaficiuc.

On Monday, the Councy Council discussed, the feasibility study for the Sacalaz Industrial Zone, an alternative to the PITT, for investors interested in leasing larger land plots. Ostaficiuc said some investors were demanding land plots of eight to ten hectares, for which local authorities are considering offering plots in Sacalaz.
At the same time, on Monday, Satu Mare City Hall announced the leasing of four of the ten land plots totaling 33 hectares put out to tender in the Satu Mare Industrial Park.

Deputy Mayor Gabriel Les stated that ten companies had met the terms and conditions of the tender. Only seven turned out to be eligible. Four companies were selected to be leased land plots for 4.5 euros to 9.5 euros per square meter. The land was leased for a maximum period of 49 years with a clause stipulating the acquirer can choose to buy the plot after five years.
According to the conditions imposed by Satu Mare City Hall the companies must use the land for building industrial production facilities. The construction of warehouses or commercial buildings is forbidden. Another condition is that the company must start production within one year of the time of signature of the contract.

A new tender will be organized in the next 45 days for the leasing of the six remaining land plots.
The 69.5-hectare Satu Mare Industrial Park, built with a five million euros grant from the European Union, will be inaugurated next week with the participation of the president of the European Commission Jonathan Scheele.

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Prices of land increased in the last 18 months by 60-70% because of the big market demand but they should stabilize in the future, according to a study realized by CB Richard Ellis (CBRE).

The company shows that in the coming years, land prices will increase by an average 15-20% per year. The largest part of the offers for land located inside towns is represented by the small individual properties of up to 2,000 square meters and the properties of the former industrial facilities with surfaces of 5,000 up to 20,000 square meters. T

he prices for this terrain category are high, fluctuating between 700 and 1,500 euros per square meter. This situation determined the residential and industrial buyers to focus on the terrains situated outside Bucharest, where acquisition prices are accessible. In such areas, the prices vary between 30 and 50 euros per square meter.

The less developed areas like the East and Southeast of Bucharest are also the target of investors because of lower prices. The investors are also interested in medium size plots, of 1,500 square meters and 3,000 square meters and are situated inside the city, for projects regarding office and residential development, while some of these are looking for larger surfaces of up to 30,000-40,000 square meters, situated outside Bucharest, for investments in the industrial sector.

According to CBRE, land prices differ depending on the size, location, access to utilities and other factors. In Bucharest's central area, prices of land meant for real estate investments vary between 800 and 1,500 euros per square meters. At the city periphery, the prices depend on the plot's final destination. For residential investments, the prices fluctuate between 40 euros per square meter in the south zone and 100 euros per square meter in the north zone.

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International Canadian Management Agency International (ICMA) is continuing the series of seminars on the latest management and business administration models.

The Strategic Management Seminar on 21 October 2005 will be held at the Sofitel Hotel, Bucharest (New York conference room) and it is open to all business people interested in acquiring solid knowledge on strategic management.

The speaker at the seminar is Canadian professor Stephen Quesnelle, who has 20 years experience in management and leadership.

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The gross index of industrial production registered a 1,4% increase in the first eight months of the year compared with the same period in 2004, a rhythm which has fallen twofold compared with that registered in the first semester, according to data provided by the National Statistics Institute (INS).

In August the gross index of industrial production increased by 1.5% compared with the same month in 2004. The total turnover of companies active in the industrial field registered a 3.1% increase over the first eight months of the year and rose in August by 4.7%.

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Holcim Romania (cement producer) will invest approximately 98 million euros between 2005 and 2008 for the modernization and extension of the group's production facilities.

The modernization program of the cement factories owned by Holcim in Romania will end with the construction of the largest cement drying factory in Romania, to be built in Campulung Muscel with a 1.5 million tons capacity.

Holcim owns three cement factories in Romania (concentrating operations especially on the North-West part of the country) in Alesd, Campulung and Turda where the Swiss group is producing white lime, destined both for the local and international market.

Over the first semester the group's sales increased by 14.1% compared with the same period in 2004 and the prices of the company's products registered a 12.9% increase.

The representatives of the Swiss group estimate that the internal cement market should grow this year by 5%.
According to the data offered by the Swiss group the sales increase in the Romanian market was lower than that recorded in Bulgaria (40.5%).

The group reported a decrease in the quantities delivered in Slovakia (by 35.6%), Germany (19.8%), Hungary, Italy, Croatia and France.

In May, Holcim reported profits below expectations as result of the bad meteorological conditions and high energy prices.
Cement sales increased only in Spain and Romania as result of the capacity increases.

For 2004 the company reported a 130 million euros turnover. The company's main competitors are, both in Romania and on the international market, Lafarge (France) and HeidelbergCement (Germany). The Swiss group is present in more than 70 countries, has 50,000 employees and owns 130 cement factories.

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Libra Bank and Vanguard brokerage company have launched a credit line for investments made in real estate listed on the Romanian capital market.

"The product is designed for active investors from the capital market, clients of the Vanguard company who already posses a share portfolio", explains a company statement. The product is called "Smart" and is the first of its type on the Romanian market with a monitoring service attached for credit usage. The maximum limit of the credit depends on the shares owned by the client.

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Electronics and home appliances retailer Altex has invested 500,000 euros in a loyalty card to be offered to all clients making an acquisition of at least 1500 RON (approximately 425 euros).

With each acquisition the company gives a bonus of four percent of the value of the purchase. The bonus increases with the different total acquisitions thresholds up to eight percent. The value of the bonus is deducted from the price of the next acquisition.

The card can be used for the purchase of products paid in cash or in installments in the Altex, Altex Megastore and Media Galaxy networks. Currently, 70% of products sold by Altex are paid in installments.  Last year the company registered a profit of 146.6 million euros.

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The increase of the average wage, the decrease of fiscality and the development of consumer credit re-shaped local retail sector by changing consumer behavior.

Romania is one of the countries that provides the best conditions for consumer goods producers and retailers, reveals a study of PricewaterhouseCoopers (PwC). The survey concluded that along with China, Turkey, Vietnam, Russia, Bulgaria and India, Romania ranked first on the list of the countries offering the best investment opportunities in this sector. PwC experts say local retail and consumer goods market are growing while the obstacles and market risks are considered to be insignificant.

The level of per capita retail sales is only $630 in Romania as compared to a $2,000 level in countries like Hungary, the Czech Republic and Poland. These figures show the potential of the Romanian market, all the more so as the national economy is estimated to register an average growth of four to five percent over the next few years.

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The draft law for the 2006 budget sets as priorities the EADS border security contract, the construction of the Pan-European Corridor IV, as well as supplementary revenues to the state budget from anti-fiscal evasion activities and increasing the taxpayers' base.

The revenues for the general budget estimated for next year are expected to rise by 15 percent compared with this year's level. The authorities forecast that expenses should increase by approximately 14 percent, with most of the supplementary funds being directed to the main priorities of the government, such as the health, education, agriculture and transportation. The Ministry of Economy and Trade will receive fewer funds from the budget.
The border security contract, closed with EADS, and the employment of 4,000 persons by the Customs Police are the main projects which should be supported by the government, alongside tourism investments, the Pan-European Corridor IV and the upgrading of the railways. 
Prime Minister Calin Popescu Tariceanu declined to comment on whether the budget will provide for a wage increase for state employees, who benefited this year from a twelve percent pay rise. However, the PM did say the authorities are considering layoffs from several public institutions to compensate for an eventual wage increase. State employees' wages should increase next year by at least five percent, to compensate for inflation.
Mihai Tanasescu, former minister of Public Finances and president of the Senate's Budget-Finance Commission, expressed his concerns that the government had prepared a draft budget without having a Fiscal Code, so creating the premises for the budget to be changed soon, when the new provisions of the code are applied. His opinion was shared by economic analyst Dragos Nedelcu, who expects the draft budget to be changed by Parliament, which is likely to criticize it for not being based on a coherent fiscal policy.
The draft budget was approved on Monday evening in a special government session and is based on an inflation rate of 5.5 percent, a budget deficit of 0.5 percent and a current account deficit of 6.9 percent of Gross Domestic Product. The draft law on the budget also envisages an increase in the number of employees, as well as a rise of 100,000 in the number of taxpayers.
The most important employers and trade union leaders in Romania recently asked the government to modify the taxpayers base so that next year's budget could benefit from a rise in the number of taxpayers to six million from the current five. 
According to the authorities, the revenues to the state budget as a proportion of Gross Domestic Product (GDP) are expected to rise by 0.2 points, up to 31.2 percent. In nominal terms, the 28.3 billion euros represents a 15.4 percent increase.
The sums could be obtained by fiscal relaxation measures, consider government representatives, as well as by an expansion in the taxpayers' base, improving collection methods and fighting fiscal evasion.
The draft law for the budget has set a 0.2 percent reduction in the ratio of expenses in the general budget as a proportion of GDP, to 31.7%. In nominal terms, expenses are expected to increase by 13.9 percent, up to 28.7 billion euros in 2006.
The revenues of the social insurance budget should increase by 12.4 percent in nominal terms, to 5.5 billion euros, while those of the unemployment budget should be boosted by 2.6 percent, up to 591.8 million euros.
Expenses for products and services should decrease as a ratio of GDP, down to 6.5 percent, alongside a reduction in interest rates for public debts, from 1.3 to 1.1 percent.
Industrial production is expected to increase by 4.4 percent, while import and export operations are expected to be boosted by 15.8 and 14.6 percent respectively.
The draft law envisages a 2.5 percent increase in the collective consumption of the public administration. 
The differences between the proportion of GDP and the nominal terms result from the six percent hike in GDP forecast for next year to 90.6 billion euros. The average exchange rate calculated for next year's budget is 3.55 RON per euro.
The draft will be analyzed together with the experts of the International Monetary Fund (IMF), who are expected to arrive in Bucharest on October 20. The draft law will be submitted to Parliament for approval.

The draft budget for next year should be focused on projects and contain detailed explanations for each destination of the funds, said President Traian Basescu. "I requested the budget should be extremely accurate in using the money," added Basescu.
The chief of state made an example of the Ministry of Transportation, which should include in its budget details of their projects, such as road kilometers and necessary funds.

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The winners of Nobel Prize in Economics in 2005 are Israeli Robert Aumann and American Thomas Schelling, the Nobel Committee announced on October 10.

The scientists were awarded for the ?comprehension on conflict and partnership by game theory?, says the official statement.  Schelling used game theory that gives the possibility of rational decisions in the lack of information situation. His principal work, printed in 1960s, is named ?Strategy of Conflict?. In this work, Schelling showed that the possibility of countermeasures is sometimes more useful, then the possibility to withstand the attack, or that ?possible unknown revenge is more effective than known inevitable revenge.?

Aumann studied the possibility of keeping needed results for a long time. His works explain such conflicts as price and trade wars, and they also reveal negotiation mechanisms in different situations ? from rising wages to signing international trade deals.

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CeWe Color, the German photofinishing company, will enter the Romanian market and Lithuanian, Slovenian and Croatian ones, according to company officials.

CeWe Color has been supplying Poland, Hungary, the Czech Republic and Slovakia since the early 1990s. Central and Eastern Europe, with a sales volume of more than EUR 61 million, is one of the most important markets for CeWe Color, say officials. It will supply the Croatian and Romanian markets from Budapest, while Slovenia will be supplied from Bratislava and Lithuania from Graudenz, Poland.

"Our main competitors are regional industrial processing companies and small developing labs in the retail networks," Rolf Hollander, president of CeWe's administration council, said. He believes the company will soon become market leader in these new countries.

The market potential for color prints is still not great, but digital photography is becoming increasingly popular, according to him. CeWe is active in 14 European countries with 22 production units. In 2004, turnover amounted to EUR 428.5 million.

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Shareholders of Bucharest-based ventilation and air conditioning equipment manufacturer Ventilatorul are expected to increase the company's share capital by 8.7 million lei from the current level of 3.1 million lei, as it plans to issue 1.58 million shares with a face value of 5.53 lei each.

The company's shareholders approved the operation at the end of September and will benefit from preemption rights to acquire shares at 5.53 lei each. Shareholders will be able to buy a volume of shares that is proportional with the package held on October 14. Shares left unsubscribed at the end of the preemption period will be annulled.

The company's majority shareholder is Contips Limited, controlling a 66.8 percent stake. Contips Limited represents the interests of a group of companies from Israel, Belgium and South Korea.

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Romania is included in a list of seven countries offering numerous investment opportunities for retail and consumer companies, reads a survey by PricewaterhouseCoopers dubbed ''From Beijing to Budapest. Winning brands. Winning formats.

'' The list encompasses China, India, Turkey, Vietnam, Russia and Bulgaria. Romania, Russia and Bulgaria are on this list for the first time, because of the progress registered in shaping the framework for a market economy. The survey is radiography of the economical, cultural and social situation of 20 transition economies from Asia and from Central and Eastern Europe.

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AQUILA&SECA group of firms, which operates in the field of consumer goods distribution, plans to expand its activity in the Balkan region, after estimating a turnover of more than 97 million euros for 2005, the Ziarul financiar reads on Tuesday.

The group is one of the few Romanian distribution companies to announce a policy of expansion outside Romanian borders. One of the two shareholders in the AQUILA&SECA group, Catalin Vasile, said that the group's intention is "to gain one of the top three positions among logistics services providers in Romania".

In what the company's profits are concerned, these saw a slight increase during the 2003-2004 period, mainly due to the growth in consumption. Vasile believes that the Romanian distribution market has gained strength, even if it has had to face an increased competition with major international companies, both in retail and wholesale. The total value of Aquila&Seca's investments is 14.2 million euros.

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TechTeam Global bought the Romanian company Akela Informatique last week for EUR 2.45 million in cash and EUR 250,000 worth of TechTeam common stock, Business Review reports in its latest issue.

Up to EUR 450,000 more may be paid by TechTeam if Akela reaches specified gross profit objectives during the 2006 and 2007 fiscal years and satisfies various other conditions that were not disclosed by TechTeam officials. "The collaboration between TechTeam Global and Akela began two years ago when we decided to implement the HR solution developed by Akela," Vali Covaciu, country manager of TechTeam Global, told Business Review.

The acquisition contract was signed on October 3, after negotiations that lasted for several months. At present, TechTeam's subsidiary in Romania employs more than 150 people, and the total TechTeam Global staff in Romania including Akela, will now amount to over 250. TechTeam Global entered the Romanian market at the beginning of 2004 and invested more than $2 million in starting up its activities.

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The inflation rate was 0.6 percent in September, while in the nine months of 2005 the average monthly inflation rate also stood at 0.6 percent, down from 0.7 percent in the same period a year ago, the National Institute for Statistics (INS) said.

Prices in this September increased by 5.8 percent on December 2004, while from September 2004 they grew by 8.5 percent. The prices for non-foodstuffs posted the highest increase, 0.7 percent, in September against August. Foodstuffs and services were by 0.2 percent more expensive compared to August. Prices for services went up 9.4 percent from September 2004, while prices for non-foodstuffs and foodstuffs went up 11.4 percent and 5 percent respectively, the INS announced.

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The gross index of the industrial production registered a 1.4 percent increase over the first eight months of the year compared to the same period of the last year. The processing industry grew 2.4 percent over the same period, the National Statistics Institute informs.

Labour productivity in industry advanced 3.7 percent over the analysed period. Total turnover of companies operating in industry reported a 3.1 percent increase in real terms over the analysed period, and 4.7 percent in August 2005 compared to August 2004.

The main resources of raw energy totalised 27.591 million tonnes equivalent of crude oil, of which 16.323 million tonnes represented domestic output.

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The number of jobless persons registered until the end of August 2005 in Romania was 499,000, on the drop by 53,600 persons against 2004, INS informs. Of the total number of unemployed, women represented 42.5%.

The unemployment rate registered in August 2005 was 5.6% compared to the total active civilian population (6.2% in August 2004). The same month the jobless rate for women was 5% (5.5% in 2004) and 6% for men (6.8% in 2004).

High unemployment rates were registered in Hunedoara (10.5%), Mehedinti (10.2%), Ialomita (9.7%), Galati and Vaslui (8.5%).The lowest jobless rates were in Bihor (2.1%), Timis (2.3%), Ilfov and Satu Mare (2.8%) and in Bucharest (2.7%).

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With 25 exhibiting organizations,Romania's presence at OutsourceWorld-New York this October 18-19 is being coordinated by the Romanian government and ARIES, Ministry of Economy and Commerce, and the Romanian Trade Promotion Center, and organized by IDM TOUR Company.

Romanian exhibiting companies include: ARoBS TRANSILVANIA SOFTWARE, KODIMENT SOLUTIONS, GECAD Cvantage, SAS, pintilie.RO, INFODESIGN, DesignMySoftware, MULTIMEDIA CAPITAL ROMANIA, IntegraSoft, INFOBEST Romania, APAL INFORMATIQUE, FORTECH, ZITEC, OFFNET, CARPE DIEM SOLUTIONS, MAGIC
SOLUTIONS, CAMBRIC CONSULTING, 2m computers, CONECTYS, GZK Software, OPTOEL,
VEGRA, INTERSOL, INTELIDEI and DANETIEL.

Display areas are specially arranged for conferences and will be in accordance to the number of exhibitors, volume of exhibited products and the event's profile.  The fair will have an Information Desk that will ensure the presentations of participants who will show their development strategies and resources and projects under consideration in the medium and long terms.

On October 18, a conference will be held at 3:00 p.m. in the conference area, followed by a cocktail reception, business meetings, round tables, etc. The presentation will be "Romania - European Outsourcing Tiger" by Florin Vrejoiu (Vice-president, ARIES Romanian Association for Electronic & Software Industries). The theme is "ARIES - New Vision - Outsource World."

ROMANIA - The European Outsourcing Tiger
Located at the intersection of three large markets -- the European Union, the former Soviet states and the Middle East -- Romania promises to follow in the footsteps of India and Ireland as a success model in the development of the IT sector.

Companies such as Siemens, Motorola, Alcatel, Solectron, Alvarion and Infineon understand this situation and have developed profitable activities benefiting from the great opportunities this market offers.

The great advantage of the Romanian IT industry consists of the quality and creativity of its young specialists, proven by their constant first-place wins at most international mathematics and informatics competitions and world inventors' exhibits.

Every year, the university educational system prepares more than 5,000 specialists in this area, which leaves Romania mentioned in international statistics as having the highest density of specialists and, at the same time, an advantageous price/performance ratio. Public university education is organized in 29 cities and includes 59 institutions. Private university education is organized in 174 colleges.

Romania holds fifth place among EMEA countries (Europe, Middle East and (Africa) and eleventh worldwide in the Cisco Networking Academy program, with a total of approximately 3,000 students enrolled in 105 local Cisco academies.

In 2001, the first Ericsson academy opened in Romania; in 2002, Autodesk gave Romanian universities the largest donation in the world -- US$64 mil in software products.

Knowledge of the English language of all IT specialists from Romania, a significant German minority together with several German-language schools, as well as links with the French, Spanish and Italian languages, due to Romanian's Latin origins, make linguistic barriers seem almost nonexistent in Romania's case.

Over 3,500 software-producing companies operate at present in Romania, located mainly in the great university centers of Bucharest, Timisoara, Cluj, Brasov and Iasi.

The competitiveness of Romanian companies is illustrated by Microsoft's acquisition of the GeCAD RAV product for use in Microsoft Security Solutions.

In past years, the annual growth rate of Romanian IT companies has exceeded 25%, and that of exports 60%, while GDP growth has been below 5%.

One of the greatest challenges of the current stage is mobile telephony, especially content development. The Romanian business environment is profiled as exceptional, having complied with almost all international standards of mobile telecommunications. GSM and CDMA exist, and the first implementations in UMTS standards have come out, coupled with the special attention the government grants e-content programs. Romania has registered one of the largest growths in mobile communications in Europe in the past five years.

The area's legislative framework is in an advanced harmonization process with the European Union's recommendations, many of the important laws having already been approved: copyright law, electronic signature law, electronic commerce law, legislation regarding personal character data processing, protection of private life in telecommunications sector, etc. In March 2001, the Group for Promotion of Information Technology was created.  It functions as a task force, led by the Prime Minister and having as members seven other government ministers. The group ensures a coherent, coordinated approach to
implementation of the Information Society in Romania, having as main tasks elaboration of strategy and approval of all major projects in the field of information technology and communications.

Romanian government efforts at developing e-government have received international recognition on several occasions, proving that Romania is one of the world leaders in bringing IT technology into the public administration field.

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A high-level Romanian delegation, which includes 12 oil and power company representatives, will be visiting India from October 22. Led by the country?s commerce minister Loan Codrut Seres, the delegation will explore cooperation in several sectors including energy, automotives, heavy machinery, pharamaceuticals and real estate.

Embassy officials told FE Mr Seres, who will be visiting India at the invitation of petroleum and natural gas minister Mani Shankar Aiyar, will meet his counterpart Kamal Nath and also power minister PM Sayeed.

Also, during the four-day visit to India, the Romanian commerce minister will attend a business seminar on India-Romania investment opportunities organised by CII.

The delegates will also have meetings with Indian corporates like the Tatas, Birlas, Mahindra & Mahindra to discuss investment opportunities and joint ventures in their country, embassy officials said.

The representatives of oil and power will follow-up the discussions they had with Indian companies during their meetings earlier in the year. And will also have meetings with officials from ONGC, IOC, GAIL and EIL. The two countries recently had extensive discussions for cooperation in energy and defence as they both felt that there was tremendous scope for cooperation in these sectors.

According to officials, Indo-Romanian economic ties have been on an upswing in recent years, with trade doubling each year in the last few years. It is expected to touch around half a billion dollars in 2005. It maybe recalled that Mr Aiyar visited Bucharest a few months back and four MoUs were signed in the hydrocarbon sector.

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Holcim Ltd, the world's second largest cement maker, said it plans to invest more than 150 mln sfr modernising and expanding cement production capacity in Romania over the next three years.

The Swiss company said the investment will help it to tap into growing demand for building materials in Romania, where cement consumption is forecast to rise 5 pct this year.

Holcim is present in more than 70 countries and on all continents.

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Ministry for Transport, Constructions and Tourism (MTCT) is holding talks with the European Investment Bank (EIB) for the allotment of funds for the recovery of infrastructure affected by floods and for the prevention of floods.

''At present talks are underway with the European Investment Bank for about 230 million euros to be used for the prevention of flooding, 115 million euros for rail infrastructure and 115 million euros for road infrastructure,'' state secretary with the Transport Ministry Constantin Dascalu told Rompres.

The Romanian government has so far earmarked around 70 million euros for the recovery of flood-affected roads. Other financial institutions have also announced their intention of allotting funds for the infrastructure recovery. EIB informed it is ready to extend about 600 million euro for the recovery of flood-hit areas and infrastructure.

European Commission vice-president Franco Frattini said late in September in Bucharest that advanced talks with the Romanian government are underway for the grant of 500 million euros by several bodies of the European Union and of EU member states. Frattini said the Europeans Commission extends funds through several mechanisms such as the EU Solidarity Fund and the three pre-accession instruments - PHARE, SAPARD and ISPA.

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The northeastern Suceava county is conducting as many as 97 projects under SAPARD programme, therefore ranking first in Romania in this respect, director of the Agriculture General Directorate (AGD) Dragos Juravle said.

As many as 74 projects are carried out through the AGD Technical Delegate Service based in Suceava. With respect to the processing of farm and fishery products, 12 projects have been contracted out of the 15 projects submitted, and their overall value is 11.3 million euros.

On investment in agricultural farms, out of the 21 projects worth 2 million euros, 18 have already been contracted for 1.5 million euros, while the remaining three projects are currently being contracted.

Out of the 38 projects put forward for the measure on the development and diversification of the economic activities meant to generate multiple activities and alternative incomes, worth a total six million euros, as many as 33 projects have been contracted so far amounting to an overall 5.3 million euros.

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Starting next year, Romania might have a few beaches attested by the Blue Flag International Organization, said the new president of the National Authority for Tourism (ANT), Ovidiu Iuliu Marian.

The ANT president wants to convince the representatives of the local authorities and the ones of Apele Romane to grant again the beaches on the Black Sea shore, as, in the opinion of the above-mentioned newspaper, one of the factors keeping foreign tourists away is the low quality of the Romanian beaches.

"They hope that, at the beginning of the next summer season, ten beaches and the harbour at Eforie Nord should be assessed. The programme is very ample and refers to the quality of the water, the quantity of algae and jellyfish, the finesse of the sand and, last but not least, the quality of the connected services," says the ANT president.

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The rise in mortgage loans extended in foreign currencies this August outpaced the rise in the same loans extended in the local currency, the leu, with the weight of forex mortgage loans in the real estate investment increasing to almost 92 percent, daily Ziarul financiar reports .

Mortgage loans increased by 4.4 percent up to approximately 1.14 billion euros, while lei loans posted a slight increase of only 3.4 percent, reaching some 100 million euros. In spite of all pressure from Romania's Central Bank (BNR), customers prefer foreign currency loans due to smaller interest charged on them. Yet, interest charged on lei credit has started to go down to under 10 percent, which might create real competition in the future. At the same time, some commercial banks, especially those owned by international financial groups, can raise foreign currency credit with smaller costs and also much easier than they raise lei loans.

Bankers are expecting most of the debtors to draw incomes in euros in the long run, as Romania will switch over to the single European currency in a few years after she accedes to the EU, and then the pay-back of the credit in foreign currency would become easier and safer, the paper mentions.

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The Romanian IT&C market totaled 3,637 billion euros in 2004 and is expected to rise to 4,153 billion euros in 2005, the Ziua daily quotes statistics of the European IT Observatory (EITO) as saying.

When it comes to the software industry, EITO estimates the area of software systems, applications and products will generate 168 million euros this year, and that of services 116 million euros.

Irina Socol, the general manager of the SIVECO company, which was awarded a prize by the readers of the Bucharest Business Week review, said that Romanian software firms attach much importance to increasing the value of the international business environment. ''We believe the Romanian specialists have a say in high tech and only constant investment in research and development can lead to long-lasting growth,'' said Irina Socol.

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At the end of last week, the Ministry of Environment and Water Management launched the national Strategy for flooding risk management, which observes the latest directives of the European Commission, being based on the European principle dubbed "More space for water".

The first step which is going to be made after the implementation of this strategy is the enforcement of the Water Management Programme (WATMAN), which implies the setting up of several centres for intervention at the hydrographical basins, more precisely, the installation of specific equipment at 96 dams across the country.

The total value of the project was estimated at 154 million dollars, being accomplished with international financing. The strategy is still analysed by the Public Finance Ministry, in order to get its approval.

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An exceptional economic growth, coupled with a rapid expansion of crediting, generated a 53.5 percent rise in the total volume of bank assts recorded in Romania in 2004. This was the highest 2004 growth rate of bank assets recorded in Central and Eastern Europe (EEC), show findings in a study conducted by Austrian Raiffeisen Bank group and released Monday.

The same study estimates that in 2005 Romania will record a 5.5 percent economic growth, a per capita Gross Domestic Product (GDP) of 7,930 euros, an inflation rate of 8 percent, a current-account deficit of 8.7 percent as well as a 27.5-percent ratio of foreign debt to the GDP. At the same time, the study shows the average exchange rate of the local currency, the leu (RON), against the euro will be 3.58 RON this year.

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The charge d'affaires of the U.S. Embassy in Bucharest Mark Taplin hailed on Monday on behalf of the U.S. Government the launching of the National Institute for the Study of Holocaust in Romania "Elie Wiesel".

Mark Taplin hailed the opening of the archives and the implementation of the report of the International Commission regarding the Study of Holocaust in Romania, presented in November 2004, whose conclusions show that there was holocaust in Romania during the Second World War. He stressed the importance of introducing this subject in the educational curriculum and said that the new Institute is to play a key role in the issue.

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Massive illegal cultivation of genetically engineered (GE) crops threatens farmers and the economy in Romania. At a Greenpeace press conference today in Bucharest, Monsanto's former general manager in Romania warned that Romanian authorities have totally lost control over genetically modified organisms in the country.

During a research tour in Romania, Greenpeace discovered illegal growing of GE soya in ten counties of the country's total 42. Greenpeace presented findings that prove that Romanian authorities have lost control over the situation. Romania, a future member of the EU, is the only country in Europe where planting of the controversial Roundup Ready (RR) soya is allowed. The country has the largest GE-cultivated landscape in Europe; officially half the 140,000 hectares of soya planted in 2005 is registered to be GE. However, according to representatives of farmers' associations and even biotech giant Monsanto's former Romanian manager, up to 90% of soya is GE. The core of the problem is due to genetically engineered crops contaminating the traditional cultures, as well as the illegal selling of GE soya seeds.

Gabriel Paun, Greenpeace Central-Eastern European (CEE) campaigner in Romania said: "In the past few months we have found GE potatoes, GE plums and now it turns out that even the commercial planting of GE soya happens illegally. What's next? The Romanian government must act immediately and take back control of the situation."

Mr. Dragos Dima, former Monsanto general manager in Romania agrees with the fears. Speaking at the press conference, he said: "Such a huge surface of uncertified GM soya is not tolerable due to lack of monitoring and control systems. I left the company because I expressed my concerns regarding the introduction of GM technology in Romania. I believed that neither Romania nor the company were ready and able to monitor and control the GM technology. Unfortunately, the management has not listened to my concerns and the situation today shows a total lack of control over the GM technology." Mr. Dima left Monsanto in December 1998, while GE soy was introduced in Romania in 1999.

"Monsanto knowingly pushed Romania in a technology that had to lead to a situation out of control. Romanian farmers and food companies now have to suffer the economic consequences," added Paun.

Since their introduction in 1996, GE crops have contaminated food, feed, seed and the environment right across the globe. Worldwide over 100 incidents of illegal or unlabelled GE contamination have been documented in 27 countries on 5 continents - and those represent only the recorded incidents. For more information visit www.gmocontaminationregister.org

Greenpeace is an independent campaigning organisation, which uses non-violent, creative confrontation to expose global environmental problems, and to force the solutions that are essential to a green and peaceful future.

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Romania's government expects strong economic growth to continue in 2006 and wants to cut the budget deficit to 0.5 percent, Prime Minister Calin Popescu Tariceanu said Monday.

Inflation is expected to drop to 5.5 percent in 2006, down from about 8 percent in 2005. The government also wants to cut the current account deficit to 6.9 percent, down from 8 percent this year.

The economy is expected to continue to grow strongly at about six percent next year, up from about 5.5 percent in 2005.

The budget also takes into account the creation of about 100,000 jobs, which will help raise tax collection by 15.4 percent.

The budget deficit target for 2005 was initially 0.7 percent, but Finance Minister Sebastian Vladescu recently warned that record flood devastation would push that figure higher. Analysts expect it to reach about 1 percent.

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Greece's Parliament will ratify both Bulgaria and Romania's European Union (EU) Accession Treat before October 25, it emerged Monday.

The news was broken by Stavros Dailakis MP of the ruling New Democracy Party of Greece following his meeting in Sofia with Bulgaria's Euro-integration Minister Meglena Kuneva.

October 25 is the date when Bulgaria expects the European Commission to publish its next report on the country's progress towards EU membership.

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Several banks from the retail market that operate in Romania have moved forward with modifying interests for credits reacting to the newly enforced BNR's norms, ACT Media news agency reports.

Raiffeisen Bank was the first large banking institution from the retail market to reduce interests for credits in ?lei? sometimes by up to four percentage points.

Thus, the yearly interest for residential credits in lei is now 13.5%, the interest for car-acquisition credits is 15% a year.

The bank disburses its FlexiCredit for 17.5% a year and the overdraft credit for 22%.

On the other hand, Raiffeisen also slashed the interests for deposits in lei down to 4.5% for one-month terms, respectively to 5.2% for deposits set up for one year.

At the moment, the bank no longer grants credits in foreign currency, because it has exceeded the ceiling imposed by BNR. Piraeus Bank launched two new credit instruments in lei, addressing natural persons.

For the car-acquisition credit the bank charges a floating interest of 11.9%, updated by the BUBOR.

The credit for personal needs is disbursed over a maximum of five years, for an interest of 13.9%.

The bank also announced that it would rise its own capitals, in order to be able to further disburse credits in foreign currency.

Alpha Bank Romania announced that it would double its own funds to 240 million euros.

Some 60 million euros will be supplied by a capital increase and a credit will bring in another 60 million euros.

The bank prepares new instruments for the retail activities, the most important being the residential and consumer credits.

Daewoo Bank will also amend its interests for deposits in lei.

The bank will pay 6% for a one-month depositl, 6.25% for three-month deposits, 6.5% for six-month deposits, 6.75% for nine-month deposits and 7% for one-year deposits.

For deposits on term with a maturity of less than one year set up by judicial persons, the bank ill pay an interest of 3.5%.

Pensioners and students get an extra 0.24% against the standard interests for deposits in lei.

Daewoo will also amend the interest for the deposit Maxim.

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In Romania, on October 9, they commemorate the Holocaust, a date marking the beginning of the Jewish population being deported to Transnistria in 1942.

According to a press release issued by the Ministry of Foreign Affairs the Holocaust Day is particularly important for the entire nation first of all due to its symbolic character. The events commemorating the Holocaust Day this year are focused on the cultural and educational dimensions.

The main moments will be the opening in Bucharest of the National Institute for Studying the Holocaust in Romania and of the Centre for Hebrew Studies in Iasi (eastern Romania) as well as the launch of the textbook for the optional course of lectures on the Holocaust titled "History of the Jews: the Holocaust."

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The representatives of the International Monetary Fund and of the National Bank of Romania (BNR) on Friday and Saturday, in Sinaia (southern Romania), discussed the implications of the rapid growth of the credit in Central and Eastern Europe, reads a release .

The discussions were occasioned by the regional conference on the rapid growth of the bank credit meant for the banking system. Representatives of the supervising authorities from 21 countries in Central and Eastern Europe, from some European Union member states, of some international organizations (the Bank for International Settlement, the Committee of European Banking Supervisors, the European Central Bank) as well as of the National Bank of Romania.

The debates mainly focused on the rapid growth of the credit in the countries in the region and offered a good opportunity for the participants to present their countries' experience in the field.

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Romexterra Bank is currently discussing with several large European and US financial groups the possibility to sell the controlling stake, but it also seeks bourse listing ? Romexterra president Adrian Radu said. The bank president added that the 120,000 shareholders are still examining the complex bourse listing process and that if it gets their okay, the move would take place next year.

In order to enhance its transparency, the bank requested ratings from Standard & Poor?s (S&P); the agency?s report was given to publicity this week, conferring a ?B? rating on Romexterra, with stable outlooks. ?The bank?s approaches for getting rated reside in the fact that it could get easier access to foreign finance and are also correlated with the shareholders? intention to have the institution listed on the bourse,? said Radu.

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According to a provision freshly introduced by the National Commission for Transferable Securities (CNVM) in the Regulation concerning the establishment of the Central Depositary, if the latter is agreed as unique registrar of government stock, the Ministry of Public Finance will be allowed to appoint a representative in the Board of the depositary.

The FinMin?s representative can attend all the Board meetings the agenda of which includes issues related to the government stock market and has a veto right only for subjects concerning the respective market.

CNVM approved on September 29 the Regulation for the authorization and functioning of the Central Depositary, Clearing houses and Central counterparts. According to the Regulation, the shareholders must apply with CNVM for the release of the establishment authorization for the Central depositary no later than November 30.

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The draft budget for 2006 is ?well balanced and counts on a deficit of just 0.5%?, Minister of Finance Sebastian Vladescu announced on Tuesday, adding that next year?s priorities will be infrastructure, education, public health and research. Particular support will be provided to the projects in these sectors, capable to help Romania?s development and evolution towards the European community ? added Vladescu. Although the budget will be restricted at 30% of the GDP, the authorities hope this will be enough to ensure the normal functioning of all State institutions.

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Romania does not yet have a fiscal strategy; it might be completed most probably next year ? Minister of Public Finance Sebastian Vladescu told a televised broadcast this Tuesday.

?At present, we do not have this strategy (...), but we are working on a medium-term fiscal strategy,? said Vladescu, adding that his predecessor Ionut Popescu had made the start and that the present FinMin team is continuing his efforts, so that the strategy be completed in 2006. Vladescu specified that this work takes so long because ?we should define Romania?s GDP, but we are unable to do that because of the events that are beyond our control?The floods, for instance, caused a change in the GDP and implicitly a change in budget revenues, triggering a chain reaction. Depending on budget revenues, we can see what expenditures we can afford. We are also confronted with the problem of EU-related funding, we need to establish the corresponding amounts of co-financing?, said the Finance Minister.

Vladescu added that as a first step, the business environment can count on the stability of the main taxes in 2006, and that talks over the fiscal program for 2007 ? 2008, 2009 and eventually 2010 ? 2011 will kick off in the first quarter of the coming year.

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In reply to criticism by representatives of the business environment over the planned changes in the Tax Code as of January 1, 2006, Minister of Finance Sebastian Vladescu expressed his confidence that no disruptions will occur, with the ?exception of particular sectors that the authorities really want to shake up.?

Vladescu said that that far from obstructing the development of economy, the new taxes will have a stimulating effect. ?The major taxes and levies will stay unchanged. There will indeed be a tax on cars that exceed a given cylinder capacity and on yachts, but I don?t believe that this will affect the Romanian business environment,? said the FinMin, adding that if the operated changes do not yield the expected outcomes, the Tax Code will be amended again.

?We want to ensure economic stability, predictability over the defined period and the functionality of the social security system,? declared Vladescu.

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The new interest of the deposits in lei of the main banks in the Romanian banking system will stand at some 4 to 6 percent annually. After the Romanian Commercial Bank (BCR), the first bank in the Romanian system, the Romanian Development Bank (BRD)- Societe Generale, the second bank on the market, operated a decrease of one percent in the interests to the lei deposits, which currently oscillate from 5 percent per year for the maturities paid on a monthly basis to 5.75 percent per year for the maturities on an annually basis.

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Sarantis Romania, the Romanian branch of Greek cosmetics firm Sarantis, reported 22.1% higher turnover in the first nine months of the year against the similar period of 2004, to 20.05 million euros.

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Sun Motorway will have approximately 50 new km in 2006, declared Transport Minister Gheorghe Dobre, in a televised show. ?Next year we intend to have double lanes on the whole section Drajna - Cernavoda, meaning that 52 to 54 km of motorway will be finalised?, said Dobre.

Romania is trying to speed up the motorways construction, since it is lagging behind EU members and even EU candidates, with only 226 km of motorway built so far.

?In order to build Corridor IV, which includes the Sun Motorway, we need approximately EUR 4 - 5 bln, making up for an average of EUR 4 M per km, considering that the length of the corridor is over 800 km?. The Minister emphasised that besides Corridor IV, which will be finalised in 2011, the Bucharest - Brasov motorway also has to be included in the calculations. ?In the next stage we took in consideration Bucharest - Brasov, where Comarnic - Brasov is a priority section; this will be the section with which we will have to start.?

In reply to the accusations brought by former Transport Minister Miron Mitrea, accusations of having blocked the construction of Brasov - Bors, Dobre replied that the negotiations were temporarily stopped because the public money was used inadequately. ?This motorway, which would have been built in public private partnership, would have cost EUR 6 bln? Dobre said.

The Minister said that for building the road infrastructure, international financial institutions are willing to offer Romania special conditions. ?Two weeks ago I had a discussion with European Investment Bank?s Vice-president, and they are considering giving us funds with a grace period of 7 years and a pay back period of 25 years? Dobre explained. The European Investment Bank is also preparing to lend approximately EUR 230 M, which are to be split in half and distributed to reconstruction of roads and railway infrastructure, following the floods of this year. Funds are also destined to works for preventing the risk of flooding.

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Foreign companies wishing to invest in Romania must work hard to find reliable partners and strong legal counselling, and they must research the market very well before investing in Romania, the economic counsellor of the United States Embassy in Bucharest, John Rodgers said, quoted by Rompres.

Although there are signs that the domestic business climate is improving, the American officials are still pointing toward chapters where Romania still has much to work in order to narrow the existing gap in terms of conditions provided to investors in Western Europe. ?The economic situation is improving rapidly, there is a dynamism across the country and the region, but we warn the companies wishing to invest here that the current conditions are still very much different from those in Western Europe,? Rodgers explained. In his opinion, Romania is still lagging far behind in terms of the legal system, associated with the transparency necessary in this sector, and the main negative aspects in this respect are the lack of court competence, impartiality and understanding of what free market means among judges.

US companies in Romania are frequently complaining about bureaucratic delays, non-transparent governmental regulations, while the frequent modifications of legislation and the corruption are still substantial problems that harm the business climate in Romania, especially for the foreign investors, the American official added.

The Romanian legal system?s inadvertences are being, for a long time, the main reason for complaints by foreign investors, the unpredictability of the local judicial system doing no less than putting investors on the run, as they seek adequate conditions that would secure them stable results. ?In any country around the world, political stability and the predictability of the legal framework are essential conditions for stable results of investments in an economy, Rodgers pointed out, who said that the political stability of Romania is well demonstrated. However, though there is still progress in terms of legal system and transparency, these fields continue to cause uncertainty among investors. Furthermore, Rodgers considers that fair investors are at a disadvantage, while economic delinquents are still operating here apparently without consequences, and this attenuates Romania?s international prestige and taint its reputation in the business field.

Referring to the prestige of American companies that seek to enter Romania, the US diplomat thinks counselling bureaus are necessary. ?The more it takes them to make an offer, the more there are chances that investments go somewhere else, taking all the employment opportunities and the know-how with them,? John Rodgers stressed.

According to the US official, direct investment with American capital totalled USD 771.1 M at end-June, meaning 5.35 per cent of the total direct investment attracted by Romania since 1989. The most attractive sectors for the US investors are heavy industry, the industries of electronics, natural gas equipment, engineering, digital engineering and design, IT&C, the banking sector, general and life insurances, consumer goods. The United States are an important investor in Romania, and the Americans are interested by almost all the sectors of the economy, particularly by the natural gas and electricity sector, the mining and defence industries, Rodgers declared.

US-Romanian trade exchanges could exceed USD 2 bln in 2005

On the other hand, with regard to the Romanian-American trade exchanges, Rodgers said they could exceed USD 2 bln. by the end of this year, especially as in the first eight months of 2005 they had reached a volume of USD 1.4 bln. ?Based on the current trends, we can estimate that US exports to Romania might reach USD 1.1 bln. at the end of year 2005, while imports from Romania could reach USD 1 bln.,? explained the American official. In the first eight months of the year, Romania?s imports from the USA topped USD 738.4 M, while its exports to the USA went up to USD 724.8 M. In year 2004, bilateral trade exchanges totalled USD 1.6 bln., of which USD 934 M were imports and USD 667 M were Romanian exports to the United States.

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The Romanian Commercial Bank (BCR) will be listed on the stock exchange through a public sale offer after a three-year period from its being taken over by one of the present participants in the privatisation process. This obligation is also accompanied by assignment of dividends of at least 40 per cent of the net profit registered over the period until the shares are listed with the stock exchange, stated sources within the shareholders? structure, informs Mediafax.

These stipulations are part of an agreement signed by the five financing investment companies (SIF), shareholders at the bank and the BCR privatisation commission, and will be included within the majority shares? package sale contract. In return, the five SIF agreed to give up the stipulations within the BCR statute regarding the adoption of certain decisions with a majority of at least 75 per cent of the votes, also mentions the quoted source.

On the other hand, according to ?Ziarul Financiar? daily, the American investment bank Goldman Sachs evaluated BCR, at Erste Bank?s request, one of the bidders, at between EUR 3.8 bln and EUR 5.8 bln. The quoted sources claim that during the talks on the protocol, the authorities? representatives allegedly replied that the privatisation price will increase the value of the bank to over EUR 5 bln. Recently, the privatisation commission has announced that the offered price will represent 90 per cent of the valuation grid to decide between the competitors and that the technical criteria counts only for 10 per cent. On the background of the score obtained, the offers - which have to be submitted by October 17, 2005 at the latest - will be analysed and two investors will be selected for the final negotiations. The race for the BCR take over still involves Fortis, Banco Comercial Portugues, The National Bank of Greece, Intesa Bank, Deutsche Bank AG, Erste Bank AG, Dexia, KBC and BNP Paribas. The banks will submit offers for the purchase of 61.8825 per cent of the BCR?s shares. AVAS is the main shareholder at BCR, with 36.88 per cent, and it also has the option to buy back the packages held by EBRD and IFC if the two institutions do not sell the shares directly to the bank?s buyer.

IMF and BNR debated rapid credit growth in the region The International Monetary Fund and the National Bank of Romania (BNR) held a joint regional conference on Rapid Growth of Banking Sector Credit to the Private Sector in Sinaia, Romania, on October 7-8, 2005.

Staff from Central Banks and supervisory agencies from twenty one countries in Central and Eastern Europe and some other EU member countries, as well as a number of international organisations, including the Bank for International Settlements, The Committee of European Banking Supervisors, and the European Central Bank, participated in the conference.

Discussions focused on issues arising from rapid credit growth observed by countries in the region and participants shared information about country experiences. It is intended that the proceedings of the conference will be published in due course.

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With hotel prices rising and Bucharest losing its affordable hotels to refurbishment as parts of big hotel chains, travelers are often forced to pay premium prices for a hotel room. Many companies have found a simple and more affordable answer for their accommodation needs: luxury short term apartments. Such apartments can be rented from one day and discounts are available for longer stays.

Eduard Tomescu, Managing Director at Bucharest Invest, said that foreigners coming to Romania, for the first time stay in a hotel first, but those who have been to the city before, opt for serviced apartments. "Many spend their first couple of nights in a hotel and later move to a serviced apartment. Renting a short-let for a short term as opposed to staying in a hotel makes a lot of sense because they can be a budget option for travelers, especially in the face of a looming 20 percent increase in hotel room prices and 100 percent occupancy at the hotels".

"The demand for less expensive, private accommodation is increasing." Eduard Tomescu confirms the trend that is continuing to boost business for accommodation agencies. According to in-Bucharest.com, a cheap hotel room with a shared shower is available for ¤50. This might not be a lot of money for some, but for many travelers, workers, trade fair exhibitors or people coming to Bucharest as a result of the economic upswing, these forms of accommodation are simply too expensive. This is why more and more people are opting for private lodgings. In this sector, accommodation can be rented from ¤35 upwards, or even less for long-term bookings. in-Bucharest.com alone registers up to 20 enquiries a day.

The serviced apartment market has emerged as a most cost-effective alternative to hotel accommodation and, at times the only option to consider. High in comfort, low in cost with complete consistency. Three stars rating that provide a good benchmark for anyone needing to stay, for whatever length of time, away from home.

Alia Accommodation & Rent a Car Bucharest was founded in 1993 as one of the first Romania-based, branded apartment product. It quickly established itself as one of the best Romania brand of medium priced corporate apartment accommodation.

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By Martin Dokoupil BUCHAREST, Oct 9 (Reuters) - Romania, which for decades denied any part in the Holocaust, must teach its children that Jews were murdered on its territory, the foreign minister said on Sunday as Romania marked its second Holocaust Day. "Admitting what happened, and a proper education of the young generation, will prevent similar events taking place," Foreign Minister Razvan Ungureanu was quoted as saying by state news agency Rompres. Ungureanu was attending a memorial ceremony in the eastern city of Iasi for hundreds of thousands of Jews killed during Romania's World War Two alliance with Nazi Germany. He later opened a Jewish Studies Centre in Iasi, where most of Romania's pre-war Jewish population lived. "The city of Iasi has a responsibility to study Jewish history in Romania and to present the Jewish contribution to Romanian culture," said Paul Shapiro, head of advanced studies at the Holocaust museum in Washington, who also attended. Romania, which is a member of NATO and is due to join the European Union in 2007, only admitted its role in the Nazi genocide in 2003, when a government denial that Jews had perished on its territory sparked a diplomatic row with Israel. The country observed its first Holocaust Day last year. Romanian children were not taught about the Holocaust during decades of communist rule that ended in 1989, and the subject was introduced into schools only last year following the spat with Israel. Between 280,000 and 380,000 Romanian and Ukrainian Jews were killed by Romanian civilian and military authorities in the Balkan state and territories under its control. Another 135,000 Romanian Jews living in then Hungarian-controlled Transylvania and 5,000 Romanian Jews living outside Romania were also killed, and over 25,000 Romanian Roma were deported, of whom 11,000 died. Romania's war-time marshal Ion Antonescu and his fascist Iron Guard are blamed for pogroms in Bucharest and other towns. Many Jews were killed in death trains or forced labour camps, most in the eastern Transnistria region. "What happened during World War Two represents just a black chapter in the history of relations between Romanians and Jews but the rest is dominated by friendship," Romania's Chief Rabbi Menahem Hacohen said on Sunday. Only around 13,000 Jews now live in Romania. More commemorative events are planned in Bucharest on Monday, including the opening of the Elie Wiesel Institute for Holocaust Studies.

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OCT. 7 10:23 A.M. ET Renault's takeover of Romania's leading car maker Dacia in the late 1990s was the most successful privatization in post-communist Romania, the country's president said Friday.

Traian Basescu, who was a transport minister in the government when it sold Dacia to the French company in 1999, recounted lengthy negotiations with the French car maker.

"There were many questions, but there were also hopes," Basescu was quoted as saying by state news agency Rompres during the opening ceremony of the Bucharest Auto Show.He added that the Romanian side insisted at the time that Renault agree to invest some US$220 million in restructuring Dacia.

"Today the investments have surpassed euro600 million (US$720 million), and they could reach one billion euros (US$1.2 billion) in the next two years," he said, adding that he hoped Romania could find a similar investor to take over a Daewoo plant in the southern city of Craiova.

The government owns 49 percent of that plant and is negotiating with Daewoo to buy back the company, hoping to resell it to General Motors or another major car maker.

Basescu stopped at the Dacia stand and looked at the new, diesel version of the Dacia Logan, a popular model introduced last year.

Dacia chairman Francois Fourmont said Dacia would produce 200,000 cars next year, with about half of them to be exported.

He said the Romanian car market, which has boomed in recent years, continues to grow, with sales expected to reach 250,000 cars by the end of the year, making it the sixth-largest market in Europe.

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Investment fund MCI Management will enter the Romanian market at the beginning of 2006.
It is a technology fund operating as a venture capital holding listed on the Warsaw Stock Exchange.
Tomasz Czechowicz, CEO and managing partner of the fund, said that representatives had started to scan the Romanian market for potential investments and that by the end of 2005, beginning of 2006 they will probably make their first move on the market. MCI has operated on the Polish market since 1998 and from 2004 expanded its activity to the Czech Republic and Slovakia.

The capital available for new investments is about EUR 30 million, and is expected to increase to EUR 50 million in two or three years. Of it, from 5 to 10 percent is destined for the Romanian market, according to Czechowicz. He said that the investment projects in Romania should be worth between EUR 100,000 and 1 million, and the average investment period lasts four to seven years. The expected annual rate of return should be between 35 and 50 percent.

MCI has invested in more than 20 companies from the Central and Eastern European market and made three complete exits until now. ?We chose Romania as the second country for our international expansion mostly due to the positive prospects of the market, economy and technology sector,? said Czechowicz, adding that this would be a good moment for entry because of future EU accession.

The fund?s operations in Romania will be focused on investments in IT, the internet and mobile projects, as well as biotechnology, or life science companies. ?As I see it, the future of business lays in the internet, mobile technology and afterwards, biotechnology,? Czechowicz said. ?We are interested in finding an especially strong management team and a good business plan.?

According to Czechowicz, the fund is interested in already existing businesses, but has not ruled out start-up projects.

The exit strategies of the fund include trade sale, initial public offer on the stock exchange (IPO), post-IPO and selling companies to their managers or to other groups of external managers.

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Two years after full liberalisation of the telephony market, the number of landline and mobile services increased by 56.6 per cent as compared to January 1, 2003, reaching 14.6 million users in late 2004. According to the National Communication Regulatory Authority (ANRC) landline operators managed 30.05 per cent of the total customer number, while 69.95 per cent used mobile telephony services.

Since liberalisation on January 1, 2003, the number of users who chose alternative landline telecom services increased six times, with a total landline coverage rate standing at 20.24 per cent late last year. Trends in the telecom market in 2005 indicate on the one hand the re-launch of landline telephony, along with an increase in the mobile telephony coverage rate from 47 per cent to 60 per cent, according to recent statements made by ANRC chairman Dan Cristian Georgescu.

?In 2005 we are counting on a rebound in landline telephony, not only for RomTelecom, but also for newcomers in the market, who started to develop, in the context of a steady positive trend in the Romanian communication market this year as well,? the ANRC head explained.

RomTelecom will become more aggressive in the ensuing period, on the one hand because it went in the black - for the first time in years it reported EUR 100 M profits in 2004 - and on the other hand because it sold a stake accounting for 70 per cent in its mobile division, Cosmorom (which has reported substantial losses over the past few years). As opposed to the low coverage rate for landline telephony, the mobile service coverage rate is seen as having the fastest growth in European states in such a short time. The vigour of the Romanian mobile telephony market is proven by the high coverage rate, which specialists expect to reach 60 per cent by end-2005, as opposed to other European states where it did not exceed a 35 per cent ceiling.

The Romanian communication market is extremely attractive - transactions closed recently by Vodafone with TIW, on the take-over of Mobifon, and Cosmorom?s acquisition by CosmOTE standing proof in this respect.

The presence of two giants in the Romanian market, namely Orange and Vodafone, through the Connex brand-name, will lead to extremely attractive tariffs offered to mobile telephony users. Currently Orange and Connex share over 10 million users, while the other two operators, Telemobil (through Zapp) and Cosmorom, have a total 300,000 users. The leading two companies target six million users each by the end of the year. On the other hand, the current major shareholder in Cosmorom, CosmOTE, intends to upturn the mobile operator by year end. The Cosmorom upturn will be possible if the operator?s services incur costs lower than average current market costs, which in principle would lead to a fall in tariffs charged in the local market.

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MiniMax Discount retail chain will organize a tender in October to appoint the construction companies for 10 of its outlets.
The company said that it will follow the same strategy and organize such a tender for every series of 10 stores it builds in Romania.
According to a press release from the company, the first 10 locations in mind are Brasov, Buzau, Calarasi, Campulung, Cernavoda, Mangalia, Oltenita, Ploiesti, Pucioasa and Turnu Magurele.

?Each of our stores requires an investment of around EUR 750,000, with regular surfaces reaching 1,350 sqm. The parking lots that we are building by the outlets have between 80-100 places,? said Rainer Exel, the company?s general manager.

MiniMax Discount?s target is to establish a network of 100 stores in cities with over 20,000 inhabitants.

According to the company, the next tender after the October one will be held in December. The company opened its first outlets in April and predicts it will have 10 units opened by the year?s end. It aims to open up to 20 new outlets by the end of 2006.

?So far what we have noticed is that the peak in our sales was registered right after the outlets were opened ? before Easter. Afterwards, the situation became stable and we continued to develop our client portfolio,? Exel added.

The miniMax Discount chain pre-leased a 14,000-sqm space earlier this year within Mercury Logistic Park, the largest lease transaction on the industrial space market so far this year. The deal was signed for 10 years. Within this space, the company is to set up its central warehouse to manage the entire logistics system, as well as prepare and deliver exact amounts of merchandise to retail stores.

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A new three-star business hotel is going to be established on General Berthelot St. in central Bucharest. The developer is a private individual and the value of the investment has not been disclosed.

?The location is excellent for the establishment of a business hotel. The investment is being completed by a Romanian investor, and is his first project in this field. Currently, the owner is preparing to organize a tender to award the contracts to the suppliers and construction companies,? said architect Marina Pitrescu, managing partner at Alpha Studio. ?The construction works will begin right after this stage is completed which means sometime during the first quarter of 2006. The hotel will be delivered on the market 18 months after construction begins.?

The hotel will be structured on an underground floor, ground floor and five upper levels and will have 43 rooms for guests. ?It will also have two conference rooms, which together can host up to 100 people,? Pitrescu added.

The hotel is being developed on a 640-sqm plot and will have an overall surface of 2,500 sqm. An 11-space parking lot will be arranged in the building?s underground level, while an additional three places will be available outside the hotel.

Alpha Studio was established in 2000 and has since handled projects in the residential, office and hotel fields. The company?s representatives said that for the past year and a half the office participated in large-scale projects and wants to continue with such projects. Projects it has recently completed or participated in include Bucharest Business Park, Baneasa Airport Tower and the Louis Blank Office Building.

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The Ministry of Transport, Constructions and Tourism has signed a principle deal with The European Bank for Reconstruction and Development for a EUR 145 million loan, in order to build the Constant highway and the flood affected infrastructure.

The minister of transport, Gheorghe Dobre, announced in a press conference last Tuesday that the loan would be signed after November, 15, when the BERD managing council would discuss the approval. The memorandum was approved by the Government last Tuesday.

According to Dobre, only EUR 100 million of the loans will be used for the Constanta highway. The other funds are destined to restore 92 roads and 16 bridges affected by floods. The works for the Constanta highway are to start in the spring of 2007, and the project's duration is of 36 months.

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In November, The Ministry of Transport, Constructions and Tourism (MTCT) will start negotiations with the European Bank for Investments (BEI) to get a EUR 187.5 million loan necessary to build the Cernavoda-Constanta highway.

The minister of transport, Gheorghe Dobre, said last Tuesday that the project's total value will be of EUR 340.2 million and that it would be financed by the BEI loan and by cohesion funds, granted by the European Union, worth EUR 152.7 million.

"By the end of the year, the financing for the entire Bucuresti-Constanta highway will be insured," Dobre said. The works will start in November, 2006, and they have to be completed in 36 months. The pan-European Corridor IV includes the Pitesti-Sibiu-Timisoara-Arad highway and the Cernavoda-Constanta highway. BEI is already involved in the project, through a EUR 200 million loan granted at the end of 2003.

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Muntenia Bucuresti oil producer wants to sell their Interoil shares to Koninkljke Bunje (KBBV) for some EUR 2.4 million. The operation will be discussed in October.

Interoil Oradea?s shareholders are Muntenia, 66.3 percent, Cereol, 25.1 percent, Banca Transilvania, 5.7 percent and SIF Banat-Crisana, 1.3 percent. Muntenia Bucuresti is controlled by the American group Bunge, which has been present on the Romanian market since 2002, when they bought Cereol Holdings, a company that owns Unirea Iasi.

In 2003, Bunge bought the majority stake for Muntenia and Interoil Oradea. In 2004, Muntenia Bucuresti got a USD 35 millionn loan in September, 2004, from KBBV to buy raw materials and to finance the work capital for the 2004-2006 campaign.

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The Ministry of Economy and Trade is reviewing the possibility to grant under concession to Rompetrol the pipelines between Midia and Constanta, the impact of this decision being expected to be the diminution of the fuel prices through the elimination of the additional costs recorded on this route. ?The pipelines for the transport of the oil products between Midia and Constanta could be granted under concession to Rompetrol, if the latter want it. Afterwards, the company would pay a royalty,? declared yesterday the Minister of Economy, Codrut Seres. The same stressed that Rompetrol has not yet filed any official request in this respect. Minister Seres? declaration comes after the reaction of Rompetrol chairman, Dinu Patriciu, who requested certain facilities in order to cut the fuel prices. Dinu Patriciu has submitted this week, at the meeting of the representatives of the oil companies with the head of the state, three solutions through which the fuel prices could be cut by 8-9 per cent. Patriciu considers that the operation of the Midia-Constanta pipelines by Rompetrol Rafinare would eliminate the additional costs determined by the oil losses and thefts recorded on this route.

Rompetrol chief also declared that the energy transport and distribution costs should fall to a reasonable level, comparable to that in the EU. Third, setting equal excises for gasoline and diesel, and strengthening the norms for the authorisation of the fiscal deposits are in Patriciu?s opinion conditions required to reduce the costs of gasoline and diesel.

Referring to the rise of the price of fuels further to the understanding between the state and the major oil companies from Romania, Minister of Economy stressed that the Ministry cannot get involved into an unknown competition environment, the only exception being Petrom, whose shareholder is the Ministry of Economy.

On the other hand, the Minister of Economy stressed that his Ministry has not yet designated the second representative in the Board of Petrom, after Sebastian Vladescu has been appointed Minister of Finance. ?It is not easy to find a representative of the state in a company like Petrom, and we do not want to hurry up,? Seres stressed.

The chairman of Petrom Board is Wolfgang Ruttenstorfer, who is also chairman of the Austrian company OMV.

by Raluca Stoica

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n the coming five years, 90 per cent of the small and medium enterprises will shift to exclusively online personnel recruitment, and over 50 per cent of large companies will exclusively use online recruitment procedures, Liviu Dumitrascu, manager of eJobs.ro, told Rompres on Thursday.

eJobs.ro is the largest online recruitment site in Romania according to Trafic.ro, the official independent Internet traffic auditing body in Romania. Currently, over 700,000 Romanians access eJobs every month. Over the past four years, over 4,000,000 Romanians resorted at least once to eJobs? recruitment services, and over 14,800 companies used eJobs in the past six years.

?At the moment, we have over 2,700 vacancies posted on the site at any given time. This means that at any given time, there are more jobs posted on eJobs than in all newspapers in total. Basically, traffic indices and the number of vacancies have doubled from one year to another,? Dumitrascu pointed out. According to Trafic.ro, over 30,000 Romanians use eJobs every day and over 1,500 companies access eJobs on a daily basis.

The site manager stated that eJobs receives vacancy announcements from all types of companies, from big-size multinational corporations operating in Romania to small start-ups. Companies in Bucharest or companies in smaller towns in the country enter eJobs every day, to recruit staff.

Virtually over 80 per cent of the large companies operating in Romania use online recruitment - Coca-Cola, Ursus, Raiffeisen, IBM, Honeywell, Procter&Gamble, Oracle, Softwin, ABN Amro, Adecco, Pfizer, JTI, Manpower, BAT. ?There are companies which use exclusively online recruitment procedures. First of all, due to the price, approx. 10 times lower than recruitment through ads in newspapers, most of the small and medium enterprises only recruit their personnel over the internet. Large multinationals continue to use classic, newspaper recruitment as well,? Dumitrascu explained.

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three times more foreign companies exhibiting than in 2004

Bucharest - The 2005 edition of the International Bucharest Car Show (SIAB) was opened officially yesterday, at the Romaero Exhibition Halls of Baneasa, in the presence of Prime Minister Calin Popescu-Tariceanu. The public opening is scheduled for today and the show will be open throughout October 16. This 12th edition of the show is going on under good omens, on a background of the resuscitation of the local automotive industry as a result of Renault Group having entered Romania. The sales figures are on a constant increase and authorities assured they intend to support investment in the automotive industry. ?Ever since Renault decided to take over Dacia in 1998, the Romanian automotive industry has recorded strong developments that allowed the resuscitation of the moribund Dacia company and boosting the dynamics of the entire Romanian automobile industry, as many suppliers of automobile components and spare parts decided to relocate to Romania,? Tariceanu said in the opening speech. He added that the plans of Dacia-Renault are very ambitious, which will allow the automobile industry to continue development, mentioning that car traders are making big investment efforts to bring automobile services up to the demands of the Romanian customers. Moreover, ?these efforts generate very well paid jobs, compared with other fields,? and that is why the auto industry should be further stimulated, Tariceanu said.

Exhibition area expanded by 25 per cent

This year?s edition of SIAB is the fifth international edition mentioned in the calendar of the International Organisation of Motor Vehicle Manufacturers (OICA). The show was launched as the Bucharest Car Show. ?This will be a successful edition,? says chairman of the Romanian Association of Automobile Manufacturers and Importers (APIA) Brent Valmar, mentioning that there are 180 exhibitors, 80 of which are first-time exhibitors, and the exhibition area was rented out. Moreover, the number of foreign companies displaying at SIAB 2005 increased three times from 2004, and among the countries in the show are Hungary, Austria, Italy, Turkey, France and Poland. As for the brands on the show, approximately 80 models are first-time exhibits in Romania, including Aston Martin, Audi Q 7, Porsche Cayman, Skoda Yeti, SSangYong Kyron and Lamborghini Gallardo. Over 100 companies will exhibit 450 brands of spare parts. The number of exhibitors is 40 percent over the 2004 edition, while the exhibition area was expanded by 25 percent to 38,000 square metres. Renault Romania will bring for the first time in Romania its new Clio II model as well as a formula one car, alongside the Megane Coupe Sport, Megane Coupe Cabriolet, Modus and Laguna models. The novelties at the Nissan stand include Micra C+C mini-car, the 350Z Roadster and 350Z sports cars, the Navara pick up as well as the Murano and Pathfinder utility vehicles. Toyota Romania will bring to SIAB its mini model Yaris, the Corrolla hatchback and sedan, the Avenis medium-class model power by a new 2.2l 150HP diesel engine, the Land Cruiser and RAV4 sport utility vehicle, as well as the Corolla Verso. Honda will display a series of models powered by the new FR-V diesel engine. The importer of Fiat, Lancia, SsangYong and Alfa Romeo cars will exhibit for the first time in Romania the small-class Fiat Grande Punto and the medium-class Fiat Croma. Among the absolute firsts are the new SUV SsangYong Kyron and the new Alfa Romeo 159 compact car. Aston Martin, represented by the Austrian branch of the British manufacturer, Hummer, Lexus, Infiniti and Rolls Royce are just a part of the companies to display their latest models at SIAB. Forum Auto, the local importer of Volvo, will release on October 6 its latest coupe car of the Volvo C70 high range, reads a release of SIAB organisers AMC-APIA. Italian Autoleggero company will also be at the show as the sole importer of the Piaggio light automobile range. The company will display at a stand of 120 square metres the newest range of light passenger and freight automobiles.

Citroen brings C1 and C6 in Romania

French automobile manufacturer Citroen will present at SIAB C1 mini-cars, C3 face-lifted cars and C6 luxury cars. Citroen C1 and C6 will be available for Romanian customers starting this November, while the C3 model is already available at the showrooms of general automobile importer Automotive Trading Services. Among the novelties of the Citroen cars is the V6 2.7 HDi diesel engine of 208 HP and a maximum couple force of 440 Nm, fitted into the C6 model. As far as safety is concerned, Citroen has opted for the ABS system as a standard, double airbags and board computer. The outside of Citroen C3 was restyled and it now has a more impressive protection bar and new lights with a transparent middle. In the interior, there is a new dashboard, with information about the speed regulator, a bigger LCD display and an easy to follow speedometer.

Peugeot presents 407 coupé and 307 restyled versions

Trust Motors, the general importer of Peugeot, yesterday presented, for the first time in Romania, the 407 Coupé model and the restyled version of the 307 model. For a start, the coupe version of the 407 model may be equipped with two petrol engines of 2.2l, 160 HP and a V6, 3l 210 HP engine, as well as a diesel propeller - 2.7l Hdi, developing 205 HP. Transmission is provided by two six-gear boxes, one manually powered and the other automatically. The most powerful engine has an acceleration rate from 0 to 100 km of 8.4 seconds and a maximum speed of 243 km/h. The mixed consumption for this model is approximately 10 litres per 100 km. Also available at the Peugeot stand is the 1007 mini-car model, equipped with two sliding doors.

Chevrolet to replace Kalos model with Aveo in 2006

The Romanian representative of the South-East European arm of General Motors yesterday unveiled at SIAB the Chevrolet Aveo compact model that is to replace from the spring of 2006 the Kalos model, which will be out of trade in November 2006. GM also presented the new version of the Zafira, which will be out this October, as well as a face-lifted Vectra version.

112,000 unit sales for Dacia in the first nine months

The company Dacia sold in the first nine months approx. 112,000 vehicles, 27,000 for export, Dacia?s general manager, Francois Fourmont, stated on Thursday, at SIAB 2005. 85,000 Dacia vehicles have been sold on the Romanian market, 64,000 of them being Logan models and 40,000 Dacia Logan have been ordered for exports, 27,000 of them being delivered.

In France, more than 10,000 customers have ordered Dacia Logan models, while Dacia has reached a two per cent market quota in Central Europe and in Turkey. Now, Logan is being sold in 29 countries and by the end of 2005 it will be launched on 13 more foreign markets, Fourmont said.

There are 1,200 Dacia traders in the world and the Logan model will be produced in three more locations - Russia, Marrocco and Columbia; Dacia will deliver to them 35,000 cars this year. Next year, the production of the Logan model will start in Iran, followed by the one in India and then in 2007 in Brazil; Dacia will deliver component and parts for 150,000 cars to the foreign production centres. According to Francois Fourmont, the acquisitions from suppliers are now 60 per cent assured by the local market; the share will reach 80 per cent in the following three years.

In 2005, Dacia will produce 175,000 vehicles and 220,000 cars next year; in 2007, the production will reach 235,000 vehicles. Dacia has three stands at SIAB 2005 - a vehicle one, one for utility vehicles and one for spare parts.

GM confirm interest in taking over Daewoo Craiova

The representatives of the American company General Motors (GM) have confirmed on Wednesday evening, that the group is negotiating with the Romanian Government the taking over of the majority stake at Daewoo Automobile Romania (DWAR).

?It is true we are negotiating with the Romanian Government (for taking over DWAR) as we think Romania is a good market for business,? GM?s executive manager for Central and Eastern Europe, Chris Lacey, stated during a press conference.

Set up in 1994 as a joint venture, created by Automobile Craiova and the South-Korean group Daewoo, Daewoo Automobile Romania has an agreement with General Motors Daewoo Auto and Technology, which took over in September 2002, a part of the Daewoo Motor assets. The agreement allows Daewoo Automobile Romania to produce under the Daewoo licence until October.

Daewoo Motor owns a 51 per cent stake of Daewoo Automobile Romania shares. The 49 per cent difference of share capital belongs to Automobile Craiova, company where the State controls 72.4 per cent of shares.

The Government has recently authorised the Office for State Shareholding and Privatisation in Industry (OPSPI) to negotiate the transfer to Daewoo Motor of 51 per cent of Daewoo Automobile Romania shares and to erase the debts of the Korean party to the Craiova auto producer. The authorities filed a EUR 45 M offer for the purchase of the 51 per cent stake which Daewoo Motor owns at Daewoo Automobile Romania.

Regarding the sale of other GM brands in Romania, the American company?s official said they reach a positive level, especially for Opel and Chevrolet. On the SAAB brand, ?changes are due to take place in several countries in the region.? Lacey also stated that ?the total launching? of the Chevrolet Spark model, which wants to be an alternative for Daewoo Matiz, is due to take place in next year?s first or second trimester. A limited number of such vehicles are now available on the Romanian market, and 123 units have been distributed in this year?s first eight months.

According to the company?s data, the total sales of the American group (Opel, Chevrolet and Saab brands) on the markets in Central and Eastern Europe amounted to 209,611 units, almost 32 per cent higher than the results from 2003. In this year?s first eight months, the total demand for these models amounted to 133,859 units. The total sales on the Romanian market reached 5,719 units in this year?s first eight months, 88 per cent higher than the results from last year?s similar period of time. More than 3,200 vehicles were Opel, 2,465 units were Chevrolet, the rest (26 units) being Saab vehicles. GM controls a 700 dealer network in Central and Eastern Europe.

by Sabin Huidu

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Romania is the second country in southeastern Europe in terms of foreign direct investments, with 5 billion dollars attracted in 2004, and the figures could rise to 6-7 billion dollars in 2005, the representative of the U.N. Information Centre in Romania Soknan Han Jung said.

"Romania did many reforms lately, the taxation system has been changed, and that makes Romania one of the most attractive countries of southeastern Europe," says Soknan Han Jung. According to National Agency for Foreign Investments (ARIS), the 116 percent increase of foreign direct investment in 2004 as against the previous year was boosted by the privatisations of Petrom Oil Company, the natural gas distribution companies Distrigaz Sud and Distrigaz Nord as well as by the electricity distributors Electrica Banat and Electrica Dobrogea.

"The trend continues over the first seven months of the year. The social subscribed capital rose over January-July by 69.5 percent over the similar period of 2004," ARIS advisor Iustina Lutan said.

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Standard and Poor's assigned its B/B rating to Romexterra Bank for its loan extension and deposit activities. The outlook is stable, the bank representatives said on Thursday.

The "stable" outlook equals Standard & Poor's' conviction about the Romexterra Bank franchise's improvement in the market share, enabling the bank to boost earnings. The bank's credibility will depend on the efficient growth management, amid stiff competition and maintenance of the appropriate liquidity and capitalization.

Financial position, capitalization, liquidity and adequate assets account for the bank?s credit rating. Its rating was prompted by the narrow market share, new strategy and constant competition in the banking sector from foreign banks and the pressure put by interest rates.

Romexterra Bank caters for both individuals and companies, compensating for its small network by quick, good services, mostly in the areas of Internet and mobile banking. In an attempt to expand its foothold, Romexterra has extended its retail department. The short-term strategy also includes the development of the subsidiary office network, alternative sales and card transactions.

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Smuggled cigarettes occupy 25% to 80% share from the markets of Southeastern European states, and 40% of the cigarettes at the Macedonian market had been imported illegally, a publication in today?s Romanian Gandul newspaper reads.

According to the edition, Albania ranks first in smuggled cigarettes with a share of 80%, followed by Bosnia and Herzegovina with 47%, Macedonia ? 40%, Bulgaria ? 38%, Serbia and Montenegro ? 37%, and Romania and Croatia ? 24%.

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By Russ Rizzo, Stars and Stripes
Stripes European Travel

Russ Rizzo / S&S A look outside one of Constanta?s many plush hotels offers an enticing view of the horizon. Russ Rizzo / S&S The main pedestrian street in Brasov features an Old World atmosphere. Russ Rizzo / S&S The sandy beaches of Romania's Black Sea coast draw the most tourists. Russ Rizzo / S&S From a cable car, an impressive view of the tidy city of Brasov in the heart of Romania. Tourists often come here on their way to the Carpathian Mountains.

Visitors to Romania?s Black Sea coast will find variations of the phrase ?esti frumoasa? ? ?you are beautiful? ? come in handy.

It can be used to refer to the famously gorgeous women who dance topless under a beaming sun on the soft-sand beaches.

Or, it can be used to refer to the area?s breathtaking countryside and charming small cities.

In July, during a break in training exercises in Romania and Bulgaria, I was able to see a bit of Romania. On the six-hour train ride from the coastal resort town of Constanta to the popular city of Brasov near the country?s center, views turned from sunflower fields to mountain peaks.

Nestled at the foot of two mountain chains, Brasov pulls off a cozy mountain-village atmosphere with cobblestone pedestrian walkways lined with boutiques and restaurants.

A cable-car ride to the top of a hill a short walk from the city center offers stunning views of rust-colored rooftops below. A walk back through the woods makes it easy to forget that the path is just a stone?s throw from Internet cafes and coffee shops.

Brasov makes an ideal starting point to explore the Carpathian Mountains, which offer hiking in the summer and skiing in the winter.

Farther east, the city of Sighisoara draws visitors from around the world to its well-preserved walled city. It?s no wonder the country?s most popular medieval festival is held here each year in July.

Visitors take over the city of 32,000 people for three days to enjoy medieval art, crafts and music, and drink $1 beers. They dress in costumes and search the town for their next form of entertainment.

The energetic ones find well-hidden night clubs and dance to American pop and hip-hop to escape from the Old World atmosphere.

The city?s clock tower, built in 1556, houses a museum of the history of the area, although a walk through the town and its centuries-old buildings offers a more tangible idea of what life was like in medieval days.

Towns brimming with life fill the countryside all the way west to tiny Targu, where open-air markets bring locals together to enjoy traditional foods like mamaliga, a type of corn meal; sarmale, minced meat in cabbage leaves; and mizi, a type of grilled meat.

The whole scene will leave you thinking ?it is beautiful? ? in any language you choose.

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Romanian exports to Slovakia increased by more than 20% in the first six months of 2005, their value being in excess of 140 million dollars in 2004, ACT Media news agency reports.

There is a big potential increase of the bilateral commercial exchanges volume, especially when taking into account that, over 2002-2004, Romanian-Slovakian commercial exchanges volume tripled, reaching at 500 million dollars.

In 2004, Slovakian exports to Romania were 335.8 million dollars worth, up more than 37%, compared to the previous year.

Main Slovakian exports to Romania included rolled iron and steel products, washing machines, new tyres, passenger ships, cardboard and paper, television sets, components for railway vehicles.

Romanian exports to Slovakia were mainly comprised of different clothes and textile industry products, cables, railway wagons, fridges, footwear, furniture and chemical products.

In the field of direct foreign investment, Slovakia participates in 102 joint Slovakian-Romanian companies registered on Romania's territory that amount to a subscribed share capital of almost one million dollars.

The respective companies are involved with wholesale (50 percent) and services (30 percent), while industrial production and other fields of activity represent 12 percent, respectively five percent.

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General Motors Corp. (GM) is discussing a potential investment in Romania with the government, a General Motors Europe spokesman told Dow Jones Newswires Thursday.

The spokesman, Marc Kempe, declined to elaborate on the nature of the investment.

The Romanian government said last month that it is trying to persuade U.S. auto makers General Motors and Ford Motor Co. (F) to open new production units in Romania or buy Daewoo Automobile Romania, the local plant of South Korea's defunct Daewoo Motor Co.

The Romanian state owns 49% of Daewoo Automobile Romania and the government is in talks with creditors of bankrupt Daewoo Motor Co. to buy the remaining 51% stake to keep the plant running until a new owner can be found.

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The most influential investment bank on Wall Street, Goldman Sachs, has valued Banca Comercial? Român? (BCR) at 3.8 to 5.8bn euros, taking into account a multiple of 3 to 4.5 times the accounting value of what is Romania''s largest bank.

"In a scenario we deem as realistic, BCR could be sold for 4.9bn euros, that is 3.8 times the accounting value estimated for this year. This means the value of the transaction involving the 62% stake being sold by the Romanian state should be of some 3bn euros," Goldman Sachs analysts say.

In other words, the American bank believes BCR''s privatisation could be the most expensive transaction of its kind ever conducted in Central and Eastern Europe.

At a price of 4.9bn euros, the buyer would be paying some 15.6 million euros for a branch and nearly 1,100 euros per customer. One percent of BCR''s market share in terms of assets will therefore be worth around 190 million euros. Goldman Sachs points out that this is only one of the possible outcomes of the negotiations between the Romanian state and the banks lined up for the privatisation race.

The US-based bank judges the minimum value of BCR to be 3.8bn euros, three times its accounting value, while a multiple of 4.5 would lead to a price considered the maximum possible.

"The time of cheap acquisitions in Central and Eastern Europe is long gone. The line up of nine banks in the start of the BCR privatisation makes us think that the Romanian bank may even benefit from a first assessment even compared to similar transactions in the region," the Goldman Sachs analysts explained. They went on to say that buyers of banks in Central and Eastern Europe had paid 2.2 to 5.2 the accounting values since 1999.

The expiry of the deadline for submitting financial bids for BCR is less than two weeks away, on October 17.
Staying true to itself, the government again modified the privatisation strategy on September 29, saying that the strategic investor could only submit bids for a majority stake of 61.8825% in BCR, dropping the option of 50% plus one share. Most banks in the race had anyway expressed their intention publicly of bidding for the maximum stake.

The 61.8825% stake will be made up of the 36.8825% minus two shares currently held by the State Assets Resolution Authority (AVAS) in addition to the 25% plus two shares acquired by EBRD and IFC after the state exercises its repurchase option.

The government decision says that the sale price per share in the case of the controlling interests cannot be lower than the price paid for repurchasing the shares from EBRD and IFC. At the same time, BCR''s privatisation commission decided that the price offered by investors would account for 90% of the final score used in differentiating bidders. With ABN Amro having dropped out of the race, the remaining contenders are Fortis, Banco Comercial Portugues, the National Bank of Greece, Banca Intesa, Deutsche Bank, Erste Bank, Dexia, KBC and BNP Paribas.

Since the start of the privatisation process, the government had said it wanted to get the highest price possible for the controlling interests in BCR. On the other hand, several investors have said publicly that they expect other factors - such as international reputation, experience and prospects - to count besides price, hinting that they were not intending to spend too much money to get control of the largest Romanian bank.

At any rate, the clash ahead looks set to be a fierce one, particularly since the suitors include smaller banks that are very determined to enter the market.

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There are less than two weeks left until the financial offers for the acquisition of 62% of BCR?s stocks will be put forward.The most influential bank on Wall Street , Goldman Sachs, has evaluated BCR to be worth between EUR 3.8bn and EUR 5.8bn, with an average value of EUR 4.9bn.

This means that the value of 62% of the bank?s stocks to be sold is about EUR 3bn, say analists from Golden Sachs. The American bank considers that the privatization of BCR could be the most expensive transaction of this kind ever made in the Central and Eastern Europe region.

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The value of transactions at the Bucharest Stock Exchange (BSE) increased with almost 40% compared to the last two sessions, to RON 31.1 mn, with most companies registering increases in listings.

"The general trend of the stock exchange is somewhere in the middle.

It will be upward when new maximums are attained, and the downward trend might appear if listings go below last week?s maximums," a broker declared.

He added that the market evolution can be influenced by clarifications to be made on imposing gains on the capital market.

"Taxations of sums obtained from stock exchange transactions have an important effect on the market.

There s a big difference between 1% and 16%.

The enforcement method is also very important, if there will be differentiations between revenues before and after January 1, 2006.

There are many things to clarify, beyond the percentage as such.

Details are very important especially for natural persons Romanian investors," the broker added.

SIF Oltenia and SIF Moldova were the most traded companies, with operations of RON 7.9 mn, and RON 4.8 mn respectively.

SIF Moldova closed at RON 1.61 per share, increasing with 2.6%, and the SIF Oltenia price increased 1.6%, to RON 1.91 per share.

The listing for SIF Transilvania remained at Tuesday?s level, of RON 1.7 per share, with a liquidity of RON 2.1 mn.

BET-FI, the index reflecting the evolution for the five SIFs, increased 1.33%, and the value of transactions for these companies added up to RON 17.7 mn.

High volumes were also reported for the banking system, the roll of Banca Transilvania being RON 5.9 mn, and the one registered for BRD-Groupe Societe Generale stopping at RON 2.9 mn.

For Banca Transilvania the price remained as on Tuesday, RON 1.02 per share, while BRD decreased 1.5%, to 13 per share.

Investors bought Petrom shares worth RON 1.9 mn, as the company?s listing increased with 0.4%, to RON 0.459 per share.

Indexes BET and BET-C slightly decreased at 0.14%.

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The Chamber of Commerce and Industry of Romania /CCIR/ organised a meeting with Croatia to discuss issues on improving existent opportunities in the petro-chemical and electro-technical industry, constructions and harbour services, ACT Media news agency reports.

Among the issues of common interest regarding the strengthening of relations between Romania and Croatia was the project of the oil pipeline to transport Caspian oil to Central Europe, as well as the relaunching of Vukovar harbour, a key element in reviving transport on the Danube.

There are also opportunities to cooperate on accessories and spare parts in the automobile industry, as well as the manufacture of agricultural machines and engines.

The twinning of Constanta and Rijeka is on the agenda of the decision ?making factors in the two countries.

Four years ago, the trade exchange volume was worth 20 million dollars.

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Private companies dominated the top-ten ranking of the largest companies in Romania for 2004, even if the number one place went to the only state-run company Electrica, ACT Media news agency reports.

Electrica made 2.357 billion euros in consolidated turnover in 2004, 10 percent higher than Petrom, which ranked second.

The electric power producer will most likely vacate its position this year, however, after four of its eight branches for the distribution and supply of electricity come under the control of private investors, such as Enel (Italy), E.ON (Germany) and CEZ (Czech Republic). Petrom became part of Austrian group OMV's portfolio at the end of last year, after its majority stake was acquired in a deal worth a total of 1.5 billion euros. The most profitable company in the rankings is Mittal Steel Galati, which made 345 million euros in profits last year.

The former "black hole" of the Romanian economy now ranks third on the list and boasts the highest rate of turnover growth, at over 57 percent, which saw it reach a total of 1.693 billion euros.

The steel plant in Galati - currently held by the world's leading steel manufacturer, Mittal Steel - is the largest Romanian exporter and sees its business grow due to the high demand on foreign markets. The Dacia Pitesti car factory, held by the Renault Group, made it to the top ten of the largest companies in Romania for the first time, coming ninth on the list.

The highest profit rates were recorded by the country's two main mobile telephony operators:

Orange Romania derived 183 million euros in net profits against turnover of 607 million euros, while Connex posted 150.2 million euros of net profits against turnover of 565 million euros. By sector, the top positions in the rankings were held by companies working in the petroleum industry - Petrom, Petromidia and Rafo - and telecommunications companies - RomTelecom, Orange and Connex.

The rankings do not take into account the results posted by the state-owned railway company, CFR SA, whose financial results were not available on the Finance Ministry website. The top ten companies cumulated a total of 11.59 billion euros in turnover in 2004, accounting for approximately 20 percent of Romania's overall economy.

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Omniasig has sued the State Assets Recovery Authority (AVAS) on Astra Asigurari's privatization, claiming that the buyer Nova Trade had failed to comply with the obligations stipulated in the privatization contract. Consequently, Omniasig, part of the Austrian-based group Wiener Stadtische, has requested that the insurance company's privatization process should be repeated.

Nova Trade bought a 75.67 per cent stake in Astra in July 2002, in a 2.5 million USD deal. Based on the contract, the buyer committed itself to invest another 43 million USD, the figure including a planned share capital increase. Omniasig claims that the sell-off contract broke a stipulation included in the task book for the company's privatization, namely that the share capital increase would only be conducted via cash contribution. "Astra's board approved an in kind share capital increase, including a building in the company's share capital," Omniasig officials added.

According to them, AVAS failed in fulfilling with its post-privatization legal obligations, damaging the public interest and negatively influencing the competitive environment on the insurance market. Astra is a major player in the insurance sector, with a 5.67 per cent market share in 2004, according to data provided by the Insurance Supervision Commission. Omniasig ranks fourth among local insurers, with a market share of 8.69 per cent.

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VB Leasing has signed 4,700 leasing contracts so far this year, their total value standing at 80 million Euro, company officials said. According to Mediafax, VB Leasing also has optimistic forecasts for 2006.

"If we reach a value of contracts of 110 million Euro by the end of this year, we forecast an increase of at least 20 pert cent next year," said Razvan Diaconescu, the company's administrator. VB Leasing has seven outlets in Romania and plans to open another three by the end of the year.

The company is a member of the Banking Leasing Association and its majority shareholder is VB-Leasing International, which controls an 80 per cent stake in the company. Volksbank Romania controls the rest.

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Cluj-based company Ceda Imobiliare said it would launch a five million Euro residential project called the American Village. Construction works are due to start in March 2006 and they are to be finalized by 2009.

The complex will have a gross built area of 40,000 sqm and in the first stage it will have 27 condominium-type apartments. Later the complex will expand to include 45 houses. The first six apartments would be finalized by July next year, while the other 21 by the end of 2006, officials said.

The first phase of the project will involve an investment of around 1.5 million Euro. In the second phase of the project, the company plans to build 25 houses, while another 20 will be added in the third phase. The complex will also have a leisure area.

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by Teodora Bodeanu

Confident of winning a trademark legal battle later this month with Zapp, international officials with Vodafone said last week they are poised to begin their re-branding process, which will last six to nine months, and to focus on attracting frequent-users of 3G services.

"As lifestyle influences 3G use, so the challenge for us will be finding out what best attracts customers here," said Vodaphone group CEO, Arun Sarin, on his first visit to Romania. "In Portugal, downloading songs was the main attraction. In Germany, it's about mobile TV."

Sarin's visit comes a week after Greek mobile phone operator Cosmorom announced it would invest around 450 million Euro here to play catch-up on Orange, Zapp and Connex.

Sarin, highlighted the diversity of 3G, adding that Connex/Vodafone - which will remain as a combined brand - will focus on developing these services here, "GSM has served us very well over the last few years. But frankly, with high-speed Internet access, the industry is moving on to 3G. It brings entertainment on the go. Wireless Internet, video-calling, mobile TV, downloading song and games. We'll invest heavily in third generation."
He added that Vodafone has 3.5 million clients for its 3G service
globally, saying his company's contracts with media and music companies will bring much more content. Its services also include Live, a news and entertainment service, which will allow access to international content currently unavailable through Connex's service, Play. He also promised more incentive packages. "More minutes for less money, better customer service. Clients will be able to take the price plan from country to country where Vodafone operates."

Commenting on legal battle with Zapp over the Vodafone name, Ted Lattimore, Connex president, said the next court date is on October 6. "We went through two appeals and won them both, so I'm sure that we'll win this one too." He added that Connex "intends to re-gain first position on the market, but will concentrate more on "getting the right customers," explaining, "The average 3G customer uses from three to five times as much of our services."

Reacting to Vodafone, Orange said it had "a very well defined strategy on mobile broadband services, with a goal of providing wide-reaching coverage." Richard Moat, the company's CEO, said "This objective will be reached actually at the beginning of next year when Orange Romania will launch 3G.

While 3G network will be focusing on the population of the main cities, EDGE network will be used to provide complementary national coverage. Whether via EDGE or 3G, our focus is on delivering the best communications experience to our customers through simple, innovative and easy-to use-services."

Costas Kapetanopoulos, Cosmorom marketing and communications director, said: "3G is a complex technology but consumers are much more interested in affordability and access and that is exactly what we will provide. 3G is a small niche market in Romania, not a mass-market one, which is the one we will concentrate on. Vodafone will have to prove that it is a strong revenue-maker. From my understanding, investment in 3G won't pay back in two or three years, but in 10 to 13 years, and by then this technology will be old."

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The project entitled "Knowledge-based Economy" was initiated by the Romanian government through the Ministry of Communications and Information Technology (MCTI) and will be financed by the World Bank with 60 million dollars. Romania's contribution is 10 million dollars.

The negotiations between the World Bank and the Romanian authorities recently ended and an official announcement is expected from the MCTI minister, Zsolt Nagy.

The project's purpose is to ease access to information and to reduce the gaps in IT&C education through the Local Community Electronic Network (RECL).

The pilot phase of the project was launched in April this year when the announcement regarding the international tender for the endowment of nine localities with IT&C equipments was made.

After the tender, the cities of Pilu (Arad), Albestii de Muscel (Arges), Lapusnicu Mare (Caras-Severin), Corund (Harghita), Ostra (Suceava), Jurilovca (Tulcea), Sinca (Brasov), Aninoasa (Hunedoara) and Tirgu Lapus (Maramures) received IT equipment.

According to the project, in the coming year, approximately 300 virtual networks will be created in the rural and urban areas.
These should serve as "knowledge centers" and will offer information and services online for citizens and business.

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The level of Hungarian investments in Romania reached over the first six months to 443.5 million dollars, up by 40% compared with the similar period in 2004. According to some estimates, the value of the investments should total two billion dollars by the end of the year.

Present at the Romanian-Hungarian business forum, the commercial attaché within the Hungarian Embassy in Romania, Halasz Janos, stated that the statistics do not take into consideration the credits, assets or other operations in the capital market performed by Hungarian companies. "Our estimates show that the value of the Hungarian capital invested in Romania over the first semester is 900 million dollars," stated Janos.

Hungarians are Number 11 in the list of foreign investors in Romania. Also, after the first six months, the number of companies with mixed or fully Hungarian capital surpassed 5,000, a fact that places Hungary in the top five largest investors in Romania.

"The industrial sector is becoming more and more interesting for Hungarian investors and an important role is played by the banking sector," stated the Hungarian official. Among the largest Hungarian investors on the Romanian market was the OTP bank, which has expressed its interest in taking over the Romanian Savings House (CEC).

Synergon Information Technology, one of the main IT companies from Hungary, announced its intentions of expanding through a series of acquisitions on the Romanian and Bulgarian markets. The company's decision is motivated by the advantages this region offers and by the difficulty in expanding on the Western markets.

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Electroputere Craiova signed an agreement with the National Electricity Company of Jordan for the delivery of three power transformers and the improvement of five other similar systems at a value of nearly four million euros, according to Jordan Times.

The agreement was signed yesterday by Minister of Foreign Affairs Mihai Razvan Ungureanu during his visit to Jordan. The systems will be used by the electricity generating stations in Salt, Duleil, Marka, Sahab, Zarqa, Abdoun,Tareq and Al Hashemiyeh.

Products manufactured by Electroputere are being used in various domains like the petroleum sector, mining and the cement industry.

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The National Association of Tourism Agencies (ANAT) will not participate in the International Tourism Fair (TIT) to take place between October 21 and October 24 in Bucharest because of dissatisfaction over the conditions imposed by the host of the event, Romexpo.

The National Tourism Authority (ANT) tried last week to mediate the conflict but ANAT considered the essential problems have not been solved. ANAT president Ovidiu Iuliu Marian admitted that Romexpo held a monopoly position on the market for fair organization which allows it to increase tariffs and rents without any kind of improvement in the quality of the services provided.

On the other hand the dimensions of the stands are modified with each event, which involves additional expenditure for the exhibiting companies, said the ANT president.

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The SAPARD agency has contracted projects totaling 680 million euros up to the present, out of which 380 million have been used for the payment of eligible programs, according to a statement from the institution.

In 2005 SAPARD paid 176 million euros to the beneficiaries of the projects, representing 85% of the total sums which had to be used by the end of the year.

The Agency signed 1,719 contracts, and the largest part of the allotted funds (490 million euros) were awarded for projects for the development and improvement of the rural infrastructure.
123 million euros were allocated to the improvement of the marketing and production of agricultural products while 49 million euros were destined for the agricultural exploitations sector.

Rural tourism as well as beekeeping and the snail and mushroom cultivation   received 23 million euros.
Romania is eligible to receive more than 1.4 billion euros from the EU by 2007, through the SAPARD Agency.

In May the SAPARD Agency started a 600,000 euro-worth eight-month campaign of promotion in rural areas according to Gheorghe Flutur, the minister of Agriculture. The European funds were allocated for the creation of several information centers (240,000 euros), a mass media campaign (120,000 euros) and expertise (150,000).

The possibilities offered by the SAPARD program were advertised through auto caravans which will cover over 1,000 kilometers. The company which implements the program was assigned through tender.

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Romexterra bank has reduced by one percent the fixed interest rate for the Favorit personal needs credit from 17% to 16% and the fixed interest rate for the first three years of mortgage loans by 2.5%, from 13% to 10.5%.

The personal needs credit Favorit Plus granted for 25 years within the limit of 30,000 euros has a variable interest rate of 14%. The bank also recently launched the credit for the acquisition of cars for which a variable interest of 13% is charged, without guarantees, with a six-year maturity term.

To estimate a client's solvency the bank takes into account salary, revenues from independent activities, pensions, income from rent incomes and other sources.

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The accession to the European Union would be trauma for the countries who do not prepare well and do not adopt the measures imposed by the European rules, stated the president of the Hungarian-Romanian Chamber of Commerce Tivadar Orosz yesterday.

Orosz said the low level of minimum wage in Romania could generate problems at the moment of the accession. He recalled that Hungary increased the level of minimum wage right before the accession to allow an adequate adaptation to post-accession costs. The costs of the accession would be found in prices, that is why the high difference between the salaries in Romania and those in Europe would be an advantage for investors but a disadvantage for living standards, Orosz explained. He added that another role of utmost importance was justice reform.
In the opinion of the Hungarian official, European accession does not solve all the problems of a country. He said in Hungary the bureaucracy increased and taxes grew higher after the accession. "Hungary needs lower fiscality, a goal Romania achieved with the flat tax," said Orosz.

He explained, however, that drastic fiscal reductions should be seriously analyzed to avoid creating problems to the budget and the introduction of compensatory taxes. Moreover, the European funds that would come after the accession will need co-financing, bringing additional pressure to the state budget. Orosz insisted that it was very important for the state to be able to co-finance European funds, but said Romania should not have a trade deficit problem because its level was lower than what Hungary had.

In August, the leaders of the four main trade union confederations asked the Ministry of Public Finance (MFP) to increase the minimum wage from the existing 100 euros to between 120 and 150 euros. Trade union representatives supported the principle of the predictability of fiscal policy, demanding that fiscal principles should be adopted for longer periods and after discussion with social partners.

Gheorghe Barbu, the minister of Labor, Social Solidarity and Family, declared he was in favor of increasing the minimum wage to a level correlated with the inflation rate. Barbu said negotiations would soon begin on this matter with the unions.

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Some US companies are to invest in Romanian environmental reconstruction, said US Embassy's Chargé d'Affaires Mark Taplin attending the second Environmental Conference on Water and Mining in South-Eastern Europe, organised by the Romanian Waters Association (ARA) in Bucharest.

 Taplin put the emphasis on the fact that the transition period has had two-fold effect on Southeast European countries - both economic growth and environment degradation having sped up pace. The USAID, the US Commercial Service, the US Export Import Bank are already involved in financing the environmental reconstruction effort. Taplin said that hundreds of millions USD will be invested in reconstruction, and stake holders from the region will be brought together. The next step is the identification of bankable projects by companies and state institutions.

A number of 21 US registered companies involved in waste treatment, consulting and mapping are taking part in the event, among them the international brands like Lockheed Martin, Vexcel, YSI Environmental, Washington Group International. Romania is among the ten most active countries in the world in terms of campaigning for clean water resources, said ARA President Vasile Ciomos during the conference.

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The privatisation of Electrica Moldova electricity supplying corporation ended on Monday by the transfer of shares to Germany's E.ON company for 100 million euros. E.ON thus owns a current 51 percent stake in Electrica.

"Following this 100-million-euro investment, with stakes in Electrica Moldova and Distrigaz Nord, E.ON becomes the most important foreign investor in Romania," Walter Hohlefelder, a member on the E.ON Administration Board, told a news conference.

Under the privatisation agreement, E.ON has paid 31.4 million euros in total for 24.62 percent of the shares in Electrica, while the remaining 68.6 million euros were provided as a contribution toward the augmentation of the share capital that increased to 51 percent the ownership of E.ON. According to Hohlefelder, the 68.6 million euros are already fuelling the company, as they are used for infrastructures projects, especially in the flood-stricken areas, as well as for network quality projects. "The aim of the privatisation process is to provide environment-friendly services at European standards.

We would like the Romanian companies to participate in the modernisation of the country," said Romanian Minister of Economy and Trade Ioan Codrut Seres, explaining that his ministry will display great openness toward investors

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Electrica Oltenia on Tuesday became a private company, following the transfer of the ownership rights over a 51-percent stake in the company to Czech CEZ corporation.

CEZ paid 47.4 million euros for 24.62 percent of shares in Electrica Oltenia and contributed a further 103.6 million euros that will increase to 51 percent the final stake of CEZ. "We have managed to transfer the ownership rights over Electrica to CEZ in a reasonable amount of time without procrastinations, and this is important. From now on, attention should be attached to the post-privatisation obligations written down in the privatisation contract.

The Office for the State Industrial Privatisation and Shareholdings will have to pay attention to the unfolding of the post-privatisation obligations, while the government officials on the Electrica Administration Board and General Shareholders' Meeting should concentrate on the smooth running of Electrica Oltenia," Minister of Economy and Trade Ioan Codrut Seres told the signing ceremony on Tuesday of the privatisation contract for Electrica Oltenia.

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President Traian Basescu and the representatives of the main oil companies working on the Romanian market met on Tuesday for the second time in a bid to find solutions for an adequate policy for oil tarrifs.

According to a communiqué issued by the Presidency after yesterday?s meeting with the Lukoil representatives, Petrom - OMV, RAFO and Rompetrol, the head of state noted the positive attitude of the oil companies in approaching internal problems generated by the increase of crude oil prices on the world market.

The proposals made by the main operators on the oil market will further be analysed by the Government. Rompetrol president Dinu Patriciu presented three solutions which may cause the fuel price to decrease by eight-nine percent, a Rompetrol communiqué reads. Patriciu believes that Rompetrol Rafinare?s operating the pipes between Midia and Constanta (both in south-eastern Romania) might eliminate the supplementary costs caused by the oil losses and thefts registered on this route.

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The state will recover from RAFO Onesti between 10 and 50 percent of the debt, the president of the National Agency for Fiscal Administration /ANAF/ Sebastian Bodu stated.

The Bacau Tribunal declared its judgement stating the decision of the General Assembly of the RAFO Onesti shareholders ? the budgetary debts of the state versus RAFO, before 13 October 2004, were ?converted? into shares to be issues by the company ? as null and void. The decision of the RAFO shareholders broke the law and was taken without the consent of the creditor, represented by ANAF.

The conversion into shares addressed debts worth 9,000 billion ROL, more than 300 million dollars respectively. Following the Bacau Tribunal decision, this debt keeps its first-rank priority among the other debts against RAFO Onesti, and the Romanian state did not become RAFO shareholder.

In order to clarify some contradictory information in the Romanian media, the Balkan Petroleum Ltd. announced on September 18 that it continues to be the major stockholder of the RAFO Onesti refinery.

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There is a possibility for Romania and Turkey to take Bulgaria's place in electricity supply for the Balkans, after the closure of Units three and four of Bulgaria's Kozloduy Nuclear Power Plant.

The forecast came from British Ambassador Jeremy Hill, who visited the Danube city of Kozloduy's Nuclear Power Plant (KNPP) Wednesday.

Hill refused to give a synonymous answer to the question of Bulgaria's replacement as the main electricity supplier for the Balkan region. He said that there are options for Romania and Turkey and that the possibility of Belene Nuclear Power Plant is also open.

The ambassador told media that the goal of his visit in Kozloduy is to understand what the socio-economical consequences of prematurely shutting down nuclear units would be for Bulgaria and the region. He added that the British government has already granted GBP 220,000 for Bulgaria to partly compensate these consequences.

Hill claimed that by signing the EU accession treaty Bulgaria has agreed with the shutdown of the two KNPP units.

The shutdown of the two reactors was one of the EU's main preconditions for signing an accession treaty. Domestic opposition, backed also by President Georgi Parvanov, claims that the terms of their decommissioning must be rescheduled.

The deadline for shutting down Kozloduy's nuke units, which provide nearly half of the country's electricity needs, is set for 2006.

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The Romanian Commercial Bank alongside HEC Montreal, Canada, one of the first ten business schools in the world, announced yesterday the inauguration of the BCR Corporate University (UBCR), a faculty where the bank?s employees will have the opportunity to train according to the position they have within the company.

The new approach focuses on the employees? continuous training, combining the classic learning system with elements from the company?s strategy, the final purpose being a higher quality for solutions offered to clients? specific problems. In a first stage, the system will be supported and promoted by HEC Montreal specialists, an institution set up in 1907, as Professor Michel Patry, Academic Director for HEC, said.

?The classes will start no later than the beginning of next year and they will be exclusively aimed at the BCR employees, as UBCR is not a publicly accredited institution,? Cosmina Coman, Knowledge Management executive manager, stated. The ?Corporate University? concept, was launched in 1961 by the McDonald?s company which set up ?McDonald?s Hamburger University.? The concept was later taken over by other large companies such as General Electric, Ford, Motorola, Walt Disney and became a general concept beginning with the ?90s.

by Serban George

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Material values are more important in Central and Eastern Europe than in Western Europe. Consumers there are intent on increasing their consumption and are more strongly focussed on their careers than their counterparts in the West. Central and Eastern Europe consumer values and needs differ significantly from those of Western European consumers. Whereas a majority of 62 per cent of Western Europeans are more interested in personal development than in material possessions, almost 46 per cent of Central and Eastern Europeans have a materialistic attitude. This is one of the results of the ?Consumers in Europe 2005? survey.

Increasing their consumption is the aim of 42 per cent of consumers in Central and Eastern Europe, whereas the figure is just 39 per cent in Western Europe. However, in keeping with corresponding national and cultural mechanics in the eleven Central and Eastern European countries surveyed, there are evidently distinct differences in the propensity of people to buy something for themselves.

The top of the rank is occupied by Romanians with 24 per cent and then only around 47 per cent of Hungarians are only interested in the price, 56 per cent of Germans and even 62 per cent of Polish consumers are this price conscious. The superior half of the rank is occupied by Czech Republic - 47 per cent, Croatia - 50 per cent, Serbia and Montenegro - 51 per cent, and Poland - 55 per cent. The order of rank does not reflect the level of social and economic development of a country, but is an expression of the generally positive consumer mood of its population.

According GfK?s study, in Central and Eastern Europe, consumption is more important and encompasses a number of different aspects, ranging from simply satisfying basic needs right through to reflecting personality, lifestyle and success. Price is not usually the critical factor.

Naturally, Central and Eastern Europeans keep an eye on the price. However, at 51 per cent, pure price orientation, that is, preferring lower prices to higher cost quality is scarcely higher than in Western Europe at 49 per cent.

by Anca Bernovici

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The Competition Council issued a RON 7,000 fine on Procter&Gamble Management Germany, for failing to notify the institution upon acquisition of Wella AG, as the transaction also has an impact on the Romanian market, where both companies also operate.

?An economic concentration operation was conducted on the Romanian hair care market (shampoo, conditioner, hair treatment, styling product and hair dye sales),? reads the decision of the regulation authority.

Procter & Gamble Management Germany and Wella AG Germany have been operating in Romania since 2003, through Procter&Gamble Marketing Romania, Procter&Gamble Materials Management Romania and Detergenti SA, and through Wella Romania and Londa Cosmetics respectively. The fine issued by the Competition Council is to be paid within 30 days since the decision was communicated, by Procter&Gamble Management Germany, through its Romanian subsidiary. Procter&Gamble explained to the Competition Council that notification of the economic concentration operated by Procter & Gamble and Wella / Londa was neglected, as it was an indirect acquisition in the Romanian market.

?At the time the economic concentration notification was drawn up, for submission to the European Commission, the need to also submit it to Romania was not considered. This is in part owing to the fact that the economic concentration operation was conducted by two foreign entities and that a direct acquisition of the two companies in Romania did not take place. On the other hand, Procter & Gamble focused on preparing the notification for the European Commission and on preparing acceptable measures and commitments so as to eliminate European Commission concerns related to the effects of the economic concentration in Member States such as Ireland, Sweden and Norway. Not least, P&G did not have clear information on the operations conducted by Wella in Romania, so as to be aware that notification of the economic concentration was necessary in Romania as well,? the consumer goods company explained.

According to the company, failure to notify the operation was accidental and unintended, which is proved by the company?s mentioning the acquisition in the notification of another transaction, between P&G and Gillette, submitted to the Competition Council in March 2005.

P&G added it would make available all information related to the acquisition to the Romanian competition authority.

by Mediafax

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The Fiscal Code?s alteration draft is designed for implementing the 0.5 per cent tax on tangible assets only for a part of the companies, beginning with January 1, 2006, while introducing the vice tax might determine the increase of a pack of cigarettes up to EUR two, according to the intentions of the Minister of Finance, Sebastian Vladescu.

The official explained that the new measures? impact on next year?s inflation will be a ?zero? one and the idea of introducing the tangible assets tax was a response to the complaints from the business environment regarding the existence of certain companies with a non-competition policy. ?The tax is introduced for the companies which do not report a profit and have large assets, having two goals: to tax the economic activities which exist but do not pay debts and to force the former State factories to use the assets taken over, by a possible sale,? Vladescu said.

The Fiscal Code?s alterations proposed by the Ministry of Finance on taxing tangible assets stirred a strong response from the representatives of the business environment who claim the stipulated measures are anti-economic. The Minister of Finance stated his availability for any alternative solution which may come from the business environment.

Starting with next year, besides the price increases for power and gas, the population will pay much higher taxes and a new tax for the luxurious products. ?The price for a pack of cigarettes could reach EUR two beginning with next year, if the counterfeiting could be controlled; the price increase needs an analysis of the demand?s elasticity on this market,? Minister Vladescu stated. He said no decision on the form in which the vice tax will be included in the new Fiscal Code has been reached, but claims this name will not be mentioned in the Normative Deed. ?All I can say is that beginning with January 1, 2006, the tobacco and alcohol products will cost much more. If there will be a vice tax, it will represent a schedule advance on the excises? increase, or another tax, but it will not be called a tax vice,? Vladescu said. He added that through the alteration proposed in the Fiscal Code?s draft for cigarettes? tax, the budget supplement will amount in 2006 to 0.1 per cent of GDP. On the other side, the Minister of Finance stated that he will give up on eliminating the tax exemption for IT programmers? incomes, after the requests received when the Fiscal Code draft was published on the institution?s site. At the same time, he said the 16 per cent tax on incomes from share transactions will be made through a trimester analysis of the results of each investors? whole portfolio. The Minister of Finance pointed out that the 16 per cent tax will be applied for banking interests? incomes, even if the gain is already negative.

2006 budget - 0.5 pc deficit of GDP

The 2006 budget is estimated to have a 0.5 per cent deficit of GDP, allowing the maintaining of the economic stability taking into account that another high deficit of the current account is estimated, the Minister of Finance stated yesterday. ?We have tried to follow the line of what the Premier stated about next year?s priorities: infrastructure, health and education,? the MFP official said. On this year?s budgetary evolution, the Minister of Finance stated that it registered a surplus in the first nine months. According to the preliminary data of the Ministry of Finance, the consolidated general budget registered a 0.56 per cent surplus of GDP in the first eight months. According to Vladescu, the 2006 budget was projected so that it can provide a high absorption of European funds. On the other side, he stated that the funds the international institutions are ready to assign to Romania as loans, amount to EUR four bln. The loan offers come from the European Bank for Reconstruction and Development, the European Bank for Investment and the World Bank.

by Gabriela Folcut

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Company Tehnofrig based in Cluj-Napoca (northwest of Bucharest) posted 1.24 million RON (some 354,000 euros) in net profit by mid-2005, which is twice as much as the earnings by mid-2004, Bursa daily reports .

Overall revenue rose to some 2 million euros up from 1.28 million euros, while the like-for-like turnover shot up to 1.7 million euros in the first half of 2005 up from 1.35 million. The company says in a report issued to e-stock exchange Rasdaq that "the heavy tax burden and the appreciation of the leu against the euro underlay Tehnofrig's financial results in the first half of 2005." Tehnofrig designs projects for foodstuff bottling lines, milk-processing factories, etc.

It was set up in 1949 and passed into private ownership in 2002. Its majority shareholder is Cluj-Napoca-based company Metalo-Chimice, which accounts for 82.88 percent of the share capital, show data released by Rasdaq. The 17-percent interest is held by individuals and companies with five-percent-minus stakes.

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Germanos Telecom Romania, a subsidiary of the Germanos tie-up headquartered in Greece, increased its operating profit by mid-2005 and is considering expanding its foothold on the Romanian telecommunications market.

he overall revenue posted by all Romania-based Germanos arms - Sunlight Industrial, Sunlight subsidiary and Germanos store chain - hit 39.1 million euros in the first half of 2005. The EBITDA (Earnings before interest, taxes, depreciation and amortization) reached 2.3 million euros, while EBT (earnings before tax) stood at 1.4 million euros.

Germanos has been boosting its business in Romania over the past few years amid a diversified market and bullish prospects. The Germanos chain now owns 89 stores which provide services on behalf of mobile telephony operators Connex and Zapp.

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The National Authority for State Assets' Recovery (AVAS) received 18 letters of intention, one week after the announcement regarding the privatisation of the Fagaras-based Nitramonia company, daily Gandul reports .

Among the interested companies there are six Romanian companies, two Turkish, two Hungarian and one each from Spain, France, the UK, the US, Italy, Germany, Lebanon and Argentine.

AVAS has put up for privatisation its 79.05 percent majority stakes in the five companies on the Nitramonia platform, with the nominal value of one share standing at some 2.5 new lei (one euro sells for 3.5 new lei). These five companies were established almost two years ago when the former American owner split the unit in six companies. The parent company, Nitramonia SA, remained to pay all the "historical" budgetary debts, so that the company is currently going into liquidation. After the split, when it found out it must pay some million US dollars he did not know anything about before, the American investor terminated the privatisation contract the former APAPS (now AVAS) agreed to take over so that the companies came under the Romanian state's ownership again.

According to the new privatisation contract, the investor interested in taking over the Nitramonia Faragars has to submit to AVAS the pre-qualification documents, the participation ones as well as financial and technical bids before October 24.

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Portuguese company Coindu, a producer of leather and faux leather seat covers for cars and other types of motor vehicles, is about to open a facility in the Curtici-Arad Free Zone (western Romania), Bursa daily reports on Friday.

The first stage of the investment is almost complete, its value exceeding 10 million dollars, while not taking into account the value of the cars, equipment or installations. Also, the company has already started to employ staff.

Currently, Coindu has some 400 employees and has announced it will reach 800 by mid-2006 when the second stage of the investment is to end. The last stage of the investment will be completed by the end of 2006, when the company will need to employ another 400 hundred people. The Portuguese company has also requested in the letter of intent submitted to the Arad County Local Council to be given some 4 hectares of land in the Free Zone to build the factory on.

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Michelin Romania tyre maker considers investing some 150 million euros in a facility to be built on a 40-50 hectare area the Transylvania area (central Romania), one of the chosen locations being the Cluj-Napoca city, said sources close to the company. The sources also say the development of this investment will create some 1,000 new jobs in the area over the next five years.

Michelin Romania is a branch of the French Michelin Group, the world leader in tyre production, that sells in 170 countries and has around 127,000 employees all over the world.

The group entered the Romanian market in 2001, by taking over two facilities of the Tofan group - Silvana based in Zalau (northeastern Romania) and Victoria based in Floresti (southern Romania), coupled with other assets of the Romanian group. Also, the group has bought another facility this year, metallic cord and tyre carcass producer Romsteel Cord Zalau, the investment amounting to some 25 million euros.

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Bucharest ranks 83rd in the top of the first 127 towns that offer the best living conditions. The stuffy made by the Economist shows that the Chinese town of Guangzhou.

Analysts who made the study took into consideration about 40 indicators grouped in 5 categories: stability, health system, culture and environment, education and infrastructure.

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The revenues from transactions with shares will be taxed with 16%, through quarterly analysis of the results on the entire portfolio of each investor, and the revenues from bank interests will have the same taxation, despite of the negative rates, stated minister of Public Finances Sebastian Vl?descu.

"I met the representatives of the investors at the stock exchange, who claimed the revenues accomplished at the stock exchange should not be subject to taxes.

I do not agree as in Romania it was settled a 16% tax for all the revenues.

The revenues got from stock exchange speculations are considered like any kind of revenues," explained Vl?descu.

He was convinced by the investors? representatives that the taxation takes into account the result on the entire portfolio of a player.

He said that in the first stage, the analysis of the portfolio will be made quarterly and subsequent to the establishment of the mechanism, it is going to be made a monthly calculation of the profitableness.

Questioned about the negative effect of interests taxation upon the savings and considering the rates offered by the banks being currently negative, Vl?descu said the modification of the taxation does not represent the solving of the problem.

He also said the way each taxpayer values the available sums is a personal problem, stating the tax must cover all the forms of revenues.

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Fitch Ratings stated that the overall trend for Romanian banks is positive, thanks to an improving operating environment as a result of strong economic growth and the expertise of their foreign shareholders.

"Foreign parents have generally conducted significant restructuring projects, improving both the product offering and risk management frameworks," said Tim Beck of Fitch's Financial Institutions team.

"Together with improvements in the operating environment, Fitch views these benefits as offsetting its concerns about higher levels of competition and the still high levels of loan growth.

In the medium term, these trends could lead to upgrades in the banks' Individual ratings."

Fitch noted that currently around 55% of banking sector assets is held by foreign-owned banks.

With the planned privatisations of Banca Commerciala Romana ("BCR") and Casa de Economii si Consemnatiuni ("CEC"), which are scheduled for completion during H106, this will jump to over 90%, one of the highest levels in Europe.

"Romania has a large population, with a low level of banking penetration," added Mr. Beck.

"The market has attractive growth prospects, and foreign banks want to gain a market share here.

It seems likely that BCR and CEC will be sold to foreign investors, and they will seek to leverage the two banks' distribution networks, and particularly BCR's large customer franchise."

More aggressive competition is likely to follow these privatisations, as well as the merger of HVB-Romania, Banca Tiriac and probably UniCredit Romania, which will create the third largest bank in Romania.

Together with lower interest rates, this is likely to further squeeze margins.

Fitch also highlighted potential risks that banks face in the sector.

Loan growth has moderated in the last 18 months, but remains high.

While acknowledging that this growth is coming from a low level, Fitch cautions that such rapid growth carries both credit and operational risks.

"In particular, Fitch is concerned about the level of FX borrowing in Romania.

Unfortunately, this is particularly the trend for retail customers and especially longer-term mortgage loans," said Mr. Beck.

"However, a stable operating environment and the recent strength of the Romanian Leu have meant that these risks have not resulted in significant losses to date."

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Winners in the first half of the year are BRD (Romanian Development Bank) - Societe Generale, which consolidated its second position and HVB, that went up to the sixth position, ACT Media news agency reports.

Assets in Romania's banking system increased in the first half of 2005 by some 27 percent, reaching 29.1 billion euros.

Under growing competition pressure, CEC (Romanian Savings Bank) and ING lost some positions in the rankings of the most powerful ten banks on the Romanian market.

Also, ABN Amro' market share went up, ranking fourth.

BCR (Romanian Commercial Bank), the largest bank in the Romanian banking system, continued to lose ground down to 25 percent, as compared with the 30 percent two years ago.

Raiffeisen also lost its last year second position and is going down.

The local branch of the Dutch group ING registered a significant decrease in terms of market share, slipping down two positions on last year's ranking, in spite of the rapid growth in the number of new customers attracted through the retail programme based on the Self Banking concept.

Bancpost, under the control of the Greek EFG Eurobank, ranked eighth, having recovered from an almost insignificant lost in the market share as a result of restructuring.

Banca Transilvania ranks ninth, two places up as against last year.

Banca Tiriac, with a 2.7 market share, is next, on the tenth position, but the bank is about to merge into HVB so it will rank fourth in the classification.

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The international reserves of Romania reached 17.97 billion euros at the end of September, of which the gold reserve represented 105 tones and valued 1.327 billion euros, ACT Media news agency reports.

Foreign currency reserves amounted to 16.647 billion euros on September 30.

The 214 million euro increase reported in September were the result of inflows of 948 million euros, accounting for purchases of the central bank from the exchange market, revenues from privatization, revenues from the administration of international reserves and modification of minimal reserves in foreign currency of the commercial banks.

Outflows totalized 734 million euros, representing payment of installments and interests for the direct public external debt, guaranteed by the Ministry of Public Finance, modification of minimal reserves in foreign currencies at commercial banks, payment of shares, bank commissions and others.

By the end of 2005, the failing due payments for the public external debt, guaranteed by the Ministry of Public Finance, totalize 539 million euros.

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Romania could reach an inflation rate of 8% by the end of the year, to be reduced to 5% in 2006, National Bank of Romania (BNR) announced, according to ACT Media news agency reports.

The revised inflation target set at 7.5%, so, the rate could reach around 8%, or a little higher.

As for 2006, the target is estimated at 5%, with plus or minus one percent margin.

In August 2004-August 2005, the consumer price index lowered to 8.9%.

The increase was triggered by the rise in regulated prices and in international oil prices.

In August, BNR adopted the inflation targeting strategy intended to reduce the price increase rate before Romania's European accession scheduled for 2007.

BNR could use the interest rate policy to increase the level of Romanians' savings and encourage banks to reduce interest rates charged for credits in RON.

Bank's officials stated that they monitor the market and will take the necessary steps to consolidate the savings process, to reduce inflation and ensure financial stability.

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Romanian financial daily Ziarul Financiar has reviewed the market weight if the country's ten largest banks, and found that the market shares of BCR, Raiffeisen, CEC, ING and Bancpost has dropped in the first half of the year. They could not keep up with the 27% boom of the sector's balance sheet total, which amounted to EUR 29.1 billion at the end of June, the paper said.

The winner of the second quarter was BRD-Socgen, which managed to increase its market share to 14.2% from 13%. This was enough for the second place. HVB also performed excellently, coming up to the 7th position.

The market share of Romania's largest bank, BCR, has kept eroding. Based on balance sheet totals, the bank's share went down to 25% from 30% in two years.

The gap between the top 2 banks and the rest has grown as Raiffeisen's market share (3rd place) fell to 8.8%. HVB has a 5% market share (7th), indicating strong competition in the mid-section.

This is where OTP may enter via buying CEC, the market share of which has also been on the decline. By the time OTP acquired CEC, the Romanian bank's share would probably be even smaller. OTP is already present in Hungary's neighbouring country via OTP Bank Romania.

OTP Bank's Deputy CEO László Wolf said OTP would make a competitive bid for the savings bank, adding that the only concern in the deal was that rival bidders would overvalue CEC, old business daily Világgazdaság reported on Wednesday.

Wolf said they would review CEC's product portfolio and internal processes and would also enhance sales activities. Besides the modernisation of branches, CEC's ATM network, which is currently almost non-existent, will also be expanded, he added.

There are a total of eight contenders for CEC, which could be a key asset in terms of expansion in Romania. If OTP failed to acquire CEC in its privatisation, the focus is likely to be shifted onto organic growth.

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Romanian Commercial Bank (BCR) assets reached 7.18 billion euros in H1, up 42% in euros versus H1:04, ACT Media news agency reports.


BCR posted 121 million euros in H1 net profit, which is 70% of the 2004 net profit.

BCR is currently in the second phase of the privatization process, the short-listed banks to submit by October 17 the binding bids.

The short-listed banks are Fortis, Banco Comercial Portugues, National Bank of Greece, Banca Intesa, Deutsche Bank, Erste Bank, Dexia, KBC and BNP Paribas.

The investors can choose either the purchase of 50% plus one share or the purchase of a 61.8825% stake.

AVAS is the main shareholder of BCR, by a 36.88% stake, after it sold in 2004, 25% plus 2 shares to the European Bank for Reconstruction and Development and the investment arm of the World Bank, International Finance Corporation, for 222 million dollars.

The other shareholders of the BCR employees (8%) and the five financial investment companies (6% each). The BCR own capital amounts to 3.5 billion RON, i.e. some 1 billion euros.

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Austrian group Wienerberger, one of the world's biggest brick makers and the second operator on the European roof market, recorded in Romania in H1 an 80% surge in sales versus H1 2004, ACT Media news agency reports.

The company's officials said that this increase was owed mainly to new residential buildings, which rose significantly in H1.

The new buildings represent the most dynamic sector on the construction market, estimated at 5 billion euros yearly.

This sector has drawn in the past years several investment projects from foreign construction material companies.

Despite the fact that in Romania new buildings have a small share in the total of construction works, these record the highest growth rate.

Wienerberger entered the Romanian market in 1998 and has invested so far some 38 million euros.

The Austrians have announced the intention to invest 100 million euros by 2009 in brick, tile and paving stone factories.

Wienerberger owns two brick factories in Romania, in Sibiu (centre) and Gura Ocnitei (south), in which it invested over 27 million euro.

By opening the Gura Ocnitei factory, Wienerberger Romania became the biggest brick maker in Romania.

Wienerberger Romania doubled turnover last year to 51 million RON (14.4 million euros) versus 26.2 million RON (7.4 million euros) in 2003.

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A protocol of joint government commission for economic, technical and scientific cooperation was signed between Pakistan and Romania on the conclusion of 18 th session of Pak-Romania joint government commission here on Tuesday.

Secretary of State Ministry and Commerce Ionel Mantog led the Romanian delegation while Khalid Saeed Secretary Ministry of Economic Affairs and Statistics led the Pakistan side.

The Romanian delegation showed interest in providing equipment and expertise for refiners' modernization and expansion, desalinization and power generation projects.

Romania has high capacity equipment in mining exploration and offered providing their expertise and machinery for mining projects in Balochistan.

A delegation of Romanian experts in mining and refinery is expected to visit Pakistan to work out specific proposals.

Both sides emphasized the need to expand trade and decide to facilitate exchange of private sector trade delegations and businesspersons and experts of the two countries.

Both sides agreed to exchange view regarding modalities for formulating funding and undertaking joint research and development projects in Science and technology fields.

Both countries agreed to explore the possibility of investment and industrial cooperation and joint ventures in SME sector, mining sector, oil and manufacture sectors.

It was also decided to promote a dialogue between the related institutions, entities, companies form both countries in agriculture, livestock and fisheries.

It was also further agreed upon that Pakistan and Romania would cooperate in the field of information technology by establishing joint venture between IT companies and exchange of visits of IT experts of private business community.

Romania invited Pakistani companies to invest in Romania in textile, leather industry, food processing industry and any other sector of interest.

Pakistan offered to supply food products, processed horticulture product, textile garments, rice, finished leather products, footwear, pharmaceuticals and railway rolling stock.

Romanian side offered to supply equipment for cement plant, refinery, CKD tractors, truck, lorries, city cars, electrical and Electro-mechanical equipment, chemical, petrochemical, meteorological products, soda ash and oil seeds.

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Investors interested in BCR are to submit offers for 61.88% of the shares.

The banks interested in taking over Banca Comerciala Romana (BCR) will submit offers to purchase 61.8825% of the shares of the credit institution.

Previously, the privatization strategy of the bank stipulated the investors could choose to take over a stake of 50% plus a share at BCR, or a stake of 61.8825%.

State Assets Resolution Authority (AVAS) is the main stockholder of BCR, with 36.88% of the capital, after having sold last year a stake of 25% plus 2 shares to the European Bank for Reconstruction and Development (EBRD) and to the investments division in the private sector of the World Bank, namely International Finance Corporation, for $222 mln.

The government authorized AVAS to value the entire stake owned at the bank and to ransom, according to the agreements, the shares previously sold to EBRD and IFC.

Recently, the privatization commission announced the offered price will represent 90% of the evaluation chart to select the competitors and only 10% of the score will take into account the technical criteria.

Based on the score, the engaging offers that must be submitted by October 17, 2005 the latest will be analyzed, and two investors will be selected for the final negotiations.
The two finalists will submit improved financial offers, with higher values than those forecasted in the first stage.
The winner will have to offer the highest price for a stake of 61.88% of BCR shares.

Subsequent to the first pre-selection, following the letters of interest, in the race to take over BCR remained Fortis, Banco Comercial Portugues, National Bank of Greece, Bank Intesa, Deutsche Bank AG, Erste Bank AG, Dexia, KBC and BNP Paribas.
BCR registered in H1 a net profit of RON443 mn (EUR121 mn), at a total of the assets of RON26.3 bn (EUR7.18 bn ).
Source: Reporter Greece

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NORWEGIAN offshore support specialist Island Offshore has ordered a UT 776 E platform supply vessel from Aker Yards NKr235m. This with be the 16th vessels built for the Island Offshore Group for Aker Yards. The hull will be built in Romania with outfitting at Brevik, Norway. Delivery of the vessel is scheduled for March 2007.

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Greek retailer Elmec Sport?s Romanian subsidiary has secured a deal with Greek clothing company Fashion Box Hellas for the exclusive distribution of garments in Romania.
 
According to the terms of the two-year deal, Elmec Romania Srl will sell the Replay, Replay & Sons, We Are Replay, E-Play and Replay Footwear brands in its existing Famous Brands stores or in specialised outlets.

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Bank lending to the population and companies amounted to roughly 14.95 billion euros at the end of August, up 3.6% from July, ACT Media News Agency reports.

According to figures released by the National Bank of Romania (BNR), national leu currency credits grew by 4.5% in the above-mentioned period, outstripping the balance of foreign exchange funding that went up only 3%.

Non-governmental credit went up by 37.4% compared to Jan.-Aug. 2004 thanks to the 40.4% increase in its leu component and the 35.5% rise in the foreign exchange component.

According to the central bank, the population's savings increased 29.6% at the end of August from the same period a year ago, while the individuals' deposits reached 9.886 billion lei or 2.81 billion euros.

In euro terms, the residents' foreign exchange deposits surged 50.5%, the population's deposits went up 18.5%, while the companies' deposits nearly doubled from the same period a year ago.

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Romanian president Traian Basescu on Tuesday asked the country's oil executives to search for ways to lower fuel prices, his office said.

The president's office said in a statement that oil executives were receptive to tackling the problems generated by the rise in fuel prices internationally.

Gasoline prices have risen sharply in Romania over the last few months.

A liter of gasoline now costs about 3.5 lei (US$1.16; euro0.97) in a country where the average wage is 900 lei (US$300, euro250).

Austrian-owned OMV-Petrom, the country's largest oil company, has been criticized for charging higher prices at the pump, while the company continues to extract cheap Romanian oil.

OMV received rights to most of Romania's oil when it acquired a majority stake in Petrom last year from the Romanian government.

The second-largest oil company, Rompetrol, said it proposed a set of measures that would enable it to lower prices by 8 percent to 9 percent.

Rompetrol CEO Dinu Patriciu urged the government to lower electricity prices it charges its refinery and to improve fuel tax collection to eliminate competitors who don't pay taxes.

He also asked to take over a 22 kilometer (14-mile) state-owned pipeline between the ports of Constanta and Midia, which currently causes heavy losses due to poor maintenance and sabotage by thieves.

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E.ON aims to increase its presence in the energy distribution sector in Romania and to get involved in energy production, declared Walter Hohlefelder, Board Member of E.ON Energie AG, at the official take over of 24.62% of Electrica Moldova.
According to the privatisation contract, E.ON paid EUR 31.4 M for the shares and will subscribe another EUR 68.6 M to the social capital in order to obtain control of 51%.

With Electrica Moldova in its portfolio, E.ON holds 9 per cent of the distribution market, and the stake is expected to increase after the take over of another state company.

E.ON competes with another nine investors for the take over of Electrica Muntenia Sud, ?the crown jewel? of Electrica?s network, as state secretary Victor Alexandru once called it.

E.ON has an important stake in this take over, but is also interested in Transilvania Nord and Sud, Hohlefelder indicated.

He also said that the company wants to involve in production of energy in Romania, since on international level it already functions as both producer and distributor.

E.ON representatives recently visited CET Suceava, a thermal power plant in Moldova, confirmed Henning Probst, Country Manager for E.ON Romania, but he did not wish to make any further comments.

Probst explained that for Electrica Moldova, the company prepared investments with two separate schedules.

He said that heavy investments in IT, customer care centres and cash desks will be made in short term.

?We are prepared for them and they will be ready next year? Probst added.

On the other hand, infrastructure investments still need further planning.

Infrastructure development will have a different schedule-planning is to end in a couple of months, implementation of investments is to start in 2006 and last 5 to 6 years, the country manager explained.

Price increases are possible for electricity, if quality of services is improved and if the agreement of the National Agency for Energy Market Regulation (ANRE) is obtained said Hennig Probst.

However, for captive consumers, which are mostly domestic consumers, there will be no price increase assured Economy Minister Seres.

Minister Seres said that the state still holds an important stake in the company and following privatisation there will be consultations between the two parties, in order to ensure obligations are respected and quality services provided to the population.

In respect to investments in network modernisation, Seres added that Romanian companies need to be involved in an important proportion in the construction works.

The privatisation of Electrica Moldova was approved in April 2004 by the Government. In 2004 the company ranked first as contributor to Electrica SA?s turnover, with share of 12%.

In addition, another privatisation contract was just finalised.

The Economy Ministry and Czech company CEZ signed for the shares transfer of Electrica Oltenia.

CEZ paid EUR 47.4 M for 24.62% of the shares and is to contribute another EUR 103.6 M to the company?s social capital.

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The transactions on BSE (Bucharest Stock Exchange) were on a slight downward trend for the fourth session in a row, both at the prices? level and at the level of the liquidity.

?We cannot talk about an overall downward trend on BSE yet, as the fluctuations are insignificant,? declared operations manager with CA IB Securities Valerian Ionescu, adding that it is difficult to predict the future evolutions in the market.

He mentioned that the amendments in the Fiscal Code introduced by the Ministry of Finances had a higher negative impact than the brokers expected.

He said that the significant growth in September was influenced by the decrease in the interests for deposits, and the investors orientated their funds towards the capital market.

SIF Oltenia and SIF Moldova were the most transacted issuers so far this week, with transfers worth RON 5.7 mn and RON 3.1 mn, respectively.

SIF Oltenia?s quota stagnated at RON 1.87/share ? the closing level in the previous session, while the price for SIF Moldova dropped by 0.6%, down RON 1.56/share.

SIF Transilvania posted the most significant decrease in the quota, by 1.7%, down to RON 1.69/share.

The transactions conducted with the shares in the five financial investments companies summed up RON 13.1 mn, covering almost 60% in the liquidity on BSE.

The transactions conducted with shares in Petrom reached RON 2.4 mn, while the quota dropped by 0.4%, down to 45.1 bani/share.

Rompetrol Rafinare posted a liquidity of RON 2 mn. The price dropped by 1.7%, down to 11.5 bani/share.

Banca Transilvania closed at RON 1.03/share, down by 1%, recording transfers worth RON 2.1 mn.

BRD-Groupe Societe Generale was the only liquid issuer that posted an increase in the quota, by 2.3%, up to RON 13.2/share.

The total value of the transactions reached RON 1.4 mn.

The total value of the transactions on BSE was of RON 22.1 mn, a similar level to the one posted in the Friday session.

The BET index, based on the most liquid shares, went down by 0.36%, while BET-C index, which reflects the overall trend on the market, stagnated, as the increase was of only 0.06%.

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Germany is currently the fourth largest investor in Romania, with 12,201 German companies operating in the country, totalling EUR 1,033M underwritten capital during 1991 - July 2005, according to the National Trade Registry Office data.

The Romanian market has become a favoured target for German companies to expand to, particularly considering that Romania is close to the 2007 European Union accession date, which will turn the country into a strategic investment location in South Eastern Europe.

?A strategic location in South Eastern Europe, a highly skilled workforce, a cost-competitive business climate and a government committed to building business success - all these factors are working together to make Romania the best investment choice,? president of the Romanian Agency for Foreign Investments (ARIS) Ana Maria Cristina said.

The enthusiasm of German investors did don?t come out of nowhere.

The explanation is that they moved on, from the stand-by, fact-finding and market analysis stage, to action, particularly after 2000.

Development of business relations between Romania and Germany was also proven by the positive trend reported by trade exchanges, which account for 15 per cent of Romania?s foreign trade.

In the first half of the year, bilateral trade exceeded EUR 4 bln, while exchanges between the two countries totalled EUR 7.5 bln in 2004.

Investments carried out by German companies in the local market account for approx. 8.6 per cent of the total contribution to capital by international companies.

The Germans hold key positions in the Romanian industries, starting from retail, automotive component production and going on to acquisitions in the energy and financial sectors.

After companies such as HVB, Metro, RWE, Praktiker, Carpatcement, Continental opened businesses in Romania a few years ago, the Germans included, in the ?Romanian acquisitions? chapter, companies Distrigaz Nord and Electrica Moldova as well, through E.ON giant.

German company officials also target Electrica Muntenia Sud, as well as other companies.

On the other hand, the financial sector is witnessing an acquisition spell.

After the HVB Bank - Tiriac merger, further to which the bank moved up to the fourth position in the Romanian banking system, Germans want to expand their presence in the banking industry.

And the stake is quite significant.

The Romanian Commercial Bank, holding 26 per cent of the total assets in the local market.

Deutsche Bank is one of the competitors in the race for the BCR privatisation, and winning this challenge would strengthen the German investors? interest in Romania.

On the other hand, the results reported by companies already operating in Romania only reinforce the country?s status as a target state for investors.

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