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February - 2005

Economic News

Turkish timber firm to pour millions into Romania

Turkish parent company of door and timber product manufacturer Prolemn will be investing around 115 million Euro in expanding its wood processing operations in Romania. Prolemn general manager Dogan Gures told The Diplomat that after so far investing 50 million Euro in its factory in Reghin, the firm will expand their operations by 15 million at this site, while parent company Kastamanu Entegre (part of Hayat Holding) will invest 50 million Euro each in two other wood processing factories in Romania, as yet undisclosed locations.

Connex calls on Ericsson as 3G partner

Ericsson has been selected by Connex as the equipment and services supplier to roll out its third generation (3G) voice and data network in Romania. Financial arrangements were not available and the contract does not have “a limited timeframe”, Ilyana Guzman, group
function communicator at Ericsson's office told The Diplomat, adding the deal included WCDMA Core Network, WCDMA Radio Access Network, Network Rollout, system integration, competence development and support services.

Italians ready to pick up state banks

Italian Banca Intesa is aiming to penetrate the Romanian banking market through acquisition, according to Ziarul Financiar. This could see the firm picking up one of the two banks remaining to be privatised, national savings bank CEC, which has the largest network and Banca Comerciala Romana, which is worth somewhere in the region of one billion Euro. Meanwhile CEC is preparing to sell ten to 15 per cent of its value on the Romanian Stock Exchange.

Inflation just misses target

Inflation for the whole of 2004 was 9.3 per cent, according to the office for national statistics, following a 0.6 per cent rise in December. This official figure just misses the target of nine per cent.


Tariceanu tells Romania to slow down

Prime Minister Calin Popescu-Tariceanu wants Romania to grow at a slower rate than the reported eight per cent growth in GDP in 2004, which he said was "not entirely healthy". The new premier believes a 5.25 per cent growth, similar to the World Bank's suggestions, is "better
as the economy cannot yet bear such high economic growth rates year on year." Part of the leap in growth was due to Romanians working abroad, which contributed up to two billion Euro to the economy last year.


Making it big:Tourism

Romania received 1.6 million foreign tourists last year, representing a 44 per cent increase on 2003. The nation's annual income from international tourism is now about 800 million USD and contributes four per cent to Romanian GDP. The value of investment in this field was between 300-400 million Euro, twice more than last year, which also saw 30 new hotels and 378 pensions open.

Petrom helps double annual FDI to three billion

Foreign invesments in 2004 will pass three billion Euro, according to initial results from the Romanian Agency for Foreign Investments (ARIS), thanks mainly to the privatization of Petrom. “Petrom put Romania on a real competitive footing,” said Alexandru Popa, last year's president of ARIS. “We are starting to appreciate the real value the international community expected of Romania.”

State to sell phone shares

Fixed line operator Romtelecom is likely to see its remaining 45.9 per cent stake floated on the stock exchange by 2006, as the new Ministry for Communications and IT aims to sell its shares. The majority 54.01 per cent is owned by Greek phone firmOTEGroup.

Tuborg continues awarding environmental grants

Tuborg Romania and the Romanian branch of the Balcanic Association for the Environment will continue awarding grants to researchers specializing in environmental protection. This year, Tuborg Romania decided to grant over one billion ROL (25,000 Euro) to these projects, said Shachar Shaine the company president, pictured above with Roxana Cozma, Counselor for relations with NGOs in the Ministry of Environment and Prof FK Vosniakos, president of the Balcanic Association for the Environment

Home ownership loans receive EBRD cash…

European Bank for Reconstruction and Development (EBRD) has lent Greekowned Banc Post a second 20 million Euro to support housing loans for Romanians to buy, build or renovate their homes and a further ten million Euro to HVB Bank to fund its mortgage programme. In Romania, mortgages now account for around one billion Euro in value, but lack long term financing. The EBRD loan to Banc Post hopes to plug this security gap with its 11 year-long grant, while the HVB loan is over 12 years.

…and so does small enterprise

In addition the European Bank for Reconstruction and Development has leant Volksbank ten million Euro to help it finance small and medium enterprises (SMEs) and a further 22.5 million Euro to Banca Transilvania to also assist finance in this sector and in corporate and retail businesses.

Carplant faces closure without a buyer

Craiova Daewoo will end its car production this year unless the factory can find a new buyer by the end of December. The Ministry of Economy and Commerce has the majority 51 per cent stake in Daewoo Romania, which includes the land's value. But the local factory, which makes brands such as the Matiz and Cielo, is suffering under debts of around 800 billion USD to South Korean creditors.

EU grants loans for infrastructure

European Investment Bank (EIB) is granting a 16 million Euro loan to BRD – Groupe Societe Generale to fund small and medium-sized projects in environmental protection, energy and energy savings and general infrastructure
improvement. This is the fourth loan granted through BRD, and a figure totalling 100 million has so far been handed to the French-owned bank. The EU long term finance institution has now clocked up 3.3 billion Euro in loans to
Romania since 1990.

Shiver me timbers! Here comes the new Captain!

President Basescu revisited his naval past by checking out the two latest purchases by the Romanian fleet: two frigates bought from the United Kingdom. King Ferdinand has a top of the range cannon, a landing pad for elicopters and 5,300 tons. 203 sailors are currently aboard the vessel, which has seven decks and four Rolls Royce turbines. named King Ferdinand and Maria,

Fixed phone network opens for competition

Fixed line operator RomTelecom will make its wire network infrastructure available to competitors. Its local loop will be deregulated, allowing fixed telephone firms more access to
customers in return for maintenance costs, reports Ziarul Financiar.


Dutch bank on SME loans

Netherlands Development Finance Company (FMO) has given Banca Transilvania a ten million Euro in credit, so the bank can award loans to small and medium enterprises. Last summer the FMO granted a long term credit line to BancaTiriac.

Strong currency sees interest rates slashed

Owing to inflation and the increasing value of the leu, the National Bank (BNR) has cut interest rates from 21 to 17 per cent, with a possibility that further cuts could take place in the near future.