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February - 2005

National Days

Kazakhstan - Oily tiger out to make friends

A rapidly-growing eastern nation with a market for raw materials is hoping to boost its bilateral trade with Romania

Twenty years ago a cabinet or coffee table built in Bucharest was a prize much sought after by the more privileged members of the Kazakhstan region of the Soviet Union.
“Our people knew how to notice good quality craftsmanship and design and if one family had Romanian furniture in their apartment, it was a symbol of the good life,” says Dr Eric Zhussupov, 33 year-old charges d'affaires and chief of
mission for Kazakhstan in Romania. But, thirteen years on from the separatist revolution of December 16 1991, most of the tables, chairs and chests of drawers in the average upmarket Kazakh flat are bought in from Italy, Russia, the Ukraine or China. Zhussupov argues this is a great example of a good business opportunity where Romanian firms can build upon their previous good reputation for quality standards. A furniture company could therefore export its wares with the tagline 'Made in Romania' and knock it up at a premium rate.

Physically, Romania is the closest European Union candidate country to Kazakhstan and while the eastern country has seen a massive growth in its GDP of between nine and 11 per cent, among the top of the ex-Soviet countries, it has also benefited from Romania's need for raw materials and its own ability to provide them in enormously large amounts.
Trade between the two countries is increasing year on year, with the benefit firmly in favour of Kazakhstan. In 2003 exports from Romania to Kazakhstan totalled 22.6 million USD and 240.9 million to Romania. While, for the first nine months of last year, 337.2 million USD in exports were made to Kazakhstan and 18.3 million the other way.
Kazakhstan's main exports to Romania include oil, gas, cereal, coke and cotton, as well as agricultural machinery There is currently a pipeline from Kazakhstan to Novorossisk, where the oil then travels to Romania, mainly by tanker. In return, Romania offers the ex-Soviet country industrial machinery, electrical equipment, furniture and textiles.
“There are a lot of opportunities not yet realised,” said Zhussupov, whose job is to stimulate more Kazakh business in Romania. Next year he hopes for the first Kazakh firm to open up a business in the Balkan country, in either the banking or oil sectors.
“The banking sector in Kazakhstan is very well developed,” he says, citing five years of privatization and a presence already in the Russian Federation and Ukraine, and with a hope to someday reach Romania.
This would not be competition on the retail circuit, but a specialist bank in the energy and manufacturing sector for business clients, which could begin with a branch in Bucharest to support specific companies in these categories Further links between the two countries could be improved. “Romania has very good expertise in the industrial and machine-building sector, which is very interesting for Kazakhstan,” says Zhussupov. “Newly established in our country is the state programme for industrial and innovative development that aims to put Kazakhstan on the modern industrial map by 2015. In this, the experience of Romanian engineers in helping build new factories and industrial machinery is very important.”
Many Romanian experts in oil, already based in Kazakhstan in 1991, have stayed there to build up the industry in a new, free market environment, especially in designing and building the pipeline network.
There is also a large ethnic population in Zhussupov's nation. He estimates around 20,000 Romanians and Moldovans live in Kazakhstan, which is itself a melting pot of over 130 nationalities, many deported to the district during the Communist period.
Liberalisation has allowed the former capital Almaty to start offering a plethora of different restaurants and even one Balkan eatery called the 'Romanian Courtyard' that serves up a selection of mici, sarmale and marmaliga for those homesick emigrés living at the cusp of Asia.
However there is yet to open a Kazakh Restaurant in Bucharest. “Once we have more firms established here,” says Zhussupov, adding, as though it were an incentive to boost business: “then we will need a kitchen.”

Michael Bird

India diversifies trade options

We take a look at the trade between India and its Balkan partner, following the Asian country's Republic Day on January 26

India is branching out from being a trade partner in only steel and metallurgy, with further investments in the tourism, textiles and film industries and a promise of more FDI in the country. But tight tariff and Visa laws have been seen by some as a handicap to a freer form of trade.
“Both our economies are growing at a healthy pace and there is tremendous potential for future cooperation,” says the Ambassador Mr.Ajai Malhotra. The largest investment by Indian individuals has so far been the Mittals' LNM Holdings, who now own the Sidex steel plant at Galati and smaller factories in Iasi, Roman and Hunedoara. “Theirs is one of the biggest foreign investments to come t o Romania,” adds the Ambassador.
In November 2001 the Government sold 92 per cent of state firm Sidex to LNM in a deal worth more than 500 million USD. LNM is now the largest trading company in Romania, according to the firm, accounting for three per cent of GDP, four per cent of industrial output and five per cent of its exports, with five million tonnes of steel manufactured in 2004. The firm exports about 65 per cent of its output.
“Commerce with India has a strong history and has been going on for 40 years,” says Diwaker Singh, president of the Indian BusinessAlliance of Romania, which helps coordinate and promote Indian trade. “The purchase of Sidex was an important factor which proved that business could be profitable here.” He says Indian firms could come to Romania because there are still some opportunities for Indian firms in privatisation, Romania is a gateway to Europe with a sea-port and is still a country with fairly attractive labour costs. Now he is receiving around five to six inquiries per month from Indian firms interested in expanding to Romania.
But there are problems. “There is a draconian and archaic Visa system in Romania which means it us far easier for Indians to get into the EU and the USA,” he says. Indians also find it hard to sell their products due to the high tariffs, which demand payment of up to 30 per cent of the costs at the border.
In IT and communications, Singh sees great options. “India has become a leading market for western nations to outsource their call centres, but in terms of European languages, it is mainly an Indians are also promoting an ecotourism with the establishment of the luxury Delta Nature Resort in the Danube Delta at Somova near Tulcea, which will open this spring in a 6.5 million USD investment, using Indian furnishings, with an Indian chef and meditation and nature therapy from Indian specialists, plus 30 villas for upmarket nature travellers.
Clothing is also showing growth. Last year Tata International signed a Joint Venture partnership with Romania footwear producers Oxalaga to supply finished leather products to central and south-east Europe, with an ambition to seize around ten per cent of the 400 millionUSDmarket.
“As a result of concerted efforts by both sides, India-Romania two-way trade is on the upswing,” Malhotra adds. After declining in the 1990s, it has risen from 68 million USD in 2000 to 132 million USD in 2003 and almost doubled to 250 millionUSDin 2004.
In turn, Romania also supplied India with its industrial expertise and products in iron, steel, chemicals and machinery, English speaking country.” Because of its language skills in, especially, French, he argues that Romania could act as a second destination for such centres, with Indian expertise in the industry. as well as gas turbines.
The nations have identified sectors such as pharmaceuticals, information technology, energy, power and heavy “countries possess world-class expertise which we are ready to share with each other,” says the Ambassador.
During 2004, India provided training opportunities in IT to several Romanian trade specialists, which it hopes to develop.
“Romania also has considerable strengths in petroleum refining and exploration and related fields, which too have good prospects for future cooperation with India,” says Malhotra.
Because of trade reforms and Indian foreign exchange reserves now exceeding 130 billion USD, Malhotra says more Indian investment into Romania will arrive directly, rather than through third countries. engineering for special focus.
These are fields in which our A recent opening in Mumbai of a Romanian Consulate General and the appointment of a Romanian Honorary Consul in Kolkata is also going to assist the bilateral process.
Bollywood is also coming to Bucharest as, in the last six months five Indian films have taken advantage of Romania's studios and its status as a desired location, by choosing to shoot movies in this country such as Dost (My Best Friend), a Hindi film about a six year-old girl who is separated from her Indian parents and winds up in Romania.

Michael Bird