REVIEW OF THE SECTORS TRANSPORT,
INFRASTRUCTURE AND
COMMUNICATIONS IN ROMANIA
MAIN REPORT
(D20010458\23021)
Submitted to:
Submitted by:
Senter Internationaal
NEA Transport research and training
Rijswijk, The Netherlands, May 2001
CONTENTS
page
1
EXECUTIVE SUMMARY ............................................................................ 5
1.1
1.2
1.3
Transport, Infrastructure and communication .............................................. 6
Donors and Financing................................................................................. 8
Business opportunities for Dutch enterprises .............................................. 9
2
GENERAL INTRODUCTION AND BACKGROUND ................................ 15
2.1
2.2
2.3
2.4
2.5
2.5.1
2.5.2
2.6
2.7
Objectives of the study ............................................................................. 16
Purposes of the study ............................................................................... 16
Results of the project ................................................................................ 16
Activities ................................................................................................... 17
Methodology and Approach ...................................................................... 18
Desk research .......................................................................................... 18
Field research ........................................................................................... 18
Organisation of a seminar ......................................................................... 19
Project Team ............................................................................................ 19
3
GENERAL DATA ON ROMANIA ............................................................. 21
3.1
1.2
Foreign investment ................................................................................... 21
Privatisation process in Romania .............................................................. 27
4
TRANSPORT, INFRASTRUCTURE AND COMMUNICATIONS .............. 31
4.1
4.1.1
4.1.2
4.1.3
4.2
4.2.1
4.2.2
Transport and infrastructure...................................................................... 31
General overview ...................................................................................... 31
General policy........................................................................................... 35
Development of transport means and facilities (2001-2004) ..................... 36
Communications and information technology............................................ 38
Communications and information technology policy.................................. 38
Present situation regarding telecommunication......................................... 41
5
PRIORITIES OF INVESTMENT BY THE ROMANIAN AUTHORITIES .... 45
5.1
Investment priorities in the sectors transport, infrastructure and
telecommunication .................................................................................... 45
Investment opportunities as obtained by the CCIR ................................... 48
5.2
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6
EXISTING DONOR ACTIVITIES IN ROMANIA ........................................ 51
6.1
6.1.1
1.1.2
1.1.3
1.2
1.3
European Union........................................................................................ 51
Phare ........................................................................................................ 51
ISPA ......................................................................................................... 56
SAPARD................................................................................................... 58
EBRD ....................................................................................................... 59
World Bank ............................................................................................... 61
7
MARKET OPPORTUNITIES PER SUB SECTOR .................................... 65
8
DUTCH BUSINESS OPPORTUNITIES IN ROMANIA.............................. 71
9
CONCLUSIONS ....................................................................................... 85
9.1
9.2
Transport, Infrastructure and communication ............................................ 86
Investments priorities in the sectors transport, infrastructure and
telecommunication .................................................................................... 88
Donors and Financing............................................................................... 89
Business opportunities for Dutch enterprises ............................................ 91
9.3
9.4
4
D20010458.doc
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1
EXECUTIVE SUMMARY
The Programme for Co-operation with Countries in Central and Eastern Europe (PSO)
aims at supporting the transition of central and Eastern European countries to a
market-oriented and sustainable economy. Under this programme, the Netherlands
government funds projects, assigned to enterprises in The Netherlands, for the transfer
of knowledge and expertise, which should lead to sustainable investment and/or trade
relations on a business to business basis.
It was decided to carry out a Transport Sector study for Bulgaria, Romania and Ukraine
in order to develop a framework for the development of new transport projects in these
countries within the PSO framework.
The main findings for Romania are:


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Romania’s economy in the 1980’s was affected by economic policies under which
resources were misdirected and maintenance was delayed and deferred. Romania
managed to settle its external debt, but the burden that fell on the nation was
tremendous.
Currently, Romania is working to overcome the difficulties faced ever since the
events of December 1989. The economy is moving towards a market economy.
The recent change of government may lead to more emphasis on revitalising stateowned enterprises and a deceleration of the privatisation process.
Foreign investment has been considered a key economic factor since 1990 when
the Romanian economy started the change towards a market economy. Romania
offers many comparative advantages such as:
- A large domestic market (almost 23 million consumers), the second largest in
Central Europe;
- A good location at the cross-roads of traditional commercial routes, allowing
access to over 200 million consumers in a 1000 kilometre radius; Romania is
also located at the junction of three prospective European transportation
corridors;
- A skilled, relatively low cost labour force, well trained particularly in technology
and engineering;
- A wide range of natural resources, including fertile agricultural land, oil and gas
and a significant tourist potential;
- Liberal investment legislation based on free, non-discriminatory access to
markets and economic sectors.
Subject to the legislation in force, investment is allowed in almost all-economic
sectors.
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
The volume of foreign direct investment recorded by Romania between December
1990- April 2000, was about 4.6 billion USD. The high number of Romanian
companies with foreign investment, 74,025, shows that numerous small and
medium sized foreign investors discovered the economic potential of the Romanian
market and decided to invest there.

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The Netherlands is among the top five investors in Romania.
Starting with the last months of 1998, Romania has been speeding up the
restructuring process and, by consequence, several large-scale privatisation
operations were completed.

Even if the present level of foreign investment is below the Romanian economy
potential, mainly due to slower start of the privatisation process, foreign investment
has already an important impact in several industrial branches.
In 2000, one of the major targets was the accomplishment of PSAL provisions
negotiated by the Romanian Government with the World Bank. The Private
Structural Adjustment Loan (PSAL) is a loan agreement worth USD 300 million,
which includes major objectives regarding the privatisation. Under the PSAL
agreement, 63 Romanian state-owned companies are to be privatised by
privatisation agents.

1.1
Transport, Infrastructure and communication

The Romanian road network is in a deteriorated stage due to the low quality of the
road construction works and the enormous backlog in repair and maintenance.
Romania is pursuing a strategic plan for the development of its road network until
2006, comprising rehabilitation of international routes, modernisation of national
routes and motorway construction.

It is projected that 13 highways are to be built covering 3,000 Km, as well as 1,200
Km of new railway lines, new bridges over the Danube and the Prut river and 4 new
airports at Brasov, Galati, Alba – Iulia and Bistrita. The existing railways will be
upgraded to suit high – speed trains. The territory of Romania will be crossed by
several pan-European corridors: the Danube connected to the Rhine-Maine –
Danube Canal, a lot of main railway lines, the highway and the Bucharest-ChisinauKiev road.
The report specifies the development of transport means and facilities planned for
the period 2001-2004 and emphasising quality of services, traffic safety and
transport security.
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6
The state railways’ company, SNCFR, has been split into five separate companies.
New train operators are also to be given access to the network.
A two-stage railway modernisation and rehabilitation programme is being
implemented.
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The construction of the Danube-Black Sea canal created an important waterway
that connects the Black Sea to the North Sea through the Rhine-Main-Danube
canal.
The main problem of inland waterway transport over the Danube is the fact that the
river still has to be cleaned nearby Novi Sad by removing remaining parts of the
destroyed bridges.
This operation is planned to be completed by the end of 2001. Further problems
concern the need for dredging on several places. The Romanian dredging industry
is still not privatised.
Finally, agreement with Bulgaria should be reached regarding the planning and use
of the terminals in the river ports in both countries.
About 60% of the Romania’s imports and exports pass through the port of
Constanta, the most important maritime port of the country.
Romania plans to sell a maximum stake of 66 per cent of the Tarom airline, with the
state keeping a 34 per cent controlling share.
The strategy of telecommunication development was drawn up as a priority field of
the country’s macroeconomic infrastructure. A long term Development Program
was devised, with strategic objectives. Part of the Program has already been
accomplished through the commissioning of digital transit telephone exchanges,
local and international.
Mobile telephony evolves very fast. In only three years it reached an average
penetration rate of 10%. In comparison, Romtelecom, the fixed telephony network
and active for decades, has an average penetration rate of 17%.
The quality of the fixed telecommunication infrastructure is below standards and the
future for the fixed telecommunications network is very uncertain because of the
increasing competition from the mobile operators.
The penetration rate of Internet is still low: less than 1%. In this field there still is a
large potential for growth.
There is an extensive list of investment priorities and covers all transport modes. A
distinction has been made between investment priorities in the sectors transport,
infrastructure and water by the public sector (listed in the report) and those as
indicated by the Romanian Chamber of Commerce and Industry (CCIR). The latter
are not priorities for investment, but should be considered as business opportunities
(CD-ROM).
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1.2
Donors and Financing

The Accession Partnership continues to provide the single framework through
which the priority areas for further work are identified regarding progress to be
made by Romania towards membership of the European Union, the financial
means available to implement these priorities and the conditions which will apply to
that assistance. The 1999 Accession Partnership with Romania was adopted by the
Council in December 1999 and remained the framework on which the programming
for the year 2001 has been based.

Indicative allocations for Romania in 2001 are as follows (in million EURO):
Phare:
298.7
ISPA:
243.9 (mid-point of range)
SAPARD:
153.6
Total:
696.2

A Working Document on priorities for Phare 2001 was prepared by the Commission
in consultation with the Romanian authorities in early 2001.
The institution building priorities identified for Phare support under the 2001
programme for Romania (which will represent about 30 % of the total Phare
budget) indicate for transport: The adoption of EC norms as regards driving/resting
hours for road transport and the implementation of maritime safety acquis as
regards State Flag Control.

8
The main priorities identified for investment in the acquis (expected to receive about
30% of the Phare budget) and selected for the transport sector are Maritime safety
equipment and testing equipment for railway safety.
Investments in economic and social cohesion are expected to receive up to 40 % of
the overall Phare budget allocation and include: road worthiness enforcement,
railway rehabilitation, cross border co-operation and waste water treatment
projects.
ISPA: For Romania, Community aid in the framework of ISPA will be between 20%
and 26% of the total allocation. The average mid-range allocation is € 243.9 million
a year (at 1999 prices), equivalent to € 1,674 million for the 2000-2006 period.
Guidance is that half of the support - € 121.9 million a year - will be used to finance
transport infrastructure projects, the other half for environment projects.
Strategic Objectives in the field of transport are stemming from serious weaknesses
in its network of roads, railways and waterways. At the same time, there is a
necessity of upgrading to European standards and of increased traffic capacity
around urban areas.
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
During the year 2000, the Commission has approved four transport-related
projects.
The EBRD’s pipeline of projects is concentrating on:
- large-scale privatisation and restructuring with strategic investors;
- private sector investment in either local private or joint-venture projects;
- SME financing, banking and non-banking financial sector;
- national and municipal infrastructure privatisation and public-private
partnerships;
- Significant additional levels of investment (read private capital and finance by
IFI) are needed in order to achieve acceptable standards.
Since 1991 the World Bank has built up a portfolio of 29 IBRD-financed projects, of
which 22 are currently active, and two Global Environmental Facility (GEF) projects,
of which one is currently active. Since 1991, World Bank commitments to Romania
total over US$3 billion. Priority is given to advice and financing for EU accessionrelated programmes.
In 2000 one transport sector project has been approved (Trade and Transport
Facilitation Project, worth US$ 17 million).
1.3
Business opportunities for Dutch enterprises
Romania offers many business opportunities for Dutch enterprises as can also be
concluded from the large number of Dutch companies active there already. The liberal
investment climate, the huge market potential, a skilled and low cost labour force, the
influx of international assistance and capital and a consistent harmonisation policy with
EU legislation and regulations have resulted in an interesting business climate for
large, medium and small enterprises.
However, the new government elected ultimo 2000 may change some priorities in
economic policy and slow down the privatisation process. Moreover the persistent
bureaucracy on all public levels may remain a time consuming element the near future.
There are and will be many business opportunities in Romania. The project ideas
identified implicitly prove the relevance of the current PSO+ programme. Given the
emphasis the authorities put on improving transport and infrastructure the PSO budget
for the theme “Transport” is likely to remain too small.
The following table shows an assessment of the business opportunities in the different
sub sectors for possible PSO+ projects. Sometimes the expression "no key area" has
been used to indicate that the relevant sub sectors do not really qualify for PSO+
projects. This does not necessarily mean that there are no sound business
opportunities in the mentioned sub sectors.
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Sector
Road transport
Goods / Freight
Good opportunities in special and heavy
transport.
Passengers
Harmonisation public
transport regulations with
EC rules; no key area.
Towing services and mobile service
stations.
International bus lines; no
key area.
Supply and use of rescue
vehicles/equipment for fire brigade and
traffic police.
Supply industry
Transport by rail
Supply Industry
Inland water
transport
Manufacturing of components for
automotive industry in Pitesti.
Manufacturing of buses
Timisoara.
Production of on-board computers for
commercial vehicles.
Opportunities for forwarders;
shuttle services container transport.
Government controlled;
no key area
Improvement conditions navigation Danube Not relevant
(dredging; terminal development; shipping);
still no key area.
Supply industry
Sea transport and Establishment offshore company tug boats.
ports
Supply industry
Construction rescue boats; shrimps
vessels.
Manufacturing steel components for
shipbuilding industry.
Maritime navigation and safety systems.
10
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Air transport
Opportunities in forwarding and storage
activities.
Disinfecting station; plants to divide
petroleum products from rainwater;
pyrolytic incinerator for Bucharest Otopeni
International Airport; no key area.
Noise monitoring systems and solid waste
incinateror for Bucharest Baneasa
International Airport; no key area.
Public works &
water
management
Telecommunicati
on and ICT
Postal services
Massive investments planned in road
construction and maintenance;
Opportunities in supply of modern road
building machinery and technology.
Public works projects at the municipality of
Pitesti; no key area.
Provision of internet services; no key area.
Development integrated postal services.
Key areas for PSO projects
Shipbuilding industry and manufacturing of steel components for shipbuilding industry.
Automation international cargo transport - railways; establishing container shuttles
between Constanta and Rotterdam.
Towing services and mobile repair and maintenance units; service stations for road
transport. Heavy and special transport. Manufacturing of components for automotive
industry.
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Business opportunities / project ideas identified for Dutch enterprises
In spite of the fact that government influence and interference in the market economy is
likely to increase in Romania since the new Government has come to power, the well
educated labour force and the huge market potential offer increasingly sound business
opportunities.
The PSO programme for Romania is and will prove to be very effective in view of the
stage of economic and institutional development of the country. The sectors transport,
in particular road transport, and shipbuilding and related industries offer many
opportunities to Dutch enterprises, which we have summarised below more specifically.
It should be noted that project ideas as listed below do not necessarily qualify as PSO+
project.
Road transport (freight)


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Good opportunities in heavy transport.
Towing services, mobile repair unit and service stations.
Production of on-board computers for commercial vehicles.

Enhancing quality levels in manufacturing of components for automotive industry at
Trian S.A. in Pitesti and S.C. Giramex SRL in Mioveni - Arges.
Supply and effective use of rescue equipment for fire brigade/traffic police.

Road transport (passengers)

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Harmonisation of public transport regulations with EC rules.
Production of buses in Timisoara.
Railways

Setting-up a rail shuttle service between Constanta and Rotterdam using
automated tracking and tracing systems.
Inland waterways

12
Improvement navigation conditions Danube River (dredging; terminal development)
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Maritime and ports
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Manufacturing of steel components for the shipbuilding industry including
components for dredging vessels.
Construction of rescue boats for the port of Constanta and small fishing boats
(shrimps vessels) of 50 tonnes.
Establishing an off shore company with tugboats in Constanta.
Air transport

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Disinfecting stations; plants to divide petroleum products from rainwater for
Bucharest Otopeni International Airport.
Pyrolytic incinerator for Bucharest Otopeni International Airport.

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Noise monitoring systems for Bucharest Baneasa International Airport.
Solid waste incinateror for Bucharest Baneasa International Airport.
Public works and water management

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There are various opportunities for co-operation in the sector maintenance and
construction of roads, especially in the field of supply of road construction
machinery and technologies and transport equipment.
Public works projects in Pitesti.
Telecommunication

Provision of Internet services.
Postal services

Development of integrated postal services.
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2
GENERAL INTRODUCTION AND BACKGROUND
The Programme for Co-operation with Countries in Central and Eastern Europe (PSO)
aims at supporting the transition of central and Eastern European countries to a
market-oriented and sustainable economy. Under this programme, the Netherlands
government funds projects, assigned to enterprises in The Netherlands, for the transfer
of knowledge and expertise, which should lead to sustainable investment and/or trade
relations on a business to business basis.
Transport is one of the sectors within the PSO programme and covers a wide range of
activities and encompasses the following sub sectors:


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

Freight transport.
Public transport.
Transport by mode; air, water, road, and rail.
Public works and water management.
Telecommunication and postal services.
Information and communication technology.
It was decided to carry out a Transport Sector study for Bulgaria, Romania and Ukraine
in order to develop a framework for the development of new transport projects in these
countries within the PSO framework. Emphasis should be put on business to business
projects, however some institutional projects may be included to assist in the further
development of a particular sub sector.
This document reports the main findings of the assignment. The level of development
of the different sub sectors in the 3 countries varies, which is likely to have an impact
on the opportunities for enterprises in the Netherlands in the particular sectors in the
different countries. Therefore, a country by country approach, rather than a (sub) sector
approach has been applied in this study.
Our approach has an entrepreneurial character. We have incorporate local expertise
into the project by making use of the services of experts and facilitators in the 3
countries. This should give a structural support dimension during and after the
execution of this study.
Expertise from private companies already established in the defined countries also
have been used to explore complementary or spin-off activities, whilst making use of
their assessment of their business environment.
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2.1
Objectives of the study
The 3 main objectives of this study, which should lead to an optimal allocation of the
funds for the transport sector within the 2001-2003 PSO programme, are:
1. Increasing Dutch investments in CEE countries and in particular in Bulgaria,
Romania and Ukraine and develop sustainable bilateral trade relations.
2. Assist in restructuring of the transport sector in Bulgaria, Romania and Ukraine.
3. Increasing the business-to-business relations of enterprises from the Netherlands
active in the transport sector with enterprises in Bulgaria, Romania and Ukraine.
2.2
Purposes of the study
In order to achieve the objectives mentioned above the following purposes have been
listed:
1. Present a clear survey on the current situation in the transport sector in Bulgaria,
Romania and Ukraine.
2. Identify sub sectors with market opportunities, in particular considering Dutch
potential.
3. Indicate possible PSO project ideas in these sub sectors, preferably with an
indication of potential recipients.
4. Indicate possible web-sites where the studies can be published.
5. Organise a seminar in the Netherlands for presenting the results of the study.
2.3
Results of the project
The following products and services are being delivered in order to achieve the
purposes of the project:
1. A separate report per country delivered in hard copy and electronically, covering
the transport sector in respectively Bulgaria, Romania and Ukraine.
2. A list of at least two concrete market opportunities in every promising sub sector,
per country.
3. A seminar organised for Dutch companies to present and distribute the final
reports.
16
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2.4
Activities
For realising the first result, the following activities have been carried out:
1. Collection and analysis of available information to make a survey of the transport
sector in Bulgaria, Romania and Ukraine, with emphasis on opportunities for
business-to-business relations.
2. Provision of a description of the activities of multilateral donors in the field of
transport in Bulgaria, Romania and Ukraine. Special attention will be paid to the
EU/ISPA programme, the World Bank (IBRD and IFC), the EBRD and the EIB. The
study must include an analysis of the possibilities to integrate PSO projects into
these multilateral activities. PSO projects should, however, always be stand-alone
projects with a separate budget.
For realising the second result, a list of at least 2 concrete market opportunities in
every promising sub sector per country has been elaborated carrying out the following
activities:
1. Provision of an inventory of international Dutch companies active in the transport
sector and companies in Bulgaria, Romania and Ukraine. The list also contains
companies in Bulgaria, Romania and Ukraine in the transport sector having ties
with Dutch enterprises. Also Dutch companies planning or considering activities in
the field of transport in (one of) these countries have been mentioned.
2. Survey and detailed description of the sub sectors with market opportunities for
Dutch companies.
3. Identification and description of concrete market opportunities in every promising
sub sector.
For realising the third result, organising a seminar, the following activities have been
carried out:
1) Identification of Dutch companies in the transport sector.
2) Organisation of the seminar and presenting the study on the Internet.
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2.5
Methodology and Approach
2.5.1
Desk research
The project team has identified and listed Dutch companies active in the transport
sectors per Country (Bulgaria, Romania and Ukraine). This information has been
obtained from, among others:
 The Associations for transport (in the Netherlands and the three countries) and their
publications.
 The Chambers of Commerce in the Netherlands and the three countries.
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The Departments of International Co-operation in the three countries, responsible
for the co-ordination of bilateral or multilateral co-operation or investment
programmes.
Ministry of Transport, Public Works and Water Management and Ministry of
Economic Affairs.
Senter.
The Dutch Embassies in the three countries.


The Embassies of Bulgaria, Romania and Ukraine in the Netherlands.
Individual companies, active in the transport sectors.

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The NCH (Nederlands Centrum voor Handelsbevordering).
The EVD.
The Association of Dutch Exporters: Fenedex.

Also, an inventory and analysis on the transport sector data available for the
3 countries have been carried out. Information has been drawn from studies performed
by NEA as well as from reports produced and published by the Ministries and
International Finance Institutions.
Local experts have assisted in obtaining the relevant market data and making it
accessible.
2.5.2
Field research
In each country a field research programme has been carried out, assisted by local
experts.

18
Interviews and discussions with key persons and staff of the Ministry of Transport,
identifying relevant transport policy lines and measures per sector, priorities,
constraints and opportunities have been carried out.
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In this context the presence and effectiveness of the institutional framework
relevant to the sub sectors has been assessed.

The Dutch Embassy has been an important source of information for identification
of possible general opportunities in the transport market, for the assessment of the
local transport policies in relation to Dutch interests and the identification/contacting
of key persons in the different sub sectors.

Many private and publicly owned enterprises have been interviewed, which are
leading in or representative for the sub sector. Foreign owned or subsidiary
companies deliberately been included.
The output from these interviews has been used to draw conclusions on segment
attractiveness for investments. Opportunities, spin-off and synergies have thus
become visible.
2.6
Organisation of a seminar
A seminar has been organised in the Netherlands to present the results of the study to
a wider audience of interested Dutch companies active in the studied sub sectors.
2.7
Project Team
The project did consist of four experts:
René Meeuws
Hans Houtsma
Arthur Gleijm
Jan-Coen van Elburg
Team Leader
Extensive use has been made of local experts, facilitators and interpreters in Ukraine,
Romania and Bulgaria.
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3
GENERAL DATA ON ROMANIA
The economy of Romania is historically depending on agriculture and oil and gas
sectors. After the Second World War more emphasis was put on developing heavy
manufacturing industry as shipbuilding and machine tools. Since 1989 also focus has
been put on developing the light industry (textiles, clothing and furniture).
Prior to 1989, the economy was rigidly planned and centralised, with emphasis on
maximising exports and minimising imports. The process of reorganising state
enterprises into commercial enterprises is still underway and not finished yet.
Currently, Romania is working to overcome the difficulties faced ever since the events
of December 1989. Romania’s economy in the 1980’s was affected by economic
policies under which resources were misdirected and maintenance was delayed and
deferred. Romania managed to settle its external debt, but the burden that fell on the
nation was tremendous.
Today, economy is moving towards a market economy. Some of the key elements of
the reform process have been:
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liberalisation of prices;
liberalisation of foreign trade;
development of the private economic sector;
restructuring and privatisation of state-owned enterprises;
development of a free-market finance and banking system; and
modernisation of the tax system.
3.1
Foreign investment
Foreign investment has been considered a key economic factor since 1990 when the
Romanian economy started the change towards a market economy because this
supplements the domestic capital, brings modern management and technology, and
provides access to international markets.
The major comparative advantages of Romania from the point of view of a potential
foreign investor include:

A large domestic market (almost 23 million consumers), the second largest in
Central Europe;
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An good location at the cross-roads of traditional commercial routes, allowing
access to over 200 million consumers in a 1000 kilometre radius; Romania is also
located at the junction of three prospective European transportation corridors:
- Berlin - Prague – Budapest – Arad – Bucharest – Constanta – Istanbul / Salonic
(corridor 4) for motor vehicles and railways;
- Constanta – Basarabi – Danube – Main – Rhine (corridor 7), river corridor;
- Helsinki – Moscow / Kiev – Odessa – Bucharest / Constanta – Alexandroupolis
(corridor 9 – project) for motor vehicles and railways.
Well located to offer competitive prices for goods transiting between the Caspian
Sea, the Black Sea and the Western Europe;
Available facilities offered by the Free Zones of Constanta-South Basarabi, by
those located along the Danube River (Galati, Braila, Sulina, Giurgiu) and by the
new one Arad - Curtici;
Extensive maritime and river navigation facilities (Constanta is the largest port on
the Black Sea and the completion of the Rhine-Main-Danube canal provides
uninterrupted water access from the Black Sea to the North Sea);
Facilities available in the Romanian shipyards for repairing, docking and building
ships of any type and capacity;
International airports in Bucharest, Constanta, Timisoara, Arad, Suceava;
Networks of mobile telecommunications in GSM and NMT/LEMS systems;
A developed industrial infrastructure, including oil and petrochemicals;
A skilled, relatively cheap labour force, well trained particularly in technology and
engineering;
A wide range of natural resources, including fertile agricultural land, oil and gas and
a significant tourist potential;
A liberal investment legislation, based on free, non-discriminatory access to
markets and economic sectors;
The presence of branch offices and representatives of various well-known
international banks: City Bank, ABN-AMRO, ING Bank, Chemical Bank,
Kreditanstalt, etc;
Diplomatic relations with 176 countries;
Member of the UN and of numerous international organisations (associate member
in EU, CEFTA, BSEC, etc).
From 1991 to 2000 in Romania operated the Romanian Development Agency (RTA) a
specialised institution for attracting foreign direct investment. The RDA provided
consulting services to both potential foreign investors and Romanian investors looking
for foreign partners and acted as an interface between the foreign investors and the
Romanian institutions.
22
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May 2001
In May 2000, the Romanian Development Agency, the National Agency for Small and
Medium Sized Enterprises and the National Agency for Regional Development have
been merged, by Government Decision No.382/2000. In this respect, the new National
Agency for Regional Development has been reorganised as a public institution, coordinated by Romania's Prime Minister, undertaking the main responsibilities of the
three above mentioned institutions.
During December 1990 - 31 October 2000, foreign investment in Romania accounted
for over US$4.94 billion.
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23
The following table shows the top ten of foreign investments in Romania:
Table Top 10 Foreign Investments in Romania
Name
in million USD
Activity
MOBIFON SA
229.9 telecommunications GSM
DAEWOO AUTOMOBILE ROMANIA SA
156.1 car manufacturing
AUTOMOBILE SACIA SA
104.4 car manufacturing
MOBIL ROM SA
104.1 telecommunications GSM
SHELL ROMANIA SRL
95.5 fuels, minerals & chemicals
ROMTELECOM SA
77.6 telecommunications GSM
UNILEVER SOUTH CENTRAL EUROPE
61.5 production & wholesale of soaps, detergents
SRL
and maintaining products
8
PETROTEL LUKOIL SA
53.3 fuels, minerals & chemicals
9
DAEWOO - MANGALIA HEAVY
53.0 ship building
INDUSTRIES SA
10
BANCA ROMANA PENTRU
52.6 banking services
DEZVOLTARE
Source: In Review, March-April 2001; data approved by National Trade Registry
1
2
3
4
5
6
7
The Netherlands is among the top five investors in Romania. The following table shows
the top 14 Dutch investors in Romania:
24
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May 2001
Table
Top 14 Dutch Investors in Romania
Investor company
1
MARGA BV
1
MARGA BV
2
ING GROUP
2
ING GROUP
2
ING GROUP
3
BUTAGAZ
INTERNATIONAAL BV
BUTAGAZ
INTERNATIONAAL BV
ABN AMRO BANK NV
3
4
5
6
6
7
8
9
10
11
11
11
11
12
DAMEN SHIPYARDS
GROUP BV
VAN DER PLOEG
INTERNATIONAAL BV
VAN DER PLOEG
INTERNATIONAAL BV
KPNQWEST NV
PHILIPS ELECTRONICS
NV
DARIMEX ARACO BV
STEELWELD BV
E VAN WIJK ROMANIA
BV
E VAN WIJK ROMANIA
BV
E VAN WIJK ROMANIA
BV
E VAN WIJK ROMANIA
BV
PHILIPS LIGHTING
HOLDING BV
DIJKMAN TRANSPORT
HOLDING BV
MILKPACT C. V.
Contribution to
Romanian company
Romanian partner
invested in
(in USD)
45,007,683 UNILEVER SOUTH
CENTRAL EUROPE
34,463,393 UNILEVER ROMANIA
SA
25,738,314 NEDERLANDENASIGURARI DE VIATA
ROMANIA SA
480,000 ING BARING
SECURITIES
(ROMANIA) SA
N/A ING BANK BUCHAREST
BRANCH
25,225,527 SHELL GAS ROMANIA
300,000 TRANS GAS SERVICES
RL
19,764,205 ABN AMRO BANK
(ROMANIA) SA
7,027,695 SANTIERUL NAVAL
SAMEN GALATI SA
305,458 PRODAS HOLDING SA
wholesale of soaps, detergents and
maintaining products
production of soaps, detergents and
maintaining products
life insurance
stockbrokerage
corporate & investment banking
intermediary trade of fuels, minerals
and chemicals for industry
transfer services
banking
ship building
services
2,889,837 RONEDA SA
agriculture
1,181,104 KPNQWEST ROMANIA
1,113,840 PHILIPS ROMANIA
internet service provider
trade & marketing in electrical and
electronic equipment industry
wholesale
sub-assembly execution for
automatic lines, motor welding
assembly
international transport
1,034,439 DARIMEX TRADING
820,000 STEELWELD SIMITEX
7,400 INT TRANSPORT E VAN
WIJK SA
182,292 LOGISTIC E VAN WIJK
11,726 EUROPAEXPEDITIE
472,743 EVW HOLDING
350,000 PHILIPS AND ELBA
STREET LIGHTING
13
335,867 DIJKMAN ION
TRANSPORT
13
205,382 MAROKA AGROTECH
SA
14 MILKPAKT C. V.
11,270 MILKPACT ROMANIA
COMSA
Source: In Review, March-April 2001; data approved by National Trade Registry
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Activity
international transport
custom agent
importer (DAF), dealer (Bridgestone,
Firestone), leasing
production of electric lamps and
lighting equipment
transport
milk production
production of chocolate glazes
25
The most significant laws providing the general framework for foreign investments are
as follows:

Company Law No.31/1990 as republished and subsequently amended by the Law
no. 99/1999;


Trade Registry Law No. 26/1990 as subsequently amended by Law No.12/1998;
Government Emergency Ordinance no. 92/1997 on direct investment incentives, as
amended by the Law no. 241/1998;

Government Ordinance No. 70/1994 on Corporate Tax with subsequent
amendments;

Government Ordinance No. 88/1997 regarding privatisation, amended by Law no.
99/1999 regarding the acceleration of the economic reform;
Accountancy Law No. 82/1991 as republished and subsequently amended;
Law No. 84/1992 on Free Trade Zones;










Bankruptcy Law No. 64/1995 with subsequent amendments;
Bank Privatisation Law No. 83/1997 with subsequent amendments;
Emergency Government Ordinance no. 67/1998 on development of economic
activities;
Emergency Government Ordinance no. 24/1998 as republished;
Government Ordinance no. 73/1999 regarding the individual income tax,
subsequently amended;
Law no. 133/1999 on stimulation of small and medium sized enterprises;
Government Ordinance no. 66/1997 on portfolio investments through the purchase
of state bonds, amended by Government Ordinance no. 131/1998;ഊ
— Securities
and exchange market Law no. 52/1994 as amended by Emergency Government
Ordinance no. 229/2000;
Concession Law no.219/1998.
Since 1991, different conditions, as well as different tax incentives to foreign
investment have been provided by the Romanian legislation. The regime of foreign
investment has been governed by a continuously changing legislation.
Presently, Government Emergency Ordinance no. 92/1997, as subsequently amended,
establishes the general regime of guarantees granted to direct investors, defining direct
investment as either:
(i)
the participation in the setting up or in the development of a company,
(ii)
the acquisition of shares (except for portfolio investments), or
(iii)
the setting up or the development of a branch by a foreign company through:


26
Cash contribution in local or foreign currency;
In-kind contribution, consisting in either immovable or movable goods (tangible or
intangible);
D20010458.doc
May 2001

Contribution to the increase of a company’s assets by any legal financing means.
Subject to the legislation in force, investment is allowed in almost all economic sectors,
including natural resources, agriculture, manufacturing, telecommunications,
construction, scientific research, trade, tourism, banking and insurance. However,
restrictions are applicable to investments, which could:
 Fail to comply with environmental protection requirements;

Affect Romania’s national security and defence interests; or

Impair the public order, health or morals.
Certain areas, including electric, thermal and nuclear energy, natural gas, oil
processing, telecommunications, and railways are declared as strategic areas.
According to Privatisation Law No.88/1997, with subsequent amendments, these
areas, administrated by the so-called “national companies” will probably be gradually
privatised and opened to competition.
A step forward was made through the enforcement of Concession Law no. 219/1998,
according to which public activities and services such as: public transportation, public
roads, post-office services, telecommunications, distribution of water, electricity or
thermal energy and of natural gas, the exploitation of mineral resources, etc, can be
conceded to investors, irrespective of their nationality, through a government decision
or a decision of the local council.
3.2
Privatisation process in Romania
Foreign companies may purchase shares in state owned companies either directly or
indirectly, on the capital market. The majority of state-owned companies are to be sold
through direct negotiation or auction. Smaller companies are normally sold through
auction, if they appear on privatisation lists published regularly by the State Ownership
Fund. The larger (and generally more profitable) companies are sold through direct
negotiation with potential investors.
The volume of foreign direct investment recorded by Romania between December
1990- April 2000, was about 4.6 billion USD. The high number of Romanian companies
with foreign investment, 74,025, shows that numerous small and medium sized foreign
investors discovered the economic potential of the Romanian market and decided to
invest here.
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27
The explanation for the relatively low level of foreign investment in Romania can be
found in the slower rhythm of privatisation in comparison with other countries in the
region. The large banks, the public utilities, large companies started only in 1997 –
1998 to be offered for sale.
Starting with the last months of 1998, Romania has been speeding up the restructuring
process and, by consequence, several large-scale privatisation operations were
completed. Among them: ROMTELECOM, the national telecommunications company –
privatised with the Greek company OTE, the Romanian Bank for Development privatised with Societe Generale, BANCPOST – privatised with General Electric Capital
Corporation and Banco Portugues de Investimento, Dacia Pitesti, the most important
Romanian carmaker, with RENAULT.
A number of monopolies that had been previously organised as autonomous
administrations have been transformed into national companies that are now ready for
privatisation - the national tobacco company S.N.Tutunul Romanesc, the national oil
company PETROM, the national airline TAROM, the national electric power company
CONEL, the Romanian Mail, etc. The agreements signed by Romania both with the
World Bank and International Monetary Fund aim to strengthen the privatisation
process.
Anyway, even if the present level of foreign investment is below the Romanian
economy potential, foreign investment has already an important impact in several
industrial branches.
Some examples in this respect are presented below:
Car industry
Daewoo (Republic of Korea) and Renault (France) invested in the two largest car
factories in Romania. Other foreign investors are present in the component automotive
industry: pumps, suspension systems, electrical components, etc. Continental, the
fourth largest tire producer in the world, is investing also in Romania.
Machine building industry
Daewoo Heavy Industries (shipyards), Koyo (Japan) – ball bearings, Timken (USA) –
heavy ball bearings, ABB Asea Brown Bovery – energy equipment.
Oil and chemical industries
Lukoil, Shell, Elf-Acquitaine – oil industry; Unilever – detergents.
Cement industry
The largest producer in Romania is now part of Lafarge Group (France).
28
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Telecommunication and electronics
OTE participated in the privatisation of the Romanian operator ROMTELECOM;
Siemes and Alcatel have invested in production of electronic switchboard equipment
and software production; Solectron in computer components. In the mobile
telecommunication the operators Mobifon and Mobilrom represent important foreign
investors. One of the largest Internet operators Global One is a joint venture between
Romtelecom, France Telecom, Deutsche Telecom and Sprint.
Soft drinks and mineral water
An important share of the market belongs to Coca-Cola, Pepsi-Cola, Parmalat, etc.
Food industry
Danone – dairy products; Kraft Jacobs Suchard – chocolate.
Infrastructure and construction
Road rehabilitation projects, Black Sea and Danube ports rehabilitation, tourism and
office buildings are done with foreign investors from France, Italy, Turkey, Japan.
In 1999, 1,772 commercial companies were privatised with a total share capital sold of
6783.64 billion ROL:
 82 large sized commercial companies, having a share capital sold of 2,842.01
billion ROL;
 507 medium sized commercial companies, having a share capital sold of 3,015.01
billion ROL;
 1,183 small sized commercial companies, having a share capital sold of 926.62
billion ROL.
In 1999, 83 sales contracts of shares with foreign investors were signed, having the
investment approximate value assumed of 600 million USD.
The most important registered companies privatised in 1999 were:
 Automobile Dacia –dealing 269.7 million USD.

Banc Post – dealing 92 million USD;



Astra Vagoane Arad – dealing 50 million USD;
Santierul Naval Galati – dealing 25 million USD;
Artrom Slatina – dealing 6.2 million USD;


Silcotub Zalau – dealing 6.8 million USD;
Cerealcom Slobozia –dealing 6.8 million USD;
Between January – June, 2000 were sold 872 companies with a total share capital
worth ROL 6,663.6 billion:
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29
In 2000, one of the major targets was the accomplishment of PSAL provisions
negotiated by the Romanian Government with the World Bank. The Private Structural
Adjustment Loan (PSAL) is a loan agreement worth USD 300 million which includes
major objectives regarding the privatisation, workout and liquidation of state owned
companies, bank’s privatisation, state bonds and titles market, business environment
improvement and the attenuation of the related social implications. Under the PSAL
agreement, 63 Romanian state owned companies are to be privatised by privatisation
agents such as: Barents Group LLC, Societe Generale Conseil Pays Emergents,
Raiffeisen Investment AG, European Privatisation and Investment Corporation, CAIB
Financial Advisers, Fieldstone Private Capital Group Ltd. Roland Berger Partner
GmbH, Paribas and Central European Trust, The Recovery Group, RES & Co, etc.
Under the PSAL provisions, the Government of Romania has applied for a Public
Institution Building Loan from the International Bank for Reconstruction and
Development (IBDR) under which the services of investment banks and privatisation
agents will be sought.
Foreign investors that are easily adaptable to a transition economy, having an accurate
image of the Romanian economic environment, may be able to turn the formerly state
owned companies into profitable businesses. The legal framework offers the investors
some customs and fiscal facilities, the right to convert in hard currency the amounts in
ROL which result out of their investment, as well as to transfer the hard currency in
their country of origin, according to hard currency regime regulations, the possibility to
use accelerate depreciation and amortisation and guarantees against nationalisation,
expropriation or any other measures with equivalent effect.
30
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4
TRANSPORT, INFRASTRUCTURE AND COMMUNICATIONS1
4.1
Transport and infrastructure
4.1.1
General overview
Romania contributes to the achievement of international economic exchanges between
the West and East, North and South of the continent, between Europe and the Middle
East.
Romania inherited a transport system that is not fully compliant with the needs of newly
structured production, new loading directions and the life of Romanian society. As a
result of the low level of investment and insufficient maintenance and repairs in the
past, the Romanian transport infrastructure does not meet current needs and lags
behind the quality common in Western Europe. These conditions should be improved
through further development of the transport infrastructure and arrangement for proper
maintenance and repairs.
Roads
The public road network is 73,260 Km, with an average density of 30.7 Km per hundred
sq. Km. The modernised roads represent 22.8% of total network. The main national
roads largely follow the railway lines.
Bucharest is the most important road junction in Romania, where from the routes
crossing the territory of the country in every direction start. Some of these roads are
connected to major European transport corridors. Such is the case of E60 running from
Hamburg to Constanta, via Oradea and Bucharest.
The road network is in a deteriorated stage due to the low quality of the road
construction works and the enormous backlog in repair and maintenance.
Romania is pursuing a strategic plan for the development of its road network until 2006,
comprising:
1
This chapter is based on official information from the Government of Romania derived from the
national development plans.
D20010458.doc
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31

Rehabilitation of the main international routes, in a three phase programme with
external and state budget financing;

Modernisation of the existing national roads; and

Motorway construction programme with priority on east-west connections
(Bucharest – Pitesti and Bucharest – Constanta) with financial support from the
EBRD and the Japan Bank for International Co-operation (JBIC).
Railways
The Romanian railway network is 11,430 Km of which 3,782Km electrified track (33.1%
of the total network).
The state railways’ company, SNCFR, has been split into five separate companies.
New train operators are also to be given access to the network.
A two-stage railway modernisation and rehabilitation programme is being implemented.
During the first stage priority is given to the rehabilitation of the railway infrastructure,
while the second stage will focus on modernisation of the railway lines in order to
increase speed. The financial support for this programme is ensured through loan
agreements with inter-national financial institutions and programmes (the World Bank,
EBRD, EIB, and PHARE).
Some foreign investors have identified the Romanian railways sector as an area with
good future potential. The US Company Trinity Industries purchased in April 1999 a 70
per cent stake in Astra Vagoane Marfa, a freight carriage maker. The deal was worth
US$ 50 million in cash and future investments. The plans of Trinity Industries are to
start manufacturing railway equipment for the domestic market and for export. Later in
1999 the same company bought a 70 per cent stake in another Romanian freight
carriage maker, Meva Drobeta Turnu Severin, for US$ 6.5 million, including
investments. Trinity’s president stated after the purchases that the company was
aiming to make Romania the new centre of its European operations. Another foreign
company that is involved in Romania’s rail regeneration is Germany’s Adtranz, a unit of
Daimler Chrysler. In May 1999 the company won a US$ 118 million order from the
Bucharest underground to supply 108 carriages and a signal system.
River transport
River traffic is almost exclusively done on the Danube: from Bazias (at its entry into
Romania) up to Braila it is navigable for small draught ships (up to 2 m), while the
maritime Danube, between Braila and Sulina, is navigable for up to 7m draught ships.
32
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The river Danube, which flows 1,075 kilometres through Romania, is an important
trade route for the country to central Europe. The construction of the Danube-Black
Sea canal created an important waterway that connects the Black Sea to the North Sea
through the Rhine-Main-Danube canal. At the same time, The Danube-Black Sea canal
offers more opportunities for trade as the newly independent Caspian states seek
outlets for oil exports that bypass the Bosphorus. However, the potential of the Danube
as a trade link was severely hindered as a result of the Kosovo conflict and the
resulting blockage of the river.
The main problem of inland waterway transport over the Danube is the fact that the
river still has to be cleaned nearby Novi Sad by removing remaining parts of the
destroyed bridges. This operation is planned to be completed by the end of 2001.
Further problems concern the need for dredging on several places. The Romanian
dredging industry is still not privatised.
Finally, agreement with Bulgaria should be reached regarding the planning and use of
the terminals in the river ports in both countries.
The main river ports are: Orsova, Drobeta-Turnu Severin, Turnu Magurele, Oltenita,
Calarasi, Giurgiu, Cernavoda, Galati, Braila, Tulcea and Sulina.
Maritime transport
About 60% of the Romania’s imports and exports pass through the port of Constanta,
the most important maritime port of the country. A new port, Constanta-Sud, has been
recently built at Agigea, on the Black Sea.
Other secondary ports are Mangalia and Sulina.
Air transport
For air transport there are several airlines, such as TAROM (Romanian Air Transports),
LAR (Romanian Airlines), DACAIR, JARO and ROMAVIA.
The Romanian national carrier Tarom has almost 3,000 employees and operates 146
flights every week to 44 destinations. It has 19 aircraft including Airbus 310, Boeing
737-300, ATR 42-500 and BAC 1-11. In 1997 the airline’s management started a
restructuring programme for the company, including job cuts, purchases of new aircraft
and sales of old Soviet-made planes.
In January 2000 a consortium led by ABN AMRO Corporate Finance Ltd signed a
contract with Romania’s Transport Ministry to advise on the privatisation of Tarom.
D20010458.doc
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33
The consortium, including lawyers Musat & Associates, auditing company
PricewaterhouseCoopers and U.S.-based aviation consultants Simat and Helliesen &
Eichner Inc, to evaluate the airline and draft a privatisation strategy to be subsequently
approved by the government. Romania plans to sell a maximum stake of 66 per cent of
the airline, with the state keeping a 34 per cent controlling share. The privatisation
strategy may envisage a sell-off of the remaining shares on international capital
markets.
Tarom, whose privatisation has been delayed for years, is on a list of 59 big stateowned firms to be sold off under a World Bank US$ 300 million Private Sector
Adjustment Loan (PSAL) programme. The airline has a share capital equivalent to
US$ 330 million. Its estimated turnover for 1999 is US$ 180 million, up from some
US$ 149 million a year ago. Tarom plans to acquire eight new Boeing 737-700 and
737- 800, with two of them expected to become operational by the
end of 2000. By 2002 it expects to add an Airbus 330 to its fleet.
The Romanian capital Bucharest has two large airports, Otopeni, which handles
international traffic, and Baneasa. An ambitious expansion and restructuring
programme for Otopeni airport is under implementation with a consortium of two Italian
companies, Italstrade and SEA. Other Romanian airports for international traffic are
Timisoara, Constanta, Arad, Sibiu, Targu Mures, Oradea and Iasi. In total 17 towns in
the country are being served. Romanian airlines are connecting Romania with over 50
cities on 4 continents.
The development of the transport infrastructure will continue to feature among the
principal aims of the Romanian Government. In this respect, the Government has
drawn up a bill of law on modernising the country’s overland, air and maritime
transports.
It is projected that 13 highways are to be built covering 3,000 Km, as well as 1,200 Km
of new railway lines, new bridges over the Danube and the Prut river and 4 new
airports at Brasov, Galati, Alba – Iulia and Bistrita. The existing railways will be
upgraded to suit high – speed trains. The territory of Romania will be crossed by
several pan-European corridors: the Danube connected to the Rhine-Maine –Danube
Canal, a lot of main railway lines, the highway and the Bucharest-Chisinau-Kiev road.
A credit worth 1 billion USD, granted by Japan, is being used for developing the
Constanta-Sud harbour and the West-East main railway line. A financial group from
Turkey provides funding for the works on the Bucharest-Giurgiu highway (44 Km., three
lanes for each direction). In order to modernise the aircraft fleet, certain types of aircraft
will be replaced with Boeing 767-300. This later through a loan from the ING Group.
34
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4.1.2
General policy
The government programme pursues the development of the transport infrastructure
ensuring:

The assertion of Romania’s position as the main turnplate of continental and
intercontinental transports on the major West-East and North-South routes;

The organisation of all national networks for all transport ways, in order to secure a
better territory coverage;

The removal of disfunctions in certain areas, by providing better transportation
conditions to citizens;
The development of intermodal transports, both as regards traffic and in areas of
impact with the main European corridors;
The improvement of transportation safety and environment protection.


Along this line, the following goals have been set:







Rehabilitating, upgrading and developing transport infrastructures (highways,
bridges) to improve transportation comfort and safety, freight transport efficiency,
mobility of the population, along with harmonising the national transport system to
the European one.
Expanding international financing through the World Bank or private sources in
order to speed up the modernisation of the road, railway, port and airport
infrastructure.
Developing and upgrading transport means and equipment with a view to improving
the quality of services, traffic safety and cargo security.
Reorganising thoroughly the system of state companies in the railroad system with
a view to curbing losses, reducing subsidies, and securing the smooth co-ordination
of the Romanian Railway Company.
The thorough restructuring of the National Roads Administration, by letting
connected activities branch out and go to private hands (repair, maintenance,
signalling), the securing of a coherent management of the motorways, the
reconsideration of the roads’ classification, the efficient employment of the internal
and external funds and the employment, to a greater extent, of Romanian-made
products and equipment.
The restructuring of the companies with state capital subordinated to the ministry
with a view to enhancing the efficiency, cutting down the subsidies and paving the
way for the privatisation process.
Stimulating, encouraging, consolidating and liberalising the domestic transport
market, in a competition-oriented system, especially as concerns the rail and air
transport.
D20010458.doc
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35

Securing the population’s social protection by means specific to the domain.

Backing the Romanian capital, by promoting and supporting the Romanian
investors in investment projects abroad.

Ensuring environmental protection and conservancy.
An ambitious programme has been elaborated for rehabilitation, upgrading and
development of the transport infrastructures for the improvement of the passengers’
comfort, increasing their safety and rendering the goods transport more efficient, with a
view to setting the national transportation system in line with the European system.
4.1.3
Development of transport means and facilities (2001-2004)
This paragraph describes development and upgrading of transport means and facilities,
in view of improving the quality of services, the traffic safety and transport security over
2001-2004.
The programme of setting the national railway transport in line with the European
system has the following targets:






Rehabilitation and purchase from the Romanian industry of locomotives by cooperation with prestigious foreign companies;
Upgrading 500 freight cars and 100 passenger cars;
Modernisation of major railway stations; assistance for marketing;
Equipment of passenger railway transport with electric trains and motor engines
(135 units);
Development of a computer-assisted system to issue tickets and seat booking;
Upgrading subway trains and buying new trains.
Programme of alignment of national transport system by the Danube with the European
system:


Upgrading Danube shipping safety systems.
Ship traffic monitoring and management system at the port authorities of Galati,
Tulcea and Drobeta-Turnu Severin.
The stimulation, encouragement, consolidation and liberalisation of the domestic
market of railway transportation in a competition-oriented system shall be ensured by
means of:

36
Revising the current railway organisation and defining the statute of the regulatory
authority in the railway transportation sector;
D20010458.doc
May 2001

Backing the development of the private rail transport operators’ activity;

Starting the privatisation of the commercial companies that branched out from the
SNCFR.
Securing the population’s social protection by means specific to the domain:

The development of the communal infrastructure and inauguration of the road
transportation specialising in carrying school children in at least 120 localities a
year, with the assistance of the county and local councils;

Subsidising the naval transportation for the Danube Delta inhabitants and the road
transportation for Tara Motilor region’s inhabitants.
Securing environmental protection and conservancy:





Cushioning the impact of the transportation sector’s activity upon the environment
by extending the employment of motor vehicles with treated emanations and low
noise;
Operation of low emanation transport means, with a view to diminishing
environmental pollution and rendering more attractive the low pollution transport
ways and means;
Rehabilitation of environment in Constanta Port and on the sea coast;
Carrying out development works (dams) seeking to protect the Romanian sea
coast;
Environmental protection works and equipment in the Danube harbours.
Endorsement of community acquis in this domain, mainly meant to:

Secure technical assistance for the harmonisation of the regulations and their rules
of enforcement, consistent with the community acquis provisions;

Earmark funds for the institutional construction of the rail, road, air and naval
regulatory authorities.
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37
4.2
Communications and information technology
4.2.1
Communications and information technology policy
The strategic target of the Government Programme in the field of Communications and
Information Technology is to set in place the lasting prerequisites for the
implementation of the “information-oriented society”, by relaunching the process of
privatisation, liberalisation and development of the respective sectors.
The following shall be envisaged in this respect:



Promoting and supporting an open and competition-oriented market for services of
communications and IT, apt to provide good-quality services at convenient tariffs;
Narrowing down the technological gap and catching up with the European
Community and world legislation, by developing new technologies and services, so
that the consumers and operators should enjoy a homogenous, non-discriminatory
treatment open to competition;
Developing the Internet platforms and technologies towards the building of a digital
economy at a national level.
The established measures and actions shall be meant to guarantee:





Citizens’ access to information and freedom of expression;
Access to communication services;
Free and non-discriminatory access to universal services of posts and
telecommunications;
Citizens’ integration in the “information-oriented society”;
Free flow of information.
The relevant state authority - the Ministry of Communications and Information
Technology - shall protect the citizen in relation to the operator, so as to secure for the
former a stable degree of protection of the information and of his or her private life,
transparency of tariffs and terms of use of the communication services. It shall also
secure co-ordination for:

38
The drawing up and implementation of the programs of financial assistance from
the European Union and of the government agreements in the field of
communications and information technology;
D20010458.doc
May 2001

Connecting through Internet and multimedia services the citizen - his or her home
and job - the school, public services and administration, in order to consolidate and
develop the social cohesion.
The main actions that ensure the attainment of the strategic targets are the following:


The institutional and legislative reform.
The building of the institutional framework required for the development of a
modern economy, the securing of a strong and regulated competition-oriented
market apt to ensure free competition, on the one hand, and the protection of the
citizens’ investments and interests, on the other hand.
The following are envisaged for this:







The setting up of the National Regulatory Authority on Communications, that should
be a politically independent and technologically neutral body with responsibilities in
the field of spectrum administration and numbering, regulations and
standardisation, authorisation and licensing, control and monitoring;
The provision of the legislative and organisational framework required for the
complete liberalisation of the telecommunications and postal services;
Getting ready the operators for the complete liberalisation of the communications
services and the adjustment of the extant licences of the national operators;
The setting in place of the legal framework fit for ensuring the free flow of
information and the definition of the legal statute of the electronic document, digital
signature, electronic data base and electronic commerce;
The promotion and backing of an open and competition-oriented market for
communications and IT services;
The definition of a coherent and realistic tariff policy, relying on costs at the level of
the national operators;
The taking over by the Ministry of Communications and Information Technology of
the responsibility for the privatisation processes of the commercial companies in its
field, as well as the speeding up of these processes;

The setting up of the “112” unified system of emergency calls - one of the
necessary measures for enhancing the safety and protection of the citizen and his
property;
 The establishment of the legislative and institutional framework for fighting
electronic frauds and unauthorised access to electronic information.
The implementation of the communications development strategies, preparing the
Romanian market for communications globalisation, ensuring the universal service and
the building of a competition-oriented market conducive to the improvement of the
services’ quality, the improvement of the technological level and the lowering of the
tariffs.
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39
The following shall be ensured in this respect:



The faster development of the public telephone network;
The introduction of new technologies converging towards communications’
globalisation;
The provision of the universal telephone service by introducing telephone lines in
localities with a population of more than 1,000 inhabitants, concomitant with
improving the quality of the services;

The promotion of the multi-service technologies in the field of wide band
communications, including modern technologies of access in local band;

The correlation of the use of the FM land radio broadcasting band, of the VHF
television bands, the correlation of the radio-electric spectrum in Romania with the
European Allocation Table;

The upgrading of the technologies of the postal services concomitant with the
enhancement of the quality and safety of the mailing;
The encouragement of the domestic production of sub-assemblies and spare parts
for communications for a limited period of time, through measures to encourage
and develop the small and medium-sized enterprises (SMSE) in this field;


The involvement of a minimal percentage of domestic private capital in the process
of privatisation and licensing.
The implementation of the information-oriented society as a foundation for the
economic growth, the attraction of foreign investments, the creation of new jobs and
increasing the weight of the IT products and services in Romania’s exports, by means
of:


Promoting the IT in the public administration by bettering the communications of
data, classified lists and registers of public interest;
Upgrading the flow of information among ministries, central and local
administration, in order to make it fit for e-government;

Increasing the degree of the public’s access to information of public interest like
legislation, statistic indicators, population’s registration, cadastre, and commercial
register by Internet and electronic pay desk. Setting up public units of access to
Internet and Multi-media resources, even in the less advantaged areas;

Developing the e-commerce, by facilitating the supply of goods and services by
Internet;


Endorsing and regulating technologies of protection and coding;
Promoting the smart cards to protect the electronic access with direct applicability
in medical services, electronic payments, Internet mobile access, public transport
services, pay phones;
40
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
Establishing the legislative and institutional framework for fighting electronic frauds
and unauthorised access to electronic information;

Supporting and encouraging the providers of IT services;

Ensuring active partnership with the professional associations, employers’
organisations, trade unions and NGOs in this field;
Implementing the information-oriented society through educational system, seeing
to the securing of the necessary conditions for the training of communications and
IT specialists, the elimination of the barriers and discrepancies between the rural
and urban milieus, on the one hand, and between Romania and the EU membercountries and the US, on the other hand.

The following shall be realised to this effect:
 Promotion of IT in education for the attainment of the long-term target: “at least one
computer having access to Internet for every school by the year 2004”;
 Development of support services and educational resources for Internet;
 Providing the required conditions for the training of the teaching staff to use the
Internet and multi-media resources;
 Development of academic education and research by Internet;
 Encouraging the creation of jobs for higher school graduates and diminishing the
rate of specialists’ emigration in this field.
4.2.2
Present situation regarding telecommunication
After 1989 Romanian telecommunications and post systems have been restructured.
In 1991, the operational functions of unitary telecommunication system were
separated. Rom-Telecom was set up as a regie autonomous.
Rom-Telecom main activities include the administration, development and operation of
the telephone-telegraph services for domestic and foreign end-users, meeting the
requirements of the public, social and defence interests. Rom-Telecom includes 41
telecommunication departments, organised according to the administrative-territorial
structure of Romania.
In November 1998 the state sold a 35 per cent stake with majority voting rights in
RomTelecom, the domestic fixed-line monopoly supplier, to the Greek
telecommunications firm OTE. The investor has started a major investment programme
to modernise the country’s network. The OTE deal and the general drive for
restructuring in Romanian telecommunications have created a positive environment for
the involvement of other foreign companies.
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41
The French equipment group Alcatel was at the centre of another major deal in
Romania’s telecommunications sector.
In November 1999 they won a contract worth EUR 116 million (US$ 120.7 million) to
expand Romania’s fixed telephone network over the next four years.
42
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The agreement was concluded with RomTelecom and provides for the installation of at
least 650,000 new telephone lines in Alcatel exchanges in the country. Alcatel has
been present in Romania since 1991, during which time it has invested over US$ 40
million in the country’s telecommunication system.
The strategy of telecommunication development was drawn up as a priority field of the
country’s macroeconomic infrastructure.
Based on the survey undertaken by the consultancy company Dofrecom France, a long
term Development Program was devised, with strategic objectives: the use of top world
technology; expansion and improvement of the quality of services. Part of the Program
has already been accomplished through the commissioning of digital transit telephone
exchanges, local and international. There have been built over 10,000 Km of main
communication lines through optic fibre cables.
As regards international telephone connections, the actions taken in 1993 let to the
extension of direct telephone connections with 38 countries.
Digital lines were developed in co-operation with the USA and Canada.
As for international telecommunications, the year 1993 meant the establishment of the
Home Country Direct Services that can be obtained from any telephone set with
access to automatic international exchanges.
The first partners with which this convention was concluded were AT&T and Sprint
International from USA and Telecom from Canada.
In 1997 GSM system mobile telephony, in the 900 MHz band, came to cover the whole
country. The best known private companies boasting a national coverage are the
Romanian Canadian MOBIFON, which supplies CONNEX GSM services and the
Romanian French MOBILROM which supplies Dialog GSM services. The Romanian
national Telephone Company Romtelecom, in which Greece’s OTE Telecom, has a
controlling stake, launched in February 2000 another mobile telephone operator in
Romania. The mobile telephony service, named CosmoROM and operating in the
1,800 MHz frequency band, will cover in an initial phase three major cities – the capital
Bucharest, the Black Sea port of Constanta and Brasov, in the Transylvanian region –
and the highways linking them. By 2002 OTE plans to have nation-wide coverage for
the mobile telephone operation.
Mobile telephony evolves very fast. In only three years it reached an average
penetration rate of 10%. Around 2.5 million Romanians own a GSM mobile phone. In
comparison, Romtelecom, the fixed telephony network and active for decades, has an
average penetration rate of 17%.
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43
The quality of the fixed telecommunication infrastructure is below standards and the
future for the fixed telecommunications network is very uncertain because of the
increasing competition from the mobile operators. Companies will be reluctant to invest
huge amounts of money in updating the fixed telecommunication infrastructure.
Romania Telecom Networks Services is a joint stock company licensed to exploit the
public network of data transmissions through Rompac packages shift. The company is
licensed by the Ministry of Communications to supply E-mail and EDI services.
The main activity of the company is the development, exploitation and marketing of the
public network of data transmissions. Rompac is part of France Telecom Transpac
Europe network.
In November 1999 Sweden’s Ericsson won a US$ 100 million contract to expand
Internet and voice services for Romania’s national fixed-line network. Under the deal,
signed by Ericsson’s partner in Greece, Intracom, the company will deliver its latest
AXE switching system to RomTelecom. This will give the operator full integration with
IP (Internet Protocol) Internet and other data communications networks and will
improve Internet services for RomTelecom users. The new equipment will boost
Romania’s fixed-line network and make it possible for inhabitants in some rural areas
to make a phone call for the first time.
The penetration rate of Internet is still low: less than 1%. The number of billed accounts
are around 180,000 of which 60% corporate users and 40% home users. The real
number of Internet users is estimated at 800,000. In this field there still is a large
potential for growth.
At the present time, the Romanian Post is a regie autonomous, part of the
communications system. Its major function is the administration, development and
marketing of post services in the public field, and co-operation with similar institutions
abroad.
The Romanian Post espouses the outlook of the European Commission regarding the
new unitary market of post services laid down in the Green Book. This implies the
practice of the same tariff in the whole Community and granting of the same categories
of services.
44
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5
PRIORITIES OF INVESTMENT BY THE ROMANIAN AUTHORITIES
We will make a distinction between investment priorities in the sectors transport,
infrastructure and water by the public sector and those as indicated by the Romanian
Chamber of Commerce and Industry (CCIR). The latter are not priorities for investment,
but should be considered as business opportunities.
5.1
a)








b)
Investment priorities in the sectors transport, infrastructure and
telecommunication2
Rail transport programmes
Upgrading the railway on the corridor IV - section Bucharest-Ploiesti-CampinaBrasov;
Upgrading the railway on corridor IV - Bucharest-Constanta;
Beginning the infrastructure rehabilitation on the rail sector Arad-Brasov;
Resuming abandoned works on sector Rm. Valcea-Valcele; Brebesti-Alunu;
Harlau-Flamanzi; Saueni-Darabani;
Consolidating railway infrastructures in the Iron Gates zone;
Upgrading the line Curtici-Arad-Alba Iulia-Medias-Brasov;
Rehabilitation and upgrading of Bucharest subway;
Extension of the subway in the sector Drumul Taberei-Pantelimon and completing
the works on the already started but unfinished sectors.
Road transport programmes

Simplification of the taxation system for road carriers;

Backing Romanian road carriers, by simplifying the system of granting licences and
authorisations for inland and international transport;


Rehabilitation of the network of European and national roads:
Completion of the rehabilitation works on the national roads included in the second
stage (694 km) and a program of road safety and institutional development;

Completion of the rehabilitation works on the national roads included in the third
stage (334 km);
2
This list is made by the Government of Romania. Presently, the Ministry of Public Works,
Transport and Housing is updating the list of investment priorities.
D20010458.doc
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45


Starting the rehabilitation works on the national roads included in the fourth stage
(732-km): Cluj-Dej-Bistrita-Campulung Moldovenesc; Petrosani-Simeria; LugojTimisoara and the roundabout belts of Timisoara and Craiova; Craiova-Turnu
Severin-Lugoj.
Project of rehabilitation of national road DN 1A, extension up to four lanes of
Ploiesti city roundabout belt and technical assistance with turning the maintenance
operations to private hands;

Development works to and from frontier check and cross stations (Giurgiu,
Varsand, Bechet, Petea, Cenad);

Program of rehabilitation, motorway building and upgrading of the infrastructure on
the itineraries of the pan-European corridors IV and IX:
The Bucharest-Ploiesti-Brasov motorway;




The Bucharest-Constanta motorway: the sector Bucharest-Fundulea-Lehliu-FetestiCernavoda;
Detour ways around the localities: Deva, Orastie, Sebes, Sibiu, Pitesti;
Upgrading and extension up to four lanes of the national road DN 5 BucharestGiurgiu;
The Nadlac-Timisoara-Arad motorway;
Bridge across the Danube by Braila;
The Bucharest North belt;

Development of county roads’ rehabilitation programmes.


c) Programmes of river and inland navigable ways transport



Works of hydro-technological development and securing due depths at Bara Sulina;
Rehabilitation of navigable ways and channels;
Container terminal in Drobeta-Turnu Severin port;

Building of high earthworks and protection structures on the Danube-Black Sea
Canal banks;

Bank protection and consolidation works on the Poarta Alba-Midia-Navodari Canal;

Program of rehabilitation and modernisation of the infrastructure along the line of
the pan-European corridor VII (the Danube);

Development works to secure navigability of the Danube (Calarasi-Sulina),
including signalling and topo-hydrographic measurements on the Danube.
d) Sea transport programmes


46
Rehabilitation of Constanta Harbour and going on with works on North and South
dams;
Extension by one km of the offshore dam in Constanta Harbour;
D20010458.doc
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
Modernisation of Constanta Harbour and building the electricity supply station (P
IV);

Container terminal in Constanta Harbour (mol II S).
e) Air transport programmes

Rendering air transportation more efficient by upgrading the air fleet to cope with
international standards;

Purchase of new aircraft (short-, medium- and long-range);

Upgrading the Bucharest-Baneasa International Airport;

Building shopping areas and parking grounds for cars at the Bucharest-Otopeni
International Airport;
Developing and upgrading the Bucharest-Otopeni International Airport, second
stage.

f) The Stability Pact




Railway sector: Corridor IX, North-South (Bucharest-Giurgiu - 48.0 km);
Corridor IV, East-West (Curtici-Arad-Deva-Simeria - 183.0 km);
Corridor IV, East-West - Southern Branch (Simeria-Petrosani - 80.0 km; PetrosaniTargu Jiu - 49.5 km; Targu Jiu-Turceni-Filiasi - 71.0 km; Filiasi-Calafat - 93.0 km;
Filiasi-Craiova - 36.0 km; Craiova-Calafat - 106.0 km);
Navigable ways: Corridor VII, East-West; Improvement of Danube shipping,
including environmental protection.
g) Telecommunication

Measures are being taken to increase investment and expose former state
monopolies to genuine competition. The government plans to invest US$ 7-8 billion
over 15 years in a programme supported by the EBRD and the World Bank, which
includes provisions for the installation of 500,000 new phone lines and the
introduction of digital systems.
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47
5.2
Investment opportunities as obtained by the CCIR
The Chamber of Commerce and Industry of Romania and Bucharest is promoting a
new product called the Centre of Investment Partnership in Romania – PART-INVEST.
PART-INVEST is a new integrating concept in the organisation and development of
investment promotion objectives, focusing on the continuous-flow utilisation of the
current information stock and of the structured data bases created and developed
during the first three annual editions (1997-1999) of the International Investment Fair in
Bucharest.
PART-INVEST pretends to do more than the matching between the demand and
supply of investments. It wants to develop business contacts and partnerships for all
categories of investors.
Access to PART-INVEST services and databases is differentiated, according to the
situation of those interested:
1.
2.
3.
4.
5.
6.
Those interested in promoting investment demands will contact the Chamber of
Commerce and Industry of Romania and Bucharest or the County Chambers
directly, forwarding the PROJECT QUESTIONNAIRES filled in properly (a
means to load the demand in our data bank).
PART-INVEST will contact an investment fund or a credit operator, promoting
their funding offer among those interested in getting an investment.
The initiative belongs to PART-INVEST that will directly notify those interested
of the results of its undertakings, i.e. whether demand and supply match.
Periodical press releases will include data on the information loaded in our
database, notifying the new information thereon.
Conventions will be concluded for on-line contacts, on Internet, with respect to
different companies and firms accessing the information in our databases;
Promotional events:
 Investment forums notifying and promoting new legislation and special
stipulations;

48

Investment shows addressing power factors and important investors, for
wide-ranging, complex (regional, sectoral) programmes/projects;
Seminars debating on investment issues;

Investment fairs.
D20010458.doc
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The major objectives of PART-INVEST are:






Assisting investment processes in Romania.
Promotion and development of Romanian investment projects in different fields of
activity.
Drawing inflows of venture capital and funding sources for the development of
different investment projects.
Supplying investment donors with exhaustive information on the economic and
business setting in Romania, as well as on special regulations with regard to
investments.
Investment business partnerships – face-to-face meeting of investment demand
and supply (bank credit lines, investment funds, direct investors, etc.).
Organisation of promotional events in the field of investments.
The structure of PART-INVEST is as follows:
1. Database
a) Investment demand (investment programmes and projects);
b) Available assets, equipment and plant;
c) Fund supply (supply of funds/credits for investment project development);
d) Investment environment;
- legislation and special stipulations
- restructuring and privatisation programmes
- guidebooks, statistic information
2. Investment contact-making and partnership
a) Information
- general information – the general project supply (free-of-charge)
- punctual, focused information on demand (against payment)
b) Services
- consulting
- assistance
- intermediation
- direct negotiations
c) Investment partnership
- investment consulting
- investment contacts;
– face-to-face
– multilateral (partnerships, business missions)
3. Marketing
a) Involving the Romanian System of Chambers of Commerce and Industry
D20010458.doc
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49
b) Development of inter-institutional relations with connections to investment networks
and data banks (e.g.: capital market: RASDAQ; the Stock Exchange; Commodity
Exchanges)
c) Promotional events;
- Seminars, focused workshops, forums organised in co-operation with previously
selected partners.
- Investment shows for regional, sectoral, etc. programmes/projects.
- National and international investment fairs.
- The annual TII editions.
The extensive list of projects as identified by the Chamber of Commerce and Industry
of Romania and Bucharest can be found on the CD-ROM, which accompanies this
report. Most of the projects are in the water sector (supply of drinking water and
wastewater). Few projects have been offered in the field of transport and
communication.
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6
EXISTING DONOR ACTIVITIES IN ROMANIA
This chapter is mainly focused on 'the big three' regarding multilateral donor and cooperation programmes: the European Union; EBRD; and the World Bank.
6.1
European Union3
The Accession Partnership continues to provide the single framework through which
the priority areas for further work are identified regarding progress to be made by
Romania towards membership of the European Union, the financial means available to
implement these priorities and the conditions which will apply to that assistance. The
1999 Accession Partnership with Romania was adopted by the Council in December
1999 and remained the framework on which the programming for the year 2001 has
been based.
Indicative allocations for Romania in 2001 are as follows (in million EURO):
Phare:
ISPA:
SAPARD:
298.7
243.9 (mid-point of range)
153.6
Total:
696.2
6.1.1
Phare
The Phare programme has been providing support to the countries of Central Europe
since 1989, helping them through a period of massive economic restructuring and
political change. Its current “pre-accession” focus was put in place in 1997, in response
to the Luxembourg European Council’s launching of the present enlargement process.
Phare provides the applicant countries of Central Europe with support for institution
building, investment to strengthen the regulatory infrastructure needed to ensure
compliance with the acquis and investment in economic and social cohesion. This
support comprises co-financing for technical assistance, "twinning" and accompanying
investment support projects, to help them in their efforts to adopt the acquis and
strengthen or create institutions necessary for implementing and enforcing the acquis.
This also helps the candidate countries develop the mechanisms and institutions that
will be needed to implement Structural Funds after accession and is supported by a
limited number of measures (investments or grant schemes) with a regional or thematic
focus.
3
The information for this paragraph is provided by institutions from the European Union.
D20010458.doc
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51
Around 30% of the Phare allocation is used for “institution building”, while the
remaining 70% is used for financing investments. During the period 1990 – 1999, the
Phare programme allocated € 1.2 billion to Romania.
The Financing Memorandum for the Phare 2000 National Programme for Romania,
which has a total value of € 215 million, was signed in November 2000, following the
positive opinion of the Phare Management Committee, which was given in July 2000.
The 2000 programme reflected the following priorities:

Political criteria, including the judicial and penitentiary systems and support for civil
society (€ 13 million);

Economic criteria; programmes supporting the emergence of the market economy
(€ 41 million);
Meeting the obligations of the Acquis; twinning and investment in regulatory
infrastructure (€ 73 million);
Economic and social cohesion (€ 88 million).


The key issues highlighted by the 2000 programming exercise were:


The weak institutional capacity to prepare well-defined, mature projects
corresponding to accession priorities, and
The need to further develop the institutional framework for programmes of
economic and social cohesion as regards programming, operational
implementation and financial management and control as well as the division of
responsibilities between national level bodies and the regions.
As regards the former, a short-term response is to provide Phare resources for project
preparation, and give greater weight to project preparation in the programming cycle. In
the longer term the need is underlined for coherent measures to develop the
competence and capacity of the public administration. On the latter point, specific
decisions by the Romanian authorities as regards the institutional framework for
economic and social cohesion will be needed prior to finalisation of the Phare 2001
programme.
Romania’s indicative Phare allocation in 2001 is € 298.7 million, including € 24.5 for
SIF.
The Commission in consultation with the Romanian authorities in early 2001 prepared
a Working Document on priorities for Phare 2001.
52
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It was prepared within the framework of the Accession Partnership and the Romanian
National Programme for the Adoption of the Acquis, and draws on the analysis of the
Commission’s Regular Report on Romania for 2000.
The institution building priorities identified for Phare support under the 2001
programme for Romania (which will represent about 30 % of the total Phare budget)
are in the following areas:

Economic reform: support to the judiciary to improve the handling of bankruptcy
proceedings.

Reinforcement of institutional and administrative capacity: strengthening the central
co-ordination of civil service rules and procedures, recruitment and training;
developing the regulatory framework for municipal services.
Internal market: alignment of legislation on intellectual and industrial property rights;
strengthening supervision in the banking sector; establishing and independent
authority for data protection; strengthening insurance supervision; improved
operation of customs services; alignment of the legislative framework for the audiovisual sector.
Agriculture: improvement of phytosanitary controls including border phytosanitary
inspection; preparatory action for the creation of a national animal identification
system.
Fisheries: organisation of common market arrangements for the fisheries sector.
Transport: adoption of EC norms as regards driving/resting hours for road transport;
implementation of maritime safety acquis as regards State Flag Control.
Energy: implementation of oil stocks acquis; development of the commercial
operators for electricity and gas markets.
Environment: harmonisation of environmental legislation as regards water and
waste.







Justice and home affairs: development of an integrated border management
strategy; support for legislative approximation as regards the Law on Aliens;
twinning support for the modernisation and professionalisation of the police.
Economic and social cohesion: development of national policy framework as regards
the specific priority measures in the National Development Plan which are expected to
benefit from Phare support in a multi-annual framework; strengthening the institutional
framework for regional policy.
The main priorities identified for investment in the acquis (expected to receive about
30% of the Phare budget) are as follows:

The cadastre and land registration system.
D20010458.doc
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53

Phytosanitary control structures, including border inspection posts.

Equipment required for the preparatory phase of development of the national
animal identification system.


Maritime safety equipment.
Testing equipment for railway safety.

Equipment required for strengthening of the local environmental protection
agencies.
Equipment required for a visa information system.
Further investment is also envisaged in the modernisation of the child protection
services.


Investments in economic and social cohesion are expected to receive up to 40 % of the
overall Phare budget allocation:
A further package of regional investment measures is expected to be financed,
targeted on zones selected on the basis of socio-economic criteria related to the
industrial restructuring process.
As for Phare 2000, investments will relate to SME development, human resource
development, and regional infrastructure. For SMEs, Phare support should be
channelled through a national SME support scheme. In the area of human resources
development, support will be provided for investment in the national vocational
education and training system. Continued support will be provided for infrastructure
projects of regional importance, including environmental rehabilitation of industrial
sites. It is intended that the eligible target zones, and the measures supported by the
Phare budget, will remain stable over a multi-year period, permitting the development
of operational capacity and a resulting in a significant medium-term impact on socioeconomic conditions in the target zones.
The National Development Plan will be amended following the 2001 programming
exercise to provide an appropriate medium-term-planning framework for programmes
in the target zones. Further efforts are needed to build up the operational and financial
implementation structures for programmes of economic and social cohesion. The
introduction of an element of multi-annuality into Phare programmes of economic and
social cohesion prefigures the future implementation of a structural funds approach.
Multi-annuality will be achieved through maintaining support to the same priorities,
measures and schemes over a number of years, and maintaining also the
concentration on specific target zones of intervention, and will be reflected a new
version of the National Development Plan which is expected to be prepared during
2001.
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The proposed investments in the phytosanitary control structures and the animal
identification system respect the guidelines concerning the respective scope of
intervention of Phare and SAPARD. Phare investment is limited public regulatory
infrastructure supporting implementation of the relevant acquis areas.
Phare infrastructure investment in economic and social cohesion relates primarily to
infrastructure of regional importance; projects are selected to avoid the possibility of
overlapping with national environment and transport priorities eligible for ISPA support.
Other Phare support for economic and social cohesion is concentrated on target areas
defined on the basis of socio-economic criteria related to industrial restructuring; the
concentration of activities is primarily on urban and industrial areas, which results in a
clear distinction between the spheres of intervention of Phare and SAPARD.
The following list of Phare projects in the sectors of transport, infrastructure and water
are being planned for 2001:

Preparation of the Detailed Design for the Project Rehabilitation of the Railway Line
Bucharest – Constanta, Section Fundulea – Fetesti.

RoadWorthiness Enforcement Project.

FIDIC engineer for the implementation of the works contracts for the rehabilitation
of the railway line: Bucharest-Constanta, sections: Baneasa – Fundulea &
Fundulea – Lehliu.

Cross-Border Co-operation Romania-Hungary "Airport Cargo Terminal"; Location Arad, Arad County.

Cross Border Cupertino Romania-Bulgaria "Giurgiu-Ruse Bridge Railway
Superstructure Rehabilitation and Continuation of the Substructure Safety Works".

Technical Assistance for the implementation of the multi-annual CBC Ro-Bg
strategy.

Lasi Waste Water Treatment Works.

Danutoni Wastewater Treatment Plant Extension – Biological Stage; Location Valea Jiului.
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55
6.1.2
ISPA
For Romania, Community aid in the framework of ISPA will be between 20% and 26%
of the total allocation. The average mid-range allocation is € 243.9 million a year (at
1999 prices), equivalent to € 1,674 million for the 2000-2006 period. Guidance is that
half of the support - € 121.9 million a year - will be used to finance transport
infrastructure projects, the other half for environment projects.
Strategic Objectives in the field of transport are stemming from serious weaknesses in
its network of roads, railways and waterways. Due to lack of maintenance in the past
20 years, most of its components suffer from deteriorated condition. At the same time,
there is a necessity of upgrading to European standards and of increased traffic
capacity around urban areas.
During the year 2000, the Commission approved four transport projects in the field of
transport:




Rehabilitation of the Baneasa - Fetesti railway (151 km on the Bucharest Constanta line).
Widening to four lanes of the national road from Bucharest to Giurgiu (Bulgarian
border).
Construction/rehabilitation of sections 4 and 5 of the Bucharest - Cernavoda
motorway on the route to Constanta (EIB parallel co-financing for 3 other sections).
Rehabilitation of the road section Craiova-Drobeta Turnu Severin (100 km
representing the first phase of Craiova-Lugoj).
The total eligible cost of these projects is € 579.8 million and the total multi-annual
ISPA support amounts to € 434.55 million representing 51% of the 2000-2006
allocation.
In view of support from ISPA in 2001, the Romanian Government has defined as a
priority for ISPA financing modernisation of well travelled sections of the three trans
European corridors crossing the country while maintaining a reasonable balance
between road, rail and waterways:

Corridor IV: from Hungary to Constanta (East Branch) and from Hungary to
Bulgaria (South Branch) with a view of rising most of this rail/road corridor to EU
standards.

Corridor VII: Danube River from the Yugoslavian border to the delta (Ukrainian
border), where navigability has to be improved.
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
Corridor IX: from the Ukrainian and Moldavian borders to the Bulgarian border, an
accent being put on road connections with Bulgaria.
In the field of environment, Romania faces acute problems concerning air, water and
soil pollution, which require large investment and the participation of both the public
and the private sector.
The major environmental impact relates to the poor quality of water, which is the result
of discharge of untreated or partially treated wastewater. This is a substantial health
risk and stresses the ecosystem. Furthermore, there are no wastewater plants with
tertiary treatment, which resulted in eutrophication of many lakes and reservoirs.
Five projects gained approval for Community financing in 2000:



Piatra Neamt – Waste management programme (co-financed with the Danish
Government).
Constanta – Sewerage and wastewater treatment rehabilitation (co-financed with
EBRD).
Valea Jiuliu - Danutoni - Wastewater treatment plant.
Iasi – Upgrading of water and wastewater systems.

Craiova – Rehabilitation of sewerage network and wastewater treatment facilities.

The total value of these five projects is € 241.8 million and the total multi-annual ISPA
support amounts to € 181.4 million.
In addition, the ISPA Management Committee expressed a favourable opinion with
regard to:


Braila – Wastewater treatment plant.
Arad – Wastewater treatment plant.

Bucharest – Technical Assistance for the preparation of the WWTP project.
These projects, which represent a total cost of € 79.7 million and ISPA assistance of
€ 59.8 million, were decided by the Commission early 2001.
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57
Strategic priorities for 2001 are as follows:
Priority 1: Wastewater and drinking water
ISPA projects will focus on the largest urban agglomerations (in general of more than
100 000 inhabitants), on cities with no or insufficient treatment facilities, on urban areas
with high wastewater discharges and on measures that mitigate the impact on
environmental sensitive zones.
Priority 2: Waste management
Projects will focus on measures to minimise the disposal of waste through selective
collection in large agglomerations and the promotion of waste recycling. Old landfills
that cause severe health hazards will be rehabilitated and new landfills that meet EU
standards will be opened. If needed, waste incinerators based on EU regulations will
be built.
Priority 3: Air quality protection
Priority will be given to projects in agglomerations, to measures with cross-border
impact and which maximise reduction, and to clean technologies (as opposed to endof-pipe solutions). This priority will be addressed from 2002 onward.
For the purpose of ISPA, the Commission favours an integrated basin-approach for
water and waste management priority projects, which are located in the beds of the
Danube and of its main tributaries.
The 2000 allocation of € 239.305 million was fully committed in 2000 with a strict
balance between transport and environment projects. This success in programming
has been allowed through good and timely preparation of projects, most of the related
technical assistance having been provided through the PHARE 1998 and 1999
programmes. Lessons learnt in this respect are the crucial importance of extensive
feasibility studies.
6.1.3
SAPARD
Romania’s indicative allocation for SAPARD for 2001 is € 153.6 million (at 2000 prices)
to support agricultural restructuring and rural development. In this context, a Rural
Development Plan for the period 2000-2006, prepared by the Ministry of Agriculture,
was submitted to the Commission in December 1999.
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A final version of the plan, for a total cost of € 2.083 million, submitted in November 21,
2000, following the positive opinion of the STAR Committee has been approved by the
Commission on December 12, 2000. The plan foresees the following main objectives,
which are coherent with the National Development Plan:
Contributing to the implementation of the "acquis communautaire" concerning the
common agricultural policy, the environmental protection and related policies in the
field of food and consumer protection, public health, wellbeing and good health
condition of the animals and plant health.
Engaging in the environment protection, the transposition in the national legislation and
implementation of the Directive "Nitrates", of the programme "Natura 2000" and of the
Directive "Evaluation of the Environmental Impact" (Annexes I and II).
Solving priority and specific problems for the sustainable adaptation of the agricultural
sector and rural areas.
According to the plan, the priorities set out will be implemented by the following
measures financed with the respective amounts (share of total allocation of EU funds):




Processing and marketing of agricultural and fisheries products (16.4%);
Improving the structures for quality, veterinary and plant-health controls, foodstuffs
and consumer protection (2.6%);
Development and improvement of rural infrastructure(27.9%);
Management of water resources (2.7%);



Investments in agricultural holdings (14.5%);
Setting up producers groups (1.6%);
Agri-environmental measures (2.5%);

Development and diversification of economic activities, multiple activities and
alternative income (9.6%);



Forestry (10.1%);
Improving of vocational training ((5.2%) and
Technical assistance 4.9%).
6.2
EBRD
The EBRD’s investment programme has been marked by a clear focus on large-scale
private transactions and on public private partnerships in infrastructure along the
following lines:
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59
Private sector investment
New projects in paper manufacturing, GSM-based cellular telephone services and
banking were signed in 1999. These include post-privatisation financing of the
rehabilitation of a paper mill, the largest bank privatisation to date (Societe Generale
Romanian Development Bank) and the first credit line for SMEs (Banca Transilvania)
under the EBRD-EU Horizontal Facility.
Public-private partnerships in infrastructure
The EBRD continued an innovative approach to infrastructure investment by pioneering
the use of private finance for public infrastructure. For example, the Bank extended its
first two loans to private operators of water supply (Suez-Lyonnaise Timisoara) and
district heating (Dalkia Ploiesti) services. Suez Lyonnaise Timisoara project was the
first purely private concession of water and wastewater services supported by the
Bank. Since December 1999 Romania has been included in the group of EU Accession
countries. The government is committed to further accelerating the transition process
and the structural reform and to maintain the macroeconomic stabilisation. Its
programmes include the privatisation of national and municipal utilities, restructuring of
large loss-making commercial enterprises in the industrial sector, agricultural reform,
and strengthening of the financial sector. The EBRD’s emphasis on new investment in
private companies and privatisation is consistent with the objectives of the government
and complements structural reform.
The EBRD’s pipeline of projects is concentrating on:

Large-scale privatisation and restructuring with strategic investors;

Private sector investment in either local private or joint-venture projects;


SME financing, banking and non-banking financial sector;
National and municipal infrastructure privatisation and public-private
partnerships.
Major projects to upgrade the transport networks are being implemented with the
assistance of the EBRD, the EIB, the World Bank and the EU. However, significant
additional levels of investment are needed in order to achieve acceptable standards.
Romania will find it hard to find such large budgetary resources. Therefore there will be
a continuing need for private capital and finance by the international financial
institutions.
The EBRD is contributing to the financing of the programme for upgrading existing
roads.
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It has also extended further technical co-operation to the National Administration of
Roads to review the overall market structure of the roads sector and identify the next
stage of restructuring.
At the end of 1999 the Romanian government signed a loan with the European
Investment Bank for a motorway project worth EUR 210 million (US$ 212 million). The
funds will be used by the National Road Administration for financing the completion of
new motorway sections totalling 113 kilometres on the Pan-European corridor IV
between Bucharest and the port of Constanta. The financing arm of the EU stated that
it has lent over EUR 1 billion (US$ 1.2 billion) to Romania for transport projects since
1991.
The EBRD is engaged in technical co-operation with the Port of Constanta to develop a
programme to attract further private sector financing for its operations. The assistance
will also address this issue at the smaller seaport of Mangalia. Important for the
success of this programme will be the establishment of appropriate legislation for
developing private sector concession or lease-based financial packages.
In support of the first private concession in Romania’s municipal sector, the EBRD is
providing a EUR 24.7 million loan to Aquatim, a water and waste-water company
owned by the Romanian municipality of Timisoara. Aquatim provides services to a
population of 380,000 in Timisoara and in smaller neighbouring communities.
Financing from the EBRD worth US$ 190 million helped the new mobile Telephony
Company Mobifon. Since the launch of commercial services in April 1997 Mobifon’s
Connex GSM mobile telephone service has attracted around 500,000 customers,
surpassing twice the level of initial expectations. In November 1999 Vodafone AirTouch
announced that it had raised its stake in Mobifon from 10 per cent to 20.1 per cent.
6.3
World Bank
Since 1991 the World Bank has built up a portfolio of 29 IBRD-financed projects, of
which 22 are currently active, and two Global Environmental Facility (GEF) projects, of
which one is currently active. Since 1991, World Bank commitments to Romania total
over US$3 billion.
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The lending programme of the World Bank aims to help Romania addresses its
challenges by: strengthening the social safety net; increasing investments in health,
education, and rural development; strengthening the business environment; supporting
structural reforms in the financial, utilities, and enterprise sectors; enhancing
effectiveness of Government services; and building capacity for environmental
protection. Priority is given to advice and financing for EU accession-related
programmes.
In fiscal year 1998 the Board of the World Bank approved four loans (totalling US$131
million):


A US$70 million Schools Rehabilitation Project;
A US$26 million General Cadastre and Land Registration Project;


A US$30 million Telecommunications Reform and Privatisation Project, and
A US$5 million Child Welfare Reform Project.
Four Bank projects (totalling US$340 million) were approved in Fiscal Year 1999:



A US$5 million Cultural Heritage Project;
A US$10 million Social Development Project - Phase 1;
A US$25 million Private Sector Institutional Building Loan;

A US$300 million PSAL.
In addition a US$8 million GEF grant was approved for Biodiversity Conservation
Management.
The PSAL and the Private Sector Institution Building Loan aimed to build on the
reforms initiated under the FESAL. They aimed to support the Government's efforts to
stabilise the macroeconomic situation by accelerating structural and banking sector
reforms, including privatisation of state-owned enterprises (there were more
privatisations in 1999 than there had been in the previous eight years together), and
creating an environment conducive to private sector growth and development. They
were also aimed at avoiding the human costs associated with privatisation and the
resulting potential instability. With the successful completion of the PSAL in June 2000,
a new PSAL program will be designed in 2001 to continue and deepen these reforms.
Four projects have been approved in 2000:
(i) US$45 million Mines Closure and Social Mitigation Project,
(ii) a US$11 million Agricultural Support Services Project,
(iii) a US$17 million Trade and Transport Facilitation Project, and
(iv) a US$40 million Health Sector Reform Project.
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In 1999, the Romanian authorities requested the country to be included among the pilot
group of countries for the Comprehensive Development Framework (CDF). The CDF
provides a holistic approach to the challenges of development that integrates the
macroeconomic and financial aspects of development with the structural, social, and
human dimensions. The consensus-building process is under way in Romania, and the
first results will articulate the country's long-term priorities, integrating the medium-term
strategy for EU accession as well as the Bank's next Country Assistance Strategy, to
be agreed with the Romanian Government in the fall of 2000.
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63
7
MARKET OPPORTUNITIES PER SUB SECTOR
For the identification of market opportunities following sub sectors have been covered:


Freight transport.
Public passenger transport.


Transport by mode; air, water, road, and rail.
Public works and water management.

Telecommunication, postal services, information and communication technology.
Criteria for the assessment of market opportunities for Dutch enterprises:






There is a need for (additional) technology and know how, which the Dutch industry
can supply.
The Netherlands should have an international competitive advantage (Competitive
edge) in this technology or market.
Investments from the Dutch enterprise are likely and most probably effective.
There should like to be a promising spin-off for other enterprises.
There is likely to be a growing market (potential), not or hardly depending on
Government budgets or spending.
Projects in this sector should be able fit within the PSO+ framework and meet the
PSO+ criteria and requirements.
Identification and assessment of market opportunities in Romania
Based on the criteria mentioned above an assessment has been made of the different
sub sectors for possible PSO+ projects.
This does not necessarily mean that no sound business opportunities do exist in the
sub sectors indicated as “no key area” for PSO+. In some sectors the level of
investment required is very high, whereas it appears difficult to develop a pilot project.
In some sectors Dutch supply or interest is inadequate or not available (e.g. public
transport operations). In other sectors the supply will have a one-off character
(tender system), and durable business relations will be unlikely.
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65
Sector
Road transport
Goods / Freight
Good opportunities in special and heavy
transport.
Passengers
Harmonisation public
transport regulations with
EC rules; no key area.
Towing services and mobile service
stations.
International bus lines; no
key area.
Supply and use of rescue
vehicles/equipment for fire brigade and
traffic police.
Supply industry
Transport by rail
Supply Industry
Inland water
transport
Manufacturing of components for
automotive industry in Pitesti.
Manufacturing of buses
Timisoara.
Production of on-board computers for
commercial vehicles.
Opportunities for forwarders;
shuttle services container transport.
Government controlled;
no key area
Improvement conditions navigation Danube Not relevant
(dredging; terminal development; shipping);
still no key area.
Supply industry
Sea transport and Establishment offshore company tug boats.
ports
Supply industry
Construction rescue boats; shrimps
vessels.
Manufacturing steel components for
shipbuilding industry.
Maritime navigation and safety systems.
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Air transport
Opportunities in forwarding and storage
activities.
Disinfecting station; plants to divide
petroleum products from rainwater;
pyrolytic incinerator for Bucharest Otopeni
International Airport; no key area.
Noise monitoring systems and solid waste
incinateror for Bucharest Baneasa
International Airport; no key area.
Public works &
water
management
Telecommunicati
on and ICT
Postal services
Massive investments planned in road
construction and maintenance;
Opportunities in supply of modern road
building machinery and technology.
Public works projects at the municipality of
Pitesti; no key area.
Provision of internet services; no key area.
Development integrated postal services.
Key areas for PSO projects
Shipbuilding industry and manufacturing of steel components for shipbuilding industry.
Automation international cargo transport railways; establishing container shuttles
between Constant and Rotterdam.
Towing services and mobile repair and maintenance units; service stations for road
transport. Heavy and special transport. Manufacturing of components for automotive
industry.
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67
Business opportunities / project ideas identified for Dutch enterprises
In spite of the fact that government influence and interference in the market economy is
likely to increase in Romania since the new Government has come to power, the well
educated labour force and the huge market potential offer increasingly sound business
opportunities.
The PSO programme for Romania is and will prove to be very effective in view of the
stage of economic and institutional development of the country. The sectors transport,
in particular road transport, and shipbuilding and related industries offer many
opportunities to Dutch enterprises, which we have summarised below more specifically.
It should be noted that project ideas as listed below do not necessarily qualify as PSO+
project.
Road transport (freight)



Good opportunities in heavy transport.
Towing services, mobile repair unit and service stations.
Production of on-board computers for commercial vehicles.

Enhancing quality levels in manufacturing of components for automotive industry at
Trian S.A. in Pitesti and S.C. Giramex SRL in Mioveni - Arges.
Supply and effective use of rescue equipment for fire brigade/traffic police.

Road transport (passengers)


Harmonisation of public transport regulations with EC rules.
Production of buses in Timisoara.
Railways

Setting-up a rail shuttle service between Constanta and Rotterdam using
automated tracking and tracing systems.
Inland waterways

68
Improvement navigation conditions Danube River (dredging; terminal development)
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Maritime and ports



Manufacturing of steel components for the shipbuilding industry including
components for dredging vessels.
Construction of rescue boats for the port of Constanta and small fishing boats
(shrimps vessels) of 50 tonnes.
Establishing an off shore company with tugboats in Constanta.
Air transport


Disinfecting stations; plants to divide petroleum products from rainwater for
Bucharest Otopeni International Airport.
Pyrolytic incinerator for Bucharest Otopeni International Airport.


Noise monitoring systems for Bucharest Baneasa International Airport.
Solid waste incinateror for Bucharest Baneasa International Airport.
Public works and water management


There are various opportunities for co-operation in the sector maintenance and
construction of roads, especially in the field of supply of road construction
machinery and technologies and transport equipment.
Public works projects in Pitesti.
Telecommunication

Provision of Internet services.
Postal services

Development of integrated postal services.
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8
DUTCH BUSINESS OPPORTUNITIES IN ROMANIA
1. On-board computers for trucks and buses including digital tachograph
devise and navigation systems for vehicles
Recipient:
U.N.T.R.R./SETAR together with Romanian IT company.
Business activities:
U.N.T.R.R. is the employers' organisation in the road
transport sector. Through SETAR founded by U.N.T.R.R.
and the trade union S.T.A.R. Foundation some
commercial services for road transport operators and
drivers are being carried out.
Purpose of the project:
Improve transport operations, harmonise with
international practises and standards, increase safety.
Improve tracing and tracking of trucks for better planning,
discourage truck jacking, and improve safety.
Possible Dutch partners:
Suppliers of on board computers and navigation systems
service providers.
Hardware:
Onboard computers and navigation systems.
Technical assistance:
Training in maintenance and repair of the equipment,
training in effective application.
Possible results:
Pilot and later wider use of the systems by the
professional road hauliers. Improvement of route planning
and road safety.
Business environment:
In Romania there is a basis for the use of modern
telecommunication.
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71
2. Harmonisation of rules and regulations in public transport in Romania with
the EC rules and regulations (PSO pre-accession)
Recipient:
RATB Public Transport Company Bucharest and other
public transport companies.
Business activities:
RATB carries out passenger transport in Bucharest.
Purpose of the project:
To give technical assistance and professional advice in
order to change public transport regulations at national
and municipal level and harmonise with West European
(EC) regulations.
Technical assistance:
See above under 'Purpose of the project'.
Possible results:
Harmonisation of public transport regulations with EC
regulations and progress in adoption of 'Acquis
Communitaire'.
Business environment:
RATB is the sole supplier of public bus and tram transport
services in the city of Bucharest. RATB is government
owned and self-supporting in repair and maintenance
(Equipment and infrastructure). RATB is actively
implementing new technologies and very active in
international organisations for public transport.
3. Supply and effective use of rescue equipment for fire brigade/traffic police
Recipient:
Fire brigade, traffic police or private companies
specialised in rescue operations in traffic.
Business activities:
Rescue operations in traffic and transport.
Purpose of the project:
Giving assistance in establishing an effective operational
system for rescue services in traffic.
Possible Dutch partners:
Providers of rescue equipment.
Hardware:
Rescue equipment.
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Technical assistance:
Training; introduction of a system for rescue operations;
adaptation of traffic infrastructure and regulations to
facilitate rescue operations.
Possible results:
Improving traffic safety.
Business environment:
The inter-ministerial council for traffic safety is currently
together with the World Bank implementing a '112'
project. A PSO+ project where a well-known Dutch
company would support a Romanian supplier of
equipment would be complementary to this project.
4. Improvement of road and bridges construction technology, materials and
equipment
Recipient:
Romanian contractors in road and bridge construction.
Business activities:
Construction, rehabilitation and maintenance of road and
bridge infrastructure.
Purpose of the project:
To raise the quality of construction, rehabilitation and
maintenance of road and bridge infrastructure by
improving technology, construction materials and
equipment.
Possible Dutch partners:
Equipment suppliers; contractors; engineering companies.
Hardware:
Equipment for the infrastructural works.
Technical assistance:
Training; innovate technology.
Possible results:
More efficient use of the means for construction,
rehabilitation and maintenance of road and bridge
infrastructure (ISPA funds; EIB; Phare; etc.).
Business environment:
The market for construction, rehabilitation and
maintenance of road and bridge infrastructure is booming.
There are funds available from the ISPA facility; from EIB;
from Phare; from World Bank; from EBRD; etc.
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73
Only local contractors are bidding for national works
projects. Quality of works will be one of the major issues
in the next future.
5. Improvement conditions for inland shipping over the Danube
Recipient:
Ports on the Danube and inland shipping companies.
Purpose of the project:
Dredging and improving handling capacities in the
Danube ports.
Hardware:
Still to be defined.
Possible results:
Use of the Danube as an international transport corridor.
Business environment:
Presently, no international navigation is possible on the
Danube. The Danube still needs to be cleaned from the
destroyed bridges nearby Novi Sad in Yugoslavia and
dredging is necessary on many spots in the river. Also
agreement have to be reached with Bulgaria on use of the
Danube. However, the potential of the Danube is
enormous.
6. Setting-up a rail shuttle service between Constanta and Rotterdam
Recipient:
CFR Marfa (Rail Freight Company).
Business activities:
Transport of cargo by rail.
Purpose of the project:
To establish a rail shuttle service linking Constanta with
Rotterdam.
Hardware:
Integrated information system ERS, CFR Marfa and third
parties.
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Technical assistance:
Development master plan for multimodal transport
operations; introduction and development ICT
applications.
Possible results:
More efficient link between Rotterdam and Constanta
(Black Sea) for container transport.
Business environment:
There is a market for efficient container transport between
Constanta and Rotterdam. Inland waterway transport is
still not possible. Transport by sea takes about 10 days.
Transport by road is relatively expensive.
7. Disinfecting station; plants to divide petroleum products from rain water;
pyrolytic incinerator for Bucharest Otopeni International Airport
Recipient:
National company 'Bucharest Otopeni International
Airport'.
Business activities:
Integrated package of airport services.
Purpose of the project:
To improve the environmental conditions at the Bucharest
Otopeni International Airport.
Disinfecting stations
To prevent arising and spreading out of some infectious –
contagious diseases due to transport of animals and their
related products.
Division plants
To improve the quality of rain water gathered from
Bucharest – Otopeni International Airport in order to
respect the provisions NTPA – 001/1997, as well as
monitoring and maintaining the quality of environment
factors in the parameters mentioned by normative
documents into force concerning the protection of
environment.
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75
Pyrolytic incinerator
To increase the environmental safety of the waste
incineration resulting from aerial transport activity and
other airport related activities (handling, customs,
catering, hangar, commercial activity, etc.) as well as the
reduction of the negative impact upon the environment
produced by the existing waste incinerator located in the
airport technical area.
Hardware:
Disinfecting station; plants to divide petroleum products
from water; pyrolytic incinerator.
Technical assistance:
Installation; training; planning; monitoring.
Possible results:
Improvement of the environmental quality at the Otopeni
Airport.
Business environment:
Bucharest – Otopeni International Airport has obtained
Notice of Working from the Agency of Environmental
Protection Ilfov county. The Notice has been issued on
condition that Bucharest – Otopeni International Airport
takes certain measures to improve the environment
safety. For this purpose, the company has established a
compliance programme with Notices above mentioned.
Once integrated with the environmental management
system, this project represents a very important step
within the chain of the environmental safety, through the
improvement of the environmental quality on the airport.
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8. Noise monitoring systems and solid waste incinerator for Bucharest Baneasa
International Airport
Recipient:
National Society 'Bucharest Baneasa International Airport
SA.
Business activities:
Integrated package of airport services.
Purpose of the project:
To improve the environmental conditions at the Baneasa
International Airport in Bucharest.
Noise monitoring systems
Installation of a set of noise sensors ("monitors") in the
vicinity of the airport to be able to monitor noise levels and
to detect “noise events”. They will retrieve and store
measured acoustic data, which will be automatically
processed and reported.
Solid waste incinerator
The main plant would consist of the waste processing
plant; the storage bunker; the feeder; the burning furnace;
the post-burning chamber and the dust-separator.
The final processing plant would consist of a boiler for the
heat recovery; the scrubber for pollution emissions
retention; and the chimney for burning gases emission.
Hardware:
Noise sensors and solid waste incinerator plants.
Technical assistance:
Installation; training; monitoring.
Possible results:
Improvement of environmental quality at the Baneasa
International Airport in Bucharest.
Business environment:
The projects would contribute to compliance with the
national law concerning the Environmental Protection and
in the purpose of the harmonisation with the EU
Environmental Policy.
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77
9. Bus production plant in Timisoara
Recipient:
Ioron Industries.
Business activities:
SC Iorom Trading, Bucharest is active in the
manufacturing, trade and distribution of spare parts and
components for primarily the automotive industry,
including Dacia, Raba, Saviem, Ikarus and DAF.
The company is active in International Road Transport as
well as in technical inspections, maintenance and repairs
of cars and trucks.
The company employs in total 400 people.
Iorom Industries in Timisoara is a subsidiary company as
from 1997 and the majority of shares were taken over by
SC Iorom Trading in 2000 (78%). Main activities here are:
capital and general repairs on trucks, tractors, agricultural
machines, technical inspections (RAR), and construction
of bodies and parts. Number of employees: 196.
Iorom has 6 spare parts shops in Romania of which 2 in
Bucharest.
Iorom also owns two Hotels/Pensions (Comarnic and
Eforie Nord)
Purpose of the project:
Production of buses for public transport
Hardware:
Manufacturing equipment. Prototype in CKD
Technical assistance:
Quality control during production process.
Possible results:
Production of high quality buses for public transport.
Business environment:
The market need for public transport buses is estimated
at 400 per year. In the next 1 to 1.5 years, 50 buses will
be needed in Timisoara. Iorom Industries is willing to
invest and is looking for a Dutch partner.
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10. Manufacturing of steel components for the shipbuilding industry including
components for dredging vessels
Recipient:
Dutch-Romanian Marine Consultants BV (DRMC); the
former Thorexim.
Business activities:
Productive a commercial activity related with the
shipbuilding industry.
Purpose of the project:
To manufacture steel components for the shipbuilding
industry including components for dredging vessels.
Hardware:
Production equipment.
Technical assistance:
Business planning in increasing the local production of
components for the shipbuilding industry.
Possible results:
Increasing Romania's capability in producing steel
components. Develop Romanian dredging capacity
(Danube).
Business environment:
The shipbuilding industry in Romania is very strong and
has a good international reputation. Damen Shipyards
Group are the main owners of Santierul Naval Galati
Shipyard. Romania is also exporting ships and vessels to
member states of the European Union (including the
Netherlands).
The Danube needs dredging on many places.
11. Construction of rescue boats for the port of Constanta and small fishing
boats (shrimps vessels) of 50 tonnes
Recipient:
Dutch-Romanian Marine Consultants BV (DRMC).
Business activities:
Productive and commercial activities related with the
shipbuilding industry.
Purpose of the project:
Construction of rescue boats and shrimps vessels for the
international market.
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79
Hardware:
Equipment and/or construction projects for components.
Technical assistance:
Project implementation.
Possible results:
New production line for rescue boats and shrimps
vessels.
Business environment:
The shipbuilding industry in Romania has a good
reputation and meets international quality standards.
There is growing market for the mentioned kind of ships
and vessels.
12. Establishing an off shore company with tug boats in Constanta
Recipient:
Romanian off shore company in Constanta.
Business activities:
Activities related with tugboat operations in the harbour
area of Constanta.
Purpose of the project:
Assistance in the establishing of an off shore company;
production of tanks and provision of navigation and
computer equipment.
Hardware:
Navigation and computer equipment.
Technical assistance:
Assistance in setting-up an off shore company related
with tugboat operations.
Possible results:
Increasing maritime safety and improving efficiency port
operations.
Business environment:
The expansion of the port of Constanta requires safe and
efficient port operations.
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13. Public works projects at the municipality of Pitesti
Recipient:
Public Works Department of the Municipality of Pitesti.
Business activities:
Planning and implementation of public works activities in
the municipality of Pitesti, including transport, parking,
water/sewerage, road construction, electricity, lighting.
Purpose of the project:
Improve the quality of several urban services in Pitesti.
Road lighting
Improvement of the quality of road lights systems
comparable to international standards.
Improvement quality of bitumen
Improvement of the quality of bitumen at the asphalt
station. A laboratory should be installed to check quality,
which would require foreign assistance. Take-over of the
asphalt station operations by a private company could be
discussed.
Parking policy and parking garages
Construction of a parking garage in the centre of the city
and production and placing of parking meters and
auxiliary equipment. Development of a parking policy.
Service stations for buses
Construction and management of service stations for
buses (regional transport) and trucks.
Hardware:
Various.
Technical assistance:
Technology improvement production bitumen. Parking
policy municipality of Pitesti. Business plan service
stations for buses and trucks.
Possible results:
Improvement functioning urban services in Pitesti.
Business environment:
The needs for improving urban services are high. There is
a starting awareness of the fact that most of the urban
services should be delivered on a cost-recovery basis.
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14. Co-operation with S.C. International Transport S.A., Pitesti
Recipient:
S.C. International Transport S.A., Pitesti.
Business activities:
International transport.
Purpose of the project:
Develop international transport and value added services.

Expansion truck fleet.

Establishing multi-service station for trucks.


Implementation GPS technology system.
Setting-up storage capacity (including bonded
warehouse).
Hardware:
Still to be defined.
Technical assistance:
Business planning and introduction of value added
logistics services.
Possible results:
Well-positioned provider of international logistics services.
Business environment:
The business environment is very competitive and there is
a growing need to expand the value added logistics
services.
15. Enhancing quality levels in manufacturing of components for automotive
industry at Trian S.A. in Pitesti and S.C. Giramex SRL in Mioveni - Arges
Recipient:
Trian S.A. in Pitesti.
S.C. Giramex SRL in Mioveni-Arges.
Business activities:
Manufacturing of components for the automotive industry,
notably Dacia.
Purpose of the project:
The improvement of the quality of manufacturing of
components for the Dacia automotive industry to comply
with the new requirements of Renault.
Hardware:
Still to be defined.
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Technical assistance:
Improving production process and quality control.
Possible results:
Production line of high quality components for the
Romanian automotive industry.
Business environment:
There are good opportunities for plastic components.
16. Co-operation in special transport (very heavy and/or voluminous transport)
Recipient:
Romanian companies specialised in very heavy and
voluminous transport.
Business activities:
Transport of exceptional cargo (very heavy and/or
voluminous).
Purpose of the project:
Create capacity in Romania for transport of special cargo.
Hardware:
Still to be defined.
Technical assistance:
Business planning.
Possible results:
Increased facilities for transport of exceptional cargo in
Romania.
Business environment:
There is a growing need for national and international
transport of special cargo in Romania.
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83
17. Mobile repair and maintenance service unit
Recipient:
Automobil Clubul Roman ACR Starter.
Business activities:
Delivering mobile repair and maintenance service on
commercial basis.
Purpose of the project:
To increase the reach of the mobile repair and
maintenance service.
Hardware:
Equipped service vehicles and tool kits.
Technical assistance:
Business and operational planning.
Possible results:
Enhancing road safety and better service for drivers of
vehicles.
Business environment:
Mobil repair and maintenance services on commercial
services are new in Romania. In April the first service
started for the capital of Bucharest within a range of 25
km. There is a commercial attractive market for this kind
of services.
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9
CONCLUSIONS

Romania’s economy in the 1980’s was affected by economic policies under which
resources were misdirected and maintenance was delayed and deferred. The
economy was rigidly planned and centralised, with emphasis on maximising exports
and minimising imports. Romania managed to settle its external debt, but the
burden that fell on the nation was tremendous.

Currently, Romania is working to overcome the difficulties faced ever since the
events of December 1989. The economy is moving towards a market economy.
Some of the key elements of the reform process have been development of the
private economic sector.
Restructuring and privatisation of state-owned enterprises, development of a freemarket finance and banking system. The recent change of government may lead to
more emphasis on revitalising state-owned enterprises and a deceleration of the
privatisation process.
Foreign investment has been considered a key economic factor since 1990 when
the Romanian economy started the change towards a market economy. Romania
offers many comparative advantages such as:
- a large domestic market (almost 23 million consumers), the second largest in
Central Europe;
A good location at the cross-roads of traditional commercial routes, allowing access
to over 200 million consumers in a 1000 kilometre radius; Romania is also located
at the junction of three prospective European transportation corridors.
- well located to offer competitive prices for goods transiting between the Caspian
Sea, the Black Sea and the Western Europe;
- available facilities offered by the Free Zones;
- extensive maritime and river navigation facilities.






Networks of mobile telecommunications in GSM and NMT/LEMS systems;
- a skilled, relatively low cost labour force, well trained particularly in technology
and engineering;
A wide range of natural resources, including fertile agricultural land, oil and gas and
a significant tourist potential;
- a liberal investment legislation, based on free, non-discriminatory access to
markets and economic sectors;
Subject to the legislation in force, investment is allowed in almost all economic
sectors, including natural resources, agriculture, manufacturing,
telecommunications, construction, scientific research, trade, tourism, banking and
insurance.
The volume of foreign direct investment recorded by Romania between December
1990- April 2000, was about 4.6 billion USD.
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85

The high number of Romanian companies with foreign investment, 74,025, shows
that numerous small and medium sized foreign investors discovered the economic
potential of the Romanian market and decided to invest here.
The Netherlands is among the top five investors in Romania. Main investors are
e.g. active in: the banking sector, production and wholesale of convenience goods
(soaps, detergents), ship building, electrical and electronic equipment, and
automotive sector.

Starting with the last months of 1998, Romania has been speeding up the
restructuring process and, by consequence, several large-scale privatisation
operations were completed. Among them: ROMTELECOM, DACIA and
BANCPOST.

Even if the present level of foreign investment is below the Romanian economy
potential, mainly due to slower start of the privatisation process, foreign investment
has already an important impact in several industrial branches. (Car industry, Ship
and machine building, Oil and chemical sector, telecommunication and electronics
and infrastructure and construction).
In 2000, one of the major targets was the accomplishment of PSAL provisions
negotiated by the Romanian Government with the World Bank. The Private
Structural Adjustment Loan (PSAL) is a loan agreement worth USD 300 million
which includes major objectives regarding the privatisation, workout and liquidation
of state owned companies, bank’s privatisation, state bonds and titles market,
business environment improvement and the attenuation of the related social
implications. Under the PSAL agreement, 63 Romanian State owned companies
are to be privatised by privatisation agents.

9.1


86
Transport, Infrastructure and communication
The Romanian road network is in a deteriorated stage due to the low quality of the
road construction works and the enormous backlog in repair and maintenance.
Romania is pursuing a strategic plan for the development of its road network until
2006,comprising:
- rehabilitation of the main international routes, in a three phase programme with
external and state budget financing;
- modernisation of the existing national roads; and
- Motorway construction programme with priority on east-west connections
(Bucharest-Pitesti and Bucharest-Constanta) with financial support from the
EBRD and the Japan Bank for International Co-operation (JBIC).
The development of the transport infrastructure will continue to feature among the
principal aims of the Romanian Government. In this respect, the Government has
drawn up a bill of law on modernising the country’s overland, air and maritime
transports.
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
It is projected that 13 highways are to be built covering 3,000 Km, as well as 1,200
Km of new railway lines, new bridges over the Danube and the Prut river and 4 new
airports at Brasov, Galati, Alba – Iulia and Bistrita. The existing railways will be
upgraded to suit high – speed trains. The territory of Romania will be crossed by
several pan-European corridors: the Danube connected to the Rhine-Maine –
Danube Canal, a lot of main railway lines, the highway and the Bucharest-ChisinauKiev road.

The report specifies the development of transport means and facilities planned for
the period 2001-2004 and emphasising quality of services, traffic safety and
transport security.
The state railways’ company, SNCFR, has been split into five separate companies.
New train operators are also to be given access to the network.
A two-stage railway modernisation and rehabilitation programme is being
implemented. During the first stage priority is given to the rehabilitation of the
railway infrastructure.
while the second stage will focus on modernisation of the railway lines in order to
increase speed.
The river Danube, which flows 1,075 kilometres through Romania, is an important
trade route for the country to central Europe. The construction of the Danube-Black
Sea canal created an important waterway that connects the Black Sea to the North
Sea through the Rhine-Main-Danube canal.
The main problem of inland waterway transport over the Danube is the fact that the
river still has to be cleaned nearby Novi Sad by removing remaining parts of the
destroyed bridges. This operation is planned to be completed by the end of 2001.
Further problems concern the need for dredging on several places. The Romanian
dredging industry is still not privatised.
Finally, agreement with Bulgaria should be reached regarding the planning and use
of the terminals in the river ports in both countries.
About 60% of the Romania’s imports and exports pass through the port of
Constanta, the most important maritime port of the country. A new port, ConstantaSud, has been recently built at Agigea, on the Black Sea.




Romania plans to sell a maximum stake of 66 per cent of the Tarom airline, with the
state keeping a 34 per cent controlling share. Tarom, whose privatisation has been
delayed for years, is on a list of 59 big state-owned firms to be sold off under a
World Bank US$ 300 million Private Sector Adjustment Loan (PSAL) programme.

The strategy of telecommunication development was drawn up as a priority field of
the country’s macroeconomic infrastructure. A long term Development Program
was devised, with strategic objectives: the use of top world technology; expansion
and improvement of the quality of services.
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87

Part of the Program has already been accomplished through the commissioning of
digital transit telephone exchanges, local and international. There have been built
over 10,000 Km of main communication lines.
Mobile telephony evolves very fast. In only three years it reached an average
penetration rate of 10%. Around 2.5 million Romanians own a GSM mobile phone.
In comparison, Romtelecom, the fixed telephony network and active for decades,
has an average penetration rate of 17%.

The quality of the fixed telecommunication infrastructure is below standards and the
future for the fixed telecommunications network is very uncertain because of the
increasing competition from the mobile operators. Companies will be reluctant to
invest huge amounts of money in updating the fixed telecommunication
infrastructure.

The penetration rate of Internet is still low: less than 1%. The number of billed
accounts are around 180,000 of which 60% corporate users and 40% home users.
The real number of Internet users is estimated at 800,000. In this field there still is a
large potential for growth.
9.2



88
Investments priorities in the sectors transport, infrastructure and
telecommunication
There is an extensive list of investment priorities and covers all transport modes. A
distinction has been made between investment priorities in the sectors transport,
infrastructure and water by the public sector (listed in the report) and those as
indicated by the Romanian Chamber of Commerce and Industry (CCIR). The latter
are not priorities for investment, but should be considered as business
opportunities.
The extensive list of projects as identified by the Chamber of Commerce and
Industry of Romania and Bucharest can be found on the CD-ROM, which
accompanies this report. Most of the projects are in the water sector (supply of
drinking water and wastewater). Few projects have been offered in the field of
transport and communication.
The Chamber of Commerce and Industry of Romania and Bucharest is promoting a
new product called the Centre of Investment Partnership in Romania – PARTINVEST.
PART-INVEST is a new integrating concept in the organisation and development of
investment promotion objectives, focusing on the continuous-flow utilisation of the
current information stock and of the structured data bases created and developed
during the first three annual editions (1997-1999) of the International Investment
Fair in Bucharest.
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9.3
Donors and Financing

The Accession Partnership continues to provide the single framework through
which the priority areas for further work are identified regarding progress to be
made by Romania towards membership of the European Union, the financial
means available to implement these priorities and the conditions which will apply to
that assistance. The 1999 Accession Partnership with Romania was adopted by the
Council in December 1999 and remained the framework on which the programming
for the year 2001 has been based.

Indicative allocations for Romania in 2001 are as follows (in million EURO):
Phare:
298.7
ISPA:
243.9 (mid-point of range)
SAPARD:
153.6
Total:
696.2

The Phare programme has been providing support to the countries of Central
Europe since 1989, helping them through a period of massive economic
restructuring and political change.
A Working Document on priorities for Phare 2001 was prepared by the Commission
in consultation with the Romanian authorities in early 2001.
The institution building priorities identified for Phare support under the 2001
programme for Romania (which will represent about 30 % of the total Phare
budget) indicate for transport: The adoption of EC norms as regards driving/resting
hours for road transport and the implementation of maritime safety acquis as
regards State Flag Control.
The main priorities identified for investment in the acquis (expected to receive about
30% of the Phare budget) are for the transport sector: Maritime safety equipment
and testing equipment for railway safety.

Investments in economic and social cohesion are expected to receive up to 40 % of
the overall Phare budget allocation and include: road worthiness enforcement,
railway rehabilitation, cross border co-operation and waste water treatment
projects.
ISPA: For Romania, Community aid in the framework of ISPA will be between 20%
and 26% of the total allocation. The average mid-range allocation is € 243.9 million
a year (at 1999 prices), equivalent to € 1,674 million for the 2000-2006 period.
Guidance is that half of the support - € 121.9 million a year - will be used to finance
transport infrastructure projects, the other half for environment projects.
Strategic Objectives in the field of transport are stemming from serious weaknesses
in its network of roads, railways and waterways.
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Due to lack of maintenance in the past 20 years, most of its components suffer from
deteriorated condition. At the same time, there is a necessity of upgrading to
European standards and of increased traffic capacity around urban areas.
During the year 2000, the Commission approved four transport projects in the field
of transport:




90
In the field of environment, Romania faces acute problems concerning air, water
and soil pollution, which require large investment and the participation of both the
public and the private sector. Strategic priorities for 2001 are Wastewater and
drinking water, waste management and air quality protection.
Romania’s indicative allocation for SAPARD for 2001 is € 153.6 million (at 2000
prices) to support agricultural restructuring and rural development.
The EBRD’s pipeline of projects is concentrating on:
- large-scale privatisation and restructuring with strategic investors;
- private sector investment in either local private or joint-venture projects;
- SME financing, banking and non-banking financial sector;
National and municipal infrastructure privatisation and public-private
Partnerships. Significant additional levels of investment (read private capital and
finance by IFI) are needed in order to achieve acceptable standards.
Since 1991 the World Bank has built up a portfolio of 29 IBRD-financed projects, of
which 22 are currently active, and two Global Environmental Facility (GEF) projects,
of which one is currently active. Since 1991, World Bank commitments to Romania
total over US$3 billion. The lending programme of the World Bank aims to help
Romania address its challenges by: strengthening the social safety net; increasing
investments in health, education, and rural development; strengthening the
business environment; supporting structural reforms in the financial, utilities, and
enterprise sectors; enhancing effectiveness of Government services; and building
capacity for environmental protection. Priority is given to advice and financing for
EU accession-related programmes.
In 2000 one transport sector project has been approved (Trade and Transport
Facilitation Project, worth US$ 17 million).
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9.4
Business opportunities for Dutch enterprises
There are many and a wide variety of business opportunities in Romania:
 Onboard computers for trucks and buses including digital tachograph devise and
navigation system.
 Harmonisation of rules and regulations in public transport in Romania with EC rules
and regulations (PSO pre-accession).
 Supply and effective use of rescue equipment for fire brigade/traffic police;

Improvement of roads and bridges construction technologies, materials and
equipment.

Improvement conditions for inland shipping over the Danube.


Setting up a rail shuttle service between Constanta and Rotterdam.
Disinfecting station; plants to divide petroleum products from rainwater; pyrolytic
incinerator for Bucharest Otopeni International Airport.


Noise monitoring systems and solid water incinerator for Bucharest Baneasa
International Airport.
Bus production plant in Timisoara.
Manufacturing of steel components for the ship building industry, including
components for dredging vessels.
Construction of rescue boats for the port of Constanta and small fishing boats
(shrimps vessels) of 50 tonnes.
Establishing an off shore company with tugboats in Constanta.
Public works projects at the municipality of Pitesti.
Co-operation with S.C. International Transport S.A., Pitesti.
Enhancing quality levels in manufacturing of components for the automotive
industry at Trian S.A. in Pitesti and S.C. Giramex SRL in Mioveni – Arges.
Co-operation in special transport (extra dimensional or heavy transport).


Mobile repair and maintenance service unit.
Co-operation in the design and manufacturing of trailers.

Development of integrated postal services.


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



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91
REFERENCE MATERIAL UKRAINE (AVAILABLE ON CD-ROM)
1.
2.
3.
4.
5.
6.
92
Investor's Business Guide Romania; Romanian Development Agency; 2000.
2000 Country Investment Profile Romania; EBRD.
Pre-Accession Status Romania - November 2000; Transport policy and
Telecommunications and Information Technologies.
List of Proposed Project Investments as indicated by the Chamber of Commerce
and Industry in Romania.
List of Romanian Consulting Companies.
List of Dutch/Romanian Companies active in Romania.
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