TIMISOARA – PILLAR OF DEVELOPMENT
Romania Morning Seminar
(Tailored presentation for Construction and Architecture Companies delivered
to the Derbyshire and Nottinghamshire Chamber of Commerce in support
of a trade mission visiting Romania in March 2011)
_________________________________________________________________________________________________________________________________________________________________________________
10th of March 2011
Nottingham
SUMMARY
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15.
Introduction.
General State of the Romanian Market.
Timisoara.
SWOT – Timisoara Market.
Forecast for Medium and Long Term Investments.
Relevant Development Areas and Market Opportunities in Timisoara – The
Historical Centre.
Relevant Development Areas and Market Opportunities in Timisoara Infrastructure.
Events to Generate Business for Construction and Architecture.
Funding.
Legalities and Formulas for Setting up a Business in Romania.
How to Find a Suitable Partner and What to be Careful About.
What do British Businesses already in Romania Say about Their Experience.
Business Practices.
The BRC Services to Help British Companies.
Get in Touch.
INTRODUCTION
Lorela Corbeanu
(Managing Director)
The British Romanian Consultancy
(The BRC)
The British Romanian Consultancy
(The BRC)
Is an enterprise
That provides British investors intending to
invest in Romania with the support
they need
Because it has the right network,
information and skills
So that they could set up successfully in
this new emerging market.
ROMANIA - OVERVIEW
Romania:
• is the second largest consumer
market in Central and Eastern
Europe after Poland.
•
Together with its neighbouring
countries, Romania is part of a
100m market.
•
Important grants and incentives
available.
•
Tax breaks for boosting certain
sectors.
“Now is the perfect time for UK
businesses to consider
Romania as a viable option.”
(Digby Jones)
GENERAL STATE OF THE ROMANIAN MARKET IN 2011
Economic
Political
• Slow economic recovery that
would not allow much public
investment. Other funding
sources and support are
available.
• Political instability generated by
the severe economic crisis.
• GDP growth forecasts for
2011: between 0.2% and
2.6%. IMF forecasts 1.5%
GDP growth.
• Pressures on Romanian
administration for accelerating
the absorption of EU funds.
• Budget deficit for 2011: 4.4%
of GDP including arrears.
• Local and parliamentary
elections are due in 2012.
• Pressure on Romanian
administration for reform.
ROMANIA
Administrative Map/Historical Map
KEY ECONOMIC INDICATORS
2010
2009
2008
GDP
Real Growth Rate
-1.9%
-7.1%
7.1%
GDP/capita
Euro
11,200
11,000
12,000
Budget Deficit
6.5%
7.2%
5.5%
Inflation Rate
6%
5.6%
7.8%
Unemployment rate
8.2%
7.8%
4.4%
Public Debt
34.8% GDP
24% GDP
20.1% GDP
17.28%
( 31 Dec. 2009)
14.99%
(31 Dec. 2008)
Commercial Bank
Prime Lending Rate
TIMISOARA
•
Population: 317,660 (2002) and a
surface area of 12,926 hectares.
•
Among the most attractive towns
for foreign investors together with
Bucharest, Brasov, Cluj-Napoca,
Constanta and Craiova.
•
Easy access to Serbia (170 Km
to Belgrade) and Hungary (300
km. to Budapest). 550 km. to
Bucharest.
•
Cosmopolitan town, with many
cultural influences: Hungarian,
German, Turkish.
SWOT – TIMISOARA MARKET
Strengths
•One of the strongest towns in the Danube-CrisMures-Tisa Euro- region.
•Development pillar in Romania, equal to
Bucharest.
•Improving infrastructure.
•VAT: 5% for Construction sector.
•Important historical centre.
•Important tax breaks for renovating patrimony
houses and historical public areas.
•Permissive legislation.
•Keeps the EU regulations.
• Well trained work force, speaking English.
Opportunities:
•Important European Funds available.
•Rich offer of land.
•Access to a market of about 28 mil.
inhabitants.
•Strong economic channels open with Hungary
and Serbia.
•Need for rehabilitating and modernizing parts
of the town.
•Important projects to be developed.
•Authorities are elaborating the New General
Town Plan.
Weaknesses
•Construction sector severely affected by the
economic crisis:
- General decrease of 13.2% in 2010 due to a
residential construction decrease of 35.7% in
2010 (NIS).
•Low public funds available.
•Authorities are elaborating the New General
Town Plan – slow decisions.
Threats
•Excessive politicization of administration –
slow decisions.
•Public investment targeted by local real estate
developers with influence over the decision
factors.
•Foreign Real Estate developers only preferred
if they bring investment or offer finance
solutions.
FORECAST FOR MEDIUM AND LONG TERM
INVESTMENTS
MEDIUM TERM
LONG TERM
• Increased absorption of the EU
funds expected (Euro 22bn. by
2015).
• Slow improvement in
Construction sector.
• Domestic public funds for big
projects less probable but EU
funding still available.
• Taxes likely to rise but
construction sector may be
exempt.
• Inflation.
• Romania is expected to return
to the rhythm of GDP growth
before the crisis.
RELEVANT DEVELOPMENT AREAS AND MARKET
OPPORTUNITIES IN TIMISOARA I
The Historical Centre
Rehabilitation of historical
buildings
•
•
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Cooperation between the
Timisoara Town Hall, the German
Company GTZ and the German
Federal Ministry for Economic
Cooperation and Development.
14,500 historical buildings – only 5
rehabilitated.
Funds: Euro 5 mil ( 3 mil as
grants) from The Institute for
Credit for Reconstruction of
Germany (KfW) + EU money.
•
Law 422 ( Law of Historical
Monuments).
•
Tax Breaks.
Rehabilitation of historical public
areas.
• Tax breaks.
RELEVANT DEVELOPMENT AREAS AND MARKET
OPPORTUNITIES IN TIMISOARA II
Infrastructure I
Central Rail Station
• Stage: Town planning study.
• Possibility to be included in the
General Town Plan.
• Proposed finance: state budget,
local budget, EU funds, private
investor funds.
Reconstruction of the Central
Industrial Area
• Hundreds of hectares available,
suitable for commerce, services and
private properties.
• There are available: urban
development feasibility studies and
new projects.
Development of Bega Channel
• Development of a water network
for transportation.
• Enhancing the banks and the
adjacent area – entertainment and
landscape architecture.
• It is a PPP project supported,
including financially, by the
Timisoara Town Hall.
Central Pedestrian Area
• Excluding motor traffic.
• Transforming Timisoara Citadel
into a commercial pedestrian area.
• Building underground and
overground parking on the traffic
ring around the area.
• Project proposed and supported
by Timisoara Town Hall.
RELEVANT DEVELOPMENT AREAS AND MARKET
OPPORTUNITIES IN TIMISOARA III
Infrastructure
Other projects proposed by Timisoara Town Hall
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Transportation: 11 projects.
Health Institutions : 15 projects, 3 have reached the tendering stage.
Streets + Roads: 3+1 projects.
Utilities: 2 projects.
Parks: 5 projects.
Education: 4 projects.
Energy: 4 projects.
Business support: 5 projects.
• Funding: mostly EU funding.
EVENTS TO GENERATE BUSINESS FOR CONSTRUCTION AND
ARHITECTURE
RENEXPO South-East Europe
(9th – 11th of November 2011, Bucharest)
CAMEX Exhibition - Timisoara
(5th – 8th October 2011)



B2B Event
Brings together all the leaders of
Constructions Industry in Romania.
Opportunity to meet specialists from
Hungary and Serbia.
Linked events:
•
Regional Forum in Constructions
Construct Week ( Specialised conferences
on Constructions, Architecture, Town
Planning, Professional Associations, Trade
Unions, Central and Local Authorities.
•
Evening of Excellence in Construction


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Annual international trade fair and
conference for renewable energy and
energy efficiency in building and renovation.
Provides Know How and Networking
possibility.
It is an international business gathering.
2010: 71 exhibitors ( 30% international, from
11 countries) and 3115 visitors ( 12%
international).
INGLASS
(12th of April 2011)
 National Conference on Architecture.
FUNDING
- Sources European Regional Development
Fund ( ERDF): 2007 - 2013
Regional Operational Program: Euros
70.5 mil.
• Axis 1: Support for sustainable
development of urban growth
pillars.
• Axis 2: Improvement of regional
and local transport infrastructure.
• Axis 3: Improvement of social
infrastructure.
• Axis 4: Strengthening the regional
and local business environment.
• Axis 5: Sustainable development
and promotion of tourism.
• Axis 6: Technical Assistance.
Public Private Partnerships.
Local Budget.
Sponsorships.
LEGALITIES AND FORMULAS FOR SETTING UP A BUSINESS IN
ROMANIA
I. Set up a new trading company, a
Romanian legal entity based on
collaboration, association
agreements with foreign
companies.
The legal status of the company
may be:
• Joint-stock company: 2
associates, Euro 25,000 capital.
• Limited Partnerships: 1
associate, Euro 50 capital.
• European Company: the EC
regulation no. 2157/2001, Law
no. 31/1990. It can transfer ( shift)
its head office to another member
state.
II. Set up a subsidiary of a foreign
trading company, if the statute of
the foreign company allows this.
III. Set up a branch of a foreign
company in Romania, if the
statute of the foreign company
allows this.
IV. Set up a commercial
representative office of a foreign
company (which is also currently
referred to as an agency) in
Romania, even if it is not the
formula appropriate to the type of
activity you intent to carry out.
Costs:
• Money: between Euro 300 – 800,
excluding the lawyers fee and the
share capital values.
• Time: approximately 10 days.
HOW TO FIND A SUITABLE PARTNER AND WHAT TO BE
CAREFUL ABOUT
Do you need a partner?
Yes
• if you want to access EU funds.
• If you want to buy land in
Romania.
No
• If you set up a business in
Romania as unique associate
and buy land for business
purpose.
• SPV (Special Vehicle Purpose)
– to buy patrimony houses
(historic buildings belonging to
the Ministry of Culture.
Recommended:
• To have a local partner.
What could help?
•
Register with OAR ( Order of
Architects in Romania):
mandatory.
•
Main ruling body of the branch
•
Good legal advice: get advice
about unexpected aspects you
might encounter while developing
a project with a Romanian partner.
WHAT DO BRITISH BUSINESSES ALREADY IN ROMANIA SAY
ABOUT THEIR EXPERIENCE
PITFALLS
REWARDS
 “Difficult business environment”.
 “Many good opportunities”.
 “Corruption – cultural contract” but
“you can get around it”.
 “A virgin land where many things
could be done”.
 “Bureaucracy – you have to
understand how to work with the
system”.
 “Easy communication – many
Romanians speak English”.
 “Lack of transparency”.
 “Cultural differences”.
 “I intend to stay. Despite
everything, I will do it again”.
 “Romanians and British have
similar sense of humour!!!”
Business Practices
•
Initial greetings: formal and reserved.
•
Title: people are addressed by their honorific title ("Domnul" for Mr. and
"Doamna" for Mrs.) and their surname. Only close friends and family
members use the first name without appending the honorific title.
•
Start out in a formal style and become familiar once a personal relationship
is developing.
•
Appointments needed, be prepared to wait, meetings keep rules of
formal/old fashioned courtesy.
•
When doing business, Romanians value personal relationships.
•
Expect your counterpart to be a good/tough negotiator!
•
Romanians could be very direct as well as good diplomats.
HOW THE BRC COULD HELP YOU
• Market research.
• Selection of the local
partners.
• Finding local legal
representation.
Other benefits
•
Access to material in Romanian
and to Romanian specialists
could give you hints about
aspects of interest.
•
Access to inside aspects of
different situations and advice
about how to deal with them.
•
Find out the backstage political
games behind decisions.
• Support in getting finance.
• Advice about the cultural,
political, and social
particularities.
• Advice about the political
and economic evolution in
Romania.
• Interpretation.
Testimonials
•
“The seminar Lorela delivered was of very high quality. Lorela’s knowledge and understanding of
the business environment in Romania was superb. The seminar gave many of our clients the
confidence to pursue business in Romania and passed on vital knowledge to help them succeed. I
would have no hesitation in recommending The British Romanian Consultancy and its services.”
(Laura Howard, Manager of Midlands Enterprise Europe Network)
•
“With her knowledge and experience of Romania, Lorela has been a valuable information link to
the members and non-members of Derbyshire and Nottinghamshire Chamber. In addition her
expertise was appreciated by those clients accessing the services of the Enterprise Europe
Network in the East Midlands. Both organizations are organizing a Market Visit to Romania
towards the end of March 2011 and as of mid March seventeen representatives will be
participating.In the long term Lorela will be an important ally in assisting both communities in
Romania and the UK develop their International Trade activities”
(David Hood, Head of International Trade and Information, Derbyshire and Nottinghamshire
Chamber)
GET IN TOUCH
Contact:
Lorela Corbeanu
Managing Director
E: lorela.corbeanu@thebrc.co.uk
M: +44(0)7920147592
The British Romanian Consultancy
www.thebrc.co.uk
The Hive, Burton Street, Nottingham, NG1 4BU
M: +44(0)7920147592
E: welcome@thebrc.co.uk