RSM Romania_Business brief_14-19.03.2016

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THE BUSINESS WEEK IN ROMANIA

14-19 March 2016


MACRO:

• The European Commission removes Romania

from under the incidence of the procedure for

macroeconomic disequilibrium

President Klaus Iohannis declared on Friday in

Brussels that he salutes the decision of the European

Commission to remove Romania from under the

incidence of the procedure for macroeconomic

disequilibrium, which was implemented by EU officials

in February 2015. The meeting of the European

Council also discussed the question of the 2016

European Semester, which represents a cycle for

co-ordinating EU economic and budgetary policies.

Romania was included in the list at the end of

February 2015, along with fifteen other countries,

on the grounds of “macroeconomic disequilibrium

that requires monitoring and action at the political

level.” The Commission decided in November last

year that thorough analysis is necessary for eighteen

member states in order to evaluate whether they are

facing macroeconomic disequilibrium and if so, how

severe it is. The Commission reached the conclusion

that six countries, including Romania, are not facing

disequilibrium within the framework of the procedures

for macroeconomic disequilibrium.

• Isărescu, Cioloș, NBR officials, ministers and investors

on acute economic problems

Romania’s indicators are looking good at the moment.

After years of austerity, Romania has one of the

highest rates of economic growth in the EU and fulfils

the conditions for joining the euro zone, says NBR

governor Mugur Isărescu. Nevertheless, Romania’s

financial and economic stability is threatened by

the “dation in payment” act and by the growth of

the budget deficit above sustainable levels, warned

Isărescu at the opening of the first day of the Growth

Forum Conference—Romania’s Development Strategy

and Convergence with the Euro, organised by Profit.ro

at the NBR. “Personally, in the last twenty years I have

never seen so many dangers to Romania’s economic

and financial stability”, said Isărescu, also referring to

the danger that the budget deficit might reach four per

cent of GDP in 2017, above the three per cent limit laid

down by European treaties, in which case it will lead

to an increase in public debt. Prime Minister Dacian

Cioloș argued that the Government supports the wise

resolution of the problems generated by the proposed

resolution agency act and he urged those involved to

display solidarity, avoiding benefits to speculators and

erosion of trust in the state because of the retroactive

change to the rules. He said that such a retroactive

change to the rules might affect the younger generation

wishing to buy homes on credit.

• Fighting unfair competition

The Government has set up a Cross-Institutional

Council to combat unfair competition. The Cross-

Institutional Council will ensure the transparency and

implementation of public policies in markets where

fair competition needs to be maintained, according to a

government press release. The Council will include two

representatives from each of the following institutions:

Ministry of Public Finance, the Council of Competition,

the National Audio-Visual Board, the National Authority

for Consumer Protection, the State Patents Office, and

the Romanian Copyright Office.

• Infrastructure through emergency ordinance

The Government has passed an Emergency Ordinance

to accelerate the process of building transport

infrastructure. The emergency ordinance sets forth a

series of measures to accelerate the implementation

of trans-European transport infrastructure projects

with the aim of adopting regulations aimed at

shortening deadlines and simplifying the process

for authorising construction works and implicitly

eliminating blockages in the implementation of projects

to ensure interconnectivity between the national/

regional and European transport network. “The law has

in view, when realising trans-European infrastructure

projects, simplification of the process of issuing

construction permits by shortening the deadlines for

issuing approvals or, according to the case, the location

approvals stipulated in planning certificates and by

simplifying the procedures for removing pieces of

land situated on the expropriation corridor from the

agricultural/forestry circuit”, states a communiqué

issued by the Gouverment.

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MACRO:

• Form 088 to be modified in around a week

Modification of Form 088 for VAT purposes will take

place within a week, since it is excessive and deals only

with the effects of tax evasion, rather than the cause,

declared Gabriel Biriș, Secretary of State in the Ministry

of Public Finances. He declared that he supports the

introduction of a similar form, which Romania needs,

but “I didn’t think of 088. I didn’t think that we would

go from nothing to too much.” Biriș does not view the

form as the main culprit for the rise in VAT evasion, bur

rather “the cause lies elsewhere, in the way in which

VAT works in Europe.” At the same time, Biriș believes

that the rise in VAT evasion, which since Romania joined

the EU has risen to four to six billion euros a year, can be

eliminated through inverse taxation.

• Pollution Tax back to citizens

The pollution tax paid between 2007 and 2013 will be

fully reimbursed by the state. An ordinance to this effect

has already been published in the Official Gazette.

Applications for reimbursement of the tax can be

submitted to ANAF, after publication of the norms for

application. But don’t rejoice too soon, because the

money will be paid back in five years. Go to ANAF and

submit your tax receipt. Fill in a form and present your

vehicle documents. The state will then transfer the

money to an account. Applications will be processed

within forty-five days, and reimbursement of the tax

plus interest will be staggered over five years.

• Foreign investors complain about excessive

bureaucracy yet again

Romania’s system of taxation is uncompetitive in

comparison with other countries’ and this is due in

large part to the excessive bureaucracy faced by

companies in their relations with the tax authorities,”

believe foreign investors, according to a press release.

The Foreign Investors Council (FIC) publishes a biannual

Index of its members’ perceptions of the business

sector. The results of the most recent FIC Index

show that the majority of members (60%) expect

growth in 2016 and just 15% except shrinkage of

their businesses. Despite the expectation of growth,

FIC members report that they are confronted with a

series of all-too-familiar problems: ninety per cent say

that bureaucracy is excessive compared with other

countries in the region; eighty-five per cent believe

that the country’s infrastructure is uncompetitive; and

seventy-five per cent encounter problems connected

with the unpredictability of local legislation. Romania’s

well-trained workforce remains a strong point and

competitive advantage (75%). Because they predict

economic growth, almost half of those questioned plan

to take on additional staff in 2016 (43%) and a third

(34%) will make significant capital investments. More

than half (55%) expect significant growth in exports in

2016.

Sources: Adevărul Financiar, Hotnews, Mediafax,

profit.ro, stirilePROTV.ro

BUSINESS

The State brings back “Mindfulness”

The owners of Constantine Brancusi’s sculpture

“The Mindfulness of the Earth” have accepted the

Government’s offer of eleven million euros, announced

Minister of Culture Vlad Alexandrescu. The Government

will pay five million euros, and the Ministry of Culture will

launch a national public subscription for the remainder

of the sum. Last month, the Government announced

that it would resume negotiations for purchase of

Brancusi’s sculpture, which an auction house has valued

at around twenty million euros. The Romanian State’s

right of pre-emption on purchase of the work expired

in 2014, but the Government decided to resume talks.

Carved in 1907, The Mindfulness of the Earth was

bought by engineer Gheorghe Romașcu directly from

the artist in 1911, and at present, after being confiscated

by the communist regime and finally retroceded in

2008, it belongs to the original purchaser’s heirs. The

Mindfulness of the Earth is a national heritage object,

which cannot be removed permanently from the

country, and is currently kept in the Cotroceni Museum.

Tarom flying without a boss

Tarom’s board of administrators has decided to suspend

the company’s general director, Edouard Heinzmann,

starting 22 March, as a result of management

shortcomings, announced the relevant minister, Dan

Costescu. “The manager ought to have ensured the

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BUSINESS

• financial resources and staff to meet the company’s

goals. The aeronautical authority set the deadline of

22 March; from 22 March it will no longer be possible

to meet the goals. This is the first point we received

from board of administrators of Tarom. (…) Lack of

responsibility and management shortcomings do not

seem acceptable to me. They are matters regarding

failure to achieve the revenues and expenses budget,

and rather than eight million in losses there were fortyone

million, despite the fact that the price of aviation

fuel decreased dramatically last year. Had it not been

for this advantage, we would have faced disaster,” said

Costescu. On Monday, 21 March the administrative

board will be meeting to make a final decision regarding

the company’s future. Decisions will have to be taken

quickly, said Costescu. He said that Tarom will continue

to operate normally. “There might be some delays, but

it will not affect flight safety,” he said.

• Porsche hiring engineers in Romania

Porsche is looking for engineers in Romania and has

opened a branch in Cluj to this end. Porsche Engineering

Group GmbH is extending its engineering activities

for mobility services, and to this end it has founded

Porsche Engineering Romania SRL in Cluj. “Cluj will

help us to push forward car digitalisation,” announced

Porsche. Porsche says that Romania and the city of

Cluj are among the most innovative regions in Europe

when it comes to software research and development.

The first job announcements have already appeared.

Porsche is looking for engineers to work on chassis,

engines, quality, and closed-loop simulations.

• Wizz Air adds two new services to Bucharest

Low-cost airline Wizz Air has announced that it will be

expanding its services to Bucharest from London Luton,

adding another two weekly flights from 20 May 2016.

The weekly number of flights will increase to twentyfive.

The company will be moving its service from

Lübeck Airport to nearby Hamburg and will continue

to offer low-fare flights to northern Germany. Because

of constant financial problems at Lübeck, Wizz air will

move three flights to Hamburg starting 17 April. After

relocation to Hamburg, Wizz Air will continue to provide

services to Gdansk, with four flights a week, and to

Skopje and Kiev, with two flights a week. The low-cost

company also announced a new service between Sofia

and Copenhagen, which will operate three times a week,

starting on 13 June.

• Hauliers hold a national protest

The announcement was made by the Romanian

Confederation of Authorised Operators and

Transporters (COTAR), and the date set for the protest

remains 18 April. It is estimated that forty thousand

vehicles will take part, unless government institutions

deliver a clear message by Wednesday, reports news.

ro. The haulier’s main bone of contention is the rapid

increase in the costs of vehicle insurance policies over

the last year. Likewise, transporters are unhappy with

the activity of the ASF and demand that Parliament

sack its management, a decision which would halt the

hauliers’ protest.

Banca Transylvania has announced the acquisition of

Capital Partners

The transaction involves the takeover of the Capital

Partners team and brand, with BT Securities becoming

BT Capital Partners. The transaction will be finalised

by the end of March this year. BT Capital Partners will

assist and advise companies on their stock-market

listings and on attracting new investors; it will provide

brokerage and consultancy services for mergers and

acquisitions, financing and structuration of complex

financial operations, market research and consultancy

on strategic management. Horia Ciorcilă, the president

of Banca Transylvania, declared: “The entry of Banca

Transylvania Financial Group into the Investment

Banking market is a milestone in our development,

given that it consolidates our range of products and

services for large clients. BT Capital Partners will

provide top-level specialised financial services to

complement our banking products. ” Doru Lionăchestu,

the main partner and president of Capital Partners,

added: “BT Capital Partners will focus on Romanian

companies with investment potential and will

contribute to the consolidation of the most powerful

financial pole with Romanian capital.”

Sources: Adevarul Financiar, Business Magazine,

hotnews.ro, news.ro ,profit.ro, Ziarul Financiar

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