With over EUR 4 billion invested in Romania up until 2013, Greek
investors have continued to seek local business opportunities, with close to
300 new companies with Greek capital having been registered last year.
The Hellenic business presence has remained intact in recent
years, and even developed further, despite the ripple effects of the global
economic crisis, according to Efrossyni Mita, counselor for economic and
commercial affairs at the Embassy of Greece.
Greek foreign direct investments to Romania exceed EUR 4
billion, if the figure includes investments by companies of Greek interest via
third countries such as Luxembourg, Cyprus or the Netherlands, according to
estimates by the office for economic and commercial affairs at the Greek
Embassy.
According to the national trade registry (ONRC), Greek FDI
reached EUR 1.7 billion last year, accounting for 4.7 percent of total FDI. The
National Bank of Romania (NBR) said that FDI from the Balkan country amounted
to EUR 2.5 billion at the end of 2012, accounting for 4.3 percent of total
investments. However, the central bank uses a different methodology to draw up
data.
“A significant number of new Greek companies were registered
during the years in question (e.n. the crisis period), 2013 included. This
included big investors, as well as small and medium sized companies. In
addition to newcomers, many Greek companies, already active in the market,
proceeded with their investment plans,” Mita told BR.
Romania is home to 5,790 firms with Greek capital, out of
which 295 were founded in 2013. They have created around 45,000 jobs in various
sectors including banking, retail and manufacturing.
Meanwhile, trade between the two countries rose 5.5 percent
to EUR 1.1 billion, with Greek exports to Romania gaining 6.3 percent to EUR
604.3 million, while Romanian exports to Greece rose by 10.9 percent to EUR
604.5 million.
“This positive trend shows that there is much room for
further improvement,” said Mita.
Banking and telecom
stand out
Greek investments are particularly notable in banking, with
a 12 percent market share in terms of assets, and in telecom.
Four large Hellenic banking groups are present in Romania.
Banca Romaneasca is owned by the National Bank of Greece (NBG), while EFG
Eurobank controls Bancpost. Meanwhile,
Alpha Bank and Piraeus Bank operate under their own brands.
According to daily Ziarul Financiar, NBG will withdraw from
Romania, having struck a deal with the EU’s anti-trust body.
Banca Romaneasca’s assets amounted to RON 7 billion (EUR 1.5
billion) at the end of 2012. Aside from the lender, NBG’s Romanian operations
include an insurer, a financial investment firm and a leasing company.
Meanwhile, Eurobank registered a EUR 40 million loss in
Romania 2013, up by EUR 5 million over the previous year. Its assets fell 6
percent to EUR 3.8 billion.
Last year, Piraeus Bank sold a 93.2 percent stake in ATE
Bank Romania to Romanian businessperson Dorinel Umbrarescu, in a EUR 10.3
million deal. The lender has been rebranded as Banca Romana de Credite si
Investitii and will be run in a dualist system. Piraeus registered a gross
profit of EUR 3.3 million last year, while its assets amounted to over EUR 2
billion.
Meanwhile, Alpha Bank posted a pre-tax loss of EUR 4.7
million in Romania last year on the back of higher provisioning for bad loans.
Moving to telecom, Romtelecom's total revenues amounted to
EUR 609.5 million. Greek OTE controls 54 percent of the company’s shares, while
the rest are held by the Romanian state. The state is planning to sell its
stake through an initial public offering (IPO). Meanwhile, telecom operator
Cosmote Romania, in which OTE holds a 70 percent stake, recorded revenues of
EUR 458 million last year. Both Romtelecom and Cosmote registered a slight
decrease in revenues year-on-year. The two companies will be rebranded as
T-Mobile by September, which could represent another step in their merger,
according to news portal hotnews.ro.
Gauging Greek
investment sentiment
BR asked the heads of Greek firms active in various sectors
about their experience in Romania and their outlook for 2014.
Ilias Pliatsikas, general manager at Olympus Romania, said
the company had launched new products locally last year and that its turnover
had grown by 41 percent to EUR 55 million in the same period. He said this had
allowed Olympus to register its first profit since starting production at its
Brasov-based plant in Halchiu. This year, the company expects a 30 percent hike
in turnover. Olympus relies solely on milk from Romania for its plant and
exports 70 percent of its output. “2014 is important for the dairy sector. The
price and quality of the raw material will play a key role in the industry,”
Pliatsikas told BR.
Dimitris Nikolakis, CEO of Druckfarben Romania, a
manufacturer and supplier of inks and solvents for the flexible packaging
industry, architectural paints and related products, said the company has been
impacted by the economic crisis, which has changed consumption patterns.
“Romanian consumers’ shift towards more economical solutions
in the last couple of years resulted in a slight decrease in the local turnover
for both business units in 2013, offset by increased export activity to
neighboring countries,” said Nikolakis.
“Due to the prevailing market conditions, the previous year
was a transitional one for Druckfarben, in which the foundations were laid for
the future strategic positioning of our brands and the expansion to previously
unexplored areas,” he added.
He said the construction and building materials industries
were expected to slightly decline or remain flat this year, depending on
political developments. However, Nikolakis expects the paints business,
represented by the brand Kraft Paints in Romania, to yield double-digit growth
this year. He said the company holds 40 percent of the market for flexible
packaging inks. The company is part of the Druckfarben group, which is active
in the Balkans region with a consolidated turnover of over EUR 50 million.
The turnover in the local construction sector continued to
fall in 2013, although some of the sector registered a revival, mainly due to
private initiatives, which continued in the first quarter of this year,
according to Alexandros Ignatiadis-
shareholder of Octagon Contracting & Engineering, Dimitris Nikolakis- CEO, Druckfarben Romania,
Effie Valsamaki- general manager, Dirent
Group, Ilias Papageorgiadis- CEO, More Group of companies.
“Unfortunately, as
this year is an electoral year, most of the public funds will be allotted to
pensions and other areas that can bring votes, so the construction sector will
not be a priority for public investments. At the same time, for pretty much the
same reasons, the effervescence of the private sector has started to flatten
out,” Alexandros Ignatiadis told BR. He said this year will be broadly similar
to the previous one for construction. The company more than doubled its
turnover to EUR 19.6 million last year against the previous one. In 2014 the company is aiming to reach a
turnover of EUR 16 million and to maintain its portfolio of clients.
Effie Valsamaki, general manager at Dirent Group, said the
firm had seen its turnover in the operating leasing service fall due to a weak
market, while the short-term rental service has increased since its launch in
Romania three years ago. “Although the car rental market in Romania has not
seen huge fluctuations over the last three years since the big drop of
2009-2010, Dirent’s specific service has gained a bigger market share every
year. The expectation for this year is to increase the turnover of the rent-a
car service by 50 percent,” Valsamaki told
BR.
“The used car business has faced various obstacles, mainly
due to additional taxation and low demand, but the local market started to move
much better at the beginning of 2014. For executive used vehicles with high
engine capacity, the local market is still very difficult, the taxation very
high, and prices would have to drop even more before local drivers would buy
them. Otherwise these vehicles will have
to be sold on foreign markets,” she added.
Ilias Papageorgiadis, CEO of the MORE Group of companies, a
consultancy, said that brokerage activities in the real estate sector recorded
7-8 percent growth last year. The company started to focus on income properties
and investments in 2009. It grew its renewable energy business by 3.5-4
percent. In April 2013, the group decided to focus solely on biogas and biomass
projects, due to changes to the incentives system.
“Biomass and biogas will attract Greek capital, as Greece
does not have the advantages of Romania in this sector and lots of companies
are scoping the market and moving onto the next steps. Once the situation is
100 percent clarified, you could witness a new wave of investments in this
sector that could surprise an outsider,” the CEO told BR. He added that demand in the real estate sector,
especially for income-generating properties, such as farmland and forests.
Greek investors hold a 20-25 percent share in the overall
portfolio of clients.
For Divertiland, the outdoor water entertainment park in
eastern Bucharest, the first year of operations attracted over 100,000 people.
“This year we will concentrate our efforts on developing a
complete customer experience and position Divertiland as a city break
destination within the city. Some of our efforts will go into the development
of additional activities, such as events and parties,” Alejandro Poulakis, the
park’s CEO, told BR. He added that 20 percent of the total number of visitors
last year were foreign.
Ambassador of Greece to Romania Grigorios
Vassiloconstandakis says the euro’s current problems would most likely be
solved by 2019, when Romania aims to join the Euro zone. His compatriots have
invested over EUR 4 billion here and their development plans have continued
despite the difficult economic situation.
BR: How are Greece
and Romania collaborating in the economic field? What are the strong points and
which areas still need improvement?
Ambassador: Greece
and Romania have very strong relations in all domains of economic collaboration.
This is due to historical reasons, cultural ties and geographical opportunity,
and I must say that these bilateral economic relations are mainly characterized
by a strong Greek business and investment presence in Romania.
The investment capital of Greek origin currently makes
Greece the sixth biggest foreign investor. Total Greek investments have far
exceeded EUR 4 billion, and I must stress that these investments are
qualitative, reflecting the long-term Greek business presence in Romania. I
believe that this is rightly appreciated, since all Greek firms have contributed
to the modernization of the Romanian economy, and its gradual adaptation to the
EU economic environment.
Of course, Romania’s subsequent membership of the EU greatly
enhanced our bilateral relations. Trade advanced significantly in 2013 both
from the point of view of Greek exports to Romania and Romanian exports to Greece.
I believe there is room for a further increase in bilateral trade as well as in
Romanian investments in Greece.
BR: What are
Greece’s priorities for the EU presidency?
Ambassador: Greece
has assumed the presidency at a time when Europe is going through an extremely
delicate phase. We have had the crisis over the last few years, which resulted
in recession and unemployment, shaken the confidence of high numbers of
European citizens in EU institutions and gravely affected social cohesion.
Our challenge is to ensure prosperity and stability, because
it is more and more obvious that the priority areas of our presidency cannot
escape the pressing needs of European citizens today. In a few words: the
promotion of policies and actions to achieve growth, combat unemployment,
promote economic and social cohesion and structural reforms, deepening
integration and completion of the European monetary union, as well as
addressing external challenges, including EU enlargement, have formulated the
priority framework of the Hellenic presidency.
BR: Does Greece
support Romania’s Schengen accession and do you think that something will
happen this year given the unfolding crisis in Ukraine?
Ambassador: It is well known that Greece supports Romania’s
accession to the Schengen area because we think that Romania fulfills all the technical
criteria; it complies with the acquis communautaire (e.n. European Community
laws) in this field. We are doing our best, now that we have the EU presidency
this semester, to promote Romania’s candidacy for the Schengen area. As you
know, of course, this is not totally dependent on us, because accession into
the Schengen area is a complicated procedure and the role of the rotating
presidency is different, so Romania’s accession will come down to a synthesis of
different options, positions, views and trying to find, when conditions are
right, the common denominator in order to reach consensus.
You know very well that unanimity is needed for this kind of
decision, and we hope that consensus can be reached soon.
BR: Would you
advise Romania to join the Euro zone, given the economic hardship suffered by
Greece in recent years?
Ambassador: What
we must say from the beginning is that Greece joined the Euro zone some 12
years ago, when nobody could predict the architecture, procedures, outcome and
the possibility of the euro positively impacting the economies of the Euro zone.
I think that following the crisis that started three-four years ago, all Europeans
are aware of the problems related to the architecture of the euro asa common
currency. And I think that over the last few years all of us have tried to find
a new basis for this architecture so that the euro will never deal with the
same difficulties we have gone through in the last few years. I understand that
your prime minister has predicted that Romania could join the Euro zone at the
end of the decade. The current problems of the euro would most likely be solved
by then, and Romania, with its very good economic indicators, will be in a
strong position to adopt the euro.
BR: Has the EU as
a political entity emerged stronger from the recession?
Ambassador: The
first big advantage of being a member of the EU is that all members define
Europe as a common place to be – as a family, as a great area of activities (economic,
political and cultural) andthis is an invaluable asset for all Europeans.
Of course problems and challenges frequently arise and the
EU has to be ready to deal with them, taking into consideration its weight, not
only economically, but also politically and diplomatically.
It is true that we are trying to move in that direction and
these are the efforts made by the common institutions we all respect. That is
the European Parliament; first of all, the European Commission, the Council, and
I think that over the years this is the goal to which we are getting closer and
closer.
But you are right and I think that the crisis like the one
in our region, in Ukraine, indicates the need for coordination. And through
dialogue and unanimity we have decided on a common response approved by all
member states.
BR: We’ve seen more
public officials jailed. Do you think that this is a genuine crackdownon
corruption in the public sector?
Ambassador: I
think that Romania, like Greece, has taken big steps forward concerning the anti-corruption
fight. We can see that and all of us appreciate these big steps, which have
taken place over the last few years – over the last year to be more specific. We
are confident that Romania is on the right path in this field.
BR: What issues
are raised by Greek investors doing business in Romania?
Ambassador: Greek
investors consider the business environment in Romania a safe one. However we
would like to see more stability and predictability in the legislative framework
that applies to different domains of business and investment activity, especially
regarding fiscal provisions and tax levels, as well as the incentives provided
for investments in various economic fields. As an example, I could mention the
changes in the renewable energy legislation and the insolvency law, but in
general I understand that the biggest asset that Romania presents for foreign
investments is the stability and security of the business environment.
(Sursa: Business
Review, Autor- Ovidiu Posirca)
