RSM Romania_Business Brief_ 11-15.04.2016

THE POWER
OF BEING
UNDERSTOOD
AUDIT | TAX | CONSULTING
THE BUSINESS WEEK IN ROMANIA
11-15 April 2016

MACRO
New public acquisitions laws
The new package of public acquisitions and
concessions law will be put to a vote in the Chamber of
Deputies on Wednesday, 20 April, two days after the
expiry of the deadline for the application of the
regulations, as stipulated by European Directives.
The two commissions had a deadline of 18 February
2016 to adopt the (admission) reports for the laws put
forward by the government for the transparency of
European acquisitions directives in the national
legislation. The 2014 Directives stipulate among other
things the abandonment of the “dictatorship” of the
lowest price in public acquisition, placing the emphasis
on the quality/price ratio. If they are adopted on 20
April, the laws will be sent to President Iohannis for
promulgation. If promulgated, they will enter into force
after publication in the Official Gazette. But the laws
will not be operational until after the Government
adopts the norms for their application, a project which
has already been drawn up by the National Public
Acquisitions Authority (ANAP).
Insurance premiere
In 2016 Romanians will have taken out a far greater
number of obligatory than facultative home insurance
policies. The bankruptcy of Astra and legislative
changes of last year will lead to a premiere on the
Romanian insurance market this year. The number of
obligatory home insurance policies burgeoned by 6.6%
last year, swelling to more than 1.59 million policies, and
it is expected to reach the figure of 1.9 million this year,
outstripping the number of facultative home policies,
which last year dwindled by 2.45%, shrinking to 1.7
million, a figure that is expected to remain stagnant this
year, according to Aurel Badea, an UNSAR expert.
Commissioning payment, costs passed on
to taxpayers
The vice-governor of the National Bank, Bogdan
Olteanu, expects few commissioning payments to be
made after application of the law adopted today in
Parliament, although this does not rule out a severe
risk to financial stability, through erosion of trust in the
institution of the contract, he said in the first edition of
Profit Live, a platform via which the most important
issues on the public agenda will be debated. “We
envisage a grave imperilment of financial stability due
to the influence on the level of trust in society. Today,
society sees that it is possible to alter a mortgage
contract, tomorrow utilities contracts might be altered,
and the day after that, loans contracts. The financial
markets’ stance towards Romania might shift. It is a
thing that we did not and do not wish, but we cannot
rule it out,” said Olteanu. He also believes that we can
expect few commissioning payments, since the
majority of citizens who have taken out mortgages on
the abodes wherein they dwell will wish to continue to
reside therein: “We are a nation of property owners, a
nation that worships property, and our homes are very
much our principal wealth. The home is the chief
element of household wealth.”
New fuel tax
All vehicle owners and users of fossil fuels will have to
dig deeper in their pockets to pay for petrol and diesel
after the introduction of a pollution tax of 5 Romanian
bani per litre of fuel. Vehicle buyers will benefit from the
planned cancellation of the environment stamp,
however. The law proposing this measure was
launched recently and is due to be voted on in Parliament.
In the event that it is passed, it will abolish the
current environment stamp. The initiators of the
proposed law intend that the pollution tax should be
raised from a 0.05 lei levy on the price of every litre of
fuel. The authors of the law have calculated that an
environment tax of 5 Romanian bani/litre of fuel will
amount to around 2 Romanian lei for a full tank, and
given that the average vehicle consumes a full tank
every month, the tax will amount to 24 Romanian lei
per annum and 360 Romanian lei for the average
fifteen-year lifespan of a car. “There is not question of
the tax leading to price hikes in the national economy,
given that supra-excises of more than 40 Romanian
bani/litre have not done so,” argue the law’s authors.
At present, with the exception of electric or hybrid
cars, the owners of new vehicles pay an environment
stamp on purchase of the most popular makes, which
varies according to cylindrical capacity and emissions,
ranging from 60 to 300 euros.
THE POWER OF BEING UNDERSTOOD
AUDIT | TAX | CONSULTING

MACRO
The National Anti-Corruption Strategy for 2016-2020,
to be drawn up by mid-May
The National Anti-Corruption Strategy for 2016-2020
will be drawn up by mid-May and will be based on the
conclusions of the SNA evaluation for the last four
years, carried out by international experts, who
analysed the impact of the document and are to
establish the gaps and shortcomings they found
therein, identifying the best practices. According to the
Ministry of Justice, between 13 and 15 April the first
independent evaluation of implementation of the
2012-2015 National Anti-Corruption Strategy (SNA)
was carried out. The conclusions of the evaluation of
the SNA will form the basis of the strategic document
for 2016-2020. This is to be put to public debate in
mid-May and will subsequently be voted on by the
Government, announced the Ministry of Justice. The
external evaluation was carried out in order to assist
the Ministry of Justice in analysing the impact of the
2012-2015 SNA, to identify best practices, gaps and
shortcomings in the four years of implementation. The
experts will examine the 2012-2015 SNA objectives,
their impact, efficiency and the efficacy of implementation
measures and the sustainability of results.
Sources: Hotnews, Profit.ro, News.ro
BUSINESS
The Chinese are coming to Rovinari
The joint company created by the Oltenia Energy
Complex in partnership with the China Huadian
Engineering state company, which intends to build a
600 MW heating plant in Rovinari, will be registered at
the Registry of Commerce in May, according to a press
statement issued by the complex. The investment will
be almost one billion euros.
OTP Bank lends to the Post Office
OTP Bank Romania will grant the Romanian Post Office
two credit lines, each worth ten million lei, payable
within a year, in order to finance on-going activities.
The bank, owned by the Hungarian OTP group, won a
tender held by the national post office operator in
October last year, at which the Romanian Commercial
Bank and Bancpost also made offers. The Post Office
asked for offers for a credit line worth a total of twenty
million lei, divided into two equal parts. The operator
estimated that it will pay interest and commission to
the sum of 1.1 million lei, but the final contract stipulates
costs of 750,000 lei. The terms of the contract were
reached through negotiation to reach the lowest price.
The Post Office will repay the loan from its own funds.
Discovery confirmed in the Black Sea
In October 2015, Lukoil, PanAtlantic and Romgaz
announced the discovery of an important seam of
natural gas on Romania’s continental shelf. According
to evaluations carried out by Russian experts from
Lukoil, the LIRA seam within the Trident perimeter of
the Black Sea contains reserves of more than
thirty-two billion cubic metres. Visiting Romania,
Vladimir I. Nekrasov, the first vice-president of Lukoil,
met with Minister of Energy Victor Grigorescu on 13
April. Talks tackled Lukoil production and current
activity, the investments needed to achieve energy
and environmental efficiency, and the prospects for
future development of the Lukoil refinery in Ploiești.
Oresa and Cristian Amza take over La Fântâna
On Thursday, 14 April, Swedish investment fund Oresa
signed an agreement with Cristian Amza, founder of
La Fântâna, an agreement to buy all the shares owned
by Polish investment fund Innova Capital. In 2007
La Fântâna was bought from Oresa by Innova Capital
as part of a transaction worth more than thirty-five
million euros, with the Swedish fund making an
estimated six hundred per cent profit on its initial
investment, with Innova Capital owning 92% and
founder Cristian Amza the remaining 8%. In 2014 the
company bought Blue Coffee Services from Aquila
Group, and subsequently La Fântâna merged with the
coffee machine company, the local Lavazza distributor,
with the group run by Cristian Amza in effect setting
the pace for water distributions services in Romania
and Serbia. At present it provides integrated national
services in both markets, covering the entire chain,
from water sourcing to production/bottling plants
and water and coffee distribution through its own
logistics network.
THE POWER OF BEING UNDERSTOOD
AUDIT | TAX | CONSULTING

BUSINESS
E-commerce at a new level
The marketplace platform utilised by eMAG helps
retailers to reach customers more quickly and more
easily, and has become the largest local online retailer.
With the help of the platform, the company provides a
simple but effective channel, which offers very good
visibility to a wide range of products and retailers, from
electrical goods, telephones, toys, furniture, cosmetics
and sports equipment to products for the home and
garden. It is also a very good way of making money
from other people’s goods, which eMAG has been
practising very effectively since 2011, becoming an
online “mall” that will bring the company almost 40% of
total online orders by 2017, almost twice as much as in
2015. At the eMAG Marketplace New Sellers conference
held in partnership with Ziarul Financiar, Iulian
Stanciu, eMAG’s CEO, declared: “This year the marketplace
platform will generate 27% of orders and 22% of
their value, or more than one hundred million euros. We
expect this to double in future.” Last year eMAG
recorded business worth 353 million euros (direct sales
plus those made via marketplace partners) and
estimates that it will reach the threshold o half a billion
euros this year. eMAG is trying hard to develop the
e-commerce market in Romania, in terms of both
volume and high standards of service, with the
marketplace platform being the company’s main
direction for growth. At present more than 750,000
products from 1,250 sellers are listed.
The resource productivity in Romania and Europe
In 2014 Romania came second from last after Bulgaria
in the list of EU member states by resource
productivity. It seems that developments over the last
few years in the productivity of European resources
have not been of much help to Romania. Making
equivalent of just 0.7 euro per kilogramme of raw
material utilised in 2014, Romania achieves only a third
of the EU average and is a long way behind countries
such as Holland (3.5 euros/kg), the U.K (3.4 euros/kg),
Italy (3.2 euros/kg) and Spain (3 euros/kg).
The productivity of a country’s resources is measured
by dividing its GDP by domestic materials consumption
(materials from domestic production plus the balance
between imported and exported raw materials). In
order to ensure comparability between different
countries, the GDP per capita is employed at parity
with standard purchasing power and in order to trace
correctly the evolution in time GDP per capita in real
terms is employed, adjust according to volume at the
prices of a reference year.
According to Eurostat data, resource productivity is
mainly influenced by the drop in the quantity of raw
materials utilised by an economy. The situation in which
development has not kept up with the consumption of
materials and raw materials utilised to secure development
is completely atypical at the European level and in
the regional context, where Poland, Hungary and even
Bulgaria have managed to perform much better.
Sources: Profit.ro, News.ro, Evz.ro, economica.net,
mirsanu.ro, revistabiz.ro, ZF.ro, capital.ro,
cursdeguvernare.ro
THE POWER OF BEING UNDERSTOOD
AUDIT | TAX | CONSULTING