Austria-Romania Roundtable Business Conference & Awards 2010
Austrians focus on long-term strategies
The conference was organized in partnership with BCR, Raiffeisen Bank, Asirom, Cargo Partner and Julius Meinl and hosted by the JW Marriott Bucharest Grand Hotel. It included an awards ceremony, recognizing the successes of some of the most prominent Austrian companies and banks operating in Romania.
Representing a solid business community here, with total investments of over nine billion Euro and 5,600 registered companies, Austrian investors have set their sights firmly on the opportunities that Romania still has to offer. “Everyone was affected to a varying degree by the economic conditions last year, but Austrian investors and companies remain committed to Romania because we are not here for short-term gains and profits,” Rudolf Lukavsky, Commercial Counselor with the Austrian Embassy, told the participants to the conference. He added: “Austrian companies are aware of the huge potential that Romania has and we are very confident and optimistic about mid-term and long-term development prospects.”
Investors seek improved conditions
In spite of the hurdles raised by the crisis, investors have also pressed ahead with their efforts aimed at improving the overall business environment in Romania, according to Doina Ciomag, Deputy General Manager, Foreign Investors Council (FIC). Referring to the Austrian presence in the ranks of FIC, she said the volume of Austrian direct investment in Romania was mirrored in the structure of FIC’s board of directors, with three of the 15 directors representing Austrian companies OMV, Erste and Raiffeisen. “The issues we are trying to solve through our dialogue with officials and decision-makers in Romania are usually collected from our members, as we run surveys to identify problems and obstacles that need to be addressed,” said Ciomag, adding, “We create working groups bringing together specialists in various areas with the support of our members. Currently we have active working groups in areas such as taxation, fiscal environment, infrastructure, agriculture, energy and labor market.”
Specifying that the council had 117 multinational members, including a substantial number of Austrian representatives, Ciomag emphasized that FIC’s efforts to improve the local business environment could also result in more FDI for Romania. “Our approach is proactive, as we not only identify the problems but we also offer solutions. The role of our working groups is to draft recommendations and solutions, which we believe the government could implement easily and rapidly, with low costs, requiring only political will,” she said.
To illustrate some of the activities pursued by FIC experts, Ciomag referred to an analysis of procedures regarding the preparation of infrastructure projects. “We have made a simple comparison of the procedures and stages involved in the process and their duration in the case of a hypothetical two-year project. We found that a similar two-year infrastructure project in Austria or any other EU country usually takes around 36 months to prepare, while in Romania the same procedures can take between 38 to 88 months. That is mainly the result of two bottlenecks: firstly, the plots of land which the project is supposed to occupy are not available and secondly, the processes involved in awarding and signing such tenders are very lengthy,” she said. “We are also very active in areas such as taxation, with its frequent changes in the fiscal environment and the lack of procedures and labor legislation.”
Asked about the prospects for future foreign investment in Romania, Ciomag responded: “There are definitely some areas that were developing fast when the crisis hit the local economy and we believe that sectors such as construction, infrastructure, renewable energy, IT and agriculture should be on the list of priorities for the Romanian government. In our view, these sectors will continue to offer great growth opportunities in the future.”
Change of strategies in the financial sector
While most major Austrian banks and insurers have already set foot in Romania, further development may depend on Romania’s capacity to create better conditions for investors. “Romania has to provide adequate infrastructure, because without infrastructure investors will not come. Also banks should be able to trust the economic development and supply the country with guarantees and credits so investments can be made,” said Boris Schneider, Asigurarea Romaneasca Asirom – Vienna Insurance Group. Speaking about the insurance industry, Schneider pointed out that the market conditions remained poor in the first half of the year. “The market is shrinking for the second consecutive year, because people have no money to insure their property or buy new cars. At the same time, the number of insurance companies in the market remains the same,” he said. In such a context, companies had to readjust their strategies. “The business model has changed dramatically, from long-term to short-term planning. Every month you are faced with a new situation, new clients and new partners. Also in the last year, year-and-a-half, the business environment has changed, becoming less predictable,” he added.
Schneider also indicated that in times of crisis, fraud attempts are on the increase. “We believe the fraud rate currently stands at around 15 – 20 per cent in Romania. Therefore it is very difficult for us to operate in such an environment. Nevertheless the growth potential in this country is tremendous,” he said. “The average insurance spending per capita currently stands at 100 maybe 150 Euro in Romania. Since insurance is a long-term business, we hope that the living standards in Romania will get closer to those in western Europe in 10 – 15 years. Currently, the average spending on insurance products stands at around 2,000 Euro in countries such as Austria and Germany.”
Overall, Schenider believes Austrian investment in Romania has been a huge success story.
Starting in a positive note, Wolfgang Schoiswohl, Executive Vice-President with Banca Comerciala Romana (BCR), emphasized that Romania had sound development prospects. The country’s recent economic downturn was simply a correction after years of robust growth. “We should not forget that Romania has had growth rates that reached five times the EU average and the potential is still there. The strategies are changing, however. Companies and banks need much more flexibility in order to adapt to the fast-changing environment,” said Schoiswohl. “The economic environment is still difficult and, generally, investors are holding back. But looking ahead, it is clear that the crisis is in the process of reducing its impact. We hope that in the second half of the year the signs of recovery may become clearer.”
Even so, the BCR official said the bank was doing its best to support clients, including those from Austria. “We are a universal bank, offering a wide variety of banking services, but certainly it is always an advantage for Austrian investors to have an Austrian banking partner. We have a special international desk and within it the Austrian desk provides German-speaking staff for the Austrian business community,” said Schoiswohl.
In turn, Reinhard Zeitlberger, Head of Corporate Customers and International Desk, Raiffeisen Bank, spoke about his bank’s efforts to adapt its strategy to the new economic conditions. “During years of steady growth we provided our clients with products supporting expansion. However we have changed our focus with the onset of the financial crisis in Romania,” he said, adding, “One of the new products is the so-called Product for Europe. This is a special product for our clients developing projects co-funded by the European Union, being a mixture of financing and consultancy. We finance up to 80 per cent of the project volume.” Zeitlberger also said that Raiffeisen Bank had launched a cash management platform and new financing products in 2009. “Our new factoring platform allows our clients to access integrated services, offering more predictability to cash flows. On the cash management side, we have created a new communication channel, mainly for our international clients, allowing them to access their accounts without installing a special cash management software,” he added.
Positive for trend for bilateral tourism
Citing the geographical proximity between Austria and Romania and the varied tourist attractions that the former has to offer, Traian Badulescu, Spokesperson for the National Tourist Agencies Association (ANAT), said Austria was a favorite tourist destination for Romanians. “Austria ranks third as a year-round destination for Romanians, behind Bulgaria and Greece, which are mainly summer destinations. However, Austria is the number one winter tourist destination for Romanians,” said Badulescu, adding that Austria was also attractive as a cultural destination, for products such as “city breaks” and as a shopping destination. “Austria also wants to be an attractive summer destination for Romanians. It can be promoted as a destination for rural tourism, eco tourism destination, as well as a medical and spa destination. Anyway, Austria is geographically close to Romania and most Romanians use their own cars to visit Austria.”
Badulescu said that the National Tourism Office of Austria was very well represented in Bucharest and he expressed his hope that more Romanian tour operators would specialize in the Austrian market.
In turn, Rudolf Lukavsky, Commercial Counselor with the Austrian Embassy, said the number of Austrian tourists visiting Romania was also quite significant. “We see a very good potential. So far Bucharest has been mainly a business travel destination, but there is a growing trend for city tourism, particularly in Transylvania. We also believe ecological tourism could grow, with Austrian tourists visiting the Danube Delta,” he said. “We can discuss the development of Danube cruises. Austrian companies have a certain expertise in infrastructure and I think Romania needs to work in this area so it can develop its tourism sector,” added Lukavsky.
Determined to capitalize on the existing potential, Blue Air announced the launch of new products for passengers and an extensive flight schedule to Vienna. “Austria represents a strategic market for Blue Air. We operate nine flights a week to Vienna from Baneasa and three from Larnaca. Our prices are very attractive and competitive,” said Cristina Popescu, Corporate Sales Executive, Blue Air.
Optimistic view
While many companies have downsized their operations and reduced costs to fight the financial crisis, Infineon Technologies Romania, which employs 200 engineers locally, has continued its expansion, according to Michael Neuhauser, Vice President and General Manager of Infineon Technologies Romania, a company focusing on high technology development. “Companies can grow during crisis periods and this is exactly what we have done. Recently we have hired more people for our operations here in Romania,” he said. “Even so, this country has a much greater potential. We have very good engineers here, but I think there would be even more growth opportunities if the business environment could be improved even further.”
In turn, Andre Hofer, Managing Director, Cargo Partner Expeditii, pointed out that his company was in a favorable position, selling services rather than goods in this troubled economic context. “Of course we have been careful, checking our internal costs and cutting expenses wherever possible. However we have also invested in people, in our staff. We realized quite early that the crisis was accompanied by a general change in business patterns. Clients no longer come to us, but instead we have to go out there and explain what we are able to do for our clients,” said Hofer.
The director also said his company was an integrated solutions provider, offering transport and transport-related services: “We are thinking globally but acting locally, which is crucial for an integrated services provider such as ourselves. We have to cover most parts of the globe because we have seen that trade is reaching an increasingly global dimension. So it is very important that we can cover a large part of the world, from the US to Japan.”
The conference was organized in partnership with BCR, Raiffeisen Bank, Asirom, Cargo Partner and Julius Meinl and hosted by the JW Marriott Bucharest Grand Hotel. It included an awards ceremony, recognizing the successes of some of the most prominent Austrian companies and banks operating in Romania.
Representing a solid business community here, with total investments of over nine billion Euro and 5,600 registered companies, Austrian investors have set their sights firmly on the opportunities that Romania still has to offer. “Everyone was affected to a varying degree by the economic conditions last year, but Austrian investors and companies remain committed to Romania because we are not here for short-term gains and profits,” Rudolf Lukavsky, Commercial Counselor with the Austrian Embassy, told the participants to the conference. He added: “Austrian companies are aware of the huge potential that Romania has and we are very confident and optimistic about mid-term and long-term development prospects.”
Investors seek improved conditions
In spite of the hurdles raised by the crisis, investors have also pressed ahead with their efforts aimed at improving the overall business environment in Romania, according to Doina Ciomag, Deputy General Manager, Foreign Investors Council (FIC). Referring to the Austrian presence in the ranks of FIC, she said the volume of Austrian direct investment in Romania was mirrored in the structure of FIC’s board of directors, with three of the 15 directors representing Austrian companies OMV, Erste and Raiffeisen. “The issues we are trying to solve through our dialogue with officials and decision-makers in Romania are usually collected from our members, as we run surveys to identify problems and obstacles that need to be addressed,” said Ciomag, adding, “We create working groups bringing together specialists in various areas with the support of our members. Currently we have active working groups in areas such as taxation, fiscal environment, infrastructure, agriculture, energy and labor market.”
Specifying that the council had 117 multinational members, including a substantial number of Austrian representatives, Ciomag emphasized that FIC’s efforts to improve the local business environment could also result in more FDI for Romania. “Our approach is proactive, as we not only identify the problems but we also offer solutions. The role of our working groups is to draft recommendations and solutions, which we believe the government could implement easily and rapidly, with low costs, requiring only political will,” she said.
To illustrate some of the activities pursued by FIC experts, Ciomag referred to an analysis of procedures regarding the preparation of infrastructure projects. “We have made a simple comparison of the procedures and stages involved in the process and their duration in the case of a hypothetical two-year project. We found that a similar two-year infrastructure project in Austria or any other EU country usually takes around 36 months to prepare, while in Romania the same procedures can take between 38 to 88 months. That is mainly the result of two bottlenecks: firstly, the plots of land which the project is supposed to occupy are not available and secondly, the processes involved in awarding and signing such tenders are very lengthy,” she said. “We are also very active in areas such as taxation, with its frequent changes in the fiscal environment and the lack of procedures and labor legislation.”
Asked about the prospects for future foreign investment in Romania, Ciomag responded: “There are definitely some areas that were developing fast when the crisis hit the local economy and we believe that sectors such as construction, infrastructure, renewable energy, IT and agriculture should be on the list of priorities for the Romanian government. In our view, these sectors will continue to offer great growth opportunities in the future.”
Change of strategies in the financial sector
While most major Austrian banks and insurers have already set foot in Romania, further development may depend on Romania’s capacity to create better conditions for investors. “Romania has to provide adequate infrastructure, because without infrastructure investors will not come. Also banks should be able to trust the economic development and supply the country with guarantees and credits so investments can be made,” said Boris Schneider, Asigurarea Romaneasca Asirom – Vienna Insurance Group. Speaking about the insurance industry, Schneider pointed out that the market conditions remained poor in the first half of the year. “The market is shrinking for the second consecutive year, because people have no money to insure their property or buy new cars. At the same time, the number of insurance companies in the market remains the same,” he said. In such a context, companies had to readjust their strategies. “The business model has changed dramatically, from long-term to short-term planning. Every month you are faced with a new situation, new clients and new partners. Also in the last year, year-and-a-half, the business environment has changed, becoming less predictable,” he added.
Schneider also indicated that in times of crisis, fraud attempts are on the increase. “We believe the fraud rate currently stands at around 15 – 20 per cent in Romania. Therefore it is very difficult for us to operate in such an environment. Nevertheless the growth potential in this country is tremendous,” he said. “The average insurance spending per capita currently stands at 100 maybe 150 Euro in Romania. Since insurance is a long-term business, we hope that the living standards in Romania will get closer to those in western Europe in 10 – 15 years. Currently, the average spending on insurance products stands at around 2,000 Euro in countries such as Austria and Germany.”
Overall, Schenider believes Austrian investment in Romania has been a huge success story.
Starting in a positive note, Wolfgang Schoiswohl, Executive Vice-President with Banca Comerciala Romana (BCR), emphasized that Romania had sound development prospects. The country’s recent economic downturn was simply a correction after years of robust growth. “We should not forget that Romania has had growth rates that reached five times the EU average and the potential is still there. The strategies are changing, however. Companies and banks need much more flexibility in order to adapt to the fast-changing environment,” said Schoiswohl. “The economic environment is still difficult and, generally, investors are holding back. But looking ahead, it is clear that the crisis is in the process of reducing its impact. We hope that in the second half of the year the signs of recovery may become clearer.”
Even so, the BCR official said the bank was doing its best to support clients, including those from Austria. “We are a universal bank, offering a wide variety of banking services, but certainly it is always an advantage for Austrian investors to have an Austrian banking partner. We have a special international desk and within it the Austrian desk provides German-speaking staff for the Austrian business community,” said Schoiswohl.
In turn, Reinhard Zeitlberger, Head of Corporate Customers and International Desk, Raiffeisen Bank, spoke about his bank’s efforts to adapt its strategy to the new economic conditions. “During years of steady growth we provided our clients with products supporting expansion. However we have changed our focus with the onset of the financial crisis in Romania,” he said, adding, “One of the new products is the so-called Product for Europe. This is a special product for our clients developing projects co-funded by the European Union, being a mixture of financing and consultancy. We finance up to 80 per cent of the project volume.” Zeitlberger also said that Raiffeisen Bank had launched a cash management platform and new financing products in 2009. “Our new factoring platform allows our clients to access integrated services, offering more predictability to cash flows. On the cash management side, we have created a new communication channel, mainly for our international clients, allowing them to access their accounts without installing a special cash management software,” he added.
Positive for trend for bilateral tourism
Citing the geographical proximity between Austria and Romania and the varied tourist attractions that the former has to offer, Traian Badulescu, Spokesperson for the National Tourist Agencies Association (ANAT), said Austria was a favorite tourist destination for Romanians. “Austria ranks third as a year-round destination for Romanians, behind Bulgaria and Greece, which are mainly summer destinations. However, Austria is the number one winter tourist destination for Romanians,” said Badulescu, adding that Austria was also attractive as a cultural destination, for products such as “city breaks” and as a shopping destination. “Austria also wants to be an attractive summer destination for Romanians. It can be promoted as a destination for rural tourism, eco tourism destination, as well as a medical and spa destination. Anyway, Austria is geographically close to Romania and most Romanians use their own cars to visit Austria.”
Badulescu said that the National Tourism Office of Austria was very well represented in Bucharest and he expressed his hope that more Romanian tour operators would specialize in the Austrian market.
In turn, Rudolf Lukavsky, Commercial Counselor with the Austrian Embassy, said the number of Austrian tourists visiting Romania was also quite significant. “We see a very good potential. So far Bucharest has been mainly a business travel destination, but there is a growing trend for city tourism, particularly in Transylvania. We also believe ecological tourism could grow, with Austrian tourists visiting the Danube Delta,” he said. “We can discuss the development of Danube cruises. Austrian companies have a certain expertise in infrastructure and I think Romania needs to work in this area so it can develop its tourism sector,” added Lukavsky.
Determined to capitalize on the existing potential, Blue Air announced the launch of new products for passengers and an extensive flight schedule to Vienna. “Austria represents a strategic market for Blue Air. We operate nine flights a week to Vienna from Baneasa and three from Larnaca. Our prices are very attractive and competitive,” said Cristina Popescu, Corporate Sales Executive, Blue Air.
Optimistic view
While many companies have downsized their operations and reduced costs to fight the financial crisis, Infineon Technologies Romania, which employs 200 engineers locally, has continued its expansion, according to Michael Neuhauser, Vice President and General Manager of Infineon Technologies Romania, a company focusing on high technology development. “Companies can grow during crisis periods and this is exactly what we have done. Recently we have hired more people for our operations here in Romania,” he said. “Even so, this country has a much greater potential. We have very good engineers here, but I think there would be even more growth opportunities if the business environment could be improved even further.”
In turn, Andre Hofer, Managing Director, Cargo Partner Expeditii, pointed out that his company was in a favorable position, selling services rather than goods in this troubled economic context. “Of course we have been careful, checking our internal costs and cutting expenses wherever possible. However we have also invested in people, in our staff. We realized quite early that the crisis was accompanied by a general change in business patterns. Clients no longer come to us, but instead we have to go out there and explain what we are able to do for our clients,” said Hofer.
The director also said his company was an integrated solutions provider, offering transport and transport-related services: “We are thinking globally but acting locally, which is crucial for an integrated services provider such as ourselves. We have to cover most parts of the globe because we have seen that trade is reaching an increasingly global dimension. So it is very important that we can cover a large part of the world, from the US to Japan.”
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