Greece-Romania Roundtable Business Conference & Awards 2011

Greek investors seek a more active role

Organized together with the Hellenic Embassy to Romania and in partnership with Coca-Cola HBC, the Greece – Romania Roundtable Business Conference and Awards 2011 brought together a large number of business leaders, bankers and diplomats who shared a cautiously optimistic outlook for the economy. This traditional Business Arena Magazine event, hosted by the Ramada Plaza Hotel, was moderated with charm, wit and spirit by Luciana Petrescu.


Both our countries have been confronted with problems that have often been multiplied by external factors. The recent messages from the Romanian economy are quite encouraging. We did not have growth in 2010 as some analysts were expecting, but the National Statistics Board’s (INS) announcement regarding the slight 0.1 per cent recovery in the fourth quarter is a good sign that brings Romania closer to a more substantial economic growth in the current year. Thus the estimated 2011 economic growth of 1.5 per cent is becoming a more realistic target.
As for the Greek economy, analysts expect an upturn by the very end of the year. We might still have tantalizing problems with the overall public debt which, in the mid term, is going to grow, but we will also register quite positive developments. We have managed to reduce our public deficit by six per cent, a target that has never been attained before by any other country of the Eurozone.
Although the Greek GDP decreased by around 4.6 per cent in 2010, the pace of decline slowed down as we approached the end of the year. Moreover the current account deficit is falling, while exports grew by eight per cent in a difficult economic environment.
In spite of all the difficulties, the Greek business presence in Romania remained intact. According to Romanian official data, Greece is the fifth largest investor in the Romanian economy, behind the Netherlands, Austria, Germany and France. Greek companies, as you know, came to Romania quite early, in the early ‘90s, because they trusted the potential of the Romanian economy. And they came here to stay in good times and bad.
The total number of Greek-owned companies registered in Romania by the end of September 2009 stood at 4,899, of which the most active ones amount to some 1,800.  They are active in virtually all sectors of the economy and employ more than 22,000 people. According to the Romanian central bank’s statistics, the volume of Greek direct investment in Romania amounted to 3.281 billion Euro at the end of 2009. According to our estimations, the investments from Greece have exceeded that volume, standing at over four billion Euro. In addition, Trade Registry data showed that the Greek capital invested in Romania in 2009 exceeded 700 million Euro, while in the first nine months of 2010, the local economy attracted another 560 million Euro from Greek investors. I believe these statistics prove the solid Greek contribution to the development of the local economy, considering that the total 2010 foreign direct investment in Romania stood at around three billion Euro.
It is important to emphasize that in spite of the gloomy predictions for 2009 and early 2010, the severe crisis that affected Greece has not had a knock-on effect on the southeastern European countries where Greece maintains prominent investment positions. This is due to the solidity of the Greek banking sector. In difficult times they have managed to stay solid, trustworthy, capitalized and perform their obligations to clients and shareholders.
As we are not out of the woods yet, we will continue to be on the defensive in 2011. As the Romanian economy moves again towards growth I believe our investors will again become more active and energetic. We are going to assist them in their endeavors, but honestly they are quite capable on their own. The areas on which we should focus increasingly include agriculture and energy. Also, the major infrastructure projects have great potential too.


Greece’s business presence in Romania is dynamic and continues to stay strong despite the difficult times that the world economy and the region itself have been facing.
I would like to point out that the total 2010 Greek trade recorded an increase globally. In the first 11 months of the year, the trade figure rose by 7.1 per cent. At the same time Greece’s imports recorded a 21.5 per cent decline, while and its trade balance deficit dropped by 35.1 per cent.
Coming back to the Greek – Romanian bilateral trade, its trend showed steady growth for a number of years, but in 2009 the effects of the financial crisis started to hit the local economy. During that period, the drop in Greek exports to Romania reached 27.9 per cent and the decline in imports from Romania stood at 15 per cent. At the same time, the trade volume went down by 22.7 per cent. In 2010, we saw a very important change, as the Greek exports to Romania increased by around nine per cent and the bilateral trade volume advanced by three per cent. I believe that was a very important and positive sign for both economies. That change in trend proves that both business and bilateral trade relations can resume their growth when the economic situation improves. And we expect the Romanian economy to show some positive signs in 2011.
Greek business people and exporters have maintained a keen interest in Romania in spite of the crisis. Our office has witnessed that increased interest, as we have had many companies making inquiries about the Romanian economy.
Greek investors have been present in all sectors of the Romanian economy, but lately we have gradually seen increasing interest for sectors such as agriculture and agricultural processed products, animal feed, etc. We have also seen intensive investment activity in the field of healthcare and pharmaceuticals and of course there is more interest in the energy sector, especially in the renewable energy sources. Another area that has attracted attention among Greek investors is the EU fund absorption. Romania’s economy has a major source of funding and Greek businesses are looking closely at ways of attracting those funds into the market.  
Romania’s economic growth was indeed driven by consumption and real estate, which have both been dramatically affected by the crisis. Nevertheless, our cautiously optimistic tone is not suggesting that suddenly the economic outlook has become very promising, but we appreciate that the efforts businesses are making are beginning to yield some results. That in itself is a positive sign, showing that there is room for further development. The actions to be taken are many and it is up to the government to take the right initiatives. However, it is also up to the business associations to try and find solutions that could subsequently be put forward to the government.  


“This award has a great value for us. Back in July 2009, when the “Prima Casa” program was initiated, we made an effort and launched the product, but for a couple of months nothing happened. We were really worried and started to investigate what was going on. We corrected what we thought was not working, we asked our entire network to focus on selling this product and here we are, one and a half years later, we are in the position to receive this award. Thank you very much.”

Dan Grigoriu, Retail Division Director, Banca Romaneasca:
In 2010, we saw the mortgage lending grow by about 15 per cent, but at the same time we saw consumer lending decreasing. I believe that the same trend will continue in 2011 and overall we expect a moderate growth.
If we go deeper into the product structure, I believe mortgage lending will continue to be the driver of the retail banking segment. In turn, the “Prima Casa” program will continue to be the driving force behind mortgage lending, however we hope that the other mortgage products will also become more visible.
In the consumer lending segment, we are quite optimistic about the evolution of credit cards, even if consumer lending has been the Cinderella of the banking sector in the last couple of years. Credit card products have shown a very good performance, so we are very much encouraged to continue. We have also seen increased saving, as clients postpone spending, which creates the opportunity for banks attract the existing funds in the form of deposits.
Banks will have to focus acquiring and retaining clients in 2011. The acquisition of clients has become more expensive in the last couple of years and it is much more difficult to attract clients than it used to be the past. The retention of clients is also of utmost importance, as the acquisition of clients is costly, therefore the retention of clients should be the main focus for all banks.   

For Alpha Bank, 2010 was a year marked by innovation and careful growth, what can you tell us about 2011?
Last year was difficult for the economy and so was for the banking sector. It was the second consecutive year of contraction, but towards the end of it we started to see the first signs of a possible recovery.
As for 2011, I believe we should remain cautiously optimistic. We hope 2011 is going to bring a positive economic growth for Romania, and the banking system has an important role in sustaining the drivers of this growth. In the same time, in 2011 the entire banking system should come closer to its customers, as in 2010 the incorrect implementation of some EU directives, created certain misunderstandings and unfortunate clashes between banks and their customers. We hope we will be able to solve those issues in a transparent and open manner, as there is no other way of reaching growth, except by bridging the existing gap between customers and banking system.
Could you summarize the challenges of the real estate market in Romania?
In my opinion, the real estate boom in Romania has two phases. There was a first phase involving foreign investors who spotted the opportunity to come to Romania. In the second phase, their model was used by many others who thought they can replicate their success, but unfortunately, due to the global crises they faced a lot of difficulties. Now the biggest hurdle is that the real estate and mortgage markets are blocked by a lack of confidence, especially on the consumer side. Potential clients still expect further adjustments of the prices, but after two years of price correction, I believe we have nearly reached the bottom.
Mr. Oprescu, you received the Banker of the Year award. What is the “recipe” for success, in a few words? It is no piece of cake to lead a major player in the banking market...
The recipe for success is not rocket science…I believe it is just a matter of putting together good teams and give them the floor.
I would like to thank Business Arena Magazine for this award, and I would like to dedicate this distinction to the Alpha Bank team.



While 75 to 80 per cent of Romania’s business ties involve partners in the other EU countries, we believe we should broaden our perspectives. China offers many business opportunities and a lot of money could come from that country. Therefore, we are adapting our 2011 agenda to this new perspective to include the BRIC countries, namely Brazil, Russia, India and China, and even South Africa. Individual SMEs have limited possibilities to focus on such business destinations on their own, but the Chamber of Commerce can always help with such projects. And I would like to invite the business community to focus more on this type of thinking and looking further afield, beyond the Euro-Atlantic area.
We should also focus on consolidating our business mentality. What we have now is based on imports of business models. However creating a business mentality takes time. Therefore, we have to focus more on people and rethink our attractiveness as an investment destination. We should also put to good use the European funded programs on human resources development.


We are talking about a different human resources market in 2011. We all know that Romania has had a very fast economic growth. As a result employees would quickly be promoted, without having their skills fully developed. Based on our data, more than 80 per cent of the companies did not have evaluation systems. More recently, companies have started to realize that they need such systems to evaluate the performance of their employees. Now we can say that companies choose quality instead of quantity. In turn, employees are not longer simply targeting a bigger salary, but they are also looking at the reputation of the company, they are looking at career development opportunities, training and certifications.
Over the last year, a lot of companies have started accepting people for internship programs and developing their skills. This method offers a major advantage because the employees in question become familiar with the culture of the company, with its values and at the same time the company can also see if they meet the requirements of the organization.



I am optimistic about the prospects of the Romanian economy. However, it is also quite true that as we are coming out of the storm we find ourselves amid the most difficult circumstances. In the beginning, most of us had healthy operations, our businesses were still going strong, the revenues were there and so was growth. Therefore we did not really feel the bite of the crisis. But as we’re moving towards the end of the crisis, most of us have exhausted our resources, cash and stamina. And although the statistics have started pointing up, if you talk to the average business person in the street you will find out that there are a lot of problems, which now seem even more difficult to handle.
However we have to trust the figures, because they reflect the reality. As I am sure all of you know, for over a year now Romania’s exports have been on the increase, which in turn means that an important part of the Romanian economy has had more growth opportunities that before. Exports are a major factor for Romania’s economic growth. But I think another important indicator that we should be watching is the FDI.
Looking at the Greek businesses in Romania, with very few exceptions, we have not had examples of serious problems. I think the average Greek company in Romania had enough experience, strength and resources to weather the crisis. Now we live in a time of opportunity. We are definitely at the end of this crisis and even though we will not see the same sort of growth we had back in 2005 – 2007, the market conditions will improve and businesses will have new opportunities.
For the future, we need to focus on quality. By 2007 – 2008, quantity was the main focus. I come from the banking sector and everybody was talking about issues such as market share, growth and number of branches. However, nobody was talking about things like the return on capital, the return on equity, on total assets and the return on risk assets. But now the most important aspect is quality, cost control and long-term planning. These are the success factors I think.  I also hope we will see an improved absorption of EU funding. There are a lot of funds available and it is a pity that Romania has not been able to use more of that money.
The Greek Chamber of Commerce has entered a new phase of its existence. We are working on mobilizing our resources in the hope of producing solid results for our members. We are organizing a number of work groups as part of our board of directors and each of these work groups is going to take up one or more tasks. We will also engage a large number of managers and business owners from the Greek business community in these efforts. One of the work groups is going to work on developing relations with organizations such as the Romanian Chamber of Commerce, the IMF mission, the EU mission, the multilateral chambers of commerce, etc. The idea is to try to develop joint programs which will create opportunities and develop platforms for our members and the members of our partner organizations. Another work group is going to focus on identifying the needs for legal and regulatory intervention. Areas to work on include taxation, environment and regulatory issues relating to the financial industry. Another work group will take up the task of developing more focused lobbying activities.
The Greek business presence here is very important so we need to play a more important role in shaping up the business environment in which we work. And lobbying is a very important activity in this respect. At this stage all of these plans are still in the preparation stage, but hopefully we will start seeing some results within a couple of months. 
Before the crisis, Romania’s economy was indeed driven by real estate and consumption. If you remember, the first indication that not everything was in order was the country’s balance of payments. Real estate and consumption are using resources, but do not have lasting results and do not have multiplying effects. We now must focus on a different growth model, based on exports and imports substitution, meaning to generate the capacity to produce locally, which is one locomotive of growth. The other locomotive of growth should be infrastructure development. The infrastructure produces lasting effects and attracts investment and growth. Of course we have also mentioned that the agricultural potential of this country is immense and it has not been fully utilized. All in all, we need to look at productive activities other that consumption and real estate.   


I was glad to hear the opinions of the bank representatives here, because they offered more realistic views on the economic outlook. Earlier we have heard optimistic views about 2011, about growth and profits and how various institutions are supporting the business environment. Being in the real life, the picture is quite different.
The locomotives of the economy have been real estate and consumption, but these sectors are still suffering. The real estate has reached the bottom, it cannot go further down and if you look at the market figures consumption is in the same situation. Therefore, I would like to see if we can find solutions to improve our efficiency and productivity.
Mike Hapoianu,
Sales Manager, Go Travel
Go Travel focuses on a specialized type of tourism, namely corporate travel. We target companies and their travel needs. Obviously, there is a huge difference between the way the business was running in 2008 and 2009 and the current conditions. The volume is not the same, but it is still there. So we focus more on increasing the number of our clients. Each client is spending a little bit less on travelling. They choose four-star hotels instead of five-star ones, they no longer use business class as often as they used to, some companies have even tried low-cost carriers, even though after a while they returned to using regular airlines.  Innovation is one of the things that are going to make a difference. In the corporate world there is a great need for flexibility. Therefore we have to come up with a different strategy and with a different plan.


I believe 2011 will show a little improvement, but our optimism needs to be treated with moderation. Both 2009 and 2010 were difficult years for the industry. From 2005 to 2008, Romania’s outgoing tourism segment, especially for destinations such as Greece, saw annual growths of around 30 per cent. Last year, 230,000 Romanian tourists visited Greece using the services of travel agencies. It was not a major decrease compared to the year before and Greece remains the number one destination for Romanian tourists. This year we believe there will be an increase in the number of Romanian visitors to Greece. My problem is that we have been very shy at promoting our own touristic brand. Attracting Greek tourists to Romania may be more difficult. We will not promote our seaside to Greek tourists, but the cultural tourism could be an interesting offer for them. So far, the promotion of our destinations has not been very efficient.