Greek Awards for Excellence 2010

MOST INNOVATIVE PRODUCT PACKAGE DEVELOPMENT

Citing corruption, bureaucracy and the frequent changes in fiscal legislation as some of the main hurdles affecting the business environment in Romania, the representatives of the Greek business community are still optimistic.
Gathered together at the Grand Hotel Continental, the diplomats and business people participating in Business Arenas Greece/Romania Roundtable Business Conference and Awards 2010 sounded a positive note with regard to the future of Greek/Romanian business ties.
In this context, Ioannis Paschalis, Minister Counselor with the Greek Embassy, told the participants that although the economic conditions were unfavorable, the number of Greek-owned companies registered in Romania increased to 4,778 in January 2010 from 4,697 in December 2009. “We had 81 new companies registered in just one month despite of the economic crisis affecting Romania, Greece and the world at large,” he said. At the same time, the volume of Greek investment expanded considerably in 2009. “According to the Romanian central bank, Greek investments in Romania amount to 3.1 billion Euro and in spite of the crisis we have seen a tremendous increase in the volume of Greek investments. Although 2009 was dominated by the financial crisis, we recorded a doubling in the volume of Greek investments in Romania,” said Paschalis. While pointing out that the Greek-owned banks were partly responsible for the new investment, as they increased their capital base, the Greek diplomat said other sectors were also quite active. “The opportunities are there in spite of the crisis. So we have had a good development in the investments field and I hope that the positive trend will continue in 2010.”    

Strong presence in telecom and banking 
Greek investors are currently active in all the sectors of the Romanian economy, according to Paschalis, who mentioned telecommunications and banking as two of the sectors that have attracted massive Greek investments. “In terms of paid capital, I believe the Greek-owned banks are market leaders in Romania, while in terms of combined assets they rank second. Telecommunications and banking are the dominant sectors for the Greek presence in Romania, accounting for around 50 per cent of the total Greek investments in this market,” he said. While Greeks have also shown major interest in sectors such as construction and food processing, Paschalis added that agriculture is becoming increasingly attractive to investors. “Perhaps Romania could follow this growth model and rekindle its tradition, as between the two World Wars it was considered one of the bread baskets of Europe.”
While Greek investors are one of the most active business communities here, Paschalis said that Romanian investments in Greece are still at an early stage. “Romanian investors are welcome to invest in Greece, but so far they have only expressed interest in the tourism sector. Some Romanian investors have bought hotels, on Thassos Island for example, but the value of their investment is not very large. There are also small shops in many cities, offering goods from Romania. These are not significant investments, but in the future some might develop into larger businesses,” added Paschalis.

Greek-owned banks stay sound
Referring to the problems confronting the Greek economy, Bancpost CEO Mihai Bogza specified that the bank he represented had been privileged not to feel any turbulence. “Firstly, whenever we needed capital from our mother bank we have received it. Last year for instance, we got around 165 million Euro. Secondly, a number of Greek-owned banks, including our own, have made a clear commitment to maintain their exposure to the Romanian market, in other words not to withdraw a single penny from this country even though currently lending operations are slow. We have kept the money here to show our support to the Romanian authorities. Eurobank, our mother bank, is being loyal to its commitment,” said Bogza. He added that the Romanian banks with Greek capital were well capitalized, their capital adequacy ratio being above average and their liquidity adequate.
However, the Bancpost official said the business climate remained highly uncertain. “We make estimations but we do not publish them because we are afraid that the situation may be so volatile that we would have to change the results all the time.” Thus the bank is now focusing on maintaining the quality of its loan portfolio and its solid liquidity and capital adequacy position. “When the crisis started showing its effects, we asked our mother bank for fresh capital even though we were not in need of funding. We did so just to make sure we were well covered whatever happened in the Romanian market. Thus at the end of 2009 we had a capital ratio of 19 per cent, which was well above the 14 per cent average in the banking sector.” The bank also focuses on maintaining a positive ratio between deposits and loans. “In times of crisis one must consider both challenges and opportunities. One opportunity for us was that we have had the chance to adjust our costs. It’s also been a tremendous opportunity for Romania to adjust its public sector,” added Bogza.

Challenges and opportunities
Sofronis Strinopoulos, Vice President of the Hellenic–Romanian Chamber of Commerce and Industry (HRCCI), estimated the number of active Greek-owned companies in Romania at around 600. In his view, however, the 100 members of HRCCI account for some 70 per cent of the total Greek investment here. “Thus we have a good overview of the Greek-owned business activity in this country,” said Strinopoulos. Referring to the activity of the Chamber, he emphasized its lobbying efforts. “We are in constant dialogue with the Romanian and Greek authorities on changing and shaping up laws and regulations, which affect directly or indirectly the business environment,” said Strinopoulos. “We have also had meetings with our members, getting feedback from them regarding their problems and the potential solutions they see concerning the legal and regulatory environment in Romania and in Greece,” he added.
Even so, doing business in Romania is still a risky endeavor, Strinopoulos believes. “Romania’s business environment needs improvement so it can overcome its risks and weaknesses. Corruption is widespread in this country. We also have corruption in Greece, but in Romania corruption is more difficult to handle because it is unpredictable. Corruption in itself is a waste of resources, but more importantly it is hindering the business environment. Other problems here are bureaucracy and frequent changes in taxation legislation,” he said. 
However, Strinopoulos remained optimistic and pointed out that risks also create opportunities. “These difficult times also help clean up the business environment. Basically, the companies that go under are the weakest. They either over-expanded or had unwise management. In the end we are going to be left with a clean, healthy business environment.”     
As for the future, the representative of the Hellenic–Romanian Chamber of Commerce and Industry said areas such as bio-diesel fuel production, solar energy, agriculture and medical services presented great growth potential. 
 
Positive prospects
Panagiotis Drakopoulos, Senior Partner with Drakopoulos Law Firm, pointed out that Romania’s emerging market status was actually an advantage. “I am more optimistic about the situation in Romania compared to the situation in Greece. I believe Romania has much better prospects to come out of the crisis than Greece, because Romania is an emerging market. At the same time, the difficulties affecting Greece will make more and more Greek investors look at Romania as a potential investment target,” said Drakopoulos.
In turn, Traian Badulescu, spokesman with the National Association of Tourism Agencies (ANAT), said that in spite of the crisis, Greece will remain the top destination for Romanian tourists. “Our estimations show around 200,000 Romanian tourists visiting Greece this year. There is high demand for the islands, including Crete, Rhodos, Corfu and Thassos. The Halkidiki area will also see large demand from Romanian tourists. In fact, this is the number one destination for Romanians. Last year, 150,000 Romanians visited the area,” he said. In addition, Badulescu pointed out that the Romanian travel agencies were satisfied with their business with the Greek tour operators and would continue to support Greece as a tourist destination. 
Presenting the steps taken by of the Chamber of Commerce and Industry of Romania in support of its members and the business community, Daniel Pavel, Deputy Director of the Chamber, said the institution aimed at developing its high-profile lobby and dialogue with various entities and organizations. “Recently we held our biannual convention in Mangalia, which still preserves ancient vestiges of Greek presence in the area, proving that Greeks have had a long tradition in doing business in this part of the world. We got together in Mangalia in the presence of Economy Ministry officials to identify the real problems and priorities for the business community and for the government,” said Pavel.
The conference, organized in partnership with the Greek Embassy in Romania and Drakopoulos Law Firm, included an awards ceremony recognizing the efforts and successes of some of the most prominent Greek investors, companies and banks operating in the Romanian market.