The Business Week in Romania 02.05 - 06.05.2016



■    Government to force through acquisitions laws

The Cioloş Government has informed the leaders of the Chamber of Deputies that it will go to Parliament this week to oversee the vote on the public acquisitions laws, but it emphasised that if the deputies do not ensure a quorum and a majority, then a decision will be taken at the governmental level with regard to the package of laws. The Government can take responsibility in Parliament for the adoption of laws, but at its own level it can push them through via emergency ordinances. The deputies have already thrice delayed the vote on the public acquisitions laws, due to the lack of a quorum, in the situation in which Prime- Minister Cioloş had informed them that he intended to be present on Wednesday with all his ministers at the vote in the Chamber of Deputies. But having received a letter from the Prime Minister, the deputies postponed yet again the session for the final vote, scheduling it for this week. Asked whether the Government intends to assume responsibility for the laws, given Parliament's delays, Cioloş declared on Friday that the texts have been finalised and it is just a question of a procedural vote in the plenum, although the Executive does not exclude making a decision if the vote be further tergiversated.

■    Further modification to the environment stamp

A working group made up of experts from the Environment Ministry and the Administration of the Environment Fund (AFM) are working on a proposal to modify the environment stamp legislation, according to AFM chairman Istvan Jakab. At the moment there are a number of plans to modify the tax in Parliament. “At the Ministry of the Environment, Waters and Forests (...) we are examining all the proposals brought before Parliament, but we are also trying to come up with our own proposal. As far as I am concerned, the environment stamp is in order at present. It has not been declared inconsistent with EU legislation, but we will have to rethink it from the viewpoint of the principle that the polluter pays. There are a number of version in Parliament: that it be turned into a road tax or that it be a kind of annual impost or some other version in
which a pollution tax will be included in the price of fuel, and even the complete abolition of the environment stamp. I trust that in the immediate future the minister will come up with a proposal that we shall be able to bring before Parliament, but for the time being, we are keeping the current environment stamp,"
explained Jakab, as quoted by

■    VAT reduction creates smaller tax revenues, but more than targeted

The anti-smoking law has made its mark on excise collection. The reduction in the standard rate of VAT from 24% to 20% from 1 January and the introduction of a reduced rate of 9% on food from 1 June 2015 generated tax revenues of 17.97 billion lei in the first four months of this year, 1.72 billion lei less than revenues for the same period last year (19.69 billion lei). However, this was two per cent more than target, according to ANAF. VAT returns were 5.1 billion lei, 254.8 lei more than in the same period last year. Overall, ANAF collected a total of 66.62 billion lei in this period, three per cent more than the target stipulated by the annual budget law and 736.1 million lei more than in the same period last year. The state budget collected 47.01 billion lei, 187.4 million lei more than in the same period of 2015 (46.82 billion lei), six per cent more than targeted: 6.93 billion lei in tax on profit was collected, 746.7 million lei (12%) more than in the first four months of 2015 (6.19 billion) lei, and seven per cent above target, and 8.73 billion lei in income tax was collected, 300.9 million lei (4%) more than in 2015 (8.43 billion lei), five per cent above target.

■    It will be harder for foreigners to buy agricultural land in Romania

The Minister of Agriculture and Rural Development, Achim Irimescu, announced that Law 17/2014 on the sale of agricultural land will be modified in such a way as to make it harder for foreigners to buy agricultural land in Romania. In Botoşani on Sunday he declared that there has been pressure from Romanian farmers to modify the law after very large tracts of agricultural land were bought up by foreign companies.
"We shall introduce filters to ensure that it does not end up in the hands of just anybody. It is clear that persons who do not have Romanian citizenship are involved. There is very great pressure from Romanian producers, who believe that the sale has led to them no longer having land to work," said Irimescu. He said the decision was taken following a discussion with Prime-Minister Dacian Cioloş, and ministry experts have two weeks to finalise a new draft law for public debate.



■    Hidroelectrica will be listed on the stock exchange either in November this year or in February 2017

Hidroelectrica, one of the most profitable state companies, might be listed on the stock exchange in November, if it emerges from insolvency in May-June, but if the insolvency continues into the autumn, the listing will be postponed until February 2017, declared Remus Borza, a representative of Euro Insol, the judicial administrator of the energy producer. The Property Fund, the shareholders of Hidroelectrica, has signed an accord with the intermediary syndicate, made up of Morgan Stanley and Raiffeisen Bank, whereby the obligations agreed upon for the listing of Hidroelectrica will become valid once more; the process will be concluded by the end of this year.

■    UniCredit enters the electronic meal voucher niche

UniCredit Bank has entered the meal voucher niche, becoming the first bank in Romania to provide employees with an electronic meal ticket card. The card will be issued under licence from Visa and will therefore have the features of a bankcard. It will be able to be used nationwide to buy food products from partners in the retail chain displaying the Meal Card, Electronic Meal Voucher, or Menu Card logos. The main advantages to employers who provide their staff with Manu Cards from UniCredit will be cost efficiency, simplification of the process of distributing benefits, and the security specific to bank services. Cards will be valid for three years and will be topped up with sums equivalent to the value of meal vouchers. Sums not spent during the period in which the card is valid will be returned to employees. For employees, the advantages of the card are flexibility, given that it does away with the problem of not being able to receive change from meal vouchers, convenience, and greater security. Cards will have chips and contactless technology and will be able to be deactivated quickly in the event of loss or theft.

■    CNADNR accepts a tender of 20 million euros for the Domneşti underpass

Straco-Comnord-Specialist Consulting has been appointed to build the Domneşti underpass after CNADNR re-evaluated tenders. Construction of the passage was delayed because the original tenders process was contested. The roads company re-evaluated the bids and designated the same consortium as in the first place. The Domneşti underpass will cost around twenty million euros, according to CNADNR. “The Romanian National Company of Motorways and National Roads announces that following re-evaluation of tenders for the contract to built the DJ 602 Bucharest Ring Road-Domnesti Underpass (...) the winner is the SC Straco Group SRL, SC Comnord SA, SC Specialist Consulting SRL consortium, with a price of 91,552,381.90 lei,"according to the CNADNR press release.

■    ENGIE Romania looking to insure its fleet of vehicles

ENGIE Romania (formerly GDF Suez Energy Romania) is looking for an RCA and CASCO insurer for the company's fleet of 1,350 vehicles and estimates that
it will pay 4.2 million lei on the policy over the course of two years. Offers will be made in the first part of June. ENGIE Romania is the main subsidiary of the French ENGIE group, which also owns Distrigaz Sud, Distrigaz Confort, Alizeu Eolian and Brăila Winds. The five companies have a portfolio of 1.5 million clients, operate a 18,500-km network, have two wind power parks with a total capacity of 100 MW, and employ around 3,650 people. In 2014 the company reported a net profit of more than 390 million lei on a turnover of 4.5 billion lei. ENGIE reported a net loss of 4.6 billion euros in 2015, compared with a net profit of 2.4 billion euros in 2014, after it was forced to depreciate its assets by 8.7 billion euros as a result of the large fall in raw materials and energy prices.

■ Varnish and paint market grows

The varnish and paint market grew by five per cent to around 170 million euros, a rate of growth that looks set to continue in 2016, against a backdrop of consumption generated by renovation and new housing projects. Marius Văcăroiu, the CEO of Policolor, estimates that this year the sector will grow by five per cent: "The estimated growth will be based on consumption generated by DIY projects and demand from new housing projects, given that in Bucharest alone a 25% increase in the number of finished homes is forecast." Last year Policolor announced that it will be building a new factory in the west of the Capital, near AFI Palace Cotroceni, where it will produce paint for the home decoration market and also the motor industry, on a 2.5 hectare plot of land.

■ Rise Project starts publishing list of Romanian businessmen included in the Panama Papers

RISE Project has started publishing a list of Romanian businessmen who have incorporated offshore companies via Mossck Fonseca. They include persons of notoriety, such as Ion Ţiriac, Ionuţ Costea, Corneliu Iacobov, and Gabriel Comănescu, as well as less notorious figures. The biggest leak of information in history features the names of more than a hundred Romanian citizens among its eleven million documents. Rise Project, a partner of the International Consortium of Investigative Journalists (ICIJ), has already written about some of these businessmen, while the dealings of others will be exposed in the weeks to come.


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