Review of the sectors transport, infrastructure and communications in romania
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Privatisation process in RomaniaForeign companies may purchase shares in state owned companies either directly or indirectly, on the capital market. The majority of state-owned companies are to be sold through direct negotiation or auction. Smaller companies are normally sold through auction, if they appear on privatisation lists published regularly by the State Ownership Fund. The larger (and generally more profitable) companies are sold through direct negotiation with potential investors. The volume of foreign direct investment recorded by Romania between December 1990- April 2000, was about 4.6 billion USD. The high number of Romanian companies with foreign investment, 74,025, shows that numerous small and medium sized foreign investors discovered the economic potential of the Romanian market and decided to invest here. The explanation for the relatively low level of foreign investment in Romania can be found in the slower rhythm of privatisation in comparison with other countries in the region. The large banks, the public utilities, large companies started only in 1997 – 1998 to be offered for sale. Starting with the last months of 1998, Romania has been speeding up the restructuring process and, by consequence, several large-scale privatisation operations were completed. Among them: ROMTELECOM, the national telecommunications company – privatised with the Greek company OTE, the Romanian Bank for Development - privatised with Societe Generale, BANCPOST – privatised with General Electric Capital Corporation and Banco Portugues de Investimento, Dacia Pitesti, the most important Romanian carmaker, with RENAULT. A number of monopolies that had been previously organised as autonomous administrations have been transformed into national companies that are now ready for privatisation - the national tobacco company S.N.Tutunul Romanesc, the national oil company PETROM, the national airline TAROM, the national electric power company CONEL, the Romanian Mail, etc. The agreements signed by Romania both with the World Bank and International Monetary Fund aim to strengthen the privatisation process. Anyway, even if the present level of foreign investment is below the Romanian economy potential, foreign investment has already an important impact in several industrial branches. Some examples in this respect are presented below: Car industry Daewoo (Republic of Korea) and Renault (France) invested in the two largest car factories in Romania. Other foreign investors are present in the component automotive industry: pumps, suspension systems, electrical components, etc. Continental, the fourth largest tire producer in the world, is investing also in Romania. Machine building industry Daewoo Heavy Industries (shipyards), Koyo (Japan) – ball bearings, Timken (USA) – heavy ball bearings, ABB Asea Brown Bovery – energy equipment. Oil and chemical industries Lukoil, Shell, Elf-Acquitaine – oil industry; Unilever – detergents. Cement industry The largest producer in Romania is now part of Lafarge Group (France). Telecommunication and electronics OTE participated in the privatisation of the Romanian operator ROMTELECOM; Siemes and Alcatel have invested in production of electronic switchboard equipment and software production; Solectron in computer components. In the mobile telecommunication the operators Mobifon and Mobilrom represent important foreign investors. One of the largest Internet operators Global One is a joint venture between Romtelecom, France Telecom, Deutsche Telecom and Sprint. Soft drinks and mineral water An important share of the market belongs to Coca-Cola, Pepsi-Cola, Parmalat, etc. Food industry Danone – dairy products; Kraft Jacobs Suchard – chocolate. Infrastructure and construction Road rehabilitation projects, Black Sea and Danube ports rehabilitation, tourism and office buildings are done with foreign investors from France, Italy, Turkey, Japan. In 1999, 1,772 commercial companies were privatised with a total share capital sold of 6783.64 billion ROL: 82 large sized commercial companies, having a share capital sold of 2,842.01 billion ROL; 507 medium sized commercial companies, having a share capital sold of 3,015.01 billion ROL; 1,183 small sized commercial companies, having a share capital sold of 926.62 billion ROL. In 1999, 83 sales contracts of shares with foreign investors were signed, having the investment approximate value assumed of 600 million USD. The most important registered companies privatised in 1999 were: Automobile Dacia –dealing 269.7 million USD. Banc Post – dealing 92 million USD; Astra Vagoane Arad – dealing 50 million USD; Santierul Naval Galati – dealing 25 million USD; Artrom Slatina – dealing 6.2 million USD; Silcotub Zalau – dealing 6.8 million USD; Cerealcom Slobozia –dealing 6.8 million USD; Between January – June, 2000 were sold 872 companies with a total share capital worth ROL 6,663.6 billion: In 2000, one of the major targets was the accomplishment of PSAL provisions negotiated by the Romanian Government with the World Bank. The Private Structural Adjustment Loan (PSAL) is a loan agreement worth USD 300 million which includes major objectives regarding the privatisation, workout and liquidation of state owned companies, bank’s privatisation, state bonds and titles market, business environment improvement and the attenuation of the related social implications. Under the PSAL agreement, 63 Romanian state owned companies are to be privatised by privatisation agents such as: Barents Group LLC, Societe Generale Conseil Pays Emergents, Raiffeisen Investment AG, European Privatisation and Investment Corporation, CAIB Financial Advisers, Fieldstone Private Capital Group Ltd. Roland Berger Partner GmbH, Paribas and Central European Trust, The Recovery Group, RES & Co, etc. Under the PSAL provisions, the Government of Romania has applied for a Public Institution Building Loan from the International Bank for Reconstruction and Development (IBDR) under which the services of investment banks and privatisation agents will be sought. Foreign investors that are easily adaptable to a transition economy, having an accurate image of the Romanian economic environment, may be able to turn the formerly state owned companies into profitable businesses. The legal framework offers the investors some customs and fiscal facilities, the right to convert in hard currency the amounts in ROL which result out of their investment, as well as to transfer the hard currency in their country of origin, according to hard currency regime regulations, the possibility to use accelerate depreciation and amortisation and guarantees against nationalisation, expropriation or any other measures with equivalent effect. 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