BrexitToRemainia Newsletter #30By CC / In Newsletters / 3 Comments
During the past two weeks since you read our last newsletter few things happened. The Government was ousted (by its own party!) while president Iohannis was having “very good” meetings with Angela Merkel and Emmanuel Macron, reassuring them that Romania is a stable and attractive country. Speaking of which, Clever Taxi got a nice exit with Daimler’s Mytaxi for an undisclosed (eight digit) amount and an investment fund just launched 20 million EUR for tech startups in Eastern Europe, based in Bucharest. As you see, business gets on with its business despite little political crises here and there :).
Be savvy: know what`s happening right now in Romania. News from politics, economy, business, various industries and social life.
Bucharest-Berlin-Paris axis strengthened
In our previous newsletter we described the visit of Romania’s president Klaus Iohannis to White House. During that visit, Iohannis reinforced the strategic partnership with the USA but also made it very clear to Donald Trump that an undivided Europe is in everyone’s best interest. Fast forward 2 weeks, same Klaus Iohannis meets German president & chancellor as well as France’s newly elected president. Let’s take them one by one:
- Germany: During the 3 day visit to Berlin (June 19-21), Iohannis met with both President Frank Steinmeier and Chancellor Angela Merkel. This year marks the 50th anniversary of the Romanian-German bilateral relationships and 10 years since Romania joined the EU. In their joint press release, Merkel and Iohannis covered topics such as economic relations, Romania’s presidency of the EU Council in 2019, the fight against corruption and the recent political crisis in Romania (see below)
- France: During the European Council Summit in Brussels last week, Klaus Iohannis had a brief meeting with Emmanuel Macron. The former declared it was a “very good meeting” in which they addressed topics such as economic and cultural cooperation, Romania’s accession to Schengen, Eurozone budget. The latter, posted on Twitter that he welcomes Romania’s help in the efforts of strengthening the EU.
A shaky change in Government
Over the past 2 weeks funny things happened in Romania: the ruling and majority party (social-democrats / PSD) have impeached their own Government, 6 months after installation. What is the explanation? Officially, it is that ministers of the current Government have not delivered the promised reforms from the governmental program of PSD. Unofficially, it is that PSD leader Liviu Dragnea lost authority over the prime minister Sorin Grindeanu (especially after the massive protests in February) and tried to oust him. Regardless of reason, the outcome is clear: 1) we will have a new government as soon as possible and 2) the rupture within PSD between factions that support current president (Liviu Dragnea) and ex-president (Victor Ponta) has increased.
So let’s just take the series of events and have a good look at them (with or without popcorn):
- Liviu Dragnea announces an “audit” on the current status of reform implementation done by the government / ministers PSD has appointed 6 months before
- The results of the audit “confirm” the hypothesis of Dragnea that the current Government did not do its job fast enough in implementing the reforms -> PSD withdraws the political support for the current government and PM Sorin Grindeanu is asked to leave
- Sorin Grindeanu doesn’t want to resign … or better say: he says he will resign under two conditions: 1) that Liviu Dragnea resigns as well and 2) that president Iohannis selects another PM from PSD (and not from other parties). Obviously this doesn’t work
- All ministers resign, with the exception of Sorin Grindeanu, by now excluded from the party. The EUR/RON exchange rate goes to the highest level in 5 years
- Sorin Grindeanu appoints Victor Ponta (ex-president of PSD and ex-PM) to the position of chief of staff. Ponta fires a series of secretaries of state working for most important ministries, those that have strong ties to Liviu Dragnea of course (PS: Ponta hopes to get back the lost authority in the party, so he grasps the opportunity)
- The motion of no-confidence is announced for June 15th. Each faction within PSD tries to gain allies: Grindeanu-Ponta look into the PSD membership for supporters unhappy with current status quo, Dragnea-Tariceanu (ALDE) try to make a deal with UDMR (the secessionist party of Hungarians living in Romania) which infuriates Romanians
- The motion passes, even if most minority parties do not vote, saying they don`t want to be part of a war within PSD and that both “clans” are equally bad for Romania
- It is now up to President Iohannis to nominate a new PM, based on proposals from parties who believe can build a majority in parliament to vote the candidate. During all this time he preferred to stay away from the mess and to reassure external parties that Romania is a stable, promising country to invest in. Smart move!
PS: there are rumours that some people voted twice, given that there are 251 voting ballots registered but video recording shows only 249 MPs being present. One of the smaller parties currently assesses whether to open a criminal investigation into the issue or not. Where is that popcorn again?
Take action: grasp opportunities for advancing business in (and/or with) Romania. What others think & do. What business events to attend.
Romanian Clever Taxi, now Daimler’s
In the world of automotives there are two main schools of thought. One envisions that the rise of car hailing & sharing Apps will destroy the auto industry, as people prefer to share rather than buy their own car. The other one sees the opportunity for car industry giants to expand their business model (and sales) by following this trend in the market.
Daimler seems to be in the latter group, as it just acquired Romanian Clever Taxi through their subsidiary Mytaxi. Clever Taxi is an application with 600.000 users and 17.000 taxi drivers registered across Romania. The hopes of CEO Mihai Rotaru is that the company will increase its employee base from 25 currently to 100 in the future. This, in case Bucharest will be chosen to host an R&D center on tech mobility for Mytaxi.
EUR 20 million available for tech startups
Fribourg Capital is a private equity and venture capital fund based in Bucharest, which operates in Eastern Europe and CIS. It might help if we say they invested in elefant.ro, or startup hub Liberty Technology Park. Recently the investment fund announced the launch of Fribourg Digital Division, responsible for managing a new EUR 20 million investment fund dedicated to IT start-ups. So entrepreneurs in Eastern Europe, read on if you find yourself in this description:
- Your are in the business of IT, ideally looking at block-chain, fintech, artificial intelligence, machine learning algorithms, software and cloud-based integrated solutions (SaaS, PaaS and DaaS)
- Your innovative idea is already translated into an MVP (minimum viable product), or if not, you can be very convincing about your market potential
- You are looking for seed capital in the range of EUR 20.000 to EUR 250.000 as first round of funding
- You need a strategic partner to advise how to best commercialize your product or service (operational excellence, marketing knowledge, exit strategy)
Romanian Overview Report: In this comprehensive report you will find information about: macroeconomic landscape, industries and investments, infrastructure and technology, taxation system, human capital, governmental support and last but not least quality of life in Romania (if you decide to move over here ;)).
Investor Guide Romania: In this well-structured guide you will find information about: investment climate in Romania, economy in general and the business ecosystem in particular, availability of financing, employment and labour law, fiscal policies, as well as how it is for an expat to live in Romania (not too bad, we can assure).