BrexitToRemainia Newsletter #33By CC / In Newsletters / 2 Comments
Talking about Romanian politics every two weeks is like watching a football match every 30 minutes. Chances are high that you already missed a goal or a huge opportunity to score. Since last time we spoke (July 24) three taxation proposals were scrapped, an extraordinary session of the Parliament was announced and withdrawn equally quickly. On the bright side, other parts (and people) of Romania keep on with their own business. Today we introduce you to Alba Iulia, a small, cheap, perfectly located university center who will become a smart city soon. We also recommend you MondayMemo, a weekly newsletter (in Romanian) written beautifully by professional journalists (unlike ours). Enjoy!
Be savvy: know what`s happening right now in Romania. News from politics, economy, business, various industries and social life.
To tax or not to tax?
Not a week passes (let alone 2) without our politicians to do (or undo) something of significance to the Romanian society and business environment. This time, it was (still freshly appointed) PM Mihai Tudose who clarified that none of the latest contended fiscal measures will be put in practice:
- Global household taxation will not be introduced in 2018. We talked about the numerous practical hurdles for its implementation here. It seems like the PM understood the complexity, as he now delayed it for when the “right time” comes
- Taxing corporations based on turnover (rather than profit) will not happen. This came as no surprise after sharply negative market reaction, criticism from President Klaus Iohannis as well as local and foreign investors. The confirmation of changes in plan came right after PM’s visit to Brussels, where he insisted Romania is a stable and business friendly country
- Solidarity taxation will not be imposed on wealthier citizens. When this idea came into public agenda at the end of June (after previous PM was ousted) there was a major reaction from everyone. How could it not have been, given PM’s way of explaining it: “wealthy individuals should show solidarity with the State as it provided the opportunity for them to earn so much”. And we are talking about slightly more than 3.000 EUR gross / month wages, by the way
All these efforts of ruling PSD-ALDE coalition to force the increase in public revenue is due to poor fiscal performance in the first 6 months of the year. European Parliament member Siegfried Muresan showed just how bad things are: investments have halved and fiscal deficit has almost doubled.
The extraordinary meeting at Parliament
At the end of July PSD ruling party’s president Liviu Dragnea asked the Parliament for an extraordinary meeting to happen the following week. MPs received text messages from Mr. Dragnea too, given the Parliament is already on holiday. The stated reason was to discuss the transfer of Elcen (a State owned electricity provider) under Bucharest constituency. The real stake, mass media hypothesized, was for the party in power to shake up the military and secret services by cancelling their special pensions.
In itself, reducing very generous pension packages (estimated to cost 10-17 billion lei in few years’ time) is good for the public budget. The fact that such measure was planned to be taken “through the back door” indicates there are larger games at stake. Some even talk about the will of PSD to “clean” the security system and place their own people in, as the old ones would exit in due time to still receive their good fortunes (a phenomenon already seen starting last week). Luckily, something went wrong in the Parliament and the extraordinary session never took place. But, as we like to say in the civil society: #vavedem (we keep an eye on you).
Take action: grasp opportunities for advancing business in (and/or with) Romania. What others think & do. What business events to attend.
Alba Iulia, a smart city
What a better way to live by the motto of this section (“Take action: grasp opportunities for advancing business in Romania”) than to recommend you a city of the future: Alba-Iulia. Bucharest and Cluj are too expensive for business nowadays. Timisoara ((and the West in general) is an area where you can’t find employees anymore – they are all taken. Iasi (and the East) is interesting but still under-developed in terms of infrastructure & connections with the West.
Wait … we just said Alba-Iulia and for good reason you might have raised an eyebrow. Where is this place? What`s so special about it? How can it help me in my business? And here comes our pitch:
- Alba-Iulia is a medium sized, cheap city of 65k inhabitants. A two bedroom apartment can be rented at about 200 Euro / month (or bought at about 50.000 Euro :))
- It is placed ideally in the center-west of Romania, 1.5 hours of driving from tech-rich Cluj-Napoca and 1 hour from picturesque and touristy Sibiu
- It is a university city … well, maybe not as famous as the big ones, but surely an interesting option even for Erasmus students, a record number studying here in 2017
- It will become a smart city!!! As a pilot for the Romanian Government smart city initiative, Alba Iulia has already signed 50 contracts with large and small enterprises who can support it become better connected, greener and more efficiently run
- In 2018 Romania will celebrate 100 years from the Great Reunification which happened … you guessed it … in Alba Iulia
So don`t hesitate to read about this lovely city and be smart: invest there while it’s cheap. Be it in tourism services, technology, green energy or real estate, your business might have a blast.
News from #MondayMemo
If you are Romanian (or able to speak the language) we highly recommend you register to MondayMemo. It is a weekly newsletter dedicated to entrepreneurs covering news from Romania and abroad (written exclusively in Romanian though!).
While we just like to read news and share them with you, the author(s) of MondayMemo are experienced and high quality journalists. Mona Dartu has 20+ years of experience in business and generalist media, as chief editor of Business Magazin and Money Express. Andreea Rosca (former chief editor of Capital) is the second co-founder. She unfortunately stopped writing the newsletter in June, citing other priorities. We still recommend you to have a look at her website, as it’s full of interesting interviews with local entrepreneurs. The two have also written the book called “Cei care schimba jocul“ (The Game Changers) … it’s about entrepreneurs and entrepreneurship, of course.
To give you a glimpse of what you can expect from MondayMemo, here are some extracts from the latest edition available (July 10th, before holidays):
- Romanians spend 5 hours/day watching television (versus 3 hours the European average)
- Deutsche Telekom launched a business accelerator for Romanian startups
- Through AI, IBM Watson identified the top two traits of successful CEOs: intellect and …. altruism. Who would have guessed
- Founder of local retailer Altex, Dan Ostahie, made it to top 3 of Romania’s richest people
- What are the top 100 young brands with most potential to disrupt their industries?
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).