BrexitToremainia Newsletter #42

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December should be a month of joy, peace and kindness. Not in politics though, where our beloved old King passed away and Parliament is preparing its knock-out on Justice. While we await for some (Christmas?) magic to lighten up our MPs minds, you might want to plan your business moves for 2018. Buy some property, hire some youngsters, start a permaculture business :). Use EU funds for all of the above: a business-friendly 2018 budget has just been approved.

Be savvy: know what`s happening right now in Romania. News from politics, economy, business, various industries and social life.

The King is dead. Long live the king

While the first part is true, the second might not. King Michael I of Romania, cousin of Queen Elisabeth II of United Kingdom, died last week, aged 96. The future of monarchy in Romania (abducted since 1947) is not clear, as King Michael had 5 daughters and none of them is eligible for the throne (Romania’s Constitution of 1866 explicitly excludes females from succession). Also, while public opinion about Royal House in Romania is high (60%+) only a third of voters would support its reinstitution. But let’s get back to King Michael and who he was:

  • Born in 1921 in Romania, he lived in exile for most part of his life after 1947, when forced to abdicate by pro-Soviet Government of Petru Groza. He died in his residency in Switzerland on 5th Dec 2017
  • He reined twice as Romania’s monarch: the first as a child in the 1920s and then from 1940 to 1947, as Romania became caught up in the struggle between the forces of fascism and Soviet communism
  • One of his major achievements was to oust fascist Ion Antonescu in 1944, and turn the arms against Nazi Germany. Historians say his action might have shortened the WW II by few months and spared some tens of thousands of lives

Rest in peace, King Michael I of Romania, while we continue our fight against 21st century types of “dictatorships”.

A candle for Justice, please

It’s almost hilarious how what happens in Poland to the rule of law is being copy-pasted in Romania.

  • Soon after taking power, populist PiS party tried to pass some controversial legal reforms (it was in early 2016): EU opposed. Our populist PSD did the same in February this year, 3 months after being elected. Things got quiet for few months on both sides.
  • Then in July 2017 same PiS-controlled Parliament made another step with the judicial draft reforms, against EU criticism and massive street protests. Guess what? In the past 2-3 weeks this is exactly what happened in Romania, too. Parliament currently debates a draft bill which will ensure that politics can take over judicial control. EU warned us, too. Protests continue, too.
  • In November 2017 the Polish MPs voted to effectively hand over to PiS the control of Supreme Court and judicial appointments, a move which some consider is now the end of independent justice in Poland. By means of association, this implies we haven’t got much left either.

Take action: grasp opportunities for advancing business in (and/or with) Romania. What others think & do. What business events to attend.

Real estate in Bucharest

It was almost a year ago when we last spoke about property investment in Romania. So it might be good to refresh our memory about one of the hottest sectors of activity post recession. Let’s focus on Bucharest this time and see what this Q3 2017 report from JLL (in EN) and this report from H2 2017 (in RO) tell us:

  • For the first 9 months of 2017, Bucharest accounted for 25% of national property investment volume, which was 610M EUR (or 44% more than in 2016)
  • Market volumes were dominated by retail purchases (60%) while office building accounted for 25%. This makes sense given the populist actions of government, including support for first time buyers, aggressive increase of basic income, low interest rates etc.
  • Profitability is still high: Prime office yields are at 7.5%, prime retail yields are at 7.25%, while prime industrial yields are at 8.5%. PS: In Western Europe, yields average at around 3%
  • Prices for residential property are now equal to their 2010 value, but are on the rise
  • In Bucharest, average purchase price for an apartment was 1.240 EUR/sqm, almost 13% above 2016 level. However, if you fancy something in the top neighbourhoods of Aviatorilor or Primaverii, expect to pay double

EU 2018 Budget Approved

Good news from the EU: the 2018 budget has been approved. We write about this not only because a Romanian was the chief negotiator (Siegfried Muresan) but also because there are good news for entrepreneurs:

  • additional 110M EUR for research, SMEs and Erasmus scholarships (including Erasmus+ exchanges for entrepreneurs)
  • additional 116M EUR for new jobs for youngsters (now its’ good time to hire!)
  • additional 34M for young farmers (fancy some permacultures? :))

Sensitive areas of security, immigration and Eastern relationships were not forgotten, also. If you fancy a full read on how EU’s ¬160BN EUR pot will be spent next year, read here.

Know your game: Build your Aces for when you meet a Romanian business partner for coffee. What we (might) like to talk about.

Happy birthday Romania!

December 1st was the 99th birthday of Romania. You know what that means, right? That in 2018 you will have a good reason to visit the country. While we searched for a centenary website and couldn’d find one, we know there will be things happening in major cities of Romania plus Alba Iulia, the place where the Big Union of 1918 happened (we wrote about Alba Iulia here, if you fancy a short read). Also, we know that the Government created an agency to deal specifically with the Romanian centenary which will hire 35 people to oversee the events. PS: Pope Francis might also join, rumours go.

2020 World Handball Championship

The 2020 Women’s Junior World Handball Championship will take place in Bucharest and Brasov, Romania. Who cares that no other country applied for hosting this event apart from us :). We won!!! So keep this in mind for 3 years from now: we bet you won’t forget until then. And by the way, Brasov is a gorgeous medieval / saxon city: it has easy access (3 hours by train or car) from Bucharest and you can visit it anytime summer or winter. You will not be disappointed.

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).

#MondayMemo Newsletter (register): 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 Dirtu and Andreea Rosca.