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|  Romania
the awakening giant of Europe |
 Looking for lost prosperity - 1997 : A mixed performance - Rebuilding the Country -
Major Infrastructure Projects March On - The Tough Game - No Pain, No Gain -
The Young Wolves of the Private Sector - What's Next? 
|
Interview with
Mr. Ciumara,
Minister of Industry,
on January, 30. |
Question: Mr. Ciumara, many says that the structural unbalances within the Romanian industry are dramatic. How can they be resolved? By top-down approach or by bottom-up one, leaving the market force to solve this issue?
Answer: Personally, I don’t want to give a mark of the situation but to discuss about the real situation. After this you will tell me what percentage is dramatic, especially because it’s the American style. We act on many plans in the same time. First of all we want to broke the monopoly of the state regies. This means that we restructure all the regies and transform them in commercial societies and we separate the activities in societies, to privatize them after that and also to create competition between them. The second effort is to sustain the small and medium size enterprises, which need a legal and fiscal system. Until now, we thought at the level of each industrial branch, chemical, metallurgical, wood industry, but now we try to introduce a new concept, a regional one. We don’t propose ourselves anymore to make different strategies for every field and wait to see the results. We do a program for each area, for instance Valea Jiului, a mining area, and we try to make this program for the good welfare. After these area programs, if we put them together, it results a program for each field, because it’s necessary to have a view for each field, but we must change the concept of development. This is the most important problem for me. There are a lot of big enterprises which are not depending anymore on the Ministry of Industry. They are commercial societies owned by the state and conducted by the State Ownership Fund. For example Sidex Galati, a metallurgical enterprise, which officially is not in our field anymore. We want also to change the policy of the Ministry of Industry. We want to transform it from a centralized system into an organism who offers services like consulting, preparing the laws for the Romanian industry and I work very hard to change the mentality of some of my colleagues. Maybe this doesn’t sound very spectacular but it’s one of the hardest problems. We have now in Romania a big financial blockage, which is not only the objective result of the economical evolution, but there are people which are interested to maintain it, because the responsibility of managers is diminished this way. For any inefficient result, it’s not their fault but it’s the financial blockage fault. In the same time, this blockage allows corruption. For these reasons we initiated many actions to broke this blockage. In time, all of these will be correlated and we want to resolve this problem in three years. I said three years for many reasons. In three years there will be new elections and I must have positive results to be reelected. In the same three years we have some programs with World Bank and International Monetary Fund. The external debts of Romania have some extreme payment points in these three years, for example, next year we have to pay back 2.5 billion $, this year 2.1 billion $. So, even if we need a big financing for adjusting the economy, we cannot afford to make new debts with the due date in these three years. I can give you more reasons for these three years.
For example, Sidex Galati, that I already mentioned, in the year 2002 it will be very difficult for them on the external markets, because the European Union legislation will release some taxes and that’s why I want to finish this program until the year 2000, to be ready for these changes.
Q: I believe that you are part of the board in Sidex. Is that correct or is that a wrong information.
A: I am not in the board of Sidex, but I am a deputy from Galati.
Q: Last week I saw you on television for the restructuring of Sidex. Could you give us the main aspects of this process?
A: My party is 150 years older and we have a principle: the president and the 12 vice-presidents are not allowed to make businesses for themselves. We are obliged to be poor, but nobody is obliged to be vice-president. I’m a shareholder in only one institution, a publishing house of the research institute where I worked before, and my shares are equivalent with my salary for a week. I’m deputy from Galati, but I mentioned about Sidex because it represents two thirds of the Romanian metallurgy and siderurgy. It produces 6 million tones of steel per year and practically it’s the main part of the Romanian siderurgy. Secondary, Sidex is specialized on sheet iron and the other part of the siderurgy is producing tubes and other long products. For this reason I’m talking about Galati separate from the others. The other people will come here on Tuesday. I introduced a new way of collaborating with these enterprises. At these discussions there will be the management, the unions and the ministry representatives. In this situation, the truth cannot be hide, because if one part tries to tell something which is not true, the other part will react. I asked to the management of Sidex to do the restructuring program for three years, with the technical and economical aspects, and the ministry will only give consulting. When this technical and economical part will be ready, the union will come to discuss the social problems which result from this program and than talk with the local administration to take the measures for creating new work places, depending on the local administration needs. After all these steps, the Ministry of Industry will help them with the necessary funds for their programs. Our mission is to accelerate the process, to give consulting and to finance the programs, in the concept of local development. We will use the same strategy for the other companies. In the same way we are now taking care of Valea Jiului, where we invited also some specialists from the World Bank to work with our specialists, we created an agency for development in the mining areas, with union leaders involved in the management of this agency. First, we must see exactly what will be the structure of the production in the area and than financing development programs.
Q: You said that Romania cannot afford more loans this year. So, you probably agree that the only way would be for an investment.
A: No, Romania cannot afford short term loans. Last year, when I was minister of finances, I asked for loans for at least 5 years, to jump this period of three years. The big problem of Romanian enterprises is that they don’t have circulating capital and generally, this capital is obtained from short term loans.
There are a lot of companies who don’t need investments in equipment, they need a better management and liquidity in the bank to pay the salaries and the supply. And this type of loans we cannot afford.
Q: I was saying this because we have been interviewing some private companies as well and, unfortunately, for those companies the only way to grow is with foreign capital, because of the problems they have to get credits.
A: Last June I was in Galati and I discussed with the general manager. I told him that I won’t give him any money from the state budget, I won’t give him state guaranties for loans and I don’t even let him to take loans. we fought then, but this Saturday, when he came here, he thanked me, because I told him the truth and I pushed him to find other solutions, without taking loans, and he did well. They changes the relationships with their providers and their clients. Before inviting them here, one week before I gave a statement in a newspaper, very threatening for them, this made them furious and they came here prepared for a strong opposition and this made our discussions be very productive.
| Q: The new emergency ordnance on encouraging direct foreign investments will put local and foreign investors on the same level. What will be the actions of your ministry to encourage foreign investments, according to this new emergency ordnance?
A: The goal of this ordnance was to simplify the legislation. A business man, when he invest, especially in the long term investments like metallurgy, wants to have the guarantee that he can make a profitability study since the beginning. For him there are very important the information about the real status of the company, the stability of the legislation and of the fiscal system. From this point of view we can be useful. We offer to the potential investors the information about the companies, but it is important to give to all of them this information. Secondary, in this ordnance it is specified that for all the years, the gains are safe, no matter the eventual changes in the legislation. There are situations when we must help them because the company in which they want to invest have debts to the state budget, to RENEL, to RomGaz and sometimes we can spread out payments or find other solutions to support the company situation.
Q: I have the feeling, Mr. Minister, that your strategy is quite different from the one of Minister Tariceanu, the former minister, when you are talking about consulting and the new rules of the ministry. Don’t you think that this might me confusing for the investors?
A: I don’t agree with your point of view. I don’t offer different condition to the investors, but I came with some new advantages, and I don’t see why this may bother them.
Q: Maybe I didn’t express myself very well because I know that you are offering more advantages and it was not at all the way I was thinking. I was just asking.
A: Mr. Tariceanu is an engineer and he was used with the mentality that he uses in the company he owns.
I’m an economist, I have a macro-economical vision and it’s normal to think different. We also think different in politics. But that’s why the ministers are changed, to change the mentality.
Q: I think that this is better for the investors. However, my point was that we don’t want to offense you Mr. Minister.
A: You have no chance to offense me. You can tell me any insult and I will still smile. I have too much experience in the relations with people.
Q: What I want to say is that it’s not my personal point of view. We focus on business people and we have relations with them and we know that those changes and this so called crisis in the government is affecting business very much.
A: I was in Budapest last Monday, to a reunion with Hungarian and Romania business people. A Hungarian investor told me one of his problems. He has a process here in court, with a bank. I told him that you can resolve a problem through the court, and this will take longtime, but also through a mutual agreement. I proposed him to come here and talk to the bank and in this way he would save both money and time. After that, a Romanian investor said that he won a process with a Hungarian custom and he didn’t receive the money in one year. The Hungarian representative told him to be very careful with whom he makes deals. This is the difference between Mr. Tariceanu and myself. Because Mr. Fazekas, the Minister of Industry from Hungary, is a copy of Mr. Tariceanu.
Q: In the last period, a lot of American companies began to be more interested n Romania. Do you think that this will continue? What should Romania do more attractive for the business community in the United States?
A: I’m convinced that this process will continue, even if in the last time the press created some confusion. There are too big investment interests in Romania. Unfortunately, even if the American State Secretary for Commerce wished to discuss with me in Prague two weeks ago, because of the political problems I couldn’t go. We reprogrammed the meeting for the next month. I cannot go because of the same political problems. The only solution is to invite two American State Secretaries to come here this year. They know about this invitation and I think they will answer because there are many possibilities to collaborate with the American institutions to facilitate the American businesses here. I’m repeating, the most important thing is the information. Unfortunately, there are some elementary information that aren’t received in the both parts: from where the visa is obtained, what kind of whether there is in Romania, not to mention the economical information, regarding the area of interest in Romania. We had only one representative in US. We called him back because we want to change the working system of our representatives in the world, we don’t want them to be any more civil servants, but to have a commerce institute like France and Italy have. This institute will have some support from the state budget but it will be partially self- financed and so we can have 50 people there and good ones.
Q: OK, well, I think this is a possibility, it’s just a question of working, but the idea is good. This information you are talking about, this is going to be precisely on the Internet report.
A: I have not even two months since I’m here and the main policies are directed to the autonomous regies, especially those in the mining field. I asked for information about all the people who are working in trade business, about their experience, their qualification and exactly what they are doing now.
I promise that in a very short time we will deal with them very seriously. But, even if, officially, the ex-ministries of trade and of industry are now only one, they continue to work separately. We must forget a little bit about democracy and use the authority to fix this problem. Because when you are doing the restructuring policy for an autonomous regie is not enough to think only about what equipment it will use and I must also have in mind the commercial policy which this regie will follow. Now, nobody thinks this way. This regies are not restructured for the market but for having a high level technology.
Q: I would like to ask a more personal question. What are the most pleasant and the most uncomfortable things that you have discovered since you are being Minister of Trade and Industry?
A: The work here is easier than in the Ministry of Finances and it’s very different from what I did there. It’s like a holiday. Unpleasant is the fact that here I found more personal interests. In the Ministry of Finances I was working with money; here, I am working with people. This people want to manipulate incredible sums of money, so the work to prevent corruption, to prevent centralized mentalities is the most difficult part of my job. Between the wars, the chess world champion was a Jew. He’s main idea and through which he imposed, was that the chess match it’s not a match between some figurines, like the German school developed the theory of chess, but it’s a match between two people. So, you could make a mistake, and in the objective German theory this was something incorrect, but this way you can make your opponent confused and mad and beat him. Here there is the same thing: I don’t work with steel or gas but with people and the people are more difficult than the finances. When I was deciding a new tax, I wasn’t interested in who must pay it, there where millions, hundreds of thousands persons.
Q: As a final issue, keeping in mind that you are reaching 2.5 million readers, what will be your final message to them?
A: The message is that who knows something earlier than the others and uses properly this information will win. And the information is that Romania will be the most interesting economic area in the Central and Eastern Europe. And this because of the reasons that you told me and I don’t have to repeat them. |
© World INvestment NEws, 1998.
This is the electronic edition of the special country report on Romania
published in FORBES
Magazine's enriched with complementary information,
such as full interviews, detailed company files and more.
June 1 st 1998 issue
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