TECHNICAL PAPER
Country Profile ― Export Potential
INFORMATION TECHNOLOGY
ROMANIA
Geneva
2002
ABSTRACT FOR TRADE INFORMATION SERVICES
2002 SITC 75 GLO
INTERNATIONAL TRADE CENTRE UNCTAD/WTO
Global Technology Markets: Country Export Potential Profile – Information
Technology: Romania
Geneva: ITC, 2002. xiv, 201 pages (Technical Paper)
Survey of trade capacities of Romania in the area of information technology (IT)
― reviews country‘s general economic environment, its national export diversification
policy and strategies for development of IT sector; provides overview of Romania's
production, exports and imports of IT products; reviews global, Central and Eastern
European, and Romanian IT markets; outlines sales, marketing and distribution
channels; lists major IT trade fairs, sector-related trade associations and chambers of
commerce in the country; highlights technical requirements and regulations; discusses
reactions of IT sector to WTO trade agreements; explores Romania‘s e-business
readiness. Annexes include profiles of IT companies in Romania, text of Knowledge
Economy Position Paper for Romania, abstracts of IT related official documents,
questionnaire and e-business assessment methodologies.
Subject descriptors: Information Technology, Electronic equipment, E-business,
Electronic commerce, Romania
English (Free to developing countries)
International Trade Centre UNCTAD/WTO (ITC), Publications Unit,
Palais des Nations, 1211 Geneva 10, Switzerland
______________________________________________________________________
The designations employed and the presentation of material in this paper do not imply
the expression of any opinion whatsoever on the part of the International Trade Centre
UNCTAD/WTO concerning the legal status of any country, territory, city or area or of
its authorities, or concerning the delimitation of its frontiers or boundaries.
Mention of names of firms/institutions/associations does not imply the endorsement of
ITC.
This technical paper has not been formally edited by the International Trade Centre
UNCTAD/WTO.
ITC encourages the reprinting and translation of its publications to achieve wider
dissemination. Short extracts may be freely reproduced, with due acknowledgement
of the source. Permission should be requested for more extensive reproduction or
translation. A copy of the reprinted or translated material should be sent to ITC.
ITC/T319.E/PMD/MDS/02-VIII
i
PREFACE
Information and Communication Technology (ICT) is one of the most dynamic and fast
growing global markets with increasing manufacturing and export capacities in
developing and transition economies. In spite of the current crisis on the hi-tech markets,
total exports of IT and telecommunication products by developing and transition
economies were valued at over US$ 300 billion in 2001.
In response to the growing requests from the business community as well as government
authorities, ITC launched a programme of research and dissemination activities in 1997
to examine the implications of the WTO Agreements for Information and
Communication Technology sectors of developing countries and economies in transition.
Based on the findings of the empirical study, ITC published ―International Trade in
Information Technology Products and the WTO Agreements‖ in 1999. This was widely
disseminated within developing countries and economies in transition, placed on the
WTO Web site, and translated into Japanese by JETRO ― the Japan External Trade
Organization.
The findings of the study were successfully tested and disseminated in India, Thailand,
Pakistan, Malaysia, the Philippines and Sri Lanka through ITC Business Roundtables.
More than 600 participants from the ICT sector, including local government authorities,
senior company executives, industry associations and trade promotion organizations,
participated in the events.
The 1999-2001 phase of the project focused on the ICT sector of economies in transition
of Central and Eastern Europe. Armenia, Czech Republic, Poland, Russia and Slovenia
were the initial participating partners of the project. This resulted in five Country
Profiles on Information Technology Export Capacities, which were produced by ITC and
endorsed by the appropriate national authorities. Six national business roundtables on
market prospects for Information and Communication Technology industries were
organized to address key issues of trade and business development in ICT products,
services and e-commerce. More than 500 participants from public and private sectors
participated in the events. In addition, two regional business roundtables were held
during 2000 and 2001 with the participation of high-level delegations from 18 countries
of the region.
This proposed project builds on this work and presents a new information technology
country profile on Romania.
ii
FOREWORD
Information and Communication Technology represents a tremendous opportunity for
developing and transition economies. At the same time it also imposes a heavy burden
on their trade policy-makers with ICT responsibilities to create incentives for the private
sector to undertake business in new ways, effectively promoting the WTO rules-based
business environment.
The need to assess national trade and business capacities in the ICT sector was clearly
formulated by ITC‘s beneficiary countries. ITC‘s empirical research and consultations
with ICT industry representatives and trade policy-makers confirmed growing demand
from both sides to better understand the value and competitiveness of their own ICT
industries.
Lack of a clear understanding of the national capacities and capabilities in the ICT sector
has been identified as a major problem preventing policy-makers from developing
national ICT policies coherent with the WTO rules and accession requirements of EU.
Deficiency of such a strategic assessment also blocks the development of effective
public-private partnerships in IT industries as well as inflow of eventual investments.
Therefore the prime objective of this report is to present trade and business potential of
Romania in the Information and Communication Technology sector and identify the
country‘s needs for technical co-operation.
An ITC Technology Team, drawn from the international experts and working in close
co-operation with country authorities and national ICT industry associations, assessed
Romania‘s strengths, weaknesses and opportunities for export-led growth of the ICT
sector.
To achieve this goal, the team held in-depth consultations with senior government
officials and trade policy-makers, leading manufacturers/assemblers, ICT service
providers, software developers, importers and exporters and professional associations.
On the basis of the information collected and with the support of national consultants,
ITC prepared a country profile — a tool for export strategy formulation that will build a
new image of the country as a capable source of hi-tech and sophisticated software in the
Black Sea region.
The report was endorsed both by the Government of Romania and the national ICT
associations. It was first presented to the public in March 2002 during the National
Business Roundtable on international market prospects for IT exporters from Romania.
The report facilitated a consolidation of the views of national ICT stakeholders on a
country‘s recommended E-Business Vision and national export strategy for the ICT
sector and strengthen effective partnerships between public and private sectors.
iii
It also served to enhance the ability of the Romanian business community to take the
valid decisions on the adjustment of the export potential in the ICT sector, to the
requirements of the EU and global marketplaces.
The immediate beneficiaries of this project were the national small and medium-sized
enterprises engaged in the development of the Internet-based new economy.
It is expected that this report will further promote better governance under the free trade
principles of the WTO and e-Europe initiative in the ICT sector and bridge the ―Digital
Divide‖ by enhancing the leading role of the private sector and fostering transparency in
the formulation of a sound export and e-commerce strategy.
iv
ACKNOWLEDGEMENTS
This Country Profile is published by the International Trade Centre UNCTAD/WTO
(ITC) as part of an ITC technical co-operation project on export capacity development for
the Romanian information technology and E-trade sectors. The Country Profile is the
result of close co-operation between the ITC Technology Team and national project
partners, namely, the Romanian Foreign Trade Centre and the Romanian Association for
Electronic and Software Industries (ARIES).
The principal authors are Nikolai V. Sëmine, Senior Market Development Officer, and
Ram K. Verma, ITC Senior International Consultant.
Thanks are due to Dr. Marius Vitionescu and Ms. Anca Simion from the Romanian
Foreign Trade Centre; Ms. Andiana Ticau, State Secretary for Information Technology,
the Ministry of Communications and Information Technology; Mr. Alexandru Borcea
and Mr. Florin Vrejoiu from ARIES. All have given excellent organizational support to
the project and invaluable input into the analytical and export strategy formulation
activities.
Special thanks go to the UNDP office in Bucharest and, particularly, to H.E. Winston
Temple, UN Resident Coordinator and Ms. Ruxandra Stan who helped to launch and
realize this project.
v
“The Information and Communication Technology (ICT) sector represents itself both
a well-defined economic sector and the support for accelerated growing of the other
economic sectors and, therefore, ICT is considered as a major priority of our national
strategy for economic development.”
March 2002 Cristian Colteanu,
Secretary of State,
Ministry of Foreign Affairs
“An export-led growth in ICT products is undoubtedly a dream, but one which is, in
principle, achievable. The possibility of achieving ICT exports of US$ 10 billion by
2010 is a feasible target. I believe Romania has the capacity to make quantum leap.
I also believe it will do so.”
March 2002 H.E. Winston Temple
UNDP Resident Representative and
UN Resident Co-ordinator
vi
CONTENTS
Page
Acknowledgements v
List of annexes x
List of tables xi
List of figures xi
List of boxes xii
Note xiii
Map of Romania 1
PART ONE ROMANIA: INFORMATION TECHNOLOGY
EXPORT CAPACITIES 3
Chapter 1 —- GENERAL ECONOMIC ENVIRONMENT 4
1.1 Economic Structure 4
1.2 GDP Growth 5
1.3 Privatisation 6
1.4 Foreign Direct Investment 11
1.5 Manufacturing Base 12
1.6 Foreign Trade 13
Chapter 2 —- NATIONAL EXPORT DIVERSIFICATION POLICY 15
2.1 Information Technology (IT) Policy 15
2.2 Telecommunications Policy 17
2.3 Trade Policy 19
2.4 Industrial Policy 19
2.5 Accession to the European Union 22
Chapter 3 —- INTERNATIONAL TRADE IN INFORMATION
TECHNOLOGY PRODUCTS AND SERVICES 25
3.1 Global Trade 25
3.2 Romanian Exports 25
3.3 Romanian Imports 27
3.4 Romania and WTO 29
vii
Chapter 4 — INTERNATIONAL INFORMATION TECHNOLOGY MARKET 30
4.1 Global Market for ICT products 30
4.2 Central and East European Market 31
4.3 IT/GDP for Central and Eastern Europe 33
4.4 ICT Market in Romania 39
Chapter 5 — NATIONAL INFORMATION TECHNOLOGY INDUSTRY 46
5.1 Romanian ICT industry 46
5.2 Electronic Data Processing 47
5.3 System Integrators 49
5.4 Presence of Large Corporations 49
5.5 Computer Software Industry 49
5.6 Software and Services Integrators 51
5.7 Telecommunications Industry 51
5.8 Electronic Components Industry 53
5.9 Leading National IT Manufacturers 53
Chapter 6 — SALES, MARKETING AND DISTRIBUTION CHANNELS 55
6.1 Sales, Marketing and Distribution 55
6.2 Trade Fairs in Romania 56
6.3 Leading Professional IT Journals and Magazines 56
6.4 IT Industry & Trade Associations in Romania 57
6.5 Chambers of Commerce in Romania 58
Chapter 7 — TECHNICAL REQUIREMENTS AND REGULATIONS 59
7.1 Legal Basis of the Standardization & Certification System 59
7.2 National Product Testing and Certification System 59
7.3 Software Quality Assurance and Testing 61
7.4 Software Reliability and Assurance 63
Chapter 8 — EXPORT POTENTIAL – INFORMATION TECHNOLOGY
INDUSTRY DEVELOPMENT 65
8.1 Background 65
8.2 SWOT Analysis 66
8.3 Assessment of the Romanian IT Industry 67
8.4 Impact of Accession to European Union 68
8.5 Revival of Romania through external inputs 69
8.6 Export Product Selection 69
viii
Chapter 9 — INFORMATION TECHNOLOGY EXPORT GROWTH
SCENARIOS 71
9.1 Vision for the Romanian IT industry 71
9.2 Niches for the IT Sector – Core products, Services and Target Markets 71
9.3 IT Export Growth Scenarios 75
9.4 Romania Export Growth Framework 78
9.5 Conclusion 80
Chapter 10 — ROMANIAN ICT INDUSTRY BRAND BUILDING
– STRATEGIES 81
10.1 Elements in brand building 81
10.2 Steps in brand building 83
PART TWO REACTION OF THE INFORMATION TECHNOLOGY
SECTOR TO THE WTO AGREEMENTS 85
Chapter 11 86
11.1 Background 86
11.2 Public Sector View on Post-URA 87
11.3 Private Sector Views on Post-URA 88
11.4 Needs for Technical Assistance in the ICT sector: Agenda for Co-operation 91
PART THREE ROMANIA: E-BUSINESS READINESS 93
Chapter 12 94
12.1 Introduction 94
12.2 Methodology for deriving e-readiness 95
12.3 Analysis and Results 95
ix
LIST OF ANNEXES
Page
1. National Champions – Information and Communication Technology,
Romania 103
2. Knowledge Economy – Position Paper for Romania, MCTI,
Bucharest 2002 129
3. National Policy on Communications and Information Technology,
MCTI, 2001 167
4. Investment Law in Romania, CRCE, 2001 171
5. Romania‘s Public Policy on Telecommunication, IPR & Legal
Framework, CRCE, 2001 175
6. Model for General and Software Technology Capability Assessment 179
7. ―Readiness for the Networked World: A Guide for Developing Countries‖,
Information Technologies Group (ITG) at the Centre for International
Development at Harvard University 181
8. ITC‘s Questionnaire ―E-Business Readiness‖, Romania: 2002 186
9. ITC‘s National Export Potential Index: Information and Communication
Technologies, 2001 189
10. The Economist Intelligence Unit/Pyramid Research e-readiness
rankings Methodology: How we derive the scores 192
x
LIST OF TABLES
Page
1. Romania: Broad economic indicators 4
2. Major privatisation deals in Romania 9
3. Annual FDI in Romania 12
4. Romania: Production of selected industrial items 12
5. Romania: Global trade in ICT products 25
6. Romania: Global export of ICT products 25
7. Romania: Exports of information technology products by destination 26
8. Romania: Global Imports of IT products 27
9. Romania: Imports of information technology products by country 28
10. World Market Projection for IT Products in 1999 30
10a. World Market Projection for IT Products by Distribution in 2001 30
11. Central and East European Market for ICT Products 32
12. IT/GDP and per capita IT spending in Central and Eastern Europe, 2000 33
13. Telecommunication penetration rates in different CEEC countries 37
14. Romania: Market for ICT Products 39
15. IT companies in Romania 46
16. Romanian Electronic Industry Production 47
17. Leading National IT Players in Romania 53
18. Romania: Products Identified for Export Promotion 69
19. Romania: Business Response to the URA‘s 88
20. Self assessments Regarding Readiness for the Networked World by
the Countries in South Eastern Europe 96
21. Romania‘s E-Readiness ranking by Economic Intelligence Unit Pyramid
Research Report 99
LIST OF FIGURES
1. GDP Growth 1996-2002 (Previous year = 100) 5
2. Evolution of share capital sold by year (December 1992 – December 2001) 9
3. Romania: New Organizational Structure 16
4. Regional distribution of ITA Market 31
5. IT Market by Country 33
6. Breakdown of Internet users in the CEEC countries 36
7. Romania: Growth of ITA Market (1997-2001) 40
8. Romania as Internet Hub for the Black Sea Region 81
9. Building a Strong Brand Requires Consistent Effort 83
10 Network Readiness: Romania 97
xi
LIST OF BOXES
Page
1. Romania: Major IT Projects Visualized, 2001 40
2. Flamingo Computers – A success story 48
3. Romania: Software products developed, services
offered and IT enabled services 50
4. SIVECO Romania – A success story 51
5. Electromagnetica – A success story 52
6. Specialized IT Trade Fairs in Romania 56
7. Romania: Leading Professional IT Journals/Magazines 56
8. IT Trade and Industry Associations in Romania 57
9. Chambers of Commerce and Industry in Romania 58
10. Software CMM – Key Process Areas 62
11. SWOT Analysis of the Romanian IT Industry 66
12. Romania: Three Axes Growth Plan 72
13. Romania: Emerging Market Openings 73
xii
NOTE
Unless otherwise specified, all references to dollar ($) are to United States dollars
The following abbreviations are used:
ANISP National Association of Internet Providers from Romania
ANIS National Association for Software Companies
APAPS Authority for Privatisation
APREL Association for Producers of Electrical and Electronics Industries
ARIES Romanian Association for Electronic and Software Industries
ASRO Romanian Standards Association
ATIC Association for Information Technology and Communication – Romania
B2B Business to Business
B2C Business to Commerce
CATV Cable Television
CCI Chambers of Commerce and Industry
CEEC Central and East European Countries
CEFTA Central European Free Trade Agreement
CEELEC European Committee for Electromechanical Standardisation
CEN European Committee for Standardization
CMM Capability Maturity Model
CRCE Romanian Foreign Trade Centre, Ministry of Foreign Affairs
CTI Calculus Techniques Institute
CTV Colour Television
EBRD European Bank for Reconstruction and Development
EFTA European Free Trade Agreement
EIU Economic Intelligence Unit
ERP Enterprise Resource Planning
ESIS European Survey of Information Society Projects and Actions
EU European Union
EDP Electronic Data Processing
FDI Foreign Direct Investment
GDP Gross Domestic Product
GSM Global System for Mobile Communication
IBM International Business Machines
ICT Information and Communication Technology
IDC International Data Corporation
IEC International Electromechanical Commission
IPC Information Perfection Centre
IRS Romanian Institute for Standardization
ISDN Integrated Services Digital Network
ISP Internet Service Providers
ISO International Organization for Standardization
ITA Information Technology Agreement
ITG Information Technologies Group
xiii
IT Information Technology
MCTI Ministry of Communications and Information Technology
MFN Most Favored Nation
MNC Multinational Company
OECD Organization for Economic Co-operation and Development
OMCAS Defence Ministry Certification Body
OPC Office of the Consumer Protection
PC Personal Computer
PSAL Private Structural Adjustment Loan
RII Research Institute for Informatics
R&D Research & Development
RENAR Romanian Accreditation Board
SDD Software Design Description
SMEs Small and Medium Enterprises
SMS Short Messaging Service
SNCFR National Railway Company
SRAC Romanian Body of Quality Assurance
SRS Software Requirement Specifications
SWOT Strengths, Weaknesses, Opportunities and Threats
TRIPS Trade Related Aspects of Intellectual Property Rights
UNDP United Nations Development Programme
URA Uruguay Round Agreements
VAT Value Added Tax
VSAT Very Small Aperture Terminals
WTO World Trade Organization
xiv
MAP OF ROMANIA
Country Profile – Romania
Basic Parameters
2001-2002
Population (January 2000) 22,435,205
Area (sq. km) 238,391
Per Capita PPP GDP (2001) (US$) 6.153
Real GDP Rate in 2001 (%) 5.1
GDP Distribution (2001)
Agriculture 16.0
Industry 31.7
Services 52.3
Merchandise Trade (US$ billion)
Exports (2001) 11.4
Imports (2001) 15.6
International Reserves (US$ million) (2001) 3,777
Currency Units (Lei) (February 2002) 1 US$ = 32,249 Lei
Penetration of ICT
TV/100 20
Telephone/100 22
PCs/100 31
Cellular Phone/100 13
Internet user /100 3.58
PC/100 2.69
ICT in Merchandise Trade (in US$ million)
Export (2001) 630
Import (2001) 1685
Networked Readiness Index (2001) 65
The Economist e-Readiness Rank (2001) 52
National ICT Policy Being developed by MCTI
Accession to ITA/WTO Member of WTO, EU, EFTA, CEFTA
Sources:
– National Statistical Office, 2002
– EIU Country Profile 2002
– Romania, ESIS II Report – January 2001
– World Development Indicators, World Bank 2002
– Human Development Report 2002, UNDP
– The Global Information Technology Report 2001-2002, Oxford University 2002
1
2
PART ONE
ROMANIA: INFORMATION TECHNOLOGY EXPORT CAPACITIES
3
Chapter 1
GENERAL ECONOMIC ENVIRONMENT
1.1 Economic Structure
Romania is the second largest country after Poland in terms of size, population and
market in Central Europe. It has tremendous economic potential to emerge as a leading
player in IT in the region. Its agricultural potential, human resources and industrial raw
material wealth has enabled it to develop many economic sectors including machine
building, chemical, electrical equipment, information and communication technologies,
and consumer goods industries.
During the communist regime, Romanian policy was based around central planning and a
high degree of state intervention, which resulted in the isolation of the Romanian
economy from the global markets. This affected Romania‘s ability to keep pace with
modernization, technological development and the reduced competitiveness of the
industrial sector. Even after the 1989 revolution, the process of liberalization was gradual
due to a number of factors: the massive changes required in establishing a market
economy, budgetary constraints, the lack of political commitment and administrative
challenges within the government. As a result, poverty increased sharply, with the share
of the population living below the national poverty line doubling in the second half of the
1990s, from 20 to 41 per cent. Table 1 highlights the deterioration of the economy.
Table 1: Romania: Broad economic indicators
INDICATORS 1998 1999 2001
Real GDP rates (%) -7.3 -3.2 5.1
Industrial production (average) (%) -13.8 -8.0 8.2
Unemployment rate (%) 10.3 11.5 10.5
Export growth (%) -1.5 +2.4 21.9
Import growth (%) 10.9 -12.2 25.6
Imports covering degree by export
(export/import CIF) 76.0 88.7 86.0
Trade balance (billion USD) -3.5 -1.8 -2.6
Current account (billion USD) -2.9 -1.2 -1.3
Inflation rate (%) 59.0 45.8 40.7
Exchange rate (annual average) 8,876 15,333 28,690
Sources: National Institute of Statistics and Economic Studies, 2001 and Report of the First Year of
Government‖ Ministry of Development and Prognosis, 2002
4
According to the World Bank assessment (Public information notice, June 19, 2001, WB,
Romania), the business environment in Romania suffered a downturn as a result of:
frequent changes in legislation; a strong reliance on emergency measures; and, little
attempt to build institutional capacity to enforce or implement new legislation. The
report further points out that the situation worsened because of a lack of will for reform
and the constrained institutional and governance capacities. The reasons for this
included:
(1) Very high levels of arrears amongst Romanian enterprises;
(2) Frequent changes in legislation, with a strong reliance on emergency measures
and few efforts to build institutional capacity to enforce or implement new
legislation; and
(3) An unattractive business environment.
1.2 GDP Growth
The Romanian economy contracted after 1989, but recovered during the period
1993-1996. However, the economy slowed down again after 1996 and real GDP declined
by 7.3% in 1998 and 3.2% in 1999. This trend was reversed when growth reached 1.6%
in 2000. According to government estimates, GDP is expected to increase by up to 4 and
3 per cent in 2001 and 2002 respectively, due to further privatisation and the structural
reform of state-owned enterprises. Figure 1 shows GDP growth for the period
1996-2002.
Figure 1: GDP Growth 1996-2002 (Previous year=100)
105
100
GDP (percentage
95 growth)
90
85
1996 1997 1998 1999 2000 2001 2002
Sources: National Institute of Statistics and Economic Studies, Romania, 2002
According to information made available by the National Institute of Statistics and
Economic Studies, Romania, 2001, GDP in 1998 consisted of industry (31.7%),
agriculture & forestry (16%), construction & services (52.7%). However, in 1999 the
share of industry declined to 15.4%, while the share of the construction and services
sector increased substantially. This trend indicated a healthy restructuring process, as the
services sector was gaining importance amidst the economic decline in Romania, along
the lines of development previously experienced in EU countries. Another important
factor was the contribution of the private sector, which accounted for 61.5% of GDP
in 1999. It is also noteworthy that exports made a major contribution to GDP.
5
1.3 Privatisation
The State Ownership Fund, which was established according to the provisions of
the company privatisation Law, has been operating since the second half of 1992. The
institution, which at its inception held and managed around one half of state property in
the Romanian economy, was created to transfer state property into private hands. The
State Ownership Fund's portfolio has since changed, from an initial number of
5,937 companies whose managed share capital totalled approximately
ROL 45,000 billion, to 8,472 companies whose share capital totals around
ROL 51,874 billion.
This evolution has been determined by the increase in the share capital of companies after
the implementation of the regulations regarding the revaluation of their patrimony, by:
the inclusion in the State Ownership Fund‘s portfolio of some companies
restructured from régies autonomes;
the share capital increase after the inclusion of the value of land, as a result of
the certificate of ownership;
by the capital quota settlement between the State Ownership Fund and SIFs,
spin-offs, etc.
In 2000, the Authority for Privatisation and Management of State Ownership (henceforth
referred to as the Authority for Privatisation - APAPS) was established as a public
institution with a legal identity and accountable to the Government, by restructuring the
State Ownership Fund, which was dissolved.
The Authority for Privatisation was set up according to the provisions of Emergency
Ordinance No. 296/2000, one of the first ordinances issued by the present Romanian
Government.
The Romanian Government adopted Government Decision No. 443 of May 3, 2001
and Government Decision No. 550 of June 15, 2001 for the modification of the
Methodological Norms for the application of the Government Ordinance No. 88/1997
regarding the privatisation of companies, with the subsequent modifications and
completions approved by Government Decision No. 450/1999.
These norms were adopted in order to:
provide transparency of the privatisation process;
level the playground for all investors;
speed up the privatisation process.
6
The main modifications brought by these norms refer to the following subjects:
classification criteria and method of ranking the companies into small,
medium-sized or large companies;
loss or return of participation guarantee;
documents that the potential bidders have to submit to the public institution
involved in order to take part in the negotiation;
completion of negotiation and auction procedures;
sale-purchase contracts with payment by instalment.
Right from the beginning, a public and transparent character was adopted in the
presentation of the management, restructuring and privatisation policies of the companies
in order to: develop a social and institutional dialogue; approach different points of view
with maximum flexibility; and assuage differences in opinion right from the preparation
process and not after completion. APAPS has also aimed at enforcing some new
conceptual-strategic elements in organizing and implementing the sale of shares, by
giving up the principle of ―privatisation for privatisation's sake‖ and instead moving
towards ―privatisation for economic revival‖.
APAPS shall endeavour to maximize its efforts to finalize the privatisation process, by
largely using those competitive and transparent privatisation methods that accelerate the
transfer of state property into private ownership.
Privatisation methods used are:
Public offering;
Capital market specific sale methods;
Negotiation
with final bid;
with improved and irrevocable final bid;
with selection based on technical bid;
Outcry or sealed bid auctions;
Deposit certificates issued by investment banks on the international capital
market.
On December 30th, 1999 Romania‘s Government and the European Commission, signed
the Financing Memorandum and the Agreement Memorandum for the RICOP
programme for enterprise-restructuring and vocational training. In order to complete this
programme, the European Commission granted Romania a non-reimbursable fund of
Euro 100 million, in order to reduce the social consequences of the industrial
restructuring process and implementing the PSAL I programme.
The RICOP programme has five main elements:
1. Intervention in cases of collective lay-offs, pre-dismissing services – under the
responsibility of APAPS;
7
2. Public works;
3. Initiatives for occupying the labour force;
4. Financing the creation of small businesses and SMEs;
5. Social assistance measures.
For the companies in the APAPS portfolio, punctual restructuring programmes were
released involving organizational, managerial, financial and technical measures that
aimed at increasing profit, thus eliminating losses and significantly lowering arrears and
ultimately improving their marketability for privatisation.
In 2001, one of APAPS‘ major targets was the accomplishment of the PSAL provisions
negotiated by the Romanian Government with the World Bank. The Private Structural
Adjustment Loan (PSAL) is a loan agreement worth US$ 300 million which includes four
major objectives for the acceleration of the restructuring and privatisation process:
restructuring of the banking sector, privatisation of the state-owned companies,
improvement of the business environment, and attenuation of the impact of social
problems.
One of the objectives of the PSAL programme was to finalize the tender procedures and
the conclusion of contracts for consultancy services with international investment
banks/consultancy firms, with the aim of privatizing/working-out/liquidating
64 companies, out of which 63 companies belong to the APAPS portfolio.
This programme has been structured into four components, as follows:
• Privatisation (case by case) of four large companies (ALRO, ALPROM Slatina,
SIDEX Galaţi, TAROM Bucureşti) with the help of investment banks;
• Privatisation (case by case) of five large companies (ANTIBIOTICE Iaşi,
ELECTROPUTERE Craiova, HIDROMECANICA Braşov, ROMVAG Caracal,
TRACTORUL Braşov) with the help of investment banks;
• Privatisation of 50 companies where the state is a major shareholder, grouped in
pools, with the help of privatisation agents;
• Work out/ liquidation of five large companies (IUG Craiova, NITRAMONIA
Făgăraş, CLUJANA Cluj Napoca, SIDERURGICA Hunedoara, ROMAN
Braşov), with the help of specialized consultancy firms.
The company privatisation stage (01.01. 2001 - 31.12. 2001):
• As of January 1, 2001, the APAPS‘ portfolio included 1,444 companies, with a
managed share capital of ROL 29,750 billion.
• A sold share capital of ROL 9,822.816 billion was privatized. This sold share
capital represents 33% of the share capital owned by APAPS at the beginning of
2001 and is 1.56 times bigger than the share capital sold in 2000.
• 155 sale-purchase contracts were concluded, out of which 150 are still valid.
• The investments assumed by investors in the sale-purchase contracts amount to
US$453.291 million, DM 7.373 million and ROL 29,310.0 million.
8
Figure 2. Evolution of share capital sold by year
(December 1992 – December 2001)
Table 2 shows the details of major Romanian privatisation deals.
Table 2 Major privatisation deals in Romania
Company Field Sold to : Share (%)
ROMTELECOM S.A. National OTE Hellenic 21.21
Telecommunications Telecommunication
Operator Organization (Greece)
Banca Romana de Dezvoltare Main commercial bank Societe Generale S.A. 51
(Italy)
Rulmenti S.A. Alexandria Bearings producer Koyo Seiko Co Ltd (Japan) 50.99
Petrotel S.A. Ploiesti Oil processing Lukoil 51
BANCPOST SA Commercial Bank General Electric Capital, 45
USA and Banco
Portugues de
Investmento, Portugal
Automobile Dacia SA Pitesti Main cars manufacturer Renault, France 51.05
Astra Vagoane Arad S.A. Arab Main freight railway Trinity Industries Inc., 70
Wagons producer USA
SANTIERUL naval Galati Shipyard Damen Shipyards Group, 70.47
Holland
Artrom S.A. Slatina Aluminium processing Staro Stahl GmbH, 57.82
Austria
Electromagnetica Telecommunication Romanian entrepreneur 100%
Energy Automation
Source: National Directory – Production, Trading and Services, State Ownership Fund, Romania, 2001
9
Some of the most important privatisation deals finalized by APAPS in 2001 were:
SC SIDEX SA Galaţi
Core business: Sidex S.A. Galaţi is the largest integrated flow iron and steel mill
in Romania, its products being produced from basic raw materials, ores and coal,
going through five production plants and another three that ensure production
quality. The plant is responsible for 100% of coke production, 95% of pig iron
production, 98% of flat rolled product output and 100% of the output of high
diameter, longitudinally welded pipes. At the same time, it accounts for 45% of
industrial production and 4.8% of Romania‘s exports;
Share capital: ROL 6,318,509 million;
Number of employees: 27,772;
APAPS share: 90.0%
Buyer: Through the share sale-purchase contract signed on July 25, 2001, LNM
Holdings acquired the whole of the Government‘s stake in SIDEX, amounting to
approximately 90% of the total shares in SIDEX, in exchange for a direct
payment to the Government. The LNM Group is among the world‘s four leading
steel producers. Following the SIDEX privatisation, the group has a production
capacity of 29 million metric tons and 110,000 employees worldwide. At present,
the group owns steel mills in Kazakhstan, Algeria and Indonesia. Ispat
International N.V., a member of the LNM Group, listed on New York and
Amsterdam stock exchanges (NYSE: IST US, AEX: IST NA) owns steel mills in
the United States, Mexico, Trinidad, France and Germany;
Value of the transaction: LNM Holdings undertook certain obligations regarding
SIDEX‘s debts and committed to invest at least US$ 351 million, out of which at
least US$ 251 million is to be invested during the first five years in established
projects, and the rest in the following five years. The investments are to be aimed
at improving productivity, quality and product mix, as well as at increasing
environmental protection standards. LNM Holdings will also contribute
US$ 100 million as working capital, and has agreed not to reduce the number of
employees for a period of five years after the completion of the transaction, other
than for natural reasons and within the limit of the company‘s budget for
employment costs.
SC RAFO SA Onesti
Core business: crude oil and natural gas processing, as well as trading in oil and
petrochemical products. It is the second biggest loss maker in the Romanian
economy;
Share capital: ROL 207,602.5 million;
Number of employees: 2,700;
APAPS share: 59.99%
10
Buyer: the shares sale-purchase contract was signed with a consortium
comprising S.A. Imperial Oil S.A. Bacau and Canyon Servicos LDA Portugal on
October 26, 2001;
Value of the transaction: US$ 81,819,000, out of which US$ 63,375,000 is for
investment over a period of five years and US$ 16,944,000 for environmental
investments over an eight year period. The investor committed to secure the
refinery‘s operations at 80% of the optimal production capacity, within 90 days of
the execution of the privatisation contract.
BANCA AGRICOLA S.A.
Share capital: ROL 4,057,446,676 million;
Number of employees: 3,620;
APAPS share: 98.835%
Buyer: the shares sale–purchase contract was signed with the Romanian
American Enterprise Fund and Raiffeisen Zentralbank Osterreich AG, on
April 12, 2001;
Value of the transaction: US$ 15,000,000. According to the bid, the buyer will
invest US$ 37 million as working capital, after the closing of the privatisation
process.
The involvement of Raiffeisen Zentralbank Osterreich AG in the privatisation process, a
renowned bank with financial strength and experience in the field, specialized in making
credit available to small entrepreneurs, represents a guarantee for Banca Agricola‘s future
and is especially notable for the benefit that it can bring to agricultural producers in
Romania.
A ―Law on Accelerated Privatisation‖ was introduced in March 2002 to stimulate
restructuring of the energy sector and reduce losses in state-owned enterprises.
According to the Romanian Foreign Trade Centre, twenty more companies will be
recommended for privatisation in 2002. Amongst them the most important are Banca
Comerciala Romania (BCR), the aluminium smelter-factory Alro Slatina and Alprom
Slatina.
1.4 Foreign Direct Investment
The National Trade Register Office is the single window agency for FDI. It provides
guarantees and facilities for Romanian nationals abroad, as well as tax and customs
incentives for attracting FDI. Up to the year 2000, Romania had attracted investment of
US$ 6.045 billion. It may be observed that FDI was worth US$ 1.31 billion in 2000.
Table 3 details the annual breakdown of investment in Romania.
11
Table 3 Annual FDI in Romania
Year No. of companies Equity capital
registered in US$ million
1991 5,541 920.25
1992 11,798 540.29
1993 10,581 430.01
1994 11,050 906.81
1995 3,313 281.26
1996 3,522 528.28
1997 5,153 364.38
1998 8,652 703.84
1999 7,203 930.56
2000 8,533 856.08
2001 6,683 845.32
TOTAL 82, 029 7, 316.10
Source: Chamber of Commerce and Industry, Statistics Report, Bucharest, November 2001
According to the Chamber of Commerce and Industry, the Netherlands was the main
foreign investor in Romania between the end of 1999 and November 2001, representing
14.9% of total foreign investment, followed by Germany (10.2%), France (9.1%),
Netherlands (12.7%), the USA (8.1%), Cyprus (7.3%) and Italy (6.9%). Investments
were made mainly in the area of car manufacturing, telecommunications, GSM, soft
drinks, fuels, minerals and chemicals, soaps and detergents and shipbuilding.
The Ministry of Development and Prognosis has stated that FDI has led to the
development of a strong manufacturing base for automobiles, telecommunications,
textiles, wood and furniture, and the IT sectors. However, according to the assessment of
the World Bank Office in Romania, instability and the incoherence of the legal
framework in regulating direct investment, as well as the high tax burden, has been
responsible for discouraging potential investors.
1.5 Manufacturing Base
Industrial output accounted for 31.7% of GDP in 1988 and has been in decline since the
revolution in 1989. Table 4 shows industrial output in Romania from 1994 to 1999.
Table 4 Romania: Production of selected industrial items
(in ‗000 tonnes unless otherwise indicated)
1994 1995 1996 1997 1998 1999
Row steel 5,800 6,557 6,083 6,675 6,336 4,392
Cement 5,998 6842 6.956 6,553 7,300 6,252
Plastic & resins 140 176 170 162 142 113
Synthetic rubber 27 41 37 29 23 16
Caustic soda 291 372 321 323 310 297
Town cars (‗000) 51 65 93 106 103 88
Television sets (‗000) 452 369 275 89 134 56
Washing machines (‗000) 109 125 138 82 36 28
Refrigerators (‗000) 383 435 446 429 366 323
Tractors (‗000) 14 13 13 11 10 4
Beer (‗000 hl) 9,046 8,768 8,118 7,651 9,989 11,1333
Source: National Commission for Statistics, Romanian Statistical Yearbook; Quarterly Statistical Bulletin, 2001
12
Analysis of Table 4 reveals that the production of colour televisions, washing machines
refrigerators, passenger cars and several other categories of industrial goods has declined.
This has been attributed to the un-competitiveness of Romanian industry in meeting the
demand in domestic and foreign markets.
The manufacturing sector, which accounted for one third of industrial output, however,
has shown signs of recovery due to the SME sector, which has been the main driver of
industrial development. Romanian industries, which have a comparative advantage,
include light industry consumer goods, light machinery and equipment,
telecommunications, white goods (washing machines, cooking ranges, refrigerators, etc.)
information technology and services. Public sector enterprises, which could not be
successfully privatised, were expected to close as the government could not sustain them.
1.6 Foreign Trade
Romania‘s foreign trade in 2000 amounted to US$ 23.51 billion, compared with
US$ 18.9 billion in 1999, a growth of 22.2%. Exports in the year 2000 were
US$ 10.4 billion, compared with US$ 8.5 billion in 1999. Similarly, imports stood at
US$ 13.1 billion in 2000, as against US$ 10.4 billion in 1999.
Exports increased by 22.3% and imports by 10.6%. The growth in exports was due to
favourable trends in international markets and higher levels of industrial production.
Imports grew due to higher imports of raw materials, oil, gas and modern equipment.
Romania‘s foreign trade amounted to US$ 26.9 billion in 2001. Exports in 2001 totalled
US$ 11.4 billion, while imports totalled US$ 15.5 billion.
According to the Romanian Foreign Trade Centre, Ministry of Foreign Affairs, the major
export items were textiles and leather goods accounting for 20.94%, followed by basic
metals & metal articles (15.99%), electrical machinery, appliances & equipment,
recording, sound reproduction & photographic equipment (14.00%) and mineral products
(7.93%). The remainder comprised footwear, wood and furniture, and chemical products
and machinery and equipment.
The highest share of imports was held by electric machinery, appliances and equipment;
recording, sound reproduction & photographic equipment (24.63%), followed by textile
products and leather goods (20.16%), mineral products (19.15%); chemical products
(8.25%) and base metals and articles (6.82%).
In 2001 exports were mainly supplied to Italy (24.94%), Germany (15.66%), France
(8.08%), Turkey (6.96%) and the UK (5.16%). Imports were mainly from Italy
(19.94%), Germany (15.21%), the Russian Federation (7.62%), France (6.3%) and the
UK (3.47%).
Romania‘s export performance has yet to regain the level of exports, which had been
achieved in 1989.
The ITC‘s Country Programme Evaluation Report on Romania concluded that the ten
year effort of the ITC in institutional capacity building in Romania had made a major
impact upon Romania regaining lost ground in terms of exports.
13
Romania
Key Issues:
Economic Environment
Shrinking economy due to continued Real GDP decline up to mid
1999 and marginal growth thereafter;
Low level of competitiveness of most Romanian industries due to slow
pace of structural reforms;
Increasing poverty and unemployment up until mid-1999, leading to a
flight of talent;
Uncertainty over legislation – too many changes in laws, norms and
ministerial orders;
Weak enforcement mechanism to implement legislation;
Emergence of the SME segment, contributing to 61.5% of GDP;
Services sector gaining prominence;
Exports contributing to GDP;
FDI-led development of manufacturing base;
Public sector enterprises on the brink of closure;
Agriculture, IT and tourism sectors – priority of the current
government;
Weak partnerships between the private and public sectors;
Unfocused utilization of foreign aid and credits;
Collapse of the traditional markets used before 1990.
14
Chapter 2
NATIONAL EXPORT DIVERSIFICATION POLICY
The World Bank assessment (Public information notice, June 19, 2001, WB, Romania)
revealed that Romania is in a position to pursue accelerated reforms. The economy began
growing again in 2000 after three years of negative real GDP growth. It is projected that
real GDP growth will reach 4% in 2001. The sustainability of the current economic
recovery will depend upon the new government‘s (elected in late 2000) ability to
implement a coherent set of economic reforms. Elements of these reforms include – the
strengthening of public institutions, greater access to opportunity, a strong social safety
net, sustainable development and the protection of the environment and natural resources.
Romania will have to face the challenges of business privatisation, reform of the banking
and financial sector, restructuring and deregulation of the energy sector, fiscal
decentralization, land privatisation and continued reform of the agriculture sector, access
to quality education in rural areas and reform of the pension system.
These structural adjustment and economic development policies are aimed at stopping the
decline of the economy, creating the prerequisites for economic recovery and preparing
Romania for EU accession. Towards this end, a programme, developed by the new
government for 2001-2004, lays emphasis on:
Development of the agricultural sector;
Communications and Information Technology;
Development of Tourism and Diversification of Travelling Services;
Privatisation of state-owned enterprises;
Restoration of Infrastructure and updating the Transport Network.
A package of incentives will be offered to attract foreign direct investment, with a
minimum cap of US$1 million. The new government has also launched a research and
development programme aimed at harnessing Romania‘s well-developed infrastructure
and developing the technological competitiveness of Romanian industry.
Keeping in mind, the current economic situation, the salient features of policies with an
effect upon information technology, international trade, telecommunications, and
industrial development are detailed below.
2.1 Information Technology (IT) Policy
The Ministry of Communications and Information Technology (MCTI) is the authority
for developing a strategic orientation framework for guiding the ICT sector in Romania.
The emerging ICT sector holds substantial promise for expansion into the global
marketplace. The MCTI is also developing the use of ICT in the government and private
15
sectors. Towards this end, a new organizational structure, the role of various players and
their relationships has been evolved. Details of this are given in Figure 3.
Figure 3: Romania: New organizational structure – Ministry
of Communication and Information Technology
GPTI
Information Technology Promotion Group
Integrator and Co-ordinator
National Strategy for the
CO-ORDINATION
New Economy and the
implementation of the INTEGRATION
Report
Information Society
IMPLEMENTATION
GESNSI of the National Strategy for IS
Private Sector
Private Sector
CITIZEN
Public
Sector
CITIZEN
Public
Sector
Investment
STRATEGY PROGRAM RESOURCES
Recovery
INVESTORS
(Public Sector, Private Sector,
Civil Society, Investment Societies)
Source: Ministry of Communication and Information Technology, 2001
The policies are developed through an industry-government consultative mechanism
where the views of industry are taken into account. The mechanism involves
representatives of the government, academic institutions, industry and trade. In Romania
there are five main associations in the ICT sector, as well as a number of other smaller
associations. These five main associations are:
Romanian Association for Electronic and Software Industries (ARIES)
National Association of Internet Providers from Romania (ANISP)
National Association for Software Companies (ANIS)
Association for Information Technology and Communication – Romania (ATIC)
Association for Producers of Electrical and Electronics Industries (APREL)
The associations provide inputs for policy formulation relating to tariffs, industry
competitiveness, the needs of the domestic IT industry, participation in fairs and
conferences, infrastructure and attracting foreign investment.
16
The MCTI aims at creating a conducive environment for the implementation of the
Information Society by launching the privatisation, liberalisation and development
process in the ICT sector. Details of the policy are given in Annex 1.
With a view towards developing the ICT sector, the MCTI proposes to initiate the
following measures:
Stimulation of supply and demand of ITC products in accordance with the
Information Technology Agreement of the WTO;
Promotion and support of an open and competitive market for communication
and IT services to secure quality services at lower tariffs;
Elimination of the legislative differences, in comparison with European Union
requirements;
Reduction of the technological gulf through the development of new
technologies and services;
Setting up a national telecommunications regulatory authority, so that consumers
and operators can enjoy homogenous, undiscriminating and equal treatment;
Development of ―Internet‖ platforms and technologies to assist in building a
digital economy at a national level;
Improve the quality of ICT products and services by harmonizing standards with
those of the EU in order to increase exports;
To utilize IT to increase productivity and efficiency in the economy, particularly
in SMEs;
Establish technology parks to facilitate the development of a modern
infrastructure for communications, computers, regulated power supply, and
software development skills;
To ensure priority for electronic governance;
Locating Internet Kiosks in rural areas in order to integrate the rural economy
with the national economy and to bring the benefits of IT to the rural population.
The IT policy would aim to retain IT experts in Romania to deliver IT programs and
services. To achieve this objective, the government passed a law in July 2001 exempting
IT Programmers from income tax.
2.2 Telecommunications Policy
Romania is a signatory to the WTO‘s Basic Telecommunications Services Agreement.
Under the WTO obligation, competitive regulatory principles were expected to be in
place by 1st January 1998. International services were to be open for international
competition by 1st January 2003. Romania, however, has yet to ratify the Basic
Telecommunications Agreement. Administrative reasons, according to MCTI, were the
cause for the delay and these are now being gradually removed.
17
The institutional framework necessary for the development of the telecommunications
sector has been evolved. Foremost amongst its features are the following:
Setting up a National Regulating Authority in Communications as a politically
independent and technologically neutral body, with responsibilities in the
management of the spectrum, standards, licensing, control and monitoring;
Securing the necessary legislative and organizational framework for the full
liberalization of telecommunications and postal services;
Preparing the operators for the full liberalization of communication services and
to adapt the existing licences of the national operators;
Creating an adequate legal framework for a free circulation of information and
to define the legal statute of the electronic document, the digital signature,
electronic data bases and electronic trade;
Promoting and supporting an open and competitive market for communication
and IT services;
Defining a coherent and realistic tariffs policy, based on costs at national
operator level;
Assuming responsibility for the privatisation of the commercial companies in the
IT field, as well as the acceleration of these processes by the Ministry of
Communications and Information Technology;
Creating a unified emergency call system - one of the measures necessary to
increase the security and protection of citizens and property;
Establishing a legislative and institutional framework to fight against electronic
fraud and unauthorized access to electronic information.
Implementation of the telecommunications policy was expected to lead to the
improvement of quality, the universal availability of services, tariff reductions, the
upgrading of technology etc. The policy will ultimately achieve the following:
Accelerated development of the public telephone network by securing an annual
rate of at least 500,000 new telephone subscribers;
The introduction of new and state-of-the-art technologies to meet the challenge
of globalization;
Securing universal coverage and an improvement in the quality of
telecommunications services;
The promotion of multi-service technologies in a wide range of
communications;
Harmonizing the use of the FM terrestrial radio broadcasting band, the VHF
television bands and harmonizing Romania‘s radio spectrum with the European
Allotment Table;
The stimulation of the local production of components and spare parts for the
telecommunications sector for a limited period, in order to nurture the SME
sector by way of providing incentives;
18
The involvement of local private capital in the privatisation and licensing
process.
The government is faced with the problem of a lack of telephone facilities in about
three thousand villages. This necessitates the development of an affordable
telecommunications infrastructure in order to facilitate Romania‘s links with the
emerging global economy in the future. The Romanian telecommunications environment
is characterized as being at the initial phase of market liberalization, with some level of
competition in place for mobile telephony and data services, but with basic services still
provided by a single monopoly.
2.3 Trade Policy
Romania‘s trade policy revolves around the development of an export-led economy. It
conducts trade on MFN basis and in accordance with its obligation to WTO and other
bilateral agreements. All tariff headings are aligned to HS codes.
Romania has been a member of the WTO since 1995. All tariffs are bound at ceiling
rates, and Romania is eliminating tariffs on products covered by the Information
Technology Agreement (ITA). Adding to its Uruguay Round commitments on services,
Romania is a party to the WTO Agreements on Financial Services and Basic
Telecommunication Services. Romania actively participates in the WTO, regularly
notifying Members of policy developments. In particular, standards for intellectual
property protection and their enforcement were notified in advance of 2000, when
Romania‘s transitional arrangements ended, and were reviewed by the WTO council for
the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS).
Romania also has trade agreements to eliminate tariffs on bilateral trade with the
European Community, the European Free Trade Association, the Central European Free
Trade Area, Moldova and Turkey. Most of its exports to European countries benefit from
duty free status. Reform of Romania‘s trade regime was initiated in 1992, with the aim
of ending the state monopoly on trade and the use of custom tariffs as the main
instrument of commercial policy. Quantitative restrictions have now been removed as an
instrument for market protection.
Romania has kept the applied MFN rates on industrial products steady at 16%, well
below the bound level of 35% according to the URA commitments. Applied tariffs on
agricultural products are generally much higher, but Romania reduced applied rates in
1997, bringing the average on such products from 134.1% in 1995 to 33.9% in 1999.
2.4 Industrial Policy
The Ministry of Industry and Resources is the authority responsible for industrial policy.
The Trade Registry is the focal point for industrial registration. The policy encourages
setting up any type of industrial body, including limited liability companies, joint stock
companies, branches, representative offices, partnerships or consortia, except in sectors
relating to health services, education and public administration.
19
FDI policy
The emphasis of Romania‘s FDI policy is to attract foreign direct investment by creating
a conducive business environment. The salient features of the policy are:
Focus on basic functions in the promotion of foreign investment - i.e. services for
investors (information, specialist assistance, interface with other institutions);
Building awareness of Romania as a destination for investors at country, regional
and economic branch level;
Generation of investment: direct approach to foreign investors, with concrete
projects and proposals;
Rapid solutions for the difficulties encountered by foreign investors;
Securing equal treatment for foreign and Romanian investors in creating a
favourable environment for investment;
Securing co-ordinated and efficient programmes for regional development, export
promotion and stimulation of internal investment;
Clear procedures, adapted to international practice;
Granting incentives for investment in a transparent and undiscriminating way;
Adequate financial support for the activity of attracting foreign investment;
Promote export growth through conducive policies.
The Investment Law in Romania for the promotion of direct investment was promulgated
in June 2001 and provides for incentives on investments exceeding US$ 1 million. The
investor is permitted accelerated redemption of 50% of the value of fixed assets,
exemption from customs duty and delayed payment of VAT on local procurement. The
detailed investment law may be seen in Annex 2. In order to secure foreign investment,
the government will provide professional advisers to accompany foreign investors in the
initial set-up phase of their business to facilitate easier interaction with Romanian
government agencies.
During consultations with the Ministry of Development and Prognosis it was learnt that
the World Association of Foreign Investments Promotion Agencies, the Association of
Foreign Investment Promotion Agencies of EFTA Countries and the Inapt network co-
ordinated by MIA/WORLD BANK and OPTIC have all been identified by the Romanian
government as prime targets for attracting foreign investment.
Pro export policy
A code for attracting investment has been elaborated for special zones, free zones,
technological parks and regional development to increase exports. Facilities to be
provided to investors would include the development of infrastructure, human resource
development and a set of fiscal incentives. In addition, a single window facility has been
set up under the auspices of the Prime Minster‘s Office, to attract foreign investment and
give investors easy access to governmental decision-makers, so as to clear investment
proposals promptly.
20
The Free Trade Zone Agency, under the Ministry of Public Works, Transport and
Housing, co-ordinates the free trade zones. The zones are located at Constanzta-south,
Basarabi, Giurgiu, Arad-Curtici, Sulina, Galati and Braila. Companies which are
established in these free trade zones receive incentives such as the payment of VAT,
excise, income tax, customs duty, the repatriation of profits and 100% foreign ownership
throughout the period of their activity.
Regional policy
The development of the ICT sector has been boosted by the local state agencies. They
provide a package of incentives for regional development aimed at increasing SME‘s
competitiveness, exports and investment.
Privatisation policy
The privatisation policy aims at developing a vibrant economy by way of allowing the
economic operators to set up production facilities according to international practices.
The majority of the state-owned companies in the IT sector have been privatized and the
remainder are being closed down.
Environmental policy
The Romanian government has aligned its environmental protection legislation with that
of the EU, keeping in view the objective of accession to the EU. Broadly there are three
major environmental concerns identified. The first is wastewater management and its
treatment. The second is waste management. The third concern is air pollution. The
projects for meeting these environmental concerns will be given funding based upon the
impact on the larger group or community.
Romania and the European Commission have jointly initiated many environmental
projects in Romania. Regulation No. 1267/1999 defines the following eligibility criteria
for funding environmental projects:
Project minimum value - 5 million Euro;
Correspondence with EU environmental standards and regulations;
Significant impact upon environment quality and public health;
ISPA is available only for the public utilities sector;
ISPA grant can represent 50-75% of the eligible costs of the project, the rest
being covered by local sources.
Institutions identified for management of the environment programme include:
Ministry of Water and Environmental Protection for general co-ordination,
implementation and technical aspects;
Ministry of Public Finance for implementation of the project‘s financial aspects;
Ministry of European Integration for general co-ordination.
21
A programme of environmental protection has been launched and a number of projects
have been identified for funding. Realizing this policy will require:
supporting the development of technical infrastructure and the business
environment;
supporting the regions in attracting and absorbing innovation from external
sources, by creating and developing special economic zones, regional
technology transfer centres and regional technology parks;
activities focusing on improving workforce skills.
2.5 Accession to the European Union
Romania is an associate member of the European Union and has applied for accession.
The European Council, in its meeting in Helsinki in December 1999, decided to start
accession negotiations with Romania. The accession criteria are determined by the
following:
Stable institutions guaranteeing democracy, the rule of law, human rights and the
protection of minorities;
The existence of a functioning market economy, as well as the capacity to cope
with competitive market pressures in the Union;
Ability to take on the obligations of membership including adherence to the aims
of political, economic and monetary union, i.e acquis communitaire.
The National Medium Term Development Strategy of the Romanian Economy lays down
the process of aligning national legislation with that of the EU. This process involves
setting up institutional mechanisms for implementing the legislation according to EU
criteria and fulfilling the commitments of market economy reforms. This strategy will
take into account the conclusions provided by the Commission of the European
Communities in ―2001 Regular Report on Romania‘s Progress towards Accession‖,
namely:
Since the Commission concluded that Romania has fulfilled the political criteria
in its 1997 Opinion, the country has made considerable progress in further
consolidating and deepening the stability of its institutions in guaranteeing
democracy, the rule of law, human rights and respect for and protection of
minorities;
Romanian reform of judicial procedures has continued and effective
implementation of new legislation on public procurement should play an
important role in the fight against corruption – although corruption remains a
serious problem that is largely unresolved;
Romania has made progress towards establishing a functioning market economy
and although it would not, in the medium term, be able to cope with competitive
pressures and market forces within the EU, it has taken measures that would
allow it to develop its future capacity, provided that it keeps to its economic
reform path;
22
Romania has made progress towards macroeconomic stabilisation; growth has
resumed and exports have increased. Structural reforms have been re-launched,
most notably in the area of privatisation and energy price adjustments. The
recent privatisations demonstrate a new commitment towards the establishment
of a functioning market economy;
Romania has continued to make progress with the adoption of the acquis
communitaire.
In order to meet EU accession criteria, Romania‘s medium-term national development
strategy has been implemented and the pre-adherence programmes securing general and
sectoral co-ordination of the required policies, goals and measures were adopted in 2001.
Remedial measures initiated by the new government included:
Improving the rate of meeting the political criteria requirements of the European
Union, especially those regarding humanitarian standards: integrating ethnic
minorities and fighting against all forms of extremism, such as chauvinism and
xenophobia;
Co-ordination of the whole programme of adherence to the European Union and
the implementation of the fundamental rights established within the European
Union, by means of the Ministry of European Integration;
Improvement of the judicial and institutional framework in view of
implementing and monitoring the PHARE Programme and the pre-structural
financial instruments ISPA (infrastructure and environment) and SAPARD;
Parliament should concentrate on passing the laws regarding harmonization with
European legislation;
Transparent and efficient use of non-refundable funds coming from the
European Union and the Group of the 24;
Elaboration, together with the European Commission, of a strategy for
Romania‘s image among EU member countries, in order to accelerate the
negotiations for accession;
Obtaining a decision from the Ministerial Council of European Union in 2001,
regarding the elimination of compulsory visas for Romanian citizens wishing to
travel in EU member countries;
Elaboration of a national programme for advanced training of young people in
European business studies.
The major conclusion stemming from the strategy, is that by ensuring the necessary
financial and legal support, through perseverance and social solidarity, the prerequisites
are in place for Romania to meet the essential requirements of EU accession in 2007.
23
Romania
Key Issues
National Export Diversification
Continue institutional and legislative reform in order to accomplish
EU harmonisation;
Further reduce the frequent changes in laws, norms and ministerial
orders;
Increase predictability in the national business environment;
Create a more favourable investment climate to encourage and
attract foreign investors;
Increase efficiency and improve the management of assistance
programmes granted by international agencies;
Improve the institutional framework to oversee the enforcement
and implementation of macroeconomic policies aiming at
sustainable economic growth;
Adjust fiscal policies to international norms and practices;
Promote more open and flexible industrial policies;
Prioritise the Information Technology and Communication sector
as a main driver for economic development;
Accelerate the rehabilitation and modernization of Romania‘s
logistics and infrastructure;
Apply the proper trade policy measures necessary to follow
international trade liberalisation and economic globalisation trends;
Adhere to the membership obligations of the WTO, and those
arising from the EU Agreements and the concluded Free Trade
Agreements, in order to assure the complete openness of the
Romanian economy along with a predictable and stable trade
environment.
24
Chapter 3
INTERNATIONAL TRADE IN INFORMATION TECHNOLOGY
PRODUCTS AND SERVICES
3.1 Global Trade
Romanian international trade in information technology and communication products
(ICT) amounted to US$ 2.308 billion in 2000, compared with US$ 1.44 billion in 1999, a
growth of 60% over the previous year as given in the Table 5.
Table 5 Romania: Global trade in ICT products
(Value: US$ millions)
1998 1999 2000
Total Imports 1,109 1,070 1,685.02
Total Exports 235 373 630.59
Trade Deficit -874 -697 -1,054.43
Source: ITC /PCTAS database & Romanian Trade Statistics Department, 2001
It may be observed that Romania is a major importer of electronic goods. In 1998, the
trade deficit was US$ 868 million, which grew to US$ 1,061 million in 2000. Reasons
for the high level of imports can be traced to imports of IT products for rejuvenating the
old economic enterprises and facilitating computerisation of government departments, as
well as improving the telecommunications infrastructure including GSM cellular mobile
technology and Internet service provision. Local industry could not keep pace with
technological developments and thus imports were required in order to upgrade the
infrastructure.
3.2 Romanian Exports
Table 6 gives a product breakdown for Romanian exports of ICT products.
Table 6 Romania: Global export of ICT products
(Value: US$ million)
Product category 1996 1997 1998 1999 2000
Semiconductors 3 4 3 3 41.78
Electronic data processing 2 2 7 104 130.51
Office equipment 0 0 1 0 1.44
Telecommunication 3 3 21 28 171.94
Other components 108 110 175 213 254.54
Scientific equipment 20 28 28 25 30.35
Total 136 147 235 373 630.59
Source: ITC/PCTAS database 1996-2000 / Romanian Trade Statistics Department
Analysis of the ITC/PCTAS trade data reveals that exports were valued at
US$ 630.59 billion in 2000, compared with US$ 373 million in 1999, a growth of 67.5 %.
According to the Romanian Foreign Trade Centre (CRCE), exports were likely to be in
25
the order of US$ 1 billion by 2001. The increase in exports was primarily due to the
contract manufacturing plants which have been set up by Solectron, Intrarom, Siemens,
Flamingo Computers, Siveco, CIT Alcatel and others. Major export products included
electronic data processing equipment, telecommunications equipment and other
components. Telecommunications equipment exports grew six-fold, from
US$ 28 million in 1999 to US$ 171 million in 2000. Leading items in this sector were
base stations for cellular mobile systems, telecom switching equipment sub-systems,
Electronic Private Branch Automated Exchanges (EPBX) and terminal equipment. EDP
segment exports grew from US$ 104 million in 1999, to US$ 130 million in 2000. These
exports were mainly on account of exports of assembled PCs, PC boards, modems, etc.,
Exports of other components increased from US$ 213 million in 1999 to
US$ 254.5 million in 2000. These exports included components and sub-systems for
network equipment, mobile phones, telecommunications equipment, servers, PCs and
computer peripherals. Solectron accounted for a major share of these exports.
Exports from Romania are mainly to Germany, the United Kingdom, Austria and France.
Table 7 lists the major export destinations in 1998 and 1999.
Table 7 Romania: Exports of information technology products by destination
(Value: US$ millions)
Country/area 1998 1999
United State of America 1 1
Germany 109 125
France 21 21
Italy 7 19
Israel 1 1
United Kingdom 4 61
Austria 46 58
Switzerland 0 0
Netherlands 3 2
Japan 0 0
Others 43 85
Total 235 373
Source: ITC/PCTAS database 1996-2000 / Romanian Trade Statistics Department
Semiconductor products were exported to Italy and Germany. EDP exports were to
the UK, Hungary and Italy. Office Equipment exports was mainly to Greece.
Telecommunications products were supplied to Greece, France, and UK. Other
Components were primarily exported to Germany, Austria, France, Hungary, Syria, and
Italy. Germany and Turkey both received exports of other miscellaneous products.
26
Romania
IT Export Growth Trends
Export growth – 67.5% in 2000;
Exports mainly to European destinations;
Components and subsystems;
TNCs led exports through transfer pricing;
Export of software: anti virus products and services.
3.3 Romanian Imports
Table 8 details the Romanian imports of ICT products over the last five years.
ITC/PCTAS statistics show that imports grew by 57% in 2000 compared with 1999. In
terms of volumes, the statistics of the International Data Group Romania reveal that the
number of PCs imported was growing, but the prices had fallen.
Table 8 Romania: Global imports of IT products
(Value: US$ million)
Product category 1996 1997 1998 1999 2000
Semiconductors 28 32 44 118 357.88
Electronic data processing 177 176 236 236 261.61
Office equipment 28 29 32 25 27.67
Telecommunication 118 229 322 239 400.04
Other components 190 217 296 349 498.56
Scientific equipment 103 94 179 103 139.25
Total 644 777 1,109 1,070 1,685.02
Source: ITC/PCTAS database 1996-2000
Imports included semiconductors, electronic data processing equipment, telecom
switching and transmission equipment, other components and scientific instruments. The
leading items imported within the semiconductors segment included processors, memory
and hybrid circuits mainly for the assembly of PCs and switching equipment. EDP
imports included servers, PCs, printers, monitors and networking equipment.
Telecommunication imports included switching, transmission, base stations for cellular
networks, mobile phones and other terminal equipment. Imports of Other Components
were largely made by contract manufacturers and television manufacturers, for the
assembly of PCs, CTVs and other products. Within the scientific equipment segment,
testing and measuring instruments for industries and laboratories, process control
instrumentation, automation devices were imported. Table 9 shows the major import
sources in 1998 and 1999.
27
Table 9 Romania: Imports of information technology products by country
(Value: US$ million)
Country/area 1998 1999
United State of America 144 74
Germany 209 268
France 181 123
Italy 51 64
Israel 25 25
United Kingdom 67 57
Austria 42 46
Switzerland 12 56
Netherlands 23 4
Japan 12 31
Others 343 322
Total 1,109 1,070
Source: ITC/PCTAS database 1996-2000
As highlighted in Table 9, imports were mainly sourced from Germany, France, Japan,
the United Kingdom, Switzerland, the USA and Asian countries. Imports from the EU
were mostly telecommunications equipment for infrastructural development. EDP
equipment was mainly imported from Asian countries. CTV picture tubes were imported
from Italy and Poland. Imports of semiconductor devices and standard software products
were mainly from the USA.
Romania
IT Import Growth Trends
Imports grew by 57% in 2000;
Imports value – US$ 1.68 Billion;
Telecom & EDP equipment;
Semiconductors & other components;
Contract manufacturing and assembly;
Computerization in government, SMEs and developers.
From analysis of the trade data, it was observed that the major contract manufacturing
companies, namely Solectron, Intrarom, Siemens, CIT Alcatel and Flamingo Computers
were importing components for the assembly and re-export of finished goods. In
addition, imports were also used to upgrade the fixed and mobile telecommunications
infrastructures, as well as the Internet service provision infrastructure. The SME
segment, particularly the producers of textiles, leather goods, wood & furniture, washing
machines, cooking ranges, refrigerators and electro-technical and mechanical machinery,
were also buoyant and were deploying IT solutions to improve their competitiveness.
28
Statistics from the Romanian authorities, as well as analysis based on the PCTAS import
and export database, are appended at the end of this chapter.
3.4 Romania and WTO
Romania was a founding member of the Information Technology Agreement (ITA) in
1996. Romania negotiated extended staging until 2003 from the ITA with the purpose of
lengthening the protective period for its IT sector, as the country was not prepared to face
free competition. As of today, Romania has eliminated all tariffs on IT products,
i.e. personal computers, servers, printers, keyboards, network equipment,
telecommunications equipment (including switching and transmission), semiconductor
devices (ICs, processors, memory), PCBs and component-mounted boards, electronic
components, capacitors, resistors and other similar products.
Romania
Key Issues and trends
International Trade in IT Products
Trade deficit widening;
Exports improving due to proximity of Timisoara to the EU
and comparative advantage of software development;
MNCs taking advantage of cost-effective and skilled
manpower for application development and contract
manufacturing;
Software services and products – a niche area for export
development;
Exports mainly to Germany, United Kingdom, Austria and
France, through their subsidiary companies in Romania;
Potential for exports to the CEEC region, Libya, Iran and
Moldova through preferential agreements;
Imports for developing infrastructure, IT deployment and
contract manufacturing.
29
Chapter 4
INTERNATIONAL INFORMATION TECHNOLOGY MARKET
4.1 Global Market for ICT products
The global market for IT products and their regional distribution is given in Table 10.
Table 10 World Market Projection for IT Products in 1999
(Value: US$ billion)
Western Eastern Rest of World
1999 US Japan
Europe Europe* World Total
IT hardware 88.08 5.77 126.04 39.57 49.38 308.84
Software 38.85 1.10 60.91 11.76 20.77 133.39
IT Services 69.32 3.55 126.24 33.11 38.96 271.18
Telecommunication
51.86 5.98 21.25 10.78 39.62 129.49
equipment
Components 6.56 3.28 97.15 71.79 101.67 280.45
Total 254.67 19.68 431.59 167.01 250.40 1,123.35
Source: Electronic Year Book 1998 / European IT Observatory 2000
The market projections for the year 2001 are given in Table 11.
Table 10a World Market Projection for IT Products by Distribution in 2001
(Value: US$ billion)
Western Eastern Rest of World
2001 US Japan
Europe Europe* World Total
IT hardware 100.23 6.46 140.97 42.62 62.07 352.35
Software 50.72 1.93 79.85 14.91 27.15 174.56
IT Services 86.91 3.98 153.73 36.90 46.93 328.45
Telecom
69.94 6.87 22.31 11.47 50.67 161.26
equipment
Components 7.35 3.68 118.81 80.40 113.87 324.11
Total 315.15 22.92 515.67 186.30 300.69 1,340.73
Source: Electronic Year Book 1998 / European IT Observatory 2000
30
Figure 4 Regional distribution of ITA
Market
22% 23%
2%
15%
38%
West Europe East Europe
USA Japan
Rest of World
Source: Electronic Year Book 1999 / European IT Observatory 1999
It may be noted that the market for ITA products was valued at US$ 1,123.35 billion in
1999 and was expected to grow to US$ 1,340.73 billion in 2001. The distribution of the
IT market by product sector is given in Figure 4, which reveals that IT hardware
accounted for 27%, followed by components 25%, IT services 24%, telecommunications
equipment 12% and software 12%. Figure 5 shows the distribution by region of the
market. It may be noted that the USA accounted for 38% followed by Western Europe
23% and Japan 15%. East European countries accounted for only 2% of the market and
the Rest of the World accounted for 22%.
4.2 Central and East European Market
The market for IT products in the six selected East European countries was
US$ 19.3 billion in 2000, compared with US$ 16.9 billion in 1999. Poland, the Czech
Republic, Slovenia, Hungary, Romania and Russia together accounted for about 86 % of
the region‘s market in 1999, a level which was expected to come down to 84% in 2001.
The size of the market represented by these six countries was expected to reach
US$ 21.6 billion in 2001. Table 11 gives the market for ICT products.
Poland, Czech Republic, Slovenia, Hungary, Russia and Romania.
31
Table 11 Central and East European Market for ICT Products
No. ITEMS YEAR
1997 1998 1999 2000 2001
1.0 Computer Hardware 5,236 3,994 3,873 4,333 4,773
Servers 1,059 844 893 1,060 1,149
PCs 3,168 2,274 2,102 2,310 2,758
Workstations & Other add-ons 1,009 876 878 963 866
2.0 Data Communication Hardware 813 710 764 862 1,052
LAN Hardware 458 405 454 506 594
Other data communication 355 305 310 356 458
3.0 Software 2,903 2,848 3,060 3,624 4,057
Software Products 1,007 987 1,077 1,253 1,469
Software Services 1,896 1,861 1,983 2,371 2,588
4.0 Telecom Equipment 3,339 3,402 3,907 4,679 5,559
Public Network Equipment 2,921 2,968 3,415 4,076 4,945
Private Network Equipment 418 434 492 603 614
5.0 Office Equipment 619 408 388 365 417
Copier 415 306 278 263 289
Other Office Equipment 204 102 110 102 128
6.0 Semiconductors 919 1,082 1,266 1,432 1,598
7.0 Passive Components 1,239 1,326 1,419 1,506 1,597
8.0 Scientific Instruments & 1,890 2,087 2,275 2,425 2,556
Control Equipment
TOTAL 16,958 15,857 16,952 19,226 21,609
Source: Electronics Yearbook 1998 / European IT Observatory 2000
The market for IT products is led by Russia, followed by Poland, the Czech Republic,
Hungary and Romania. The market for electronic components is led by Poland, followed
by Russia and the Czech Republic. For telecommunications equipment, Russia and
Poland were dominant markets, while the Czech Republic is also an important market
segment for telecommunications equipment. The market for IT products in Russia and
Poland offers great potential. For EDP, Hungary, the Czech Republic and Slovenia were
moving towards integrated solutions. Figure 6 shows the IT market share of the target
countries. Romania accounted for 4% of the ICT market among the selected Central and
East European countries.
Poland, Czech Republic, Slovenia, Hungary, Russia and Romania.
32
Figure 5 IT Market by Country
Czech
4% 4% 19% Hungary
12% Poland
39%
Russia
22%
Slovenia
Romania
Source: Electronics Year book 1999 / European IT Observatory 1999
4.3 IT/GDP for Central and Eastern Europe
While spending on information technology has grown remarkably over the last decade,
both the relationship of IT expenditures to GDP and per-capita IT spending reveal that
expenditures are still considerably lower than that of the average in Western Europe.
Table 12 IT/GDP and per capita IT spending in Central and Eastern Europe, 2000
IT/GDP (%) Per capita IT spending
(US$)
Bulgaria 1.19 11.60
Czech Republic 2.74 106.25
Hungary 2.50 80.35
Poland 1.49 41.07
Romania 0.56 6.25
Russia 0.61 12.50
Slovakia 1.90 53.57
Slovenia 1.64 109.82
Estonia 3.21 73.21
Croatia 1.35 40.17
Source: IDC, USA, 2000
Table 12 illustrates that only the Czech Republic, Hungary and Estonia exhibit spending
levels which match those of Western European countries: the vast majority of Central and
Eastern European states still spend less than 1.5 % annually on information technology.
Similarly, per capita spending across the region is quite low, from Slovenia‘s high of
approximately US$ 109 in 1998 to Romania ‘s US$ 6.25. Given these ratios, it will take
considerably longer for many of the states in the region to attain the IT penetration rates
common in many Western European countries.
33
Once driven by the basic demand for hardware to compensate for years of minimal
investment in obsolete technology, many markets of the region have now moved into a
second, mature stage of development. In this stage, user requirements have shifted to the
implementation of relevant solutions to operate more efficiently and profitably in a
market economy. As a consequence, spending on packaged software, IT services and
communications technologies has increased sharply. With respect to IT, while the
demand for basic hardware remains weak, a growing amount of annual expenditures are
being directed towards purchasers of data communications, software, professional
services and maintenance/support services. It was observed that, despite these
developments, the region‘s IT market is still largely oriented towards hardware, which
accounted for a major share of IT spending in the year 2000.
Developments in the different sectors of the ICT market are detailed below.
IT hardware
The countries of Central and Eastern European have spent the last decade investing in
basic information technologies to establish a modern national infrastructure. While a
general trend is now taking place in which more spending is being devoted to software
and services to utilize this hardware base more effectively, the region‘s IT markets
remain heavily oriented to basic IT hardware such as personal computers and PC-related
technologies (PC add-ons, peripherals).
This characteristic of the regional market reflects, in part, the still relatively low levels of
IT penetration in many Central and Eastern European countries. It also mirrors the
requirements of the solution-driven era of IT market development in which the expanded
usage of packaged software applications, networking solutions and the Internet, demands
higher processing speeds and storage capacity. In 2000, IT hardware including data
communications accounted for 27% of IT spending among the six countries surveyed, to
US$ 5.2 billion.
Personal computers
Within the hardware segment, personal computers continued to drive demand for
information technology in Central and Eastern Europe. Shipments of PCs, according to
the European Information Technology Observatory, reached 2.1 million units in 1999,
which was equivalent to that of Italy.
The ongoing boom in regional PC sales reflects a number of factors including the
relatively low installed base of machines and notable investment in IT by SMEs in the
services sector. It is also determined by an increase in real wages which is influencing
demand among home users, Internet usage, as well as major IT investment projects in
sectors such as public administration, insurance, banking/financial services and
manufacturing. Despite rising sales, the personal computer markets of Central and
Eastern Europe are still relatively small.
34
Moreover, the regional market remains extremely price sensitive in view of low average
per-capita incomes. Reflecting, in part, a modest recovery in Russia, the PC market of
the six countries examined in this survey will continue to grow strongly. IT expenditure
as a proportion of GDP and per capita IT spending in Central and Eastern Europe can be
seen in Table 12. It may be observed that per capita IT spending in Romania was the
lowest among the ten countries in the region.
Systems and servers
Evolving requirements to share resources, network sites, access to the Internet, and
implement cross industry application solutions have generated notable demand for
computer systems and servers in Central and Eastern Europe. The systems and server
market was estimated to be of the order of US$ 1.06 billion in 2000, a growth of 18.7%
over 1999. Servers comprised 23.5 %of the total regional market of computer hardware.
While NT has made notable inroads into markets oriented to low-end PC servers, Unix
continues to account for the highest share of annual server revenue, particularly in the
mid-range and high-end server segments.
Packaged software
Mirroring worldwide trends, packaged software represents one of the fastest growing
segments of the ICT market in Central and Eastern Europe, now that software piracy rates
are dropping and users require more structured application support. Particularly strong
growth is being seen in the market for basic operating systems, PC application software,
integrated Enterprise Resource Planning (ERP) applications and application tools for
database development and management. The regional value of the packaged software
market reached US$ 3.62 billion in 2000, a growth of 20% over the previous year.
While the demand for packaged software has noticeably increased, the ratio of software
sales to overall IT spending in most countries in the region is still low compared with
Western Europe, with Romania being the lowest.
IT services
The IT services market in Central and Eastern Europe was valued at US$ 2.37 billion in
2000, representing 12.3% of IT spending in the region. Implementation services
accounted for the largest share of the market with nearly 46%, followed by support
services and IT consulting. According to European Information Technology
Observatory, IT services will represent one of the most dynamic ICT market segments
over the next several years in terms of growth potential. Factors driving the demand for
IT services in Central and Eastern Europe include the pace of technological change, the
growing popularity of packaged application solutions, Internet/Intranet usage, the limited
skill base of user groups and the trend toward networking and connectivity. In view of
the growing sophistication of technology, external providers (IT and other) are
increasingly viewed as the best solution to implement the required changes, despite the
relatively low wage rates of local employees.
35
Evolving Internet market
The Internet is quickly becoming an important element of everyday life in Central and
Eastern Europe and user numbers are growing steadily. The region‘s Web population is
expanding rapidly and the Internet is beginning to surpass the PC as the engine of growth
for regional information technology. According to the ESIS II Report, ―Information
Society Indicators in the CEEC Countries‖, January 2001, the number of Internet users in
12 selected countries was around 9 million in 2000. This regional user base is expanding
at a compound annual growth rate of 23 %. While this rate is lower than the 27% annual
rise projected for the more dynamic markets of Western Europe, the number of Internet
users in Central and Eastern Europe is expected to exceed 10 million by 2003. This
figure could potentially be higher, depending on developments in the region‘s two largest
markets, Russia and Poland, which together account for a major share of all Internet users
in the region. An economic recovery in Russia would facilitate higher Internet usage,
while further liberalization of telecommunications would boost penetration rates in
Poland.
Figure 6 Breakdown of Internet users in the CEEC countries* (%) end 2000
Total number of internet Users = 9,467 million 2% 3%
4%
5%
7%
7%
54
7%
11%
Albania Bosnia FYRMacedonia Latvia Slovenia Estonia
Bulgaria Lithuania Hungary Romania Czech Republic Poland
Source: ESIS II Report, Information Society Indicators in the CEEC countries, January 2001
The chart below details the percentage share of Internet users in 12 selected countries.
It may be noted that the Internet penetration rate in Romania is 7%. Channels across the
region are now consolidating, as Internet Service Providers (ISPs) rush to grab early
market share and growth is being stimulated by a new focus on the Small and Medium
Enterprise (SME) market. Currently, more than half (51%) of all Internet users in the
region have free access through schools or government organizations. This will decline
over the next few years, as SMEs start using the Internet. This will lead to ISPs
becoming more cost-effective, as the paid customer base gradually increases.
36
Over the next few years Internet growth in Central and Eastern Europe will be spurred by
three main factors:
the availability of Internet-ready PCs,
decreasing access fees and plentiful cheap bandwidth
free Internet access.
While currently only one in every four PCs installed in the region is connected to the
Internet, this figure is expected to surpass three in every four by 2003.
Telecommunications
The telecommunications market in Central and Eastern Europe was estimated at
US$ 4.68 billion in 2000, compared with US$ 3.9 billion in 1999, a growth of 20%. The
ITC team observed that the most dynamic growth areas were mobile infrastructure and
services, followed by CATV, telephone and switched data and leased line services. East
European countries have made great strides in improving their fixed-line communications
infrastructures and service offerings. In the early 1990s, all the countries in the region
were suffering from long waiting lists for phone lines, low digitisation rates, poor access
line quality and low customer satisfaction levels.
However, most countries in the region have since attracted foreign investment and
expertise through national operator privatisation, involving a combination of public share
offerings and tenders for strategic investors. This strategy has helped to increase
revenues in the profitable areas of domestic and international long-distance calls, as well
as improve penetration rates and infrastructure quality. The average penetration rate
increased from 22% in 1995 to 30% in 1998. A recent ESIS II survey shows
telecommunications penetration rates in the different countries in the CEEC region at the
end of 2000 (see Table 13).
Table 13 Telecommunication penetration rates in different CEEC countries
1996 1997 1998 1999 2000
Albania 1.5 2.4 3.5 4.5 5.2
Bosnia 8.1 9.3 22.3 26 24.8
Bulgaria 32.2 33 35.1 38.9 44.3
Czech Rep 29.3 36.9 45.8 57.1 77.6
Estonia 34.9 43.7 53.9 64.1 2
Hungary 30.6 37.4 44 51.7 60.8
Latvia 30.6 33.2 37.3 42.6 46.9
Lithuania 28.4 35.8 39 39.4 43
Poland 17.5 21.8 26.7 36.9 44.5
Macedonia 38.9 39.7 40.4 42.2 45.6
Romania 14.2 16.4 19.0 23.5 32.3
Slovenia 35.6 41 48.7 76.1 104.7
Slovakia 23.7 29.6 37.3 47.9 52.9
CEEC - average 20.1 23.9 28.5 35.9 45.0
Source: ESIS II Report, Information Society Indicators in the CEEC Countries, January 2001
37
It may be observed that Romania‘s telecommunications infrastructure is gradually
improving and that teledensity reached 32.3% in 2000, compared with 14.2% in 1996.
Despite these improvements, however, some countries have fared better than others in the
telecommunications arena. In markets where foreign investors were able to enter early in
the 1990s, such as the Czech Republic, Hungary, and Estonia, many obstacles have been
quickly overcome.
In the Czech Republic and Hungary, waiting periods for phone lines have decreased from
10 years to a matter of weeks. In Poland, however, where privatisation did not occur
until 1998, the average customer waiting period for phone installation is still up to
34 months, and the penetration rate is still less than 25 %.
Russia, although the largest country in terms of population and main lines, saw either
stagnation or a decline in carrier services and revenues between 1997 and 1999. This was
due to a combination of factors which included the August 1998 economic crisis, the
unsuccessful partial privatisation of Sviazinvest and a weak regulatory framework, which
made enforcement of telecommunications legislation a challenging task.
One of the highest growth areas for telecommunications in Central and Eastern Europe is
the mobile sector, for both services and equipment.
Market liberalization, combined with increased requirements for mobility, the increase of
prepaid services, and the licensing of several competitors in each major market, have
helped to propel mobile telecommunications into the mass market. At the end of 1998,
Estonia retained the highest mobile penetration rate in the region with 17 %, followed by
Hungary (11 %), Slovakia (10 %), and the Czech Republic (9 %). In some countries,
such as Estonia and Slovenia, mobile service revenues are comparable or even surpassing
fixed-line revenues.
Components
In 2000, the market for semiconductor components was US$ 1.43 billion, while for
passive components it was US$ 1.50 billion. These markets are expected to reach
US$ 1.6 billion and US$ 1.6 billion respectively in 2001. The market for components is
growing strongly because of the contract manufacturing facilities being located by large
TNCs in Poland, Hungary, the Czech Republic, Slovenia and Romania. The ITC team
observed that almost 50% of the PC market was served by local assemblers which were
importing components from Asian sources, specifically to serve their domestic markets.
As a result of consultations with the principal national IT players, it was concluded that
the major factors propelling the ICT market in the region were:
Large-scale public infrastructure in government administration, banking,
financial services and insurance;
The emergence and fast growth of small and medium-sized private companies;
Investment made by enterprises undergoing restructuring and cost-cutting
measures;
38
Advancement in technology necessitating change/upgrading of manufacturing
processes;
Demand of standard software solutions; client/server solutions and Enterprise
Resource Planning;
Rapid modernization of Telecommunications Infrastructure.
4.4 ICT Market in Romania
As explained earlier, the Romanian IT market is very small compared with other
neighbouring countries, accounting for just 4% of the regional market (see Figure 6). In
2000, the market was estimated at US$ 1.23 billion and expected to reach US$ 1.4 billion
in 2001, at a growth rate of 12.8%. A breakdown of the ICT market is given in Table 14.
Table 14 Romania: Market for ICT Products
(Value: US$ million)
S. No. ITEMS YEAR
1997 1998 1999 2000 2001*
1.0 EDP Computer Hardware 140 164 167 180 200
Servers 10 20 22 25 30
PCs & Workstations/Other add-ons 130 144 145 155 170
2.0 EDP Data Communication 40 41 43 45 50
Hardware
LAN Hardware 30 32 31 31 35
Other data communication 10 9 12 14 15
3.0 Software & Services 32 43 56 83 102
Software Products 18 24 30 45 62
Software Services 14 19 26 38 40
4.0 Telecom Equipment 214 305 435 610 700
Public Network Equipment 160 240 360 530 600
Private Network Equipment 54 65 75 80 100
5.0 Office Equipment 35 35 45 40 50
Copiers 25 25 30 20 30
Other Office Equipment 10 10 15 20 20
6.0 Semiconductors 60 61 62 67.5 75
7.0 Passive Components 87 81 67 75.6 80
8.0 Scientific Instruments & Control 110 120 131 135.1 138
and Measurement Equipment
TOTAL 718 850 1,006 1,236.2 1,395
* Projected figure
Source: Electronic Year Book 1998 / European Information Technology Observatory, 2000
39
Figure 7 charts ITA market growth for 1997 to 2001.
Figure 7 Romania: Growth of ITA Market (1997-2001)
1400 1395
1236.2
1200
1006
1000
850
800 718
600
VValue: US$ million
400
200
0
1997 1998 1999 2000 2001
Source: EUROBIT 2000 & Digital Planet 2000 WITSA / IDC
The Romanian market was expected to expand due to investments in the modernization
of telecommunications, IT spending in the government and public sectors, a boom in the
IT industry and the deployment of IT solutions in the SME sector to improve
competitiveness. The government that came to power in late 2000 is enacting
progressive measures to bring stability to the economic reforms and market liberalization.
The World Bank and the EBRD are assisting the Romanian government in restructuring
the economy and are providing a package of technical assistance. The Ministry of
Communication and Information Technology has been set up to evolve a number of
development programmes. Box 1 gives details of the large IT projects visualized during
the ITC Technology Team mission to Romania in June 2001.
Box 1 Romania: Major IT Projects Visualized, 2001
Nationwide projects started: Forthcoming large projects:
Ministry of Finance – Customs Cadastre and Land Book System
Office Ministry of Labour – National
Ministry of Finance – Global Employment System; National State
Income Taxation System Pension Office
Ministry of Interior – ID & Car Ministry of Justice – IS
Registration Ministry of Interior – Metropolitan
Ministry of Interior – Border Police Police C3I Systems; Border Police
Ministry of Health – Central Network
Administration and Neamt District Public Administration – IS
National Health Insurance Office IS of large national companies
(started) (Pentrom, Conel, Romgaz, etc.)
IS of major banks with branches all B2B e-Commerce Portals
over the country Software Parks
Educational & Research Networks
Source: ITC Technology Team mission, 2001
40
The ITC team had consultations with trade and industry associations, as well as IDG
Romania, various ministries and educational institutions. The details of contacts
established and discussions held may be seen in Annex 3. The sectoral analysis of the
potential market demand in Romania was undertaken based on the investigations and
discussions held by the ITC team with leading national IT players, government
authorities, industry and trade associations.
Electronic Data Processing
The EDP market comprised of computer hardware and data communication networks.
In 2000, the market was valued at US$ 225 million, of which computer hardware totalled
US$ 180 million and data communication equipment stood at US$ 45 million. The
market was expected to reach about US$ 250 million in 2001, a growth of 11%.
The market was dominated by brands such as IBM, Bull, Compaq, Hewlett-Packard and
Cisco, in addition to laptops from Canon and Toshiba, which accounted for almost 52%
of unit shipments and more than 60% of value. Among the most popular
locally-assembled brands was Flamingo Computers. Locally manufactured brands
accounted for 48% of the market. The price advantage that the popular brand enjoyed
was about 10% over local products. In the year 2001, about 100,000 PC units were
expected to be shipped. As volumes were increasing it was observed that the prices were
coming down.
The Romanian market continueds to be influenced by government procurement and the
banking/financial services segments. Nevertheless, most assemblers and several well
known brands, such as Compaq, began to expand sales into the Small Office/Home
Office (SoHo) segment, and small and medium-sized business segments, in an effort to
offset declining shipments to traditional customers. The SoHo market represented about
20% of the shipments of PCs in 2000.
The Romanian market for computers, network components and Internet-enabled devices
is expected to grow rapidly. Government bodies, public corporations, private
companies, banks and state-owned companies are expected to initiate computerisation in
view of the main thrust of Ministry of Information and Communication Technology IT
projects. The increase in the market could also be linked to the modernization of the
National Railway Company (SNCFR), the employment in the social protection project,
the power sector rehabilitation and modernisation project, the telecommunications
project for Romtel, as well as programmes for the higher education reform programme.
Nevertheless, PC penetration in Romania still remained at the low level of 3.2%.
Computer software
In the year 2000, the software and services market was estimated at US$ 83 million
compared with US$ 56 million in 1999, a growth of 48%. The market for standard
software products was valued at US$ 45 million and Software Services at
US$ 38 million. This is expected to climb to US$ 62 million and US$ 40 billion
respectively in 2001. The market is expected to grow at a rate of 23-25%.
41
The packaged software market in Romania is dominated by Microsoft, as evidenced by
the high number of personal computers shipped with Windows 95, NT or Windows 2000
and Windows XP. Oracle is another major player, which dominates the database
segment. The demand for software arises from the need of clients to have
state-of-the-art software for their information systems. Growth in the market is being
stimulated by:
Anti-virus software packages; providing a good export market;
Customised software to meet the need of users in the SMEs and SoHo segment;
Customizing existing software packages by adding Romanian interfaces;
Software written in the Romanian language to meet the specific requirements of
Romanian legal, government and business practices;
Increased use of standard software packages;
Profitability of imported software leading to vertical or niche markets for locally
produced software;
Vertical market segments such as accounting, medical, manufacturing systems
etc. which are potential areas for application development.
As the government is taking initiatives to launch e-governance and create an information
society by implementing major IT projects, the requirement of standard software products
and services is expected to grow gradually.
Telecommunications
In 2000, the Romanian market for telecommunications equipment was valued at
US$ 610 million and was estimated to reach US$ 700 million in 2001, a growth of
16.6%. The market for public network infrastructure was estimated to be of the order of
US$ 530 million, with private network equipment making up the remaining
US$ 80 million.
In basic telephony, RomTelecom, was expected to invest US$ 2.7 billion to upgrade its
infrastructure by 2003 with a view to achieving the following:
Improving teledensity from 11% to more than 30% by 2005;
Lowering the waiting list from 920,000 in 1998, to telephone on demand;
Improving the quality of service by reducing the 105 average confirmed
complaints per 100 main lines to international standards;
Introducing new services such as ISDN and voice mail, creating a national
digital network, developing microwave networks and encouraging radio link
solutions, improving basic services provided to rural areas, and, encouraging
development of value added services.
42
Four operators provide mobile telephony in Romania - the
In just 3 years the two largest two largest having entered the market in 1997. These are
mobile firms have grown their
combined subscriber base to Mobifon GSM that operates under the name ConnexGSM,
over 2.0 million ― compared and MobilRom GSM which markets under the name,
with RomTelecom’s currentDialog. The third provider of mobile services is
3.74 million subscriber base forTeleMobile which provides limited services using the
main telephone lines. 450 MHz frequency band in a few selected cities.
CosmoRom, a subsidiary of RomTelecom has initiated
mobile services with little market penetration at this time.
There are about 2 million mobile subscribers at present in Romania. The market is
expected to grow at a rate of 35% per annum.
Data/Internet Services Internet in Romania
The data/Internet market is open
The Internet environment in Romania, unlike basic
for free competition and telephony services, is open for competition with a large
RomTelecom is not allowed to number of ISPs participating in the market.
enter this market directly, but only
There are an estimated 150 ISPs operating in
through a joint venture. This has Romania
resulted in the use of cable, Current estimates of the number of Internet
VSATs, private networks, leased subscribers is placed between 60-70 thousand—with
lines, etc. to be established and the number of users likely to be 3-4 times this amount
used for providing bandwidth to While most access to the Internet is via dial-up, access
is also achieved via leased lines, wireless, and cable
customers. Interconnection,
TV
however, is still through A number of the larger ISPs have established their
RomTelecom which has high own international Internet access via VSATs,
connection charges. This has purchasing access from an international provider, or
limited Romania‘s ability to via fibre to a neighbouring country
expand Internet usage.
Internet Service Providers
At present, it is estimated that there are as many as 150 ISPs within Romania, but only 10
or so with a substantial enough customer base to be sustainable in the longer term. There
is considerable consolidation taking place among the smaller ISPs through merger
activity, as well as larger ISPs buying smaller companies.
Part of this consolidation is due to the fact that the base of Internet subscribers, while
growing, is such that the potential profits for providing Internet services is being realized
mostly by RomTelecom - because of the high costs of local loop dial-up. Obtaining
financing to expand their businesses continues to be a major obstacle, and is one of the
reasons for the consolidation that is taking place.
43
A lack of legislation has been prohibiting the emergence of E-commerce, the most
promising source of future revenue (the value-added services that come from developing
and supporting content on Internet, rather than providing access). It has been estimated
that there are 60-70,000 Internet accounts in Romania and 10,000 registered domains. It
was also noted that only 2.7% of businesses and 1.0% of households had PCs.
Components
The ITC‘s consultations with the Ministry of Industry and Resources confirmed that the
market for semiconductor components in 2000 was valued at US$ 67.5 million and for
passive components, including TV picture tubes, it totalled US$ 75.6 million. This was
expected to reach US$ 75 million and US$ 80 million respectively in 2001. Table 11
gives the market growth. The market for components has stagnated as the old industries
have almost come to the brink of closure.
The new investments, which came mainly from abroad, were for contract manufacturing.
These plants were importing components under transfer pricing for assembly and
re-export. The market for the assembly of television and PC systems is growing.
The stronghold of radio communication systems, which were used in paramilitary
applications and in other industries, such as industrial automation and consumer
electronics, are under pressure in the new free market environment, making the
requirement for components virtually non-existent.
Office and Scientific Instruments
The market for office equipment is negligible and is met largely through imports.
Recent research made by IDG, a Bucharest-based IT company, indicated that the market
was largely held by MNC brands including Xerox, Canon, Hewlett-Packard, etc. For
scientific instruments, the market is dominated by Marconi, Siemens, Motorola etc.
44
Romania
Key Issues and Trends
Information Technology Market
CEEC market is comparatively small for ICT products;
IT penetration is low and slow in developing, compared with
Western European countries;
Hardware market is shifting towards implementing IT to
improve productivity and promote e-governance;
IT market is oriented to hardware, which accounts for a major
share of IT spending;
IT spending in Romania is the lowest in the region;
Emergence of E-commerce is restrained by lack of the
legislation;
Internet is the new growth engine (Internet penetration to
increase to 75% by 2003);
Mobile infrastructure and services, CATV, telephone and
switched data and leased line services are a major growth
market in telecommunications;
IT market is dominated by MNCs like IBM, Bull, Compaq,
Hewlett-Packard, Cisco, Canon and Toshiba;
Rise in PC volumes is leading to a reduction in prices;
SoHo market growth – representing 20% of the total market;
Software piracy rates dropping;
Software market dominated by MNCs like Microsoft and
Oracle;
Unix accounts for the highest share of server revenues.
45
Chapter 5
NATIONAL INFORMATION TECHNOLOGY INDUSTRY
5.1 Romanian ICT Industry
Romania has a well-developed ICT base. It dates back to the COMECON regime when
the Romanian IT industry built its own computer in 1957 called CIFA, followed by
MECIPT in 1961 and DACICC in 1962. The industry suffered from isolation imposed
by the Coordinating Committee for Multilateral Export Controls (COCOM), which
blocked the export of many IT items to Romania. Thus the ICT industry could not keep
pace with current developments in the sector. However, this situation changed after
1989. The first impact was on the Institute of Calculus Techniques and Informatics,
which was split into three institutions; namely the Calculus Techniques Institute (CTI),
the Research Institute for Informatics (RII), and the Informatics Perfection Centre (IPC).
These institutes were under tremendous pressure to change their roles to become
self-sustaining, as government funding was being reduced. The large state-owned IT
companies were also facing a similar situation.
During the era of the COMECON planned economy, the industry manufactured a wide
range of components, telecommunications equipment, consumer products, computers and
computing systems, automation systems etc. The companies were huge, employing over
75,000 people. Few companies survived the downturn in the economy during the
transition. As the economy underwent recession and market forces started operating,
local companies could not withstand the competition from large overseas companies or
joint ventures. Those state companies, which were not taken over, came close to the
brink of closure. Another set of companies were those undertaking contract
manufacturing for their overseas counterparts. The software and services industry has
many enterprises employing between 5-10 professionals. The software industry segment
has been described as vibrant.
Table 15 provides data regarding IT companies operating in Romania as per the registry.
Table 15 IT Companies in Romania
Number of companies 1997 1998 1999
Hardware 286 205 224
Software 2,093 2,955 3,408
Source: Trade Registry Romania, 2001
46
ICT sector production for 1997-2001 may be seen in Table 16.
Table 16 Romanian Electronic Industry Production (in million USD)
1997 1998 1999 2000 2001*
Electronic Data Processing 225 198 218 400 460
Semiconductors 7 13 14 15 16
Telecommunication 407 510 440 515 570
Other Components/sub-assembly 429 531 402 632 711
Office Equipment 14 17 15 16 24
Scientific Instruments & Control 88 81 81 122 132
and Measurement Equipment
Software and services 50 60 100 150 200
Total 1,220 1,410 1,270 1,850 2,113
Source: Yearbook of World Electronics / Ministry of Industry & Resources 2000
* estimated
It may be noted that the electronics industry grew by 45% in the year 2000 over the
previous year. Solectron, Intrarom, Flamingo, Siemens, Ericsson etc. were some of the
major companies using Romania as a base for assembly/contract manufacture for
international markets. In the software sectors, Softwin and Siveco were the major
software developers in addition to many system integrators. ARIES revealed that 76% of
the firms in the Informatics services sector had less than 10 employees; 14% of firms
hired between 10 and 50 employees; 8% of firms had between 50 and 100 employees,
and 2% of firms had over 100 employees. The current slowdown in the US and global IT
markets has had an impact on the software sector in Romania.
The sectoral analysis of the Romanian ICT market, in terms of electronic data processing,
semiconductors, telecommunications, computer software, and other areas, is given in the
following paragraphs. The analysis is based on the ITC team‘s wide ranging interaction
with the leading IT industry associations, the IT industry, the Ministry of Industry and
Resources, the Ministry of Communication and Information Technologies and others
involved in the ICT sector.
5.2 Electronic Data Processing
Conventional industries
Hardware manufacturers fared badly during the transition from the COMECON regime to
the free market. As Romanian hardware was slower, had lower capacity, was harder to
maintain, energy-inefficient, costlier and generally out-of-date compared with Western
hardware, which had suddenly become widely available, the state companies came to the
brink of closure. As state funding for mainstream computers also dried up, demand for
local hardware consequently imploded and local firms were forced to diversify or shut
down. Although nominally autonomous, their survival relied on state contracts for the
mass production of items such as cash registers, electronic scales, and
47
telecommunications equipment. ROMCD, for example, saw its joint venture lapse and it
then merged with other companies to form Romanian Cable Systems, focusing on
production of telecommunications equipment.
Contemporary Private Initiative
New enterprises emerged to take advantage of local assembly based on the CKD/SKD
imports from Asian sources. There were three major players and a number of other small
players in the market. The quality products, efficient assembly process, smart thinking
and design, resulted in reliable and high performing machines and in a huge awareness on
the Romanian market for these local brand PCs. Many companies received ISO 9001
certification for their assembly activity including design. Local manufacturing accounted
for 48-50% of the EDP market and produced about 50,000 PCs annually. Box 2 shows
the success story of Flamingo, a local brand turning out to be a multi-product, regional
player with an annual turnover of US$ 52 million and subsidiaries in many countries.
Box 2 Flamingo Computers – A success story
FLAMINGO COMPUTERS
Flamingo Computers started as a local player in Romania. After gaining
experience in working with vendors, organising logistics and managing an efficient
distribution channel for this particular region of Europe, the company started
expanding the business outside Romania.
In January 1999, the company became a Joint Stock Company under the name
Flamingo Computers S A. In July 1999, Flamingo International S A was established as
a mirror company for Flamingo Computers S A to provide a single vendor window and
manage the distribution business of Flamingo in the whole region outside Romania.
It operates from the Giurgiu Free Trade Zone where it assembles its various
brands of PCs – Atlas, Maestro, Assistant, Classic, Diablo, Conecta.
The product mix of Flamingo computers comprises key computer components
(16%), peripherals and printers (14%), storage devices (15%), video and multimedia
(13%), monitors (12%), software and services (14%), PCs and notebooks (10%),
networks and accessories (6%).
In terms of its growth, from a
fcst.
revenue of US$3 million in
$52 mil.
1995, it reached US$30
million in 2000, maintaining
$30 mil. a CAGR of 50%. The
$23.5 mil. revenue growth is indicated
$15.8 mil. in the graph opposite.
$3 mil.
$7.4 mil.
$8.9 mil.
A key element of Flamingo‘s
success is the ability to
1995 1996 1997 1998 1999 2000 2001
generate a consistent market
Revenue Growth 1995-2001
strategy, a sharp financial policy based on profit reinvesting and supporting the
working capital growth and a focus on human resources as the most important asset of
the company.
Source: Flamingo Computers Annual Report 2001
48
5.3 System Integrators
There are a number of private sector system integration firms; the larger ones typically
employ 10-50 staff. These system integrators source hardware and related software from
various vendors and provide total service and support to customers. The activities of
system integrators include:
• Purchase of hardware;
• Purchase of retail software packages covering accounts, purchasing, inventory, sales
and MIS reporting functions;
• Installation of hardware systems;
• Creation of customized links and a Romanian interface for software packages;
• Installation of software systems;
• Client staff training; and
• Continuing support.
The work of such firms tends to be more software than hardware focused, and they
represent an important pool of Romania's current software capabilities. As the IT sector
has grown, many existing companies have been converting themselves into service
providers for large corporations such as IBM, Compaq, Hewlett-Packard, Dell, Acer,
Cisco, 3COM etc.
5.4 Presence of Large Corporations
One highly visible change since 1989, has been the arrival of foreign IT products and
multinational IT firms in Romania. MNC brands account for 50% of the market.
However, MNCs remain cautious in Romania because of the continuing high-risk
business environment. IBM, Compaq, Cisco and Hewlett-Packard have set up their
representative offices and marketed their products through local distributors/assemblers.
Products are imported and supplied to the customers through their local distributors.
IBM is a major hardware player and is expected to play a major role in the future of
Romania‘s IT industry. Its presence is spread throughout the country via a network of
70 representatives.
5.5 Computer Software Industry
The computer software sector in Romania is vibrant, employing about 25,000 skilled
software professionals. The industry is delivering software and services worth about
US$ 150 million per annum , which is expected to increase to US$ 200 million in 2001.
There are a couple of large companies employing about 400 employees and many small
companies. But as a rule, a very large number of one- and two-person software firms
with low turnover typify the market. These are often set up by IT professionals who have
left R&D institutions, or by recent IT graduates.
49
The Romanian language and the specific requirements of Romanian legal, government
and business practices have enabled the industry to develop local solutions or adapt
standard software packages to meet the demand. The work of the smaller companies is
related to:
Custom-built software for SMEs and the SoHo segment.
Through customizing existing software packages for SMEs and SoHo (building
databases and spreadsheets, using application programming languages like
Visual Basic, and/or adding a Romanian interface to the package),
Trading imported software packages.
Larger Romanian companies offer services in all typical software development processes,
including consulting, modelling, development, implementation, integration, testing,
re-engineering and maintenance; web-based applications and tools;
e-commerce / e-business applications; design, development and deployment of
distributed architecture applications; custom XML application development; and
SM/SGM standard implementation. These companies concentrate on the major segment
of software product development, IT services and IT-enabled services. Box 3 details the
software products developed, services offered and IT-enabled services
Box 3 Romania: Software products developed, services offered and
IT-enabled services
Products IT services IT enabled services
B2B electronics Web enabling legacy On line web reporting
transactions; systems Offshore data processing
AVX Virus Scanner, E-commerce / extended Call centre applications
AVX System Security enterprise applications Web site maintenance
etc. Standards based Content creation
RAV Anti virus, application integration
GeCAD Fast Commander Secondment of IT
PRAXIS – Legal professionals
Software development
Electronic Advocate;
projects across the
LITERATURE –
industry spectrum
Bibliography of
Romanian Literature
Source: Romanian Association for Electronic and Software Industries, 2001
The software industry in Romania is poised for exponential growth as many large
corporations are considering Romania as their offshore software development base.
Microsoft, Cisco, Motorola, Ericsson etc. are a few large corporations, which have
established their subsidiaries in Romania to take advantage of the low cost skilled
software professionals. To illustrate the success story of developing software in
Romania, Box 4 details the success of Siveco, a software company in Romania.
50
Another example of success in the software segment is Softwin Consulting Inc., that has
emerged as a leading software service and product company operating in Sweden, the
United Kingdom, the USA, France, Finland, Germany and many other countries. Their
success has been in developing cutting-edge technology products, managing technology
and co-operation with leading players overseas.
Both the SIVECO and Softwin models could be replicated for developing Romania into
an attractive software development and services base.
Box 4 SIVECO Romania – A success story
SIVECO
Siveco (Romania), began operations in
1992 and employs around 50 people. It is
a joint venture between a group of
Romanian businessmen and Siveco
(France). Activities include custom-
building, customization, conversion work,
design and development, QA and QC
maintenance and training in line whole
line of products implemented by the
SIVECO group world wide. The success
of SIVECO Romania is in delivering very
flexible software packages built upon
state-of-the-art technology to the SIVECO
group the world over.
5.6 Software & Services Integrators
Software companies such as Microsoft, Novell, SCO Unix and Oracle are all represented
in Romania. They utilize the services of local firms, as well as authorized resellers and
distributors, for marketing and application development based on their standard software.
The local companies develop applications using the standard packages to meet the
requirements of their customers. Localization and content creation are the main service
areas for the local companies.
5.7 Telecommunications Industry
The telecommunications industry in Romania is a well-established industry producing
equipment for meeting the requirements of basic telephone services, radio
communications for police, paramilitary and defence forces, aeronautics and customer
premises terminal equipment. After liberalization, most of the companies were either
sold or shut down. One example, Electromagnetica, survived the competition from
MNCs and converted its business into the manufacture of EPBX equipment and other
terminal products. This has been a successful case of a company being transformed and
the details may be viewed in Box 5.
51
Box 5 Electromagnetica – A success story
ELECTROMAGNETICA
Electromagnetica, a company dating from the
COMECON regime became a joint stock company
in 1990. It was split into smaller companies in
1999, by establishing joint ventures - EMCOM SA
in co-operation agreement with Siemens for the
manufacture of EWSD digital telephone exchanges
and PCM transmission equipment; EMGS SRI in
co-operation with Goldstar for manufacturing
digital telephone exchanges; and ATOEM SRI in
co-operation with ATOFORM of Germany for the
manufacture of orthopaedic and medical
equipment.
The company is a ISO 9001 company. Its quality
system is certified by Underwriters Laboratories
Inc. (UL), AEQOQ SA and OMACS. It deploys
state-of-the-art SMD and SMT-based pick and
place lines for the assembly of PC Boards. Its
turnover has increased steadily from
US$ 11 million to US$ 20 million in 2000. The
success of Electromagnetica has been in converting
a typical COMECON regime company into a
vibrant, modern state-of-the-art company
delivering quality products meeting international
standards.
Other major companies in the telecommunications equipment sector include Intrarom, Ericsson,
Siemens and CIT Alcatel. The products manufactured include digital exchanges, transmission
equipment and a host of EPBXs, modern data collection systems, digital pair gain systems and
public telephony management systems, wireline networks etc. Wireless equipment, access
equipment, telephone terminals, radio relays, public card phones, ISDN network terminals,
intelligent terminals for lottery systems are locally produced. Many small companies
manufacture telephone instruments, EPBXs and other telephone accessories to meet the needs of
the local market. The majority of production is for meeting the requirements of RomTelecom,
Organismos Tilepikoino-nion Ellados (OTE), Mobifon, MobilRom and TeleMobile. Other
industry segments that are emerging include Internet Service Providers, Cyber Cafés and
community information centres.
52
The size of the telecommunications industry was estimated at US$ 515 million in the
year 2000, compared with US$ 440 million in 1999. The industry was projected to grow
to US$ 570 million in 2001. The manufacturers pursue quality measurement assurance
systems and qualified certification of SRAC (Romanian Body of Quality Assurance) and
OMCAS (Defence Ministry Certification Body). Quality principles were implemented at
all levels, from production processes to management activities. Quality Assurance
Departments regularly audit company departments to control the effectiveness and the
improvement of quality management systems.
5.8 Electronic Components Industry
In Romania, the production of semiconductors and electronic components dates back to
the development of silicon transistors. The industry used to manufacture a wide variety
of semiconductor, passive and electromagnetic components to support assembly of
equipment owing to the regime‘s ideology of self-sufficiency. During the transition
towards a free market economy, the component manufacturing base was eroded because
the industry could not keep pace with technology, and as a result of the closure of
production units for systems and hardware.
The Microelectronic Institute of Romania is now involved in developing technology with
the support of European R&D programmes. Another company designs microcircuits for
a US based company. There are two main companies which manufacture capacitors and
resistors. However, they are no longer competitive. As such, the base of electronic
component manufacturing has almost vanished, except for a few companies which
manufacture electromechanical components.
5.9 Leading National IT Manufacturers
The ITC team, after an extensive survey, identified companies whose profiles could be
included in the export potential profile. A list of the companies, designated by sector, is
included in the export potential profile, which is provided in Table 17. Detailed profiles
of these companies are in Annex 4.
Table 17 Leading National IT Players in Romania
Computer software IT Telecommunication Electronic Internet
hardware components service
providers
Infopulse Flamingo Ericsson, Romania Isratech
Softwin Consulting Inc. Omnilogic Electromagnetica NEI, Bucharest Softwin
GeCAD srl Intrarom Top 9+ Geo Strategies
Software ITC Solectron Baneasa Euro Web
Bucharesti
CST Cornersoft CIT Alcatel Microelectronica Soft Net
Technologies
Ubi Soft Entertainment Mensa
Source: Romanian Foreign Trade Centre, Ministry of Foreign Affairs, 2001
53
Romania
Key Issues and Trends
Information Technology Industry
Large state-owned companies facing closure;
Under-utilization of skilled manpower;
Above 75,000 hardware assembly workers unemployed;
Contract manufacturing for MNCs – initial stage of development;
Software companies small and fragmented;
Skilled software capability to develop competitive products / services;
Telecommunications manufacturing for the local market – leading to
exports;
Assembling rates for products competitive (eg. CTV assembly US$ 3-5 per piece);
Clustered industry development in software technology parks;
ISP industry not developing due to high interconnection charges;
Content creation and IT enabled services – an area of growth;
Multilingual capability – asset for delivery of software and services.
54
Chapter 6
SALES, MARKETING AND DISTRIBUTION CHANNELS
6.1 Sales, Marketing and Distribution
There are no restrictions on sales in Romania. Suppliers may sell their goods through
direct or indirect distribution depending on the nature of the goods. In the case of direct
distribution, producers supply goods directly to the end-user without the intervention of
wholesalers or retailers. Marketing by company-owned networks, either as distribution
companies or as production departments with attached sales teams, has become
widespread during in recent years.
The indirect selling approach is used to sell industrial goods. Foreign suppliers sell their
goods through independent traders or through sales agents. Specialized trading
companies for importing goods from abroad and selling them to domestic producers and
dealers are also present on the market. The retail distribution system has developed
specialized stores, department stores, supermarkets and shopping centres as its main
outlets.
The Romanian distribution system has enjoyed considerable foreign investment by major
international holdings in the distribution network. While the distribution of industrial
goods in Romania is quite similar to most European countries, the distribution of IT
products and services has not yet been developed properly. Companies such as IBM
have developed an extensive retailer network having 70 retailer distributors across the
country. Compaq and Hewlett-Packard have also franchised their distribution networks.
Most foreign companies have representative offices in Romania and have utilized local
networks for delivery, after-sales service and system integration. The leading software
suppliers are Microsoft and Oracle. They also deploy value-added retailers for marketing
their products. Manufacturers either directly procure electronic components from Asian
sources or through distributors. Component distribution is geared to supplying small
quantities to SMEs engaged in the assembly of products, as well as repair and
maintenance establishments.
There are very few professional distributors and in most cases they lack the financial
sources, the logistics and the know-how required by a profitable distribution activity.
Moreover, the business ethics of Romanian distributors is substantially different to their
Western counterparts. For example, receiving timely payment from Romanian
distributors was reported to be one of the worst business hurdles.
55
Advertising Law (No.148/2000) protects consumers, tradesmen, service providers and
professionals. The Law protects the general public interest against misleading
advertising and the potentially negative consequences of advertising, and establishes the
conditions for comparative advertising. The provisions of the law are applied to the
content of advertising items and advertising messages, whatever the media.
IT companies are resorting to advertising in the news media, technical journals and on the
Internet, where advertising is becoming popular. In Romania, Compaq is using this media
heavily and it was mentioned to the ITC team that the company had a budget of
US$ 1 million for Internet advertising in the year 2000.
6.2 Trade Fairs in Romania
The trade fairs held in Romania are given in Box 6.
Box 6 Specialized IT Trade Fairs in Romania
Name Place Content
Romanian Computers Show (ROCS) Bucharest Computes & IT solutions
CERF (April) Bucharest Information technology
and communications
IFABO (September/October) Bucharest Information technology
and communications
BINARY Romania Software Fair (October) Bucharest Computer Software
Source: Romanian Association for Electronic and Software Industries, December 2001
6.3 Leading Professional IT Journals and Magazines
The leading professional IT journals / magazines available in Romania can be found
in Box 7.
Box 7 Romania: Leading Professional IT Journals/Magazines
Name Period Content
COMUNIC@II Mobile Monthly Communication
Computer World / IDG Bi-weekly Computers
PC World / IDG Monthly PCs
Network World / IDG Monthly Network & communication
Net Report Monthly Information technology and communications
CiP Monthly Information technology and communications
e-Week Weekly Internet
Vivid Monthly General
Mobile Communications Weekly Communication
CAD Report Technical
BBW Weekly General
Romanian Business Journal Weekly General
Source: Romanian Association for Electronic and Software Industries, December 2001
56
6.4 IT Industry and Trade Associations in Romania
The leading IT trade and industry associations in Romania are listed in Box 8.
Box 8 IT Trade and Industry Associations in Romania
Romanian Association for Electronic and Software Industries (ARIES)
Str. Splaiul Independentei 2021
Sector 6, Bucharest, Romania
Tel: 0040 1 224 82 77 or 224 93 54 or 222 12 89
Fax: 0040 1 220 27 12
Email: aries@hades.ro Website: www.aries.ro
office@aries.ro
National Association of Internet Providers from Romania (ANISP)
Bd. Natiunile Unite nr.1bl.108A,et.1,
Sector 5 – Bucharest, Romania
Tel: 0040 1 335 82 80 or 335 82 81
Fax: 0040 1 3335 82 90
e-mail: grusu@ew.ro Website: www.anisp.ro
National Association for Software Companies (ANIS)
Bd.Unirii 64, Bl.K4,Sc. 5,
Ap.129, Sector 3,
Bucharest, Romania
Tel: 00 40 1 327 63 66
Fax: 0040 1 327 15 46
E-mail: a.mustea@anis.ro Website: www.anis.ro
Association for Information Technology and Communication – Romania (ATIC)
Calea Floreasca, 167,
72321, Bucharest, Romania
Tel: 0040 1 232 19 08
Fax: 0040 1 233 18 77
Association for Producers of Electrical and Electronics Industries (APREL)
b-dul Dimitrie Pombei, nr.5-7
Sector 2, Bucharest, Romania – 72326
Tel: 0040 1 232 89 91
Fax: 0040 1 232 01 98
e-mail: neisa@dnt.ro
Small and Medium Industries Association, Romania
0, Lavandel ST
Bloc O12/112
77568 – Bucharest, Romania
International Data Group
Communication Publishing Group SRL
8-10 Maresal Averescu Bd., 7th floor
Bucharest 1, Romania
Tel: 0040 1 224 11 32
Fax: 0040 1 224 11 32
Source: Romanian Association for Electronic and Software Industries (ARIES), March 2002
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6.5 Chambers of Commerce in Romania
The major Chambers of Commerce and Industry in Romania are given in Box 9.
Box 9 Chambers of Commerce and Industry in Romania
Chamber of Commerce and Industry of Romania and Bucharest Municipality
2, Octvian Goga Blvd, Sector 3
Bucharest.
E-mail: ccir@ccir.ro
Website: www.ccir.ro
Chamber of Commerce, Industry and Agriculture of Timis
2, Victoriei S
Timisoara
E-mail: cciat@cciat.ro
Website: www.cciat.ro
Source: Romanian Association for Electronic and Software Industries (ARIES), March 2002
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Chapter 7
TECHNICAL REQUIREMENTS AND REGULATIONS
7.1 Legal Basis of the Standardization & Certification System
Standardization in Romania is governed by the following legislation:
Government Ordinance 38/1998 on accreditation activities and the infrastructure for
conformity assessment;
Government Ordinance 39/1998 on standardization (amended by Government
Ordinance 44/1998); and
Government Decision 168/1997 on products and services that may endanger life,
health, the environment, and worker safety.
7.2 National Product Testing and Certification System
The standardization regime in Romania was overhauled in 1998. The former state-owned
Romanian Institute for Standardization (IRS), which was in charge of national
standardization and accreditation, was dissolved and two new private bodies were created
in its place. The new Romanian Standards Association (ASRO) is now in charge of
national standardization. ASRO is a private, non-profit organization with 85 employees.
Its members include institutes, the government, and private companies. ASRO is
financed through membership fees, sales of publications and government contributions.
The new Romanian Accreditation Board (RENAR) is in charge of accrediting testing
laboratories. RENAR is a private, non-profit organization financed by membership and
accreditation fees. Currently, more than 100 laboratories have been accredited and can
award the Romanian standards mark. These laboratories are spread across Romania and
also issue type approval for telecommunication terminal equipment.
The Office of the Consumer Protection (OPC) and relevant ministries are in charge of
market surveillance. A product liability law is being discussed in Parliament.
The National Programme for Standardization, which was drafted by ASRO and should be
updated every three years, sets targets for the introduction of new standards. In addition,
a programme started in 1990 to convert all mandatory standards to voluntary standards
was completed in 1998. The voluntary character of national standards is explicitly
expressed in Article 6(1) of Government Ordinance 39/1998.
The government has decided that new products and services can be imported without
further inspection or testing if they:
59
Carry the EU standards mark (the CE mark);
Carry the Romanian standards mark;
Have a certificate of conformity from an acknowledged institute;
Have a declaration of conformity submitted by the manufacturer or importer.
A producer or importer can also market a product by submitting a declaration of
conformity in accordance with an annex in Government Decision 168/1997. The
Decision sets penalties that range from 700,000 to 1,000,000 lei and for interdiction of a
product if the rules are violated.
For telecommunication terminal equipment, type approval is necessary if it is to be
incorporated in the national network.
In order to assure the quality of the tests, the testing of communication equipment and
systems is performed in accordance with the technical specifications and
testing methodologies approved by the expert bodies, the national standard SR EN 45001
– ―General criteria for the operation of testing laboratories‖ and Guide ISO/CEI 25 –
―General prescriptions for the competence of calibration and testing laboratories‖.
The products that require conformity testing include terminal subscriber equipment, PBX
systems, transmission systems, modems, automatic answering devices, alarm emission
and reception on telephone lines, radio communication systems, postal mechanization
and automation systems.
Romania is aligning its standards and technical requirements to European Union
standards according to the ―New Approach‖ to technical harmonization and
standardization. A system is to be developed to create specific conformity assessment
procedures and independent ―notified bodies‖ that are authorized to carry out conformity
assessments. A National Accreditation Body would have to be set up to oversee
enforcement, market surveillance, standardization, and conformity assessment. In
addition, a functioning dispute settlement system has to be in place to assess violations of
product conformity and to reimburse appropriate damages. Co-ordinated standardization
legislation is required to spell out the responsibilities for drafting framework legislation
and standardization laws, and for implementing conformity inspections.
An effective system of market surveillance has still to be established through enhanced
co-ordination between the involved parties, ministry officials, and Office of Consumer
Protection. Furthermore, the legal basis for a comprehensive product liability law has to
be adopted and implemented as soon as possible, so that manufacturers have an incentive
to apply the voluntary standards. The law should ensure that producers and importers are
liable for damages caused by faulty products.
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7.3 Software Quality Assurance and Testing
Romania has good potential for developing IT solutions, IT products and IT services. In
order to garner a greater share of the world market, Romanian companies will have to
deploy Software Quality Assurance and Testing Systems. Software Quality Assurance
and Testing is utilised to create an image of credible software development procedures
and methodologies.
Software Specifications, Design Limits, and Documentation are the most important
aspects of Software Development Life Cycle. These are essential elements for the
Romanian software industry to emerge and take up offshore projects.
Specifications
Software specifications are developed based on the clear understanding of the
requirements. These are known as Software Requirement Specifications (SRS) and
include details like functions, performance, attributes, simplicity, maintainability,
reliability etc.
Design limits
The design aspects of the software are covered in Software Design Description (SDD)
and include descriptions of the operating environment and all functional modules,
interfaces, formats, security, integrity, prioritisation and design limitations etc.
Documentation
The entire Software Life Cycle development depends on Software Configuration
Management and User documentation. The User Documentation includes, Installation
manual, Operating Manual, Maintenance Manual and Training Manual. These are the
minimum requirements for delivering quality to the customers in software development.
Quality Strategy for the IT industry
The software quality strategy reflects the ability of software professionals in developing
software applications using engineering practices to be successful in the international
market. It was observed by the ITC team that, in Romania, the majority of software
companies did not deploy any quality system, except for a few that had obtained ISO
9000 certification. Software enterprises will have to deploy quality systems like CMM to
display their maturity in demonstrating software quality.
Going Beyond the Minimum
Mature organizations have several options available when choosing an improvement
framework. The most important quality improvement models available are:
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SEI‘s Capability Maturity Model (CMM) – software, systems engineering,
people, etc.
ISO 9001 (Quality Management Systems) – TickIT
ISO/IEC 15504 (Software Process Assessment),
or Baldrige (USA) Bootstrap (Europe),
ISO/IEC 12207 (Software Life Cycle Processes)
Software Productivity Research (MIS), Trillium (telecom).
Selection Criteria
The selection of an appropriate model for deployment is based either on the requirement
of the customer or on the government regulation. In order to obtain a return on
investment and to establish credibility, companies often opt for a standard model. These
models enable the company to absorb the quality culture and reduce the software
development life cycle. The most popular and comprehensive software model currently
available is the CMM that integrates Software System Engineering and Integrated
Product & Process Development. TickIT is the best quality management standard, most
popular in Europe, whereas ISO 15504 is an emerging international standard. Box 10
details the software CMM model and its various application areas:
Box 10 Software CMM – Key Process Areas
Level Focus Key Process Areas Quality
Productivity
1. Optimizing Continuous Defect Prevention Initial level
Process Technology Change Management
Improvement Process Change Management
2. Managed Product and Quantitative Process Management Marginal level
process quality Software Quality Management
3. Defined Engineering Organization Process Focus Gaining
processes and Organization Process Definition maturity
organizational Training Programme
support Integrated Software Management
Software Product Engineering
Intergroup Coordination
Peer Reviews
4. Repeatable Project Requirements Management Versatile
management Software Project Planning
processes Software Project
Tracking & Oversight
Software Subcontract Management
Software Quality Assurance
Software Configuration Management
5. Initial Competent people and heroics Exemplary
Source: Software Engineering Institute, Carnegie Mallon University, USA, 2001
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Romanian companies need to deploy the CMM model or TickIT to make a breakthrough
in the European and US markets. Countries that have made progress in software
development include India with 50 companies and Ireland with 10 companies, which
have reached CMM level 5 maturity. In order to emulate the success of India and
Ireland, Romania needs to organize its quality assessment systems. There are three
methods currently used in assessment:
First party assessment – by a supplier for internal use (possibly with assistance
from a consultant);
Second party assessment – by a customer (picking or working with a supplier);
Third party assessment – by an external auditor for use by suppliers, customers
and the judicial system.
Second and third party ―assessments‖ are audits, which are made against the criteria of
the model/standard.
7.4 Software Reliability and Assurance
Deployment of quality models will also enable Romanian companies to improve their
image. Software reliability testing will also have to be adopted. The testing covers all
stages – unit testing (module testing), integration testing, external function testing,
system testing, acceptance testing and installation testing. The tools that could be
utilised during testing are:
tools for reviews and inspection;
tools for testing planning;
tools for test design and development;
test execution and evaluation tools;
software testing support tools.
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Romania
Key Issues and Trends
Standardisation, Testing and Conformity Assessment
No clear ministry or agency is in charge of drafting the necessary
framework legislation for alignment to EU deploying their New
Approach System;
Conflicting standards in use during the transition period of adopting EU
norms;
Lack of trained staff with ASRO to manage the transition and
deployment of EU standards flowing out of global approach to
conformity assessment;
Lack of funding to ASRO and RENAR – leading to delays in creating
necessary laboratory infrastructure;
Romania‘s dispute settlement system lacking ability to assess violations
of product conformity and to compensate appropriate damages;
Lack of coordination among the various ministries and between the
ministries and Office of Consumer Protection;
Lack of deployment of quality systems by the software industry;
Lack of software project management technologies and methodologies.
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Chapter 8
EXPORT POTENTIAL – INFORMATION TECHNOLOGY INDUSTRY
DEVELOPMENT
8.1 Background
The Romanian IT industry had a strong manufacturing and development base during the
Communist regime. The industry was developed on a concept of self-reliance, which
integrated research institutes, academia and industry. At the same time, it had developed
under isolationist policies and centralized government control. Policy changes in the IT
industry started in Romania in 1989.
Romania has built up technological capability – a crucial determinant of
industrialization – in the production of both hardware and software.
IT capacity assessment tools utilized by the ITC Technology Team to gauge the
competitiveness of the Romanian industry were as follows: ―Schmitz & Hewitt Model‖,
ITC‘s National Export Potential Index and SWOT analysis. Overall results of each
assessment are given below:
The Scale of General Technological Capability was developed by Schmitz & Hewitt
(1991). The Software Technological Capability model of Schmitz & Hewitt (1991) was
utilized to gauge the capability of the software industry in Romania. These capabilities
are embodied in the skills and experience of individual workers, which are often seen as
the most critical resource required by software industries to attain technological
development. The ITC team assessed the software sector at level 4 in a scale of 7.
The model for general and software technology capability assessment may be seen in
Annex 6.
To arrive at the above assessment, the ITC Team reviewed the ―Working Paper Series,
Paper No. 2 on Romania‘s Hardware and Software industry: Building IT Policy and
Capabilities in a Transitional Economy‖ by Mihaiela Grundey and Richard Heeks, June
1998, published by the Institute of Development Policy and Management, University of
Manchester, UK.
ITC‘s National Export Potential Index was designed to assess comparative advantages
and export potential of the most active players on the global market for information and
telecommunications technologies. It is based on the professional views of experts,
opinion leaders and industry associations across the regions.
The principal objective of this tool is to provide IT policy-makers, as well as the business
community and potential investors in IT, with an objective, qualitative assessment of the
main parameters affecting IT sector development.
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Delphi methodology has been used for obtaining the assessment. In each country, the
project interviewed an average of 10 professionals from industry, government, academia
and the mass media.
A grading system from 1 to 10 points was used to assess country competitiveness, based
upon the selected parameters listed below. The scale is divided as follows:
from 1 to 4 – lower country capacity;
from 5 to 6 - average country capacity;
from 7 to 10 – high country capacity.
The ITC‘s assessment of the Romanian national export capacity in the IT sector was
ranked as average at level 6. For more details see Annex 9.
8.2 SWOT Analysis
The ITC team had intensive consultations with the Ministry of Information and
Communication Technology and other government, trade and industry associations.
Romania‘s IT industry showed many encouraging signs that it could go on to gain a
major share of global IT market place. A SWOT analysis, (see Box 11) shows the
Strengths, Weakness, Opportunities and Threats facing the Romanian IT industry.
Box 11 SWOT Analysis of Romanian IT Industry
Strengths Weakness
Highly qualified human resources Business environment lacks credibility
Company productivity comparable with High cost of telecommunications and
that of developed countries IPLC infrastructure
Advanced technology Lack of credible investment policies
Low cost of human resources keeping foreign investors and companies
High mobility and flexibility of manpower at bay
Presence of IT companies from US and Lack of IT development entities such as
Europe freedom of information, or data
Well-developed education system producing protection
out 5,000 IT graduates and 2,000 graduates in Enforcement of copyright law
other disciplines Lack of IT credibility
Naturally developed industry around centres Lack of integration of information
of excellence in Bucharest, Cluj, Iasi and systems
Timisoara, Lack of financial resources for IT
Sound software industry base employing over companies to start projects and develop
25,000 people supports
Motivated workforce with entrepreneurial Insufficient resources for marketing and
skills brand building
Romanian talent spread across various Lack of skilled manpower for managing
acclaimed MNCs software projects
Strategic market location to serve EU Lack of understanding of software
Workforce with knowledge of English, French quality, certification and development
and German methodologies
Attractive contract manufacturing facilities Lack of domestic IT projects to develop
(e.g. US$ 3-5 for assembly of CTV sets) credentials and experience
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Inherent cultural and linguistic ability for Lack of IT training facilities,
rendering IT-enabled services such as call management and quality.
centers
Opportunities Threats
Romanian market for e-business, Lack of market information
e-governance and the developing information Lack of a domestic market to enable
society industry to develop expertise
Fast growing West Europe IT market having Lack of communication between
cultural similarities government and industry
Large emerging global IT market for off Lack of support programmes for
shore development, R&D, IT-enabled industry promotion
services Lack of networking in industry
E-commerce necessitating skilled Lack of a coherent industry image
professionals Growing unemployment due to closure
Telecom privatisation market opportunity of state enterprises and lack of job
IT deployment improving productivity of opportunities
other sectors
Source: ITC Technology Team, December 2001
The ITC team compared Romania‘s IT industry based on its SWOT analysis with similar
analysis of other countries in the region. It was observed that the industry was in its
development stage compared with Russia, Hungary, Poland, the Czech Republic and
Slovenia.
8.3 Assessment of the Romanian IT Industry
Industry in Romania has become linked to the new technologies through companies from
developed countries which have established local operations to take advantage of the
qualified labour that has graduated from technical institutes in Bucharest, Cluj, Iasi and
Timisoara. Over 1,000 software companies and more than 5,000 hardware, services and
telecommunications companies have formed a Bucharest software industry cluster. The
cluster also includes ten specialised professional associations and three trade associations,
which have created synergy for the whole group.
The ITC Team observed that the industry has developed on the basis of export
opportunities, as the market for ICT products in Romania is very small. However,
software products are increasingly in demand from domestic companies to improve
competitiveness, as well as the general development of the market economy.
Nevertheless, most success stories are still linked to software export activities. It was
also observed that the leading IT companies had located their representative offices in
Bucharest. However, the Romanian government cannot widely deploy IT to improve
either its interface with citizens or its automating processes due to a lack of resources.
Romania has more than 75,000 trained workers in the hardware sector, which are
deployed in state enterprises. Most of them are underemployed as the major state
companies are on the verge of closure. A few successful companies which have
emerged, have been taken over by foreign investors or local entrepreneurs. A striking
example is that of Electromagnetica, which has diversified into a vibrant multi-product
company. Flamingo Computers is another success story, which has developed an
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attractive brand of computers and delivered complete solutions to its clients. NEI
Bucharest has emerged as another successful company, which manufactures CTVs, but is
now facing competition from Goldstar and Daewoo.
A successful migration took place in the telecommunications sector where Alcatel and
Siemens entered into joint ventures with local units to manufacture telecommunications
equipment for the domestic and export markets. Intraron produces switching and
terminal equipment in Greece and entered the Romanian market after the participation of
OTE in RomTelecom.
In the process control and automation sector, NEI Bucharest and AUTOMATICA
Bucharest produce systems for the local market. They have good capabilities, but have
not been successful in export markets because of their technological obsolescence.
Solectron is by far the largest single investment that has been made in Romania. It
employs about 5,000 professionals and is expanding facilities to accommodate up to
10,000 workers for the production of sub-systems for network equipment, mobile phones,
servers, PCs and computer peripherals. The non-availability of electronic components is
one weakness of the industry, which has led to the erosion of the industrial base.
Many Romanian IT companies have been successfully transformed by splitting into
smaller entities and divesting non-core businesses. Others have survived by selling space
for manufacturing activities to foreign partners. Some successful companies are those
which have set up manufacturing facilities in alliance with overseas companies with the
aim of exporting, as the local market is too small. Companies which have followed the
cluster approach have succeeded in utilizing the low cost production base in Romania.
For example, Renault France integrated DACHIA into its global production programme
to cater to the EU and Central and East European markets and also initiated an R&D
programme to design and develop a small car at a unit price of Euro 5,000.
8.4 Impact of Accession to European Union
Romania is an Associate Member of European Union and is in the process of preparing
for accession to the EU by the year 2007. Towards this end, initiatives have been taken
on the following:
Stable institutions guaranteeing democracy, the rule of law, human rights and the
protection of minorities;
The existence of a functioning market economy, as well as the capacity to cope with
the competitive market pressures in the Union;
Ability to take on the obligation of membership, including adherence to the aims of
political, economic and monetary union, i.e. acquis communitaire;
Harmonization of standards, technical rules and obligatory requirements, referring to
product safety and industrial production processes.
It is widely believed that the legislative mechanism and institutional framework may not
be developed until 2007, and an extension to 2010 has even been considered. Therefore
strategies are being developed, keeping these two scenarios in view.
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8.5 Revival of Romania through external inputs
The World Bank and the EBRD have assessed Romania to be in a position to implement
a coherent set of economic reforms. The assistance would support a broad set of
structural and sectoral reforms to accelerate growth and pave the way for Romania‘s
eventual accession to the EU.
In the IT sector, telecommunications, e-readiness and a gateway project are the three
main initiatives of the World Bank. The telecommunications project pertain to
telecommunications reform and support for privatisation relating to a policy framework
in accordance with WTO agreements, a regulatory framework to cover technical and
economic regulations, a legal framework for transparency in regulation and policy. and
the privatisation of RomTelecom.
The World Bank e-readiness project aims at developing institutional mechanisms, cyber
laws and a prototype centre to demonstrate Romania‘s readiness to usher in a new era of
e-commerce and e-governance.
The gateway project is intended to create a portal or a mega site containing a large
number of public and private networks. It will involve development issues from
academia, institutions, investment agencies and others, and will aim at providing
government services as interactive services online. The World Bank would provide a
grant for this purpose to Ministry of Communication and Information Technologies.
(MCTI) will implement the project in association with Microsoft, Hewlett-Packard,
Compaq and the service company MediaHolding.
8.6 Export Product Selection
Based on the capacities and the technology available in Romania, the ITC Technology
Team identified products (see Table 19) for export promotion.
Table 18 Romania: Products Identified for Export Promotion
Passive components Process Control Telecommunication Computer software
equipment
Sub assemblies Electrical Switching Software
– Mother boards automation equipment applications
EPBX boards systems
GSM base stations Anti virus products
Contract Network
EPBXs Localization of
manufacturing components
standard application
– IT products & Terminal equipment
Factory automation
Services Software services
systems Radio
communications Call Centres
equipment
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In terms of IT sector potential, the areas for focus may include the following:
Computer Software Development;
Computing Hardware and Networks;
Telecommunications Equipment;
Telecommunication Carriers and Added Value Service;
Electronics Subcontracting;
Multimedia and Contents Industry;
Electronic Components;
Instrumentation and Diverse Equipment;
Regulation, Control and Power Electronics;
Engineering and Systems Integration Services.
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Chapter 9
INFORMATION TECHNOLOGY EXPORT GROWTH SCENARIOS
9.1 Vision for the Romanian IT Industry
Keeping the preceding assessment in view, the Romanian IT industry should develop a
vision in co-operation with policy-makers and other stakeholders. The ITC Technology
Team has already presented and discussed the following vision for the Romanian IT
sector with the Romanian authorities and IT business community.
This vision was proposed by the ITC Technology Team as a result of in-depth
consultation with the major national and international players in the Romanian IT market.
Romania should aspire to becoming the “Internet Hub” for the Black Sea Region. The
Romanian IT industry will be the leading regional supplier of Internet-based services,
specialized software and contract manufacturing by 2010 by leveraging national
competitive advantages.
An effective public-private partnership in IT sector will assure a competitive and
consistent rules-based business environment, inflows of foreign direct investment and
promotion of Romania as a centre of IT excellence.
Goal
Romania should increase its IT industry exports from the existing level of
US$ 630 million in the year 2000, to US$ 1 billion by 2004, US$ 5 million by 2007 and
a target of US$ 10 billion by 2010.
Romanian society is well-educated, with English, German and French widely spoken.
The ingenuity of Romanians and their ability in abstract mathematics make the country a
potent force in software development. These assets could be a stepping stone in enabling
Romania to achieve the aforementioned vision and ensure Romania‘s transition into a
vibrant, well-developed modern country and a hub for IT enabled services.
9.2 Niches for the IT Sector – Core Products, Services and Target Markets
To make the vision a reality, the following core products, services and target markets
were pre-selected as priorities for Romania in the area of IT:
Software development;
IT-enabled services;
Research and development;
Contract manufacturing;
Consulting, engineering, repair and maintenance services.
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These areas were chosen based upon the SWOT analysis of the existing IT industry and
other advantages enjoyed by Romania, as can be seen below:
Average cost of real estate:
Land Purchase: 20-200 $/sq.m (depending upon location)
Building: 300-500 $/sq.m
Rental: 2-30 $/sq.m (depending upon position and appearance)
Average cost of IT labour
Wages: 400-600 $ net/month
Total cost: 1,000-1,500 $/month, including taxes
Average investment for a competitive work place: $ 10,000
include technology, building, furniture, facilities
does not include wages, marketing, consulting, cost of operations etc.
The following paragraphs describe the areas for strategic focus.
Software and Services
Romanian software companies possess adequate skills and expertise in application
development using Java, SQL, Visual Age, Oracle Developer 2000, Object Oriented
Programming Systems, etc. Experience of delivering applications and solutions to clients
overseas exists, having been gained from subcontracting for major companies. The
presence of global software companies like Microsoft, Cisco, Motorola, Ericsson etc. is a
motivating factor in enabling Romanian companies to ascend the value chain of software
development. Based on current capacities, a three-axis growth plan is proposed (see
Box 12).
Box 12 Romania: Three Axes Growth Plan
ROMANIAN COMPANIES HAVE OPPORTUNITIES ALONG THREE AXES
IN BOTH TRADITIONAL AND NEW SERVICES
Legacy/client Web/package
Server services based services
Web-enabling legacy E-commerce
―Extend into new applications Knowledge Management
service lines‖ Middleware-based legacy Convergence
Systems integration
Mid-market companies
―Tap new and under- ASPs and ―.com‖ companies
penetrated customer Under-penetrated industries
segments Non-English speaking geographies
―Move up the value Maintain Implement Architect
chain‖ Piece parts Full projects
Source: ITC project file, 2002
72
The first is to leverage current capabilities to extend into new, rapidly growing service
lines like e-commerce, knowledge management and convergence applications.
The second is to tap emerging customer segments such as ASPs and ―.com‖ companies
and under-penetrated segments such as the healthcare and telecommunications verticals,
and non-English speaking countries like Germany and France
The third is to move up the IT services value chain from ad hoc maintenance work to full
project implementation. Romanian companies could successfully expand their IT
consulting practices to advise companies on IT strategy and architecture issues. There
have been many examples of Romanian companies undertaking full scale projects for
overseas clients, from design to testing and delivery. SOFTWIN is delivering
XML-based solutions to a client overseas and is emerging to be a centre of excellence in
XML technologies. It could rapidly move up the value chain in the core business of
system re-engineering. Other software companies in Romania could be expected to
replicate the success of SOFTWIN.
Market openings are emerging across four broad sectors – IT Services, software products,
IT-enabled services and E-business. In addition to the global export market, all these
opportunities have a domestic market component as well (see Box 13).
Box 13 Romania: Emerging Market Openings
Sector Opportunities
Web-enabling legacy systems
E-commerce / ―extended enterprise‖ applications
IT services Standards-based application integration
Knowledge management
Convergence applications
Emerging silver-sector markets
Software products Product development
Embedded software
Human resource services
IT-enabled services Remote customer interaction
Data search, integration and analysis
Engineering and design services
E-business Domestic business-to-business (B2B)
Business to Romanian nationals abroad
Large corporate users
Domestic market Electronic governance
Increased consumer spending on IT
Source: ITC analysis, March 2002
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Contract Manufacturing
Major telecommunications companies operating in Romania have realized the cost
advantage of manufacturing in Romania and integrated their Romanian facilities into
their global supply networks. The low cost of assembling of electronic hardware has also
captured the attention of companies based in Italy and other EU countries, resulting in the
emergence of contract manufacturing plants in Romania. This strength should be
exploited to enable the SME segment to serve these mother plants through sub-assembly
work. The focus areas for contract manufacturing could be telecommunications,
monitors, PCs and computer software development.
Research & Development
The Ministry of Research & Development and Education has initiated an R&D
development programme for the period 2001-2005, in order to gain competitive
advantages for the Romanian IT industry and further the process of integration with
Europe. The four main areas identified for R&D were:
Information technology;
Biotechnology;
New materials and micro-mechanical circuits for microwave and mini-wave
applications;
Aeronautics and space applications.
Under this programme, IT would get the maximum allocation of US$ 75 million which
would enable 20 national institutions to revive their R&D programmes and develop a
foothold in the emerging technology markets.
With EU funding available for the development of applications in government and other
institutions, IT remains an important area of focus for R&D. State spending on IT
procurement and R&D, and state-oriented EU funding would ensure the preservation of
Romanian IT capabilities by employing several thousand IT staff. To commercialize
R&D, an Agency for Technology Transfer has been established with financial support
from PHARE, a European Union aid scheme supporting reform in Central and Eastern
Europe. Focused R&D would enable Romanian IT companies to develop a technological
edge and gain a foothold in the international market.
Consulting, Engineering, Repair and Maintenance services
Romanian companies have a strong base of system engineering, installation,
commissioning and operating large projects within the region in telecommunications,
telemetry, process control instrumentation, signalling and Stimulated Control and Data
Acquisition Systems. This expertise, combined with the hardware being made available
by large US and European TNCs, could enable Romanian companies to take up turnkey
projects within the region, possibly with bilateral trade partners.
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9.3 IT Export Growth Scenarios
As already indicated, annual Romanian IT sector exports currently amount to
US$ 623.9 million. This is projected to increase to US$ 1 billion in 2001, at the current
rate of growth.
The annual export of software and services is valued at approximately US$ 100 million.
To realize the Romanian vision of becoming an Internet Hub for the Black Sea Region, a
three-pronged step-by-step strategy has been proposed. This strategy should achieve the
following export growth in software and services:
US$ 1 billion by 2004;
US$ 5 billion by 2007;
US$ 10 billion by 2010.
a) Strategy for achieving US$ 1 billion exports in IT software and services
Time horizon: 2004
According to analysis undertaken by ARIES and other industry associations, there
is a distinct possibility of achieving US$ 1 billion in exports of IT software and
services using current resources. This is based on the following criteria:
Availability of manpower – 25,000 to 30,000;
Productivity to increase from US$ 35,000 to US$ 50,000 in 3 years;
Addition of manpower @ 7,000 per year.
To achieve this target, an annual growth rate of 100% would be required. To
ensure this growth rate, the mission, objectives and strategies to be pursued are
enumerated below.
Objective
Romania to become an exporter of IT software and services valued at US$ 1 billion
by 2004.
Priorities
In order to achieve the strategic objectives, Romanian industry will have to realise
the following priorities:
Improve competitiveness of software firms / products;
Build up the image of Romanian software firms / products;
Develop a federation of IT associations to build an ―apex‖ institution;
Initiate measures to retain talent and develop human resources.
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Action Plan
To accomplish the strategic priorities, a set of organisational and legislative
measures needs to be initiated by the Romanian IT firms and policy makers. These
include:
Creating a network to promote image of the Romania‘s software industry in the
US and EU by brand building;
Attracting foreign direct investment in the software and services sector by
providing a package of incentives and retaining talent;
Developing promotional programmes and commercial events, whilst
enhancing the profile of companies via exhibitions;
Creating an ―apex‖ body of federations to represent the voice of industry,
by merging the various software associations into one federation;
Setting up technological parks to provide state-of-the-art technology
infrastructure at a reasonable cost, emulating the Irish Development
Agency of Ireland and the Software Technology Parks of India at
Bangalore;
Setting up IT business incubators to enable budding software
entrepreneurs to nurture their ideas and technologies;
Attracting companies to set up R&D facilities to take advantage of
Romanian skills;
Providing venture capital facilities to young software entrepreneurs;
Establishing training institutions to provide training in emerging
technology areas to working professionals and new university graduates;
Eliminating tax barriers and providing incentives for the software industry
by implementing legislation relating to IT programmers.
b) Strategy for achieving US$ 5 billion exports in IT software and services
Time horizon: 2007
In order to achieve this target, Romanian industry will have to concentrate on
developing software products, as well as contract manufacturing. It has already
made strides in developing software products, such as Praxis for electronic legal
advocacy; Contract for Romanian legal contracts; Literature Romana – a
bibliography of Romanian literature; AVX and RAV anti-virus software; Online
WebReport – a project management tool, and many other similar software
packages.
Internationally successful applications, such as the Short Messaging Services
developed by Microsoft, need to be evolved in order to gain a foothold into the
global market. The nation‘s excellence in XML should be utilized to create best-
selling applications for delivery over the Internet.
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Objective
Romania to become an exporter of IT software and services valued at US$ 5 billion
by 2007.
Priorities
In order to realize this strategic objective, Romanian industry will have to achieve
the following priorities:
Concentrate on developing software products;
Develop Romania as a base for contract manufacturing;
Continue building the image of Romania as a source of software products;
Attract research and development operations of Fortune 500 companies.
Action Plan
To accomplish these priorities, action needs to be initiated in the following areas:
Focus on delivering services like web-based call centres, utilizing the country‘s
linguistic strengths in English, German and French;
A strategy of attracting foreign direct investment from Fortune 500 IT
companies to set up R&D operations in Romania to develop applications for
conducting m-commerce, telecommunication software, e-business and related
applications needs to evolve. Already Cisco, Motorola, Nokia, Microsoft,
CIT Alcatel, Ericsson have announced plans for setting up facilities in
Romania for offshore development;
Widen incubation centres around R&D and educational institutions, to nurture
talent by supporting budding enterprises to deliver applications at more
locations;
Establish contract manufacturing for hardware including PCs, mobile phones,
telecommunications equipment, auto electronics and colour televisions (similar
to the Solectron model).
c) Strategy for achieving US$ 10 billion exports in IT software and services
Time horizon: 2010
Objective
Romania to become an exporter of IT software and services valued at
US$ 10 billion by 2010.
Priorities
Romania will have to lay particular emphasis on the following priorities for
achieving this objective.
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Integration of Romania into the European Union;
Development of specialized human resources;
Projection of Romania as a centre of IT excellence.
Action Plan
Romania could emerge as the Internet Hub for the Black Sea Region by delivering
Internet services to Western Europe and Central and East Europe, as it should have
become a member of the European Union by 2010. The IT-enabled services and
business that have sprung up in the Netherlands and the United Kingdom could
slowly shift to low-wage economies like Romania. With a highly talented and
skilled labour force, it would be possible for Romania to become the second
―Ireland‖ of Europe in delivering software applications and services. This will
require conducive economic policies and adequate incentives like tax holidays,
custom-bonded warehouse facilities, increased volume of business and off-setting
the cost of investments incurred in the early phases of projects.
To enable the vision to bear fruit, the following other initiatives need to be pursued
by the government, associations, companies and all those involved in the IT
marketplace.
9.4 Romania Export Growth Framework
1) Attract Foreign Investment into Romania
Romania has attracted investment totaling approximately US$ 1 billion in the
information technology, telecommunications and Internet Service Provider sector
since 1989. With the introduction of the new law on investment requiring a
minimum of US$ 1 million and with no tax on IT programmers, it should be
possible to make Romania a preferred IT destination for foreign investment. The
law should be implemented effectively and with transparency.
2) Develop Human Resources
Romania‘s competitive advantage in software is its highly qualified, cost-effective
human resources. Currently, about 35,000 software professionals are working
across the various segments of the industry. To maintain and enhance this
advantage, Romania needs to tackle two key issues. The first is to train over
200,000 highly qualified employees in software and related areas as a matter of
urgency. The second is to ensure that the workforce has the right mix of technical,
business and functional skills to meet the challenges of business and customers.
This can be ensured by effective in-house and third party training.
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A three-pronged strategy will need to be implemented. The first step should be to
expand the core of people with basic IT skills. The second step is to ensure the
continuous and rapid upgrading of skills. The third step should be to launch a
concerted effort to promote Romania as a workplace of choice, so that people who
have been trained do not emigrate.
3) Initiate Research and Development Programmes
To keep pace with technology, R&D institutions need to be nurtured and links
between R&D institutions and industry strengthened. Commercialization of R&D,
as well as the establishment of R&D ventures by MNCs, should be proactively
explored.
4) Government initiatives
The Romanian government is currently engaged in encouraging exports of software
and IT services through various incentives and schemes and also by reacting to
specific industry requests and initiatives. Its desired role should be to take
initiatives to increase exports in anticipation of new opportunities and pursue a
long-term action plan to increase software exports and domestic spending.
Specifically, the government should focus on creating a favourable regulatory
environment, achieving global parity in telecommunications infrastructure and
supporting venture creation and incubation.
5) Associations Initiative
There are ten professionals and three trade associations in IT sector of Romania.
The five major associations are as follows:
Romanian Association for Electronic and Software Industries (ARIES)
National Association of Internet Providers of Romania (ANISP)
National Association for Software Companies (ANIS)
Association for Information Technology and Communication – Romania
(ATIC)
Association for Producers of Electrical and Electronics Industries (APREL).
The associations are currently involved in domestic lobbying, organizing
trade-related events and providing leadership. They should form a common
federation and assume an integrated role for global lobbying, encouraging the
growth of the domestic market, undertaking proactive marketing, providing
secretariat services, arranging venture capital and brand building. The Irish
Development Agency could be an ideal role model.
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6) Companies Initiative
The market for software and services presents almost limitless growth opportunities
for Romanian companies in Europe and the surrounding region. The challenge for
Romanian companies will be to supplement their skills with robust strategies.
Regardless of the starting point, the strategy for companies should be to set
aggressive growth aspirations. They should also combine opportunities and
capabilities to build a series of growth initiatives to meet these aspirations, and
adopt a three-axis approach, as described in Box 7, to managing and sustaining
growth over time.
9.5 Conclusion
There is a real opportunity for Romania to realize the vision of becoming the Internet
Hub for the Black Sea Region and secure a major share of the global IT market place.
It will require improved co-operation between the public and private sectors to create a
business environment conducive to nurturing contract manufacturing, the national
software and IT services industry, and developing a strong R&D base.
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Chapter 10
ROMANIAN ICT INDUSTRY BRAND BUILDING – STRATEGIES
To achieve the aforementioned vision, Romania has to project its capabilities and the
strength of its IT industry. Towards this end, it has to develop an image or brand to help
the companies that operate there. A strong brand image could result in achieving market
growth, retaining share and commanding price premiums, which would otherwise have
not been possible.
Developing the brand should have a two-fold objective:
Boosting export revenues to US$ 10 billion by 2010. This will require Romania
to position itself as a ―skill-surplus‖ nation with the ability to work on complex
problems;
To increase FDI to US$ 1 billion by projecting Romania as an attractive
destination for foreign investment.
10.1 Elements in brand building
Figure 8 depicts the elements of brand building necessary to realize the vision of
Romania as the Internet Hub for the Black Sea Region.
Figure 8 Romania as Internet Hub for the Black Sea Region
$10 billion revenues
$1 billion FDI
Increased Developer of New location for
value software IT-enabled
addition in IT products services
services & and R&D
contract
manufacturing
IT-savvy country image (including Internet)
Attractive location for FDI
Exciting opportunities for world-class talent
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There are many elements in the brand-building programme aimed at the achievement of
sales and FDI goals. There are three clear pillars of the proposed global IT business:
The addition of value in IT services and contract manufacturing;
The emergence as a developer of software products, as well as R&D;
A new location for IT-enabled services.
It is essential to articulate and communicate the desired value proposition. For
IT-enabled services, this relates to labour costs and telecommunications infrastructure. In
IT services, it is Romania‘s skilled manpower, reinforced by continual improvements in
domain knowledge, which extend from legacy systems to cutting-edge technologies. For
contract manufacturing, the value lies in the volume of business and the cost of assembly.
The value proposition needs to be built on a strong base consisting of three elements:
An overall perception as an ―IT-savvy‖ country, especially in Internet-based IT
solutions;
The preferred choice for FDI, in all dimensions of the IT and contract
manufacturing business;
An exciting environment for leading talent, to ensure that Romania retains its
best people and attracts world class employees, thereby strengthening global
links.
The properties of the brand should be clearly communicated across all these elements.
High quality manpower and attractive price performance has been a key component
of Romania‘s current value proposition and should continue to be a very important part of
the brand.
In addition, the brand should be associated with state-of-the-art skills (e.g. in web
design, XML). The audience should recognize that the workforce in Romania not only
has world-class skills, but also improves as opportunities emerge elsewhere in the world.
Finally, the brand should stand for a complication-free business environment. This
environment should include infrastructures (e.g. telecommunications) and the regulatory
framework, including labour laws, taxation and social security laws.
Over the next few months, ARIES and other associations should consider the possibility
of converging into a single federation and build consensus among its members, so that
the message going out about Romania (through companies, the press, the government,
associations, etc.) is consistent.
The new value proposition to customers and investors must be centred on the
increasingly sophisticated capabilities of Romanian vendors and the continued benefits
Romania provides in cost effective, high-quality talent. Romania already has, and will
continue to have, a growing number of vendors successfully working on complex
projects across all areas of software, and performing at levels comparable to those of the
leading global players.
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Attracted by Romania‘s value proposition, customers and stakeholders will increase their
range of activities in Romania, so that the country emerges as a preferred location for
new ventures, and a leading ―skill-surplus‖ partner country.
A further benefit will be Romanian vendors working on complex projects and
commanding the same prices as global competitors, raising their present level of fees
from US$ 25,000 per annum to US$ 50,000 per annum.
10.2 Steps in Brand Building
There are four key requirements to building a strong Romanian brand.
A distinctive credible proposition that is consistent with the brand properties is a
necessary ingredient for success, backed by other initiatives. For Romania, this
proposition is clearly its low labour costs, its proximity and cultural similarities
to Western Europe;
Given the global audience, it is important to have aggressive publicity
campaigns which are heard despite the competition from other countries;
Thirdly, the actual changes in Romania should reflect the claims being made.
For example, talking about a complication-free environment without making
the necessary telecommunications reforms, would not only reduce the impact of
the brand-building effort, it would also have long-term consequences on the
credibility of the brand;
The final requirement is the facilitation of an effective feedback system, which
reinforces the value proposition. For many brands, the facilitation of feedback
allows the creation of a virtuous cycle where small gains are significantly
reinforced and enhanced in impact.
Figure 9 gives a synopsis of the steps needed for building a strong brand. For each of the
elements of the ―Romania, Inc.‖ brand, delivery is important.
Figure 9 Building a Strong Brand Requires Consistent Effort
Distinctive
Distinctive Distinctive Credible
Credible Credible proposition
proposition proposition
High quality Targeted Word-class
manpower CEO/CIO telecom
Attractive meetings Cutting-edge
price- Broad-based education
performance image devpt. Removal of
State-of-the-art Sponsored regulatory
skills roadshows hurdles
Hassie-free
environment
Reinforcing
‗word-of-mouth‘
loop
Success story preparations
Proactive endorsements
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The first component of such delivery would be to build an ―IT-savvy image‖. A key
driver of this initiative would be to become a cutting-edge player in the high-tech, rapidly
emerging IT world. This would necessitate ensuring appropriate IT penetration within
the country. Publicizing a thriving domestic B2B and B2C sector would significantly
build Romania‘s position as a high IT-literate country. It was noted that the Chambers of
Commerce and Industry in Romania had initiated a programme for authenticating e-
signatures for initiating B2B trade. Similarly, other initiatives are being undertaken for e-
governance over the citizen-business-industry-government interface.
The second component would be a broad-based campaign, which leverages multiple
contact points to reach CEOs. This would involve a wide range of events and the
leveraging of multiple media. To do this, strong public relations firms should be used.
Contact points could include IT conferences, Internet sites and links, ad campaigns, direct
mailings, press coverage, etc.
The third component would be to demonstrate successful implementation of niche areas
both at domestic and overseas level. This would assure international IT players that
Romania is able to deliver quality projects/products.
The fourth component would be to identify a champion within Romania who would lead
the campaign to attract FDI totalling US$ 1 billion and reinforce Romania as an attractive
FDI proposition.
The fifth component would be the establishment of technology parks, along the lines
developed in Bangalore (India), at an identified cluster location, i.e. Bucharest. This
would need appropriate regulatory changes to alleviate the international community‘s
concerns about the consistency of the regulatory regime, the discipline in implementing
the planned changes and the attractiveness of the market environment.
The sixth component would be to build a credible IT-enabled services proposition around
the availability of cost-effective labour and a robust telecommunications infrastructure.
While Romania has recognized labour cost advantages, the lack of telecommunications
infrastructure and the high cost of connection has prevented development of this sector.
The campaign should convey strong signals about the changes brought about by the
telecommunications reforms. Furthermore, a proactive package should be developed to
demonstrate cost-savings from IT-enabled services for key industries/services, to
convince overseas customers about Romania‘s seriousness.
The seventh component could be the convergence of the various IT associations into a
federation to focus on the mission ―Romania as the Internet Hub for the Black Sea
Region‖ and invite world class companies to help realize this vision. The federation
should focus on the development of applications by its members, covering teleservices,
remote operations, remote software development, electronics manufacturing and offshore
fund management.
Finally, it is imperative to get the dynamic loop working in terms of testimonials.
Proactive facilitation of the entry of high-profile target investors into Romania, coupled
with strong support to ensure successful start-ups and operations, will be crucial in
communicating the message that Romania is serious about achieving its mission.
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PART TWO
REACTION OF THE INFORMATION TECHNOLOGY SECTOR
TO THE WTO AGREEMENTS
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Chapter 11
REACTION OF THE INFORMATION TECHNOLOGY SECTOR
TO THE WTO AGREEMENTS
11.1 Background
The ITC team visited Romania in June 2001 and met more than forty officials and thirty
industrialists from different spheres related to IT. A questionnaire was distributed to the
participants during the visit. Chambers of Commerce and IT associations also circulated
the questionnaire to their members. The report was based on feedback to the
questionnaire and consultations held with various organizations.
The Romanian Foreign Trade Centre (CRCE) is the co-ordination agency with the World
Trade Organization on the URA. Meetings were held with:
Ministry of Communications and Information Technology;
Chambers of Commerce and Industry of Romania and the Bucharest
Municipality;
Romanian Association for Electronic and Software Industries (ARIES);
Ministry of Foreign Affairs, Directorate General of Export Promotion;
Energy Specialist, Energy & Telecommunication Department, World Bank,
Romania;
National Communications Research Institute;
Romanian Standards Association (ASRO);
National Institute of Microtechnologies;
Association for Producers of Electrical and Electronics Industries (APREL);
Association for Information Technology and Communication – Romania (ATIC);
National Association of Romanian Exporters and Importers (ANEIR);
Centre for International Private Enterprise (CIPE);
Ministry of Development and Forecasting;
National Association of Internet Providers of Romania (ANISP);
National Association for Software Companies (ANIS);
Department of Foreign Trade & Economic Promotion;
National Council for SMEs;
Ministry of Education and R&D;
Ministry of Development and Prognosis;
Ministry of Industry and Resource;
UNDP, CCI, EU consulting as well as other trade & industry representatives.
Based on the information gathered by the ITC team consequent to the interactions and
analysis of the questionnaire, the views of the public and private sectors are enumerated
in the following pages.
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11.2 Public Sector Views on Post-URA
Romania became a member of the WTO in 1995. All tariffs are bound at ceiling rates
and Romania is eliminating tariffs on products covered by the Information Technology
Agreement (ITA). Romania is also party to the WTO Agreements on Financial Services
and Basic Telecommunication Services. It actively participates in the WTO, regularly
notifying country-members of national trade policy developments. In particular,
standards for intellectual property protection and their enforcement were notified when
Romania‘s transitional arrangements ended, and were reviewed by the WTO council for
the Agreement on Trade Related Intellectual Property Rights (TRIPS).
Romania conducts trade on a most favoured nation basis and provides equal treatment to
local and foreign firms. It was observed that the industry is taken into confidence before
policy changes were announced. The majority of quotas and licensing have been
eliminated. Tariff rates were found to be binding and in conformity with WTO rules.
Information Technology Agreement
Romania was a signatory to the Information Technology Agreement with extended
staging up to 2002. The government has ratified the Agreement and plans to eliminate
customs duty of about 600 HS product headings by 2003. At present, tariffs on most
products covered by the Agreement have been eliminated.
Although discussions have been held to broaden the scope of the ITA to include more
product headings and additional Technical Barriers to Trade, such as certification,
conformity to standards and self declaration by manufacturers, nothing has been agreed
by the Romanian government.
Agreement on Basic Telecommunications Services
Romania signed the Basic Telecommunications Agreement in February 1997. It agreed
to put competitive regulatory principles in place by 31st December 2002 and to open its
market to international competition. It was learnt that the process of liberalization had
already commenced. A programme for creating a policy, regulatory and legal
framework, as well as the privatisation of Romtelecom has been launched. The
privatisation of RomTelecom will occur through the sale of up to 30% of its shares to
investors and up to 5% of shares to employees. The General Inspectorate of
Communications will be developed into a fully-fledged regulatory authority for the
telecommunications sector.
The aim of the government is to open the mobile communications segment to private
investment, by allowing multiple players to provide different services. Currently four
operators provide mobile telephony in Romania – Mobifon GSM, MobilRom GSM,
TeleMobile and CosmoRom.
The situation in Romania with regard to the data/Internet market is considerably different
from many transitional and developing countries. The data/Internet market is not only
open to competition, but the incumbent has been prevented from participating in this
market, and is only able to do so through a joint venture – Global One. This has enabled
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for the use of cable, VSATs, private networks, leased lines, etc., to become established
and used to provide bandwidth to customers.
11.3 Private Sector Views on Post-URA
It was observed after consultation, that many business representatives had insufficient
knowledge about the WTO Agreements and the URA. Some industry observers
mentioned that the terminology of the agreements was difficult to understand and hence
they were unable to analyse their implications. Table 20 lists the business response to the
various URAs.
Table 19 Romania: Business Response to the URA‘s
TYPE OF URA RESPONSE
The average tariff rates on all industrial products remained steady at 16%,
well below the bound level of 35%. Scope of application is narrowed by
free trade agreements with partners in the region and by GSTP preference
for developing countries. Romania‘s free trade agreement with the EU
and EFTA requires the elimination of remaining tariffs on IT and other
TARIFF related products by 2002.
REDUCTION Industry representatives felt that this was likely to lead to more intense
competition in the domestic market for sensitive product areas where they
have traditional industries. Manufacturers of hardware felt that their
competitive advantage was being eroded as finished computers could be
imported without duty. Similarly, assemblers of CTVs mentioned that
competition from foreign suppliers was intense and they were finding it
difficult to sustain the competition.
Romania adopted the Harmonized System codes. Market access to the
products emanating from WTO member countries and countries with
which bilateral agreements existed, are on most favoured nation basis.
All quantitative restrictions were eliminated from 1.1.1998.
MARKET ACCESS
Respondents felt that although customs duty was eliminated, VAT was
very high. In addition to VAT, other taxes such as import surcharges,
customs commission, specific or ad valorem excise taxes, etc. were not
consistent.
The new Customs Code of 1997 unified the regime for importers and
exporters in a single framework and approximated the EU Customs Code.
The principles of customs valuation are largely the same as the EU.
Comparative values were replaced in 1999 with a database of prices.
CUSTOMS Other features of the Code are availability of duty suspension to facilities
VALUATION in the free trade zones. In Romania, customs duty is charged on purchase
price plus other costs borne by the buyer. For customs clearance, the
documents needed included the original invoice, certificate of origin,
declaration of customs value, specification of goods, agency
authorization, etc.
The Ministry of Industry and Commerce annually publishes the Guide to
the Import Customs Tariff, which includes all important international
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agreements and national legislation, as well as details of customs duties.
The guide also provides information on the level of customs duties to be
applied during the year, the legal base for that level, the rules of origin to
be observed, and any other important rules or regulations in force.
Industry representatives opined that the procedure was cumbersome, time
consuming and affected delivery schedules. Companies operating in the
bonded warehouses and free trade zones were able to improve their
volume of business, but others faced bureaucratic hurdles. Many
companies had deployed experts to interact with government and
smoothen business operations.
Type approval was necessary from the National Communications
Research Institute for components, which are used in the national
telecommunications infrastructure. The testing of communications
equipment and systems is performed in accordance with testing
methodologies and specifications approved by the export bodies and
standard SE EN 45001 – ―General Criteria for the operation of testing
laboratories‖, ―Guide ISO.CEI 25 – General prescriptions for the
TECHNICAL competence of calibration and testing laboratories‖.
BARRIERS TO The National Accreditation Association of Romania, RENAR, is the
TRADE body, which accredits laboratories for testing, and certification. Technical
standards have been aligned to CEN/CENELAC standards with eventual
accession to the EU in mind. Many companies have obtained ISO 9000.
Industry representatives were unclear about the standing of the various
statutory provisions and specifications needed for conformity, particularly
in the EU. It was felt that the trade and environmental issues pursued by
the developed countries were indirectly acting as TBT because these were
very difficult to meet. It also added to costs due to the requirement to
demonstrate biodegradability and the elimination of waste packaging
materials.
No case of direct subsidies for the export of information technology
products was reported. However, there were green subsidies for industry
cluster development, investment and employment subsidies. Current
thinking is towards tighter discipline on permitted, actionable and
prohibited subsidies along the lines of EU and OECD countries.
Romania provides equal treatment to foreign and local companies and
there is no condition of local value-addition. As confirmed by CRCE,
state enterprises are also not provided with direct subsidies.
SUBSIDIES In the free trade zones, technology parks and incubation centres,
incentives were offered to the small and medium enterprises, in terms of
space, delayed payment of taxes and exemption from certain other taxes.
Most of these were funded from the state budget. Similarly, industry is
entitled to subsidies on greenfield R&D projects up to 50%. Export
assistance to improve the competitiveness of SMEs is being provided, but
at a very low level.
It was learnt that the SME sector is vibrant, accounts for more than
50% of GDP, and needs nurturing. Most businesses felt threatened by
the competition from MNCs in finished products. Industry suggested
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aggressive government programmes for the integration of SMEs into the
global environment.
COUNTER-
VAILING
MEASURES AND No countervailing and anti dumping cases were reported.
ANTIDUMPING
Romania has established a uniform business framework. Industry
representatives felt that FDI had only played a very minor role up until
recently. The relatively low level of FDI has been an obstacle to
TRADE RELATED economic development in terms of modernizing the capital base and job
INVESTMENT creation in the private sector.
MEASURES
An opinion surfaced that the aid agencies such as the EBRD desired
bankable projects, which the local companies were unable to promote.
International consulting agencies such as PWC were said to design
projects for MNCs and not the major local companies.
Romania had committed to the EU level of protection of intellectual
property rights and means of enforcement. It had also added new
standards in its 1991 Patents Law for the protection of copyright,
trademarks, industrial designs, topographies of integrated circuits and new
plant varieties.
A number of international conventions on the protection of IPRs have
also been ratified. Romania intends to remove remaining lacuna between
the domestic legislative framework and the TRIPS Agreement by passing
TRADE-RELATED a law to enforce intellectual property rights at the border. Effective
INTELLECTUAL enforcement, however, remains a challenge due to the lack of resources
PROPERTY necessary to investigate infringements and also due to the diminished
deterrent effect of fines, which has been eroded by high levels of
inflation.
Industry observers felt that high tech companies were attracted to
Romania to take advantage its low-cost skilled manpower and Romanian
ingenuity. However, they were developing products in Romania and
patenting them at their European or American headquarters, because of
Romania‘s weak copyright system. Piracy was reportedly rampant and
government efforts to check it had only moderate success.
Romania is not a member of this agreement and is yet to shape its policy
GOVERNMENT on this issue. Preference is given to local agencies in public procurement.
PROCUREMENT Industry participants suggested a need for transparency in government
procurement, as large orders were allegedly awarded to companies having
political clout.
Competition between Romania‘s IT industry and the large corporations is
growing. It was revealed that major projects of national importance were
COMPETITION awarded to the MNCs because of their technology leadership and
POLICIES expertise. Views were expressed that this contributed to an increase in the
number and scale of transnational firms, a multiplication of agreements
between cartels, dishonesty, abuse of power, and uncompetitive takeovers
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of state enterprises, etc.
Industry representatives mentioned that national rules on competition
needed to be brought closer to multilateral rules for industry to maintain
standards. Romania also recognized the importance of competition
policies in the process of its accession to the EU and confirmed its
participation in WTO negotiations.
11.4 Needs for Technical Assistance in the ICT sector: Agenda for Co-operation
As a transition economy, Romania is doing its best to adjust to the global market.
National Government authorities and business community representatives suggested a
package of export-orientated technical assistance.
Representatives of the following 75 companies, 5 ICT national associations and the
policy-makers met in Bucharest, Romania, during the 8th and 9th March 2002.
The meeting was organised by the International Trade Centre UNCTAD /WTO (ITC), in
co-operation with the Government of Romania, UNDP and ARIES.
The prime objective of the event was to strengthen the Policy-Industry dialogue on the
critical issues of trade in ICT and its national capacity building.
A country profile on Romania‘s export potential in the ICT sector was prepared and
submitted to the participants by the Technology Team of the International Trade Centre
UNCTAD/WTO.
Open discussions covered a number of topics under the comprehensive title of:
―International Market Prospects for the ICT Sector of Romania‖.
The subjects and questions raised, among others, were:
– Implications of the WTO agreements and a new round of the global trade
negotiations for ICT industries;
– National ICT vision and opportunities for business;
– EU prospective on e-economy;
– Romanian on the global ICT markets;
– FDI in ICT sector of Romania;
– IT Export growth scenarios for the country;
– Effective public-private partnerships in the ICT sector; and
– IT parks.
A number of delegations made presentations on the ICT sectoral developments in
Romania and the country‘s existing potential for export growth.
The following recommendations were made for technical assistance in export
development and national capacity building for the ICT sector of Romania:
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1. Technical assistance in ICT and in the e-commerce area was needed. To achieve
this, participants invite UNDP, World Bank, EU and donor countries to consider
possibilities of funding a national programme on the export development of the ICT
industry in Romania.
2. Participants confirm the practical usefulness of the country export potential profile
on information technologies as an effective tool in goal-setting and export strategy
formulation and promoting a new technology-oriented image of the country.
3. Based on the successful results of the first phase of the project funded by UNDP and
implemented by the ITC UNCTAD/WTO, participants propose the following priority
areas for technical co-operation:
Provide advocacy support to the national ICT exporters on international trade
and business development;
Enhance private/public participation by setting up a Federation of IT
Associations through the merger of the existing software associations into one
entity;
Expand ICT Business Corporate Networking and Business Matching through
organizing Round table workshops for creating awareness of the WTO
Agreements and ITA;
Taking into consideration the new round of multilateral trade negotiations,
participants request ITC and the World Trade Organization (WTO) to enhance
support in establishing dialogue between trade policy-makers and ICT business
community to better understand benefits and challenges of the multilateral
trading system and implications of the WTO agreements for the ICT sector of
Romania;
International marketing of computer software products and services: Marketing
Romanian intellectual capital and expertise in IT to the EU and the USA;
Company export strategy and business plan development;
Export growth scenarios for specific ICT sectors;
Specialised ICT market and product studies;
Non-tariff barriers to international trade in ICT;
Country and company brand-building;
IT projects design, management and quality testing and certification: Training
and in-depth understanding of methodologies for software development, quality
control procedures and project management techniques;
E-Business development: Setting up an incubation project for e-trade to enable
industry to transact business over the Internet;
Export-oriented IT parks: Setting up National Technology Parks with adequate
infrastructure comparable to that of India and Ireland, to provide a jump-start to
the IT industry.
4. The participants express their thanks UNDP, ITC UNCTAD/WTO and the
Government of Romania as well as ARIES for taking initiative in launching this
project and organising in-depth and fruitful discussion during the business
roundtable.
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PART THREE
ROMANIA: E-BUSINESS READINESS
93
Chapter 12
ROMANIA: E-BUSINESS READINESS
12.1 Introduction
This chapter assesses Romania‘s readiness to usher in electronic commerce and to
diagnose the actions needed to facilitate the successful establishment of the national
electronic marketplace. As estimated by Association for Information Technology and
Communication – Romania (ATIC), the status of e-commerce in Romania is given
below.
Romania:
Status of e-Commerce
B2B sites >10 and B2C sites >15 - A promising start;
Home banking offered by most major banks and Internet banking pioneered by
two banks
The Digital Certificate Issuing Authority sets the operational sites using VeriSign
(USA)
The ―Information Code‖, ―Electronic Signature‖ drafts of Law on electronic
document status, including electronic signature transaction security enforcement
measures and protection of personal data in the process of implementation
E-Mall start-ups
Source: ITC Project file, March 2002
According to The Economic Intelligence Unit‘s Pyramid Research e-readiness ranking,
―E-readiness‖ was defined as the extent to which the country‘s business environment is
conducive to Internet-based commercial opportunities. It is a concept that spans a wide
range of factors, from the sophistication of the telecommunications infrastructure to the
security of credit-card transactions and the literacy of the population.
The Internet is altering the landscape of international commerce. National strategy
makers are endeavouring to create an environment conducive to the rapid growth of e-
trade and to promote the development of e-competency at the level of the individual, the
firm and the organizations, public or private, that are involved in supporting the national
export effort. Efforts are being made to integrate the economy with that of global
marketplace in the wake of the digital era.
B2B e-trade has redefined the traditional buyer–seller (importer-exporter) relationship
and establishes new business practices as the norm. It places emphasis on the exporting
enterprise as having total response capability, i.e. the capability to compete on the basis
of time and customer service, in addition to price and quality. It will, in all likelihood,
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impact on the operations and the performance of all export-oriented businesses,
irrespective of what they supply. It should, therefore, be seen as a possible threat to
current competitiveness, which must be addressed at the strategic level, within the firm
and the country as a whole.
E-trade has opened new commercial opportunities to export-oriented enterprises. In
particular, it has empowered small and medium-sized enterprises to participate in
international markets, where previously market entry and promotion costs were
prohibitive, and to streamline (i.e. eliminate intermediaries) its own supply- and export-
distribution chains and to reduce business transaction costs. In short, e-trade allows the
enterprise to reposition itself in the international market place. As the business
community is in favour of B2B trade, it should be seen as a critical element of a national
export strategy.
E-trade capability does not, however, mean that the exporter must be able to conduct each
stage of the international transaction electronically. That requirement may come in time,
but for the moment the market does not demand it. Export development in the digital
economy is not an ‗all or nothing‘ proposition.
The challenge is, nevertheless, to work towards acquiring e-trade capability at every stage
of the transaction - a challenge that will require a positive and concerted response not just
from the entrepreneur, but also from the public-sector strategists and managers of trade
support institutions, including banks.
E-readiness also provides an invaluable benchmark for the countries themselves to seize
the new trading opportunities emerging from online transactions.
E-readiness is becoming important in the Internet economy for promoting trade online,
eliminating the cost of paperwork and enhancing customer satisfaction.
12.2 Methodology for deriving e-readiness
There are many methods used to assess the e-readiness of countries. The ITC team
utilized three comparative methodologies, namely:
Harvard University‘s Readiness for the Networked World model
The ITC‘s questionnaire model
The Economic Intelligence Unit Model.
The ITC team conducted its study based on the above methodologies to arrive at the e-
readiness index for Romania. The description of each methodology and its results are
enumerated in the following paragraphs.
12.3 Analysis and Results
1. Harvard Model
The ITC team utilized the ―Readiness for the Networked World: A Guide for Developing
Countries‖ of the Information Technologies Group (ITG) at the Center for International
Development at Harvard University (Annex 6). The report looked at five groups namely,
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Network Access, Network Learning, Network Society, Network Economy, and Network
Policy. Within these groups, the following criteria were examined:
Information infrastructure Internet availability Internet affordability
Network speed and quality Hardware and software Service and support
Schools' access to ICTs Enhancing education with ICTs Developing the ICT workforce
People and organizations Locally relevant content ICTs in everyday life
online
ICTs in the workplace ICT employment opportunities B2C electronic commerce
B2B electronic commerce e-Government Telecommunications
regulation
ICT trade policy
The team obtained information for the criteria from ―Information Society Indicators in
the Countries of Central and East Europe‖, ESIS Report, January 2001 and ―Romania
2001, Telecommunications and the Internet‖ by eSEEurope. Table 21 gives details of the
self-assessments rating of Romania on each of the parameters.
Table 20: Self assessments Regarding Readiness for the Networked World by
the Countries in South Eastern Europe
Category Description Albania Bulgaria Croatia FRY Monte- Romania Macedonia
Negro
Network Information infrastructure 1 3 3 3 3 2.5 3
Access Internet availability 1 2 3 3 2 2.5 3
Internet affordability 1 3 2.5 3 4 1.5 2
Network speed and quality 2 3 4 2 3 2 4
Hardware and software 2 3 4 2 2 1.5 3
Service and support 2 4 4 3 2 2.5 3
Networked Schools access to ICTs 1 2 3 2 2 2.5 2
Learning Enhancing education with 2 2 3 2 2 2.5 2
ICTs
Developing the ICT 1 3 3 3 2 4 3
workforce
Networked People and organizations 1 3 3 3 3 3 3
Society online
Locally relevant content 2 3 3 3 2 2.5 3
ICTs in everyday life 1 3 3.5 3 2 2.5 3
ICTs in workplace 1 3 3.2 3 3 2.5 2
Networked ICT employment 2 3 3 3 3 2.5 3
Economy opportunities
B2C electronic commerce 1 2 3.2 2 1 1 3
B2B electronic commerce 1 3 3.1 2 1 1 2
e-government 2 3 3 2 2 1 1
Network Telecommunications 4 3 2.7 2 4 2 2
Policy regulation
ICT trade policy 3 4 3 3 1 3 2
Average: 1.6 2.9 3.2 2.6 2.3 2.13 2.6
Source: Self assessment 2001 e-SEEurope, Version: 9 May 2001 by e-SEEurope
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Input was also obtained from the National Agency for Communications and Informatics.
Based on the information and the analysis (Figure 10) depicts the matrix for Romania‘s
network readiness on a scale of 1-4.
Figure 10 Network Readiness: Romania
Access: Infrastructure
4
Policy: Trade
3.5 Access: Internet Availability
3.5 3
Policy: Telecom 3 Access: Internet Affordability
3
2.5
2.5
Economy: E-Government Access: Speed & Quality
2 2
2.5
1.5
2
Economy: B2B 1 Acess: Hardware & Software
2 0.5 2
0
2 3
Economy: B2C Access: Service & Support
3 3 Series1
Economy: ICT Employment Learning: Schools Access
3 3
Society: ICT in Workplace Learning: Enhancing through ICTs
3
3
Society: Info & Comm in Life Learning: Developing ICT Workforce
3.5 4
Society: Local Content Society: People & Orgs on line
Source: Romania IED Assessment, 2000
The e-readiness scores for the individual criteria may be seen in Annex 7. The average
score of Romania in the analysis of the six nations of South Eastern Europe was 2.13. It
may be observed that Romania scored marginally above Albania, placing it amongst the
nations which are at a very low state of e-readiness.
2. ITC‘s Questionnaire Model
The ITC team also prepared and circulated a questionnaire among opinion makers,
business, government and industry associations (see Annex 8). Upon analysis of
responses to the questionnaire and discussions with trade, industry, government and e-
associations, the following was concluded about the readiness of business, government,
B2B and B2C.
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Enterprise level e-competence
It was noted that gaining e-competency at enterprise level improved: communication
between customers and suppliers; pre-transaction knowledge; management of
customer relationships; monitoring logistics; and, commercial activities. The
analysis revealed that most of the enterprises were using the Internet to exchange
information. There were only a few companies which were using Internet for
publicity, advertising, acquiring books and downloading software.
National level e-competence
It was observed that draft laws had been prepared and presented to the Parliament.
Secure transaction law existed and transactions could be verified. The Central Bank
and the Ministry of Finance were looking into payment authentication. Chambers of
Commerce and Industry were likely to become the certifying authority for digital
signatures. The World Bank had also initiated an e-readiness project, which was yet
to take off. Government preparedness to usher in the digital era was at an initial
stage.
The Romanian B2B and B2C environment plays an important role in Romania‘s
integration into the digital economy. As legislative mechanisms were not yet in
place, there were no B2B or B2C transactions. It was observed that a pilot project
for train reservations utilizing an online system had been initiated. This could be
successfully replicated in other areas. Similarly Chambers of Commerce were
involved in preparing the industry through a project to deploy these technologies.
The results indicated that Romania is at an early stage of e-readiness.
3. EIU Model
The ITC team compared its results with the Economic Intelligence Unit‘s Pyramid
Research Report, which assessed the e-readiness of nations as recently as May 2001. The
research was based on the criteria of connectivity (30%), business environment (20%),
e-commerce, consumer and business adoption (20%), legal and regulatory environment
(15%), supporting e-services (10%) and social and cultural infrastructure (5%). The
methodology and scoring system used in the Economist Intelligence Unit‘s Pyramid
Research e-readiness rankings Methodology is given in Annex 10. The detailed results
may be seen in Table 22. Romania was found to be well down in the e-business
rankings, scoring 3.20 out of 10 in the e-readiness scale.
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Table 21: Romania‘s E-Readiness ranking
by Economic Intelligence Unit Pyramid Research Report
The Economist Intelligence Unit/Pyramid Research e-readiness rankings
(May 2001)
E-readiness Country E-readiness
Ranking of (60) Score (of 10)
E-business leaders
1 US 8.73
2 Australia 8.29
3 UK 8.10
4 Canada 8.09
5 Norway 8.07
6 Sweden 7.98
7 Singapore 7.87
8 Finland 7.83
9 Denmark 7.70
10 Netherlands 7.69
11 Switzerland 7.67
12 Germany 7.51
13 Hong Kong 7.45
E-business contenders
14 Ireland 7.28
15 France 7.26
16(tie) Austria 7.22
16(tie) Taiwan 7.22
18 Japan 7.18
19 Belgium 7.10
20 New Zealand 7.00
21 South Korea 6.97
22 Italy 6.74
23 Israel 6.71
24 Spain 6.43
25 Portugal 6.21
E-business follower
26 Greece 5.85
27 Czech Republic 5.71
28 Hungary 5.49
29 Chile 5.28
30 Poland 5.05
31 Argentina 5.01
32 Slovakia 4.88
33 Malaysia 4.83
34 Mexico 4.78
35 South Africa 4.74
36 Brazil 4.64
37 Turkey 4.51
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38 Colombia 4.24
39 Philippines 3.98
40(tie) Egypt 3.88
40(tie) Peru 3.88
42 Russia 3.84
43 Sri Lanka 3.82
44 Saudi Arabia 3.80
45 India 3.79
46 Thailand 3.75
47 Venezuela 3.62
E-business laggards
48 Bulgaria 3.38
49 China 3.36
50(tie) Ecuador 3.30
50(tie) Iran 3.30
52(tie) Romania 3.20
52(tie) Ukraine 3.20
54(tie) Algeria 3.16
54(tie) Indonesia 3.16
56 Nigeria 2.91
57 Kazakhstan 2.76
58 Vietnam 2.76
59 Azerbaijan 2.72
60 Pakistan 2.66
Source: The Economist Intelligence Unit/Pyramid Research e-readiness rankings report, May 2001
IT may be concluded from the above comparisons that Romania has still to take major
strides in preparing its infrastructure, legal mechanisms and enterprises to enter into the
digital economy.
100
ANNEXES
101
102
Annex 1
NATIONAL CHAMPIONS
INFORMATION AND COMMUNICATION TECHNOLOGY
ROMANIA
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BRINEL COMPUTERS
Company Name: BRINEL COMPUTERS
Address: Romania, Cluj-Napoca, blvd. N. Titulescu nr. 4
Romania, Bucuresti, str. Vasile Parvan nr. 12
Phone: +40-64-414610; +40-3103082
Fax: +40-64-414617; +40-1-3121716
E-mail: nbc@brinel.ro
Web-site: www.brinel.com
President/Director President – Marcel Borodi
and other key personnel: Executive Manager – Cornel Moisescu
Core competence: IT Solution Center – quality solution provider and IT consultancy
Range of products or – System integrator
services: – Software developer for e-business
– outsourcing and services
– in-house PC assembler – ALPIS national brand
Turnover (1999/2000): 1999: 7,500,000 US$;
2000: 8,000,000 US$
Number of employees: 80
Target markets: Romania;
intend to extend its business on Central and Eastern Europe market
Export revenues (2000): – n/a
International certificates Microsoft Certified Partner
obtained: Microsoft Certified Technical Education Center
Compaq Authorized Service Provider
Compaq Authorized Reseller
IBM Business Partner
3COM
Official System Integrator of Avaya Communication for
SYSTIMAX® Structured Cabling Solutions
Authorized System Integrator for SYSTIMAX® Structured
Connectivity Solutions
ISO 9001 Certified Company
Success indicators: – ALPIS – top 4 Romanian PC national brand
– Annual growth rate
– Romanian IT magazines awards:
PC Magazine, 2001 May, Editor‘s Choice, Entry-level
CHIP Computer Magazine, 2000 November, CHIP Price Tip
PC Magazine, 2000 May, Editor‘s Choice
– Customer references
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BRINEL was established in 1991, in Cluj-Napoca, mainly based on service and technical
support for computers and printers.
The certifications obtained by the employees, the strategically partnerships closed with
world top IT companies: Microsoft, Compaq, Avaya, IBM etc., the IT project we had
implemented, the quality of our products and services offered over the past 10 years, took
our company to enviable performances on the Romanian IT market: 8 million $ revenues
in 2000.
All these determined us to stabilize our offer in 4 lines of business:
System integrator:
Software development for e-business
In-house PC assembler and distributor for ALPIS – national brand
Outsourcing and services
The system integrator department has more than 8 years experience in turn key solutions,
software and hardware integration, software deployment, training, consultancy, analysis
and implementation of complete solutions.
We developed our service network nationwide and we can provide professional services
all over the country. We trained our partners to reach a high level of technical skills. For
each of them, his operating area is no more than 200 km away from his headquarter. This
entitles us to promptly solve our clients‘ problems. The service network is coordinated
from Cluj and Bucharest, where the service headquarters are and where we have
warehouses with service components. This way, we can assure the quick answer to our
clients‘ problems and therefore, the malfunction timing is minimized.
BRINEL has a strategic partnership with Compaq (since 1995), Microsoft (since 1997),
Cisco and Avaya Communications and very strong relationship with IBM, Acer, Toshiba,
ALPIS (local-brand produced in an ISO9001 certified company), QDI, Acer, Intel,
Epson, HP, Lucent Technologies, 3COM, Symantec, Red Hat etc.
With more than 9 years experience in software development, our software division is now
able to provide you with exceptional levels of solutions based on Microsoft, Oracle,
Imprise/Borland or Java environments.
Beginning with 1993, we are the PC in-house assembler for ALPIS computers – national
brand. Acting in partnerships with worldwide IT companies: MICROSOFT, INTEL,
QDI, Quantum, AOpen, ACER, LG and with a high qualified and professional team, we
are in the top 4 Romanian in-house PC assembler.
Now, we offer more than a product, we offer solutions and services in a wide range of
business: manufacturing, banking, government, administration, healthcare, education and
commerce. We have done international projects as well, keeping a high level of customer
satisfaction. Among our goals for 2002, we can underline our desire to increase our
national market share and extend our co-operation on European market.
All these are based on the experience and professionalism of our young personnel and
partnership with the most important IT companies and also our customer fidelity
leverages we implemented.
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EUROWEB ROMANIA
Company Name: EUROWEB ROMANIA
Address: 33 Unirii Bd., Bl.A2, Sc.3, Bucharest
Phone: +40 1 322 00 22
Fax: +40 1 323 36 30
E-mail: office@euroweb.ro
Web-site: http://www.euroweb.ro
President/Director Gheorghe Rusu – Executive Managing Director
and other key personnel: Elena Jugariu – Financial Manager
Core competence: INTERNET
Range of products or services: Data over IP, VPN Networks
Turnover (1999/2000): 450.000 USD/1.257.750 USD
Number of employees: 45
Target markets: Nation-Wide Companies, Large State-Owned
Companies,
Private Companies
Export revenues (2000): 30.000 USD
International certificates - n/a
obtained:
Success indicators: 3 times amount of turnover from 1999 to 2000
Euroweb Romania is a leading player on Romanian Internet market and a forerunner in
terms of technologies and market coverage.
The company has been acting on the Internet market since 1993 when established the
first commercial Internet connection in Romania. It gained extensive experience over
the years implementing the highest developed nation-wide network in Romania, with
POP‘s and dealers in each county.
In July 2000 become part of the Pan-European network Euroweb International, one of the
most significant ISP in Central and Eastern Europe (Nasdaq: EWEB-news), registered in
New York.
During the last few years, Euroweb International Co. oriented its activities on IP
operators acquisitions in East European countries, in order to develop a powerful network
in this area. With this purpose, they purchased completely or partially the main ISP from
Hungary, Czech Republic, Slovakia and Romania.
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Euroweb is focusing mainly on Corporate Internet Access & Applications – Virtual
Private Networks, Wireless Solutions for Metropolitan Networks and strategic integration
of the new challenging IP based products such as VoIP.
Euroweb Romania Coverage Map
Euroweb Romania has border crossings with UUNET via Pantel:
- 8 x 2 Mbps (wireless)
- 16 x 155 Mbps (fiber optics)
Euroweb Romania is founding member of the National Association of Internet Service
Providers.
Euroweb services mean minimize costs for communication channels while maximizing
efficiency for a wide area of applications. Our customers benefit from the continuous
development of our network and services portfolio.
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S.C. ―ISRATECH‖ S.R.L.
Company Name: S.C. ―ISRATECH‖ S.R.L.
Address: Iasi, Splai Bahlui 24, bl. C1, sc.E, ap. 3 , Romania 6600
Phone: +40 32 219 992
Fax: +40 32 217 852
E-mail: sales@isratech.ro
Web-site: www.isratech.ro
President/Director Eliahu Friedmann – president
and other key personnel: Fetcu Adrian – CEO
Core competence: ASIC and FPGA design, Verilog and VHDL
Range of products or services: Hi – Tech market
Turnover (1999/2000): 400.000 $
Number of employees: 135 employees
Target markets: Hi- tech
Export revenues (2000): 400.000 $
International certificates None
obtained:
Success indicators:
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IP DEVEL
Company Name: IP Devel
Address: Bd. Unirii nr. 5, bl.1B, ap.9, Bucharest
Phone: +40-1-3362408
Fax: +40-1-3366494
E-mail: contact@ipdevel.ro
Web-site: www.ipdevel.net
President/Director Bogdan Putinica – CEO
and other key Daniel Bogdan – CFO
personnel: Ileana Toma – Business Development Manager
Core competence: Customized software development and IT consulting
Range of products or Wireless applications, multimedia (entertainment and gaming),
services: financial-banking applications, encryption, security
Turnover (2000/2001): 860,000 USD
Number of employees: 30
Target markets: Europe (Germany, UK, Finland, Ireland, France, Holland, Italy)
Asia (Hong Kong, Japan, Taiwan)
USA, Canada
Export revenues (2000): 150,000 USD
International In the process of being ISO 9001/200 certified
certificates IBM partner
obtained: Reuters solution integrator
Xerox solution integrator
Success indicators: IP Devel is an integrated communications, technology and
software solution provider based in Bucharest, Romania and
having a strong presence in USA, UK and Germany, offering
remote software development & consultancy resources for
companies around the world.
It all started in a Bucharest high-school, when the two future
managers of IP Devel gained their first taste of the world of
computer science.
―In the tenth grade we were very well-prepared theoretically,
so actually touching a computer opened the practical side of the
matter and we had a tremendous chance to become specialists,‖
said Bogdan Putinica, the company's CEO.
Interest firmly rooted, Putinica later ended up graduating in
finance and banking from the Academy of Economic Studies,
while his partner, Daniel Bogdan, the technical director, finished
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the Automatics Faculty. The corporate experience came
afterwards. Bogdan Putinica had decided to give up IT, so he
joined the marketing department of Reuters and Daniel in the IT
department of HP Romania. They were both sent to the Geneva-
based offices of the companies, but never met. ―We came back
with extensive knowledge,‖ they say.
Starting out as freelancers in their first year of faculty for a
company in England, they both dreamed of being their own
bosses. Both are specialized in programming languages with
Daniel Bogdan gaining national recognition, qualifying for the
finals of the National IT Olympics.
―Even from his college days, my partner had this range of ideas
about setting up our own company, a fact that amused me at the
time, but now makes me glad as we reached this point sooner
than we planned,‖ said Daniel Bogdan.
At the beginning of last year, Bogdan Putinica, who was
attending several forums on the Internet, heard about the US site
HelloBrain.com, which had just been launched. It was a
business portal for US web companies offering projects for
which programmers throughout the world could bid.
After a serious selection, Bogdan and Daniel managed to win the
first three projects. The programmers usually do not know a lot
about the companies they are working for, in order to respect
their privacy. These companies are usually American, Canadian
or European. ―We won the first projects within two weeks,‖
Bogdan says. ―We had to move fast.‖
Putinica said they both set up IP Devel in October 2000 with
only six million lei (almost 300 USD) of their own money, but
added that ―it has evolved rapidly with a turnover for the year
2000 standing at around 150,000 USD, while turnover for 2001
approaching 860,000 USD‖.
A team of 20 programmers has already delivered over
100 projects by successfully providing a complete range of
development, implementation and customer support services
for partners worldwide.
Citibank, Siemens Germany, Intervideo, Hellobrain, ImaginOn,
Reuters, Hewlett Packard and other important companies have
emphasized the quality of our work. In addition, IP Devel is in
the process of being EN ISO 9001:2000 certified with the
Moody International Company for USA, Germany and Romania.
The company‘s vertical markets are: multimedia – gaming and
entertainment, wireless, financial-banking applications, security
and encryption.
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ROMUS INDUSTRIES S.A.
Company Name: ROMUS INDUSTRIES S.A.
Address: BUCHAREST
167 BIS CALEA FLOREASCA STREET, S1
Phone: 0040-1-2301650
Fax: 0040-1-2301660
E-mail: office@romus.ro
Web-site: www.romus.ro
President/Director SILVIU DORIAN CHELARU – C.E.O.
and other key VIOREL STANCIU – C.O.O.
personnel:
Core competence: ROMUS INDUSTRIES is a Networking and Computer System
Integrator, Official Distributor and Integrator for DTK
Computer, CANON, PowerWare and Fujitsu.
Range of products or LANs and DTK Computer equipment (server, workstation,
services: BookPC, notebook) in any configuration. CANON peripherals
and office equipment (copiers, printers, scanners, faxes, digital
cameras, multifunctionals) and PowerWare uninterruptible
power systems. Internet & Games locations (Community Cyber
Centers) fully equipped by ROMUS INDUSTRIES.
Authorized maintenance and repairing for DTK / CANON
products.
Turnover (1999/2000): 1999: 6.000.000 EUR
1999: 8.000.000 EUR
Number of employees: 60
Target markets: ROMANIA AND SUROUNDING COUNTRIES
Export revenues -
(2000):
International ISO 9001
certificates obtained:
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INFOPULSE ROMANIA GROUP S.R.L.
Company Name: INFOPULSE ROMANIA GROUP S.R.L.
Address: Verii 32 D, 4300 Targu Mures, Romania
Phone: +040 65 213644
Fax: +040 65 218397
E-mail: Dumitru.Radoiu@Infopulse.ro
Web-site: www.infopulse.ro, www.infopulse.net, www.proxy-pro.com
President/Director Dumitru Radoiu, Ph.D., CEO
and other key personnel: Calin Enachescu, Ph.D. Manager General
Core competence: Infopulse Romania Group is a powerful, dynamic company that
offers high-tech solutions for complex IT problems. IP.RO Group
focuses on software development, rapid prototype development
and IT consulting. IP.RO Group aims mainly financial and trade
processes and helps clients get a lead on the market.
Range of products or Software Development
services: Consulting
Application Architecture Design
Support & Training
Turnover (2000/2001): 1,000,000 USD
Number of employees: 52
Target markets: EU, USA, Romania
Export revenues (2001): 700,000 USD
International certificates All Infopulse companies (4) are Microsoft Certified Partner.
obtained: Nine professionals certified by Microsoft in: OS, Networking and
Infrastructure, Data Base, Distributed Applications, Client - Server
Applications (Web and Desktop).
Success indicators: We develop quality products (e.g. Infopulse GateKeeper proxy
server is rated among the best 10 in the world – ServerWatch).
Customer satisfaction is high:
- our business with US is still growing after 9/11/2001
- our business with EU increased all year 2001
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About Infopulse Group
Infopulse Romania Group is a powerful, dynamic company that offers high-tech solutions
for complex IT problems. IP.RO Group focuses on software development, rapid
prototype development and IT consulting. IP.RO Group aims mainly trade processes and
helps clients get a lead on the market.
Infopulse Group is an international network of autonomous companies that share
knowledge and support each other. Locations are: Romania, The Netherlands and
Portugal.
Infopulse divisions support each other by sharing knowledge and technology, developing
joint products and projects, thus providing co-ordinated expertise. To this end, a major
objective is the implementation of a secured communication channel over the Internet to
support interactive communication between Infopulse divisions around the world.
The cornerstone of the Infopulse network is reflected in the spirit of Infopulse
Romania—sharing information, using cutting-edge technology, providing on-going
training and managerial support and employing highly skilled, dedicated professionals.
Infopulse makes use of CASE tools throughout all phases of development: analysis,
design, implementation, installation and testing. Infopulse uses the best database
technology such as Microsoft and Oracle, and design patterns, the newest technique of
object oriented programming.
Infopulse Romania‘s primary goal is to provide the best answers to market needs and
requirements through flexibility, creativity, co-operation, teamwork and co-ordination of
expertise therefore its spin-offs have different focus:
Infopulse Romania Distributed Systems, Infopulse Romania Electronic Commerce,
Infopulse Romania Financial Markets, Infopulse Romania Management Services.
Our clients in the United States, Holland and Romania are banks, investment companies
and corporations intelligently investing in their technological development for better
managerial and decision-making support.
Our expertise, endorsed by university degrees of all our employees and by internationally
recognized certification, covers areas such as networking, security, databases,
information privacy, billing and payment, and supply-chain management.
Our activity consists of both product development and in-house full-scale projects:
Analysis, design and implementation.
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Please find bellow a short presentations of our projects/products.
Infopulse Proxy-Pro GateKeeper – GateKeeper is a proxy/firewall server that runs on a
Romania single computer and allows sharing of a single internet connection (isdn, modem,
Products Ethernet, etc.) to an entire network.
File System Monitor – a powerful tool for monitoring file activity and automated
file processing ;
EventVision – client-server applications capturing all the incoming / outgoing
information traffic flowing through a company‘s communication resources;
Pharmacia – retail software solution, real time warehousing application for
pharmacies.
Data Control System – logistic and sale software solution.
Infopulse MAME (Movie Advertising Materials Evidence)
Romania Application that enables electronic data entry on a handheld computer and HTTP
Palmtop transfer to support weekly surveys done by Southland Displays Studio
Projects (Hollywood)
Data are sent to an SQL server for further visual analysis.
Infopulse Metrixlab – client-based internet surfing behavior tracking tool;
Romania OpinionBar – client based website experience, date gathering tool;
Offshore OpinionPoll – site-based website experience , data gathering tool;
FARM (Financial Automated Risk Manager) – automated generation of most trades upon
Projects
portfolio analysis and verification against Fisher Investments policies and rules.
ExcelTrader – automated trade system, performs automated trades on Amsterdam Stock
Exchange.
Nextrader – solution developed for Amsterdam Stock Exchange in cooperation with
Infopulse the Netherlands.
NexSuite Series is a suite of products developed for the newest European Stock market,
called EuroNext, with a headcounter based in Paris. For this project we used the business
input from the Dutch traders, the specifications from EuroNext and for support we work
together with helpdesk in Paris. This is a good example how we manage offshore
projects: business input from Holland (our people are travelling to The Netherlands
periodically for information exchange and face-to-face meetings), technical helpdesk
about the stock exchange in Paris and the development team in Romania.
The WTS (Warrant Trading System) is connection software between Commerzbank
(based in Germany and not listed on AEX (Amsterdam Stock Exchange) and
Kempen & Co (a major investment bank in Amsterdam and listed on AEX). The WTS
system was developed by Infopulse Romania, based on business input from Kempen & Co
(regarding the purpose of the software) and technical specification from the IT department
of Commerzbank (regarding the physical connection).
The AQS (Auto Quoting System) is a fully automated quoting system for Amsterdam
Stock Exchange developed for ABN Amro London. The business specifications were
developed by Infopulse Romania together with business people from London and the
development/testing were held in Amsterdam and Romania by Romanian
developers/project leaders.
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SCOP COMPUTERS SRL
Company Name: SCOP Computers SRL
Address: BARBU VACARESCU 162, SECTOR 2, BUCURESTI
Phone: 231.65.94
Fax: 231.65.95
E-mail: scopcomputers@scop.ro
Web-site: www.scop.ro
President/Director Alexandru Visan
and other key personnel: Doina Ilie, Horia Chitu
Core competence: IT Distribution, Office Equipment Distribution
Range of products or Computers, Office Equipments, Power Solutions.
services: SCOP is an authorized distributor for: Toshiba, Microsoft, Borland,
APC, 3Com, AMP, Invertomatic, Victron, Fujitsu-Siemens.
SCOP offers after-sales service and on-site service.
Turnover (1999/2000): $ 19 million
Number of employees: 108 employees
Target markets: Our target markets regard the Small Offices, Home Offices,
Small-medium Business, Major Accounts and Large Accounts
Export revenues (2000): -
International certificates Best MS OEM Distributor in 2000, in 2001.
obtained: Toshiba Champion‘s Club in 1998, 1999, 2000, 2001
Success indicators: A solid distribution network, a good logistical background, good
financial resources, quality and customer oriented policy, quick service
times, special condition for Large Accounts.
At SCOP COMPUTERS we have been committed to the distribution and support for IT
solutions and birotics. Our main business is the distribution and support of personal
computers, peripherals, networking and communication products, office automation
products (document management solutions and multimedia presentation solutions), as
well as power solutions (diesel-sets generators and uninterruptible power supplies). The
services we are offering for these products: on-site service, training, IT & Office
Equipment consulting.
Based in Bucharest, Romania, our company was founded in May 1994, as a Romanian-
Austrian joint venture. SCOP Computers has over 100 employees and a turnover of over
USD 19 million in 2000. The expected turnover this year is US$ 25 million, which,
further on, will assure us one of the leading positions on Romanian IT market. We also
have two facilities, one office building located in a residential area of Bucharest and a
bounded warehouse in Giurgiu Free Zone, that assures us low cost operations and an
improved cash flow.
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SCOP COMPUTERS is working today with a well developed and balanced distribution
network of about 1200 Romanian companies to promote the range of A-brand products
for which it acts as an authorised distributor. As for area covering, resellers located in
Bucharest represent about 40% of the channel and the rest of 60% are companies from all
country areas. Our business model is based primarily on valuable partnership, good
communication and cooperation with our suppliers and customers. We are continuously
supporting our dealers into the market – that is why we developed an Internet based on-
line ordering tool in order to provide a better partner support.
Our business competencies are continuously developed through IT and office automation
equipment distribution activities for leading A-brands such as Toshiba, Compaq,
Kyocera, Microsoft (No. 1 Romanian distributor for FY99 and FY00), 3Com, American
Power Conversion, Borland, AMP Connect, CISCO, RAD, DIGI INT'L, Triton,
US Robotics, VIDAR. We are also looking for new opportunities in software
development business, focusing especially on: web sites building, web application
(e-commerce, advertising and other Internet services), financial applications on
Internet/Intranet using HTML, XML and JavaScript, Internet communication services
such as phone/videophone communication services.
Our distribution experience and our professionals expertise encourage us to look forward
to extend our business. In this respect, we rely on our good company image on the
market built in more than 6 years of experience in promoting A-brands, our financial
strength allowing us to have a well-balanced stock and a diversified product range. We
also have a well-trained technical team, with CNE Novell, Compaq ASE, 3Com
University, MCSP and other certifications.
We are interested in expanding our current products range with new networking products
such as LAN/WAN and communication products, mobile communication products,
intelligent communication products, networking products. We are also looking for new
opportunities in software business, focusing especially on: new operating systems,
applications and development tools (i.e. software for applications, systems, servers,
enterprise, network and systems management software, Internet application and database
software, graphic applications, web development tools etc).
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SOFTWIN
Company Name: SOFTWIN
Address: 7000 Bucuresti, Sector 1,
5th, Fabrica de Glucoza Street
Phone: 0040 1 233 07 80
Fax: 0040 1 233 07 63
E-mail: office@softwin.ro
Web-site: www.softwin.ro
President/Director General Manager:
and other key personnel: Florin TALPES
Core competence: Custom Software Development
Range of products or – Data Security
services: – content Structuring
– e-CRM
Turnover (1999/2000): —
Number of employees: 400
Target markets: Unites States, European Union
Export revenues (2000): 90% of turnover
International certificates – ISO 9001
obtained:
Success indicators: – +25%/year growth since 1997
– over 3000 projects developed for EU and USA clients
– ISO 9001 certified since June 1998 (1st Romanian software
company ISO 9001 certified)
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SOFTWIN‘s TECHNOLOGIES,
PROGRAMMING LANGUAGES, ARCHITECTURES, SERVICES
Operating Systems:
Windows NT, 2000 (and legacy Microsoft operating systems);
various UNIX dialects
Software:
Languages: C/C++, Visual Basic, .NET Framework, Perl, SQL;
Internet programming: HTML, DHTML, ASP, CGI;
Databases: Oracle, MS SQL Server, Sybase, MS Access;
Technologies/standards: ActiveX, COM, DCOM, COM+, CSS, SGML, XML,
DOM, XSL, SOAP
Technologies:
Distributed components, n-Tier Architecture
Object Oriented Analysis, Design and Development (OOA, OOD, OOP)
Graphical User Interface Design and Development
Rapid Application Development and Prototyping (RAD)
Unique proprietary technologies based on innovative ideas and trends in
information security industry.
Proprietary conversion tools that automatically translate native formats (MS Word,
PDF, QuarkXPress, etc) to XML and XML-based formats (HTML, OEB, MS
Reader, Gemstar and other proprietary ebook formats)
Software services:
SOFTWIN provides services in all specific software development processes, including
consulting, modeling, and development, implementation, integration and testing,
re-engineering and maintenance
Web-based applications and tools
E-commerce/E-business applications
Design, development and deployment of distributed architecture applications
Custom XML application development
SML/SGML standard implementation
Conversion services:
Document conversion from native formats (MS Word, Quark, PDF, etc.) to XML and
XML-based formats (HTML, OEB, MS Reader and other proprietary ebook formats)
Content structuring in XML/SGML
eCatalogs
In-house virus and threats analysis with great response time (the first in the world to
release Nimda or Badtrans.B removing tools, less then 12 hours after virus outbreak).
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SOFTWIN‘s OWN PRODUCTS
B2B electronic transactions
BitDefender Professional, BitDefender Home Edition, BitDefender Enterprise Manager,
BitDefender for MailServers, BitDefender for MS Exchange 5.5, BitDefender for MS
Exchange 2000, BitDefender for File Servers, BitDefender for ICQ, BitDefender for
MSN Messenger, BitDefender for Yahoo! Messenger, BitDefender for mIRC,
BitDefender for NetMeeting, BitDefender MS-DOS Edition, BitDefender Linux Edition,
BitDefender for MS Share Point Portal Server 2001, BitDefender for MS ISA Server,
BitDefender for Palm OS, BitDefender for Windows CE.
SOFTWIN‘s OBJECTIVES
To settle on co-operation with worldwide organizations, we focus especially on:
different size companies to solve their critical business challenges related to IT
development and software houses that focus on the reduction of development costs by
outsourcing at a high level of quality;
content owners (corporations, publishers, libraries) who need to re-purpose their
legacy documents to be used on internet and electronic devices; XML conversion.
outsourcing of CRM and help-desk services for Internet based companies,
IT & Telecom, finance and retailers;
the right country partner interested in representing our security solutions on their
home-market
SOFTWIN‘s INTERNATIONAL PROJECTS AND INTERNATIONAL
PARTNERS
Projects:
AUSTRIA
LATSCHBACHER,
Handheld terminal operating systems components development
BELGIUM
TRANSTEC: http://www.transtec.be
Marketing Information System (Client/Server solution, SQL based) development
FRANCE
ATOS Group: http://www.atos-group.com
Data Migration from legacy databases to ORACLE
Lucent /AT & T/ Barphone: http://www.lucent.com
ISDN levels 2 & 3 implementation in PBX operating systems, automatic testing
tools development
CREDIT LYONNAIS: http://www.creditlyonnais.fr
Banking application components migration and development
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HACHETTE DISTRIBUTIONS SERVICES: http://www.lagardere.fr
Executive Information Systems, Client/Server solution, SQL Server based
IMPACT TECHNOLOGIES:
Custom board driver
NATHAN Group: http://www.nathan.fr
Educational software development
PROLOGUE SOFTWARE: http://www.prologue-software.com
Internet tools, operating system components, custom board drivers development
JOUVE: www.jouve.fr
XML structuring
SGIT
XML structuring
BIL: www.bil.fr
Data conversion services
Euronumerique
XML structuring
GERMANY, SWITZERLAND
CLEMESSY ESPACE & TELECOM: http://www.clemessy.com
Software tools for telecommunications voice traffic quality measurement
NOUVELLE CALEDONIE
SOCIETE DU NICKEL: http://www.incoltd.com
ERP components migration
ROMANIA
AUSTRAL: http://www.austral.ro
The first Stationery Romanian E-commerce site, where you can see what you buy
and buy what you see.
SODINVEST
Executive Information system, Client/Server solution SQL Server based
development
FRD
Executive Information System, Client/Server solution Microsoft Back Office based
development
UNITED KINGDOM
Palgrave: www.palgrave.co.uk
OeB conversion
McQueen Group, UK: http://www.mcqueen.com
Digital Documents Services
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UNITED STATES OF AMERICA
JDM: (Jouve Data Management)
Technical documents database application development,
CD-ROM applications
Hearst Business Media: www.hearst.com
Content structuring for electronic circuits and residential constructions databases
GoReader: www.goreader.com
OEB Conversion of complex textbooks and morphing to certain ebook devices
Motor Solutions: www.motor.com
Content structuring for automotive insurance industry catalogs
Partners: Microsoft, Oracle, Sybase
Established in 1991 Software ITC continues the activity in the software field of the
national R&D institute in computer technologies established in the year 1968. In
mid 1995 Software ITC was becomes a private owned company with 100% Romanian
capital. The privatization was a success and the two autonomous branches in Bucharest
and Cluj continue to grow and to develop original software products for local market.
Software ITC Cluj develops pioneering activities in many fields and create new
products:
- In 1995, the first spell checker and hyphenator for Romanian language integrated in
Microsoft Office,
- In 1997, the first text to speech system for the Romanian language with unrestricted
vocabulary and using diphones as building elements of the sound inventory.
- In 1996, authoring systems destined to work out Computer Aided Instruction lesson.
Our Optical Marker Recognition product Amfora – System for automatic processing
of answering sheets – obtained the silver medal at the Inventors' Olympic Games
"Genius 2000" in Budapest.
Our newest project is to setting up an ICT park in Cluj. CETATE-TIC project is created
to promote regional economic development by enhancing research & development and
business interaction. Joint research and technology transfer will result in new processes,
new products, new companies, greater employment opportunities, and enhanced wealth
creation in the region. These aim at identifying the driving forces of technological
development, sharing experiences on the management of technology in order to enhance
business and trade capacities in ICT sector.
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INTRAROM SA
Company Name: INTRAROM SA
Address: 17, FABRICA DE GLUCOZA STREET, SECTOR2, BUCHAREST,
ROMANIA
Phone: 00401.20.40.900/00401.20.40.910
Fax: 00401/20.40.902
E-mail: office@intrarom.ro
Web-site: www.intrarom.com
President/Director Konstantinos Tsoukalidis-CEO
and other key personnel: Mihai Gherman- Deputy General Manager
Anca Rusu-Chief Financial Officer
Catalin Constantinescu- Marketing-Sales Director
Core competence: Integrated turnkey projects
Telecommunications equipment production
Range of products or Telecommunication Systems Software; Integrated Business Networks;
services: Energy Management Systems; Public Telecommunication Networks;
Integrated Information Systems; Integrated Lottery Systems
Turnover (1999/2000): EURO 39,3 million / EURO 116,7 million
Number of employees: 700
Target markets: Operators and suppliers of electronic communications services
Public Administration
Social Security Systems
Export revenues (2000): EURO 65 million
International certificates ISO 9001 by BVQI
obtained:
Success indicators: ROA: 12%/26%
ROE: 41%/65%
Gross Profit Rate: 11%/20%
Since its establishment as a Greek-Romanian joint venture, in 1993, INTRAROM has
proposed ambitious, but realistic targets. Consequently, INTRAROM managed to keep
its promises and became one of the largest manufacturers of telecommunication
equipment and supplies of IT integrated systems in Romania.
The authorized share capital reached Euro 13.5 million, the number of employees
increased to 700, and the most important, the activities range extended from electronic
equipment for telecommunication production to IT&C projects‘ development.
INTRAROM‘s main shareholder is INTRACOM S.A. Greece, one of the top
Telecommunication Company in South East Europe.
The company‘s facilities cover a total area of 30,000 sqm. The production premises
include now fully automated, high productivity placement lines for SMD components
wave soldering line, final and functional test equipment for assimilated products.
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INTRAROM produces and distributes modern telecommunication equipment and
provides integrated services for design, manufacturing, turn key project implementation
and support in the following areas:
Telecommunication System Software
Integrated Business Networks
Energy Management Systems
Public Telecommunication Networks
Integrated Information Systems
Integrated Lottery Systems
INTRAROM‘s exceptional progress since 1993 confirms its potential for dynamic
growth in this new millennium. The year 2000 brought a remarkable development of one
of the main lines of business, integrated services and turn key projects. Revenues rose to
118 million EURO in 2000, almost 200% increase over 1999, while profits before tax
reached 21,2 million EURO. Exports have risen to 65 million EURO accounting for a
significant 55% of total revenues. INTRAROM managed to keep its upward
development trend in 2001, showing potential for successful future investments in the
company.
On the base of INTRAROM‘s competitiveness are considered providing quality, in
conformity with ISO 9001 standards certified by BVQI, equipment‘ updating under the
most recent technologies, providing technical assistance for the delivered/supplied
products.
Company‘s success is mainly due to the specialists in the field, trained according to
international standards. The dynamism and efficiency the company has proved are
provided by the 700 employees with an age average of 34 years, from which over
400 holding a university degree.
The importance paid to permanent professional training, improving its product quality
and developing long terms business relations with its partners strongly show that
INTRAROM is a company for the future. Its proved capabilities, as well as the strong
financial and technical support of the INTRACOM Group of Companies recommends
INTRAROM as a reliable partner to IT and telecommunication projects of any size.
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SOFTWARE ITC CLUJ SA
Company Name: Software ITC Cluj SA
Address: 109, Republicii street,3400 Cluj Napoca, Romania
Phone: 00 40 64 197681
Fax: 00 40 64 196787
E-mail: sitc@sitc1.dntcj.ro
Web-site: http://sitc1.dntcj.ro
President/Director Mircea Pusca – president of the board
and other key personnel: Mircea Fernea – general manager
Paula Mihalcioiu – marketing director
Core competence: Software developer & service provider
Range of products or Software development for domestic markets, LAN/WAN
services: network solutions (hardware/software)
Programming services using: C/C++ programming languages,
Visual Fox and Visual Basic development environments, various
database engines
Turnover (1999/2000): 1999: 200.000 USD
2000: 220.000 USD
Number of employees: 40
Target markets: Romanian market
High schools and universities – Educational software tools
Hospitals and general practitioners - customized software
targeted to process various medical images and data base
management
Local administration software package for rural county
office
Outsourcing software development services
Export revenues (2000): 22.000 USD
International certificates Our Optical Marker Recognition product Amfora – System for
obtained: automatic processing of answering sheets – obtained the silver
medal at the Inventors‘ Olympic Games ―Genius 2000‖,
(Budapest, 4-7 may 2000).
Success indicators: On a small software market such Romania we succeed to obtain
the same profit rate, to maintain our clients and to create the
market for new products
Our turnover is small comparing other IT companies but it
results only from the sales of our product (software and related
services).
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GeCAD SOFTWARE S.R.L.
Company Name: GeCAD SOFTWARE S.R.L.
Address: OPTIDOL Center - 223 Mihai Bravu, 2nd floor, Bucureşti 3,
ROMÂNIA
Phone: +40.1.321.78.03; +40.1.321.78.59
Fax: +40.1.321.78.03
E-mail: office@gecadsoftware.com
Web-site: www.gecadsoftware.com
President/Director President – Mr. Radu GEORGESCU
and other key Executive Manager – Mr. Lucian CUMPATA
personnel: Sales & Marketing Manager – Ms. Madalina RADU
International Business Coordinator – Ms. Oana BORNAZ
Core competence: Technology innovation, focus on customers, developing global
strategic alliances and better ways of promoting our products
Range of products or The most successful GeCAD original suite of products is the RAV
services: AntiVirus family – for the past two years ranked among the ten AV
products in the world, winner of numerous international awards.
Developed on Compaq computers, RAV AntiVirus is the most used
antivirus solution in Romania and is presently marketed globally
through the RAV web site www.ravantivirus.com and over
26 distributors all around the world. With 500 resellers and over
10 million protected users in 2001, RAV AntiVirus proves to deserve
its name: Reliable AntiVirus.
Turnover (2000/2001): Over $3 million in 2000
Number of employees: GeCAD team has always been company‘s most important concern. It
includes 56 employees with an excellent professional background, most of
them in IT field (30 RAV, 7 Technical Support and 9 consultants).
Target markets: Home users, small and medium enterprises, coporates, ISP/ASP‘s
Export revenues (2001): $ 200,000
International Microsoft® Gold Certified Partner for Support Services; Microsoft®
certificates obtained: Certified Partner in Romania; Microsoft® Developer Dealer; AutoDesk
Authorized Dealer; Symantec Business Partner; Novell PartnerNet
Business Partner; Corel Certified Reseller and SCO – Linux Authorized
Partner.
Success indicators: The RAV AntiVirus family is the winner of numerous international awards
(―Excellent‖ evaluation – Virus Test Center Hamburg, Germany, March
1999, multiple-awarded ZDNet – 5 stars, ―Editor‘s Pick‖, June 1999 and
January 2001, VB 100% The Virus Bulletin, UK, September 1999 and
November 1999, Binary 1999 and 2000 – the best software creation in
Romania), Linux Journal – ―Product of the Day‖, January 2002).
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GeCAD Software – a story of success
Established in 1992, GeCAD Software is specialized in developing and implementing
software solutions. For the past nine years, GeCAD Software has been one of the
leading software developers in Romania and, additionally, is among the top local
distributors of the most important software products worldwide.
GeCAD Software puts its clients first and works hard to maintain and improve its market
leadership position in providing, implementing and consulting on software solutions.
RAV AntiVirus – development and worldwide distribution
The most successful GeCAD original suite of products is the RAV
AntiVirus family – for the past two years ranked among the ten
AV products in the world, winner of numerous international awards
(―Excellent‖ evaluation – Virus Test Center Hamburg, Germany,
March 1999, multiple-awarded ZDNet – 5 stars, ―Editor‘s Pick‖, June 1999 and
January 2001, VB 100% The Virus Bulletin, UK, September 1999 and November 1999,
Binary 1999 and 2000 – the best software creation in Romania), Linux Journal –
―Product of the Day‖, January 2002).
Developed on Compaq computers, RAV AntiVirus is the most used antivirus solution in
Romania and is presently marketed globally through the RAV web site
www.ravantivirus.com and over 26 distributors all around the world. With 500 resellers
and over 10 million protected users in 2001, RAV AntiVirus proves to deserve its name:
Reliable AntiVirus. Here are some more figures:
Over 2 million viruses and worms detected by RAV last year
More than 700 ISP‘s protected by RAV for Mail Servers
12 million different visitors at www.ravantivirus.com
$ 600.000 invested in 2001 only in antivirus research
Non-stop worldwide technical support in two languages – English and German
The RAV product family includes versions for: Desktop, Enterprise, Exchange and
Linux Mail Servers and PDAs (Psion). During 2001, the total RAV sales increased with
over 500%, the growth for this year following the same trend. Additionally, GeCAD
Software will continue to extend special offers to the educational market.
Why choose GeCAD Software?
GeCAD team has always been company‘s most important concern. It includes
56 employees with an excellent professional background, most of them in IT field
(30 RAV, 7 Technical Support, 5 programmers and 9 consultants).
GeCAD also represents an important partner for the most important software producers
worldwide, being rewarded and recognized as a:
Microsoft® Gold Certified Partner for Support Services; Microsoft® Certified Partner in
Romania; Microsoft® Developer Dealer; AutoDesk Authorized Dealer; Symantec
Business Partner; Novell PartnerNet Business Partner; Corel Certified Reseller and
SCO – Linux Authorized Partner.
126
Through expertise, years of experience and professionalism, GeCAD Software will
continue to be a leading provider of antivirus products and complete information
technology, development and data security solutions to all the companies with specific
needs of protection.
INES ADVERTISING
Company Name: INES ADVERTISING
Address: N. G. Caramfil nr. 44, bl. 11B, sc. 2, et. 2, ap. 30
sector 1, Bucharest
Phone: 01-232.21.12
Fax: 01-232.34.61
E-mail: office@ines.ro
Web-site: http://www.ines.ro
President/Director Iosif Szavuj – Executive Director
and other key personnel: Lucian Bila – Sales Director
Core competence: Internet Service Provider
Range of products or Internet access
services: IP/VPN
Web-related software development
Advertising
Turnover (1999/2000): App US$ 1,000,000
Number of employees: 30
Target markets: Internet access: Romania
Web-related software development: Romania/abroad
Export revenues (2000):
International certificates
obtained:
Success indicators:
127
128
Annex 2
Knowledge Economy
Position Paper for
ROMANIA
BUCHAREST – 2002
129
Contents
Page
Introduction and Background 132
Overall Perspective 132
Achievements to Date 133
―The Romanian economy paradox‖ 134
How useful is the knowledge economy perspective in understanding the challenges
Romania faces and the opportunities that EU accession provides to Romania? 135
What are the most difficult challenges Romania faces in building a knowledge-based
economy in the context of EU accession and the overall economic and institutional
reform efforts? 135
A. Development of an enabling economic environment and institutional environment: 135
B. Measures to provide human resources for the knowledge society 136
C. A coherent and enabling legal environment to foster a knowledge economy 137
D. Building an adequate (information) infrastructure 138
E. Building an efficient innovation system 138
1. Building a research and innovation network 138
2. Innovation and technological transfer programs
(scientific and technological parks) 138
3. Developing the capacity of the economy to absorb R&D achievements 139
4. Incentives for the creation and development of innovative SME‘s 139
Weaknesses and strengths. Romania in a global competitive knowledge economy 139
Strengths for knowledge-based development (at the beginning of the century) 139
2002 main weaknesses in building a knowledge based society in Romania 140
The national advantage in a knowledge-based economy 141
What are the implications of the ‗knowledge divide‘ for Romania in terms
of regional disparities, social exclusion and the urban–rural divide? 143
Which were some of the successes Romania experienced in moving forward
towards a knowledge economy? 144
Priorities in main action plan 145
Indicators for the knowledge-based economy 146
Measuring knowledge inputs 147
Measuring the amount and flow of knowledge 147
Measuring knowledge outputs 148
Measuring knowledge networks 148
Measuring knowledge and learning 148
Attachment 1 – Statistical data 149
Attachment 2 – The National Research Network and its activities in the transition period 152
130
The Network of Romanian R&D units 152
The Romanian Education Network (RoEduNet) 152
The Agricultural Research Network 154
Attachment 3 – K.E. – related indicators 155
Attachment 4 – The external environment acts through the STEEP factors
(Social, Technological, Economics, Environmental and Political) 157
Attachment 5 – SWOT analysis for the Romanian use of knowledge 159
Attachment 6 – EU accession related activities 160
1. The e-Content program 160
2. Safer Internet Action Plan program 160
3. IDA II Program (Interchange Data Administration) 160
4. IST Program – Information Society Program 160
5. Signing of a memorandum of understanding between some accession
candidate states regarding communication 161
6. Participation within the eEurope Action Plan 161
Attachment 7 – MEC Projects 162
Financed through bilateral agreements 162
Financed by the World Bank 162
Financed through European programs 162
Attachment 8 – Action plan 164
1. Education and training within a knowledge-based economy 164
2. Research, development and innovation 164
3. Culture in the knowledge-based society 164
4. Public (civil society, policy makers, specialists in various fields) awareness
campaign on the importance of knowledge economy and information society
development in Romania 164
5. The development of a new attitude: a new ―culture‖ of communication and
cooperation in the new knowledge-based society 165
6. Knowledge-based economy infrastructure (development of the national internet) 165
7. The required legislation and institutional framework 165
8. The adjustment of public administration to the knowledge-based society
and the development of other public services 166
9. SME‘s development in the framework of a knowledge-based economy 166
10. Development of a strong ICT industry 166
11. The role of the financial and banking system and e-commerce 166
131
Knowledge-based Economy
Issues Paper for the 19-22 February 2002
World Bank Conference
Introduction and Background
This paper aims to provide a framework for discussion at The World Bank‘s ‗Knowledge
Economy Forum for EU Accession Countries‘ to be held in Paris on February 19 – 22,
2002. This international conference will review the achievements and challenges of the
knowledge economy approach to date, as well as foster an exchange of views among
governments, domestic stakeholders and their partners on how this approach could best
impact on development.
During 2001, the World Bank launched the idea of a ‗knowledge–based economy‘
strategy paper for Romania to be delivered at the ‗Knowledge Economy Forum for EU
Accession Countries‘ hosted by Paris in February 2002. The World Bank initiative
brought together representatives the Romanian Government, the civil society and the
academic community as well as of donors, into a Working Group. The Group met in
several sessions and eventually agreed on this strategy paper.
The purpose of the paper is to provide a framework for debate at the conference on the
priority issues raised by the numerous Knowledge-based Economy approach stakeholders.
The paper is an open-minded survey of the Knowledge-based Economy to date.
Conference participants are invited to identify any other issue that may not be addressed
herein.
Overall Perspective
Knowledge is now recognized as the driving force behind productivity and economic
growth, shifting the focus to information, technology and learning and their role in
economic performance. The growing codification of knowledge and its transmission
through communications and computer networks are shaping an ‗information society’.
The course to this emerging economy based on knowledge is determined by two major
underlying and inter-related factors. The first is globalization. Increasingly, economic
activities are undertaken with no regard to international borders. The second are
communications, which means lower costs and a higher efficiency in information
transmission, retrieval and analysis. Together, these factors create a global economy
where knowledge is used pervasively as both input and output.
Defining the knowledge economy (or knowledge-based economy) is a fairly difficult task:
all the more is this so as this is a compound name and each of its components are in turn
difficult to define.
Such a definition implies several levels:
production of knowledge by steady innovation;
dissemination of knowledge to all members of society;
132
intensive use of scientific knowledge in every area of life (in technology and
organization more particularly);
society training for this type of economy through an education and training
system based on innovation and research;
emergence of dynamic, internationalized markets1:
Knowledge production, knowledge distribution, employment and the science systems
have to change and reflect the new ‗knowledge-based economy’ paradigm. This term is
an outcome of the recognition of the role of knowledge and technology in economic
growth.
Science, technology and industry policies have to be formulated to maximize performance
and well-being in a ‗knowledge-based economy’, which is directly based on the
production, distribution and use of knowledge and information.
There are many economies that make use of knowledge, but only few ‗knowledge-based
economies‘.
Knowledge and information are no scarce resources. Once the information is used, it is
available to others to do likewise. What is, however, scarce is the capacity to use it in
meaningful ways. A lot of information brought together may be more than just a sum-
total, it may generate new ideas and knowledge. Some kind of knowledge can easily be
reproduced and distributed, but some other (tacit knowledge) cannot be transferred from
one organization to another or from individual to another. Knowledge can also spill over
from one firm or industry to another, with new ideas being used repeatedly at little extra
cost. Such spillovers can ease the constraints placed on growth by the scarcity of capital.
Achievements to Date
This type of society is just emerging in Romania which has to address the challenge of a twofold
transition: from a centrally planned to a market economy (common to all former socialist
countries) and from the old society to the new one (along with all world countries, with the
economically advanced ones in the first place – statistical data in attachment no.1)
The new production factor offers Romania new opportunities such as:
highly diversified possibilities of economic growth
easier access to recent findings and innovations
higher-quality goods
lower costs
adjustment to consumers‘ requirements
better efficiency - social equity correlation
1
This new type of markets is characterized by: supplying goods that are customized down to
uniqueness, the consumption of which does not necessarily imply disappearance (the case of
information), beyond the control of the laws of equivalent exchanges (the exchange of knowledge is
non-equivalent and depends on the potential it holds for use and the receiver‘s creativity).
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Negotiation packages for EU integration for integration education and research have been
closed in 2000. Romania also follows closely the eEurope+ plan.
eEurope+ action plan aims to build an information society for all and the ‗most
competitive economy in the world‘ based on knowledge. The key objectives of eEurope
are:
Bringing every citizen, home and school, every business and administration entity
into the digital age and online
Creating a digitally literate Europe, supported by an entrepreneurial culture ready
to finance and develop new ideas
Ensuring that the whole process is socially inclusive, builds consumer trust and
strengthens social cohesion
The eEurope+ action plan was built by and for accession countries and has the following
main objectives:
1. European youth into the Digital Age
2. Cheaper Internet Access
3. Accelerating e-Commerce
4. Fast Internet for researchers and students
5. Smart cards for secure electronic access
6. Risk capital for high-tech SMEs
7. e-Participation for the disabled
8. Healthcare online
9. Intelligent transport
10. Government online
―The Romanian economy paradox‖
The development of a knowledge society seems to be Romania‘s only viable explanation
of, and solution to, what Romanian economists call the ―Romanian economy paradox‖.
The paradox is that for the last 150 years (except the period after 1989), even though
Romania‘s development pace was higher during the ascending phases of the centenary
cycles – considered as a world and/or European cycle – and the contraction during the
descending phases was smaller, the economic gap has widened steadily (under the
influence of efficiency criteria), just like the productivity gap and the living standard gap,
too.
A possible explanation of that paradox is that Romania‘s economy has always focused on
less than state-of-the-art products. It happened in a framework that offered a temporary
comparative advantage (in short run).
This vicious circle can be broken only by embarking on the path to the knowledge
economy that is based, as shown above, on a new production factor, i.e. knowledge and
transition to the ―competitive advantages‖ as defined by M. Porter.
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How useful is the knowledge economy perspective in understanding the challenges
Romania faces and the opportunities that EU accession provides to Romania?
The perspective for the development of a knowledge-based economy for Romania will
ensure:
1. A strong and durable economic development and decrease of social and economic
discrepancies
2. A better (and quicker) integration into the European Union and the world economy
3. Setting up of a national competitive system
4. Creation of a culture of communication and knowledge motivation
5. Creation of knowledge generating human resources
6. Setting up of knowledge generating structures
7. Turning knowledge into capital
8. Training regarding the use of knowledge
9. Promotion of continuous innovative system
What are the most difficult challenges Romania faces in building a knowledge- based
economy in the context of EU accession and the overall economic and institutional
reform efforts?
The most significant challenges Romania faces are:
A. Development of an enabling economic environment and institutional
environment:
1. Awareness of the need for knowledge:
at policymakers level
at businesses level
at civil society level
knowledge-oriented education and training
development of a knowledge culture and motivation
overcoming the ―inertia‖ to changes
2. Appropriate prioritization of the actions to be taken:
assessment of benefits, risks and costs as well as effects
sectoral strategies and ranking them in terms of priority
3. Integration into the international knowledge flow
linking up to such flows
legislative and logistic compatibility
identification of world and European trends in knowledge economy
narrowing down cultural, religious and social-economic discrepancies
information management
communication opportunities (seminars, conferences, mobility of
students, teachers, researchers as well as entrepreneurs) and brain drain
prevention
integration into the knowledge production and utilization environment
(co-operation or competition)
4. Adequate knowledge management in connection with:
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production of new knowledge
effective utilization of the existing knowledge
formation of knowledge-creating human resources:
- education based on creative thinking
- initial training as well as continuous, formal and informal training
management of the new knowledge flows and exchanges
creation of a legal framework to stimulate knowledge, information
protection and intellectual property protection
establishment of knowledge-producing structures:
- a strong academic environment
- creation and stimulation of excellence centers
- expansion and strengthening of research networks
digitalizing the existing knowledge (especially the internal, specific
ones) and generalized digital learning
systematic and effective monitoring of the strategies adopted
5. Completion and strengthening of the structural reform of the economy (for
setting up a functional market economy) and public administration.
6. Removal of all obstacles that prevent access of businesses (especially small
and medium sized ones) to knowledge and resources.
7. Steady growth of the ―social capital‖.
B. Measures to provide human resources for the knowledge society
1. Development of education and knowledge society:
Education at all levels (adjusting the curricula to the new needs of a
knowledge society as well as to labor market demand, promoting
multimedia technologies in learning, digital literacy, extension of on-
line education, virtual learning units creation, etc)
Continuing qualitative reform of the education and research system:
- education effectiveness (in relation to societal needs, curriculum,
teachers‘ training, education management, evaluation and
examination)
- growing equitable access to education (and higher mobility within the
system to allow for education to be furthered)
- an updated infrastructure to meet the development needs of society
(especially access to information technology, to Internet)
- promotion of multimedia technology in teaching
Continuing education (formal and informal)
Strengthening the public and school libraries systems
2. Integration into the world (particularly European) research and innovation
system:
correlation of national research, development and innovation programs
to those in the EU
development of the ability to absorb and disseminate the outcome of
research across the economy (the technology transfer and innovation
infrastructure - information and assistance centers, incubators,
technology transfer centers, etc)
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development of high level research centers in key areas of science and
technology
integration of research units into European and world R&D networks
international training programs for young researchers
promotion of international cooperation in knowledge production and
use
3. Stronger links of education and research with the real economy (between the
knowledge generation and utilization) and stronger public - private sector
partnership
fostering creativeness
promoting knowledge demand
building and strengthening the national research and innovation
network and innovation and technology transfer programs (scientific
and technological parks)
4. Training the trainers
5. Narrowing down geographic, cultural, social, economic discrepancies
C. A coherent and enabling legal environment to foster a knowledge economy
1. The creation of an adequate legal framework to stimulate knowledge,
information protection and intellectual property protection;
2. Promotion of and support to open competitive markets and the liberalization of
sectors.
The main fields where quick actions are required (with some already under way) to align
the national legislation are:
- Intellectual property protection:
The copyright protection in the field of information
Liability and penalties for information fraud
- Regulation of personal data protection:
Individual protection against personal data processing and dissemination
Free information and communication, including by Internet, in accordance
with the deontological and professional rules for data processing and
transmission in the social environment;
- E-commerce regulation:
a) Creation of a framework able to stimulate e-commerce in accordance with
EU legislation:
development of services using electronic documents and signature;
implementing an information system based on e-tax adopted legal
framework
implementing an information system based on and e-procurement
adopted legal framework
intellectual property protection
safety of transactions, data privacy
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consumer protection
exclusive use of electronic means for public procurement
b) Enabling environment through liberalization and regulation of
telecommunications
- Promoting SME‘s integration into the knowledge-based economy, information
society and e-commerce utilization:
- Equal access to networks and information
- Improvement of the legislation on ―incubators‖ and ―spin-offs‖
- Access to public information through electronic means
D. Building an adequate (information) infrastructure
1. Building and expanding modern communication infrastructure
2. Closing the geographic, social and cultural gaps in access to computer
infrastructure
3. Cheap and quick access to Internet:
establishment of a competitive environment for cheap connection and
utilization
high access speed
accessible equipment
4. The provision and promotion of e-content
5. Implementation of a high speed communication network:
building a metropolitan network
international interconnection
provision of an open competitive environment
E. Building an efficient innovation system
1. Building a research and innovation network
- strengthening and aggregation of national networks
- open research network for schools/high-schools/universities/research
institutes
- raising investment funds to develop and strengthen the research network
and create laboratory networks
- promoting centers of excellence
2. Innovation and technological transfer programs (scientific and technological
parks)
- creation of public-private partnerships for the development and use of
specific technologies of a knowledge-based economy, mainly through the
development of specific technologies for virtual centers of technological
services and technology transfers (focused on advanced technologies and
environment-friendly technologies)
- promotion of links between domestic and international research (also
through technology transfers enabled by FDI)
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- improving the legal framework to protect the outcome of research
3. Developing the capacity of the economy to absorb R&D achievements
- development of the technological transfer and innovation infrastructure
(technology information and assistance centers, technology transfer
centers, incubators, etc.);
4. Incentives for the creation and development of innovative SME‘s
- creation of zones where various incentives (other than fiscal ones) will be
provided to firms (scientific and technological parks)
Weaknesses and strengths. Romania in a global competitive knowledge economy
(See also the STEEP and SWOT analysis in attachments 3 and 4)
Strengths for knowledge-based development (at the beginning of the century)
To address the above-mentioned challenges, Romania may claim several advantages that
could amount to strengths for outlining a draft knowledge economy strategy. At the very
least, the strengths include:
1. Political will to develop a knowledge economy:
government programs and strategies (mainly in the research, education
and ICT field, for public administration etc.)
several national working programs
pilot projects of national interest: in 2001 alone, 20 projects were
successfully implemented (to be extended or already being so)
establishment of the Parliamentary Commission on Advanced
Technology, Communications and Information Technology, of the IT
Promotion Group
2. Relatively well-educated population:
high literacy rate (97%)
high-school training – fairly good (as proved by the prizes won at the
International Olympiads)
top-level higher education in certain fields (computer sciences,
communication, mathematics, medicine, etc.)
about 5000 ICT graduates a year
300,000 specialists trained in 116 universities with 36 computer and
communications faculties.
3. Ethnic, cultural, religious tolerance.
4. Young people eagerly acquiring knowledge and seeking promotion.
5. Women significantly involved in active life.
6. Political and societal will to join the EU (the higher share of EU accession
supporters).
7. A positive education reform.
8. A growing economy; (GDP growth was 1.6% in 2000 and 4.9% in 2001, with
4.5% forecast for 2002; see also attachment no. 1).
9. Conditions for a public – private partnership are good.
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10. High growth rate of the IT industry (Romania‘s electronic industry accounts
for just 0.5 percent of the manufacturing industry and employs 19,000, but was
almost 100 percent privatized in 2001; together with the electrical equipment
and appliance industry, it contributes 5 percent to the country‘s industrial
production, 5.1 percent to employment, 8 percent to exports and only 3 percent
to foreign investment in Romania).
11. Fast developing software industry (over 3500 companies that employed about
25,000 in 2001 as against 15,000 in 1999).
12. Initiation of e-government (in four areas: G2C, government – citizen
interaction; G2B, government – business interaction; G2E, government - civil
servants interaction; G2G, government – governmental institutions interaction)
and especially the adoption of e-administration strategy in September 2001.
13. Faster adoption of technologies based on mobile communications and cable
TV (while the mobile telephony growth rate of 108 percent exceeds the
73 percent average for EEC, the share of mobile telephones in the number of
conventional lines is 38 percent, similarly to EEC; Romania is sixth in Europe
in terms of cable TV subscribers, i.e. 71 percent of TV set owners, adding to
whom are satellite aerial users that make up a further 9 percent ).
14. The ICT average growth rate of 15 percent in Romania as against 8 percent in
the world.
2002 main weaknesses in building a knowledge based society in Romania
Along with the existing strengths, there are also constraints and obstacles, shortcomings
that Romania has to overcome or address in developing a knowledge society. All must be
carefully considered in any strategy. We identified, among other things:
The high rate of the poor (33.8 percent in 2000; 28.2 percent urban and
40.5 percent rural) and the implicit risk of ―elite‖ capture of the field
(accessible only to the rich, highly trained, urban residents)
Major urban-rural gaps, as well as social and regional disparities
The propensity to migrate of the young and highly skilled
Relatively low economic development level
Incomplete legislative framework, inappropriate for the development of a
market economy
Poor computer science knowledge and internet access of Romanian high
schools and universities (only 17.8 percent)
Low investment in producing and using knowledge
Inappropriate development infrastructure
Poor communication (last mile) infrastructure requiring major investment
(e.g. the fixed telephony penetration rate is under 20 percent, compared with
27.5 percent in the EEC)
Internet penetration rate of only 10 percent (as against 86 percent in the EEC)
and number of users of 3.1 in 100 inhabitants (as against an average of 8.4)
Low e-content
Relatively high cost and relatively low speed of access to e- information
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Incomplete standards and lack of specific indicators
Inefficient and poorly managed agriculture which employs about 38 percent of
the working population
Major geographic, social, economic gaps (imbalanced development), e.g.
70 percent of ICT labour force is in Bucharest, even if employment in
agriculture is around 40 percent of labour force the added value of agriculture
is under 18 percent of GDP
Low level of IT expenses as a percentage of GDP (in 2000, the figures were
6.25 USD per capita and 0.56 percent of GDP)
The national advantage in a knowledge-based economy
Porter‘s diamond will be used to analyze the national advantage, presented in the figure
below:
Local factors: good education system, e.g.
30.000 engineering graduates of whom 5,000
graduates/year IT&C; native intelligence; the Support
Demand:
existing solutions are not integrated and well domains:
In communications, demand education,
exceeds the offer; demand scheduled;
research and
for IT is growing; the public development;
is unaware of the benefits of ICT industry
the Information Society; Companies and competition:
still few exports in the high 250 research centers (universities and institutes)
tech field, especially in ROMTELECOM – monopoly in fixed
software applications telephony; 4 mobile telephony providers; few
Romanian hardware providers; 5 big foreign
providers represented in Romania; few
Romanian hardware; few Romanian integrated
solution providers; few ISO9000 certified
companies;
Fig. – Porter‘s diamond
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The Romanian competitive advantage in the production and the use of knowledge is
dependent on Romania‘ resources and capabilities in this field. The strategy for the
development of a knowledge-based economy should be based on how best to use the
existing resources and capabilities
Critical success factors:
Competitive advantage
Coherence of strategy
Strategy implementation, strategic control,
Excellent human
resources; good education improvement,
education system identifying finance, the adequate
use of resources
Knowledge based capabilities: coordination and integration, strategic management, strategic
control, education, research & development
Resources
Tangible Intangible Human resources
Physical Financial Technology Reputation Culture Skills and Communication Motivation
Knowledge interaction
Poor communication small budget Private Sector Good Individualism Excellent Individualism Weak
Is up to date Ambiguity
Legend: Bold = weaknesses Italic=strengths
Fig. – Grant – Resources, capabilities and competitive advantage
As an investment, education is an end in itself, or an intermediate end with knowledge
gained from education as the ultimate end. The proportion of education services used
increases when per capita income is higher because of the declining marginal return on
other marginal things. Therefore, higher education in a knowledge-based economy
consists of the following three characteristics:
a. Academic excellence
There are a number of institutions that are qualified research universities capable
of creating new knowledge and be major sources of technological progress, which
is indispensable to modern economic growth
b. Higher education public awareness campaign
In a knowledge-based economy, higher education is no longer a luxury that only
the rich can afford and is restricted to the elite of society. Higher education is
required not only for the continuous growth of the economy, but also for reasons
of equity
c. Diversification of higher education
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What are the implications of the ‗knowledge divide‘ for Romania in terms of
regional disparities, social exclusion and the urban-rural divide?
The main aspects regarding the knowledge divide (both as cause and effects) refer to the
following aspects:
1. Social polarization
2. Social marginalization of persons with disabilities
3. Limited access to the culture of the population in rural and suburban areas
4. Economic discrepancies between and within the regions
Even if a bulk of population works in agriculture a small share of added value is given by
this branch.
Structure of employment and GDP
Employment Value added
Administrative data LFS data
1991 1995 1997 1996 1997 1998 1991 1995 1997 1998
Agriculture, forestry 29.7 34.4 37.5 38.0 39.0 40.0 20.1 21.4 19.8 17.7
Industry 35.5 28.6 27.1 27.2 26.3 25.4 40.4 35.6 38.8 35.1
Construction 4.6 5.0 4.9 4.3 4.2 4.0 4.7 7.1 5.8 5.8
Services 30.6 32.0 30.5 30.5 30.5 30.6 34.8 35.8 35.7 41.4
Total 100 100 100 100 100 100 100 100 100 100
Note: Administrative data on employment (―employment balance‖) indicate a lower than actual rate of
employment for specific occupations, especially small farming
Source: Institute of Agricultural Economy, internal paper 2001 and Labor Market and Social Policies in
Romania – Employment OECD 2000, p. 36.
The distribution of employment is distorted.
Distribution of employment, by occupational groups in 2000
Specification Total Urban Rural
Total employment – thousand 10148 4930 5218
Executives and high-ranking public administrators and 2.4 4.3 0.6
economic and social corporate officers %
Intellectual and scientific professionals % 6.8 12.5 1.3
Technicians, foremen and similar % 8.4 14.1 2.9
Administrative office workers % 4.0 6.6 1.6
Operators in services, trade and similar 7.0 0.8 3.5
Farmers and skilled workers in agriculture, forestry, fishery % 36.8 3.1 68.6
Craftsmen, tradesmen % 17.8 26.1 10
Other occupation classes % 16.8 22.5 11.5
Source: Household Labour Survey AMIGO, CNS, trim I, 2000 p.22
Out of the total employees in agriculture, 1.7% have graduated from a higher school,
6.5% from a secondary and post-secondary school, 50% from a middle or vocational
school, 35.4% from a primary school and 6.4% have no formal schooling (according to
the 1992 population and housing census).
In recent years, enrolments in agricultural secondary schools and vocational schools have
dropped sharply from their 1989-1990 school year levels:
143
1990 1999
1991 2000
Agricultural secondary schools, – enrolments 125893 28636
Vocational schools– enrolments 32252 7252
Agricultural higher schools (including veterinary medicine) – 7075 18562
enrolments
From ―Lessons of Transition. Romanian Agriculture‖ by Marin Popescu, Ed. Expert 2001 (p. 226)
General school training in rural area has also declined (shorter school years, growing
number of children who are not enrolled or do not attend school, poorly equipped school
laboratories, libraries plus many teachers who lack proper qualification)2. Enrollments in
agricultural higher schools are rising, but the experts who migrated from agriculture still
outnumber the graduates who take employment in this sector. In 2000, the telephone
penetration rate was 16.8% in rural areas as compared to 83.2% in the urban areas.
Which were some of the successes Romania experienced in moving forward towards
a knowledge economy?
Considering Romania‘s effort to develop a functional and prosperous market economy
based on knowledge, the following achievements are worth mentioning:
1. Passing of regulations and laws, consistent with those in the EU:
electronic signature
e-tax
e-procurement,
intellectual property rights
protection of private data
access to public information
2. Computerized education programs:
computer aided education
electronic management of the education system (electronic
management of the high school and university entrance examination)
e-learning
3. Pilot programs of MCIT (first e-government) and of MER (see attachment no.X)
4. A significant growing position of the IT sector in the economy
5. Involvement in international research and development programs: Framework
program V, Ecolinks, Eureka, Cost, GEANT, E-content
6. Initiation of the competitive funding of research and higher education
7. Electronic debt compensation program
8. Telecentre network
2
As education in the countryside declined, rural young people‘s access to higher schools was constrained.
According to the President of Romania, in the late nineties rural residents who took regular higher-school
courses accounted for just one per cent of total enrollments in higher education.
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9. ROEDUNET national education network
10. Danube Delta Institute
11. Public information centers
12. Development of communication systems: radio communications, mobile
telecommunications, multimedia telecommunications
13. ORACLE, CYSCO, INFOSOC academic initiatives
14. Participation of Romania at the European Survey of the Information Society,
within the European Commission project for Central and East European and
Mediterranean Countries (ESIS)
15. In February 2001, an ICT Task Force known as GPTI (Group for Promotion of
Information Technology), was established by Government Decision No.
271/2001. GPTI is chaired by the Prime Minister of Romania and comprises
the heads of ‗e-ministries‘ (those ministries which have an important stake in
the implementation of e-government): Public Administration, Education and
Research, Communication and Information Technology, Public Finance,
Development and Prognosis, and the minister for the General Secretariat of the
Government.
16. An economic and institutional environment that provides incentives for the
efficient use of the existing and new knowledge and growing entrepreneurship
direct investment legislation (Emergency Ordinance 92/1997 as amended)
new direct investments complying with the provisions of Law 332/2001
may benefit from the following tax incentives
access to a special development fund set up by the Government in
accordance with Emergency Ordinance 59/1997 as amended (GD
317/2001) from the proceeds of the sale of state-owned companies
incentives available to small and medium enterprises (SMEs) under the
provisions of Law 133/1999 as amended
income tax legislation – tax exemption (Emergency Ordinance 94/2001)
for analysts and programmers
Government Decision on the privatisation strategy for companies under the
Authority for Privatisation and State Ownership Administration in which
the State has a stake
Priorities in main action plan
1. Education and training in a knowledge based economy
2. Research, development and innovation
3. Culture in the Information Society
4. Public (civil society, policymakers, specialists in various fields) awareness
raising in connection with the importance of the knowledge economy and
information society development in Romania
5. Development of a new attitude: a new ―culture‖ of communication and
co-operation in the new knowledge based society
6. Knowledge based economy and information society infrastructure
(development of the national internet)
7. The required legislation and institutional framework
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8. Adjustment of public administration to knowledge based economy and
development of other public services
9. SME‘s development in the framework of a knowledge based economy
10. Development of a strong ICT industry
11. The role of the financial and banking system and e-commerce.
The actions envisaged for these priorities are detailed in attachment no. 9.
Indicators for the knowledge-based economy
At the heart of the knowledge-based economy, knowledge itself is particularly hard to
quantify as well as price. While new knowledge will generally increase the potential
output of the economy, the quantity and quality of its impact are not known in advance.
There is no production function, no input-output formula that could approximate, however
roughly, the effect that one unit of knowledge would have on economic performance.
Knowledge, unlike conventional capital goods, has no fixed capacity.
The achievements in implementing eEurope+ are measured by a set of indicators:
1. percentage of population who regularly use the Internet
2. percentage of households with Internet access
3. Internet access costs
4. faster Internet for researchers and students
5. speed of interconnections and services available between and within national
research and education networks (NRENs) within EU and world-wide
6. number of secure server per million people
7. percentage of Internet-using population that have experienced security
problems
8. number of computers per 100 students in primary/secondary/tertiary education
9. number of computers connected to the Internet per 100 students in
primary/secondary/tertiary education
10. number of computers with high speed connections to the Internet per
100 students in primary/secondary/tertiary education
11. percentage of teachers using the Internet for non-computer skills teaching on a
regular basis
12. percentage of workforce with ( at least) basic IT training
13. number of places and graduates in ICT-related tertiary education
14. percentage of workforce using telework
15. number of Public Internet Points( PAP) per 1,000 inhabitants
16. percentage of central government websites conforming the WAI accessibility
guidelines at A level
17. percentage of companies that buy and sell over the Internet
18. percentage of basic public services available on-line
19. public use of public procurement which can be performed on-line
20. percentage of health professionals with Internet access
21. use of different categories of web content by health professionals
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22. percentage of EU web sites in the national top 50 visited
23. percentage of the motorway network equipped with (traffic) congestion
information and management system.
There are four principal reasons why knowledge indicators cannot approximate the
systematic comprehensiveness of traditional economic indicators:
There are no stable formulae or recipes for converting knowledge inputs into
outputs
Inputs into knowledge creation are hard to map because there are no knowledge
accounts analogous to the traditional national accounts
Knowledge lacks a systematic pricing system that would serve as a basis for
aggregating pieces of knowledge that are essentially unique
New knowledge creation is not necessarily a net addition to the stock of
knowledge, and the obsolescence of units of stock knowledge is not documented
Measuring knowledge inputs
1. R&D – standard practice for research and experimental development surveys
(Frascati Manual 1993)
2. R&D – measurement of research and experimental development (Frascati Manual,
1993)
3. Technology balance of payments – Standard methods of compiling and
interpreting technology balance of payments data (TBP Manual, 1990)
4. Innovation – guidelines for collecting and interpreting technological innovation
data (Oslo Manual, 1992)
5. Patents – using patents data as science and technology indicators (Patent Manual,
1994)
6. Human resources – measurement of human resources devoted to S&T (Cambera
Manual, 1995)
Measuring the amount and flow of knowledge
1. Rate of return on R&D investment
2. R&D personnel
3. flow of knowledge = the amount of knowledge that flows into the economy during
a specified period of time
a. embodied diffusion (embodied in tangible, corporeal assets; operating new
machinery, equipment and components thereof as part of the production
process)
b. disembodied diffusion (embodied in intangible, incorporeal assets;
conveying knowledge, technical expertise or technology in the form of
patents, licenses or know-how)
Information technology indicators are being developed that focus on the dissemination
and use of information technology – computers, software, networks – by businesses and
households. They measure the flow of technology and the factors that enable or obstruct
it, such as pricing, which allows us to assess how fast the information society is growing.
147
Measuring knowledge outputs
Rough indicators have been developed that convert specific knowledge inputs into
knowledge outputs in order to analyze and compare the economic performance of
countries. These measures tend to categorize industrial sectors or parts of the workforce
as being more R&D, knowledge or information-intensive or less so. The measures are
based on the assumption that certain knowledge-intensive sectors play a key role in a
country‘s performance in the long run by their spillover effects, by creating high-skill and
high-paying jobs and generating a higher return on capital and labour. R&D intensity
(R&D expenditure-to-gross output ratio).
Measuring knowledge networks
Innovation surveys capture information on the factors affecting the propensity of firms to
innovate and how knowledge and innovation spread in the economy. Based in part on
these innovation surveys, efforts are just beginning to map out national innovation
systems and the knowledge dissemination power of the economy by analyzing two main
flows:
The distribution of knowledge across universities, public research institutions and
industry
The distribution of knowledge in a market between suppliers and users (Smith,
1995)
1. acquired technology
2. outsourcing of R&D to public R&D institutes
3. outsourcing of R&D to private R&D institutes
4. outsourcing of R&D to other companies
5. informal contacts
6. recruitment of qualified personnel
Measuring knowledge and learning
To assess the social rate of return means to measure the impact of education expenditure
and attainment levels in society at large on economic growth. Measures of private rates
of return tend to look at changes in human skills and competencies at the individual or
firm level and their impact on firm performance. More micro-level or firm-level
indicators are needed to establish linkages between enterprise training, its impact on
human capital and skill formation and the effects on firm performance. Human capital
indicators, particularly those relating to education and employment, are central measures
for the knowledge-based economy. Measuring the private and social rates of return on
investments in education and training will help point to means of enhancing the learning
capacity of individuals and firms. Micro-level firm indicators on human resource
requirements, employment and occupational mobility will help better match supply and
demand for skills in the labour market.
148
Attachment 1 – Statistical data
Romania has a population of 22,435,205 (at July 1st, 2000), with 94,1 inhabitants/km2.
Urban residents account for 54.6% of the total. By ethnicity, the composition is as
follows: 89.5% Romanians, 7.1% Hungarians and 3.4% others. The capital is Bucharest
with 2,009,200 inhabitants: first time recorded at 09.20.1459, its capital city status goes
back to 1862.
Main statistics are:
1996 1997 1998 1999 2000
Basic data thousand
Population (at 1st of July) 22,608 22,546 22,503 22,458 22,435
2
km
Total area 238,391 238,391 238,391 238,391 238,391
National accounts thousand million Lei
Gross domestic product at current prices 108,920 252,926 371,194 539,357 796,534
thousand million ECU/euro
Gross domestic product at current prices 27.8 31.2 37.2 33.0 40.0
ECU/euro
3
Gross domestic product per capita at current prices 1,200 1,400 1,700 1,500 1,800
% change over the previous year
Gross domestic product at constant prices (nat. currency) 3.9 -6.1 -4.8 -2.3 1.6
in Purchasing Power Standards
4
Gross domestic product per capita at current prices 6,100 5,900 5,800 5,800 6,000
5
Structure of production % of Gross Value Added
- Agriculture 20.1 19.5 15.8 14.8 12.6
- Industry (excluding construction) 34.8 33.4 30.3 29.9 30.5
- Construction 6.8 5.7 5.5 5.4 5.3
6
- Services 38.3 41.5 48.4 49.9 51.5
Structure of expenditure % of Gross Domestic Product
- Final consumption expenditure 82.6 86.4 90.2 87.2 86.4
- household and NPISH 69.5 74.2 76.0 74.4 73.9
- general government 13.1 12.3 14.2 12.7 12.5
- Gross fixed capital formation 23.0 21.2 18.3 18.0 18.5
7
- Stock variation 2.9 -0.5 -0.4 -0.8 1.0
- Exports of goods and services 28.1 29.2 23.5 29.0 34.1
- Imports of goods and services 36.6 36.2 31.5 33.4 39.9
Inflation rate % change over the previous year
8
Consumer price index 38.8 154.8 59.1 45.8 45.7
Balance of payments million ECU/euro
-Current account -2,446 -1,895 -2,637 -1,382 -1,477
3
Figures have been calculated using the population figures from National Accounts, which may differ from those used in
demographic statistics.
4
Figures have been calculated using the population figures from National Accounts, which may differ from those used in
demographic statistics.
5
Including FISIM.
6
Figures include changes in inventories, acquisitions less disposals of valuables and the statistical discrepancy between the GDP
and its expenditure components.
7
Figures include changes in inventories, acquisitions less disposals of valuables and the statistical discrepancy between the GDP
and its expenditure components.
8
Changes in Methodology: PROXY HICP since 1996 (see methodological notes).
149
1996 1997 1998 1999 2000
-Trade balance -2,350 -1,756 -2,332 -1,183 -1,831
Exports of goods 7,693 7,475 7,376 7,986 11,268
Imports of goods 10,043 9,231 9,708 9,169 13,099
-Net services -366 -367 -581 -402 -276
-Net income -294 -285 -393 -387 -305
-Net current transfers 564 513 669 589 935
-of which: government transfers 45 57 46 54 76
- FDI (net) inflows 250 1,077 1,804 980 1,114
Public finance % of Gross Domestic Product
General government deficit/surplus -3.5 -4.5 -4.4 -2.1 -3.8
General government debt : 16.5 17.9 24.4 22.9
Financial indicators % of Gross Domestic Product
Gross foreign debt of the whole economy 21.5 24.1 19.8 25.2 22.4
% of exports
Gross foreign debt of the whole economy 76.4 82.6 84.2 86.8 65.8
Monetary aggregates thousand million ECU /euro
- M1 2.2 2.1 1.7 1.6 1.9
- M2 5.9 7.0 7.2 7.3 7.7
- M3 : : : : :
Total credit 6.3 5.7 6.8 6.0 4.9
Average short-term interest rates % per annum
- Day-to-day money rate 53.4 86.0 80.9 80.8 44.8
- Lending rate 55.3 72.5 55.4 65.6 53.8
- Deposit rate 38.1 55.7 37.3 45.8 32.9
ECU/EUR exchange rates (1ECU/euro=.. Leu)
- Average for period 3922 8112 9985 16345 19922
- End of period 5182 8859 12814 18345 24142
1991=100
- Effective exchange rate index 1.2 0.6 0.5 0.3 0.2
Reserve assets million ECU/euro
-Reserve assets (including gold) 1,259 2,780 1,981 2,455 3,637
-Reserve assets (excluding gold) 429 1,987 1,175 1,519 2,652
External trade million ECU/euro
Trade balance -2,733 -2,596 -3,202 -1,979 -3,055
Exports 6,364 7,481 7,381 8,055 11,365
Imports 9,097 10,077 10,583 10,034 14,420
previous year = 100
Terms of trade 97.2 101.2 105.1 103.8 103.5
% of total
Exports with EU-15 56.5 56.6 64.5 65.5 63.8
Imports with EU-15 52.3 52.2 57.7 60.7 56.6
Demographics per thousand people
Natural growth rate -2.5 -1.9 -1.5 -1.4 -0.9
Net migration rate (including corrections) -0.9 -0.6 -0.3 -0.1 -0.2
per thousand live births
Infant mortality rate 22.3 22.0 20.5 18.6 18.6
Life expectancy : at birth
Males: 65.2 65.2 65.5 66.1 67.0
Females: 73.0 73.0 73.3 73.7 74.2
Labor market (ILO methodology) % of labour force
150
1996 1997 1998 1999 2000
Economic activity rate 64.8 64.8 63.6 63.4 63.2 P
Unemployment rate, total 6.7 6.0 6.3 6.8 7.1 P
Unemployment rate, males 6.3 5.7 6.5 7.4 7.7 P
Unemployment rate, females 7.3 6.4 6.1 6.2 6.4 P
Unemployment rate of persons = 25 years 4.2 3.8 4.2 4.9 5.3 P
% of all unemployed
Long-term unemployment 51.3 47.7 41.9 44.3 51.5 P
Average employment by NACE branches % of total
- Agriculture and forestry 38.0 39.0 40.0 41.7 42.8 P
- Industry (excluding construction) 27.2 26.3 25.4 23.9 22.4 P
- Construction 4.3 4.2 4.0 3.7 3.8 P
- Services 30.5 30.5 30.6 30.7 31.0 P
2
Infrastructure km per thousand km
Railway network 47.8 47.7 46.2 46.1 46.2
Km
Length of motorways 113 113 113 113 113
Industry and agriculture previous year = 100
Industrial production volume indices 106.3 92.8 86.2 97.8 108.2 P
Gross agricultural production volume indices 101.3 103.4 92.5 105.2 85.8 P
Standard of living per thousand inhabitants
Number of cars 106 116 125 133 139
Main telephone lines 139.8 151.9 161.2 168.3 173.8
Number of subscriptions to cellular mobile services : 9.0 24.5 50.1 90
Number of Internet subscriptions : : : : :
P=provisional figures
151
Attachment 2 – The National Research Network and its activities in the transition
period
The Network of Romanian R&D units
The Ministry of Education and Research is an active promoter of new beginnings, in its
efforts to modernize the country through advanced science and technology. At the
beginning of the new millennium, the Romanian scientific research proves to be a real
force which gives the strategy makers opportunities to stay abreast of the changes taking
place at a global level. The interdependence and conduction of scientific knowledge and
research results is the new philosophy of action, among both economic, political, social
and cultural decision-makers and the executives of firms, companies, organizations and
institutes. The organizations that are part of the Network of Romanian R&D units range
from basic research, applied research, and technological development to the design and
execution of prototypes and short series products. The Network of Romanian R&D units
comprises 665 research bodies (universities, institutes, centers, SMEs, enterprises),
regardless of their organizational structure: national R&D institutions subordinated to or
co-ordinated by the Ministry of Education and Research, other central bodies, state-owned
joint stock companies, national authorities and private companies.
The units of the Romanian Research Network are grouped into the following categories:
- Entities of the Romanian Academy = 65
- Entities subordinated to and co-ordinated by the Ministry of Education and
Research = 28 national institutes
- Entities subordinated to and co-ordinated by universities and other central
institutions and independent entities = 557
In 2001, the Romanian Government launched the extension of the National Plan for
Research, Development and Innovation (PNCDI), through programs for priority domains
(10 new thematic programs). The Plan for 2001-2005 stipulates that 30% of the total
budget of PNCDI should be allocated to ―Co-operation and innovation in support of
developing the new, knowledge-based economy‖.
New Materials,
Four programs with themes related to the priority Information Micro and
National Plan for Research, Development
Society
domains defined for the Framework Program VI Nanotechnologies
belong to this last category, namely: Research and Innovation for the
New Economy (Knowledge-based)
new materials, micro-and nanotechnologies
and Innovation
(2001 – 2005)
Technologies for
(MATNANTECH), information society Biotechnologies Aeronautics and Space
(INFOSOC), biotechnologies (BIOTECH) and Environment Strengthening of the
Agriculture and and energy infrastructures for quality
technologies for aeronautics and spatial activities. food and standardization
Research and Innovation for
Quality and Economy Modernization Patterns aplication
standardization (1999 – 2005)
Economical development through
Transport research and innovation
2 CAS – October 12, 2001
The Romanian Education Network (RoEduNet)
Was created in July 1993, concomitantly with the establishment of the Polytechnic
University of Bucharest (PUB). A Local Area Network was created and the PUB Central
Node got connectivity with the international data networks and services. From the very
beginning RoEduNet was conceived as an open structure, offering free access to the
academic, scientific and cultural non-profit institutions; once the first institution was
152
connected – the University of Bucharest, August 1993 – the nucleus of the academic data
communication infrastructure was created.
This process has continued and, today, the RoEduNet data communication infrastructure
covers the national territory, connects and offers services to more than 150 institutions,
offers international connectivity through two high speed channels – 1.5Mbps with
TaideNet and 4Mbps with LoralOrion; the measured traffic figures shows a data
exchange volume over the international channels of 0.8-1 Tbytes/month. The structure
remains open to all universities as well as to non-profit scientific and cultural institutions.
RoEduNet - Backbone
The RoEduNet backbone consists of the links between the NSP (Network Service
Provider) nodes in 6 major cities: Bucharest, Iasi, Tg. Mures, Cluj, Timisoara and
Craiova. These nodes make up the ―level-0‖ entity of our network, the infrastructure
(backbone) providers. The blue (2Mbps) lines represent the existing links between the
backbone nodes. The green (256Kbps) lines are the connections between RoEduNet NSP
nodes (backbone nodes) and RoEduNet POPs in each county capital city. These
connections will bring a RoEduNet point of presence closer to educational institutions
throughout the country, minimizing the cost of the network. All NSP nodes are/will be
able to connect our users via dialup, leased asynchronous lines and leased digital (n*64
kbps) lines. Also, based on local resources, users can be connected over Ethernets, cable
(CATV), wireless or fiber optic. All NSP nodes are sufficiently equipped for operating a
high-speed infrastructure based on this model, high performance routers being deployed
in each node.
The Romanian National Research and Development Network (RNC)
RNC is a national project coordinated and established by the Research Department of the
Ministry of the Education and Research (formerly the National Agency for Science,
Technology and Innovation) and focuses on the following main objectives:
Setting up technical and organizational infrastructure meant to provide national and
international services for the Romanian scientific research community;
Providing a rapid and competitive tool for the exchange of information in the
framework of R&D community;
Using the scientific and technical data bases available in the country and offered by
the national networks from other countries through international networks;
Providing support for information, documentation and scientific and technical
co-operation considering research teams and topics and R-D programs.
94 institutions connected through leased lines, over 250 research institutions connected by
―dial-up‖;
about 8,000-10,000 users. Total international traffic 300 Gbytes/month and total
international & national traffic 500 Gbytes/month;
153
RNC is a member of the following European organizations:
- TERENA (Trans European Research and Education Networking Association)
- CEENet (Central and Eastern European Networking Association)
International link:
Connection to LORAL ORION – USA (2M / 512k)
The Agricultural Research Network
The post-1990 agricultural research network has not changed its structure significantly. It
is made up of 39 central institutes and stations across the country and 74 field stations. Of
them, 21 institutes and all stations are under ASAS (the Academy of Agricultural and
Forestry Studies). The remaining 18 institutes and central stations have only their
specialized activities coordinated by ASAS but otherwise do not report to it.
In 1998, the ASAS research unit network employed some 29,000, of which 2,800 were
qualified researchers, with 300-350 of them being also involved in technology transfer
activities. In 1998, those units operated about 100,000 hectares of farmland, and owned
16,000 cattle, 20,000 sheep, 260,000 pigs and 400,000 poultry. There were about 300 test
and experimental plots where technology transfers were used.
About half of the ASAS-subordinated research units are commodity-oriented, with a few
others being activity-oriented (marketing, soil science and agricultural chemistry, agrarian
economy, food chemistry, irrigation and drainage engineering).
154
Attachment 3 – Knowledge Economy related indicators
Education units – all levels
1997/1998 1998/1999 1999/2000 2000/2001
Total 29084 29409 27633 24481
School enrollments (thousand)
Total 4643 4631 4578 4565
Preschool education 623 625 616 611
- private sector 4 4 3 4
Primary & Middle 2560 2557 2498 2412
Secondary 766 718 694 688
- private sector 13 10 7 7
Post-secondary and foremen‘s 86 96 95 82
- private sector 30 38 39 34
Higher 361 408 453 533
Private higher schools 111 130 130 151
School enrollment of the school-age population (%)
Total 65.1 66.3 67.3 68.9
Male 65.0 65.4 66.3 67.7
Female 65.1 67.2 68.3 70.2
Preschoolers, school children and higher-school students-to-teacher ratio
Preschoolers 17 17 17 18
School children 15 14 15 15
Higher-school students 15 16 17 19
School children and students per 10, 000 people
School children 1623 1599 1563 1525
Higher school students 160 181 202 238
School Graduates (thousand)
1997/1998 1998/1999 1999/2000 2000/2001
Middle school 232.6 275.6 283.7 …
Secondary school 183.6 182.8 174.1 …
Vocational and apprentice schools 81.9 78.4 70.3 …
Post-secondary and foremen‘s schools 29.8 35.0 39.2 …
Higher schools 67.8 63.6 67.9 …
Teaching staff (thousand)
Total 309 312 301 295
Preschool 37 37 36 34
Primary and middle 173 173 166 163
Secondary 64 66 67 64
Vocational and apprentice 8 7 4 5
Post-secondary and foremen‘s 3 3 1 1
Higher 24 26 27 28
R&D Workers, by sector (thousand, full-time equivalent)
1998 1999 2000
Total 52.5 44.1 33.9
- fully private sector 4.4 8.0 7.3
Business sector 36.2 32.0 22.5
Government sector 10.5 8.8 7.6
Higher education sector 5.8 3.3 3.8
Total R&D Expenditure, by sector (billion lei, current prices)
Total 1833.4 2195.8 2962.0
Fully private sector 208.0 300.0 710.6
Business sector 1406.7 1633.4 2056.1
Government sector 343.0 407.6 557.3
Higher education sector 83.7 154.8 348.6
155
Newspapers, Magazines and Other Periodicals
1997 1998 1999 2000
Titles– total 1855 1550 1986 1932
Number of libraries (end-of-year)
Total 13849 13821 13785 13422
- private sector 267 545 562 517
Cinema (end-of-year)
Number of cinema halls 468 313 321 279
Shows (thousand) 272 223 185 179
Spectators (million) 9 7 4 4
Entertainment institutions (end-of-year)
Number of units 142 144 146 147
Performances (thousand) 16 16 16 16
Spectators (audience) (million) 4 4 5 5
Museums (lend-of-year)
Total 512 506 515 519
- private sector 38 54 48 50
Visitors (thousand) 9149 10926 8818 9594
Radio service subscriptions1) (thousand) 4082 3971 3591 3055
TV service subscriptions 1) (thousand) 4018 3931 3710 3462
Radio programs1) (thousand hours per program) 89 90 92 96
- private sector 973 1382 1498 1789
TV programmes1) (hours per program) 14501 14670 14197 15296
- private sector 292013 437507 512514 512247
1) Public service
156
Attachment 4 – The external environment acts through the STEEP factors
(Social, Technological, Economics, Environmental and Political)
Table 1 – STEEP factors analysis, market and competition
Competition The current state of IT&C as support industry of knowledge based economy
(Mobile communications have experienced a boom in the past three years, the fixed
ones have developed especially in the urban area; the rural area has an incomplete
and obsolete network; until 1st of January 2003
ROMTELECOM still has the monopoly over fixed communications; Information
Technology started to be introduced in all fields; those of the State are incomplete
and non-integrated (e.g. Public Administration: Finance Ministry – Management
Information System for Public Finance: doc. mgmt
Automatic processing of forms (functional~5,000 forms/month) beginning with
General Revenue Taxation); Gen Dir of Customs: ASICUDA – monitoring and
control system for customs declarations (PHARE funds), 101 custom offices –
phase 1, 12 regions, approx 120 custom offices, hundreds of custom
commissioners, beneficiaries (export/import companies), traffic control); Web
pages for: Presidency, Chamber of Deputies, Central Government, Ministries,
Local Councils, City Halls
National companies: (TAROM, SNP, ROMTELECOM, CONEL, Romanian Post)
Market: current demand is high enough; the future is estimated to be three times
bigger, because of software solutions, based on the Internet, which extend and
increase the international flow of information; buyer behavior: buyer prefer a low
price, irrespective of quality; there were too few solutions that led to repetitive
acquisition; (e.g.: mobile communications, Internet service providers); market
segments: people over 50 years make limited use of both communications and the
Internet; students use communications and the Internet extensively, people aged 25
to 50 use the Internet mostly because of the nature of their work, on the job .
Competition: market shares: Romtelecom has a monopoly in fixed telephony until
1st of January 2003, rural areas not fully covered, (for mobile telephony there are
4 providers: Mobilrom, Mobifon, Cosmorom, Suntel); for postal services: the
Romanian Post and other providers for rapid services; for hardware there are
foreign manufacturers (HP, IBM, Sun, Compaq, etc.), but also local providers of
brands; software providers are foreign (SAP,ORACLE,BAAN, PEOPLE SOFT,
Computer Associates, Microsoft), but also local (small and medium companies); the
IT market is shared: individuals( 1%), small companies (9%), medium companies
(25%), big companies (30%), very big companies 40%); new entrants: market
entry is very difficult because of the very large initial investment needed.
Political 1. Legislation: avoidance of double taxation – agreed with some countries;
factors treaties with EU countries for IT&C workforce
2. Support for companies: high taxation; rate lowered by SME law or incentives
granted to start-up companies
3. EU Developments: entry to EU implies implementation of the acquis
communautaire
4. Political changes in many markets: developed countries are moving toward
157
the knowledge-based economy;
5. Regional Trading Blocks: Europe(EU), Americas(NAFTA), Asia (APEC,
Japan, ASEAN), Africa, Middle East, etc
6. There are many international funds and international programs for the
implementation of the Information Society in the developing countries
Economic 1. Interest rate is high (approx 40 %);
factors 2. Unemployment is high in Romania; the highest rates are in Moldova (Vaslui,
Botosani, Braila) and Oltenia (Craiova); unemployment will increase in mono-
industrial areas (Galati, Brasov, Resita, etc.).
3. Inflation: 30.3% (official)
4. National currency lost 30% of its value in 2001
5. Still high fees for communications
Social 1. Romania has about 5,000 CTI graduates each year; Education level in Romania
factors in IT&C is good, but decreasing
2. 70% of the IT&C workforce is in Bucharest;
3. 25% of IT&C workforce leaves Romania every year
4. Public not informed about the benefits of Information Society
5. People lack confidence in communications and information;
6. Labor productivity is low
7. The use of Information Technology disseminates information fast and helps
implementing the latest innovations
8. Workforce is cheap in Romania
Technologic 1. Technology development in the world leads to its implementation in Romania
al factors 2. The price of technology is high because of the small number of market players
3. Lack of integrated solutions is behind the high operational costs of businesses
158
Attachment 5 – SWOT analysis for the Romanian use of knowledge
Strengths Weaknesses
o Numerous and well educated human o Communications infrastructure in rural
resources areas; large investment requirements
o Good education system (all levels) o Average salary is low when compared
o Convergence of Communications and to developed countries
Information Technology industries o IT teams of central and local
o E-signature law, e-commerce law (draft), data administration are not well prepared or
protection law, unified emergency calls system motivated
o ICT community started to have identity o High ICT piracy level (67%)
o Political situation is favorable to the o Not enough ―externalization‖ of ICT
development of knowledge based economy services
(MCTI, Parliamentary ICT Commission, ICT o Not enough e-content
councilors at the Romanian Presidency)
o Rapid adjustment to the latest technologies
o Solutions developed ―from scratch‖
o Rapid return on investment
o IT solutions enhance company value
Opportunities Threats
o A good education system o There is a huge demand for ICT
o World economy is moving towards a professionals in the developed
knowledge based economy and Information countries (well-educated human
Society (distances become irrelevant, etc.) resources working in Romania are
o Worldwide huge demand for ICT services and getting fewer)
digital content; o If Romania does not develop a
o benefits for Romania: Romanian specialists knowledge based economy, the
use state-of-the-art technology, some of the economic gap between Romania and
people who emigrated turned into Romania‘s the developed countries will grow
good ―ambassadors‖ wider still
a. EU makes specific requirements (24 March
2000 Lisbon – EC – directives in order to
join the EU:
i. Education, as a factor of progress
ii. Cheap Internet access
iii. Use of e-commerce
iv. Interactive student-teacher
communication
v. Smart-cards use
vi. ICT use by SMEs
vii. On-line health services
viii. Intelligent transportation
ix. On-line governance)
o Substantial international funding to implement
an Information Society in developing countries
A ‗knowledge based economy‘ strategy should help Romania use the opportunities to address its
weaknesses and make its strengths grow stronger.
159
Attachment 6 – EU accession related activities
For the implementation of the eEurope+ action plan, the deadline of which is end-2003,
several EU programs have been made available to the member states and the candidate
states. The European programs in which Romania‘s involvement is sought by MCTI as
they could support Romania in the process of building an Information Society are as
follows:
1. The e-Content program
It will unfold during 2001-2005 and its main goals are the improvement of the
Internet access and extension of the use of electronic information in the public
sector, increased production of e-content in a multicultural and multi-linguistic
environment, higher e- content market dynamism. On the basis of its contribution
to this program, Romania may prepare proposals for projects which, pending
approval, will be financed through the EU program. The projects a country works
on are not limited to the contribution of that country.
2. Safer Internet Action Plan program
It spans over 1999-2002 and involves Romania‘s yearly contribution of
Euro 78,000. The main objectives are to create a safer Internet environment,
encourage Internet self-regulation and codes of conduct, promote cyber crime
prevention and deterrence. The projects a country works on are not limited to the
contribution of that country.
3. IDA II Program (Interchange Data Administration)
It unfolds over the period 1998-2004 and its main objective is the interconnection
of the administrations of the participating countries with the aim of best practice
promotion, facilitating the exchange of digital information, stimulating the
convergence as well as understanding of the problems the participant countries are
faced with, and developing public services beyond a country‘s borders. Within
this program, a common inter-operability framework will be developed, the
benefits of employing electronic services will be identified, and the criteria of
operating and interconnecting secure networks will be established. The projects a
country works on are not limited to the contribution of that country.
4. IST Program - Information Society Program
As the use of the Internet increases, more attention should be paid to social changes,
to social integration and confidence-building, to the security and protection of privacy.
Given the fact that Information Technology is a priority sector to the European Union, it
launched a program to support research in this field. In order to promote the acceptance
of innovation in every field of activity, Romania takes part in the EU‘s IST program.
The research development frame program (FP6) of the European Community was
sent to the European Parliament in February 2001. IST consists of a priority of the
frame program FP6. The 2002 budget estimate of the frame program is Euro
370 million, which accounts for some 37% of the IST program‘s annual budget in
the last three years.
The frame program priority objectives are:
- Network administration, network interoperability and distributed systems;
- Information systems for health care, and for elderly and disabled people;
160
- Development of e-commerce activities, of distance working, security and
personal data protection;
- Extension of education, training and cultural activities;
- Development and testing of GRID technologies.
Bearing in mind that the implementation of the eEurope+ action plan is
being monitored on the basis of a set of indicators which have to be sent every
year to the European Commission, MCTI has initiated a collaborative effort with
the National Institute of Statistics and Economic Studies in order to define a
thorough set of indicators for monitoring relevant developments.
The European Union intends to finance the measurement of certain
indicators that national statistics offices do not collect data for, as well as some
workshops on defining a set of indicators and measurement methods. The
workshops will be attended by MCTI and the National Institute of Statistics and
Economic Studies experts.
5. Signing of a memorandum of understanding between some accession
candidate states regarding communication
On November 19 a memorandum of understanding for facilitating the information
transfer and communication was signed in Bucharest by the Ministry of Transport
and Communications, Skopje, the Federal Ministry of Transport and
Telecommunications, Belgrade, the Ministry of Public Economy and Privatisation,
Tirana, the Ministry of Communications, Public Works and Transport, Nicosia,
the Ministry of Communication and Information Technology, Bucharest, and the
Ministry of Transport and Communications, Athens.
The objective of this interstate initiative as set forth in this MOU is to expedite and
facilitate the communication between the parties and their participants (ministries,
governments, agencies etc.). It is the will of the parties that all correspondence,
document handling, information retrieval etc be accomplished via electronic means
through secure networks and mechanisms (hereinafter referred to as ―E-Governance
Project‖).
6. Participation within the eEurope Action Plan
During a meeting held on the first day of the conference, the ministers attending
the event – around 30 – agreed on a Ministerial Declaration that reaffirms their
commitment to fast e-government development as part of the eEurope Action
Plan.
Future key challenges were also identified:
To provide one face to customers through real integration within and across
departments
To examine integrated management processes and assess different funding
models, including public/private partnerships
To engage citizens in order to drive up usage – this can be achieved by taking
a citizen‘s point of view and thinking about how to make the citizen‘s life
easier
To enable the identification and authentication of citizens; this is either not yet
resolved or faces legislative hurdles
To address security concerns, while remembering that security must be
appropriate to the service
161
Attachment 7 – Ministry of Education and Research Projects
Financed through bilateral agreements
1. Co-operation with Austria
Projects financed by KulturKontact Austria and implemented in Romanian
schools with consulting provided by the National Center for the
Development of Professional and Technical Education (CNDIPT)
a. The co-operation project ―Developing and supporting the Romanian
tourism schools‖
b. ECONET – ―Establishing a regional network for economic education‖
between the Ministry of Education and Research of Romania and
KulturKontakt, Austria, financed by the Austrian Ministry of Foreign
Affairs within the Stability Pact for South Eastern Europe.
c. ―Improving education in depressed areas-piloting the Hauptshule and
Berufshule models in schools in Romania‖, in vocational schools for the
following professions:
farming and ecological management
masonry
workers in infrastructure and railway beds
workers in concrete casings and structures
d. ―Training for the occupation – Agri-tourism operator – based on the
Austrian model‖
e. ―Development of the instruments for regional and transborder
co-operation in the field of tourism in South East Europe‖.
2. Co-operation with The Netherlands
Matra – Quality assurance in higher education
3. Projects in collaboration with the British Council
Financed by the World Bank
Education Reform Project
Higher Education and Research Reform
School Rehabilitation
Financed through European programs
1. Socrates II
2. Leonardo da Vinci II
3. FP 5
4. Phare HER (Universitas 2000) 8 million euro
5. Phare VET 25 million euro
6. TEMPUS
7. MATRA – a component for pre-university education
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8. Other PHARE Projects
1. Mutual recognition of qualifications for professional purposes
2. Access to education for disadvantaged groups, with special focus on Roma
3. Participation in Community programs and Agencies
Socrates
Leonardo da Vinci
4. Investments in economic and social cohesion (Technical and Vocational
Education and Training)
5. Institution building for economic and social cohesion (Technical and
Vocational Education and Training)
6. Phare end user support for the participants of the mobility schemes of the
Socrates II Community program
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Attachment 8 – Action plan
1. Education and training within a knowledge-based economy
No. Measure
1 Internet connection of all schools and high schools
2 Pilot projects for multimedia high schools
3 Multimedia equipment of high schools
4 Improved performance of the Ro-Edu-Net in order to set up remote education systems and support the
connection of the education unit to this network
5 Development of educational software
6 Training specialists for pre-university education: teachers of other than computer science subjects
– in the computer science field; computer science teachers – in the new technologies; network
managers
7 Virtual universities/e-learning
8 Easier access of researchers and students to virtual counterpart European teams
9 Draft a computer skills list and correlate it to the European ones (adoption of a European List of
professions and skills in the field of information science)
10 The creation of a framework that would provide incentives to private companies (and the specialists
therein) to be involved in the equipment of education units
2. Research, development and innovation
No. Measure
1 Programs for IS technologies
2 Romania‘s integration into the ―European research and innovation area‖ (EU initiative)
- participation in research networks, virtual laboratories/teams, virtual institutes.
3 Development of partnerships between the public and private sectors for the utilization of the IS
technology
4 Improved performance of the national R&D network
3. Culture in the knowledge-based society
No. Measure
1 Priority computerization of the institutions holding cultural heritage in stock (libraries, archives,
museums) and broad access to them:
- connecting university libraries to the high speed network and web sites for all libraries, museums,
theatres and other cultural units
- national internet connection of libraries and museums of towns
- connection of other libraries and museums
- connection of the theatre halls and other cultural units
2 Presenting the benefits provided by the IS technology
4. Public (civil society, policy makers, specialists in various fields) awareness
campaign on the importance of knowledge economy and information society
development in Romania
No. Measures
1 Launching of a national program to raise public awareness of the importance of the knowledge
economy and information society (in the context of the EU accession of our country – conferences,
TV and radio programs, articles in the press)
2 Training courses for specialists in various fields on the importance and features of the KE society
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5. The development of a new attitude: a new ―culture‖ of communication and
co-operation in the new knowledge-based society
No. Measures
1 Web sites for all ministries and agencies (supply of up-to-date and coherent data on the plans,
programs, expenses, achievements and effects of such action – public procurement, auctions, etc.):
web sites supplying public information (documents, actions of public interest, auctions, etc.), own
servers for web sites
2 On-line publication on the Government‘s web site of the forms commonly used by people in their
relations with local and central authorities
3 An infrastructure to secure the electronic documents so that companies and individuals may be able to
fill in and send safely the electronic documents
4 Internal programs worked out by all governmental bodies regarding their purposes and targets, action
framework and steps to be taken for the implementation of the measures for the expansion and
diversification of IT use by every ministry, agency, governmental body
5 Legal amendments to provide incentives for investment in IT
6 All applications used by public servants and citizens that are in ―electronic‖ contact with public
institutions will be in Romanian
7 Provisions for the compulsory use of Romanian diacritical marks by both producers and distributors of
keyboards in Romania, and designers and producers of applications for public administration
8 Easier access of the disabled to IT
9 Electronic format of all financial reports of companies
10 Promotion of a new ―organizational culture‖ based on computer skills essential for a successful activity
in the new information society
11 Courses for continuous computer skill training of civil servants
6. Knowledge-based economy infrastructure (development of the national Internet)
No. Measures
1 Development of digital transmission mains (optical fiber). Rational operation of the network and
performance updating.
2 Safe transmission of data in the national data network
3 Access by optical fiber to regional mains for all Romanian towns (one internet node for each town)
4 Access of remote areas to information (pilot projects and dissemination of positive outcome)
5 Access of all information producers to the data transport infrastructure
6 Development of alternative communication networks: interconnection of the networks for data
transmission; interconnection with the national internet
7 Lower data transmission costs
8 Liberalizing communications and selling by auction of licenses for zonal telephone services
9 IT resources for education, research and culture institutions consisting of hardware, software, service,
connection to internet
10 Improved performance of the national R&D network
11 Improved performance of the national RoEduNet and RNC and their connection with the GEANT
European Data Transmission Main
12 Expansion of communication infrastructure of education and research for multimedia applications:
connection by optical fiber of some research institutes for multimedia applications for further link with
GEANT, connection with GEANT
13 Campus networks able to ensure multimedia communication
14 The integration of a Romanian campus network into the European virtual campus
15 A high speed network for health care units (hospitals, polyclinics): connection of hospitals and
university clinics, connection of the emergency health care services of cities, connection of other town
hospitals and polyclinics
16 An information network to monitor the environment
7. The required legislation and institutional framework
No. Measures
1 - The updating and implementation of the legislation for personal data protection: the individuals‘
protection against the processing and transmission of personal data; the free information and
communication including internet by observing the deontological and professional rules regarding
the transmission and processing of data in the social environment.
2 A legal framework favoring e-commerce development in accordance with EU legislation
3 Appropriate application of the law on intellectual property protection in the information society
4 Legislation on information crimes: information security, the concept of information crime, electronic
payment means
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8. The adjustment of public administration to the knowledge-based society and
the development of other public services
No. Measures
1 Implementation of a system of information stalls to provide public information concerning: legislation,
local cultural events, environment conditions (in the area) – in all communities of over 20,000 people
2 The development of web sites to record the citizens reaction to legislative initiatives and performance
of public administration – legislative initiatives to be available on the internet before being discussed
3 A high speed network for the interconnection of public administration units (prefect‘s offices, mayor‘s
offices in towns and villages)
4 Connection of remote localities
5 Promotion of the smart card utilization in the following fields: health care, telephone, public transport
and payment to civil servants
6 Computer aided health care services: standardization of the utilization of smart cards in activities
concerning health care in accordance with the European solutions
9. SME‘s development in the framework of a knowledge-based economy
No. Measures
1 Amendment to the tax legislation in order to create the business environment required by the
knowledge based economy and information society (incentives for investment and technology transfer,
access to internet, communication infrastructure, etc.)
2 Development of a legal framework that would stimulate SME‘s integration into an information society:
Electronic document and signature, e-commerce, equal access to network and information,
―Incubators‖ and SME ―spin-offs‖, transaction security, privacy of some data, consumer‘s protection,
exclusive use of electronic means for public procurement
3 The creation of an environment enabling involvement of Romanian companies in e-commerce and
the globalization of their activity in accordance with EU standards, supporting companies to shift to
e-commerce and e-business.
4 Multi-lingual ―front-end‖ development on internet sites to lower or remove the trader‘s limited access
to markets due to language barriers.
5 Raising users and consumers awareness of e-commerce benefits and inducing them to accept and use
the new technologies.
6 Telework utilization
7 Development of integrated programs to ensure SME‘s connection to the networks
8 Registers per field/service
9 Development of education, training and promotion programs for SME‘s
10 Creating the institutional framework for the development of the specific domestic market
10. Development of a strong ICT industry
No. Measures
1 Improvement of the framework of enforcing the copyright law and law enforcement
2 Development of Cybercenters in the IS field (hardware and software)
3 Development of education software
4 The utilization of software in the Romanian language
5 Pilot projects in e-commerce and in scientific software applications
6 Improvement of the quality of the Romanian software ISO 9001/9002 certification
7 Development of a list of jobs in the field of CIT
11. The role of the financial and banking system and e-commerce
No. Measures
1 Smart-cards utilization in the financial and banking system
2 Easier e-commerce by means of the financial and banking system
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Annex 3
National Policy on Communications and Information Technology
Submitted by the Ministry of Communications and Information Technology, the
Government of Romania
The strategic target of the Government Programme in the filed of Communications
and Information Technology is to set in place the lasting pre-requisites for the
implementation of the ―Information-Oriented Society‖, by re-launching the process of
privatisation, liberalisation and development of the respective sectors.
The following shall be envisaged in this respect:
Promoting and supporting an open and competition-oriented market for services of
communications and IT, apt to provide good-quality services at convenient tariffs;
Narrowing down the technological gap and catching up with the European
Community and world legislation, by developing new technologies and services, so
that the consumers and operators should enjoy a homogeneous, non-discriminatory
treatment open to competition;
Developing the Internet platforms and technologies towards the building of a digital
economy at a national level.
The established measures and actions shall be meant to guarantee:
Citizen‘s access to information and freedom of expression;
Access to communication services;
Free and non-discriminatory access to universal services of posts and
telecommunications;
Citizen‘s integration in the ―Information-Oriented Society‖.
Free flow of information.
The relevant state authority – the Ministry of Communications and Information
Technology – shall protect the citizen in relation to the operator, so as to secure for the
former a stable degree of protection of the information and of his or her private life,
transparency of tariffs and terms of use of the communication services. It shall also
secure co-ordination for :
The drawing up and implementation of the programmes of financial assistance from
the European Union and of the government agreements in the field of communications
and Information Technology;
Connecting through Internet and multimedia services the citizen – his or her home and
job – the school, public services and administration, in order to consolidate and
develop the social cohesion.
The main actions that ensure the attainment of the strategic targets are the following :
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The institutional and legislative reform
The building of the institutional framework required for the development of a modern
economy, the securing of a strong and regulated competition-oriented market apt to
ensure free competition, on the one hand, and the protection of the citizens‘
investments and interests, on the other hand. The following are envisaged for this :
The setting up of the National Regulatory Authority on Communications, that
should be a politically independent and technologically neutral body with
responsibilities in the field of spectrum administration and numbering, regulations
and standardization, authorization and licensing, control and monitoring;
The provision of the legislative and organizational framework required for the
complete liberalization of the telecommunications and postal services;
Getting ready the operators for the complete liberalisation of the communications
services and the adjustment of the extant licences of the national operators;
The setting in place of the legal framework fit for ensuring the free flow of
information and the definition of the legal statue of the electronic document,
digital signature, electronic data base and electronic commerce;
The promotion and backing of an open and competition-oriented market for
communications and IT services;
The definition of a coherent and realistic tariff policy, relying on costs at the level
of the national operators;
The taking over by the Ministry of Communications and Information Technology
of the responsibility for the privatisation processes of the commercial companies
in its field, as well as the speeding up of these processes;
The setting up of the ―112‖ unified system of emergency calls – one of the
necessary measures for enhancing the safety and protection of the citizen and his
property;
The establishment of the legislative and institutional framework for fighting
electronic frauds and unauthorised access to electronic information.
The implementation of the communications development strategies, preparing the
Romanian market for communications globalization, ensuring the universal service
and the building of a competition-oriented market conducive to the improvement of
the services‘ quality, the improvement of the technological level and the lowering of
the tariffs. The following shall be ensured in this respect :
The faster development of the public telephone network, by ensuring an annual
rate of at least 500,000 new telephone subscribers;
The introduction of new technologies converging towards communications‘
globalisation;
The provision of the universal telephone service by introducing telephone lines in
localities with a population of more than 1,000 inhabitants, concomitant with
improving the quality of the services;
The promotion of the multi-service technologies in the filed of wide band
communications, including modern technologies of access in local band;
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The correlation of the use of the FM land radio broadcasting band, of the VHF
television bands, the correlation of the radio-electric spectrum in Romania with
the European Allocation Table;
The upgrading of the technologies of the postal services concomitant with the
enhancement of the quality and safety of the mailing;
The encouragement of the domestic production of sub-assemblies and spare parts
for communications for a limited period of time, through measures to encourage
and develop the small and medium-size enterprises (SMSE) in this field;
The involvement of a minimal percentage of domestic private capital in the
process of privatisation and licensing.
The implementation of the information-oriented society as a foundation for the
economic growth, the attraction of foreign investments, the creation of new jobs and
increasing the weight of the IT products and services in Romania‘s exports, by means
of :
Promoting the IT in the public administration by bettering the communications of
data, classified lists and registers of public interest;
Upgrading the flow of information among ministries, central and local
administration, in order to make it fit for e-government;
Increasing the degree of the public‘s access to information of public interest like
legislation, statistic indicators, population‘s registration, cadastre, commercial
register by internet and electronic pay desk. Setting up public units of access to
internet and multi-media resources, even in the less advantaged areas;
Developing the e-commerce, by facilitating the supply of goods and services by
internet;
Endorsing and regulating technologies of protection and coding;
Promoting the smart cards to protect the electronic access with direct applicability
in medical services, electronic payments, internet mobile access, public transport
services, pay phones;
Establishing the legislative and institutional framework for fighting electronic
frauds and unauthorized access to electronic information;
Supporting and encouraging the providers of IT services;
Ensuring active partnership with the professional associations, employers‘
organiszations, trade unions and NGOs in this field;
Implementing the information-oriented society through educational system, seeing
to the securing of the necessary conditions for the training of communications and
IT specialists, the elimination of the barriers and discrepancies between the rural
and urban milieus, on the one hand, and between Romania and the EU member-
countries and the US, on the other hand.
The following shall be realized to this effect :
Promotion of IT in education for the attainment of the long-term target: ―at least
one computer having access to internet for every school by the year 2004‖,
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Development of support services and educational resources for internet;
Providing the required conditions for the training of the teaching staff to use the
Internet and multi-media resources;
Development of academic education and research by internet;
Encouraging the creation of jobs for higher school graduates and diminishing the
rate of specialists‘ emigration in this field.
**********
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Annex 4
Investment Law in Romania
Submitted by the Romanian Foreign Trade Center, the Ministry of Foreign Affairs
Law on the promotion of direct investments having a significant impact in
economy was passed Romania‘s Parliament recently, as follows:
Chapter I
General Provisions
Art. 1(1) Direct investments having a significant impact in economy are those
investments that have a value exceeding the equivalent of 1 million US dollars, made
according to the forms and modalities provided by the current law and which contributes
to the development and upgrade of Romania‘s economic infrastructure, they induce a
positive effect of creating new developments in economy and jobs.
(2) The current law is valid only for the new investments, which comply with the
provisions of paragraph (1) and are made after the enforcement of the current law, by
Romanian private law natural and legal entities.
Art. 2 The participation in direct investments with significant impact in economy
may take place only with capital in cash in lei or in freely convertible currency.
Chapter II
Definitions and Fields of Applications
Art. 3 for the purpose of the current law, the following terms would be defined as
follows:
a) The date when the investment becomes operational – is the date when the verbal
final reception process is completed;
b) Accelerated redemption – it consists in including within the running costs, a
redemption of 50% from the entrance value of the fix asset, in keeping with the
provisions from the law on redemptions no. 15/1994 related to the redemption of
the capital immobilized in corporate and non-corporate assets, republished with
subsequent amendments.
Art. 4 The new direct investments with significant impact in economy can be made in
all fields of activity, except for financial, banking, insurance – reinsurance fields, as well
as in those fields regulated by special laws, upon complying with the following terms:
a) They must not break the environment protection norms;
b) They mush not harm Romania‘s national safety and defense interests;
c) They must not harm public order, health or morality.
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Art. 5 The new direct investments whose value exceeds 1 million US dollars or the
equivalent in lei or in other freely convertible currencies and which will be effectively
implemented within maximum 30 months since the statistic registration with the Ministry
of Development and Prognosis benefit from the facilities mentioned in Chapter IV.
Art. 6 The new direct investments, regarded as having a major interest for the national
economy, will be submitted with the Department for the Relation with Foreign Investors.
Art. 7(1) In case an investment meets the terms needed for benefiting from the facilities
provided in several laws, the investor will have to choose a single regime of facilities.
(2) Granting the facilities provided by the current law requires renouncing the facilities
provided by other laws.
Chapter III
Collateral
Art. 8 The investments made in Romania cannot be expropriated, except for public
interest reasons. Such a measure may be adopted only based on non-discriminatory bases
and only in keeping with the legal provisions.
Art. 9 The new direct investments made according to the provisions of the current law
benefit from the druidical regime provided by it, during the entire duration of operation.
Art. 10 Foreign investors benefit from the following rights :
a) To transfer integrally abroad the profit made, complying with the provisions of the
foreign exchange regime from Romania, after the payment of taxes, duties and other
liabilities provided by the Romanian legislation;
b) To transfer abroad, using the hard currency of the investment, the amounts earned
further to the sale of shares and equities, as well as those resulted from termination of
operation, in keeping with the provisions of the foreign exchange regime from Romania;
c) To transfer abroad, in the foreign currency of the investment, the amounts received as
indemnities, for the situation provided under article 8.
Art. 11 The foreign investors will benefit from all the rights provided in the mutual
bilateral agreements for promotion and guarantees of investments, concluded by Romania
with their states of origin.
Chapter IV
Facilities
Art. 12(1) Technological equipment, installations, measurement apparatus, automation
equipment and software purchased from import, which comply with the terms provided in
paragraph (3), needed for making the investments, are excepted from the payment of
customs duties in keeping with the list approved by joint order of Minister of
Development and Prognosis and Minister of Public Finances.
(2) The new assets, provided in paragraph (1), purchased from import or from Romania,
needed for making the investment, benefit during the investment‘s period of
implementation, until becoming operational, from postponements in the payment of the
172
value added tax, according to the regulations in force, which means until 25th of the month
following the date when the investment became operational.
(3) For the purpose of the current law, the assets covered by paragraph (1) are considered
as new assets if they were produced with maximum one year before entering into
operation and they have never been used.
(4) The terms provided in paragraph (3) are valid for the assets provided in paragraph (1),
made in Romania.
Art. 13(1) The new investments, made according to the terms provided by the current law,
benefit from the deduction of one share of 20% from their value. The deduction is
calculated in the month when the investment is made, only in fiscal terms, by recording it
within the amounts deductible provided in the income statement.
(2) If there is a fiscal loss, this is carried onward, during the next 5 years, against the
taxable profit.
Art. 14 The investments made according to the current law benefit from the accelerated
redemption, defined according to Law no. 15/1994, announcing but without the fiscal
entity within the area of which the taxpayer has to submit the tax statement to pass an
approval.
Chapter IV
Authorized institutions, registration and procedures
Art 15(1) Ministry of Development and Prognosis, in collaboration with the Department
responsible for the Relation with Foreign Investors, coordinates the uniform
implementation of the Government‘s policy at central and local level in the field of
stimulating the promotion of direct investments.
(2) With a view of accomplishing this target, Ministry of Development and Prognosis,
together with the Department responsible for the Relation with Foreign Investors:
a) collaborates tightly with governmental and non-governmental institutions from central
and local levels, with direct tasks in this respect;
b) Coordinates the promotion activity, at domestic and international level, for the direct
investments in Romania, monitoring the accomplishment of the targets provided by the
national strategy in this field;
c) acts, inclusively in consultation with Romanian and foreign investors, with professional
organizations, with associations of employers and Romania‘s and Bucharest Municipal
Chamber of Commerce and Industry for permanently implementing an environment
favourable to the promotion of direct investments, by having the legislation in the filed
approximated, simplifying procedures and removing administrative barriers;
d) informs the government and the Prime Minister, operatively, on any notifications
coming from investors related to deviations from the legal procedures and regulations,
from professional ethics, as well as on other deeds occurred deliberately or out of fault,
which harm the business environment, the initiation and development of investments in
Romania.
e) participates and represents Romania in the works of international institutions and
associations active in promoting direct investments.
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Art. 16 Ministry of Development and Prognosis, in collaboration with the Department
responsible for the Relation with Foreign Investors, provides upon demand, specialized
technical assistance to the investors who can be classified as complying with the
provisions of the current law.
Art. 17 The Ministries, the other organs of public central and local administration, as well
as the institutions with tasks in issuing approvals, authorizations and licenses have to
settle operatively the requests coming from investors in relation to the development of
their activity.
Chapter VI
Follow up for the development of investments and penalties
Art. 18-(1) In case when the companies which made investments defined according to
article 1 terminate their activity voluntarily during a period of time lower than 10 years,
they will have to pay the taxes fixed by the law for the entire duration when the
investment was in operation, as well as the accruals due for the delays in the payment of
taxes and duties that had to be paid in the absence of facilities, calculated in keeping with
the legislation in force.
(2) The amounts due according to paragraph (1) are paid with priority from the earnings
resulted from liquidation the investments.
Art. 19 The alleviation by the investor of the assets provided in article 17 within a period
lower than 2 years since they were brought into the country or purchased would entail the
payment of the value corresponding to the facilities he/she benefited from, as well as the
delay accruals in the payment of taxes that would have been paid in the absence of
facilities, calculated in keeping with the legislation in force.
Chapter VII
Final provisions
Art. 20(1) The litigation among investors and Romanian authorities in relation to the
rights and obligations provided by the following law are settled by the courts of solicitor‘s
office, in keeping with the procedure established in the Law on solicitor‘s office no.
29/1990.
(2) The validity remains, in the field of incidence, as regards the provisions of the
Convention related to settling differences related to investments, occurred among states
and persons of other states, concluded in Washington on March 18, 1965 and ratified by
Romania according to the Decree of State Council no. 62/1975 published in Official
Bulletin, Part I, no. 56 from June 7, 1975.
This law was passed by Chamber of Deputies and Senate in the joint session from…, in
keeping with the provisions of article 113 from Romania‘s Constitution.
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174
Annex 5
Romania‘s Public Policy on Telecommunication, IPR & Legal Framework
by the Romanian Foreign Trade Center, the Ministry of Foreign Affairs
The following provides a brief synopsis of public policies that have an impact on the use
and expansion of ICT within Romania.
Telecommunications
Since 1989 Romanian telecommunications and post systems have been restructured. In
1991, the operational functions of the unitary telecommunications system were separated.
RomTelecom was set up as autonomous. The main activities of RomTelecom include the
administration, development, and operation of the telephone-telegraph services for
domestic and foreign end-users, meeting the requirements of the public, social, and
defense interests. RomTelecom includes 41 telecommunication departments, organized
according to the administrative-territorial structure of Romania. In 1998 the regie was
privatized through foreign investment.
The strategy of telecommunications development was drawn up as a priority field of the
country‘s macroeconomic infrastructure. Based on the survey undertaken by the
consultancy company Dofrecom France, a long-term development program with strategic
objectives was devised to include: the use of top world technology; expansion and
improvement of the quality of services. Part of the program has already been
accomplished through the commissioning of local and international digital transit
telephone exchanges. These have been built over 10,000 kilometers of main
communication lines through optic fiber cables.
Regarding international telephone connections, the actions taken in 1993 led to the
extension of direct telephone connections with 38 countries. Digital lines were developed
in cooperation with the USA and Canada. In 1993 Home Country Direct Services were
established providing any telephone set with automatic access to international exchanges.
The first partners with which this convention was concluded were AT&T and Sprint
International from USA, and Telecom from Canada.
In 1997 GSM system mobile telephony, in the 900 MHz band, came to cover the whole
country. The best known private companies boasting national coverage are the Romanian
Canadian Mobifon, which supplies Connex GSM services, and the Romanian French
MobilRom, which supplies dialog GSM services. Two mobile phone licenses for the
1,800 MHz band have also been granted as of 1999.
Romania Telecom Networks Services is a joint stock company licensed to exploit the
public network of data transmissions through Rompac packages shift. The company is
licensed by the Ministry of Communications to supply E-mail and Electronic Data
Interchange (EDI) services. The main activity of the company is the development,
exploitation, and marketing of the public network of data transmissions. Rompac is part
of France Telecom Transpac Europe network.
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At the present time, the Romanian Post is a regie autonomous, part of the communications
system. Its major function is the administration, development and marketing of post
services in the public field, and cooperation with similar institutions abroad. The
Romanian Post espouses the outlook of the European Commission regarding the new
unitary market of post services in the Green Book. This implies the practice of the same
tariff in the whole community and granting of the same categories of services.
Intellectual Property Rights
Romania is a signatory of international conventions concerning intellectual property
rights and has enacted domestic legislation that protects these rights. The European
Association Agreement also includes specific provisions, which reaffirm the country's
commitment to internationally agreed rules in this field.
Romania has also concluded a number of bilateral conventions designed to protect
industrial property. Signatory countries include Belgium, Great Britain, Italy, and United
States. The State Office for the Protection of Inventions and Marks (OSIM) reviews
patent and trademark applications, issues patents, and registers trademarks.
Trademarks
Since 1920 Romania has adhered to the 1883 Paris Convention for the Protection of
Intellectual Property; joined the 1894 Madrid Agreement relating to the International
Registration of Trademarks; and complied de facto with classifications adopted by Nice
and Vienna Agreements ratified at the beginning of 1999. The current trademark
legislation provides for a level of protection similar to the international one with respect
to the basic aspects of the procedures regarding the granting of trademarks and the
protection of the exclusive right of use.
Certain trademark registration conditions are expressly set out by the law. In order to
have the rights ensured against third parties, the natural or legal person shall file an
application drawn up in Romania. The application for trademark registration is examined
by OSIM with regard to the form and contents as set out by the law. Following
ascertaining the fulfillment of such conditions, and if there are no objections filed within
the legal term, the trademark will be registered with OSIM. The applicant will be issued a
registration certificate.
According to the provisions in force, trademark registrations are valid for 10 years from
date of application, and renewable for similar periods. The first applicant is entitled to
registration. The period for contesting a trademark is 3 months.
The trademark registration gives its holder the exclusive right over such trademark for the
registered products and services. The holder of the trademark may request the competent
court to forbid third party use of such trademark in their business activity without its
consent. In the event of non-compliance, the holder has the right to request compensation
for damages.
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Patents
As a party of the 1883 Paris Convention for the Protection of Industrial Property,
Romania has subscribed to all of its amendments. Foreign inventors are therefore entitled
to the same treatment as Romanian citizens.
Patent law, Law No. 64/1991 modified by Law No. 146/1997 and Law No. 255/1998,
was adopted to broaden and clarify the basis on which a patent is granted. The patent
validity period has been extended to 20 years. Accessory patents are valid for the period
of the original patent, but for no less than 10 years.
In order to benefit from the rights provided by the law with respect to an invention, a
patent certificate issued by OSIM is necessary. The patent application will be filed with
OSIM or by an authorized representative with headquarters or residence in Romania.
OSIM‘s decision regarding a patent may be challenged within 3 months from notification
by any interested party.
Copyright
Romania is a member of the Bern Convention on Copyrights. The copyright law has been
in force since 1956, with periodic amendments to royalty regulations. After 1990, an
improved copyright law (Law No. 8/1996 modified by Law No. 146/1997) was enacted,
which covers direct and indirect rights related to a larger range of creative works.
According to the law, the object of copyright includes the original works of intellectual
creation in the literary, artistic, or scientific field, regardless of the creation methods or
form of expression. Romanian law establishes the conditions for acknowledging and
granting the copyright of a literary, artistic, or scientific work, as well as any other works
concerning intellectual creation. Copyright is assigned to the author and involves moral
and patrimonial rights.
The law provides that copyright protection begins from the moment the work is created
and lasts as long as the author lives. Generally, upon the author's death, the right to his
works passes to his heirs for an additional period of 70 years. The lifetime of software
protection guarantee is 50 years after the death of the last co-author. Works of art are
granted protection for a period of 25 years after the creation of the work.
The copyright holder may entirely or partially transfer its rights with the conditions of
stipulating in such agreement the patrimonial rights, which are conveyed, the exploitation
way, duration and extension of such transfer, and the revenues to be received. The
author‘s moral rights cannot be transferred.
By Government Decision No. 60/1997 the Romanian Copyright Office has been
established, the sole authority in Romania empowered to supervise and control the
application of the copyright legislation.
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Industrial Models and Drawings
The protection of industrial models and drawings in Romania is regulated by the Law No.
129/1992. The new aspect of a product can be registered as an industrial drawing or
model providing that it has utility function and meets the following conditions:
It has not been made public in Romania or abroad for the same class of products.
The object to which the drawing or model applies may be duplicated whenever
deemed necessary.
Industrial drawings or models which destination or aspect are contrary to public order or
good morals are not granted any protection. In order to have these rights ensured against
third parties, the author will file an application with OSIM, personally or through a
Romanian representative. The industrial drawing or model registration certificate entitles
its holder to prohibit any third party from the unauthorized duplication, manufacture,
marketing, use, or import of a product incorporating the industrial drawing or model.
The decisions regarding the application for an industrial drawing or model registration
may be challenged within 3 months from their notification and are to be examined by the
Re-examination Commission within the OSIM.
Integrated Circuit Designs
The Law No. 16/1995 modified by Government Ordinance No. 41/1998 protects the
original designs, which are the results of their creators‘ intellectual effort.
The application for integrated circuit designs protection will be examined by OSIM,
which will register the design in the National Register of Designs. At the same time,
OSIM will publish the registration and will release a design registration certificate to the
entitled person, within 3 months from the official date of the application. The validity
term of a design is 10 years from the official date of design registration.
Legal Framework
Patent Law No. 64/1991.
Law No. 133/1994 regarding the ratification of TRIPS Agreement.
Law No. 84/1998 on trademarks and geographical indications.
Law No. 8/1996 regarding copyrights and related rights.
Government Decision No. 60/1997 regarding the establishment of the Romanian
Copyright Office.
Law No. 129/1992 regarding the protection of industrial models and drawings.
Law No. 16/1995 on the protection of integrated circuit designs.
Law No. 255/1998 on the protection of various types of plants.
Government Ordinance No. 41/1998 on taxes in the field of intellectual property
protection and their use.
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Annex 6
Model for General and Software Technology Capability Assessment
(Adopted from Narasimhan (1984), Lall (1987), and Schmitz &Hewitt (1991))
1. Scale of General Technological Capability
Level 1. Non-production operational capabilities
• 1a: Using the technology
• 1b: Choosing the technology
• 1c: Training others to use the technology
Level 2: Non-production technical capabilities
• 2a: Installing and troubleshooting the technology
Level 3: Adaptation without production
• 3a: Modifying the finished product to meet local consumer needs
Level 4: Basic production
• 4a: Copying technology
• 4b: Assembling technology
• 4c: Full production using existing products and processes
Level 5: Minor production modification
• 5a: Modifying the product during production to meet consumer needs
• 5b: Modifying the production process to meet consumer needs
Level 6: Production redesign
• 6a: Redesigning the product and production process to meet local consumer needs
• 6b: Redesigning the product and production process to meet regional/global consumer
needs
Level 7: Innovative production
• 7a: Developing a new product to meet local consumer needs
• 7b: Developing a new product to meet regional/global consumer needs
• 7c: Developing a new production process
• 7d: Transferring a production process to other producers
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2. Scale of Software Technological Capability
Level 1. Non-production operational capabilities
• 1a: Using a system of menus
• 1b: Using a conventional package (e.g. word processor)
• 1c: Choosing a software package
• 1d: Training others to use software
Level 2: Non-production technical capabilities
• 2a: Filling a package with situation-specific data (e.g. spreadsheet)
• 2b: Filling a package with situation-specific data (e.g. database)
• 2c: Installing and troubleshooting software
Level 3: Basic production
• 3a: Making copies of an existing software product
Level 4: Adaptation without production
• 4a: Creating a situation-specific application from a package (e.g. creating menus and
queries with simple programming; using macros; developing Web pages)
Level 5: Simple software production
• 5a: Creating a new set of interfaces for users
• 5b: Creating a program to move data between applications
• 5c: Creating a small utility program
• 5d: Modifying an existing program to meet user needs
Level 6: Software redesign
• 6a: Redesigning a program to meet local user needs
• 6b: Redesigning a program to meet regional/global user needs
• 6c: Minor process change: modifying the software production process
Level 7: Skilled software production
• 7a: Local product innovation: developing a new program to meet local user needs
• 7b: International product innovation: developing a new program to meet
regional/global user needs
• 7c: Major process change: redesigning the software production process
• 7d: Process innovation: designing a completely new software production process
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Annex 7
―Readiness for the Networked World: A Guide for Developing Countries‖
Information Technologies Group (ITG) at the Center for International Development at
Harvard University
Network Access
What are the availability, cost, and quality of ICT networks, services, and equipment?
The minimum necessary condition for Readiness is access to adequate network
infrastructure. Without access to global communications networks, no community can
participate in the Networked World. Access is determined by a combination of the
availability and affordability of use of the network itself, as well as of the hardware and
software needed for network interface. The quality and speed of the network are also
important in determining how the network is used. The customer service orientation of
access providers is a major factor in network application adoption and usability.
Because of the growing importance and unique character of the Internet, which provides a
global platform for both data and (increasingly) voice services, the assessment of network
access should be carried out in the context of Internet access, rather than access to either
voice or data. The significance of the Internet will only continue to grow in terms of
global trade and communications.
Information Infrastructure — For most communities in the developing world, a
lack of access to voice and data services remains a significant impediment to
Networked Readiness. Communications infrastructure is deployed with widely
varying local and regional rates of penetration, depending on factors such as
geography and/or income levels. Local network access may be provided by any one
of a number of media that makes up the communications network (including twisted
pair copper wires, coaxial cable, wireless local loop, satellite, and fiber optics).
While in the future, mobile wireless technologies will undoubtedly provide an
attractive option for data access, as will cable networks and perhaps even the
electrical grid, currently most Internet access in the developing world is provided
through the traditional telecommunications network.
Internet Availability — Internet access is enhanced by competition among Internet
Service Providers (ISPs) that operate locally. The range of services offered, number
of dial-up lines (which helps determine ISP capacity) and transmission capacity all
influence an ISP‘s usefulness. The availability of leased lines is particularly
important in making the Internet available to the business community. Finally, in
many communities in the developing world, public access is essential to making the
Internet available to greater numbers of individuals and firms. Telecenters, Internet
cafes, and community information centers assume great importance in making the
Internet available to those who do not have personal access to home, school, work,
or elsewhere.
Internet Affordability — The prices which businesses and individual consumers
pay for the Internet access are in most cases determined by a combination of fees
for basic telephony and ISP services. In communities where the sum of ISP and
telephony fees is prohibitively high, a disincentive to network usage exists, and
access is curtailed. Pricing packages can be structured in ways that are conducive to
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Internet use—per minute or hourly pricing (unlike flat rate pricing) for both Internet
and telephone service can limit users‘ time online an therefore inhibit the use of the
network for many activities such as electronic commerce (e-commerce). The
provision of tiered pricing packages can improve the affordability for many
subscribers by allowing them to purchase only what they need.
Network Speed and Quality — The available bandwidth, both for individuals‘
local access and for a community‘s connection to the Internet backbone, determines
the number of users and types of online activities the network can support.
Bandwidth-intensive activities, such as large file transfers or video streaming, may
be unavailable to communities with constrained access to the network. The quality
of the network, including servers, also determines its usage. High numbers of
mainline faults, poor connections, dropped connections, and packet loss can render
any network useless or operationally sub-optimal, thus discouraging use of and
investment in new technologies.
Hardware and Software — A vibrant market with numerous hardware and
software options can encourage more specialized usage of the network, including
ICT solutions that are tailored to local needs. More widespread retail and wholesale
distribution channels for both hardware and software increases opportunities to use
the network within the community. The prices of hardware and software are
particularly important in the developing country context, where generally low-
income levels cannot support high-priced consumer items.
Service and Support — A strong customer service orientation is important in
determining the success of network deployment. Long waiting periods for
installation and repair and a lack of support services by telephone companies and
Internet providers pose major obstacles to Readiness. The quality and number of
technical support professionals are essential in maintaining the network and
providing service.
Networked Learning
Does the educational system integrate ICTs into its processes to improve learning? Are
there technical training programs in the community that can train and prepare an ICT
workforce?
Without an educated, ICT-savvy populace, no community can fully participate in the
Networked World. To foster this resource, ICTs must be incorporated into the learning
system. Lamentably, although the use of ICTs in education is one of the most powerful
catalysts to Networked Readiness, it is an opportunity that is often squandered,
misunderstood, or underestimated.
Schools Access to ICTs — Schools must integrate ICT tools into their learning
processes if they are to be part of the Networked World. Programs that give
students access to ICTs in the classroom provide an important step to improving
Readiness. A school‘s Readiness in terms of access can be broken down into six
broad areas: number of computers, physical access to the technology, types of
computers, diffusion of the network, access to and organization of electronic
content, and quality and speed of connectivity in the school. In general, the
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diffusion of ICTs is driven by unit cost per pupil. Computers tend to be adopted
first at the university level, then by the secondary school system, and finally by the
primary schools.
Enhancing Education with ICTs — While putting ICTs into schools is an
important first step to Readiness, the technologies need to be properly harnessed to
improve the learning process. Teachers must be trained to use the Internet and
computers as tools for the students‘ benefit; this training is central to Readiness.
Curricula must be redesigned to encourage the use of ICTs in the pursuit of problem
solving, group learning, and research. Students should be taught from the earliest
age possible to use ICTs to enhance and improve their learning experiences. Full
integration of ICTs into the learning process is optimal, and collaborative, project-
based learning can make up a solid pedagogical strategy for ICT-enhanced
education.
Developing and ICT Workforce — It is essential that there exist opportunities
within the community to offer future ICT workers both first-time and continuing
training in essential skills such as software programming, hardware engineering and
World Wide Web design. These opportunities are fundamental to creating a
sustainable ICT industry and support the integration of ICTs into the local economy.
Networked Society
To what extent are individuals using information and communications technologies at
work and in their personal lives? Are there significant opportunities available for those
with ICT skills?
Readiness depends upon the community‘s incorporation of ICTs into the fabric of its
activities in order to maximize the gains of joining in the Networked World. In society-
at-large, ICTs can have a profound effect upon people‘s professional and personal lives
by providing easier access to information, more efficient ways to communicate, and
powerful organizational tools. To understand how a community is using ICTs, it is
important to assess not only how many members of the community have access to the
technologies, but also how they are using them.
People and Organizations Online — One of the hardest indicators to track is the
actual number of online users. Particularly in the developing world, where multiple
users share many electronic mail (e-mail) accounts and other online tools, there are
few reliable indicators that accurately map how many people are online. The
exponential growth in online usage also makes tracking current use difficult. This
nevertheless an important indicator. As more people access the Internet regularly,
and networks of users grow, there is grater demand and opportunity for online
interaction, as well as better meshing with the Networked World at-large. As more
organizations gain an online presence, it becomes more likely that the community
will use ICTs to augment or carry out its activities and needs. One of the most
important drivers of online growth is awareness—people must first know and
understand what the Internet is in order to participate. Particular attention should be
paid to the demographics of Internet users in the community. Particularly at lower
stages in Readiness, groups such as women, the physically disabled, and racial and
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ethnic minorities often do not participate in the online environment. A community
is more ready when there are not large discrepancies in online presence among
different groups.
Locally Relevant Content — Community members find the Internet medium more
useful and relevant to their own lives when online content reflects their own
interests and needs. Locally relevant content is a major driver of growth of Internet
usage. Interactions such as chat rooms, online interest groups, special interest
software, bulletin boards, listservs, and Web sites all drive the community to use
ICTs more widely in their lives. English language dominance on the Internet
remains a serious impediment to the world‘s non-English speaking communities.
While the preponderance of English is waning, and other world languages are
gaining, most of the world does not speak a language that is strongly represented
either in software or on the World Wide Web.
ICTs in Everyday Life — Communities participate more directly in the Networked
World when information devices such as radios, faxes, televisions, telephones,
pagers and computers are culturally accepted and widely incorporated into daily
life. It is important to examine both the penetration of ICT devices into community
and their applications. In communities where either income levels or the network
infrastructure cannot support high levels of individual access, public shared
facilities provide a needed alternative. Such venues may include telecenters,
cybercafes and community information centers. Strategies for drawing people in to
use these facilities is essential.
ICTs in the Workplace — The more that businesses and government offices are
already using ICTs, the better prepared they are to participate in the global
networked economy. In order to realize important efficiency gains from ICTs,
businesses and governments need to not only make technologies available to their
employees, but also effectively incorporate them into their core processes.
Networked Economy
How are businesses and governments using information and communications
technologies to interact with the public and with each other?
Businesses and governments that are able to effectively employ ICTs find more
sophisticated and efficient ways to managing their external relationships and
communications. This growing ICT usage helps form the critical mass of electronic
transactions which supports a networked economy, both in terms of the network size and
the demand for associated goods, services, labor, and policy reform.
ICT Employment Opportunities — A thriving job market for ICT professionals
provides added incentive for growth of ICT adoption, training programs and overall
use of ICTs within the economy. The retention of technical workers becomes an
important competitiveness issue for the community.
Business-to-Consumer (B2C) E-Commerce — Online retail options enhance
consumer choice and access to products. They also allow businesses to reduce costs
associated with physical infrastructure and to augment their marketing outreach and
public relations via a dynamic communications channel.
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Business-to-Business (B2B) E-Commerce — When businesses move their
dealings with other businesses online, they can often communicate more easily at
lower costs, hold smaller inventories, and process billings and payments more
quickly, among other advantages. Moreover, networked businesses are likely to
explore new business models, including dynamic business partnerships and radical
market restructuring.
E-Government — Governments can take advantage of ICTs to improve
connections with their constituents, including using the Internet to post information
online and to offer interactive services for the public. Governments can also lead by
example and become a catalyst for the networked economy by investing in ICTs for
their internal use, leading to more efficient operations and the creation of a local
market for ICT equipment and services. Relationships with government contractors
and procurement mechanisms can be streamlined by putting them online. ICTs can
make government activities more transparent to citizens and other observers.
Network Policy
To what extent does the policy environment promote to hinder the growth of ICT
adoption and use?
Public policy can be help or a hindrance to the networked economy. The favorable
climate that public policy can create for Internet use and e-commerce encourages
communities, organizations, and individuals to invest in and use ICTs. Important aspects
of Networked Readiness dealt with elsewhere in the Guide (such as Internet availability
and affordability, hardware and software availability and affordability, ICTs in school,
and electronic commerce) are all influenced by public policy. For a community to
become ready for the Networked World, the appropriate policy-makers must realize the
implications of their decisions upon ICT adoption and use.
Telecommunications Regulation — Effective regulation should promote
competition, ensure affordable pricing for consumers and maximize
telecommunications access in the community. Liberalization within the
telecommunications sector should establish a regulatory framework that encourages
multiple carriers to operate competitively. As more operators enter and compete in
the marketplace, service offerings become more accessible and affordable, are
deployed more rapidly and reach higher levels of quality. At the same time,
regulation should encourage universal access to telecommunications services.
ICT Trade Policy — ICTs become more available and affordable when there are
low barriers to trade, including tariffs on ICT equipment and software, and
electronically ordered or delivered goods and services.
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Annex 8
ITC‘s Questionnaire
―E-Business Readiness‖
Romania: 2002
Section I: Enterprise Level
Gaining e-Competency at enterprise level improves communication between customer and suppliers, pre
transaction knowledge, manage customer relationship and to monitor logistics and their commercial
activities. Please indicate at what level your enterprise have gained expertise on scale of 1-10.
Scale
1. Basic e-Trade capability within the firm. 1
2. Conduct preliminary market research and identify possible commercial partners. 5
3. Promote capacities and establish e-presence through a website. 7
4. Initiate and maintain regular contacts with perspective clients and suppliers 9
through e-mail.
5. Acquire credit references 5
6. Negotiate terms and contract specifics (e-mail) 7
7. Exchange and sign contracts on the basis of digital signatures No
8. Order materials needed to produce the goods contracted and monitor production 5
and delivery status. i) Automobile, ii) Video, iii) Enterprise
9. Expedite clearance of the imported materials through customs. No
10. Coordinate production and delivery with subcontractors. 2
11. Provide the buyer with information on order production and delivery. 5
12. Coordinate shipment with freight forwarders. 6
13. Acquire certificates of origin and other export documentation. 3
14. Organise payment to suppliers through the local banking system. 1
(Only one bank issue credit cards)
15. Receive payment from the buyer through the international banking system 2
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Section 2: e-Competency – National Level Yes No Remarks
1. Name of the organization responsible for
conducting the design and management of
e-competency :
(Draft laws have been prepared and presented to the Parliament.
- Central Bank for Authentication payment
- Ministry of Finance
- Chamber of Commerce & industry
- Secure Transaction Law exist and transaction can be verified)
2. Does the Trade Support Institutions helps in Public/private CRCE, Chamber of
e-Competency of their members: Commerce & Industry,
e-Secure Associations,
World Bank – e-
Readiness project
3. Access to Internet and www services
- Dial up US $10.00 per month
- Dedicated Leased line US $60 per month 64/33/1mb
- Wide band (CATV) 8000 accounts (10% on cable TV)
- Community Centres (Instant Cafeteria) 1000 in Bucharest + 500
other cities
4. Technology deployed for e-Trade for B2B/B2C:
- ARBIA
- Commerce One Not yet
- i2 Technology Not yet
- Others
5. Legal procedure for authentication of records Law exist but not
and signatures, please specify. in use.
6. Establishment of Gateways and Structures for:
- e-Payments No
- Secure on-line transactions Yes
- Limited to credit Cards Yes One bank
- Controller of Certifying Authority No
7. Strategy to develop human resource to apply
e-Trade technologies. What programmes have
been initiated for upgrading skills of
participants in e-Trade:
- Refreshing Training Programme Yes
- High Degree Level No
- School Level Yes
- Professional Level Yes
8. What e-Competency facilitation measures have Nil
been initiated for completing export procedures
to improve response time and to create overall
efficiency in trade operations. Please describe?
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Section 3: Romanian B2B environment: Yes No Response
1. What marketplace model is currently adopting Small WEB site, WEB
Romania? shops
2. What is the share of direct goods (directly used in Very less
final products) in total e-purchases of Romanian
companies?
3. Romanian supply chain (how many intermediaries 2 or 3: bank buyer for
between each seller and business buyer?) smaller Owner of WEB
site
4. Supply chain efficiency: finished-goods inventory, Not aware
raw-materials inventory, stock-outs, and accounts
receivable? Measured in days.
5. On line payment: does it exist and how well it No
functions ?
6. Mechanisms for managing suppliers’ credit risk or No
legal sanctions against defaulting debtors: are they
developed?
7. Information on companies: who supplies data on Kompass and network
the finances of midsize company, i.e. Credit channels
Rating?
8. What are the procedures for payments? “Pre-paid deposit”
(Letter-of-credit?)
9. B2B market size? What is sufficient scale? At the beginning;
very small
10. Identify product clusters for B2B markets
11. Management Software No
12. Train buyers to use the B2B system and Training started
adjust to new on-line procurement.
13. Compatibility of technology with different Allowed
technology systems
14. Legal procedure for authentication of electronic Not yet
records and signatures.
15. ERP technology: Yes 20 Romanian
companies tried SAP.
It is too complex
product. 20 foreign
companies using it.
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Annex 9
ITC‘s NATIONAL EXPORT POTENTIAL INDEX
INFORMATION AND COMMUNICATION TECHNOLOGIES,
2001
Advancement Business IPR Market E-Business National Other Country
In Environment Openness Readiness ICT National Export
Technology Competitiveness Advantages Potential
Rank
Eastern and Central Europe
Bulgaria 4 4 2 8 3 4 6 4
Czech 6 6 5 8 5 7 7 6
Poland 6 6 6 8 5 6 7 6
Turkey 5 5 5 9 4 5 5 5
Russia 8 5 5 5 5 5 5 8
Baltic 6 8 6 8 6 6 8 7
Republics
Slovenia 6 6 7 5 5 7 7 6
Hungary 7 7 7 5 5 7 7 7
Ukraine 6 5 4 7 3 4 5 5
Moldova 3 4 3 8 3 3 6 4
Romania 6 5 4 8 4 5 7 6
Europe
EU 8 8 9 6 7 8 8 9
Germany 9 9 9 6 7 9 8 9
France 8 8 9 5 6 8 7 9
Italy 8 7 9 7 6 7 7 8
Greece 6 6 7 7 5 5 7 7
Finland 7 8 9 6 8 9 8 9
Denmark 6 8 9 6 7 6 9 8
Sweden 8 8 9 5 7 9 8 9
UK 9 9 9 7 8 9 9 9
Spain 7 8 8 6 5 7 7 7
Switzerland 8 8 19 5 6 8 8 8
North America
USA 10 9 9 7 10 10 10 10
Canada 8 9 9 7 9 8 10 8
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Asia and the Pacific
Japan 10 7 9 4 6 10 7 9
South 8 7 8 5 5 9 7 9
Korea
Malaysia 7 8 6 6 6 8 8 8
Thailand 7 7 6 6 5 8 7 7
Philippines 7 8 5 7 4 8 8 7
India 7 7 6 7 4 8 7 8
China 7 7 4 6 3 8 6 8
Taiwan 8 7 7 6 5 9 7 8
Latin America and others
Brazil 6 7 6 7 4 7 6 7
Mexico 7 8 7 7 5 8 7 8
Egypt 4 6 5 6 3 4 8 4
Background
ITC’s Trade Capacity Index is designed to assess comparative advantages of the most
active players on the global market of information and telecommunication technologies. It
is based on the professional views of experts, opinion leaders and industry associations
across the regions.
The principal objective of this tool is to provide IT policy-makers as well as business
community and eventual investors in IT with objective, qualitative assessment of the
major parameters affecting IT sector development.
Evaluation Methodology
Delphi methodology has been used for obtaining the assessment. In each country, the
project interviewed as average 10 professionals from industry, government, academia and
mass media.
Grades of 10 points were used to describe country competitiveness on the selected
parameters listed below. The scale is divided as following:
from 1 to 4 – lower country capacities
from 5 to 6 – average country capacities
from 7 to 10 – high country capacities.
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Selected Parameters:
The project selected the following parameters as the most representative for assessing the
general business environment, comparative advantages and potential for grow in IT
sector.
Advancement in technology:
indicates the level of technological advancement achieved in terms of innovations,
R&D capacities and its marketing and commercialisation.
Business environment:
reflects openness of the local markets, level of political and economic stability and
predictability, transparent legislation, compliance with the WTO agreements,
available infrastructure and incentives for national and international players.
Intellectual Property Rights:
indicates the level of protection of the IPR, availability of the enforcement and dispute
resolution mechanisms.
Market Openness:
estimated as a level of a non-tariff barrier for ICT products and services from other
countries.
E-Business readiness:
assesses the availability of the legal framework related to digital signature,
certification and autantification, private and transaction security in Internet – based
business environment as well as infrastructure for electronic marketplace.
National ICT competitiveness:
reflects integrated national capacities to compete at the global ICT markets in terms
of quality, price, delivery and brand image.
Other national advantages:
refers to cultural heritages, diversity and creativity, access to venture capital,
multi-lingual capabilities and participation in the WTO Agreements on the
Information Technology and the Basic Telecommunications Services.
Country potential for the ICT export growth:
refers to non-realized opportunities that can be harnessed in terms of qualified human
resources, infrastructure, innovation and market-driven environment.
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Annex 10
The Economist Intelligence Unit/Pyramid Research
e-Readiness rankings Methodology: How we derive the scores
Our first round of e-readiness rankings, published to mark the May 2000 launch of the
EIU e-business forum, were a rough proxy for ―e-business‖, combining two variables: the
EIU‘s business environment rankings, which themselves encompass 70 separate
indicators, and Pyramid‘s connectivity scores.
Our new model is far more robust, thanks to the growing body of knowledge on the
drivers of e-business worldwide. It tallies scores across six categories — including the
business environment rankings — and 19 additional indicators. Each variable in our
model is scored on a scale from one to ten. Where possible, the variables — connectivity
in particular-rest on quantitative, statistical data; other reflect qualitative assessments by
our country analysts.
In devising the more sophisticated methodology, we weighed the factors we believe
determine whether a country is prepared to seize the opportunities presented by the
Internet. Our guiding assumption remains that successful e-business is not possible
without a positive business climate overall. But we also take into account more specific
elements of Internet and e-business infrastructure: not just connectivity, but also social
and cultural factors, the legal environment for e-business, the development of e-commerce
and the existence of supporting e-services.
The six categories that freed into our rankings (and their weight in our model) are:
Connectivity (30%): E-business simply cannot function without adequate
telecommunications and Internet infrastructure. ―Connectivity‖ measures the access that
individuals and businesses have to basic fixed and mobile telephony services, including
voice and both narrowband and broadband data. Affordability and availability of service
(both a function of the level of competition in the telecoms market) also figure as
determinants of connectivity.
Business environment (20%): In evaluating the general business climate, the EIU
screens 70 indicators covering criteria such as the strength of the economy, political
stability, the regulatory environment, taxation, and openness to trade and investment. The
resulting ―business environment rankings‖ measures to expected attractiveness of the
general business environment over the next five years. Calculated regularly as part of the
EIU‘s Country Forecasts, these rankings have long offered investors an invaluable
comparative index for 60 major economies.
E-commerce consumer and business adoption (20%): Payment and logistics systems
form the backbone of this set of criteria. Here we evaluate the extent of credit-cards
ownership as well as the existence of secure, reliable and efficient electronic payment
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mechanisms, the ability of vendors to ensure timely and reliable delivery of goods, and
the extent of website development by local firms.
Legal and regulatory environment (15%): The legal framework governing e-business
is a vital factor than enhance or inhibit the development of electronic trading. We
consider the extent of legal support for virtual transactions and digital signatures. Ease of
licensing and the ability of firms to operate with a minimal but effective degree of
regulation are other criteria.
Supporting e-services (10%): No business or industry can function efficiently without
intermediaries and ancillary services to support it. For e-business markets, these include
portals and other online intermediaries, web-hosting firms, application service providers
(ASPs), as well as website developers and e-business consultants. The rankings assess the
extent to which local companies and organizations have access to these services.
Social and cultural infrastructure (50%): Education and literacy are preconditions to a
population‘s ability to navigate the web and drive future domestic Internet development.
Because entrepreneurship and risk-taking play such an important role in building new
e-commerce models, we also assess the national proclivity to business innovation and
receptiveness to web content.
____________
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