Romanian Businessman Blog

Killing business in Romania

It appears the Romanian Government is taking drastically measures against the crisis and is adopting an easy to implement but tough effective local strategy that is called “HEI-RUP” . This strategy is oriented towards quick and empirical action without too much reasoning or any analysis.  The “HEI-RUP” is composed of 3 main stages of offensive action: warning / fire / kill, and it takes the enemy – in our case Romanian companies – by surprise.

As a Romanian Businessman, sometimes I read international news and business reports and I am surprised to find out that in some European countries the laws and regulations for business are not changed several times a year and that notifications are provided long before any law or regulation is changed, allowing for companies to plan ahead and consider the impact that changes might have on their budgeting or business plans.

In Romania, the HEY-RUP fiscal policy strategy does not permit for such planning since the main component of this law is the surprise factor.  Shortly said, companies are simply faced with several changes and regulations and required to take fast action in order to survive and replan while on march without having time to waste too much thinking and analysys on long time planning or forecasting. This gives Romanian business a major advantage over lazy and slow moving foreign companies, since in Romania you must act fast and take evasive measures in difficult circumstances and this also guarantees the Romanian antrepreneurs and managers a lot of action and tension, keeping them in a full stage stress test mode.

Recently, our new Goverment just added new taxes for small companies. Each company must pay a minimal tax of 500 EUR per year, no matter the income or profit. If in other countries, small businesses are encouraged to form and grow, in Romania it appears the Goverment’s budget is on the brink of collaps if they adopted such drastical measures that is not only distroying any small and new companies that bearly can survive in the harsh conditions of today’s business, but is also driving away potential young entrepreneurs giving them one more reasons to … “go West!”.

Are Romanian Banks about to fall?

While everybody points towards Eastern Europe banking problems, as a romanian businessman, so far I did not notice any problem locally. The only think I am worried is the rise in deposits interest rate – around 15-20% per month. So far, my companies did not have any problems with payments, while in regards with credit – I always hated credit and choose to develop organically, none of my companies has any credit.

But from my information, companies do not have problems because of credits, except the ones involved in real estate. The real problem is the drop in exports that cuts productions and also some delay in payments from others.

I am surprised to see that everybody points to Eastern Europe as the prime area of Europe. I do not know what is the status in other countries, but in Romania banks are ok, credit unsolvency is low and cash-flow of banks does not show any sign of problems. This might be due to the very strict policy of Romanian National Bank, but also to the economic growth from last year and the potential of private deposits to support the need for liquidities.

As the credit, indeed is almost dead, but not everbody works on credit, so the local “reset” can only be beneficial in medium/long term.

My First Online Banking in Romania

Asking for a monthly bank account inquiry in Romania is not stress free. Depending on the bank office operator’s state of happiness you can get it or you can hope to get it. Last time I asked for a bank account status, I got the exclamation: “Oh, that’s too much!” Because I also had a payment order before, the office operator from the bank got angry at me for asking a routine account inquiry for which I pay the bank. But I don’t pay the operator, so that is a major difference.

Anyway, sick of the stress I get working directly with bank people, I thought I might try an online banking service. I know people using different services, but I tried the one from “Banca Transilvania”, called BT24. By the way, do not get any ideas with the 24 in the name, I am not sure yet weather this is really 24 hours available since so far I was not able to login into the system a 3AM and also while trying to get phone support, their Call Center only works from 9 to 19, so the “24″ in the service name I am not sure yet where it comes from.

The process is simple: you get a certificate and then you login into the system. Well … this is the part where I failed. Even thought I am a certified computer programmer that handles keyboard very well and can work with complex software programs, it appears I was not able to enter a stupid user and password in order to login. Or … their system does not work at this moment. Some other stupid fact: their system does not work so far with Windows Vista – as Andrei Crivat mentions here.

I will wait until tomorrow and get back with impressions after getting into the system … “The Online Banking system”. New stuff I am really disappointed so far, it’s no different then the other systems banks in Romania really have to improve.

State changes regulations, companies are paying

The new year brings new changes into Romanian business environment. Among many other interesting changes, there is one that affects every company, no matter the size, the profile or any other particularity: we have a new CAEN – a new National Code of Economical Activities. Each company in Romania has a major CAEN and more minor CAENs, all from a predefined list of activities. Each company can only perform activities that are included in their selected CAEN or else they can have trouble. This year the state has changed the CAEN and also has asked all companies to update their CAEN from the new registry. This is not a problem, the problem is that companies have to pay and the price is pretty big, it is almost close to registering a new company. Let’s say that they need money, so they decided to issue a new set of codes for economical activities. Let’s say that it is normal to pay when you change CAEN, even if it is not your fault that somebody out there decided to do some major change to prove they are working for us. The problem is that most institutions already ask for the new code when you submit your taxes, they will not accept your tax submissions unless you are using a new CAEN, because their “new & improved” piece of software does not accept the old code. Their software is already  using the new code. But not any company has the time and money to change CAEN overnight, some of us are struggling with productivity and competition and hard work to survive in todays Romania’s harsh business environment. Well, that’s your problem, the solution is: you must change the CAEN ASAP, even if the law does not specify at which date during current year this can be changed. But since almost all tax institutions require new CAEN, you can find out for yourself what is the deadline for registering and getting new CAEN.

The card for Internet nightmare

Having a business debit card in Romania VISA or Mastercard compatible is not easy: Romanian banks are really worse. So far, I had problems with 3 banks and I am looking for the next one.

1) First bank was ok, the card was working perfectly anytime I needed. Problem is that once, when I went to bank to get the monthly extract (btw: don’t even hope to get extract via email or snail mail), I got it via … a friend from some other company that got my extract when he got his extract … like a bonus. so, the extract is provided in an envelope that usually bank has to send it to you via snail mail, but in Romania you have to go the bank to get it. So there, when he got his extract, somehow, he got mine also. I never got the mistery behind this event, weather my friend got the extract because he asked for it (yes you can simply ask for it, no need to show any ID or other paper) or because he got mine instead of his.

I went to the bank directory and told her about this and wanted to find out how this could happen. Well, it’s a human mistake, probably the envelopes got stuck together … So much for bank secrecy,  a competitor company got my card extract and found out how much I pay for webdomains, where I buy them, where I buy hosting, how much I pay for Adwords, what books I purchased lately from Amazon, etc. This is Romania ….

2)  The second adventure is even worse. If in case #1 the card worked ok, in case #2 the card also worked, only that … it was not a business card it was an individual card. So they got me a card that was for personal use, not for business use. The weird thing is that when I noticed that company name was not printed on the card, they told me: well, it’s ok, only your name should be printed. After a about year, when I had to discover that the card I thought it was a business card, was in fact an individual card, they asked me: “why are you complaining, did you not notice only your name was printed on the card, not the company card?”  Well, of course I noticed … The other strange fact is that at this particular bank, you can not have a VISA compatible card usable for internet, unless you have other card in local currency that this card must be “linked”. An, in order to use the “virtual – Internet only” card you have to change money from the other one, so this link is clearly a must have. And I had a “must have” link between an individual card and a company card which was probably impossible unless somebody really pushed the YES button on the “are you sure you want to do this stupid mistake” windows pop-up button. In the end I gave up this bank (the same as in the previous post) and moved to bank #3

3) Bank #3 was supposed to be a cool bank: I checked their website, their services, their prices, I had an individual account with them and everything was nice, so I decided to open a company account also. Everything was ok until I started using the card for Internet payments. First month was ok, then … “credit card not approved”. I started getting this message everywhere I was trying to use the card. I called their support and they clarified me: “well, we have a new security measure in place that is banning transactions to websites that are not sending the 3 number security code. I was amazed they had idea about the 3 security code, usually card support are dumb people trying to use a computer. I asked them: “How is it possible that I tried 5 websites, all of them being major websites, using 3 security number check and non of them worked? Not even Google worked!” “Well, these are the measures we are taking for security reasons”

Now I am  searching for an other bank.

Businesses have priority … but not privacy

There is a particular bank office in my city, of a particular big Romanian bank that is driving crazy a business man that has to do work with them on a daily basis. Online banking is still not very popular in Romania, therefore most the the payments are still done in cash, both between companies and between companies and state. Usually I have to go to bank 1-2 times a week. My company’s bank, is in the top 3 Romanian Banks and I selected without a very thorough research mostly because they had an office which was closest to our office.

I had a lot of trouble with this bank, most of them related with poor service: unprepared employees, errors in communication, delays in service because of long lines etc. One interesting thing related to this bank was that until few days ago the still had different departments for local exchange and foreign exchage accounts. So, if you wanted to do operations both in local and foreign exchange you would have to go to 2 different offices (in the same building) and stay at 2 lines, speak with 2 people etc. Also, other interesting thing is that each company has assigned a particular person in the office, so if you go there and one desk has nobody in line but your assigned person has 4 people in line, you have to wait. I think they are organized this way since the communist era, some weird work management processes, because a logical distribution of work would distribute available human resources evenly, not the way they are doing. Since today I was amazed to see they made the first step: no more splitting between foreign and local exchange account managements, they are both handled by the same … stil custom assigned person and of course … in the same office.

Other interesting thing I found today: at every desk thay have an announcement: “Businesses have priority” (in regards with individual accounts). So, one more reason not to be their client if you are an individual and one more reason to be happy if you are a business. I found this announcement to be as hilarious as the commercial that they are currently running on TV in which they state: “we know what you need”. Indeed I need to have priority but there would not be a need for priority if they would just simply hire all the people they need and not overload their employees in order to cut costs. They are struggling so much to cut costs that they don’t even have security for private areas, not to speak that they don’t have the space they need, recently they opened  one more near an entrance (a privat one). When I went today to their building, going straight to the foreign exchange office where I knew I found it the last time, I was surprised to enter the room and see nobody was there but a lot of files and papers exposed. And in order to get there, I also went through some other corridor that had a lot of files stocked on each side and of course nobody was there. I could have simply stuffed a pile and take it with me if I had a large bag. Well, I was not interested what those files contained, but the possibility that they had private data of businesses made me title this post “no privacy”.

Today’s discovery is only a minor “cann’t belive it” event that is taking place in Romanian banks every day, maybe some time I will comment more on some of these events, like for example how I got my company’s card account monthly report via a friend in some other company that I was luck to know him becuase some bank employee simply gave him the report for my company, probably by error.

Why this blog?

As a businessman in Romania I have reasons to “go Canada” everyday. In interacting with people, laws, events and prospects, a Romanian businessman must be a Rambo not to get emotionally involved up to the level of madness. As far as I observed, every Romanian businessman will face (usually weekly) a large array of emotional events from “fuckit!” to “I will go to Canada!” or “I have to start-up that offshore asap!”. There are rare those weeks when you have no major reason to get in a major state of depression and even so, you know that the silence is only a sign of the storm that is about to come.

This might seem a pretty bleak perspective to you, but trust me: doing business in Romania is probably harder than doing business on the Moon. Of course, if you try to do it right, correct and waiting for benefits. Once you can drop any of these aspirations, life is easier. If you can do the job approximately, you will have reasons to believe at least you have some clue why things are not working as they should. If you accept not to do it correct, welcome to Romania, the country of every possibilities. If you are not awaiting tangible benefits you are also very wanted here. The state is just about to raise the taxes.

There are a lot of posts this blog could have had already accumulated since I am a businessman. I hope I will recall some and post them even if the action took place some time ago. But I am also sure that I will have a lot of things to write about as business in Romania is “welcome to the jungle”.

I will not mention names in this blog since I am not trying to judge, I am only trying to present how things work. I am also considering myself a part of the system and a reason for “system failure”. From the the start I confess that I am not considering myself a very good business man, since so far I have not foud the way to “push the envelope” and try to find an easier way in the maze. I to hope things will get better and this is the reason I am still a Romanian businessman and not a Canadian businessman.