My first paid work in Romania started at the back end of 1996 when I arrived in Romania as a lawyer for a Western legal firm that had set up in Bucharest a couple of years previously.
I had decided to move from the huge Budapest office of the legal firm Clifford Chance to the modest quarters occupied by my then new firm in Romania (the eight floor of a block of flats near Piata Victoriei with the washroom doubling up as a bathroom).
There seemed no rational reason for this seemingly illogical move and my new employers were convinced Clifford Chance had fired me as there seemed no other explanation for why I would move from the relative prosperity of Budapest to the dubious delights of mid 90s Bucharest.
In fact I thought I was being rather clever by moving to Romania to catch the new wave of investment that I was convinced would arrive on the back of the new Government that would be put in place if the elections went as predicted.
How happy I was as I stood opposite the Intercontinental on a cold December evening listening to Constantinescu making his victory speech from a nearby balcony. Apart from my surprise at the high pitch of his voice all seemed well. I returned from the Christmas holidays and waited for the new wave of legislation that would open up the country and its markets.
The initial key reform for us lawyers was a law that was promised to amend a whole series of earlier legislation, such as The 1990 Company Law, that needed serious improvement. The so-called Law 99/1999 was passed over two years into the Government’s four-year term. This glacial pace was reflected in almost any area that needed to be modified in order to encourage growth in the market.
It seemed that my choice to move to Romania was indeed wrong and I left to go back to the UK towards the end of the 1990s after watching the economy actually shrink whilst I was in Bucharest. The investment never really happened in the same way the Government never really governed.
In January 2005 another new Government was put in place, again a few months after I moved to Romania. How different at least the initial months have been. Clearly the previous Government had laid the foundations for EU entry on which much of the investment interest in Romania is based. This factor and the element of goodwill given to any new Government have finally triggered a realisation that Romania is a place to do business.
When Romania failed to grasp the nettle in 1997 others in Eastern Europe did. Investment poured into Czech Republic, Poland and Hungary in particular. A visit to Prague or Budapest today clearly confirms the gap that Romania needs to bridge. Romania’s luck is that those economies are becoming mature enough to be less interesting from an investment perspective, especially for those higher risk takers that first invested in Central and Eastern Europe in the 1990s.
Experience in this part of the world has made investors less nervous about local “issues” and therefore the wave currently coming in is less afraid than you might expect. Since the beginning of this year I have met with three fund managers looking to invest in media, telecoms and banking along with two fund chiefs who have several hundred million euros to invest purely in the Romanian property market, which has finally attracted the attention of international capital in a big way.
Until now the bigger funds have been investing in Romania through holding stakes in international companies with strong Romanian subsidiaries. These same funds are now looking to buy into Romania directly. Almost every flight to and from London and Vienna I have been on this year has contained fund managers of one sort or another. On the BA flight back to London on Wednesday I counted 7 of them in Club. They were all poring over spreadsheets and generally expressing amazement at the fact that growth rates in several sectors in the 20-30% per annum range.
So long as Romania signs the EU Accession Agreement on April 25, which EU Commissioner Ollie Rehn stated as an achievable target, the investment interest in Romania will increase.
From the investors I have met, many are now linking Romania to Ukraine, another large, significantly populated and relatively undeveloped Eastern European country. If somebody had suggested to me when I was here in 1996 that the Romanian boom would finally happen on the back of an unexpected change of Government in 2005, paralleling events, or at least colours, taking place in Ukraine, I would never have believed it.
Perhaps myself, and Romania, was too optimistic to link its development with the Central European countries like Czech and Poland. Now it is finally happening its in parallel with the fast growing economies of Ukraine, Bulgaria and Serbia. If this is looked at from an historical perspective, it is more in line with Romania’s position in this part of the world, similar to the countries of Central Europe but never quite the same.
What is clear is that the next three years will change Romania as much as post-World War II or December 1989. Hold on tight!
* Oliver Meister is an English lawyer based in Bucharest working for CME, a US company that invests in television stations in Eastern Europe, including Pro TV, Acasa and Pro Cinema in Romania. He is also a director of Pro TV SA, the operator of the Romanian television channels CME has invested and is part of the management team that supervises the television station Studio 1+1 which CME owns in Ukraine