By Noreen Lucey, Investment Analyst, Property Secrets

This month's round up sees Romania enjoying a boost in FDI while the Baltics seemingly suffered. If you know of any significant FDI we may have missed, email us at investments@propertysecrets.net

Romania

US giant Ford Motor Company will build a new small car model at its Craiova factory with a target of 90 per cent of vehicles for export. The car giant could employ up to 9,000 at the plant in Dolj County which will see investments of 675 million Euros in upgrading the plant. The factory will produce 300,000 vehicles and 300,000 engines annually.

This follows Ford's agreement to pay 57 million Euro to Privatisation Authority AVAS for 72.4 per cent of state-owned Automobile Craiova. The US giant expects to be the new owner by the end of 2007. "We are acquiring a plant with a skilled and enthusiastic workforce and together we will work to transform the plant into an industry benchmark for vehicle manufacturing in central Europe," said Ford of Europe president and CEO John Fleming. The car-maker will employ 7,000 - up from 3,900 currently employed at the former Daewoo Automotive plant and could hire 2,000 more. By 2012 the company estimates it will be spending one billion Euros per year on the plant. Modernisations will include an automated 1,000 tonne press line and a new body construction shop.

Oil and gas SEE market leader Petrom has bought the oil services activities of Petromservice, related to the exploration and production activities of Petrom, in a deal valued at 328.5 million Euros. Petrom will also invest around 90 million Euros in Petromservice over the next few years in technologies and equipments, infrastructure and IT. The deal is pending Competition Council approval, expected by end-2007.

The European Bank for Reconstruction and Development (EBRD) will provide a 15 million Euro loan to Raiffeisen Leasing Romania to support the expansion and further development of small and medium-sized enterprises (SMEs) in Romania.

Saint-Gobain Glass has started the construction of a factory that applies thermal treatment to glass used for production of window panes and glass in Calarasi in a total investment programme of 25 million Euro, said manager Cristina Paveliu.

"We started to work on the plant's foundations last month and are involved in negotiations with equipment suppliers. The production facility will start operations in April next year," said Paveliu.

Ursus Breweries, a subsidiary of SABMiller, will invest 50 million Euro in the expansion and modernisation of the beer plant in Timisoara. Following the investment, the weekly production capacity will increase by 200 percent.

Company officials also included in the investment a new packing line following the sales increase for the Timisoreana brand. Ursus has also invested 50 million Euro last year in expanding the plant in Buzau. The company has an estimated market share of 24 per cent, and is the second largest beer producer in Romania.

European Convergence Development Company (ECDC) investment fund and Romanian-based Dickau Investment will build an 82 million Euro Class A office on DN 1, near Baneasa airport. ECDC said it will stretch over 47,538 sqm and is scheduled for completion by 2012.

Outdoor equipment retailer Jack Wolfskin last month opened its first local store in Sibiu, with plans to open this month in Cluj-Napoca. The Sibiu store is located within Promenada mall and covers 71 sqm. The Cluj-Napoca store will cover 123 sqm and will be located inside Iulius Mall.

Property developer Redevco Europe has set up a joint venture with French developer EMCT Romania, Romanian Retail Development (RRD). The new company will focus on developing retail projects of 25,000-100,000 sqm in some of Romania's important and attractive cities. Total investment over the next five years is expected to exceed 500 million Euro.

Siemens Austria has last month signed a 12 million Euro contract to modernise and expand the public lighting system in Cluj-Napoca. The contract covers 15 years, time during which Siemens will deliver, install and maintain the entire lighting infrastructure in the central-Transylvanian city.

Poland

Toshiba Corp. is utilizing Kobierzyce, Poland as the new site for a production and sales company for LCD TVs. Called the Toshiba Television Central Europe Sp. zo. o. (TTCE), the plant will help meet demand for LCD TVs in Europe, a market for which Toshiba says is the largest for the flat-panel TV format.

Toshiba LCD TVs are already being manufactured in Europe at Toshiba Information Systems (UK) Ltd., but the company says that the second plant in southwest Poland (close to Wroclaw) will help support growing demand, and reinforce the company's presence in the pan-European market. The plant is 223,000 sq. meter, with 40,000 sq. meter dedicated to the building area; and it will employ approx. 1,000 people by 2010. Toshiba targets production of about three million LCD TV units in Europe by 2009, with the main focus on large sized LCD TVs with screen sizes of 32" and above.

Bulgaria

Bulgarian-Israeli Melina will allocate funds for construction of 12 units of a power center chain. The commercial centers are to be built in the marginal part of the cities and include several one-story commercial outlets. The EUR 150 m investment will be made within three years, Jacob Niv, Manager at Melina, said, quoted by Pari Newspaper. The first power center will open within a year in the Bulgarian city of Vratza. Plots have already been purchased in Plovdiv, Vidin and Rousse. Transactions are scheduled to be finalized in cities like Dobrich, Bourgas, Sliven, Yambol, Haskovo and Blagoevgrad.

Globe Trade Center (GTC) and Cinema City International (CCI) has announced the signing of an agreement for CCI to open multiplexes in each of GTC's seven shopping malls to be developed across Poland, Romania and Bulgaria. Under the agreement, Cinema City will lease space from GTC to build and operate one multiplex in Czestochowa, Poland, three multiplexes in Bulgaria (in Varna, Bourgas and Stara Zagora) and three multiplexes in Romania (in Arad, Bistritza and Galati). In total, under the agreement with GTC, Cinema City plans to build 65 new screens in the three countries.

Czech Republic

Carmaker Hyundai Motor Manufacturing Czech (HMMC), which is building its new factory in Nošovice, North Moravia, will increase its basic capital by € 140 million (Kč 3.9 billion), to make a total basic capital of € 160 million. A gradual increase of HMMC's basic capital will finance the first European factory of HMMC's parent company, South Korea-based Hyundai Motor Company. HMMC invested more than Kč 1.5 billion during its first year of operation in the Czech Republic. The total investment should exceed Kč 31 billion. Trial production is planned for September 2008, and batch production should start in March 2009. The factory's initial capacity should be 200,000 cars a year, but should reach 300,000 by 2011.

Czech Finance Minister Miroslav Kalousek and Bahraini Finance Minister Shaikh Ahmad bin Muhammad al-Khalifa signed an agreement on the support and protection of investments. Czech Finance Ministry told CTK. The agreement will create legal framework for investments in both countries and help expand activities of Czech and Bahraini investors, Kalousek said. Experts have agreed on the text of the agreement in 2001 but when the Czech Republic joined the EU, it had to be discussed again, Finance Ministry spokesman Ondrej Jakob said. Trade between the Czech Republic and Bahrain has been growing in the long term and the Czech Republic has a surplus in this trade. Last year, Czech companies exported goods for $3.77m to Bahrain. Czech imports from Bahrain were worth $85,000. Motor vehicles are the main commodity the Czech Republic exports to Bahrain.

US industrial giant General Electric wants to change the Czech company Walter into a world centre for small aircraft engines. General Electric acquired the Czech aircraft engine maker, based in Prague, in August. Scott Donnelly, GE Aviation head and a management member at General Electric, told the paper that so far the company has not produced small engines and that Walter exactly matches its strategy. Donnelly counts on a two-digit growth of Walter's sales a year in the next few years.

Walter's product portfolio will broaden, it will make new investments and also new jobs will be created, he said. GE's aim will be to undermine the dominant position of Canadian rival Pratt & Whitney, the paper said. Pratt & Whitney enjoys over 90 percent of the global market for small aircraft engines, Donnelly said, adding that it would be a success to get 10 percent of the Canadian company's share.

Walter Engines specialises in the production of WALTER M601 series engines designed for commuter, agricultural, and trainer aircraft. The WALTER M601 engine is a free power turbine turboprop engine. The company also produces aircraft certified components and ensures their overhauls. Walter Engines posted sales of Kc564.3m in 2006, exports making up four-fifths of the figure. GE Aviation showed a $2.9bn profit (about Kc80bn) last year. Sales amounted to $13.2bn (about Kc366bn).

Hungary

The Belarus MTZ trade and service center, the first in Europe, opened in Hungary on October 15 investing more than €1 million. MTZ manufacture Belarusian tractors which account for the half of the Hungarian market. Annual sales total about 1.000 tractors. The representative office of the Minsk Tractor Works in Hungary undertook a decision to expand its infrastructure and bought a 60-kilometer plot of Budapest. The trade and service center, build on the plot, will sell the products of the Minsk Tractor Works and provide its guarantee and service. The center includes warehouses for spare components and a ground for displaying Belarusian agricultural hardware.

Dunapack Zrt, owned by Austria's Hamburger GmbH is set to launch a Ft 67 billion investment, constructing a recycling center capable of processing 400,000 tons of paper waste annually and an associated power plant to supply the steam and electricity needed for operation.

Commentary

This month was a case of the usual suspects attracting the bulk of FDI in the CEE region. There was little news from the Baltic countries with the majority of investment going into Romania from the news over the past month. Along with large multinational companies investing in the country, the ERBD is supporting investment in small to medium enterprises also by providing a 15 million Euro loan to Raiffeisen Leasing Romania to support the expansion and further development of small and SMEs in the country. The Czech Republic and Bulgaria also featured in the news however there was little investment news from the Baltic countries of Lithuania, Latvia and Estonia this month.