EXCLUSIVE: Finnish Tornator to invest more in the Romanian forestry, creating more job opportunities

Interview with Zoltán A. KÓSY, Country Manager Tornator Romania about what was the best year for the Finnish company since entering the domestic market, as well as what local authorities should do to draw investors.

Tornator Oyj, as part of Tornator Timberland Group, is the third largest forest owner in Finland. What made the Finnish group focus to Romania’s forests?

Tornator’s investments outside Finland (Estonia and Romania) were implemented under the umbrella of the company’s long term growth and asset as well as market risk management strategy. Various business and growth opportunities as well as target countries were analyzed, including Romania. The main reasons to invest in this country were Romania to become EU member country, positive growth of Romania’s economy and the availability of forests for sale.

How many forestland hectares Tornator currently owns in Romania? Do you have expansion plans for medium-term?

The area of forestland in the property of our local Romanian subsidiary is ca. 12,000 ha. Our local subsidiary has the mutual interest and financial capacity to invest more in the Romanian forestry sector and to create more job opportunities, to promote generating added value as well as to stimulate increasing tax revenues to the state budget, if the business environment in Romania will develop in a positive and investor friendly direction

You are present in Romania for eight years already. How much have you invested during all these years?

The cumulated value of our investments in Romania is over RON 200 million. The majority of these investment funds have been used to buy forest land, but during the last years we have invested over RON 20 million in improving our forest road infrastructure, in the purchasing and renovation of wood sorting station, as well as in the continuous training and development of our local, Romanian personnel.

Through our investments in Romania during the last years we created 22 new jobs in our organization mainly for recently graduated young professionals and we contributed to local and state budget with millions of RON.

Tornator’s Romanian subsidiary is an important player on the domestic market. How do you estimate the financial figures of Tornator will show for this year-end compared to 2015?

2015 was the best year in our Romanian subsidiary’s history, thanks to re-investing our profits into infrastructure development and to continuously improving the professional skills of our local personnel, as well as to the recovery of the local wood market. Thanks to our skilled, motivated and committed local personnel, we expect year 2016 results to be even better than last year – one more new record in good collaboration with our local personnel!

What is the contribution of Romanian subsidiary at group’s financial situation?

The share of our Romanian subsidiary’s forest property area, turnover and profit at the group’s level are 2-3 percent.

Romania ranks 20th in EU regarding the level of forest coverage at end-2015, but below EU average (37 pc), as a recent PwC study reveals. What authorities should do in this respect in your opinion, considering the amendments to the Forest Code?

Romania with its ca. 6.5 million ha of forest is among the 15 European countries with the largest forest areas, although the share of forests of the country’s surface is ca 27-28 percent, which is below EU average. There are extensive degraded land areas all over the country, which are not suitable for agriculture and are not used. These areas should be mapped, analyzed and, if suitable, afforested.

The amendments to the Forest Code should address the responsible use of forests, which is financially feasible, environmentally sustainable and socially responsible. Legislation reforms and amendments to the existing laws and norms should not forget and disclose one of the key principles of EU: private ownership and property use rights of private forest owners to their forests.

Talking about authorities… What should local authorities do so that Romania opens more doors to foreign investors? Since Tornator entered domestic market, have you noticed any change in the local investment environment?

First and most important factors for investors, regardless of being domestic or foreign, are political and economic stability. The business climate and environment in Romania has been fairly turbulent, with unpredictable changes, which has been frightened investors and turned investment capital away from Romania, especially the small domestic investors and their capital.

Second important factor is to get the national legislation harmonized internally and with the relevant EU legislation.

Third is transforming the attitude and mindset of state officials, towards coaching, consulting and income/revenue tax based budgetary fund raising thinking.

Fourth is to keep fighting against corruption at all levels of Romanian society.

Given your experience in the field, at what value do you estimate the forest industry in Romania?

Finland after WWII managed to create and to build one of the world’s highest standards for living and free education sector on the basis of forestry, wood processing and other related industries (=forest cluster).

Romania with its 6.5 million ha of forests has nearly the same potential as Finland had earlier to develop its wood processing industry on the basis of wood: renewable and if responsibly managed, sustainably produced green raw material – however, to utilize this opportunity to benefit national economy and the Romanian people.

It’s necessary that decision makers understand the economic potential and importance of forests especially in the relatively poor rural areas.

Market conditions have notably worsened in the past years due to the economic crisis and Brexit that is on the way, a fact that has driven changes in most industries. How has that affected Tornator’s business strategy in Romania?

Investors became more cautious about the stability of business environment and political climate, especially in developing economies and about the predictability of future changes.

Finland celebrates this year 99 years of independence. What would you like to bring from Finland to Romania as a way of doing business? What is your message for the Finnish investors who want to come to Romania?

From Finland to Romania in doing business: transparency, reliability and partnership thinking.

Message to Finnish investors, who are thinking to enter Romania: It is difficult, but possible!