ECONOMY

Web connections still a luxury in Bulgaria and Romania

BUCHAREST (Reuters) – The website advertising cheap cigarettes, bread and vodka in the village shop is cutting-edge – in Romanian terms, that is. It is wasted, however, on the little community of Frumusani, 23 kilometers (14 miles) southeast of Romania’s capital. «Nobody owns a computer in the village,» said site designer Bogdan Ghenu, the 21-year-old grandson of the shop’s owner. «But even if they did, they wouldn’t be able to connect to the Internet because there are no fixed telephone lines or cable companies,» he said, adding that he developed the site for fun. According to the European Commission, the EU’s 12, mostly East European, candidates are significantly behind in information technology (IT), with Romania and Bulgaria dragging down the average with the least computers and the lowest Internet penetration. Ghenu’s website (http://www.96 comgyb.go.ro/) would hardly receive rave reviews in tech-savvy countries like Japan or Germany where many might scoff at the out-of-focus photo of a woman behind the counter, the snapshot of the family dog and the image of a living room. Time to modernize But, in Romania, the information technology business is only in its infancy. A survey by market research firm GfK shows that only 7 percent of Romanians own a computer and just 13 percent of the country’s 21.6 million population use the Internet. Data by research company IDC Romania show the figures to be even lower, with a total of 450,000 computers in the country in 2001, compared with 3 million in Poland and 1.2 million in the Czech Republic. Romania and Bulgaria, to be left out of the first wave of the euro bloc’s eastern expansion in two years’ time, know they must modernize their IT infrastructures ahead of joining the EU, which, at the earliest, will come in 2007. According to GfK, a total of 3.6 percent of Bulgarians over 15 years of age have a PC in their households and 11.8 percent of the Balkan country’s population uses the Internet. In Britain, more than 50 percent of the population is online. The price of a new computer, around $500, is a luxury for most people in Romania, where the average salary of about $100 a month barely covers the cost of utilities. And the low penetration of fixed-line telephony, at around 19 percent, keeps many Romanians from using the Internet system. «It’s a matter of development. The number of computers (in the country) is in harmony with Romania’s economic development,» said Liviu Dragan, director of the TotalSoft software company. After four decades under communism and about 13 years of struggling to Westernize its economy, Romania’s government is trying to develop online services and predicts fast growth in the IT sector. «The Internet service providers market will enjoy a 50 percent annual increase. Cable companies are moving fast in the ISP sector,» Communication Minister Dan Nica said at a recent conference on information technology in Bucharest. «To develop an information society, what’s important is to count how many online services you have in the country, not how many computers,» Nica added. But analysts point out that online services have to be widespread in order to be a success. «The information technology market has just begun to grow. But its development will depend on the country’s general progress,» Laurentiu Popescu, research analyst with IDC said. He estimated the number of Internet users would grow by 47 percent to 1.5 million at end-2002 in Romania, compared with a 25 percent growth in the Czech Republic, to 1.3 million, in an attempt to catch up with the regional trend. So far, the main engines of growth in the IT sector in Bulgaria and Romania are governments. According to the Bulgarian branch of IDC, more than 50 percent of the 244 million euros the country spent on IT last year was state administration money. But the data also shows Romania and Bulgaria lag significantly behind in terms of total – state and private – IT spending. In 2001, total spending on IT in Bulgaria represented 2 percent of GDP, while in Romania it was a mere 1.3 percent, compared with 3 percent in Hungary, 3.8 percent in the Czech Republic and 3.8 percent on average in Western Europe. Both Balkan countries have launched numerous projects in the IT sector, some related to their EU and NATO entry process. Bulgaria is striving to upgrade computers in the defense sector and plans to build an electronic income registry, while Romania hopes to put 500,000 computers in schools and to offer online payment of taxes to all taxpayers by end-2004. However, analysts are cautious about the results. «The Romanian IT market is one of the most unpredictable. The government announces many projects, but then drops or delays some of them due to lack of money,» said Popescu.