Cluj IT Cluster president: this is the future of Cluj for next 30 years

From paper to reality, Cluj Innovation City, the biggest project of the Cluj IT Cluster, will see the building of 33 research facilities with projects in the fields of bioeconomy, IT, medicine, renewable energy and the environment. Alexandru Tulai, president of the Cluj IT Cluster, outlines what it will take to realize this project and what benefits Romania will reap from it.

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By Otilia Haraga

Under what terms did City Hall place the 202 hectare plot at the disposal of Cluj Innovation City?

We have not reached the stage of defining the form of City Hall’s contribution. We have the agreement of all the entities that will constitute Cluj Innovation City Foundation. This is the non-profit body that will run the site. This does not mean it will own it; it is a non-profit foundation with the sole target of preserving the use of this location, no matter what. With the approval of this foundation, investors can come and build facilities such as centers, campuses, residential and business compounds. The foundation must check that the investment fits the purpose of the site.

The 202 hectares is a compact space. By a happy coincidence, construction has already started because the City Hall started two projects there a number of years ago. Three weeks ago, the construction was on its second phase. The buildings underway are the Center for Creative Industries and IT and the Business Accelerator. There will now be a tender for a four-lane road, with all the utilities included. All these objectives have been financed. When the investment in infrastructure is done, we will populate it directly with those who give it life and the critical mass of projects that will give it financial sustainability.

Where will the road start from and where will it go?

The road will link the site to the outskirts of Cluj, 8 kilometers from the city center. The budget is already set, and the road will be 4 kilometers long.

In order to attract private financing, since the bulk of the money will come from private sources, the first step must be made from public funds. Why? Because when the state invests in that area, you can start to build trust that particular investment is secure from the point of view of its purpose.

We are now working hard to obtain government co-financing but also EU financing, as part of the PORU and POSCCE directions. The Cluj City Hall is responsible for financing the utilities.

What benefits do you expect to reap within the next five-six years?

At this point, we see two types of benefits. Judging from the statements of the government officials, you have probably realized that the re-launch of agriculture and re-industrialization can no longer be postponed. We are not the first state thinking about this. Recently, France has modified the structure and name of its Ministry of Industry, which has become the Ministry of Industrial Reconstruction. We will have to do that too. We are directly involved in drafting the development strategies of the Cluj metropolitan area. This is the second exercise done by the Cluj City Hall.

The team was pretty sizeable, counting several dozen people, who conducted pro-bono activity that will benefit the entire community.

The second benefit will be the regional development strategy. This means new markets that we are creating, because at the moment they do not exist. We have managed to set the state wheels in motion and gain support for setting up productive units, be they in agriculture or industries, connected to the needs of the region. We want to set up some organisms that facilitate organizational and technical know-how. Let us not forget that Romania’s most important resource is that it is a large marketplace that is currently occupied by others. We are making efforts to make the transition from outsourcing to collaboration, which means participation with intellectual property and where it is possible, to enter with our own products.

What do you mean by regional development and what talks have you had so far?

When I say regional development, I mean first of all the north-east of Transylvania. Then, we are thinking of all this part of Europe, which includes Transylvania and has the same type of mentality. It is no secret that all countries in the region or parts of them were once part of an empire. The mentality has stuck and people act in a certain way, so there is a clear difference between the way things work here compared to Moldova or the south of the country. It is encouraging to form relations with like-minded people because the largest obstacles in the way of IT product exports are cultural.

For instance, at the invitation of the Steinbeis Foundation from Baden-Württemberg, we were invited as observers for one stage of one of their projects. They have 18 partners, from northern Italy, Slovenia, Hungary, Slovakia, the Czech Republic, Poland, Austria and Germany.

Our first emergency is to speed up or start the technological transfer because this is the symptom I have identified in all ex-communist countries, the stage that does not happen. Everything remains on paper. The Steinbeis Foundation was founded 30 years ago with the aim of kickstarting the economy of Baden-Württemberg, a place with over 160 functional clusters. This foundation was financed by the German state to promote innovation as a socioeconomic growth engine. And they actually did it. The Austrians succeeded too. If we manage to follow in their footsteps, we will be the third.

When will the tender for the construction of the facilities take place?

In about a year, when all the documentation is ready. But there will be a tender only if the investment is made from public funds. The financing will be mixed: all types of public funds plus private investments. We have had discussions with several groups of private foreign investors who are very interested in coming here and making investments in infrastructure. The first sign came in October when we were at ExpoReal. The interested investors came from Switzerland, Luxembourg, the Emirates and the United States. This year, we will go again to ExpoReal, but already with the blueprint, and we will show them the available facilities and the taken ones.

How many and what types of facilities are we talking about?

At the moment, there are 33 research institutes. The research will be done according to the development strategy and direct contact with the territory. Each institute must solve one problem – for instance, if there is one type of agricultural farm that we want to replicate in various locations, like a franchise. In this case, there is a need for specialists in agricultural technologies, in equipment, economists and sociologists. So, each of the universities makes its contribution.

What are the Cluj IT Cluster’s most important projects at the moment?

Cluj Innovation City is the largest project right now. There are also four projects in the implementation stage.
Of course, we have more projects than officially announced. The cluster is organized based on commissions, for instance the e-health commission, which gathers various companies specialized in branches of telemedicine technologies, together with the University of Medicine and Pharmacy. Some of the firms were part of the cluster and some were from outside it. So, we do not impose restrictions. From the discussions, it emerged that there are villages in Romania that do not have access to any medical assistance. So, one could train a worker from City Hall, on equipment with electrodes, to provide minimum diagnostics from a distance.

However, the first field that will be approached intensely will be bioeconomy because right now we are importing 70-80 percent of the agricultural and industrial output, while Romania is the third biggest agricultural power in Europe, by resources. Our agriculture is at subsistence level. But on the other hand this gives us a competitive advantage because we have become one of the most important genetic databases of local varieties. Intensive agriculture is done with GMOs for productivity reasons. The problem is that the whole crop is vulnerable to the same pest. If there is a diversity of local varieties, in the worst case scenario, one third or half of the crop dies. It is true, there is a difference in productivity, but after all, what are you interested in? Eating a lot or eating healthily?

There is very high potential in agriculture in the area. In Ceausescu’s time, the hierarchy of communist collective farms, based on the volume and quality of production, looked like this: in first place was one in the Baragan area, second was systematically the CAP in Campia Turzii. It could not be in first place because it was not from the right province. There are some good agricultural areas, such as the Transylvania Plain, the Western Plain and the Banat Plain.

What conditions must a company meet to become part of the cluster?

The conditions are very simple. There are four types of entities in the cluster: IT companies, universities, local authorities (of which there are only two) and a catalyst NGO, to promote innovation. There are members of the cluster from Bucharest, Brasov, Alba-Iulia and Targu-Mures. We have a code of ethics based on which we function and based on which companies can exit the cluster.

They must also pay a fee, which for an IT company, no matter how small, is not a problem. In exchange, they have the right to put a lot of other money into the projects of the cluster and have an ROI.

When we were founded, in October 2012, there were 23 companies, now there are about 32. We don’t necessarily want large companies to be part of the cluster. We have had discussions with IBM about a partnership. We proposed a partnership that was different: we come up with projects that you are interested in, which we could develop together as co-owners. So far, they have not taken up our offer.

The necessary financing for Cluj Innovation City is around EUR 300 million. Have you applied for EU funds?

In order to apply for EU funds, we need to make feasibility studies, and this in itself is rather expensive, costing around EUR 400,000-500,000. This money does not grow on trees. There is no point in talking to someone who wants to make an investment, if you don’t have the feasibility study in place so that they can see what investment they can make. The EUR 300 million covers the investment in infrastructure in the first stage.

Mayor Emil Boc did not exaggerate at all. This is the future of Cluj for the next 30 years. Do you think it is a lot to pay EUR 1 million for the studies part, for the next 30 years? Do you know how much work lies behind the modest results we have now? Just remember that in Romania so far nobody has managed to get all the political parties, the public administration and six public universities, round the same table. One of them alone has 1,800 employees and a senate of 139 members that must make a decision. Not to mention that all these things were done outside working hours.

What benefits will Romania reap in the coming years?

The most important benefit is the massive creation of new jobs, a general need around the world. Approximately EUR 80 billion of EU funds has been allocated to innovation alone, during the 2014-2021 budget. Of course, you must have the know-how and the network to access that money, and thirdly, the results of the delivery must be validated. For instance, in the case of IT projects delivered in Bucharest in the public sector, nine out of ten are failures, according to the statistics of the Ministry of Communications and Information Society.

There are two stages for which services can be offered: the production and consumption stages. Look at Germany, where internal consumption works very well.

When you create jobs, this leads to another immense benefit, the appearance of the middle class. These are generally the people who lead small firms. What the political class lacks right now is managerial experience in business.

The third benefit is a flexible and robust economic structure, and here I am referring to the German model, where more than half of the GDP is produced by SMEs and more than three quarters of the active population is employed by SMEs. That economy cannot fail.

How many specialists will be employed at the Cluj IT Cluster projects?

In the next five years, we estimate between 20,000 and 30,000 specialists. At the moment, some 5,000-6,000 specialists will be moving to the Innovation City for sure.

There are four areas of action: bioeconomy, IT, medicine, renewable energy and the environment. Bioeconomy and healthcare have the best outlook, given the resources in Transylvania.

Otilia Haraga

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