FDI in Figures
FDI in Romania amounted to USD 5.1 billion in 2017, up by 3% compared to the same period of 2016, according to data by the Romanian National Bank (BNR) and UNCTAD. Equity investments, including reinvested profits, totaled EUR 3.5 billion while intercompany lending recorded a net value of EUR 875 million. The total stock of FDI stood at USD 88.2 billion (46.5% of GDP) at the end of 2017 (UNCTAD 2018 World Investment Report).
Though the recent political tension could hinder investments, Romania has numerous advantages: in addition to a large domestic market, the country has a strong industrial tradition, coupled with a cost of labour among the lowest in the EU. This has been the reason for the development of a significant industrial sector, particularly car making, but also services. Furthermore, on 1 January 2018 additional tax cuts came into effect, making Romania one of the lowest tax jurisdictions in the EU. The low tax regime favours industrial investment and start-up initiatives equally. Romania ranked 45th out of 190 economies in the 2018 Doing Business Report, issued by the World Bank.
The distribution of foreign direct investment by sector shows a lead of the industrial sector (more than one-third of the total), with the metallurgy industry standing out. Other sectors have attracted investors, such as banking and insurance, wholesale and retail, energy, construction and telecommunications. The regions that attract the most foreign capital are Bucharest (more than 60% of the total), the centre and the south. The main investors in Romania are France, Austria, the Netherlands and Germany.
What to consider if you invest in Romania
The main assets of the country for attracting foreign investment are:
The country's accession to the EU since 2005 has allowed it to improve the country's international relations and put an end to its relative isolation
The introduction since its accession to the EU of prudent monetary measures that have enabled the country to gain the confidence of foreign investors
A relatively low level of public debt and a favourable growth rate: from 3.9% in 2015 to 6% in 2017 (Euler Hermes, 2018)
A relatively large domestic market with almost 20 million inhabitants in 2018
A qualified and low-cost workforce
A strong agro-food industry (wheat, barley, rapeseed, etc.)
The main weaknesses of the country are:
Persistent political instability
Large scale corruption, including the government's inability to make good use of the European Union's aid funds
A large informal economy
Judicial, legislative, fiscal and regulatory unpredictability weakening the confidence of the business community
A relatively poor population with limited purchasing power
Fragility in the banking sector, which does not discourage investment and entrepreneurial risk taking
High debt in foreign currencies the private sector
High external debt of the country
Government Measures to Motivate or Restrict FDIRomania is actively seeking to attract foreign direct investment and has taken steps to strengthen tax administration, improve transparency and create legal means to resolve contractual disputes quickly. Similarly, since 2009, the various governments have been able to reduce the budget deficit from 9.1% of GDP in 2009 to 3.6% in 2017.
The rise in wages, and in particular the minimum wage at RON 1 450 (about EUR 320), makes it possible to boost growth through sustained household consumption. Finally, the application of a new tax code, adopted in September 2015, allowed the introduction of numerous tax adjustments in favour of the liberalisation of the economy, including a reduction of the VAT rate from 24% to 19% in 2017 and a dividend tax reduction of 16 to 5% in 2017.
Bilateral Investment Conventions Signed By RomaniaRomania has signed bilateral agreements on investments with 96 countries.
To see the list of countries, consult the UNCTAD Investment Policy Hub.
Procedures Relative to Foreign Investment
Freedom of Establishment: Yes.
Acquisition of Holdings: Taking the majority shareholdings of a Romanian company is allowed.
Obligation to Declare: The Foreign Investment Directorate of the Ministry for Foreign Investments and Public-Private Partnerships can inform one about the necessary requirements to set up a business.
Competent Organisation For the Declaration Foreign Investment Directorate, Department for Foreign Investments and Public-Private Partnerships.
Requests For Specific Authorisations: Specific authorisations or licences in some strategic sectors, such as energy, environment, etc. Foreign investment must comply with environmental protection, national security, defence, public order and public health interests and regulations.
Find out more about Investment Service Providers in Romania on GlobalTrade.net, the Directory for International Trade Service Providers.
Tenders, Projects and Public Procurement: Tenders Info, Tenders in Romania, Ted - Tenders Electronic Daily, Business opportunities in the EU
Globaltenders, Tenders & Projects from Romania, DgMarket, Worldwide Tenders