romania – top destination for investment bucharest, october 2007 romanian agency for foreign...
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Romania – Top Romania – Top Destination for Destination for
InvestmentInvestment
Bucharest, October 2007
romanian agency for foreign investmentromanian agency for foreign investment
by Oana NisioiHead of Investment Promotion
Department
2
Structure of the Structure of the PresentationPresentation1.Geo-strategic position
2.Macroeconomic outlook
3.Valuable human potential
4.FDI performance
5.Infrastructure development
6.Investment legal framework
7.Potential sectors for development
8.ARIS – one stop shop
1. Geo-strategic position1. Geo-strategic position
4
Romania’s Geo-strategic PositionRomania’s Geo-strategic Position
Our friend the wind
AreaArea
238,391 km2
92,043 sq mi.
the 9th in the 9th in EUEU
PopulatioPopulationn
21.6 mill inhabitantsthe 7th in the 7th in
EUEU
Capital Capital citycity
Bucharest1.9 mill inh
Member Member ofof
EU, WTO, IMF, WB, NATO
5
Romania’s Strategic LocationRomania’s Strategic Location
Helsinki – Kiev - Bucharest –Odessa/AlexandropoulosIXIX
The Danube river2,300 km long
VIIVII
Dresden/Nuremberg - BucharestConstanta/Thessaloniki/Istanbul
IVIV
Pan European Pan European
Transport CorridorsTransport Corridors
The Eastern border of The Eastern border of the inland European the inland European
Union Union
Strategic position at Strategic position at the turning point where the turning point where EU meets the Balkans EU meets the Balkans
and CIS countriesand CIS countries
2. Macroeconomic outlook2. Macroeconomic outlook
7
4.1%
7.7%
6.5%
8.4%
5.2%5.1%5.7%
2.1%
2000 2001 2002 2003 2004 2005 2006 2007e
Significant Potential for Significant Potential for GrowthGrowth
2006
Rapid & sustainable GDP growth;
7.7% in 2006, based on increases in final consumption by 11.5% and in investment by 16.1%;
Highly comparable with EU25 GDP growth rate of 2.9% in 2006.
Source: EUROSTAT, *forecast Source: National Institute of Statistics
GDP Growth RateSlovakia 8.3%
Romania 7.7%
Czech Republic*
6.1%
Bulgaria 6.1%
Poland 5.8%
Slovenia 5.2%
Hungary 3.9%
8
Declining InflationDeclining Inflation
Consolidation of low inflation (sustainable disinflation);
3.66% (Mar'07/Mar'06), a record low for the post-1990 period;
Source: EUROSTAT Source: National Bank of Romania
Inflation Rate
4.0% 3.8%4.86%8.6%
40.7%
30.3%
17.8%14.1%
9.3%
2000 2001 2002 2003 2004 2005 2006 2007e 2008e
Annual Inflation Annual Inflation RateRate
Dec'06/Dec'05
HungaryHungary 6.6%6.6%
BulgariaBulgaria 6.1%6.1%
Romania 4.9%
SlovakiaSlovakia 3.7%3.7%
SloveniaSlovenia 3.0%3.0%
Czech RepCzech Rep 1.5%1.5%
PolandPoland 1.4%1.4%
3. Valuable Human Potential3. Valuable Human Potential
10
Human CapitalHuman Capital
Young population (more than 55% is under the age of 40 and 37% is between 25 and 49 years old)Almost 21.7 million people
Demographics
Talent pool160 higher education institutions109 thou university graduatesAvailability of technical engineersHigh industrial experienceFlexibility
Cities with more than 100,000 inhabitants
more than 1,000,000 inhabitants
300,000 – 400,000 inhabitants
200,000 – 300,000 inhabitants
100,000 – 200,000 inhabitants
Source: National Institute of Statistics
11
Law9%
Arts2%
Engineering23%
Education31%
Medicine5%Economy
30%
University graduates in Romania
(by education field)
ValuableValuable Human PotentialHuman Potential
high performances in international competitions
high percentage of technically competent professionals (23% are engineering graduates out of 720 students enrolled)
highest growth rate of IT specialists in the region (Annually 7000 university graduates in the software field & More then 3.000 students in 105 local Cisco academies)
Source: National Institute of Statistics
strong language skills (English, French, German, Italian, Spanish, Russian, etc.)
large skilled labor force at comparatively low wage rates
12
181326
504637648
713
1213
Slovenia Czech Rep Ungaria Poland Slovakia Romania Bulgaria
CompetitiveCompetitive Labor CostLabor Cost
174 179 204267
326380
2002 2003 2004 2005 2006 2007e
Regional ComparisonRegional Comparison2006 - EUR2006 - EUR
Gross monthly wagesGross monthly wagesEUREUR
Source: Vienna Institute of International Economic Studies; National Institutes of Statistics
The average gross monthly wage in Romania is the second lowest after Bulgaria
It is expected to grow by 16.7% in 2007
4. FDI Performance4. FDI Performance
14
1147 1294 1212
5183 5213
9082
1946
2000 2001 2002 2003 2004 2005 2006
Inward FDI FlowsInward FDI Flows
2006
Record value in 2006;
FDI Stock over EUR 30 bill (1990 –2006);
In the first 7 months of 2007 – EUR 3.6 bill
Source: Vienna Institute of International Economic Studies
Source: National Bank of Romania
Annual Inward FDI1 Poland 11093
2 Romania 9082
3 Hungary 4874
4 Czech Republic
4752
5 Bulgaria 4105
6 Slovakia 3324
7 Slovenia 303
EU
R
million
15
the the NetherlandsNetherlands AustriaAustria GermanyGermany GreeceGreece FranceFrance
4.264.26bill EURbill EUR
3.383.38bill EURbill EUR
2.342.34bill EURbill EUR
1.861.86bill EURbill EUR
1.831.83bill EURbill EUR
SwitzerlandSwitzerland ItalyItaly CyprusCyprus USAUSA HungaryHungary
1.561.56bill EURbill EUR
1.501.50bill EURbill EUR
0.820.82bill EURbill EUR
0.570.57bill EURbill EUR
0.420.42bill EURbill EUR
Major Investing CountriesMajor Investing Countries(1990-2005)(1990-2005)
1 2 3 4 5
6 7 8 9 10
Source: National Bank of Romania
5. Infrastructure Development5. Infrastructure Development
17
BUCURESTIFETESTI
CERNAVODA
GIURGIU
DROBETA TR. SEVERIN
ARAD
TIMISOARA
DRAJNA
ORADEA
BORS
NADLAC
LUGOJ
DEVA
ORASTIE
SEBES
SIBIU
PITESTI
CONSTANTA
MIHAILESTI
CAMPIATURZII
TARGU MURES
SIGHISOARA
FAGARAS
BRASOV
PREDEAL
COMARNIC
PLOIESTI
BUZAU
FOCSANICRISTIAN GHIMBAV
BICAZ
PRAID
SOVATA
PIATRA NEAMT
GHEORGHIENI
SABAOANI
ALBITA
CRAIOVA
CALAFAT
IASI
Highway Infrastructure Development - 2013
CLUJ NAPOCA
18
ARADARAD
CRAIOVCRAIOVAA
TIMISOATIMISOARARA
BAIA MAREBAIA MARESATU SATU MAREMARE
CLUJ CLUJ NAPOCANAPOCA
ORADEAORADEA
TARGU TARGU MURESMURES
SIBIUSIBIU
OTOPEOTOPENINI
IASIIASI
BACAUBACAU
SUCEAVSUCEAVAA
M. M. KOGALNICEANKOGALNICEAN
UU
BANEABANEASASA
MANGAMANGALIALIA
CONSTANCONSTANTATA
BRAILABRAILA
GALAGALATITI
OLTENIOLTENITATAGIURGIGIURGI
UU
SULINSULINAA
CORABICORABIAA
DROBETA TR. DROBETA TR. SEVERINSEVERIN
Ports and AirportsPorts and Airports
International flights
Domestic flights
TULCEATULCEA
CARAS-CARAS-SEVERINSEVERIN
ORSOVORSOVAA
CALARACALARASISI
19
Mobile Communication Mobile Communication InfrastructureInfrastructure
– coverage area -– coverage area -
Consolidated market;
Major international players;
More than 90% network coverage.
20
Map of Industrial ParksMap of Industrial Parks
More than 40 Industrial Parks
Both private & public
Greenfield & Brownfield
Access to utilities
Package of services offered by the park administration
Wide variety of activities to be developed
Some created for high-tech activities
6. Investment Legal Framework6. Investment Legal Framework
22
CompetitiveCompetitive TaxationTaxation
Corporate Corporate TaxTax VATVAT
Social ContributionsSocial Contributions
EmployeeEmployee EmployerEmployer
BulgariaBulgaria 10% 20% 12.43% 24-24.7%
Romania 16% 19% 17% 30.75-42.95%
HungaryHungary 16% 20% 13.5% 33.5%
PolandPoland 19% 22% 18.71% 17.23-20.12%
SlovakiaSlovakia 19% 19% 13.4% 34.4%
Czech Rep.Czech Rep. 24% 19% 12.5% 35%
SloveniaSlovenia 25% 20% 22.1% 16.10%Source: CEE-CIS Tax Notes - Source: CEE-CIS Tax Notes - PriceWaterhouseCoopersPriceWaterhouseCoopers
Many Central and Eastern European countries reduced Many Central and Eastern European countries reduced considerably their corporate tax in order to diminish the considerably their corporate tax in order to diminish the fiscal burdenfiscal burden
23
New Investment LawNew Investment Law Incentives for investments in Romania in:
regional development (including infrastructure)
environment protection
research and development
human resources and social inclusion, including
training
Directed according to economic status of
each region
Law expected to be passed by end of this
year, beginning of next year
24
EU grant programmes – Structural EU grant programmes – Structural Instruments and Agriculture FundsInstruments and Agriculture Funds
European Fund forRegional
Development (EFRD):• infrastructure + local
development• job creation +
maintaining• heath + education
European Social Fund (ESF)
• employment + training
Cohesion Fund (CF)• large transport +
environmentprojects
Structural Instruments (1+2+3)
Structural Funds (1+2)
European Fund for Agricultureand Rural Development (EFARD)
Fisheries Fund
Agriculture Funds
For post accession funds - the total amount allocated for the period 2007-2013 refers to more than Euro 33 billion;
For structural & cohesion funds, the allocations are estimated around 19 bill euro & for agriculture, rural development and fisheries more than 7 bill euro.
25
Structural funds channeled by Structural funds channeled by Operational ProgrammesOperational Programmes
Operational Programme
Managing Authority
IncreasingCompetitiveness
Ministry of Economy and Finance
Regional Tourism
Ministry of Development,Public Works and
DwellingsMinistry of SMEs, Trade,
Tourism and Self-Employed
Development of HumanResources
Ministry of Labour, Family
and Equal Opportunities Transport Inter-modal transport
Ministry of Transport Operational Programmes of interest toOperational Programmes of interest to
businessbusiness
7. Potential Sectors for 7. Potential Sectors for DevelopmentDevelopment
27
Potential Sectors for Potential Sectors for InvestmentInvestment
Manufacturing Wood processing
Automotive components
Construction materials
IT & Communication Textile industry
Energy (non-conventional)
Food processing
Electric & Electronics Pharmaceuticals
Real Estate Infrastructure
8. ARIS – one stop shop 8. ARIS – one stop shop for foreign investorsfor foreign investors
29
Who is A.R.I.S?Who is A.R.I.S?
Governmental body under
the authority of Prime Minister
In charge with attracting and
retaining foreign direct investment
Interface between
investors and central & local
authorities
Providing free of charge
SERVICESSERVICES for foreign
investors in Romania
Search and advice on the best location in Romania to fulfill the company' needs
including site search, analysis &
touring around
Search for industrial
and service suppliers
Value added information on
incentives and other
administrative procedures
SERVICES
Thank you Thank you for your attention!for your attention!
tel: +40 21 233.91.03tel: +40 21 233.91.03
fax: +40 21 233.91.04fax: +40 21 233.91.04
email: aris@arisinvest.roemail: aris@arisinvest.ro
website: www.arisinvest.rowebsite: www.arisinvest.ro
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