Romanian Economy – Doing Business In Romania
The Romanian economy is one of the world’s fastest developing markets outside of Asia. As the largest in south-eastern Europe and the second largest in CEE, Romania is characterised by a rising GDP, high-growth and rapid investment. It’s a region that is rich in land and energy resources, as well as being a strong manufacturing base with a low cost work force.
Geographically placed at a cross roads of the major EU, Commonwealth of Independent States and Middle Eastern markets, doing business in Romania means being at the centre of three important pan-European corridors. These have links with Europe from west-to-east and north-to-south, while water transport not only comes inland via the Danube but also at the Black Sea via Romania’s largest seaport at Constanta.
Now a part of the EU single market and NATO, Romania is split into 42 counties, divided among eight development regions, all aimed at supporting and stimulating economic growth. Areas of great potential due to the region’s extensive natural resources include tourism and agriculture, energy and services. Automotives, IT & ICT, green energy, oil and gas, pharmaceuticals, food production, aeronautics, shipyards, R&D and mining are also dynamic sectors. While those recording the highest growth, with the most potential include transport, telecommunications, banking, insurance and, again, tourism.
Greatly improving on the disappointing 1.8 billion EUR of EU Cohesion Policy funding for the period of 2007 to 2013, prospects are looking more positive for doing business in Romania with its most recent 22 billion EUR endowment, received for the period of 2014 to 2020. Public investment will continue to focus on regional operations, infrastructure and transport, as well as the environment. Green energy remains a priority, with the government aiming to invest a projected 18 billion EUR of EU funding into meeting its ‘20-20-20’ target, by establishing new sources of renewable energy across biomass, hydro, solar, wind, geothermal, bio fuels and others.
For businesses looking to invest in the economy of Romania, the government offers opportunities for PPP priority projects. In 2013, a PPP agreement was signed between Remat Group Management and BS Recycling with the country’s economy ministry, to invest approx. 1.9 million EUR in modernising the dolomite and limestone mine of Bihor county. Meanwhile, significant moves towards privatising major state corporations across railway freight, chemical production, mining and energy are underway, while the government has also implemented three SEZ locations offering aid, exemptions and fiscal incentives for new enterprise.
Right now, there are several road projects under way and boosting the economy in Romania, including the Comarnic – Brasov highway, with EU funds of over 4.5 billion EUR being allocated to motorway construction and rail rehabilitation. Government support is also focussing on investment and initiatives across crafts production and manually manufactured products, while developing and establishing business and technological incubators.
One sector with the greatest and most diverse potential for business in Romania is tourism. The region is teeming with attractions, across its awesome natural beauty, historical rural architecture and small wood and craftwork industry. There are three biosphere reservations in a country that also boasts a third of the natural springs of the whole of Europe. That means a wealth of areas enjoying natural therapeutic factors and the opportunity for business and investment in ecotourism that comes with it.
According to the World Bank the Gross Domestic Product (GDP) of the economy of Romania in 2012 was worth approx. 122 billion EUR. The country averaged approx. 55 billion EUR from 1987 to 2012, peaking at 147 billion in 2008. During the GEC to follow though, Romania fell into a deep recession but moderate growth has resumed. In 2014, the country was awarded its highest economic freedom score to date, reaching 65.5 and making it the 62nd freest economy in the world, the 29th out of 43 in Europe. But most importantly, this new peak means the country has advanced 23 points in 20 years, the eighth best improvement of any country and a fair indication of the possiblity for exponential growth. With further strucutral reforms and government efforts to privatise the rail, mining, and petrochemical sectors to come, the Romanian economy is primed for a comeback.