Seven Reasons for Optimism in Romania

EBRD EE outlook on Romania

Read the latest Outlook on Romania 2017 special report

.

Claudiu Vrinceanu

About Claudiu Vrinceanu

ClaudiuVrinceanu is a former state secretary in the Ministry of Economy in Romania (2015-2017). A former head of Invest Romania department, Claudiu holds two bachelor degrees in Economics and Political Science and an EMBA from the Maastricht School of Management. He was also manager and editor-in- chief of Wall-Street.ro.

Every morning, a gazelle wakes up. It knows it must out run the fastest lion or it will be killed. Every morning, a lion wakes up. It knows it must run faster than the slowest gazelle or it will starve. It doesn’t matter whether you’re the lion or a gazelle, when the sun comes up, you’d better be running.

This African proverb still represents the tenor of the foreign direct investments (FDI) landscape in the Central and Eastern European (CEE) countries; a very attractive region for international players who have decided to expand their business to new destinations. But what is the connection between FDI dynamics, one of the most relevant indicators reflecting the health of an economy, and the behaviour of savannah animals?

Responding to a prospective investor’s needs means to run faster than your neighbouring countries. 2016 marked the best, in the last eight years, in terms of foreign investment in Romania. The amount of foreign direct investments in our country reached close to €4.1 billion in 2016, which was an increase of 18 percent year-on-year. This record level forced all the stakeholders, implied in FDI ecosystem (state representatives, consultants, bankers, lawyers, economists), to be fully committed for better years to come and to attract investors who might be more interested in Romania.

I found seven reasons for optimism in Romania, an economic growth champion in European Union:

The current government is committed to developing the existing Invest Romania platform, which was launched last year, by approaching the promotion of the country correctly. Invest Romania, now present in the Ministry of Business Environment, is the “one-stop-shop” for foreign investors, and an ideal place for an investor to approach in order to have an institutional conversation with public authorities.

There are private and non-governmental projects or actual plans which aim to build bridges between foreign investors and local partners, promoting conversations with public institutions and positioning Romania as an attractive investment destination. The state should be helped in order to raise awareness about Romania as a doing business destination.

Labour costs are still competitive in Romania, despite the highest increase in the EU (up by 12.33 year-on-year). In my opinion, the competitive figures (wages are 20 per cent of the EU average) and the good quality and size of the IT workforce (more than 60.000 specialists) will be drivers of Romania’s strength in the next three years.

State aid schemes and EU Funding instruments continue to be some of the most advantageous sources for financing strategic investments that are available in Romania. Let’s take just one very recent example: EU funds worth €90 million were made available for investors to develop tourism sector.

The public institutions have a strong focus for the developing workforce. Last year a governmental initiative incentivised unemployed people to relocate for work, through a mobility package that covered travel expenses for commuters and it was well appreciated by foreign investors. Moreover, the current government is committed to stimulating companies to invest in the workforce. For example, firms which accept to train apprentices and trainees are reimbursed with the minimum salary.

The expected upgrade for Romania from a frontier market to an emerging market will open the country to many large investors and will also improve the local financial ecosystem.

Romania is attractive, of course, on fiscal side, with one of Europe’s friendliest tax regimes: corporate income and personal income tax are at 16 per cent, one of the lowest in Europe. The new 1 per cent tax rate that is applicable for micro-enterprises with at least one employee became a magnet for small and medium foreign investors. Moreover, the corporate income tax exemption for taxpayers that exclusively perform innovation, research and development activities is well perceived by investors, after last year’s decision concerning individuals who work in research and development or the technological development fields, and who benefited from a complete exemption from tax on their employment income that was attributable to these activities.

Macroeconomic indicators and financial incentives confirm the comparative advantages of Romania in the eyes of foreign investors, but we need to create a fresh story in order to reach two visionary objectives: Romania, in the top ten countries for expansion and co-location projects and Romania becoming the economic star of the CEE based on our reputation and new investments.

Our new story will be based on running faster than our neighbours, not the lion. We, the private environment, teamed with public institutions, should better be at running.

_______________

The views expressed in this opinion editorial are the author’s own and do not necessarily reflect Emerging Europe’s editorial policy.

RELATED ARTICLES

Risky (but Rewarding) Business

risky business

Alexandru Petrescu: Romania Is Working to Solidify the Highest Growth Rate in Europe

BUCHAREST ROMANIA - MAY 1: Unidentified people relax and socialize in the green area of the Promenada Mall on May 1 2014 in Bucharest Romania. The mall has a gross floor area of approx. 110000 m.

Romgaz and GE Partner in a New Power Project

romania GE

Romania Can Foster German Partnership

frankfurt emerging europe

Romania Will Be a Hot Topic in Europe

Princess Marina Sturdza: Things Are Bound to Improve for Romania

Central square in Iasi town Moldavia Romania

Poland and Romania: Almost 100 Years of Friendship That Is Still Growing

warsaw poland emerging europe

It’s Time for Romania to Roar

outsourcing romania emerging europe global sourcing association

Changing Perspectives and Showing That True Romania is a Vibrant Innovative Country

Driving the Romanian Automotive Industry

opel romania

Romanian IT Business Statistics Are Promising

ANIS romanian ICT

Romanian Banks Must Use Lessons Learned

romania emerging europe banks

Political In-fighting Must Be Resolved

Sorin Grindeanu

Romania Needs to Follow its EU Membership With Some Sweeping Reforms to Avoid Stagnation

Bucharest Romania - March 07 2016: Bucharest Sky Tower Business Center. Bucharest urban landscape.

The Goal for Romania — the Positives Outweigh the Negatives

ebrd emerging europe romania

People Power Reminds the Government of the Rule of Law

Romania’s Short-Term Prospects Remain Solid

romania economist

Merging and Growing Romania’s Outstanding Broadband and Other Infrastructures

electrogrup emerging europe

Romania To Stay Close After Brexit

Greg Hands

Netherlands and Romania’s Love-Match Continues

romania netherlands emerging europe

Romania Could Catch Up in Innovation

innovation emerging europe

Juncker’s “More, Together” Offers Romania a Better Future

aspen institute romania emerging europe

Romania’s Infrastructure Development Is Slow

roads romania

Surprising Resilience of Romanian Social-Democrats

BUCHAREST ROMANIA - June 21 2017: Liviu Dragnea President of Social Democrat Party speaks in front of Parliament during a no-confidence vote against Sorin Grindeanu's Cabinet.

Building on CEE’s Established Reputation for Quality and Value

Robust First-Quarter Growth in Romania

emerging europe romania brasov

Romania’s EU Membership Was Slow to Be Appreciated But Now the Tide Is Turning

Romanian Palace Of Parliament

Nurturing a Needed Knowledge and Innovation Culture

It cluster cluj

Office Real-Estate Is Burgeoning in Romania

romania office space emerging europe

Romania’s Government Plans to Grow the Country’s Already High ICT Reputation

romania ICT emerging europe

A Country of Beauty and Warmth That Will Reward Those Who Visit With an Open Mind

Cityscape Brasov

The Competitive Edge in Central and Eastern Europe

SOFIA BULGARIA - MAY 5: View of the Ivan Vazov National Theatre in Sofia on May 5 2016. Sofia is the largest city and capital of Bulgaria.

Romania in 2017 in Brief

romania emerging europe

A Family Between Britain and Romania

london emerging europe

Romania’s European Values Are Changing Public Misinformed Opinions

world bank emerging europe

The Bucharest Stock Exchange Has Started the Year on a Promising Note

stock exchange bucharest

Romania — Decades After Two Milestones

View of Palace of Parliament in Bucharest Romania

Romanian Wine: A Growing Opportunity

halewood wine

Romania’s Economic Outlook Is Bright

Different Romanian Lei Banknotes on the table

Romania Says No to Corruption

Corruption romania

Romania’s 140 Years of UK Cooperation

Romanian Market Moving Towards Rebalancing

Privatisation, Past and Present in Romania

energy privatisation romania emerging europe

Can Romania’s success last longer?

brasov adecco emerging europe

What Was First on the Romanian Table?

food romania dragut emerging europe

20 Years of Romanian-US Cooperation

usa romania emerging europe

Romanian Upgrade to Emerging Market is on the Cards

Romania capital market

Romanian Wine Is Making a Comeback

Romania Works to Cement its Position in the EU

european union

Leave a Reply

Your email address will not be published. Required fields are marked *