romania a strategic choice - bvmw
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Romania A Strategic Choice May, 2020
2004 - NATO membership
2007 - EU membership
2019 - EU Presidency
Strategic US-Romanian
partnership
Area: 238,391 km2
Capital: Bucharest
Population: 19.4M
(1st Jan 2019) Bucharest Metropolitan Area: ~3M
Currency: RON RON/EUR: 4.75
(2019)
Bridge between East and West for 500M consumers market
GDP Growth 4.1%
FDI flows € 5.3B
FDI stock € 86.4B
Romania - Country overview
20
19
2nd largest country in CEE
Largest country in SEE in
terms of size (the 9th in EU28)
and population (the 7th in
EU28)
At the crossroads of 3 great
markets: the European Union,
the CIS (Commonwealth of
Independent States) and the
Middle East
At a glance
4,7
8,0 7,2
[VALUE]
-5,5
-3,9
2,0 2,1 3,5 3,4 3,9
4,8
7,1
4,4 4,1
2005 2006 2007 2008 2011 2012 2013 2014 2015 2016 2017 2018 2019
Forecast
2020: 4.1%
GDP growth (%)
(Source: National Commission of Strategy and Prognosis)
2009 2010
Potential for growth
(Source: National Institute of Statistics)
10,0 15,0 21,9 34,5 42,8 48,8 48,8 51,4 53,7 57,9 60,0 60,2 64,4 70,1 75,9 81,1 86,4
1,9
5,2 5,2
9,1
7,3
9,5
3,4
2,3
1,7
2,5 2,7
2,4
3,5
4,5 4,8
5,3 5,3
0,0
1,0
2,0
3,0
4,0
5,0
6,0
7,0
8,0
9,0
10,0
0,0
10,0
20,0
30,0
40,0
50,0
60,0
70,0
80,0
90,0
100,0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
FDI stock FDI flows(Source: National Bank of Romania)
FDI stocks for 2009-2018 were recalculated based on the BPM6 methodological framework
(EUR Bn)
FDI Flows and Stock
4,8
7,9
5,6 6,1 5,8 [VALUE]
4,0
1,1
-0,6 -1,5
1,3
4,6 3,8
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Forecast
2020: 3.1 % (Source: National Commission of Strategy and Prognosis)
Inflation started to be on a positive trend at the beginning of 2017 due to the persistence of the internal inflationary
pressures associated with the increase of aggregate demand and the rise in wage costs.
(Source: National Institute of Statistics)
Inflation rate (%)
Inflation
7,1 7,2 6,4
5,6 6,5
7,0 7,2 6,8 7,1 6,8 6,8 5,9
4,9 4,2 3,9
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Forecast 2020: 3.8% (Source: National Commission of Strategy and Prognosis)
(Source: National Institute of Statistics)
Unemployment rate (%)
Unemployment
Note: Denmark, Italy, Cyprus, Finland and Sweden have no national minimum wage
(Source: Eurostat)
312 430 466 487
546 575 580 584 607 611 741 758 777
941 1 050
1 539 1 584 1 594 1 599 1 636 1 656
2 142 Minimum Monthly Gross Wage in EU
January 2020 (EUR)
Minimum Wage in EU
(Source: ABSL, NIS, Eurostat)
Languages studied by Romanian students
99% • 99% of Romanian high school students study two or more foreign languages
• Predominant languages: English, French, German and Spanish, yet initiatives for teaching
Japanese, Nordic languages or the entire Latin language family (Spanish, Italian, French) exist
University students in Romania are proficient in [% of total]:
Skilled labor force
90% 26% 17% 8% 5%
Skilled labor force
RO
UKR
MD
BG
SRB
HU
Ahead of Italy,
Bulgaria, Luxembourg,
Greece or Malta
World Bank ease of doing business
One of the most
competitive labor force
in the CEE (€7.7)
Hourly labor costs 2019 Natural gas & Electricity prices
EU27 ranking (S2 2019)*
14th lowest natural gas prices
*Excluding VAT and other recoverable taxes and levies
14th lowest electricity prices
(Source: Eurostat, March 2020)
(Source: World Bank Report, 2019)
(Source: Eurostat)
Romania, the largest market in the SEE
55
2 14
14
(Source: Numbeo, May, 2020)
Value for money
Consumer Prices
BERLIN PARIS
Rent Prices
Restaurant Prices
Groceries Prices
Standard of living equivalency net salary
BUCHAREST
€155
€1,966 €3,600
€170
€152
€163
€4,898
€140 €100
€100
€100
€100
€158
€131
€138
Tax
System
The Romanian tax system
Social Security
Employer Employee
35%
R&D - 0 % income tax for employees Deduction of R&D eligible expenses: depreciation of R&D equipment, salaries for R&D
personnel; 50% of these expenses can be deducted from the taxable income
Dividends are distributed to
shareholders each trimester
based on interim financial
statements and annually
2.25
%
Dividend Tax Rate Corporate Tax
16% 5%
2015 2016
VAT
9% - foodstuffs, pharmaceutical products, water supplies, some
agricultural supplies
5% - hotel accommodation, restaurants & catering services
2017/2019
IT&C - 0 % income tax for employees BA -14 technical specializations available Employee is hired on a software engineer/programmer/
software analyst position Annual revenue per exempted employee must be over
USD 10,000
24% 20% 19%
Income Tax Reinvested Profit tax
10% 0%
STATE AID - GD 807/ 2014
Minimum EUR 1M investment
Construction of new buildings
Renting costs for existing buildings
CAPEX aimed at technical installations and tools
Acquisition of intellectual property
FISCAL INCENTIVES
Investors that set up manufacturing locations or offices in an
industrial, scientific or technological park benefit from:
Exemption on land, building and urban planning tax
Taxes charged for changing land destination
STATE AID 2014-2020 Total Budget EUR 925M
Investment Support
North-West
50%
West
35%
North-East
50%
Center
50%
South-East
50% South-West
50% South
50% 10%
35%
State aid intensity, according to
development region:
North West – 50%
North East – 50%
South East – 50%
South – 50%
South West – 50%
West – 35%
Ilfov County – 35%
Bucharest – 10%
(Source: Ministry of Public Finance)
State Aid intensity 2018-2020
International Fligths
Ports
Under construction
SATU
MARE
ORADEA
SUCEAVA
TIMISOARA
CRAIOVA
SIBIU
TARGU MURES CLUJ-
NAPOCA
BACAU
IASI
BUCURESTI OTOPENI
M.KOGALNICEANU
DROBETA TR.
SEVERIN
GIURGIU
MANGALIA
CONSTANTA
SULINA TULCEA BRAILA
GALATI
BAIA MARE
ARAD
BRASOV
130 direct flights leading to 76 destinations in 31 countries worldwide
14 international airports and 8 major ports
Constanta Port - the deepest and largest port at the Black Sea
Aircraft traffic reached over 21,8M passengers in 2018, up by 7.9% compared to 2017
(Source: National Institute of Statistics)
Ports and Airports
92 industrial parks spread across Romania - both private and public ownership
Access to utilities & benefits packages according to their focus
Exemption on land, building and urban planning taxes
North West Region: 23 parks
West Region: 6 parks
South West Region: 7 parks
South Region: 24 parks
South East Region: 2 parks
North East Region: 8 parks
Center: 18 parks
Bucharest-Ilfov Region: 4 parks
Status at regional level (April, 2020) 2
7 1
1
1
3
1
1
2 3
2
4
15
1
3
2 1
2 3
1 2
3 10
1
1
1
12
1
2
3
(Source: Ministry of Regional Development and Public Administration)
Industrial Parks
In Romania there are
currently five Free
Zones
Arad
Giurgiu
Braila
Galati
Sulina
Romania’s five free zones
By economic activity, FDI stock was channeled
primarily to manufacturing (30.9% of total FDI),
out of which the largest recipients were: • 6.7% transport equipment
• 6.4% oil processing, chemical, rubber & plastic
products
• 3.9% metallurgy
Apart from industry, other activities that also
attracted significant FDI were: • 16.8% construction & real estate transactions
• 15.8% trade
• 11.5% financial intermediation & insurance
(Source: National Bank of Romania)
Sectors EUR
million
% of total
FDI
TOTAL 81,124 100.0
Manufacturing 25,032 30.9
Construction & real estate transactions 13,651 16.8
Trade 12,865 15.8
Financial intermediation and insurance 9,308 11.5
Electricity, gas and water supply 6,006 7.4
Professional, scientific, technical and
administrative activities and support
services
3,991 4.9
IT&C 3,321 4.1
Agriculture, forestry and fishing 2,406 3.0
Mining 2,273 2.8
Transportation 1,281 1.6
Accommodation & food service activities 528 0.6
Other 524 0.7
FDI Stock by Field of Activity at 31 December 2018
(Source: OPIAR Report 2018, ANIS Report 2018 - estimation, ACAROM Report Feb 2019)
AUTOMOTIVE
INDUSTRY SIZE KEY PLAYERS KEY PROJECTS
• Premium Aerotec EUR 100M investment
• Sonaca EUR 100M investment • Airbus Helicopters EUR 15M
investment • UAC Europe 100M investment
EUR
580M
EUR
4.5B
EUR
28.8B
• Siemens software dev. worked on the Mars Rover
• Deutsche Bank EUR 40M investment
• LiveRail was acquired by Facebook for EUR 600M
• Continental EUR 175M investment in 2017
• Daimler EUR 250M in 2018 investment for gear boxes
• Ford EUR 200M investment for production of new model
Key facts for top tech oriented industries in Romania (2018)
IT&C
AEROSPACE
German Investment in Romania
No. of companies 23,288
% of the total no. of companies 9.6
Subscribed share capital in company with German interest USD 7,0 mill.
% of the total value of capital 11.35
Ranking 3rd
(December 1990 – April 2020)
Source: National Office of the Trade Register (ONRC)
*The subscribed share capital accounts for only a part of the total FDI. According to ONRC, the country of origin of the investment is the country where the capital comes from and not the country of origin of the transnational company.
According to the National Trade Register available data, in reference period the highest contribution of capital subscription from German companies is in Mining and manufacturing sector (43.73%), second in Trade (21.23%) and Professional, scientific and technical activities (11.68%).
Most significant German investment in Romania
Company Sector
DAIMLER Automotive
CONTINENTAL Automotive
SCHAEFFLER Automotive
HEIDELBERGCEMENT Construction materials
MARQUARDT Automotive
DRAXLMAIER Automotive
SIEMENS Automotive
BOSCH Automotive
PREH Automotive
REWE Construction
SAP IT
DEUTCHE TELEKOM Communication
THYSSENKRUPP Automotive
LIDL Retail Trade
KAUFLAND Retail Trade
STABILUS Automotive
Most important German investors in Romania
Germany is Romania's main trading partner accounting for more than 23% of Romania's total exports
In 2019 bilateral trade reached EUR 32.9 billion (+1.24% compared to 2018), of which EUR 15.48
billion (decrease of 0.49%) and import EUR 17.4 billion (2.8% increase). The deficit in relation to
Germany increased to 1.9 billion euros in 2019 from EUR 1.3 billion in 2018
In the first two months of 2020, the value of bilateral trade was EUR 5.5 billion (an increase of 1.27%
compared to the same period in 2019), of which the export EUR 2.5 billion (decrease of 3%) and
import EUR 2.9 billion (5.5% increase). The balance of trade was -349 million euro.
Bilateral relations between Romania and Germany
Bilateral relations between Romania and Germany
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Export 6464 8394 8369 9200 10108 10782 12347 14357 15561,77 15483,25
Import 7292 8797 9511 10305 11204 12482 13809 15141 16955,74 17424,17
Balance -828 -403 -1142 -1105 -1096 -1700 -1462 -784 -1393,97 -1940,92
-2 000
500
3 000
5 500
8 000
10 500
13 000
15 500
18 000
EU
R m
illi
on
Exports, imports and trade balance during the period 2010-2019
Export
Import
Balance
Trade between Romania - Germany in 2019
Import by product group
electrical machinery, equipment (36.16%)
aircraft and transport equipment (15.91%)
chemical and related products (8.81%)
metals and metal products (8.58%)
plastics and rubber articles (8.23%)
optical apparatus, photo and measurement (4.59%)
textile and clothing (4.15%)
Food, beverages, tobacco (3.73%)
vegetable products (2.32%)
wood pulp. paper. cardboard and related art (1.37%)
Export by product group
electrical machinery, equipment (41.35%)
aircraft and transport equipment (25.62%)
metals and metal products (6.08%)
optical appliances, photo and measure (6.08%)
plastics and rubber articles (5.14%)
textile and clothing (4.22%)
goods and miscellaneous products, furniture (3.84%)
chemical and related products (2.41%)
vegetable products (1.27%)
food products, tobacco drinks (1.09%)
the consolidation of the export of traditional Romanian products and introduction of the new Romanian
products from the machine building industry (parts and components for the automotive and aerospace
industry, other products from the engineering sector);
the field of environment and renewable energies (equipment for the construction of wind energy
generators);
the information technology, especially services and software;
the materials and equipment for telecommunications;
chemical products;
the agro-food industry sector, with an emphasis on organic products;
the furniture, especially made of solid wood;
pharmaceutical products and components;
original fashion creations;
cooperation for expansion on third markets in the field of special industry.
Romania’s exports
Investment and cooperation
Intensifying the bilateral cooperation in the fields of digitization / industry 4.0 - foundation for growth.
welfare and jobs in both countries:
We have important German industry present in Romania
We have a strong national IT expertise
We need to build with the German partners the bridge industry - digitization and we will have a strong
industry 4.0
Special events to be organized in Germany. for promoting the bilateral cooperation in this field; involving AHK
in the organization
Romania - IT hub
High-level cyber-security space for German companies
Transition to 5G for: – Stimulating the penetration of German 4.0 industry in Romania – Training students in mechatronics (mechanical + electronics + computer science) – Smart solutions for digitizing the economy and society
Establishing research & development centers in Romania, given the high level of Romanian IT specialists (eg
Porsche Technological Centre in Cluj, Deutsche Bank IT Centre in Bucharest)
Production of agricultural machines, trucks, light commercial vehicles, buses and mini-buses in
Romania
Romania is the second largest market for agricultural machines and also for the transport of goods in CEE
(considering the level of development in these fields. RO could be the most attractive market in the near future)
without local producers - which creates important opportunities for major investors.
Building storage and processing facilities for agricultural products.
Investments in the food industry in Romania.
Investments in the chemical and pharmaceutical industries (Romania – net importer).
Production of medical equipment in Romania (Romania - net importer).
Expanding and modernizing the automotive industry, through new major investments in car
manufacturing and connected industries, batteries for electro-mobility, hydrogen combustion cells.
Given the longstanding tradition and proven performances of Romania in the automotive industry, there is still ample
room for investments in this field. We hope the major German car manufacturers will seriously consider Romania for
their future investments.
Investment and cooperation
Competitive advantages
planned governmental program to support digitization of the Romanian economy and society;
one of the steadiest economic growth in Europe;
a most attractive investment climate – with the lowest fiscality in the region and highly qualified
workforce;
available well and diversly qualified work force - labor force restored with hundreds of thousands
of Romanian workers repatriated from all over Europe due to the Covid 19 pandemic.
European funds, state aid schemes and other governmental programmes available;
longstanding tradition and high performances in the automotive industry (in the old times, „Dacia“ was an appreciated car in the Democratic Republic of Germany)
recognized performances in the IT sector;
we currently host two international assembly lines (Renault and Ford) and specialized
development centers – including for artificial intelligence; the PORSCHE Technological Centre in
Cluj reached 600 employees and is continuously expanding;
extensive network of producers for components and spare parts – many of them working as
suppliers for top German and international car manufacturers;
the Romanian workforce in the car industry is well known for its high qualification, passion and
dedication;
possibilities to export from Romania both by land – to Europe, CIS and the Balkan countries – as
well as to the whole world – through the Port of Constanta;
Romania is an industrial land, with almost 30% share of industrial production in GDP.
Competitive advantages
Co-operation with German companies
We are keen to participate in the production of Hydrogen Combustion Cells, especially for urban transport, to
reduce the CO2 footprint. We need a strong and substantial co-operation with German companies in this field.
We need to make a common action plan to achieve this objective. We are interested in cooperation for the joint
production of battery cells for e-mobility
We have to recuperate in Europe this expertise and to become more independent from Asian batteries
producers.
EU COM will develop a strategic approach for establishing an industrial battery cell production in EU.
Industrial sector is working at full speed to develop industrial cooperation partnerships on innovative &
sustainable battery cell production.
This kind of proposals may qualify as Projects of Common European Interest, thus the funding could be set
according to EU COM state aid scheme.
Romania is eager to offer the facilities for such project as PPP or following the “Airbus model”.
Modernization of railway, road and naval infrastructure
Intensify the participation of German companies in the construction of high-speed railway lines
Upgrading and expanding the Container terminal and the Grain terminal in Constanta Port - in addition
to the current program financed by 2023 from the "PO Infrastructure".
For the reception of large grain vessels and the extension of the railway infrastructure in the silos park
Danube region better connected and more responsible for the environment and energy (Interreg -
Danube Transnational Programme - DAPhNE).
Cooperation with German companies for:
Renewable energy production in Danube ports
Reducing the impact on the environment
Remodeling ports as multi-modal hubs
Transfer of models from the Rhein-Main region
Planning network construction - at competitive prices
System security
Intelligent, digitized networks.
Romania - logistics hub
Co-operation with German companies
Co-operation with German companies
Cooperation in the defence industry:
The only way for Europe to achieve genuine strategic sovereignty is to resolve the tensions over burden-sharing within
NATO. Here, Germany could play a decisive role.
Instead of increasing its defense spending to 2% of GDP, which might worry some of its neighbors, it could invest 1,5%
in its own forces and offer the remaining 0.5% to Eastern European NATO members to spend on defense.
Cooperation in tourism:
Investments in tourist infrastructure
Better promotion of Romanian tourism in Germany
Cooperation on third markets, namely the creation of synergies and a common approach of these markets, for
better capitalization of Romania's expertise in countries in North Africa, Gulf or former Soviet states.
Romanian companies can contribute to the expansion and modernization of the German fiber network.
Extension of the dual education system in Romania - both at institutional level (using the German model and
exchanging experience for the functioning of the Romanian National Authority for Dual Initial Vocational Training)
and at the level of companies (encouraging German investors in Romania to apply the dual training system on a
larger scale).
“one-stop-shop” for foreign investors, assisting and advising international
companies for project implementation in the country
Promoting and facilitating foreign investment in Romania
Main interface between foreign companies and central / local authorities
Assisting worldwide entrepreneurs in project implementation
Tailored and individually custom-made solutions for developing new or
current units
Consultancy and guidance during all stages of the decisional process (state aid
& fiscal incentives)
InvestRomania in a nutshell
GOVERNMENT OF ROMANIA Minstry of Economy, Energy and Business Environment
152 Victoriei Av.
District 1, Bucharest, Romania
www.investromania.gov.ro
E-mail: [email protected]