By: Ron Bar-Nir
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Many solid reasons to invest in Romania
At the present moment – and for a while now – it is my educated opinion that Romania represents some of the most inviting business opportunities in the CEE, being one of the most competitive and dynamic economies in the European Union. With a significant history in business as well as trade, Romania maintained its position as a significant foreign direct investment recipient in the CEE area.
First of all – the numbers. Romania is a remarkable market opportunity in terms of size (the 8th place amongst EU27) and population (the 6th place in the same EU27 countries), also being the second largest country in Central and Eastern Europe and the largest in the SEE.
After 2007 – Romania’s EU accession date – investors here became linked to a single market of almost 500 million European consumers, as one of the largest consolidated markets in the world, representing quite unique advantages for companies seeking real development and growth.
One other important factor in the investment decision is the fact that not only Romania is a member of the great EU family of nations, but also a NATO member – meaning solid grounds for stability and security in the region. Furthermore, while remaining a strategic partner at the Eastern frontier of the Euro-Atlantic structure, Romania also represents a major geopolitical actor on the Black Sea.
Romania hosts one third of the Danube River and it also is the most significant gateway to the Black Sea through Constanța Port, the largest and deepest port at the Black Sea, a true competitive advantage with regard to sea-faring Asian goods.
Trade-wise, Romania benefits from an unique geo-strategic location – the crossroads of three great markets: the European Union, the CIS states and the Middle East, standing in the path of three important pan-European transport corridors: corridor no. 4, linking Europe from West to East, corridor no. 9, crossing from North to South and corridor no. 7, facilitating transport on the Danube.
Rich in natural resources, Romania benefits from a plentiful agricultural land stretch and significant mineral deposits such as petroleum, natural gas, salt, coal and gold. Soil in most parts of the territory is highly fertile, allowing for a solid and diverse food production. Romania is one of the biggest producers of cereals in the EU and the largest producer of sun-flower seeds, honey and plums. The area in Romania used for agriculture constitutes almost 13.5 million hectares (57% of the total area of the country).
Becoming a first-rate choice for foreign investment is one of the priorities of Romania for the last 3 decades. As a consequence, the country secured generous state aid schemes and a competitive tax system – one of the lowest flat tax, VAT and income tax rates in the EU as well as tax exemption on reinvested profit.
Infrastructure is also a priority, and Romania owns a significant network of 100 industrial parks spread across the territory, with both private and public ownership, aiming at bringing to investors a suitable series of locations for various business purposes.
One other clear advantage of doing business in Romania consists in its highly skilled workforce and competitive labor prices, bearing the mark of reduced cultural and language barriers. Romanians are multilingual, flexible in approach towards work, really innovative and truly attentive to the future.
Thus, today Romania is a country of quality that in the past few years has succeeded in moving forward the value chain, as some of the investors that entered the market over fifteen years ago with basic manufacturing are now branching out into more technologically sophisticated projects. The country stands as a benchmark for the region, a center of core competencies in the high-technology based global market.
Speaking of the future, investing in Romanian renewable energy and hi-tech fields is an excellent idea, while these two priorities have aligned as both important for the government and heavily sustained by the EU. The IT&C services sector foster a 15-17% yearly growth rate of the large companies’ revenue, 64% of the revenue being generated by companies with foreign capital, according to the Employers’ Association of the Software and Services Industry .
Last but not least, the tax incentives create a good environment for investing in Romania – corporate tax relief on reinvested profit, super-deductions for R&D expenditure, corporate tax exemption for innovation, research and development activities, exemption from personal income tax for software development employees, unemployment contribution incentives for hiring unemployed people and protected social categories, incentives for investing in further education of employees.