Romania, a key member of the European Union is a country located at the crossroads of southeastern and central Europe. It is situated on the northern regions of the historically important place, the Balkan Province bordering the black sea. Romania shares borders with Hungary, Ukraine and Moldova to the north, while Serbia and Bulgaria are roughly to the south. Its geography encompasses the beaches on its eastern shores and the Carpathian Mountains, which give way to rolling hills, forests, farmlands and rustic villages in the towering shadow of a gothic castle.
With 238,391 square kilometers (approximately) of land area, Romania is one of the largest (ranked 9th) countries in the European Union. Romania also is known for its dense population. It is the seventh largest populated countries in the European Union, about 21.5 million inhabitants residing in the country. Bucharest, the capital city of Romania is also the largest city in the country. It is also the 6th largest city in the European Union both in terms of its size and residents residing in there (about 2 million people live in the country).
Overall, Romania’s macroeconomic situation is one of the strongest in EU in terms of real GDP growth, fiscal deficit and public debt, inflationary pressures and current account balance, with positive evolutions expected by some credit rating agencies. The output gap is projected to close in the 2nd half of 2016 amid strong recovery of the internal demand, especially in the private sector. The real GDP growth rate was 3,8% in 2015 Q4 compared with 2014 Q4, one of the highest in EU28, with forecasts maintaining a positive outlook.
There are several factors that are deemed to attract huge amounts of FDI in the near future; some of the most important benefits foreign investors can avail by investing in the country are as follows:
- Given the large size of the country, Romania is one the top ranked countries in the CEE region with a large market base. Foreign investors have the scope to cater to these markets and earn valuable returns on their investments.
- Since the induction of Romania into European Union on 1st January, 2007, the country has undergone a drastic change in its political structure. Today, Romania boasts itself of being one of the most politically and socially stable countries in the European Union.
- Being a part of the European Union, Romania has access to funds directed towards the development of the member countries (European funds). Romania has several bilateral agreements with other countries and diplomatic relations and it has signed free trade agreements with other EU countries.
- One of the most significant advantages of investing in Romania is the strategic Geographic location of the country; its central location in the EU provides an easy gateway for foreign investors to easily access other markets within the European Union and also allows the investors to penetrate through the lucrative markets of Middle-East countries.
- Foreign investors can readily have access to highly qualified labor force with technical qualification at a very low cost.
- The country has abundant high quality natural resources including mineral deposits and highly fertile agricultural land. The Romanian government offers free access to the energy supplies.
In a recent statistics released by the Romania Central Bank, it indicates that Romania shows a tremendous increase in the foreign investment in the country since 2014. According to the bank figures the FDI in Romania for 2015 had a 40% increase from 2007. Just like in 2015, FDI continued to grow at a consistent pace in the 2016. According to the official reports released by the Official Government Investment Agency, several foreign companies, including all the top ICT companies have invested in the country are expected to double their investment over the next few years in the future.
Romania is considered to be upper-middle income economy. Since the dawn of the new millennium in the year 2000 the Romanian economy underwent a radical makeover, it was emancipated from the rigid clutches of the communist regime and was transformed into a liberal economy characterized by macroeconomic stability, low unemployment and declining inflation.
FDI / Investment Policy:
The Romania government enacted a special law in 1991 that would regulate the foreign investments in the country. The law is very investor friendly. As per the law foreign investors are provides several financial benefits in terms of tax exemptions on their capital investments, Loans at reduced rates of interests and also tax benefits on investment in real estate.
The law also grants other fringe benefits to foreign investors including complete ownership rights of the Business enterprise and repatriation of after tax profits.
The Romanian Government’s rule to levy a flat rate of corporate tax at 16%, which is one of the lowest tax rates in the European Union, can greatly benefit the foreign investors.
Romania is sure to become a global economic super power in the future. All foreign investors investing in the country are sure to earn valuable profits from their investments.