It is a fact that FDI has increased dramatically in Romania, the investor friendly policies, strategic location and availability of abundant natural resource and skilled labors have worked in favor of Romania. Some of the best industries that foreign companies can consider investing in are:
1.6.1 IT&C (Information Technology)
Romania is one of the rapidly growing IT markets in the central European region. The country has made tremendous progress in all IT sectors including mobile phones and Internet. The growth leaves a scope for foreign investment in the sector. The investors can invest in establishing Research and Development centers in the country.
The IT&C sector in Romania is considered as a primary growth driver with a year-on-year growth of 9% and forecasts that by 2020 it will be worth EUR 4 billion.
Global software companies such as Oracle, Amazon, IBM or Deutsche Bank already leverage the development potential of Romanian software developers at a fraction of the cost compared to Western Europe, while maintaining the product quality. They have also contributed to the initial development of the tech start-up environment that is developing today.
The available number of engineers per capita is higher than the US, India, China or Russia. There are 7,000 IT&C grads in Romania every year, adding to a total of 90,000 with forecasts estimating that by 2018 the 100,000 mark will be exceeded.
Employers activating in the IT&C sector benefit from exemption of the income tax and certain state aid schemes aimed at encouraging employment of young graduates
Bucharest is the largest start-up hub in the country with over 132 startups and the home of many tech companies and VC firms as well as universities focused on technology, engineering and software development.
Cluj (35), Timisoara (16) and Iasi (7) are catching up, attracting companies like Amazon and investors from the UK, Germany and the US.
FDI and Financing in ICT
Venture Capital Financing
Romania has production facilities in:
- Manufacturing of landing gears
- Wheels and brakes
- Engines and engines components
- Airframes and components
- Hydraulic/ pneumatic equipment and components
- Computer software, services and databases
- Aircraft operating and control systems
At national level, more than 30 players in the aerospace industry and auxiliary sectors have total revenues of EUR 400 million and more than 6,420 employees. In 2014, the gross profit of this companies were above EUR 60 million.
Other related activities covers: Repair and maintenance of aircraft and spacecraft, engineering activities and related technical consultancy, manufacture of communication equipment, manufacture of textile articles, contracting activities, on a temporary basis, staff, wholesale of textiles, manufacture of metal structures and parts of structures, aluminum production, activities to develop custom software, general mechanics operations, manufacture of electronic (modules), wholesale of metals and metal ores, publishing of other software
In 2014, total turnover in manufacturing was approximately EUR 186 mil., 65.6% bigger than 2009. One of the main drivers of recovery is international trade, with a significant number of local aerospace companies exporting more than 77-78% of total production.
In terms of labor productivity; output per employee increased by more than 90% in the 2008 – 2014 interval. There was an aggregate growth rate of labor productivity of 11.3% per year in the same period, which is likely to keep accelerating considering the new investments entering the country. In the same period, net profit margin significantly increased, from 4.7% in 2008 to 12% in 2014, mainly driven by export demand.
The Romanian automotive market has been growing by 18% year-on-year average since 2009 and is forecasted to exceed EUR 20 bn by 2020. It is the 4th biggest automotive manufacturer in the CEE. In the last decade more than 600 OEMs for automotive supplies opened plants in Romania following the investments of 2 big automotive manufacturers at Craiova and Mioveni.
Production of vehicles almost doubled between 2005 and 2015 with automotive production peaking in 2013 with almost 411.000 vehicles.
Production in 2015 was bigger by 192.300 vehicles compared with the end of 2005. The OEM sector has grown alongside automobile production, accounting for growing demand.
1.6.4 Property / Real Estate
The overall economic growth of Romania and the surge in foreign investment is creating an environment of prosperity throughout Romania. The Real Estate industry in Romania is on the rise and has a vast scope for foreign investment. The foreign investors in Romanian property are taking the advantage of the existing low real estate prices in Europe, which is inevitable to increase in the future.
Advantages of investing in Real Estate in Romania:
- The demand for real estate properties greatly outstrips the supply; thereby there is great scope for rise in the prices of the properties. It thus presents a great opportunity for foreign investors to earn profits.
- Romania has a strong currency; the beneficial exchange rate means even better buying power for investors.
- The central bank of Romania is implementing 100% mortgage scheme for property buyers, this will further push the property prices by about 15%.
Romania is an exotic tourist destination. It is popular for its fairy tale romantic destination. It thus opens up great avenues for foreign investment. Investors can greatly invest in establishing restaurants, buying motels, hotels, luxurious beach side villa and other accommodation facilities and rent it out to the visiting tourists.