Romania

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romanian agency for foreign investment
Romania Top Destination for Investment by
Sorin VASILESCU Director
Luxembourg, February 27, 2008
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Structure of the Presentation

1. Geo-strategic position
2. Macroeconomic outlook
3. Valuable human potential
4. FDI performance
5. Infrastructure development
6. Investment legal framework
7. Potential sectors for development
8. ARIS one stop shop

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1. Geo-strategic position
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Romanias Geo-strategic Position
Area 238,391 km2 92,043 sq mi. the 9th in EU
Population 21.6 mill inhabitants the 7th in EU
Capital city Bucharest 1.9 mill inh
Member of EU, WTO, IMF, WB, NATO
Our friend the wind
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Romanias Strategic Location

• The Eastern border of the inland European Union
• Strategic position at the turning point where EU
  meets the Balkans and CIS countries

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2. Macroeconomic outlook
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Significant Potential for Growth
Q3 2007
Slovakia 9.4
Slovenia 6.3
Czech Republic 6.1
Poland 5.8
Romania 5.7
Bulgaria 4.5
Hungary 1.1
Source EUROSTAT, forecast
Source National Institute of Statistics

• Rapid sustainable GDP growth 6.5 forecast
  for 2008
• 5.7 in Q3 2007, based on increases in final
  consumption by 7.7 and decrease in net export by
  8.6
• EU27 GDP growth rate of 3 in Q3 2007.

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Inflation Rate
Annual Inflation Rate Dec'07/Dec'06 Annual Inflation Rate Dec'07/Dec'06
Bulgaria 11.6
Hungary 7.4
Romania 6.7
Slovenia 5.7
Czech Rep 5.5
Poland 4.2
Slovakia 2.5
Source EUROSTAT
Source National Bank of Romania

• EU annual inflation was 3.2 in December 2007
• Sustainable disinflation since 2000 to continue
  in the following years
• Higher rate in 2007 due to drought, wage raising
  and significant increased of oil, technical
  plants and cereals prices.

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3. Valuable Human Potential
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Availability of Human Capital

• Young population (more than 55 is under the age
  of 40 and 37 is between 25 and 49 years old)
• Almost 21.7 million people

• 104 higher education institutions
• 112 thou university graduates
• Availability of technical engineers
• High industrial experience
• Flexibility

Cities with more than 100,000 inhabitants Cities with more than 100,000 inhabitants
more than 1,000,000 inhabitants
300,000 400,000 inhabitants
200,000 300,000 inhabitants
100,000 200,000 inhabitants
Source National Institute of Statistics Source National Institute of Statistics

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Valuable Human Potential

• high performances in international competitions
• high percentage of technically competent
  professionals (23 are engineering graduates out
  of 720 students enrolled)
• highest growth rate of IT specialists in the
  region (Annually 7000 university graduates in the
  software field More then 3.000 students in 105
  local Cisco academies)

University graduates in Romania (by education
field)
Source National Institute of Statistics

• strong language skills (English, French, German,
  Italian, Spanish, Russian, etc.)
• large skilled labor force at comparatively low
  wage rates

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Labor Cost A debated topic
Regional Comparison 2006 - EUR
Gross monthly wages EUR
Source Vienna Institute of International
Economic Studies National Institutes of
Statistics

• Significant discrepancies in terms of sectors
  (1120 euro in banking and 186 euro in wood
  processing) and different regions of Romania
• It was expected to grow by 12.3 in 2008, and to
  reach 580 by 2010
• Productivity in industrial sector increased by
  more than 10

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4. FDI Performance
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Inward FDI Flows
Q3 2007
1 Poland 5721
2 Romania 5138
3 Bulgaria 4117
4 Czech Republic 3547
5 Hungary 1828
6 Slovakia 1315
7 Slovenia 665
EUR million
Source Vienna Institute of International
Economic Studies
Source National Bank of Romania

• FDI Stock over EUR 41 bill (1990 2007)
• The forecast for 2008 refers to over 7 bill euro

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FDI by Field of Activity (1990-2006)
Source National Bank of Romania
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Major Investing Countries (1990-2006)
Austria the Netherlands Germany France Greece
7.94 bill EUR 5.89 bill EUR 3.47 bill EUR 2.77 bill EUR 2.68 bill EUR
Switzerland Italy Cyprus Hungary USA
2.37 bill EUR 2.32 bill EUR 1.67 bill EUR 0.66 bill EUR 0.63 bill EUR
Source National Bank of Romania
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Luxembourg Investment in Romania
Nr of companies 521
of the total no. of companies 0.35
Ranking by no. of companies 31
Social capital subscribed in companies with German participation 251 mill EUR
of the total value of capital 1.44
Ranking 16
Source National Trade Register Office 1990
November 2007
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5. Infrastructure Development
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IASI
ORADEA
PIATRA NEAMT
BORS
SABAOANI
MIHAILESTI
SOVATA
BICAZ
ALBITA
CAMPIA TURZII
TARGU MURES
CLUJ NAPOCA
GHEORGHIENI
PRAID
NADLAC
SIGHISOARA
ARAD
DEVA
SEBES
FAGARAS
SIBIU
ORASTIE
FOCSANI
TIMISOARA
BRASOV
CRISTIAN GHIMBAV
LUGOJ
PREDEAL
COMARNIC
BUZAU
PLOIESTI
PITESTI
DROBETA TR. SEVERIN
DRAJNA
CERNAVODA
BUCURESTI
CONSTANTA
FETESTI
CRAIOVA
GIURGIU
CALAFAT
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Ports and Airports
International flights
Domestic flights
BAIA MARE
SATU MARE
SUCEAVA
IASI
ORADEA
CLUJ NAPOCA
TARGU MURES
BACAU
ARAD
SIBIU
TIMISOARA
GALATI
BRAILA
CARAS-SEVERIN
SULINA
TULCEA
ORSOVA
OTOPENI
BANEASA
M. KOGALNICEANU
DROBETA TR. SEVERIN
CONSTANTA
CRAIOVA
CORABIA
OLTENITA
CALARASI
MANGALIA
GIURGIU
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Map of Industrial Parks

• More than 40 Industrial Parks
• Both private public
• Greenfield Brownfield
• Access to utilities
• Package of services offered by the park
  administration
• Wide variety of activities to be developed
• Some created for high-tech activities

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6. Investment Legal Framework
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Competitive Taxation
Corporate Tax VAT Social Contributions Social Contributions
Corporate Tax VAT Employee Employer
Bulgaria 10 20 12.43 24-24.7
Romania 16 19 17 29.34
Hungary 16 20 13.5 33.5
Poland 19 22 18.71 17.23-20.12
Slovakia 19 19 13.4 34.4
Czech Rep. 24 19 12.5 35
Slovenia 25 20 22.1 16.10
Source CEE-CIS Tax Notes - PriceWaterhouseCoopers

• Many Central and Eastern European countries
  reduced considerably their corporate tax in order
  to diminish the fiscal burden

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Structural funds channeled by Operational
Programmes
Operational Programme Managing Authority
Increasing Competitiveness Ministry of Economy and Finance
Regional ? Tourism Ministry of Development, Public Works and Dwellings ?Ministry of SMEs, Trade, Tourism and Self-Employed
Development of Human Resources Ministry of Labour, Family and Equal Opportunities
Transport ? Inter-modal transport Ministry of Transport

• Operational Programmes of interest to business

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State Aid

• State Aid granted for stimulating investments
• granted to enterprises for achieving an initial
  investment of more than Euro 30 million,
• creating at least 300 new jobs
• Regional state aid schemes granted for
  investments in industrial parks
• de minimis state aid for developing and
  modernizing enterprises and developing activities
  in the SMS sector

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7. Potential Sectors for Development
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Potential Sectors for Investment
Manufacturing Wood processing
Automotive components Construction materials
IT Communication Textile industry
Energy (non-conventional) Food processing
Electric Electronics Pharmaceuticals
Real Estate Infrastructure
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Automotive Industry Opportunities

• Experience in the field of car makers
• Automotive component parts rapidly growing
  sector currently over 175 major manufacturers
• Availability of labor force
• Labor cost monthly average salary approx. Euro
  250
• Total number employed 600.000
• Trained work force
• 7 colleges in vehicle technology 500 graduates
  each year
• 25 colleges in mechanical engineering 1.000
  graduates / year
• Availability of suppliers and subcontractors
• Presence of RD centers
• Successful investment stories in the field

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Automotive top-tier investors
2006 1 bill investment 1.6 bill turnover 12 thou employees 2007 230.500 cars sold New projects A gear boxes facility 217 mill of Renault-Nissan Alliance A RD Centre "Renault Tehnologie Roumanie" 456 mill - 2012
Ford took over the state-owned shares of Automobile Craiova (72.4 ) for 57 million, and pledged to invest 675 mill to modernize the factory and increase the number of employees Ford is awaiting for the results of the EC investigation on the Romanian government helping the takeover Ford took over the state-owned shares of Automobile Craiova (72.4 ) for 57 million, and pledged to invest 675 mill to modernize the factory and increase the number of employees Ford is awaiting for the results of the EC investigation on the Romanian government helping the takeover
Automotive component parts sector the fastest growing sector in Romania 5.8 bill investment inflows to increase up to 9-10 bill until 2010 Huge presence of international top-tier players TYRES (Michelin, Pirelli, Continental) WIRES (Yazaki, SEWS, Leoni, Lear, Valeo, Delphi) BEARINGS (SNR, Ina Schaeffler, Koyo), SOFTWARE (Siemens VDO) SEATS (Johnson Controls), etc. Automotive component parts sector the fastest growing sector in Romania 5.8 bill investment inflows to increase up to 9-10 bill until 2010 Huge presence of international top-tier players TYRES (Michelin, Pirelli, Continental) WIRES (Yazaki, SEWS, Leoni, Lear, Valeo, Delphi) BEARINGS (SNR, Ina Schaeffler, Koyo), SOFTWARE (Siemens VDO) SEATS (Johnson Controls), etc. Automotive component parts sector the fastest growing sector in Romania 5.8 bill investment inflows to increase up to 9-10 bill until 2010 Huge presence of international top-tier players TYRES (Michelin, Pirelli, Continental) WIRES (Yazaki, SEWS, Leoni, Lear, Valeo, Delphi) BEARINGS (SNR, Ina Schaeffler, Koyo), SOFTWARE (Siemens VDO) SEATS (Johnson Controls), etc.
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Major Foreign Investment In Automotive Industry

• Germany
• CONTINENTAL AUTOMOTIVE PRODUCTS
  (Timisoara, Sibiu)
• CONTINENTAL AUTOMOTIVE SYSTEM tyres,
  software
• CONTI TECH
• LISA DRAXLMAIER (Pitesti, Satu-Mare, Timisoara)
  cable and wires
• PHOENIX AG - (Carei) - rubber car parts
• KROMBERG SCHUBERT - (Timisoara)-car cables
• DAIMLER-CHRYSLER (Cugir) gear boxes
• INA SCHEAFFER (Brasov) bearings
• LEONI WIRING SYSTEMS - (Arad, Bistrita)
  wirescables
• BAUMEISTER OSTLER - (Arad) aluminium and
  plastic car parts
• SIEMENS AUTOMOTIVE (Timisoara, Iasi )
  software
• SCHLEMMER (Satu Mare)
• MARQUARD SCHALTSYSTEME (Sibiu)
• HELLA (Timisoara) electronics

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Major Foreign Investment In Automotive Industry
FRANCE MICHELIN - (Floresti, Zalau, Bucharest) -
tires VALEO - (Pitesti) - electric wiring
systems SNR ROULEMENTS - (Sibiu) - bearings
FAURECIA - (Sibiu) - seats covers AUTO CHASSIS
INTL. (Mioveni) - auto chassis RENAULT-NISSAN
(Pitesti) gear boxes JAPAN SUMITOMO ELECTRIC
WIRING SYST. - (Hunedoara, Deva, Orastie) -
wiring systems YAZAKI CORP. - (Ploiesti, Arad) -
wiring systems KOYO SEIKO - (Alexandria) - ball
bearings TAKATA CORP. - (Arad) - airbags and
steering wheels CALSONIC KANSEI (Poiesti) - air
condition and cooling units
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Major Foreign Investment In Automotive Industry
USA JOHNSON CONTROLS - (Mioveni, Ploiesti) -
seats HONEYWELL GARETT - (Bucharest)- spare parts
for turbochargers ALCOA FUJIKURA INC. -
(Chisineu-Cris and Caransebes) - wire
harnesses DOW AUTOMOTIVE - (Pitesti) - chemical
compounds BORLA ROMCAT - (Curtea de Arges) -
mufflers, catalizers LEAR CORPORATION - (Pitesti)
- wiring systems DELPHI PACKARD - (Sannicolau) -
wiring systems TRW (Timisoara) steering
wheels DURA AUTOMOTIVE - (Timisoara)
ITALY MAGNETTO GROUP - (Dragasani) -
wheels MOMO - (Brad) - steering wheels PIRELLI -
(Slatina) steel cord and tires
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Major Foreign Investment In Automotive Industry
OTHER COUNTRIES EYBL INTL. - Austria
(Timisoara) - steering wheels SOLVAY INERGI -
Belgium (Pitesti) - plastic components AUTOLIV
INC. - Sweden (Brasov) - seat belts COFICAB
Tunis (Arad) wire harnesses COINDU Portugal
(Arad) CAUCHO METAL PRODUCTOS Spain
(Sibiu) MANUFACTURA MODERNA DE METALES Spain
(Turda) BAMESA-ARCELOR Spain (Topoloveni)
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Romanian ITC Industry Trends

• High density of Romanian IT specialists (five
  times higher than in Russia, and seven times than
  in India).
• Romanian Olympic students are usually placed in
  top 4 with China, US and Russia.
• In Microsoft the second spoken language is
  Romanian
• Low brain drain phenomenon in Romania
• IT sector is constantly growing
• Major multinational IT companies such as
  Microsoft, HP, Oracle, Cisco, Intel and Motorola
  are present in Romania - many of them use Romania
  as regional headquarters.

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A Top European Location for product RD,
outsourcing, customer service and BPO

In 2006 Microsoft opened a Global Technical Support Center creating around 700 jobs One GE group companies established an IT outsourcing, financial services and supply chain BPO HP set up a BPO in Bucharest for financial and administrative services, dedicated to EMEA region - up to 1200 employees

In 2006 WIPRO decided to set up a BPO center in Bucharest for IT services covering the East European market - 700 employees Ericsson will open in Romania, in July this year, a New Global Service Delivery Center - 70 of the employees will be young graduates BPO aiming to offer outsourcing services in HR, finance and procurement to work
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8. ARIS one stop shop for foreign investors
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Who is A.R.I.S?
Governmental body under the authority of Prime
Minister
In charge with attracting and retaining foreign
direct investment
Interface between investors and central local
authorities
Providing free of charge SERVICES for foreign
investors in Romania
Search and advice on the best location in
Romania to fulfill the company' needs including
site search, analysis touring around
Search for industrial and service suppliers
Value added information on incentives and other
administrative procedures
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Thank you for your attention!