Foreign direct investment (FDI) into Romania amounted to 4.936 billion euro ($5.585 billion) in 2018, up by 2.8 percent compared to the same period of 2017, according to data by the Romanian National Bank (BNR).
Equity investments, including reinvested profits, totaled 4.042 billion euro while intercompany lending recorded a net value of 894 million euro BNR said in a statement, citing provisional data.
At the same time, the number of newly established companies with foreign capital decreased
by 2.64 percent to 5,683 units, the National Trade Registry Office (ONRC) data showed. Those companies had a subscribed capital of more than 40.6 million US dollars, up 18.2 percent compared with 2017.
In December 2018 there were registered 477 companies running on foreign capital, the majority in Bucharest (195) and Ilfov County (42), followed by Timis (39) and Iasi (33). On December 31, 2018, Romania had 221,334 companies running on foreign capital. 45,542 run on Italian capital, but the highest share capital value was reported by Dutch companies, namely 13.2 billion US dollars in 5,258 companies.
From 1991 until 2017, as many as 215,651 companies with foreign capital were established in Romania with a total value of subscribed share capital standing at over 61.3 billion US dollars.
FDI into Romania averaged 378.20 million euro from 2005 until 2018, reaching an all time high of 2933 million euro in October of 2006 and a record low of -393.80 million euro in April of 2013, according to Trading Economics.
Investment activity in Romania remains one of the lowest in the EU
Meanwhile, Romanian firms’ investment activity remains one of the lowest in the EU, according to the annual European Investment Bank Investment Survey (EIBIS) published in December 2018.
Only 68% of firms in Romania invested in the last financial year, compared to 87% EU-wide. The perceived investment gap – expressing the share of firms that did not invest enough in recent years - is above the EU level (20% vs 16%), the survey found. Investment in intangibles is also considerably below the EU level (25% vs 36%).
The EIBIS also revealed that uncertainty about the future and business and labour market regulations are the most significant barriers to investment, while innovative high-technology firms are more likely to face difficulties in obtaining external financing.
A closer look at firms’ innovation activity in Romania shows that among the innovators, most rely on adoption rather than development.
“Altogether, this underscores the need to do more in the area and to support a transition towards more innovation-led growth in Romania” Debora Revoltella, Director of the EIB’s Economics Department said in a statement.
About 12% of firms face finance constraints, and reliance on internal financing sources remains high. Access to finance is more of an issue in Romania than in other EU countries and innovative, high-technology intensive firms face even greater difficulties in successfully tapping external financing.
Uncertainty about the future and business and labour market regulations are the main barriers for businesses in Romania. Additionally, the lack of adequate transport infrastructure is more of an obstacle for Romanian firms compared to EU peers. Finding people with the right skills is particularly a challenge for innovative companies.
The survey is part of the annual EIB Group Survey on Investment and Investment Finance (EIBIS), an EU-wide survey of 12 500 firms that gathers quantitative information on the investment activities of both SMEs and larger corporates, their financing requirements and the difficulties they face. In Romania, 475 firms were interviewed in April-August 2018.