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Number of foreign companies in Romania drops 4.5 % in first eight months of 2018

posted onNovember 14, 2018
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Foreign Direct Investment in Romania dropped 5.74 percent in the fist nine months of 2018, compared to the same period of 2017, reaching EUR 3.52 billion, according to data according to data by the Romanian National Bank (BNR).

Equity investments, including reinvested profits, totaled EUR 3.15 billion while intercompany lending recorded a net value of EUR 365 million. 

At the same time, the number of newly established companies with foreign capital decreased 4.5 percent in the first eight months of this year, Y-o-Y,  to 4,195 units, the National Trade Registry Office (ONRC) data showed. Those companies had a subscribed capital of more than 40.6 million US dollars, up 15.6 percent compared with the same period last year. 

Meanwhile, a new report issued by the World Bank finds that  business environment in Romania has gotten less friendly.

The Eastern European nation ranked 45th out of 190 economies in the 2018 Doing Business Report, issued by the Washington-based institution, but descended on the 52nd place in the fresh 2019 report, based on the evolutions seen in 2017/2018.

The report ranks 190 countries based on how easy it is to start a business there, taking into account trading regulations, property rights, contract enforcement, investment laws, the availability of credit and a number of other factors. The first report was published in 2003. The Eastern European nation ranks lower than Montenegro, Serbia, Turkey, Armenia, Belarus and Moldova. 

“Romania made starting a business more cumbersome by introducing fiscal risk assessment criteria for value added tax applications, thereby increasing the time required to register as a value added tax payer,” reads the report.

Romania ranks low for starting a business, dealing with construction permits and getting electricity due to bureaucratic procedures. However, the country is considered the best in terms of trading across borders and ranks also well in terms of enforcing contracts and getting credit.

Returning to data released by BNR, In January - September 2018, the balance-of-payments current account posted a deficit of EUR 6,619 million, compared with EUR 4,779 million in January – September 2017; the deficit on trade in goods widened by EUR 1,492 million, the surplus on services income narrowed by EUR 190 million, the deficit of the primary income balance contracted by EUR 124 million, and the surplus of the secondary income balance decreased by EUR 282 million. 

In January - September 2018, total external debt increased by EUR 634 million, of which:
long-term external debt at end-September 2018 stood at EUR 68,129 million (69.5 percent of total external debt), down 0.6 percent from end-2017; short-term external debt at end-September 2018 amounted to EUR 29,866 million (30.5 percent of total external debt), up 3.6 percent against end-2017.

Long-term external debt service ratio ran at 20.8 percent in January - September 2018 against 25 percent in 2017. At end-September 2018, goods and services import cover stood at 4.7 months, as compared to 5.4 months at end-2017.

At end-September 2018, the ratio of the National Bank of Romania’s foreign exchange reserves to short-term external debt by remaining maturity came in at 72.6 percent, against 79 percent at end-2017.