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Romania is promised land for multinational companies

Germany, France and Italy occupy the first three places in the top of the countries that control business subgroups in Romania
posted onMay 7, 2018

Foreign investors continue to see Romania as an excellent investment destination and the largest market in South-Eastern Europe. Foreign direct investment in Romania  rose 1.5 percent last year, to EUR 4.586 billion according to the National Bank of Romania (BNR) and the country is home to some 73,000 multinational groups of companies data from the National Statistics Institute (INS) showed. These companies are active in trade, construction, manufacturing or professional, scientific and technical activities.

In 2016, out of the total multinational groups of companies identified in Romania, 13867 were groups controlled by foreign legal persons and 58732 were groups controlled by foreign natural persons. The results of 2016 indicate that, according to the share of the number of employees, the first place is held by the companies subgroups controlled by legal or natural persons from Germany (17.1%), the second place is held by those controlled from France (12.7%) and the third place by those controlled from Italy (10.0%).

The subgroups of companies controlled from Germany predominantly operate in manufacturing (9.5%), in wholesale and retail; repair of motor vehicles and motorcycles (2.9%) and in professional, scientific and technical activities (2.3%).

Regarding the companies subgroups controlled from France, 6.2% operate in manufacturing and 2.6% in wholesale and retail; repair of motor vehicles and motorcycles.The companies subgroups controlled from Italy dominate in manufacturing (6.4%). 

In January, the number of newly-set up companies running on foreign capital increased by 16 percent compared to the same month of 2017, reaching 380 companies with a paid-up capital totalling EUR 1.41 million, the Trade Registry’s Office (ONRC) data revealed. According to the same source, the capital increases registered in January by local companies with foreign shareholders totaled EUR 109 million.

Romania FDI flows

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 EUR 61.3 billion. Out of the 215,651 companies, 45,542 run on Italian capital, but the highest share capital value is reported by Dutch companies, namely 12.2 billion euro in about 5,112 companies. 

Foreign direct investment in Romania averaged 373.76 EUR million from 2005 until 2018, reaching an all time high of 2933 EUR million in October of 2006 and a record low of -393.80 EUR million in April of 2013 according to Trading Economics.

Romania is on the radar of foreign investors due to a number of reasons. Last year's economic growth was the highest since 2008 and the country ranked 45th out of 190 economies assessed in the World Bank’s Doing Business 2018 report with 72.87 points.  The country's total score was 0.17 points higher than last year. 

Romania overtook countries such as Italy, 46th position, Hungary, 48th position, Bulgaria – 50th position, Belgium – 52nd and made progress in the tax payment area, where it ranked 42th in the world, eight positions higher than last year. The report also noted that Romania improved the quality of land administration by digitizing ownership and land records. 

Romania is also the only Southeast European country on the list of the top 25 European regions of the future, with Bucharest-Ilfov region placed 24th, according to a study titled European Cities and Regions of the Future 2018/2019 published by fDi Intelligence, a division of the Financial Times Group.

Furthermore, Bucharest was ranked 15th among the 25 most promising European cities in terms of foreign direct investment attractiveness, fDi Intelligence reported. Data  used for the rankings was collected for 489 locations (301 cities, 150 regions and 38 local enterprise partnerships), under five categories: Economic Development Potential, Labour Environment, Cost Effectiveness, Infrastructure and Business Friendliness. All the above confirm the country’s forward-looking position as a magnet for new investments.