German companies still trust Romania as regards investments and are looking with optimism towards the future.
According to a survey conducted by German bilateral Chambers of Commerce abroad, German companies still trust Romania as regards investments and are looking with optimism towards the future. Representatives of the Romanian – German Chamber of Commerce and Industry say that the trust in the current Romanian Government has grown, and along with it the hope that measures will be taken in order to carry on the reform process. 30% of the companies covered by the survey say the current economic situation is better than in 2015, while 56% of them believe the situation has not changed at all. Even if many companies with German capital are still unhappy with some economic factors, 91% of those questioned would choose Romania again to place their investments.
Trade exchanges between Romania and Germany have grown by 14% in the past year, just like German investments in this country, which keep on growing. “The German business people prefer Transylvania, on the one hand due to the fact that many people there speak German, but also because of the proximity with the western network of highways. And this at a time when in Germany banks have negative interest rates on offer” says Georgiana Costin, vice-president of the German-speaking Business People’s Association in Northern Transylvania.
She is also the manager of a big consulting company, working with German and Austrian investors: “German investors, in particular those who do business in Transylvania and the Cluj area, are mainly interested in machine building, car building, aeronautics, IT and also agriculture and consulting. As part of a delegation headed by Prince Radu of Romania, we’ve had meetings with foreign investors at the Chamber of Commerce in Dusseldorf and also here. They are highly interested in our country, first of all due to geographical conditions, and also thanks to this country’s political stability and the fact that Romania is a member of the European Union. Also, costs here are lower, be they of employment, raw materials, supply chains, rent, etc. Also, the Transylvania area is interesting because people there speak several foreign languages, the work-force is skilled, so it’s exactly what they are looking for.”
Romania’s attractiveness to foreign investors has been fueled by the fiscal relaxation measures taken recently, such as the reduction of the VAT to 20% this year, and to 19% as of next year, the drop in the tax on dividends from 16% to 5% and the elimination of the tax on special constructions as of 2017”, says Greg Konieczny, manger of the Property Fund, an investment fund established in 1995 by the Romanian Government as a means to pay damages to the people whose properties’ had been abusively seized by the Communist regime, and which cannot be returned in kind.
In fact, the Property Fund is one of the most important investment funds in central and eastern Europe, thanks to the shares it has at some of the most important companies in Romania, in fields such as electricity, oil, natural gas and public utilities. According to Greg Konieczny, the sectors with the highest growth potential are energy, transportation, IT, banking, construction, agriculture and health-care. The importance of IT and agriculture, for instance, is growing by the day. IT accounts for 6% of Romania’s GDP, but, Konieczny says, it has the potential of reaching at least 10% in the coming years, thanks to the sector’s solid infrastructure, low costs and skilled labour force.
“The macro-economic foundation is solid: a public debt below 40% of the GDP, a budget deficit that has been properly controlled in the past years, a current account deficit below 1% of the GDP in 2015, for the first time in 25 years, and inflation rates registering historical lows”, Konieczny has said. In other words, Romania is in a good shape after completing the programme with the IMF. The International Monetary Fund has actually estimated a 5% economic growth rate for Romania this year, which is the highest rate in Europe.
Recently, the Italian group Pirelli has invested 200 million Euro in a bicycle tyre manufacturing unit in Slatina, southern Romania. Here is the Prime Minister of Romania Dacian Ciolos talking about this investment: “The fact that Pirelli has reached the fourth stage of development and investment in our country is indicative of the fact that the Romanian economy is attractive enough, not only with regard to the lower costs of labour force, but also its quality, which has improved in the past years. Also, other factors attracting more and more investors to Romania have been the predictability of economic legislation and good economic prospects. “
According to the National Bank of Romania, Foreign Direct Investments in Romania exceeded 2.7 billion Euro in the first eight months of the year, and are 17.4% higher than in the same period last year.