Two decades after the fall of Communism and only four years since its entry into the European Union (EU), Romania is becoming a vibrant center for business, with some of the strongest prospects in the European Union.
GDP is forecast to grow 1.5% in 2011, which is unsurprising given its assets, since the country boasts a number of valuable natural resources, such as oil, timber, natural gas, coal, salt and iron ore, as well as a growing renewable energy sector and rich agricultural lands. Romania therefore finds itself in an enviable position to benefit from the global increase in energy and food demand.
The nation is also an important player both in terms of transport and security due to its excellent geostrategic position. The EU’s easternmost country, Romania is bordered by the Black Sea; and with Hungary, Serbia, Moldova, Bulgaria and Ukraine as its neighbors, it has the largest amount of non-EU borders of any country in the Union.
Romania is also an increasingly popular tourist destination due to its rich history, scenic beauty and wildlife. It boasts spectacular sites like the Danube Delta, recognized by UNESCO for its exceptional biodiversity, and Transylvania, birthplace of Vlad Tepes – the inspiration for Count Dracula. Around 1.34 million foreign tourists visited Romania in 2010, up 5.5% from 2009. According to the World Travel and Tourism Council (WTTC), Romania’s tourism industry is expected to grow annually by 6.7% from 2009-2018.
However, to maximize its potential, Romania requires significant development. It has for many years enjoyed a strong relationship with the U.S. on a diplomatic level, and only this year agreed that an American anti-missile shield should be built and placed in Romania. Now Romania wants to cement this relationship through business. Romanian President Traian Basescu says: “Romania is committed to strengthening the strategic partnership with the U.S., especially in the area of economics and trade relations.”
The Romanian government wants to demonstrate to foreign investors that Romania is a stable and safe place to invest. In recent years the country has been through a remarkable phase of economic reform. The administration of President Basescu embarked on wide-ranging austerity measures which have improved the efficiency of state-owned companies, and has initiated a privatization program. The measures have been recognized as a success by the International Monetary Fund (IMF). INVESTMENT POTENTIAL
Romania is a country of considerable potential for American investors given that it is the closest ally in the region, with stable economic projections, a highly skilled talent pool and low labor costs to boot. Romania is also an EU member, meaning any company that invests in Romania can export to any country within the EU without any barriers. Increasingly, more and more European operations of U.S. companies are moving their headquarters to Romania for these reasons.
In terms of sectors, Romania offers some golden opportunities – particularly in energy.
Karoly Borbely, Secretary of State within the Ministry of Economy, Trade and Business Environment, says, “Energy is the government’s number one priority, and 75% of investors coming here now are specifically interested in renewable energy sources. We have solar energy, wind, and we also have a lot of hydropower plants, but much more money is needed to effectively invest in these plants. American companies have excellent know-how within this field and we can learn a lot from them. Our government is willing to help anybody wanting to invest and any company that invests at least €5 million ($7 million) can get state aid.”
|‘ROMANIA IS ATTRACTING AMERICAN COMPANIES BECAUSE OF ITS STABILITY, HIGH POTENTIAL IN AGRICULTURE, ENERGY, IT AND RENEWABLE SECTORS; AND RICH NATURAL RESOURCES’ |
There is also much room for American partnerships in agriculture and infrastructure. Mugur Isarescu, governor of the National Bank of Romania, says, “American businessmen are looking for long-term, sustainable projects. Romania’s location on the Black Sea has a lot of potential. Romania is connected through its waterways to the Middle East and there is potential to develop a transport link from Europe to the Middle East.”
Mr. Isarescu also believes agriculture is a key area for development. “There is a lot of discussion about a food crisis in the future and I know some countries have limited land. The oil-rich countries in the Middle East are looking to extend their access to agriculture. A joint venture between Middle Eastern money, American knowledge and Romanian land would be a good idea.”
The tourist industry also provides significant potential because Romania is still relatively undiscovered and there are many opportunities for expanded development in tourism on the Black Sea and in the Carpathian Mountains.
U.S. Ambassador to Romania, Mark Gitenstein, comments: “There is no higher priority for the U.S. today than for Romania to become an effective democracy sustained by a transparent and efficient free market. At the heart of that endeavor is creating a larger private sector. Romania is attracting American companies because of its stability, high potential in agriculture, energy, IT and renewable sectors, as well as its rich natural resources.”
Mr. Isarescu adds: “What Romania needs now more than anything else is the credibility and confidence it deserves.”