Romania A Strategic Choice December 2017, Bucharest Romania - - PowerPoint PPT Presentation

Romania A Strategic Choice December 2017, Bucharest

Romania - Country overview Area: 238,391 km2 Best performance in EU 7% 2004 - NATO membership GDP Growth Jan – Sep 2017 Capital: Bucharest 70bn FDI stock Currency: RON 2007 - EU membership EUR/ RON: 4.5 Population: 2019 - EU Presidency apox: 20 mill Bucharest Metropolitan Area: 3mill Strategic US-Romanian S & P Moody’s Fitch Bridge between East and partnership BBB- Baa3- BBB- West for 500 mill consumers Stable Stable Stable market

At a glance 2 nd largest country in CEE and the  largest in SEE in terms of size (the 9 th in EU28) and population (the 7 th in EU28) At the crossroads of 3 great markets:  the European Union, the CIS (Commonwealth of Independent States) and the Middle East 2 nd in EU for average peak connection  speeds and 6th for 4 Mbps broadband adoption in Q1 2017* Source: *Akamai Q1 2017 State of the internet report

Potential for Growth GDP growth (%) 8,5 8,1 6,9 7,0 Q3-2017: 8.8% 4,8 1,1 4,2 -0,8 0,6 3,9 3,5 3,1 Jan – Sep 2017: 7.0 % (Source: National Institute of Statistics) -7,1 Forecast (Source: Eurostat) 2017: 6.1% 2018: 5.5% (Source: National Commission of Prognosis) FDI Inflows 9,5 9,1 7,3 (bn EUR) 5,2 4,5 3,5 3,4 2,7 2,5 2,4 2,3 1,7 FDI 2017 (9 months) bn 3.4 EUR (Source: National Bank of Romania)

Inflation Inflation rate (%) 9,1 7,9 (Source: National Institute of Statistics) 6,6 6,1 5,8 5,6 4,9 4,0 Target 3,3 1,1 December 2017: 2.7% December 2018: 3.2% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 (Source: National Bank of Romania) -1,5 -0,6 Deflation due to: reducing the standard VAT rate from 24% to 20%;  the disinflationary influence exerted by the external environment;  the dynamics of commodity prices on international markets (eg: oil, agri-food products).  Inflation started to be on a positive trend at the beginning of 2017 due to the persistence of the internal inflationary pressures associated with the increase of aggregate demand and the rise in wage costs.

Minimum Wage in EU Minimum Monthly Gross Wage in EU 1999 January 2017 (EUR) 1480 1498 1532 1552 1563 826 805 736 684 650 470 453 435 433 412 407 380 380 322 235 Source: EUROSTAT *Starting February 1 st 2017 Government program target 2020: 450 EUR/month

Unemployment Unemployment rate (%) (Source: National Institute of Statistics) 7,3 7,2 7,2 7,1 7,0 6,8 6,8 6,8 6,5 6,4 5,9 5,6 Forecast 2017: 5.0% (Source: National Commission for Prognosis) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Skilled labor force Languages studied by Romanian students 97% of Romanian high school students study 2 or more foreign languages • 97% The predominant languages are English, French, German and Spanish, yet initiatives for • teaching Japanese, Nordic languages or the entire Latin language family (Spanish, Italian, French) exist University students in Romania are proficient in [% of total]: 26% 17% 8% 5% 90% Source: ABSL, NIS, Eurostat

Skilled labor force

Romania Largest Market in the SEE Hourly labor costs 2016 Maximum broadband speed One of the most 2 Second in EU for 2 competitive average peak labor force in the UKR connection speeds CEE MD HU RO Gas prices ranking World Bank ease of doing business 4 th lowest gas prices SRB BG 36 4 Ahead of Bulgaria, 4 th lowest electricity Croatia, Hungary, price in Europe Italy, Turkey, Serbia or Greece Source: World Bank, Doing Business Report 2016; Akamai Q1 2017 Report; Eurostat 2017

VALUE FOR MONEY BUCHAREST BERLIN LONDON € 100 € 169 € 209 Consumer Prices € 100 € 229 € 543 Rent Prices Restaurant Prices € 100 € 153 € 244 Groceries Prices € 100 € 169 € 189 Standard of living € 1,767 € 3,228 € 5,058 equivalency net salary Source: Numbeo, October, 2017

Overview of the Romanian tax system VAT Social Security Employee Employer 24% 20% 18% 19% 45% 2.25% 2015 2019 2016 2017/18 Starting January 1 st 2018 Food products: 9% Corporate & Tax System Reinvested Dividend Tax Rate Income Tax Rate profit tax 5% 10% 0% 2017 Starting January 1 st 2018 R&D - 0 % corporate tax for R&D companies IT&C - 0 % income tax for employees 0 % income tax for employees  BA -14 technical specializations available Deduction of R&D eligible expenses:  Employee is hired on a software engineer/  depreciation of R&D equipment, salaries for R&D programmer/ software analyst position personnel; 50% of these expenses can be deducted from  Annual revenue per exempted employee must be the taxable income over USD 10 000

Investment Support STATE AID 2014-2020 Total Budget EUR 1.5 billion STATE AID - GD 807/ 2014 STATE AID - GD 332 / 2014 Minimum EUR 10 mil. investment Minimum 10 new jobs/ per location Construction of new buildings  Salary costs registered for a 2  Renting costs for existing buildings  consecutive year period resulted as a CAPEX aimed at technical  direct consequence of the investment installations and tools Salary costs are comprised of gross  Acquisition of intellectual property  average annual salary plus benefits FISCAL INCENTIVES Investors that set up manufacturing locations or offices in an industrial, scientific or technological park benefit from : Exemption on land, building and urban planning tax   Taxes charged for changing land destination

Intensity State Aid State aid intensity, according to development region: North-West 50% • North West – 50% North-East 50% North East – 50% • Center South East – 50% • 50% West 35% • South – 50% South-East 50% South West – 50% • 35% South-West West – 35% • 50% South 50% 10% • Ilfov County – 35% • Bucharest – 10% Source: Ministry of Public Finance

Investment Support 37.4 mill Eur 28 mill Eur Ploiesti West Industrial Park Park Sebes 11 mill Eur Tetarom Jucu Park/ 15 mill Eur Cluj-Napoca 16 mill Eur Tetarom Jucu Park/ Ploiesti West Park Cluj-Napoca

Ports and Airports  130 direct flights leading to 76 destinations in 31 countries SUCEAVA worldwide IASI SATU BAIA MARE MARE  14 international airports and 8 ORADEA BACAU CLUJ- major ports TARGU MURES NAPOCA GALATI ARAD  Constanta Port - the deepest and BRASOV SULINA SIBIU TULCEA BRAILA largest port at the Black Sea. TIMISOARA M.KOGALNICEANU International Fligths CONSTANTA BUCURESTI Ports DROBETA TR. OTOPENI SEVERIN MANGALIA CRAIOVA Under construction GIURGIU Aircraft trafic reached 16 mill. passengers in 2016, up by 20% compared to 2015

Industrial Parks Status at regional level (November , 2017) 1 1 1 North West Region: 18 parks 2 1 1 4 1 West Region: 6 parks 11 1 1 South West Region: 6 parks 1 2 1 South Region: 22 parks 3 10 3 1 2 South East Region: 2 parks 1 2 1 14 North East Region: 6 parks 4 1 2 1 Center: 17 parks 1 2 2 Bucharest: 2 parks  79 industrial parks spread across Romania - both private and public ownership  Access to utilities & benefits packages according to their focus Source: Ministry of Regional Development  Exemption on land, building and urban planning taxes and Public Administration

Industrial Parks Industrial Park Ploiești Industrial Park Bra șov Industrial Park Slatina

FDI Stock by Field of Activity at 31 December 2016 Sectors EUR % of million total FDI TOTAL 70,113 100.0 By economic activity, FDI stock was channeled primarily to Manufacturing 22,435 32.0 manufacturing, with the following Construction and real estate transactions 9,794 14.0 largest recipients: Trade 8,994 12.8  transport equipment oil processing  Financial intermediation and insurance 8,844 12.6 chemical  Electricity, gas and water supply 6,713 9.6 rubber and plastic products  metallurgy  Professional, scientific, technical and  food administrative activities and support 3,908 5.6 beverages and tobacco  services manufacture of computer  IT&C 3,628 5.2 electronic  optical and electrical Mining 1,831 2.6  products Agriculture, forestry and fishing 1,836 2.6 Other 2,130 3.0 Source: National Bank of Romania

Key facts for top tech oriented industries in Romania INDUSTRY SIZE KEY PLAYERS KEY PROJECTS AEROSPACE EUR • Premium Aerotec EUR 50m investment 400M • Sonaca EUR 12m investment Airbus Helicopters EUR 15m • investment IT&C Siemens software dev. worked • EUR on the Mars Rover Deutsche Bank EUR 40m • 3.6B investment LiveRail was acquired by • 4.0B estimated for 2017 Facebook for EUR 600m Continental EUR 26m • AUTOMOTIVE EUR investment in R&D center Daimler EUR 300m • investment for gear boxes 22B Ford EUR 200m investment • for production of new model Source: Invest Romania