FDI net flow in 2018 stood at EUR 5,266 million during the 2018 financial year, according to the statistical survey regarding the foreign direct investment (FDI) conducted by the National Bank of Romania, in cooperation with the National Institute of Statistics.
EUR 5,546 million represented enterprises’ equity (equity stakes worth EUR 2,973 million, plus reinvestment of earnings worth EUR 2,573 million), while EUR -280 million debt transactions (lending to direct investors exceeded borrowing from direct investors).
FDI stock as at 31 December 2018 amounted to EUR 81,124 million, of which EUR 57,479 million equity positions, including reinvestment of earnings (70,85%) and EUR 23,645 million debt positions (29,15%).
Income from FDI in 2018
Net earnings from equity participation were EUR 6,123 million, representing the net profit of FDI enterprises, tantamount to EUR 8,930 million, less the loss of EUR 2,807 million of FDI enterprises that incurred losses.
Net income from interest, computed by subtracting the interest received by foreign direct investors on loans granted to their enterprises in Romania from the interest paid by foreign direct investors for the loans received from their enterprises in Romania – either directly or via fellow companies, stood at EUR 672 million.
In 2018, FDI net flows went primarily to trade (EUR 1,580 million), followed by manufacturing (EUR 1,362 million). The main industrial sub-sectors benefiting from foreign direct investment were transport equipment (EUR 337 million), food, beverages and tobacco (EUR 329 million) and oil processing, chemical, rubber and plastic products (EUR 205 million). Other economic activities which received large FDI inflows were financial intermediation and insurance (EUR 896 million), and construction and real estate transactions (EUR 581 million).
The following sectors reported the largest equity capital (capital increases): manufacturing (EUR 1,016 million), construction and real estate transactions (EUR 594 million) and trade (EUR 335 million).
The highest values for reinvestment of earnings were recorded by manufacturing (EUR 991 million), trade (EUR 843 million) and financial intermediation and insurance (EUR 592 million). In 2018, the intercompany net debt transactions made a negative contribution (EUR -280 million) compared to a positive contribution of EUR 829 million in 2017. By economic activity of FDI enterprises, the main sector that benefited from financing via intercompany lending was trade (EUR 401 million).
By economic activity, 41.1 percent of FDI stock were channelled to industry, primarily to manufacturing (30.9 percent of total FDI stock), out of which the largest recipients were: transport equipment (6.7 percent of total FDI stock), oil processing, chemical, rubber and plastic products (6.4 percent), and metallurgy (3.9 percent). Another industrial activity, i.e. electricity, gas and water supply, accounted for 7.4 percent of total FDI stock.
Other activities that also attracted significant FDI were construction and real estate transactions (16.8 percent of FDI stock), trade (15.8 percent), financial intermediation and insurance (11.5 percent).
Which regions and counties lured the highest number of FDI?
FDI went mainly to the BUCHAREST-ILFOV region (60.7 percent). Other development regions which attracted significant FDI inflows were: the CENTRE region (9.0 percent), the WEST region (8.6 percent), the SOUTH-MUNTENIA region (6.3 percent), and the NORTH-WEST region (5.7 percent).
By counties, Bucharest has led the ranking, luring investments of EUR 41,273 M, followed by Timis, EUR 4,359 M and Prahova – EUR 2,481 M.
The counties that attracted the fewest foreign direct investments were Gorj- EUR 3 M, Mehedinti- EUR 16 M, Teleorman-EUR 87M and Vaslui-EUR 92 M.
The biggest foreign investors in Romania
The top five countries by share of FDI stock as at 31 December 2018 were: the Netherlands (23.9 percent of the FDI stock at end-2018), Germany (12.7 percent), Austria (12.2 percent), Italy (9.5 percent) and Cyprus (6.2 percent). Regarding the ranking of the top five countries, Italy consolidated its fourth position, while Cyprus surpassed France, climbing to the fifth place.