Is Romania still Europe’s candy?
by Andreea Marinas
Who is still seeing growth prospective in Romania and where? Because lately we hear more and more complaints from the top-executives passing by and suggestions such as ‘you should invest more in education’ or ‘Romania doesn’t have modern infrastructure nor a Carpathian highway which to connect its historic regions, 100 years after the great unification’. All these while Slovakia attracts EUR 1.4 bn investments in Jaguar Land Rover plant, Hungary a EUR 1 bn investment in a Daimler plant and Poland EUR 0.5 bn from the same investor.
Witnessing the 15 Km of highway enforced over the past two years and the postponed works for the freeway that is supposed to tie up Pitesti and Sibiu, one could not say otherwise. Especially when probably knowing about the ‘hear no evil, see no evil’ mentality present in the EU institutions, the main decision-maker on structural funds, so existentially important for the development of the less privileged countries. However, as evidence coming from a study by the Ifo Institute for Economic Research at the University of Munich shows, it is the internal market, much more than EU aid, that drives growth in Eastern Europe, region that, after the EU enlargement in 2004 and 2007, has benefited massively from their connection to the European single market.
The problem is that there’s plenty of room left for foreign investments in Romania and also for EU funds randomly fully absorbed. How to tackle the issue when recent studies show that even within its own borders there’s a gap between the development speeds and investor preferences? West gained ground, having generated 60% from the GDP per capita compared to the EU as a whole, so Timisoara alongside Bucharest rule. Yet, statistically, the economic gap between regions is narrowing, although this particularly in the East.
Apart from the underrepresentation of the other regions, there is still a problem of broadening the outreach in terms of EU funds. While foreign companies take out from Romania EUR 5 bn a year, bringing only 3 bn per year. This, coupled with the ‘if we don’t talk about it, the problem doesn’t exist’ principle followed by the EU, is kind of dragging Romania – and Europe with it – backwards and this time not for not valuing diversity.
What new production facilities are to be set up in cheaper Eastern Europe this year and which ones are already in place even though not yet ready?
Arcelik started investing last year EUR 70 M near Targoviste in a washing machine factory. Another EUR 30 M investment was to take place in Tetarom III Industrial Park from Jucu, near Cluj. For Mercedes cars, Chinese company Ningbo HuaXiang Electronic Co Ltd was planning to invest last year USD 30m in a production unit in Brasov. In Braila, Belgian WDP started last year a new car cable factory for BMW. And so on with few other investments amounting to dozens of millions of Euros, except for Continental that invested last year EUR 175m in Romania and plans to invest just the same amount also in 2018.
In the end, to fully answer my first question: according to ONRC, the first five countries of residence of foreign investors taking into account the number of companies doing business in our country are: China (1,.334), Hungary (13,494), Turkey (15,097), Germany (22,105) and Italy (45,542).