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Foreign Direct Investment

According to UNCTAD's World Investment Report 2023, FDI flows to Romania totaled USD 11.2 billion in 2022, 6.6% more than the level recorded a year earlier. In the same year, the total stock of FDI stood at USD 116 billion, around 38.4% of the country’s GDP. According to data from the National Bank of Romania, the breakdown of the FDI position by main economic activities reveals that more than 87% of the total FDI went to four key sectors: industry (39.2% of the FDI position), predominantly in manufacturing (30.2%, mainly transport equipment and oil, chemicals, and rubber), trade (17.7%), construction and real estate transactions (17.2%), and financial intermediation and insurance (13.2%). As of December 31, 2022, Germany remained Romania's primary foreign investor, retaining its leading position from the previous period. Companies originating from Germany held investments totaling EUR 16,120 million (14.9% of the total FDI position). Following Germany in the ranking of top investing countries are Austria (10.7%), France (9.7%), Italy (7.8%), the United States (6.7%), and the Netherlands (5.3%). Bucharest is the region that attracts the most foreign capital in the whole country. As per the National Bank of Romania, FDI inflows reached EUR 5.06 billion (USD 5.48 billion) between January and September 2023, marking a 42% decline from the EUR 8.67 billion recorded in the corresponding period last year. Equity holdings accounted for approximately EUR 5.83 billion, while intra-group loans amounted to EUR 776 million.

In terms of FDI, Romania has numerous advantages: in addition to a large domestic market, the country has a strong industrial tradition, coupled with a cost of labor among the lowest in the EU and a well-educated workforce. This has been the reason for the development of a significant industrial sector, particularly car making, but also services. Furthermore, Romania has one of the lowest tax rates in the EU. The tax regime favors industrial investment and start-up initiatives equally. A gradual pick-up of projects co-financed by EU funds brings further support for investment. On the other hand, corruption is still a problem, as is legislative instability and weak judicial independence. Romania introduced new legislation which tightens the FDI screening rules, in line with EU Regulation 2019/452: the National Council for Country's Defence (CSAT), an executive body chaired by the President of Romania and having the Prime Minister as its co-chair, may stop an investment if it is deemed to pose a threat to national security. The sectors involved include security, energy, transportation, infrastructure, weapons, etc. According to the new law, investments are subject to screening if they exceed EUR 2 million. Nonetheless, if an investment is perceived to pose a risk to national security or public order, the screening process may be triggered automatically, irrespective of whether the investment surpasses the specified threshold. Romania ranks 47th among the 132 economies on the Global Innovation Index 2023 and 51st out of 184 countries on the latest Index of Economic Freedom.

Foreign Direct Investment 202020212022
FDI Inward Flow (million USD) 3,43210,57411,273
FDI Stock (million USD) 111,387113,586115,980
Number of Greenfield Investments* 157175190
Value of Greenfield Investments (million USD) 3,8495,3408,972

Source: UNCTAD - Latest available data.

Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.

Country Comparison For the Protection of Investors Romania Eastern Europe & Central Asia United States Germany
Index of Transaction Transparency* 9.0 7.5 7.0 5.0
Index of Manager’s Responsibility** 4.0 5.0 9.0 5.0
Index of Shareholders’ Power*** 5.0 6.8 9.0 5.0

Source: Doing Business - Latest available data.

Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action.


What to consider if you invest in Romania

Strong Points

The main assets of the country for attracting foreign investment are:

  • The country's accession to the EU since 2005 has allowed it to improve the country's international relations and put an end to its relative isolation
  • The introduction since its accession to the EU of prudent monetary measures that have enabled the country to gain the confidence of foreign investors
  • A relatively low level of public debt and a favourable growth rate: 6% in 2021 (IMF)
  • A relatively large domestic market with around 21.2 million inhabitants in 2021 (CIA World Factbook)
  • A qualified and low-cost workforce
  • A strong agro-food industry (wheat, barley, rapeseed, etc.)
  • Low energy dependence on coal, oil, gas and uranium
  • A total of 96 industrial park infrastructures offering companies access to utilities and special benefits according to their field of activity, as well as exemptions from property, building and planning taxes
Weak Points

The main weaknesses of the country are:

  • Persistent political instability
  • Poor infrastructure
  • High risks of corruption
  • A large informal economy
  • Judicial, legislative, fiscal and regulatory unpredictability weakening the confidence of the business community
  • A relatively poor population with limited purchasing power and affected by a demographic decline (low birth rate and emigration of qualified young people) and
  • Fragility in the banking sector, which does not discourage investment and entrepreneurial risk-taking
  • High debt in foreign currencies the private sector
  • High external debt of the country
Government Measures to Motivate or Restrict FDI
Romania is actively seeking to attract foreign direct investment and has taken steps to strengthen tax administration, improve transparency and create legal means to resolve contractual disputes quickly. Similarly, since 2009, various governments have been able to reduce the budget deficit from 9.1% of GDP in 2009 to 4.4% in 2019 (according to the Romanian government).

The rise in wages, and in particular the minimum wage at RON 2,300 (about EUR 458), makes it possible to boost growth through sustained household consumption. Finally, the application of a new tax code, adopted in September 2015, allowed the introduction of numerous tax adjustments in favour of the liberalisation of the economy, including a reduction of the VAT rate from 24% to 19% in 2017 and a dividend tax reduction of 16 to 5% in 2017.

Investors can benefit from customs and tax incentives in six free zones (mainly located on the Danube or near the Black Sea). Investments in free zones can be subsidised by the state under EU rules on regional development aid.


Investment Opportunities

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