Romania – Top Destination for Investments

Romania – Top Romania – Top Destination for Destination for

InvestmentsInvestmentsThessaloniki, June, 2007

2

Structure of the Structure of the PresentationPresentation

1.Positioning Romania2.Macroeconomics3.Valuable human potential4.FDI performance5.Infrastructure development

6.Investment legal framework7.Potential sectors for

development8.ARIS – one stop shop

1. Positioning Romania1. Positioning Romania

4

Romania the largest market in CE Romania the largest market in CE EuropeEurope

Our friend the wind

AreaArea 238,391 km2

PopulatioPopulationn

21.6 mill inhabitants

Capital Capital citycity

Bucharest1.9 mill inh

Member Member ofof

EU, WTO, IMF, WB, EFTA, NATO

Major Major CitiesCities

Iasi, Timisoara, Cluj-Napoca,Brasov, Constanta

5

Romania’s Strategic LocationRomania’s Strategic Location

Helsinki – Bucharest –Odessa/AlexandropouloIXIX

The Danube river2,300 km longVIIVII

Dresden/NurembergConstanta/Thessaloniki/Istanbul

IVIV

Pan European Pan European Transport CorridorsTransport Corridors

Strategic position at Strategic position at the turning point where the turning point where EU meets the Balkans EU meets the Balkans

and CIS countriesand CIS countries

2. Macroeconomics2. Macroeconomics

7

4.1%

7.7%6.5%

8.4%

5.2%5.1%5.7%

2.1%

2000 2001 2002 2003 2004 2005 2006 2007e

Significant Potential for Significant Potential for GrowthGrowth

2006

Rapid & sustainable GDP growth; 7.7% in 2006, based on increases in final

consumption by 11.5% and in investment by 16.1%; Highly comparable with EU25 GDP growth rate of

2.9% in 2006.

Source: EUROSTAT, *forecast Source: National Institute of Statistics

GDP Growth RateSlovakia 8.3%Romania 7.7%Czech Republic*

6.1%

Bulgaria 6.1%Poland 5.8%Slovenia 5.2%Hungary 3.9%

8

Declining InflationDeclining Inflation

Consolidation of low inflation (sustainable

disinflation); 3.66% (Mar'07/Mar'06), a record low for the post-1990

period; Average annual rate - 6.56% in 2006.

Source: EUROSTAT Source: National Bank of Romania

Inflation Rate

4.0% 3.8%4.86%8.6%

40.7%

30.3%

17.8%14.1%

9.3%

2000 2001 2002 2003 2004 2005 2006 2007e 2008e

Annual Inflation Annual Inflation RateRate

Dec'06/Dec'05HungaryHungary 6.6%6.6%BulgariaBulgaria 6.1%6.1%Romania Romania 4.9%4.9%SlovakiaSlovakia 3.7%3.7%SloveniaSlovenia 3.0%3.0%Czech RepCzech Rep 1.5%1.5%PolandPoland 1.4%1.4%

3. Valuable Human Potential3. Valuable Human Potential

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Human CapitalHuman Capital

Young population (more than 50% under 40 years old)Almost 21.7 million people

Demographics

Talent pool160 higher education institutions109 thou university graduatesAvailability of technical engineersHigh industrial experienceFlexibilityIncreased labor productivity Low unionization

Cities with more than 100,000 inhabitants

more than 1,000,000 inhabitants300,000 – 400,000 inhabitants200,000 – 300,000 inhabitants100,000 – 200,000 inhabitants

Source: National Institute of Statistics

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BUCURESTIBUCURESTI

376 thou376 thouState: 67%State: 67% Private: 33%Private: 33%

CLUJ-CLUJ-NAPOCANAPOCA

SIBIUSIBIU

TIMISOARATIMISOARA

BRASOVBRASOV

IASIIASI

CRAIOVACRAIOVA

GALATIGALATI

70 thou70 thouS: 93%S: 93% P: 7%P: 7%

67 thou67 thouS: 90%S: 90% P: 10%P: 10%

51 thou51 thouS: 89%S: 89% P: 11%P: 11%

46 thou46 thouS: 69%S: 69% P: 31%P: 31%

34 thou34 thouS: 89%S: 89% P: 11%P: 11%

24 thou24 thouS: 92%S: 92% P: 8%P: 8%

21 thou21 thouS: 87%S: 87% P: 13%P: 13%

20 thou20 thouS: 86%S: 86% P: 14%P: 14%

PITESTIPITESTI

14 thou14 thouS: 79%S: 79% P: 21%P: 21%

TARGU - TARGU - MURESMURES

BUCURESTIBUCURESTI

10 Major University 10 Major University CentersCenters

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181326504637648

713

1213

Slovenia Czech Rep Ungaria Poland Slovakia Romania Bulgaria

CompetitiveCompetitive Labor CostLabor Cost

174 179 204267

326380

2002 2003 2004 2005 2006 2007e

Regional ComparisonRegional Comparison2006 - EUR2006 - EUR

Gross monthly wagesGross monthly wagesEUREUR

Source: Vienna Institute of International Economic Studies; National Institutes of Statistics

The average gross monthly wage in Romania is the second lowest after Bulgaria

It is expected to grow by 16.7% in 2007

4. FDI Performance4. FDI Performance

14

1147 1294 1212

5183 5213

9082

1946

2000 2001 2002 2003 2004 2005 2006

Inward FDI FlowsInward FDI Flows2006

Record value in 2006; FDI Stock over EUR 30 bill (1990 –2006); In February 2007 – EUR 870 mill

Source: Vienna Institute of International Economic Studies

Source: National Bank of Romania

Annual Inward FDI1 Poland 110932 Romania 90823 Hungary 48744 Czech

Republic4752

5 Bulgaria 41056 Slovakia 33247 Slovenia 303

EUR

mill

ion

15

Subscribed Capital by Country Subscribed Capital by Country and by Field of Activityand by Field of Activity

- March 2007 –- March 2007 –

No CountryNo. of

companies

Subscribed

capital EURO mill

11 NetherlanNetherlandsds

27872787 32103210

22 AustriaAustria 43574357 2182218233 FranceFrance 48774877 1574157444 GermanyGermany 1456914569 1562156255 ItalyItaly 2231422314 73673666 USAUSA 50435043 67467477 Great Great

BritainBritain29012901 630630

88 CyprusCyprus 26932693 61761799 GreeceGreece 37123712 554554

1010 Dutch Dutch AntillesAntilles

1212 547547

Industry50.7%

Retailing5.3%

Wholesale6.4%

Transport6.2%

Construction1.3%

Tourism 1.4%

Agriculture0.9%

Services27.8%

Value of Subscribed Value of Subscribed Capital Capital

by Field of Activityby Field of Activity

Source: National Trade Register Office

16

the the NetherlandsNetherlands AustriaAustria GermanyGermany GreeceGreece FranceFrance

4.264.26bill EURbill EUR





SwitzerlandSwitzerland ItalyItaly CyprusCyprus USAUSA HungaryHungary






Major Investing CountriesMajor Investing Countries(1990-2005)(1990-2005)

1 2 3 4 5

6 7 8 9 10


17

14.5%

15.0%

37.3%

4.2%3.0%

7.7% 7.3%10.9%

Manufacturing TradeFinancial services CommunicationServices MiningUtilities Others

FDI by Field of ActivityFDI by Field of Activity(1990-2005)(1990-2005)

4.3%3.8%

11.0%

7.5%

8.6%

4.8%7.0%22.0%

17.4%13.7%

Methalurgy Food processing

Transport means Chemicals

Construction materials Wood processing

Textile IT&C

Machinery Others

Manufacturing – 8.2 bill EUR

Main Activities – 21.9 bill EUR


18

North-West5.8% 1.3 bill

CENTRU7.4% 1.6 bill

West6.8% 1.5 bill

Bucharest-Ilfov

60.6% 13.2 bill

South West0.7 bill 3.4%

South Muntenia

1.4 bill 6.3%

South East1.8 bill 8.4%

North East0.2 bill 1.3%

FDI Regional Spreading FDI Regional Spreading (1990-2005)(1990-2005)


1

23

4 5

6

7

8

5. Infrastructure Development5. Infrastructure Development

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BUCURESTI FETESTI

CERNAVODA

GIURGIU

ADUNATII COPACENI

GILAU

ARAD

TIMISOARA

DRAJNA

SUPLACU DE BARCAU

BORS

NADLAC

LUGOJ

DEVA

ORASTIE

SEBES

SIBIU

PITESTI

CONSTANTA

MIHAILESTI

CAMPIATURZII

TARGU MURES

SIGHISOARA

FAGARAS

BRASOV

PREDEAL

COMARNIC

PLOIESTI

BUZAU

FOCSANICRISTIAN GHIMBAV

BICAZ

PRAID

SOVATA

PIATRA NEAMT

GHEORGHIENI

SABAOANI

ALBITA

CRAIOVA

CALAFAT

IASI

Highway Infrastructure Development - 2013

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ARADARAD

CRAIOVCRAIOVAA

TIMISOATIMISOARARA

BAIA MAREBAIA MARESATU SATU MAREMARE

CLUJ CLUJ NAPOCANAPOCA

ORADEAORADEA

TARGU TARGU MURESMURES

SIBIUSIBIU

OTOPEOTOPENINI

IASIIASI

BACAUBACAU

SUCEAVSUCEAVAA

M. M. KOGALNICEANKOGALNICEAN

UU

BANEABANEASASA

MANGAMANGALIALIA

CONSTANCONSTANTATA

BRAILABRAILA

GALAGALATITI

OLTENIOLTENITATAGIURGIGIURGI

UU

SULINSULINAA

CORABICORABIAA

DROBETA TR. DROBETA TR. SEVERINSEVERIN

Ports and AirportsPorts and Airports

International flights

Domestic flights

TULCETULCEAA

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Mobile Communication Mobile Communication InfrastructureInfrastructure

– coverage area -– coverage area -

Consolidated market; Major international players; More than 90% network

coverage.

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Map of Industrial ParksMap of Industrial Parks

More than 40 Industrial ParksBoth private & publicGreenfield & BrownfieldAccess to utilitiesPackage of services offered by the park administrationWide variety of activities to be developedSome created for high-tech activities

6. Investment Legal Framework6. Investment Legal Framework

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CompetitiveCompetitive TaxationTaxationCorporate Corporate

TaxTax VATVATSocial ContributionsSocial Contributions

EmployeeEmployee EmployerEmployer

BulgariaBulgaria 10% 20% 12.43% 24-24.7%RomaniaRomania 16% 19% 17% 30.75-

44.75%HungaryHungary 16% 20% 13.5% 33.5%PolandPoland 19% 22% 18.71% 17.23-

20.12%SlovakiaSlovakia 19% 19% 13.4% 34.4%Czech Rep.Czech Rep. 24% 19% 12.5% 35%SloveniaSlovenia 25% 20% 22.1% 16.10%Source: CEE-CIS Tax Notes - Source: CEE-CIS Tax Notes -

PriceWaterhouseCoopersPriceWaterhouseCoopers

Many Central and Eastern European countries reduced Many Central and Eastern European countries reduced considerably their corporate tax in order to diminish the considerably their corporate tax in order to diminish the fiscal burdenfiscal burden

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New Investment LawNew Investment Law Incentives for investments in Romania in:

regional development (including infrastructure)

environment protection

research and development

human resources and social inclusion, including

training

Directed according to economic status of

each region

Law expected to be passed by Autumn 2007

7. Potential Sectors for 7. Potential Sectors for DevelopmentDevelopment

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Potential Sectors for Potential Sectors for InvestmentInvestment

Manufacturing Wood processing Automotive

components Construction

materials IT & Communication Textile industry Energy (non-

conventional) Food processing

Electric & Electronics Pharmaceuticals Real Estate Infrastructure

8. ARIS – one stop shop for 8. ARIS – one stop shop for foreign investorsforeign investors

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WHO is A.R.I.S?WHO is A.R.I.S?

Governmental body under

the authority of Prime Minister

In charge with attracting and

retaining foreign direct investment

Interface between

investors and central & local

authorities

Providing free of charge

SERVICESSERVICES for foreign

investors in Romania

Search and advice on the best location in Romania to fulfill the company' needs

including site search, analysis &

touring around

Search for industrial

and service suppliers

Value added information on

incentives and other

administrative procedures

SERVICES

Thank you Thank you for your attention!for your attention!

tel: +40 21 233.91.03tel: +40 21 233.91.03fax: +40 21 233.91.04fax: +40 21 233.91.04email: [email protected]: [email protected]: www.arisinvest.rowebsite: www.arisinvest.ro

Romania – Top Destination for Investments

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