Romania FDI - inward, outward - (policy, present, history) on the Worl Investment Raport of 2012 UNCTAD, Romania is considered

ered a developed country, but not yeat a member of OECD. For the Government of Romania, the membership to OECD is seen as a strategic foreign policy included in the Government programme for 2013-2016. to do so Romania must meet the criteria of: market based economy, functional democracy, boost it economic potential in order to be considered a significant player by the OECD standards. There has to be a mutual benefic for both Romania and OECD. by achieving this goal Romania thinks that the FDI rate will rise and investors from US, China, Japan and other European countries, but not members of the EU, will consider appropriate to invest in Romania. Romania conducts several activities such as: external promotion that facilitates the access on foreign markets and the expansion of Romanian companies already present abroad; provide market intelligence and contacts to Romanian entrepreneurs interested to access foreign markets; Arranging meetings with business representatives to identify best ways to provide support; Organizing economic events European (80 per cent) and US investors (20 per cent) account for the bulk of FDI in Romania. The interest of foreign companies mainly focuses on industry, construction, agriculture, tourism and other services. FDI also dominates mobile telecommunications, banking and insurance and oil and gas. Spread among some 100000 firms, FDI is considered to be integrated into the local economy. About 50% of the total comes from just three countries: Austria, the Netherlands and Germany. Western European investors also predominate in most other central and eastern European Member States Romania has an important position in the Central and Eastern Europe in terms of volume of attracted foreign investments. Although the crisis has affected the investing behavior in Europe, Romania continues to be, along with Slovenia, more attractive than other countries in the region. However, in Romania, in FDI recorded a sharp decline since 2009. 2007 FDI: EUR 7,250 million: manufacturing (32.9% of total), out of which the largest recipients were: metallurgy (7.5%), food, beverages and tobacco (5.2%), oil processing, chemicals, rubber and plastic products (4.4%), transport means (3.6%) and cement, glassware, ceramics (3.5%). financial intermediation and insurance, which include banking and insurance and account for 23.3% of total FDI stock, wholesale and retail trade (14%), construction and real estate (7.8%), telecommunications (6.5%) and services rendered to enterprises (4.5%). Despite their large potential, certain sectors, such as textiles, wearing apparel, leather goods (1.7%), as well as hotels and restaurants (0.6% of total FDI). From Austria (21.4% of total stock at the end of 2007, down from 23% a year earlier), the Netherlands (16.3%, slightly down from 17.1% in 2006), Germany (11.7%, increasing from 10.1%),France (8.8% compared with 8% in 2006), and Greece (7,5% staying flat year on year). 2008 FDI: EUR 9,496 million: manufacturing (31.3 percent of total), out of which the largest recipients were: metallurgy (6.9 percent), food, beverages and tobacco (4.6 percent), oil processing, chemicals, rubber and plastic products (4.3 percent), transport equipment (4 percent) and cement, glassware, ceramics (3.6 percent). Despite their large potential, certain sectors such as textiles, wearing apparel and leather goods still hold a rather small share, i.e. 1.6 percent of total FDI. Other activities that have attracted significant foreign direct investment are financial intermediation and insurance, which include banks, non-banks and insurance companies and account for 20.5 percent of total FDI stock, construction and real estate (12.6 percent), trade (12.4 percent), IT and communications (6.7 percent). From: Austria (18.8 percent of total stock at the end of 2008, down from 21.4 percent a year earlier), the Netherlands (17.2 percent, up from 16.3 percent in 2007), Germany (15.4 percent, up from 11.7

percent), France (8.8 percent, the same as in 2007), and Italy (7.2 percent versus 6.1 percent, thereby replacing Greece in top 5 countries of FDI origin) 2009 FDI: EUR 3,488 million: the distribution per sector remains the same, nothing spectacular happened just the drop-out. Top 5 countries by the share of total FDI stock as at 31 December 2009 are: the Netherlands (21.8 percent, up from 17.2 percent in 2008), Austria (18.1 percent of total stock at the end of 2009, down from 18.8 percent a year earlier), Germany (13.4 percent, down from 15.4 percent), France (8.5 percent, the same as in 2008) and Greece (6.6 percent, staying flat year on year). 2010 FDI: EUR 2,220 milion: Real-estate at 9%. Top investors: the same. 2011 FDI: EUR 1,815 million. Sector distribution remains the same as in 2010. Greece decreased one place and was overcome by Italy.

National and international actors: With over 19% of the total foreign investment in Romania, The Netherlands occupies the first place in the top of foreign investors. More than 3,200 companies activating on the Romanian market have Dutch capital, high investment being made by Unilever, ING (ING Bank, ING Nederlanden, and ING Securities), ABN AMRO Bank, Frans Maas, Remco, Philips, Damen Shipyards Group, KPMG, Heineken, SPAR, Friesland, Verder Group, TNT, Golden Tulip Hotels, KLG (Kuijken Logistics Group), Centrum Transport, etc. The Dutch companies are mainly investing in production and logistic, IT, milk processing, banking, etc. Currently, Austria ranks second within the classification of foreign investors in Romania and over 5,000 companies having Austrian capital. The leading Austrian investors in Romania are, apart from Erste Bank: OMV, Raiffeisen, Schweighofer, Strabag, Porsche Romania, Bramac Baumit Wienerberger, Volksbank, Vienna Insurance (owner of Omniasig and Unita). Many Austrian companies are interested in investing in real estate, in buying land in the vicinity of motorways and transport knots, in machine construction, metallurgy, measurement and equipment production, food industry, construction materials, etc. Germany, one of the most important commercial partners of Romania is occupying the third position as investor with over 15,900 companies registered and operating in Romania. The majority of German investments are in small businesses. More than 90% of these investments amount to less than EUR 40,000, still the Germanys contribution to the strength of the Romanian economy is substantial. However, the above mentioned figures do not take into account the fact that a number of major German companies have affected their investment in Romania through their branches in various European countries. Main investment sectors for the German companies are: automotive industry, metallurgy, wholesale trade, plastics industry, textile industry, retail trade, IT, financial services and main players are: Metro, Praktiker, Kaufland (part of Group Lidl & Schwarz), Selgros, Billa, Tengelmann (Plus), E.ON Ruhrgas, Steilmann, Linde Gas, Heidelberger Cement (CarpatCement), Siemens, Dr. Oetker, etc. German investors had become interested in automotive components, constructions, textiles and retail. Over 5,500 French capital companies are registered with the Romanian Trade Register. The major French investors are Orange, Socit Gnrale, Lafarge Romcim, Renault-Dacia, Vivendi Environment, Michelin, Gaz de France, Carrefour and Alcatel. French investors were mainly interested in companies being privatized, greenfield investments being less preferred. Gas de France took over Distrigaz Sud in 2006, while other important investors started some major greenfield projects: Saint Gobain, Faurecia, Auchan. Italy is presently one of the most important commercial partners of Romania with more than 25,400 Italian capital companies registered with the Romanian Trade Register. Mainly Italian investments are focused on the so-called labor intensive projects, developing the lohn system with raw materials brought from Italy. The traditional sectors in which Italians have been investing so far are textiles, construction, trade, services and with recent projects focused on food industry and agriculture. The biggest Italian investment so far is made by ENEL that recently bought Electrica Muntenia South. Besides ENEL other important investors are: Italstrade, Unicredito Italiano, Radicifibres, DeLonghi, Butangas, Pirelli Telecom, Tenaris Dalmine, Radici, Natuzzi, Zoppas, Cefin Preferred fields for the Greek investors are: telecommunications, construction sector, IT, plastic industry, distribution, banking system. Main investors are: Romtelecom, Cosmote, Alpha Bank, Egnatia, Piraeus, Alexandrion, Loulis, Chipita, Diekat, Aegef, Terna, Techniki Olimpiaki, Arcon, Maillis, Altec, Alumil, Viohalco, Stirom, Marks&Spencer, Body Shop, Germanos, Elgeka. State-own enterprises like Romgaz, Cuprumin (mining), Nuclearelecrica, Hidroelectrica (power plants, hydroelectric plants, nuclear plants), Petrom (oil), Oltchim (petrochemicals) play a key role in today's investment scenario.

Regulatory regime - Starting with 1991, the Romanian legislation had in view to attract foreign capital in the economy. Therefore, in order to stimulate the interest of foreign and local investors for developing new investment projects in Romania, the legal framework was changed several times, aiming to identify the most suitable and efficient incentives to be granted to investors for stimulating the development of the economy. The changes in the specific rules are representative for a dynamic and flexible legal frame which adapts easily to the market demands and to the current needs of the business environment. - The maximum amount of incentives granted by the Romanian law for each investment project should not exceed the maximum allowed state financial aid, in accordance with the EU provisions on state financial aid. - Foreign investors have to obey national rules. Non-resident investors have the same rights as any resident investor. There is no limit on the foreign share in companies; a foreign investor may establish or acquire a 100 percent enterprise in Romania. The capital of a foreign investor can take many forms, including foreign currency, equipment, services, rights of intellectual property, know-how and management expertise and the proceeds and profits resulting from other businesses in Romania. - Romanian rules also provide investment guarantees against measures of ownership appropriation by state and expropriation, and other similar measures freedom in deciding on the investment forms and methods; possibility of investing in any field and under any juridical form provided by law; equal treatment - fair, equal and non-discrimination- for Romanian or foreign investors, resident or non-resident in Romania; guarantees against ownership appropriation by state, expropriation or any other measures with similar effect; The right to benefit from customs and fiscal incentives set forth by law; The right to obtain assistance in filing administrative formalities; The right to own fixed and current assets, except for land which may be acquired by Romanian natural or legal persons; The right to elect the competent court or arbitration authorities to settle potential investment-related disputes. A particular case of dispute settlement between Rompetrol Group N.V. v. Romania brought my attention. The case was settled in 2013 and dates from 2005. The claimant was a dutch company (Waverton B.V who changed its name to The Rompetrol Group B.V. and in 2002 became a public limited liability company N.V. located in Rotterdam) who alleged that the Romanian government ordered extraordinary and unreasonable investigations of Rompetrol Rafinare S.A. (a subsidiary) and its management, as well as discriminatory and arbitrary treatment of the company, which according to the Claimant amount to violations of the Agreement on Encouragement and Reciprocal Protection of Investments between the Kingdom of The Netherlands and Romania which came into force on 1 February 1995 (the BIT). The Tribunal allowed the action, but finds that the Claimant has not proved his allegations and finds that the Articles of the BIT were not breached. Adrian Buculei (I6079362)