Bucharest attracts two thirds of foreign investments

Bucharest attracts 64% of foreign investments compared with the Northeast region, which only gets 1.2%. This is the most significant gap in terms of the impact foreign investment s have on economic development.
The data was presented by the National Bank during the “Biggest players in the economy. Economic growth and foreign investors – dependency or mutual gain?” seminar organised by ZF and Voicu Filipescu law firm, in partnership with PwC and Rompetrol.
“There are two Romanias: one of Bucharest, which practically took off in terms of economic growth and suffers from labour shortage, and that of the second and third rate cities where there are no foreign investments and the state is the main employer. In these cities, the investors, be they foreign or Romanian, pay the minimum wage, 500 RON, while the minimum wage for non-skilled construction workers in Bucharest has reached 1,200 RON, and skilled workers get 2,400 RON,” said Paul Pacuraru, Labour, Family and Social Equality Minister.
The investment gap is mainly due to poor infrastructure.
“Foreign investors have been integral to economic growth over the last few years but if no steps are taken to improve infrastructure, we will no longer be among the most attractive,” stated Varujan Vosganian, Economy and Finance Minister.
The government will start a 20 billion-euro investment programme to build highways, roads and railways, at the next budget adjustment.
It was precisely the infrastructure that is lacking that caused Romania to fail to get Daimler’s investment.
Attracting foreign investors like Daimler in Romania requires a faster enactment of a foreign investment law, as well as solving the infrastructure problems. The German automotive group chose Hungary over Romania to build an 800 million-euro plant.
“The lack of new kilometres of highway will not allow us to remain among the most attractive. The failure to get Mercedes’ investment should be a case study for Romania,” said Ioan Sturza, deputy CEO of Rompetrol group.
Other than the infrastructure, red tape is another obstacle that foreign investors face in Romania. Romania is one of those countries where most payments are made, with companies having to spend no less than 110 hours paying taxes and duties, reveals a survey by consultancy company PricewaterhouseCoopers (PwC) and World Bank.
NBR statistics show that foreign direct investment went up by 92.2% at the end of April and reached 3.21 billion euros, compared with 1.67 billion euros at the end of the first quarter, and thus covered more than 66% of the current account deficit.