The Ministry of Development and Prognosis has received 58 requests from Romanian and foreign investors, who wish to benefit from the law stipulating incentives for significant investments exceeding one million dollars (Law 332/2001).
The requests present projects worth more than 400 million dollars, Constantin Dumitru, head of the Department for the relation with foreign investors, told Ziarul Financiar.
The value of investments included in the companies’ share capital amounted to 800 million dollars over the first ten months of the year, while authorities estimate it will reach one billion dollars by the end of the year.
Foreign investors may look more closely at Romania in 2003, as public utilities monopolies will be broken as of next year, especially in the field of energy, according to Dumitru.
“Investors will become more interested when Romania has a real competition-driven economy, when the state’s involvement in economy decreases. Next year, more than half of the energy output will be based on competition, as the first power units have already been slated for sale,” Dumitru maintained.
The Government pledged to sell the two gas distribution companies next year and two of the eight power distribution companies.
According to Dumitru, the Department for the relation with foreign investors has received requests for additional incentives for those investments exceeding ten million dollars from Cypriot company Kronospan, aimed at a greenfield investment in the field of wood processing, from British company Pilkington (production of float glass).
Similar requests were also submitted by Italian companies Cartiera di Pisa and Fergat SpA, which teamed up with Romanian firms Comceh SA (operating in the cellulose and paper processing industry) and Roti Auto SA (activating in the auto industry).
Other investments exceeding ten million dollars were heralded by Turkish company Erdemir (the acquisition of the electrotechnical band laminator from the Targoviste Special Steels Mill), Spanish ACE Automobile Group (in the auto components industry), and Germany-based Selgros (hypermarket construction).
The investors are discontent mainly because of legislative instability, corruption and bureaucracy, the existence of a powerful underground economy which triggers fiscal evasion, the absence or scarcity of incentives for investors, the flawed tax collection system, local authorities abuses and the uncertain legal status of numerous buildings and lands.
“The reaction of foreign investors will also be determined by the legislation effects triggered by the agreement concluded with the International Monetary Fund (IMF); changes in legislation will create a more or less friendly environment for the Romanian and foreign businessmen. They are certain to sanction any measure that could hurt their businesses,” Dumitru stated.