11

MINISTRY FOR SMALL AND MEDIUM SIZED MINISTRY FOR SMALL AND MEDIUM SIZED

ENTERPRISES, COMMERCE, TOURISM ENTERPRISES, COMMERCE, TOURISM AND LIBERAL PROFESSIONSAND LIBERAL PROFESSIONS

ECONOMIC DEVELOPMENTS AND ECONOMIC DEVELOPMENTS AND OPPORTUNITIES IN ROMANIAOPPORTUNITIES IN ROMANIA

ROMANIAROMANIA

Luxembourg, 27 February 2008Luxembourg, 27 February 2008

22

RomaniaRomania

- Area: - Area: 238.391 sq. km.238.391 sq. km.

- Population: 21,700,000- Population: 21,700,000

- Counties: 41- Counties: 41

Capital: BucharestCapital: Bucharest

Basic informationBasic information

33

Benefits of EU AccessionBenefits of EU Accession

Removal of any obstacles in the trade with EU Removal of any obstacles in the trade with EU Member StatesMember States

Common trade policy with third countriesCommon trade policy with third countries Harmonization of entire legislation, capital Harmonization of entire legislation, capital

market regulations, taxation, accounting rules market regulations, taxation, accounting rules => higher transparency and simplification=> higher transparency and simplification

Structural funds (31 billion euro till 2013)Structural funds (31 billion euro till 2013) Open gate for EU towards CIS, Asia, Middle Open gate for EU towards CIS, Asia, Middle

East, Northern AfricaEast, Northern Africa Participation in major projects in the Black Participation in major projects in the Black

Sea Extended Area and in the Central & Sea Extended Area and in the Central & Eastern European RegionEastern European Region

Romania-important role in assuring the Romania-important role in assuring the energy security for Europe (major transit energy security for Europe (major transit pipelines, energy production & supply)pipelines, energy production & supply)

FLATFLAT TAX TAX 16%16%VATVAT 19%19%

SOCIAL SOCIAL SECURITYSECURITY

4433.5.5%%

39.5%39.5% by the by the end of 2008end of 2008

AVERAGE AVERAGE WAGE WAGE (2007)(2007)

380380 euroeuro

MINIMUM MINIMUM WAGE WAGE

115115 euroeuro

Competitive TaxationCompetitive TaxationCountrCountr

yyCorporatCorporat

e Taxe Tax

RomanRomaniaia

16%16%

HungaHungaryry

16%16%

SlovakiSlovakiaa

19%19%

PolandPoland 19%19%

EstoniEstoniaa

20 %20 %

CroatiaCroatia 20.32%20.32%

SloveniSloveniaa

25%25%

Czech Czech Rep.Rep.

28%28%

55

Macroeconomic Macroeconomic Performance Performance

GDP real growthGDP real growth

Source: National Institute of Statistics

4,1%

7,7%

6,1%

8,4%

5,2%5,1%5.7%

2,1%

2000 2001 2002 2003 2004 2005 2006 2007

66

Macroeconomic Macroeconomic Performance Performance Inflation rateInflation rate

5,7% 4,3%4.86%8,6%

40,7%

30.3%

17,8%14,1%

9,3%

2000 2001 2002 2003 2004 2005 2006 2007 2008 e

Source: National Bank of Romania

77

Macroeconomic Macroeconomic Performance Performance

Unemployment rateUnemployment rate

9,5

6,6

8,910,4

11,810,5

8,88,1

76,2

5,5 5,2 5

0

2

4

6

8

10

12

%

1995 1997 1999 2001 2003 2005 2007

88

COUNTRY COUNTRY RATINGSRATINGS ROMANIA ROMANIA

Fitch Fitch - A- - A- (August 2006)(August 2006) CofaceCoface - A4 - A4 (January 2006)(January 2006)

JCRJCR - BBB+ - BBB+ (November 2006)(November 2006) Moody’ s Moody’ s - Baa3 - Baa3 (September 2006)(September 2006) Standard & Poors Standard & Poors - BBB- - BBB- (September 2006)(September 2006)

World Bank Report 2006: Romania – the World Bank Report 2006: Romania – the most reforming country in the business fieldmost reforming country in the business field

99

Foreign direct investmentsForeign direct investments - million Euro -- million Euro -

1294 1212 1627

4098

5197

91008000

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

2001 2002 2003 2004 2005 2006 2007

Source: National Bank of Romania

FOREIGN DIRECT FOREIGN DIRECT INVESTMENTINVESTMENT

Share capital in Share capital in FDI’s FDI’s at at 330.11.2007: 0.11.2007:

17.417.4 bbillion euroillion euro

1. The Netherlands - 18,41%2. Austria - 12,60%3. Germany - 10,23%

4. France - 10,03%5. Cyprus – 4,99%6. Italy - 4,64%7. U.S.A. - 3,80%8. United Kingdom - 3,49%9. Greece – 3,28%

16. Luxembourg – 1,44% Source: National Trade Register Office

Country of Country of originorigin

Number of Number of companiescompanies

Share-Share-capital in capital in Romanian Romanian companiescompanies- - mil. EUROmil. EURO

--

11NetherlanNetherlandsds

30933093 3.2083.208

22 AuAustriastria 48474847 2.1942.194

33 GermanyGermany 1547215472 11.783.783

44 FranceFrance 53405340 11.747.747

55 CyprusCyprus 34943494 870870

66 ItalItalyy 2425924259 808808

77 USAUSA 53775377 666262

88 UK UK 34993499 660808

99 GrGreeeecece 40614061 5571 71

1616LuxemboLuxembourgurg

629629 251251

1111

Value of Subscribed Capital Value of Subscribed Capital

by Field of Activityby Field of Activity

Source: Romanian Agency for Foreign Investment

Industry50.7%

Retailing5.3%

Wholesale6.4%

Transport6.2%

Construction1.3%

Tourism 1.4%Agriculture

0.9%

Services27.8%

1212

Foreign Investors Foreign Investors AdvantagesAdvantages

foreign investments allowed in all sectors of foreign investments allowed in all sectors of economyeconomy

possibility to freely manage the company possibility to freely manage the company with full ownership rightswith full ownership rights

full repatriation of capital and profitsfull repatriation of capital and profits

protection against expropriation and protection against expropriation and nationalizationnationalization

national treatment for foreign investorsnational treatment for foreign investors

New Investment LawNew Investment Law- Draft under public debate- - Draft under public debate-

Objectives:Objectives: DDetermines the principles, terms and modalities of stimulating etermines the principles, terms and modalities of stimulating

investments in Romaniainvestments in Romania, , ai aiming atming at contribut contributing toing to the the sustainable country development sustainable country development

FFullull compliance compliance with the EU legislation with the EU legislation

Legal/administrative documents will be issued by the Government Legal/administrative documents will be issued by the Government in order to regulate the state aids schemes for each objectivein order to regulate the state aids schemes for each objective

TThe goalhe goalss, objective, objectivess, tim, timinging, budget, budgetss, beneficiaries, eligibility , beneficiaries, eligibility and selection criteriaand selection criteria, , competent authorities responsible to competent authorities responsible to grant incentives grant incentives will be establishedwill be established

A rA responsible esponsible aauthority for implementing and monitoring the uthority for implementing and monitoring the legal provisions legal provisions will be set upwill be set up

1414

FOREIGN TRADE OF ROMANIA 2001 – November 2007

-30.000

-20.000

-10.000

0

10.000

20.000

30.000

40.000

50.000

Exports 12.722 14.675 15.614 18.935 22.255 25.850 27.127

Imports 17.383 18.881 21.201 26.281 32.569 40.745 46.557

Balance -4.661 -4.206 -5.587 -7.346 -10.314 -14.895 -19.430

2001 2002 2003 2004 2005 2006 Nov.2007

EURO mill.

Source: National Institute of Statistics (www.insse.ro)

1515

MAIN TRADE PARTNERSMAIN TRADE PARTNERS- November 2007 -- November 2007 -

Top import partner Top import partner countriescountries

percentage percentage of total import of total import

GermanyGermany 17,217,2

ItalyItaly 12,812,8

HungaryHungary 7,07,0

FranceFrance 6.36.3

Russian FederationRussian Federation 6,36,3

TurkeyTurkey 5,55,5

AustriaAustria 4,84,8

HollandHolland 3.63.6

PolandPoland 3.43.4

ChinaChina 3,33,3

LuxembourgLuxembourg 0,140,14

Top export partner countriesTop export partner countriesppercentageercentage of total export of total export

ItalyItaly 17.217.2

GermanyGermany 17,117,1

FranceFrance 7,7,77

TurkeyTurkey 7,07,0

HungaryHungary 5,65,6

Great BritainGreat Britain 4.24.2

BulgariaBulgaria 33,,11

AustriaAustria 2,62,6

SpainSpain 2.32.3

PolandPoland 2.22.2

LuxembourgLuxembourg 0.100.10

1616

FOREIGN TRADE OF FOREIGN TRADE OF ROMANIAROMANIA

- 11 month 2007 -- 11 month 2007 -

Total volume: 73.687 million euro Total volume: 73.687 million euro (21,6% growth compared to 11 month 2006)(21,6% growth compared to 11 month 2006) Total volume intrastate: 52.764 million euroTotal volume intrastate: 52.764 million euro Total Export (FOB): 27.127 million euroTotal Export (FOB): 27.127 million euro Intrastate export (FOB): 19.571 million euro, Intrastate export (FOB): 19.571 million euro,

representing 72,1% in total export (+13,5% representing 72,1% in total export (+13,5% growth compared to 11 month 2006)growth compared to 11 month 2006)

Total Import (CIF): 46.557 million euroTotal Import (CIF): 46.557 million euro Intrastate import (CIF): 33.193 million euro, Intrastate import (CIF): 33.193 million euro,

representing 71,3% in total import (+31,5% representing 71,3% in total import (+31,5% growth compared to 11 month 2006) growth compared to 11 month 2006)

1717

TRADE BETWEEN ROMANIA AND TRADE BETWEEN ROMANIA AND LUXEMBOURG 2001 – November LUXEMBOURG 2001 – November

20072007

-60

-40

-20

0

20

40

60

80

100

TOTAL 8,63 13,95 16,34 19,25 27,11 35,25 91,7

EXPORT 1,38 7,29 5,39 3,5 7,95 5,4 26,46

IMPORT 7,25 6,66 10,95 15,75 19,16 29,84 65,24

SOLD -5,87 0,63 -5,56 -12,25 -11,21 -24,44 -38,78

2001 2002 2003 2004 2005 20062007-11

m

1818

STRUCTURE OF ROMANIA- STRUCTURE OF ROMANIA- LUXEMBOURG BILATERAL LUXEMBOURG BILATERAL TRADETRADE

Romanian ExportRomanian Exportss

vehicles, transport vehicles, transport equipment (35,05%)equipment (35,05%)

textiles and garments textiles and garments (27,7%);(27,7%);

furniture, wood products furniture, wood products (22,5%); (22,5%);

machinery, electrical machinery, electrical equipment (2,9%);equipment (2,9%);

metals and articles thereof metals and articles thereof (4%)(4%)

minerals (1,4%).minerals (1,4%).

Romanian ImportRomanian Importss

metals and articles metals and articles thereof (52,1%) thereof (52,1%)

machinery, electrical machinery, electrical equipment (29,4%); equipment (29,4%);

plastics and rubber plastics and rubber products (6,2%)products (6,2%)

stone products (3,4%);stone products (3,4%); vehicles, transport vehicles, transport

equipment (1,9%); equipment (1,9%);

1919

LUXEMBURG FDI’s in LUXEMBURG FDI’s in RomaniaRomania

200,73200,73 million million euro share-capital euro share-capital in Romanian companiesin Romanian companies;;

636636 companiecompaniess with with LuxembourgLuxembourg capital registered in Romaniacapital registered in Romania

Sectors for Sectors for LuxembourgLuxembourg investmentsinvestments:: industry, services, industry, services, retailing, wholesale, retailing, wholesale, constructions, agricultureconstructions, agriculture

2020

Market & Location Advantage :

• Second largest market in Central and Eastern Europe (over 21 million inhabitants)                    

• Easy access to the countries of the former CIS countries, Balkans, the Middle East and Northern Africa

• Junction of three prospective European transportation corridors nos. 4, 7 & 9

Market & Location Advantage :

• Second largest market in Central and Eastern Europe (over 21 million inhabitants)                    

• Easy access to the countries of the former CIS countries, Balkans, the Middle East and Northern Africa

• Junction of three prospective European transportation corridors nos. 4, 7 & 9

Resource Advantage:

• Skilled labor force, with solid knowledge in technology, IT and engineering • Rich natural resources, including fertile agricultural land, oil and gas • Important potential for tourism

Resource Advantage:

• Skilled labor force, with solid knowledge in technology, IT and engineering • Rich natural resources, including fertile agricultural land, oil and gas • Important potential for tourism

TOP TOP REASONS TO INVEST IN ROMANIAREASONS TO INVEST IN ROMANIA (1) (1)

2121

Economic Advantage

• Sustainable economic growth • Functional Market Economy status • Competitive tax policy• Decreasing inflation • Permanent financial assistance for SME's Development • Structural funds

Economic Advantage

• Sustainable economic growth • Functional Market Economy status • Competitive tax policy• Decreasing inflation • Permanent financial assistance for SME's Development • Structural funds

Improving Infrastructure Advantage

• Well-developed networks of mobile telecommunications in GSM systems • Highly developed industrial infrastructure, including oil and petrochemicals • Branch offices and representatives of well-known international banks • Newly developed highway infrastructure • Commitment to improve the highway infrastructure to EU standards • Extensive maritime and river navigation facilities

Improving Infrastructure Advantage

• Well-developed networks of mobile telecommunications in GSM systems • Highly developed industrial infrastructure, including oil and petrochemicals • Branch offices and representatives of well-known international banks • Newly developed highway infrastructure • Commitment to improve the highway infrastructure to EU standards • Extensive maritime and river navigation facilities

TOP TOP REASONS TO INVEST IN ROMANIAREASONS TO INVEST IN ROMANIA (2) (2)

2222

Potential Sectors for InvestmentPotential Sectors for Investment

o ManufacturingManufacturingo Automotive partsAutomotive partso IT & IT &

CommunicationCommunicationo Electric & Electric &

ElectronicsElectronicso Wood processingWood processing

o Construction Construction materialsmaterials

o TextileTextileo Food processingFood processingo InfrastructureInfrastructureo Outsourcing and Outsourcing and

logisticslogistics

2323

MINISTRY FOR SMALL AND MEDIUM SIZED MINISTRY FOR SMALL AND MEDIUM SIZED ENTERPRISES, COMMERCE, TOURISM AND LIBERAL ENTERPRISES, COMMERCE, TOURISM AND LIBERAL

PROFESSIONSPROFESSIONS

Phone: +40 21 4010510Phone: +40 21 4010510

Fax: +40 21 3150086Fax: +40 21 3150086

E-mail: dgrbea@dce.gov.roE-mail: dgrbea@dce.gov.ro

Website: www.dce.gov.roWebsite: www.dce.gov.ro

THANK YOU !THANK YOU !