Foreign trade of Romania

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International trade
Exports US $45.0 billion f.o.b. (2007)
Imports US $63.0 billion f.o.b. (2007)
Current account Decrease US $18.0 billion (2007)
Export partners Italy 20.4%, Germany 17%, France 14% (2007)
Import partners Italy 23.4%, Germany 16%, France 12% (2007)

Romania's largest trading partner is Italy;there are two-way trade totalled some $22.6 billion in 2007. The principal Italy exports to Romania include computers, integrated circuits, aircraft parts and other defense equipment, wheat, and automobiles. Romania's chief exports to Italy include cut diamonds, jewelry, integrated circuits, printing machinery, and telecommunications equipment.

2.8% of the country's GDP is derived from Agricultural activity. While Romania imports substantial quantities of grain, it is largely self-sufficient in other agricultural products and food stuffs, because food must be regulated for sell in the Romania retail market, and hence imports almost no food products from other countries. Romania imported in 2006 food products of 2.4 billion euros, up almost 20% versus 2005, when the imports were worth slightly more than 2 billion euros. The EU is Romania's main partner in the trade with agri-food products. The exports to this destination represent 64%, and the imports from the EU countries represent 54%. Other important partners are the CEFTA countries, Turkey, Republic of Moldova and the USA.[1]

Romania is one of the world's major exporters of military equipment, accounting for 3-4% of the world total in 2007. EU members are represented by a single official at the World Trade Organization.

Foreign direct investment[edit]

Foreign direct investment (FDI) in Romania has increased dramatically. Romania is the 2-nd place in the Central Europe for FDI.[2] Foreign direct investment flow attracted by Romania in the first 2 months of the year 2008, reached Euro 1.2 million, thus registering a 40% increase against January and February 2007. Considering the FDI structure, the predominant was „other capitals” (loans granted by mother company to affiliate structures in Romania) representing 50.8% out of January and February total, followed by „reinvested profit” and „capital participation” amounting 49,2%.[3]

In 2006 net foreign direct investment was inbound US$12 billion (EUR 9.1 billion). Skilled labor force, low taxes, a 16% flat tax for corporations and individuals, no dividend taxes, liberal labor code and a favorable geographical location are Romania's main advantages for foreign investors. FDI has grown by 600% since 2000 to around $13.6 billion or $2,540 per capita by the end of 2004. In October 2005 new investment stimuli introduced – more favorable conditions to IT and research centers, especially to be located in the east part of the country (where there is more unemployment), to bring more added value and not to be logistically demanding.

Origin of direct foreign investment 1996-2005 – the Netherlands 24.3%; Germany 19.4%, Austria 14.1%; Italy 7.5%, United States (8th largest investor) 4.0%. Top investors from countries, by companies: Erste Bank (Austria), OMV (Austria), Gaz de France (France), Orange (France), Vodafone (U.K.), Ford (U.S.), MOL (Hungary), ENEL (Italy), E.ON (Germany), Nokia (Finland) ... General Motors is considering to build a plant in Romania.[4] General Motors could shortly begin investments in order to develop a production centre in Romania, with Cluj-Napoca as a potential location for the future plant, close to the Nokia Village. Nokia invested $100 mn in a plant near Cluj-Napoca.[5] SABMiller is set to invest EUR50m (US$69m) in expanding production at one of its breweries in Romania (Ursus (beer)).[6] Czech-based investor and developer CTP Invest plans to allocate EUR 60 mln next year in industrial property development in Romania.[7] Snowmobile and motorcycle maker Polaris Industries Inc. will invest 50 million euros ($69.41 million) in a snowmobile plant in Romania.[8] British investments in the Romanian economy currently exceed 5 billion euros, with more than 3,200 British companies operating in key sectors, including telecommunications, information technology, financial services, and water and environmental protection.[9]

Sectors of direct foreign investment - industry 38.4%; banking and insurance 22.2%; wholesale and retail trade 13.1%; production of electricity, gas and water 10.5%; transportation and telecommunications 9.2%. Foreign capital is attracted by skilled and relatively inexpensive labor, tax incentives, modern infrastructure, and a good telecommunications system. Romania has strength in information technology and other significant areas such as auto components, chemicals, apparels, pharmaceuticals and jewellery.

European Union (EU) approves €143 million aid to Ford plants in Romania. The government aid will be part of a total investment of €600 million (US$934 million) in the plants to make engines and complete vehicles in the Craiova region of southwest Romania.[10]

In 2008, Procter&Gamble (P&G) intends to allocate EUR 50 mln for construction of cosmetics factory in Romania. This would be the first greenfield in cosmetics industry in Romania.[11] PSA Peugeot is interested in opening an engine factory in Romania of a total investment of EUR600 million.[12]

Romanian investments abroad[edit]

Romanian furniture chain opens hypermarket in Bulgaria's capital. Romanian furniture company Mobexpert opened its first hypermarket in Bulgaria in Sofia's residential district of Lyulin. Ten million euro was invested, of which 80 per cent were provided as a bank credit from Alpha Bank.[13] Annual profit of Mobexpert's hypermarkets was 200 million euro. The company has 4500 employees. The Romanian electronics retailer Altex, which is considered the largest one in the country, plans to enter the Bulgarian market in 2008.[14] Altex has 90 stores in Romania's largest cities. In Bucharest alone there are ten stores. The company previously announced its plans to enter the Serbian market as well. Romanian sanitary and electric equipment distributor Romstal has entered the Serbian market, acquiring local equipment distributor Doming for 10 million euro ($14.7 million).[15]

Romanian-Moldovan economic relations[edit]

EU membership gives Romania new economic opportunities in its relations with Moldova. Romania is currently the second largest export market for Moldova, accounting in 2007 for a 15,7% market share. Moldovan exports are dominated oils, iron rods and barrels and sunflower seeds. In January–February 2007, Moldova has imported mostly garnishes, breeches and similar goods (by 196.9 times more than the same period of 2006), as well as petroleum oils and oils made of bituminous materials (+34%).[16] Simultaneously, the value of Moldovan imports from Romania went up to USD 101.6 mln (by 2.1 times more), more by USD 52.1 mln compared with the first two months of 2006.

References[edit]

  1. ^ Romania imports agri-food products of 2.4 bn euros in 2006 - Danmarks ambassade Bukarest
  2. ^ http://www.antena3.ro/Romania-ocupa-locul-al-II-lea-in-topul-destinatiilor-preferate-de-investitori_bss_48518_ext.html România ocupă locul al doilea în topul celor mai atractive destinaţii pentru investitorii interesaţi de zona de est şi sud-est a Europei.
  3. ^ http://www.arisinvest.ro/news_detail.asp?ID=554&LID=2 Foreign direct investment flow attracted by Romania in the first 2 months of the current year reached Euro 1.2 million, thus registering a 40% increase against January and February 2007. Considering the FDI structure, the predominant was „other capitals” (loans granted by mother company to affiliate structures in Romania) representing 50.8% out of January and February total, followed by „reinvested profit” and „capital participation” amounting 49,2%. The FDI development in January 2008, proves once again that Romania is one of the most attractive destinations in the pool, for placing foreign capital.
  4. ^ General Motors considers Romania for plant | ZF English | Ziarul Financiar
  5. ^ Kauppapolitiikka
  6. ^ ROMANIA: SABMiller lines up Ursus investment: Beverage News & Comment
  7. ^ CTP Invest to Allocate EUR 60 mln for Romania // Property Xpress
  8. ^ Polaris to build snowmobile plant in SE Europe | Reuters
  9. ^ http://www.setimes.com/cocoon/setimes/xhtml/en_GB/features/setimes/features/2007/12/06/feature-01 British investments in the Romanian economy currently exceed 5 billion euros, with more than 3,200 British companies operating in key sectors, including telecommunications, information technology, financial services, and water and environmental protection.
  10. ^ http://www.iht.com/articles/ap/2008/04/30/business/EU-FIN-EU-Romania-Ford.php EU approves €143 million aid to Ford plants in Romania
  11. ^ http://www.propertyxpress.com/getnews/0000004940 P&G to Build Factory in Romania
  12. ^ Peugeot Ponders Engine Factory In Romania | English section | Ziarul BURSA
  13. ^ Romanian Furniture Chain Opens Hypermarket In Bulgaria'S Capital - Business News
  14. ^ Largest Romania’S Electronic Company Enters Bulgaria - Business News
  15. ^ http://www.seenews.com/news/latestnews/romania___sromstalentersserbia_buyslocalcodomingfor10mlneuro-144259/ Romanian sanitary and electric equipment distributor Romstal has entered the Serbian market, acquiring local equipment distributor Doming for 10 million euro ($14.7 million
  16. ^ http://economie.moldova.org/stiri/eng/37767/ According to preliminary statistics provided by the Customs Service, the volume of trade between the Republic of Moldova and Romania amounted in January–February to USD 135.7 mln, that represents a doubling of the amount (approx. 190%, or plus USD 66 mln) compared to the same period last year. According to the Ministry of Economy and Commerce the volume of exports of Moldovan economic entities to Romania totalled nearly USD 34.1 mln, thus by 1.7-fold more as in January and February last year (+ USD 14 mln).