Romania A Strategic Choice 2017, Bucharest Romania - Country - PowerPoint PPT Presentation

Romania A Strategic Choice 2017, Bucharest

Romania - Country overview Area: Forecasted growth 5.2% 238,391 km2 2004 - NATO membership 2017 National Commission for Prognosis Capital: Bucharest 5x GDP 2016 vs. 2000 2007 - EU membership Currency: RON 70bn EUR/ RON: 4.5 FDI stock 2019 - EU Presidency Population: apox: 20 mill Buc-Ilfov : 2.3 mill Moody’s S & P Fitch Strategic US-Romanian BBB- Baa3- BBB- Bridge between partnership Stable Positive Stable East and West Source: *NSI 2016

At a glance Economic & political stability  Gateway to a 500 million consumers  market 2nd largest country in CEE and the  largest in SEE in terms of size (the 9th in EU28) and population (the 7th in EU28) At the crossroads of 3 great markets:  the European Union, the CIS states and the Middle East 1st in EU for average peak connection  speeds and 6th for 4 Mbps broadband adoption in Q3 2016* Source: *Akamai 2016 Q32016 State of the internet

Potential for Growth GDP growth [%] Forecast 2017: 5.2% 8.5 8.1 6.9 4.9 1.1 4.2 0.6 3.9 (Source: National Commission for 3.5 3.1 Prognosis) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 -7.1 -0.8 Source: European Commission FDI Inflows (EUR mld.) 9.5 9.1 7.3 5.2 4.1 3.5 (Source: National Bank of 3.4 2.7 2.5 2.4 2.3 1.7 Romania) *January - December 2016 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 *2016 Source: National Bank of Romania

Inflation and unemployment Inflation rate 9.1 7.9 6.6 [%] 6.1 5.8 5.6 4.9 4.0 3.3 Target *2017: 1.7 1.1 (Source: *National Bank of 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Romania) -1.5 -0.6 Source: National Institute of Statistics Unemployment rate [%] 7.30 7.20 7.20 7.10 7.00 6.80 6.80 6.80 6.50 6.40 6.00 5.60 Forecast *2017: 5.9 (Source: National Commission for Prognosis) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Unemployment in EU 25 23 Unemployment rates in December 2016, EU area (%) 20 18.4 14.3 15 11.4 12.0 3.5 3.9 4.5 4.5 4.8 5.4 5.5 5.7 5.9 6.2 6.3 6.7 6.9 7.1 7.2 7.5 7.6 8.1 8.2 8.7 8.8 9.6 9.8 10.2 10 5 0 * October 2016 ** November 2016 Source: Eurostat

Minimum Wage Minimum Monthly Gross Wage in EU 1999 January 2017 (EUR) 1480 1498 1532 1552 1563 826 805 736 684 650 470 453 435 433 412 407 380 380 322 235 Romania has the second lowest minimum wage in UE after Bulgaria. Starting February 1 st 2017, the minimum monthly gross wage in Romania is EUR 322/month. Source: Eurostat

Talent Pool University graduates by subject of degree [2015] Education Health and Services science Arts and 5% social care 4% humanities University students 535,000 11% Agriculture, 9% forestry, fishery 28% and veterinary Social sciences, science journalism and 4% information 9% Women in science & engineering Engineering, vs EU-28 avg. processing and 23% construction 17% 53% vs 38% Business, 30% vs 25% Information and Management communication and Law Natural technologies 30% Sciences, (ICTs) Mathematics 5% 112 80 and Statistics 6% Source: The current situation of gender equality in Romania – Country Profile 2012; NIS

Skilled labor force Languages studied by Romanian students [2014] 97% of Romanian high school students study 2 or more foreign languages while in secondary • 97% education The predominant languages are English, French, German and Spanish, yet initiatives for teaching • Japanese, Nordic languages or the entire Latin language family (Spanish, Italian, French) exist University students in Romania are proficient in [% of total]: 26% 17% 8% 5% 90% Source: ABSL, NIS, Eurostat

Key Figures Gas prices ranking Labor costs ranking Lowest gas prices 1 2 One of the most competitive 5 th lowest electricity labor force in the in Europe UKR EU MD HU RO Maximum broadband speed World Bank ease of doing business SRB First in EU for BG 1 36 Ahead of Bulgaria, average peak Croatia, Hungary, connection Italy, Turkey, Serbia speeds or Greece Source: World Banks, Doing Business Report 2016; Akamai Q32016

Competitive Taxation Overview of the Romanian tax system VAT Social Security Employee Employer 2016 – cut from 24% to 20%  19% 16% 23% 2017 – cut from 20% to 19%  Food products - 9%  Reinvested Corporate & Tax System profit tax Dividend Tax Rate Income Tax Rate 0 % 5% 16% 2016 – cut from 16% to 5%

Ports and Airports 130 direct flights leading to 76  destinations in 31 countries worldwide SUCEAVA IASI SATU BAIA MARE MARE  14 international airports and 8 major ports ORADEA BACAU CLUJ- TARGU MURES Constanta Port - the deepest and  NAPOCA GALATI largest port at the Black Sea. ARAD BRASOV SULINA SIBIU TULCEA BRAILA TIMISOARA International Fligths Ports M.KOGALNICEANU CONSTANTA BUCURESTI Under construction OTOPENI DROBETA TR. SEVERIN MANGALIA CRAIOVA GIURGIU

Industrial Parks Status at regional level 1 1 1 North West Region: 15 parks 1 1 1 3 1 West Region: 4 parks 9 1 1 South West Region: 6 parks 1 2 South Region: 21 parks 3 11 1 1 2 South East Region: 2 parks 1 2 1 13 North East Region: 5 parks 3 1 2 1 Center: 17 parks 1 2 2 Bucharest: 2 parks  72 industrial parks spread across Romania - both private and public ownership Access to utilities & benefits packages according to their focus  Exemption from land, building and urban planning taxes 

FDI Stock by Field of Activity 2015 3%3%3%  Manufacturing, financial services and 6% trade account for approx. 57% of FDI stock 32% 6% existing in Romania, followed by real estate and utilities 10%  The real estate sector as well as professional, scientific and technical activities registered the highest FDI growth 12% 13% rates 12%  IT&C, while not growing at the same pace, is becoming a focus sector with strong connections to the international markets Manufacturing Financial Services Trade Real Estate Utilities Prof., Science, Tech, admin IT&C Mining and quaring Agribusiness Other Source: National Bank of Romania

Key facts for top tech oriented industries in Romania INDUSTRY SIZE KEY PLAYERS KEY PROJECTS AEROSPACE EUR • Airbus Helicopters EUR 15m investment 400M Sonaca EUR 12m investment • Premium Aerotec EUR 50m • investment IT&C Siemens software dev. worked • EUR on the Mars Rover Deutsche Bank EUR 40m • 3.6B investment LiveRail was acquired by • Facebook for EUR 600m Continental EUR 26m • AUTOMOTIVE EUR investment in R&D center Daimler EUR 300m • investment for gear boxes 18B Ford EUR 200m investment • for production of new model Source: Invest Romania

Investment Support STATE AID 2014-2020 Total budget EUR 1.5 billion STATE AID - GD 807/ 2014 STATE AID - GD 332 / 2014 Minimum EUR 10 mil. investment Minimum 10 new jobs/ per location  Construction of new buildings  Salary costs registered for a 2 consecutive year Renting costs for existing buildings  period resulted as a direct consequence of the  CAPEX aimed at technical installations investment and tools  Salary costs are comprised of gross average Acquisition of intellectual property  annual salary plus benefits

Intensity State Aid State aid intensity, according to development region: North-West 50% • North West – 50% North-East 50% North East – 50% • Center South East – 50% • 50% West 35% • South – 50% South-East 50% South West – 50% • 35% South-West West – 35% • 50% South 50% 15% • Ilfov County – 35% Bucharest – 15% • Sources: Ministry of Public Finance

Investment Support Fiscal incentives IT&C R&D Industrial parks Fiscal Incentive Fiscal Incentive incentives IT&C R&D Industrial parks Other 0 % income tax for employees 0 % income tax for employees Investors that set up 0% profit tax for the manufacturing locations or reinvested profit in new Eligibility criteria: 0 % income tax for R&D offices in an industrial, scientific technological equipment used companies for the next 10 years or technological park benefit for business purposes  BA in one of the 14 technical from : specializations available Deduction of R&D eligible If a company benefits from  Employee is hired on a expenses:  Exemption on land, building exemption on the income tax software engineer/ and urban planning tax for reinvestment it will not programmer/ software  depreciation of R&D  Taxes charged for changing benefit from accelerated analyst position equipment, salaries for R&D land destination  Annual revenue per personnel depreciation exempted employee must be  50% of these expenses can over USD 10 000 be deducted from the taxable income