EY: Romania ranks 4th in Europe in terms of investment intentions in the coming year

At European level, Romania ranks 4th in terms of investment intensions in the next year, after Portugal, Great Britain and Lithuania, whether it is about setting-up a new business or expanding existing ones, said Bogdan Ion, Country Managing Partner Romania & Moldova at EY, Chief Operating Officer – Central, Eastern and Southeastern Europe & Central Asia, reports Agerpres. According to the EY Romania Attractiveness Survey, more than half (56%) of foreign companies intend to set up or extend their operations in our country this year, which makes Romania fourth in Europe, equal to France and behind Portugal (62%), Lithuania (60%) and the United Kingdom (58%),

Romania ranks above the European average, which is 53%.

“Our study was conducted between April and June 2022, so it incorporates the effects of the war in Ukraine, within the context of the investors’ perception. It includes both investors that are active in Romania but also potential investors and focuses on the calendar year 2021. Even in this situation, it is important to say that the study has positive results regarding Romania, where sometimes our local perception is a much more critical. I would like to tell you some of the conclusions of our study. Firstly, at European level, Romania ranks 4th in terms of the investment intensions for the next year after Portugal, Great Britain and Lithuania, whether it is about the setting up of new business or expanding existing ones. From this perspective, we rank 2nd in Central and Eastern Europe after Poland”, Bogdan Ion said, on the occasion of the launch of the third edition of the EY Romania Attractiveness Survey.

He mentioned that the majority of those taking into consideration the opportunity to invest in Romania think particularly about the supply chain and logistics sector.

“Romania ranks 1stin Europe, according to our study, in terms of  investment intensions, if we refer to supply and logistics chains. In other words, we see that this regionalisation and localisation of the supply flows is confirmed by the investors who were interviewed in our study. Among other important areas preferred by investors, namely 23% of them, is the creation of business support centers. From this perspective, we rank 2nd at European level in terms of the investment intentions in the next year”, he said.

Part of the investors, 33%, consider that Romania’s attractiveness will increase in the next years, which, according to the quoted source, is a positive result, but also shows a challenge, namely the fact that the increase of the local economy’s competitiveness is necessary.

In order to increase local competitiveness, investors recommend three main directions: support for SMEs; conduct environmental-related public policies and encourage responsible environmental attitudes; supporting innovation and business that are based on high technologies.

According to investors, the sectors of the future in Romania are: media and telecommunications information technology; the consumer goods industry, including agribusiness; the automotive industry with related branches. Bogdan Ion stated that these sectors were mentioned as key sectors in the previous study.

At European level, this study places Bucharest 25th in 44 cities, surpassing capitals like Budapest, Vilnius, Riga, but also important European cities, like Munich, Porto, Rotterdam, Geneva, Valencia.

In 2021, Bucharest was clearly the most targeted city in Romania for foreign direct investments (FDIs), leading the ranking by 38.9%, while the Western region accounted for 19.5% of foreign direct investments, the only representatives being Arad and Timiș counties.

However, the gap between the Western region and Bucharest can be almost equal in terms of investors’ plans for this year. Almost a quarter of future investments in Romania (24%) will be attracted by the Western region, the leading county from the area being Sălaj, with 9% of the investments, followed by Arad, Timiș and Bihor, all with 5%. Muntenia ranks third, Argeș and Prahova being the only representatives, each with 3.5% of total investments. On the other hand, the north-eastern part of Romania is represented by Neamț county (1.8%) and Suceava county (1.8%). In the south part of Romania, the only county that shall attract investments, according to respondents, is Teleorman, with 1.8% of the total.

Different from last year is the fact that counties like Sibiu, Brașov or Ilfov do not represent investment destinations in the opinion of investors.

According to EY, the pandemic has impacted the supply and logistics chain operations across Europe making the companies to want to relocate their activities closer to home markets and customers. Compared to 2020, when 595 projects were recorded, in 2021 there were 655 projects registered in terms of logistics. In 2021, the number of industrial projects exceeded its pre-crisis level, reflecting a rebound effect and a global reorganization of the supply chains.

According to the 2021 predictions, Romania becomes a growing logistics and manufacturing hub in Eastern Europe, due to its cost-competitiveness and labor supply, the events from Ukraine acting as a catalyst in this respect. Currently, Romania is the most desired location for investing in 2022 in terms of supply and logistics chains.

The major difference from last year lies in the increased popularity of businesses’ support services, which outpaced manufacturing. The largest increase was recorded by the research and development projects, from 7th place in 2021, to 4th place in 2022, the quoted document also shows.

At European level, the perception and outlook of SMEs executives is less positive than those of managers of multinational companies. Only 26% of small companies reported that their investment plans have increased due to the pandemic, compared to 64% of large companies.

Nevertheless, only 44% of SMEs intend to invest in Europe in the next year or over the next three years and 58% believe Europe’s attractiveness will increase in the same period. At the same time, 83% of large businesses are planning to invest in Europe.

For SMEs it is important to have the support of authorities. For example, all large companies stated that the Recovery and Resilience Facility had been a deciding factor in their decision to keep or to expand their activities in Europe, compared to 54% of small companies.

“Encouraging environmental policies and attitudes was selected for the second year in a row as the 2ndmain important aspect that Romania should focus on in the future in order to remain competitive within the global economies. However, when asked how Romania can remain attractive in terms of sustainability, around 59% of the executives said that there is a need of regulations to support sustainable business practices (e.g., recycling obligations, biodiversity protection regulation, green building standards). 45% of them believed that Romania should improve its potential for decarbonization of supply chains (e.g., by reducing transport through access to sustainable materials). Almost the same percentage of respondents (43%) stated that it is important to increase the number of renewable sources in the electricity supply, and 42% mentioned that Romania should ensure the presence of skills and competencies needed to facilitate sustainability projects”, highlights a release of EY Romania.

According to the consulting firm, the attractiveness of a destination is defined as a combination between image, the investors’ degree of confidence and the perception regarding the capacity of the respective country or area ability to deliver the most competitive benefits for FDY.

In the framework of the EY Romania Attractiveness Survey, the field research was carried out by Euromoney through  online interviews with 101 leaders of relevant international companies, of which 50% have already established in Romania, and 50% are established abroad.

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