German rigor calls for change

Ever since 2005, Germany has kept a respectable third position in the league of foreign investors in Romania, with its share in the country’s total FDI (foreign direct investments) constantly increasing on a yearly basis, according to data from the National Bank of Romania.

Simona Bazavan

From large corporations to small businesses, German investors are among the most long-standing foreign investors in Romania. Germany was the third largest investor to Romania last year, with FDI amounting to EUR 2.86 billion, about 24 percent more than the previous year, and the country’s top trading partner, according to Julia Kohlheim, head of the economic section at the German Embassy to Bucharest.

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Company representatives attending the German Business Forum organized by Business Review last week agreed that there is still a lot of potential for future German investments in Romania. Some of the Romanian economy’s competitive advantages that attracted investors in the first place, such as low labor costs, a relatively well qualified workforce and a large internal market, are still there. But this will not be enough in the future, considering the current economic outlook, the representatives added.

Progress has been made in the last few years, but some local flavored economic setbacks continue to baffle German rigor. Problems foreign investors are facing in Romania which were raised during the discussions were the public procurement law, bureaucracy, the lack of legal framework, and generally the lack of investment strategies and political will from local authorities to make the necessary changes. One of the most stressing issues continues to be that of payment arrears and delayed VAT returns.

The event, which attracted about 80 company officials, was sponsored by ABB, Salans, Noerr, Horvath & Partners, Marsh and IKB Leasing. More information can be found at www.business-review.ro.