The Netherlands is Romania’s top source of foreign investment with Dutch companies being among the first wave to target the local economy soon after EU accession. There were good reasons for their interest then, and in spite of the slow economic progress and limp post-crisis recovery there are good reasons to invest in Romania now, Jochum Haakma, TMF director of group business development and former consul general of Shanghai, told Business Review.
For some years now, the Netherlands has been Romania’s biggest source of foreign investments. Why is this?
Romania is in no way an exception or a curious case. Dutch companies have been roaming around the world for many years and a large amount of the Dutch GDP derives from outside the Netherlands. We are among the top five foreign inventors in a large number of countries. We have even been the top foreign investor to the US for some years and we are currently number two in Mexico, for example.
But coming back to Romania, yes, indeed, there have always very close diplomatic and economic bilateral relations between our two countries. After EU accession, supported by the Netherlands, many Dutch companies came here, attracted mainly by the location, the low labor costs and the skilled workforce. There were many good reasons to come here and there still are. Dutch companies’ interest in Romania has not been fading away, let’s put it like that.
What should the Romanian authorities do to attract more investments?
Ensuring stability in the long run and upgrading infrastructure go without saying. I don’t know how active Romania is in attracting foreign investments. As a diplomat travelling around the world – and I’ve spent eight years in the Far East and nine in China alone – I never saw many signs that Romanian governments or ambassadors were really putting an emphasis on selling Romania as an investment destination. And this is another thing. Public diplomacy is extremely important. It is not only about being good, but also about being seen to be good.
What local industries have the potential to attract Dutch investments in the future?
Romania is trying to present itself as an important regional hub, making use of the Constanta port, but in order to that, developing local infrastructure and attracting more EU funds are vital.
This is one of the features that makes Romania stand out among other economies, and it is a pity. The whole region is growing and developing and there is the momentum to really invest in logistics.
For Dutch investors I think there is a good opportunity to invest in supply chain management and logistics, which is a field where we have lots of expertise, and also in infrastructure itself. Port management, oil and oil-related business, the automotive sector, ship building, electronics and key agriculture are other fields where there are many Dutch investors already active. And there is still room for growth in the local financial and insurance markets.
Coming back to TMF Group, since when has your company been active in Romania and how has the business evolved over the years? What services does TMF provide in Romania?
TMF has been present on the Romanian market since November 1999. It started as a greenfield operation and has posted growth over the past 11 years, both organic and through acquisitions. We are specialized in providing compliance related services and we have close ties with foreign investors active in Romania.
TMF Romania offers complete administrative solutions and we assist clients at all stages of business development, start-up, growth and divestment. We can provide our clients with both local and international perspectives and guide them through the challenging Romanian legal and tax environment. The range of financial compliance services that TMF Romania provides includes: bookkeeping and reporting, fund administration, VAT, payroll processing, complete management and reporting cost analysis, human resources, corporate secretarial, domiciliary and management services. We currently have 100 employees and more than 300 clients, international and multinational companies.
What is TMF’s strategy for Romania? To what extent has your current business strategy been affected by the economic recession?
TMF Romania is part of a global network, comprising 87 offices in 67 countries, and TMF Group plans to double the size of its network in the next few years. As such, TMF Romania’s strategy is part of the global strategy and is built around a common business philosophy, aimed at focusing on customized services. This also means that the economic recession has not forced us to reconsider our strategy. At the end of the day, the economic recession was a call to reposition the business on the basis of economic fundamentals. Once companies were already positioned here – as TMF was – the recession had little impact at strategic level.
To what extent has the current economic turmoil affected the local market for such services?
The economic recession has definitely affected the size of the local market, to the extent that some companies have had to restructure or curtail their operations. The macroeconomic conditions and uncertain legal and tax environment have acted as a hurdle, not allowing the market to expand due to the significant decrease in foreign investments. Thus, the overall market has shrunk. However, the market niche in which we are active has not experienced the same decrease.
What is your company’s strategy in Romania for the next year?
We expect 2011 to be an interesting year in terms of the accounting and management outsourcing market, as more players are expected to appear in the investment arena, while more companies are likely to concentrate on strategic decisions, outsourcing some of their administrative activities. Businesses everywhere are focusing more and more on what they do best (their core competency), and wherever possible, outsourcing the rest. Our strategy is to consolidate and extend our market position by permanently adapting to our clients’ needs.