EY Romania Attractiveness Survey 2023 reveals optimistic investment climate

Romania recorded an 86% increase in the number of FDI projects in 2022, making it the fifteenth most attractive European investment destination, up seven places from the previous year according to the 2023 edition of the annual report EY Romania Attractiveness Survey.

Although Romania is by no means insulated from the global economic and geopolitical turbulence, it has shown greater resilience than many European countries and experienced a sharp rebound in foreign investment since 2020. FDI totaled EUR10 billion in 2022, 12% higher than the prior year’s record of EUR8.9 billion.

Romania still lagged Poland and Serbia among the Central and Eastern European markets. But despite this, investors are increasingly confident about the outlook, with 63% of those surveyed saying they plan to invest in Romania during 2023, compared to 53% at the time of the 2022 survey.

This increased confidence was also reflected in the fact that almost twice as many executives plan to invest more than EUR100 million in 2023 (14%) compared to a year earlier (7%). However, the majority (72%) still plan to invest less than EUR10 million. Developing bankable investment projects of scale will be critical to the economic transformation of Romania in the coming years. The EUR 80 billion of EU program funding available for 2021-2027 should be the catalyst for change and act as a multiplier by stimulating additional private sector investment.

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“Despite global challenges, Romania demonstrates remarkable economic resilience and high investment attractiveness. With impressive growth in foreign direct investment, our country is emerging as a key hub for investors, offering excellent opportunities in key sectors such as technology, sustainability and renewable energy. Now is the time for Romania to strengthen its position on the European investment map,” says Bogdan Ion, Country Managing Partner EY Romania & Moldova and Chief Operating Officer for EY South-East & Central Europe and Central Asia (CESA).

FDI projects were highly concentrated in 2022, with five cities accounting for 71% of all projects. Bucharest  (35%) remained the preferred location for investors, followed by Iasi (13%), Cluj (12%), Timisoara (7%) and Brasov (4%). Investment in four of these cities was also highly concentrated in one sector; software and IT services: 63% in Cluj, 60% in Timisoara, 48% in Bucharest and 33% in Iasi.

In 2022, Germany ranked first among the countries investing into Romania, both in terms of the number of projects and number of jobs created. The top-3 in terms of the number of projects was rounded-up by the United States of America (USA) and Switzerland, while Serbia and Ireland held joint second place in terms of the number of jobs created. The five projects invested into by Serbia (4) and Ireland (1), each created 1,000 new positions in the software and IT services sector.

A path to unlock Romania’s FDI potential

Unlocking the growth potential of small and medium enterprises (SMEs), which represent the engine room of the Romanian economy will be critical to maintaining Romania’s competitive position. Focusing on support for SMEs was cited as the main priority among respondents to our survey (45%), followed by support for high-tech industries and innovation (38%), many of which sit within the start-up and scale-up segment of the SME economy. With global investors, and increasingly consumers, paying ever more attention to the ESG credentials of businesses(34%), it will be essential for Romania to foster environmental policies and attitudes in the country that ensure investment opportunities meet these criteria.

What factors are shaping the appeal of Romania as an investment destination

Romania should play to its competitive strengths while taking swift action to address areas where investors perceive it has a disadvantage. The software and IT services sector has been the bedrock of foreign direct investment in recent years, and in this context, it will be important for Romania to continue developing the digital skills and culture required to ensure the availability of a workforce needed by future foreign investors. At the same time, Romania needs to do more to strengthen its network of technology start-ups and research institutions, provide greater protection for intellectual property rights and, support government and regulators to drive digital transformation. Ensuring such factors are given the prominence they deserve will be key to sustaining FDI in Romania’s high-tech sector.

While the war in Ukraine was not identified as a key factor impacting respondents investment plans in 2023, they did point to Romania’s membership of the European Union and NATO as its most important asset (28%). This demonstrates that security concerns remain high on the agenda and that investors perceive membership of these bodies adds significant weight to the attractiveness of a country, particularly during times of uncertainty. Romania plays an important role in the economic and security apparatus of Europe with the opportunity to further elevate its position by maximizing the deployment of funds available to support transformation and increase resilience in these areas.    

For Romania to sustain its competitive position and further improve its attractiveness among the European heavyweights, it will be critical to stimulate economic and technological development, reduce bureaucracy and ensure investors view the country’s legal framework as transparent and stable. This will help to ensure that Romania creates a progressive investor friendly environment, increasing the likelihood that the number of investment projects will grow beyond the level of the previous peak.