Dutch investors target Romanian health sector

Pioneering Dutch investors came to Romania as early as the beginning of the nineties and are now present in all the main local industries. As for future trends, Dutch companies are still finding business opportunities in industry, logistics, infrastructure and energy and taking a particular interest in the local healthcare sector, says Hans Smaling, counselor for economy and trade and chief of department with the Embassy of the Kingdom of the Netherlands to Bucharest.

Simona Bazavan

For many years Holland has held a – if not the – top position in the list of foreign investors to Romania. How do you explain this situation?

The Netherlands entered the Romanian market quite rapidly after the fall of communism in 1989, therefore commercial relations between the two countries developed extremely well during the 1990s. In 2005 bilateral trade was eight times greater than in 1989.

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Looking at investments, during the last few years Dutch investors’ interest has continued to increase. However in terms of the numbers of new companies established with Dutch capital we have seen some stabilization. This is because Dutch investors have already been represented on the Romanian market for a long time, and have always been among the biggest foreign direct investors in the last decade. In the past few years the share of Dutch investments in Romania, as part of total FDI, was around 18 percent. Looking at the last two years of economic downturn, we can see that Dutch investments in Romania totalled more than EUR 1 billion. This amount represents approximately one quarter of the total Dutch investments so far.

How much did Dutch-owned companies invest in Romania last year and how did it compare to 2008?

Based on the statistics of the National Office of the Trade Register, at the end of 2008 there were 3,456 companies with Dutch capital registered in Romania (2.16 percent of the total). Dutch investments made until the end of 2008 totalled EUR 4,016 billion (18.49 percent of the total).

At the end of 2009 we had 3,584 companies with Dutch capital registered in Romania (2.15 percent of the total), while the investments made until this date were EUR 4,065 billion (representing 16.11 percent of the total foreign investments made in Romania).

Looking at the latest developments we are glad to see that despite the economic crisis, at the end of February 2010, the number of companies with Dutch capital had increased to 3669 (2.19 percent of the total), while the total sum of Dutch investments in Romania reached EUR 4,665 billion (18.02 percent of the total foreign investments made in the country).

How do you see future Dutch investment projects to Romania? Can you give any names or mention industries where they might be coming from?

We cannot give detailed business information, but we certainly see possibilities for more Dutch investments in Romania in industry, logistics & infrastructure and energy. There is also keen interest from the medical sector in Romania.

A lot depends on political will and commitment from the Romanian side.

What do you consider to be the opportunities of the Romanian business environment for investors from Holland?

For Dutch investors the Romanian market is interesting due to its size and strategic location. In addition, successful operations in Romania can offer good perspectives to expand the activity to other countries in the region. Also, the workforce in Romania is well educated, foreign languages are well spoken compared with other countries in the region, while labour costs still offer comparative advantages.

Finally, there is a variety of niches that are not sufficiently developed yet and which have a lot of potential, for example renewable energy and the organic food industry.

There are many sectors of great interest, but the Netherlands is focussing for the moment on: logistics & infrastructure, water, environment and energy. We believe that Romania has the potential to become a trade hub for Central and Eastern Europe while the port of Constanta could become its gateway. There is a need for the development of the port of Constanta and the Danube ports, better navigability conditions on the Danube and investments in water management. In these sectors we are quite happy with the activities of the two public private partnerships between the Ministry of Economy from the Netherlands and Dutch companies active in these fields in Romania: the European Gateway Platform (EGP) and the Netherlands Water Platform (NWP) respectively. Their objective is to promote Dutch expertise in Romania and stimulate new investments.

From your contact with Dutch companies, what should the Romanian authorities do to help foreign investors?

In general we believe that investors appreciate political stability a good (macro) economic environment and transparency and predictability of regulations. A one-stop investment office would also greatly help to reduce the time taken for investors to start a company.

The importance of investing in road, rail and naval transportation in the context of intermodality is also evident. In addition there is a need for simplified fiscal regulations in terms of VAT collection (i.e. custom warehouses).