Analysis. Romania set to attract more investments in manufacturing in 2018

Georgiana Bendre 19/12/2017 | 14:21

Approximately 1 in 10 of all enterprises in the EU’s non-financial business economy – about 2.1 million firms in total – were involved in manufacturing in 2014. The sector employed 29.9 million people that year and generated EUR 1,710 billion value added.

By Georgiana Bendre

 

Due to the number of employees and their added value, in 2014, according to Eurostat, manufacturing was the largest contributor to the non-financial economy value added (at 26 percent). According to the National Bank of Romania (BNR), out of the EUR 4.5 billion of foreign direct investments in Romania in 2016, EUR 2.02 billion went into manufacturing. Moreover, new orders in the sector went up by 11.3 percent year-on-year in the first nine months of 2017, say data from the National Institute of Statistics (INS). New orders rose by 5.1 percent in September year-on-year due to growth in the wider consumer goods industry and intermediary goods.

“Romania has done a lot in the past; I think it has done a great job in terms of stability to attract direct investment,” Martina Scheidleder, managing director of Voestalpine Romania, told BR.

Voestalpine is a technology and capital goods group, combining material and processing expertise. It focuses on product and system solutions based on steel and other metals.

Scheidleder told BR that in order to attract new investments in 2018, Romania needs to improve its stability, such as by improving VAT collection, in an efficient and transparent manner, and avoiding bureaucracy. In addition, she says that Romania has proved to be successful in attracting European funds, but there are still many projects that were not realized as they could have been, so it is important to attract new FDI in this area, alongside in infrastructure and education.

Moreover, she believes that the already announced projects should be put into practice in order for Romania to secure sustainable growth in 2018.

 

Digitalization poised to shake things up in medium term
Scheidleder predicted that the challenge in manufacturing over the next 5-10 years will be digitalization, as it will change the whole environment, bringing many possibilities.

“I think it’s about getting the work force to the level of our expectations, both technically, but mostly at the level of ‘soft skills’, which currently don’t meet our expectations.  It’s a big medium-term challenge,” Bogdan Stanciu, general manager of Timken, told BR. Timken is a global manufacturer of bearings, related components and assemblies.

Stanciu notes that Romania is a friendly environment for investors and attracting new investments in 2018 requires the maintenance of this environment. Furthermore, he adds that some state aid schemes were stopped this year and it would be beneficial to continue them in 2018 to attract foreign investors. He also mentions competition between Eastern European countries for investments.

Firms look east for investments

Mihai Teodorescu, general manager of ICT Logistics, a company specialized in providing transport and logistics solutions, told BR that Romania could attract new investments next year through the openness of eastern Romania, which has seen relatively few investments.

“The main thing that Romania needs to secure sustainable growth in 2018 is to raise the level of investments,” said Teodorescu.

He adds that although the growth this year was based on consumption, this won’t last forever, therefore sustained investments are required.

Teodorescu concludes that the main challenge for the next 5-10 years is the competition between Western and Eastern transporters. Currently there are discussions within the European Parliament, which he claims is trying to protect Western transporters from the newcomers in the EU, so the challenge will be the support offered to one group of countries.

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