With significant potential for investments, Romania still lacks an efficient and structured public sector that could boost and support foreign investors in their efforts to develop their businesses on the local market.
According to the most recent data released by the National Bank of Romania (BNR), France ranks fifth in terms of total investments in Romania. It comes behind the Netherlands, Austria, Germany and Cyprus, with EUR 4.11 billion of investments at the end of December 2014. And this is seen in the number of players from different fields that are active on the local market.
As pundits say, there were no strong incentives to enter the local market in 2015 and as a result only a limited number of major foreign companies opted to put their money into a business here. But as Fitch said, Romania’s ratings present better a fiscal position and more favorable governance indicators.
“Nonetheless, Romania is still a competitive market: our clients are constantly growing and hiring personnel, which has started to become a difficult job, as it seems there is a lack of specialists on the market,” said Anca Roscaneanu, general manager at Gras Savoye.
A study conducted by ICAP based on financial data from December 2015 shows that 3,222 active companies with a more than 10 percent direct French shareholding were registered in Romania in June this year (either individuals or legal entities).
The study also found that the total 2,078 active companies posted a combined EUR 12.7 billion in turnover and had 92,252 employees in December 2015. In addition, 104 firms reported a turnover of above EUR 10 million last year. Some 1,041 companies (50 percent) recorded profit, another 833 (40 percent) posted a loss, while the remaining 10 percent declared 0 as their result.
According to ICAP, in December last year Automobile Dacia was ranked first in terms of turnover (EUR 4.25 billion), followed by Carrefour Romania (EUR 1.14 billion), Auchan (EUR 987 million), Renault Comercial Roumanie (EUR 496 million) and Expur (EUR 236 million). In terms of profits, Automobile Dacia also posted the largest profit (EUR 99 million), followed by Apa Nova Bucuresti, Carrefour Romania, CRH Ciment and Euro Auto Plastic Systems.
The researchers also found that 52 percent of the companies with more than 10 percent French shareholding are registered in Macro-region 3 (which includes the following counties: Arges, Calarasi, Dambovita, Giurgiu, Ialomita, Prahova, Teleorman, Ilfov and Bucharest). The manufacturing sector accounted for about 20 percent of the total number of companies (415) and 46 percent of the total number of employees (about 43,000). It was followed by the wholesale and retail trade and repair of motor vehicles and motorcycles (381 companies) and professional, scientific and technical activities (299 companies).
These three sectors represent 53 percent of all the French companies included in the study conducted by ICAP. Manufacturing and wholesale and retail trade are also the sectors that posted the highest number of employees (over 65,000 employees) and account for 88 percent of the total turnover.
According to Roscaneanu of Gras Savoye, companies from the west of the country face a lack of specialists. “There is still a lot of paperwork needed to run a business in Romania, but we are confident that this government will also implement a solution for companies, something similar to what they did for individuals through their Cutting Papers Committee,” she added, saying that a lack of investment in infrastructure, but also education, public health and environment corrodes the country’s competitiveness.
For the local subsidiary, the merger between Gras Savoye International, Willis and Towers Watson that took place in December was a significant step forward. “The group’s Romanian subsidiary played an important role last year, our local activity being prominent in the region. Also, our portfolio of clients willing to invest in their employees bloomed, so we helped them to retool their human capital strategies and offered some of the best employee benefit products on the market. Furthermore, we managed to settle major claims for our clients such as fire, storm and liability – bodily injuries, and product liability, among others,” says the general manager.
Last but not least, according to the financial data from 2015, quoted by ICAP, only five sectors are not profitable: electricity, gas steam and air conditioning supply; accomodation and food service activities; arts, entertainment and recreation; mining and quarrying and other service activities.