Back

Romania Remains Among the Most Attractive Destinations for Investments in Eastern Europe

Date: 11/25/2014
Source: EY

  • CEE Countries are eroding their attractiveness for FDI
  • FDI projects in CEE declined by 12% in the last five years
  •  Turkey rises as a big player for FDI

Romania climbed on the third position in the top of the most attractive markets for FDI in the CEE region, gaining two percentage points in the investors’ preferences, according to the 2014 edition of the EY Study - European attractiveness survey. Following the attractiveness decrease on markets such as Poland (31%, a decrease of 6% from 2013) and The Czech Republic (11%, down with cu 4% from 2013), Romania (+2%) is now considered, alongside Hungary (+3%) and Turkey (+4%), one of the most attractive destinations for investment in Eastern Europe.

Due to a high exposure to European countries, a fragile banking sector and a heavy dependence on consumer credit following the crisis, the number of FDI projects in Central and Eastern Europe (CEE) declined by 12% compared with a 19% increase in Western Europe between 2009-2013 compared to 2004-2008. The divergence is all the more apparent in job creation, which fell by 30% in CEE, compared with a decline of 13% in Western Europe.

CEE in European Union bears the brunt of the crisis
With a 22% drop in FDI projects during the crisis years, Poland lost its leading position among Europe's emerging investment destinations to Russia and slipped to fifth position in terms of FDI job creation in Europe between 2009 and 2013. This trend was all the more surprising given that until 2013, Poland was the only EU Member State to witness positive growth during the crisis.

The Czech Republic, another key economy in the region, saw a marked decline of 37% in inward investment projects between 2009 and 2013. Despite the decline, these two countries still remain the top two Central European destinations for FDI.

A growing performance for Turkey
Between 2009 and 2013, the number of projects in Turkey increased by 129%, positioning the country as 3rd by project growth after Germany and UK, and the 10th most attractive destination for FDI in Europe as a whole.

Creșterea nivelului de investiții în Turcia în perioada 2009-2013 a atras după sine o creştere de In Turkey, this positive trend was accompanied by a 162% increase in job creation between 2009 and 2013. With 98 new projects started (up from 95 in 2012), 2013 was a particularly successful year. Affirming itself as Europe’s new hotspot for large manufacturing projects, the country drew several large investments in the automotive sector. The US and Germany remain the two largest investors in Turkey, accounting for 24% and 16%, respectively.

Russia’s big player status
Russia received 114 FDI projects in 2013 and took the leading position for FDI projects among non-Western European destinations during the crisis years. Although the FDI number was down by 11% from the previous year, it still managed to regain its leading position as the top emerging destination in the CEE region after falling behind Poland in 2012.

This is the result of Russia’s success in attracting several key investment projects in the automotive, heavy industry sectors, such as chemicals and large transport equipment and was able to keep its leading position in the CEE region. However, it’s very likely that the geopolitical tensions arising from the situation in Ukraine will affect Russia’s attractiveness.

Eastern Europe cities lag behind
As with country attractiveness, the perceived attractiveness of many cities in the CEE region has fallen. When asked to name the three most attractive cities in Europe, only 17% of respondents named CEE cities. This compares with 82% who named a city in Western Europe and 19% who named a city in Southern Europe. In line with previous years’ results, investors chose London, Paris, Berlin, Frankfurt and Munich as the top five investment destinations in Europe. Moscow slipped from 8th to 10th on the list. Prague and Warsaw have dropped to 12th and 14th places, respectively.

Rising interest from BRIC investors
In 2013, BRIC investment in Europe reached an all-time high — with 313 projects creating a total of 16,900 jobs. China, the leading BRIC investor, has been the source of a wide range of acquisitions made with the aim of gaining access to European consumer brands and technology, with 153 FDI projects creating more than 7,000 jobs. India ranked second, with 103 projects. The technology, automotive and business services sectors have received the majority of Indian investment.

****
About the survey
Playing catch-up, is an extract on emerging markets from the EY’s 2014 European attractiveness survey. Data has been compared from before and after the crisis — up to the past year — on both the reality of investment and the perceived attractiveness of Europe’s emerging markets. The report also examines how rapidly growing economies are evolving into strong investors themselves, which represents an important shift in the global investment landscape.

EY’s 2014 European attractiveness survey is based on a twofold, original methodology that reflects the “real” attractiveness of Europe for foreign investors and our evaluation of the reality of FDI in Europe based on EY’s European Investment Monitor. This database tracks FDI projects that have resulted in new facilities and/or the creation of new jobs. By excluding portfolio investments, mergers and acquisitions, it shows the reality of investment in manufacturing or services operations by foreign companies across the continent.

By using the “perceived” attractiveness of Europe and its competitors by foreign investors, we define the “perceived” attractiveness of Europe and its competitors by foreign investors. We define the attractiveness of a location as a combination of image, investors’ confidence and the perception of a country or area’s ability to provide the most competitive benefits for FDI. The field research was conducted by CSA Institute in February and March 2014, via telephone interviews, based on a representative panel of 840 international decision-makers.

About EY Romania
EY is one of the world's leading professional services firms with approximately 190,000 employees in 700 offices across 150 countries, and revenues of approximately $27.4 billion in the fiscal year that ended on 30 June 2014. Our network is the most integrated at global level and its vast resources allow us to help our clients benefit from every opportunity. In Romania, EY has been a leader on the professional services market since its set up in 1992. Our over 500 employees in Romania and Moldova provide seamless assurance, tax, transactions, and advisory services to clients ranging from multinationals to local companies. Our offices are based in Bucharest, Cluj-Napoca, Timisoara, Iasi and Chisinau. From 1 July 2013, Ernst & Young becomes EY, the logo has been modified in response to this change and the company's new tagline becomes "Building a better working world". The new visual identity reflects the new strategy of EY, Vision 2020. For more information, please visit www.ey.com.
Romania Remains Among the Most Attractive Destinations for Investments in Eastern Europe
► CEE Countries are eroding their attractiveness for FDI
► FDI projects in CEE declined by 12% in the last five years
► Turkey rises as a big player for FDI

Romania climbed on the third position in the top of the most attractive markets for FDI in the CEE region, gaining two percentage points in the investors’ preferences, according to the 2014 edition of the EY Study - European attractiveness survey. Following the attractiveness decrease on markets such as Poland (31%, a decrease of 6% from 2013) and The Czech Republic (11%, down with cu 4% from 2013), Romania (+2%) is now considered, alongside Hungary (+3%) and Turkey (+4%), one of the most attractive destinations for investment in Eastern Europe.

Due to a high exposure to European countries, a fragile banking sector and a heavy dependence on consumer credit following the crisis, the number of FDI projects in Central and Eastern Europe (CEE) declined by 12% compared with a 19% increase in Western Europe between 2009-2013 compared to 2004-2008. The divergence is all the more apparent in job creation, which fell by 30% in CEE, compared with a decline of 13% in Western Europe.

CEE in European Union bears the brunt of the crisis
With a 22% drop in FDI projects during the crisis years, Poland lost its leading position among Europe's emerging investment destinations to Russia and slipped to fifth position in terms of FDI job creation in Europe between 2009 and 2013. This trend was all the more surprising given that until 2013, Poland was the only EU Member State to witness positive growth during the crisis.

The Czech Republic, another key economy in the region, saw a marked decline of 37% in inward investment projects between 2009 and 2013. Despite the decline, these two countries still remain the top two Central European destinations for FDI.

A growing performance for Turkey
Between 2009 and 2013, the number of projects in Turkey increased by 129%, positioning the country as 3rd by project growth after Germany and UK, and the 10th most attractive destination for FDI in Europe as a whole.

Creșterea nivelului de investiții în Turcia în perioada 2009-2013 a atras după sine o creştere de In Turkey, this positive trend was accompanied by a 162% increase in job creation between 2009 and 2013. With 98 new projects started (up from 95 in 2012), 2013 was a particularly successful year. Affirming itself as Europe’s new hotspot for large manufacturing projects, the country drew several large investments in the automotive sector. The US and Germany remain the two largest investors in Turkey, accounting for 24% and 16%, respectively.

Russia’s big player status
Russia received 114 FDI projects in 2013 and took the leading position for FDI projects among non-Western European destinations during the crisis years. Although the FDI number was down by 11% from the previous year, it still managed to regain its leading position as the top emerging destination in the CEE region after falling behind Poland in 2012.

This is the result of Russia’s success in attracting several key investment projects in the automotive, heavy industry sectors, such as chemicals and large transport equipment and was able to keep its leading position in the CEE region. However, it’s very likely that the geopolitical tensions arising from the situation in Ukraine will affect Russia’s attractiveness.

Eastern Europe cities lag behind
As with country attractiveness, the perceived attractiveness of many cities in the CEE region has fallen. When asked to name the three most attractive cities in Europe, only 17% of respondents named CEE cities. This compares with 82% who named a city in Western Europe and 19% who named a city in Southern Europe. In line with previous years’ results, investors chose London, Paris, Berlin, Frankfurt and Munich as the top five investment destinations in Europe. Moscow slipped from 8th to 10th on the list. Prague and Warsaw have dropped to 12th and 14th places, respectively.

Rising interest from BRIC investors
In 2013, BRIC investment in Europe reached an all-time high — with 313 projects creating a total of 16,900 jobs. China, the leading BRIC investor, has been the source of a wide range of acquisitions made with the aim of gaining access to European consumer brands and technology, with 153 FDI projects creating more than 7,000 jobs. India ranked second, with 103 projects. The technology, automotive and business services sectors have received the majority of Indian investment.

****
About the survey
Playing catch-up, is an extract on emerging markets from the EY’s 2014 European attractiveness survey. Data has been compared from before and after the crisis — up to the past year — on both the reality of investment and the perceived attractiveness of Europe’s emerging markets. The report also examines how rapidly growing economies are evolving into strong investors themselves, which represents an important shift in the global investment landscape.

EY’s 2014 European attractiveness survey is based on a twofold, original methodology that reflects the “real” attractiveness of Europe for foreign investors and our evaluation of the reality of FDI in Europe based on EY’s European Investment Monitor. This database tracks FDI projects that have resulted in new facilities and/or the creation of new jobs. By excluding portfolio investments, mergers and acquisitions, it shows the reality of investment in manufacturing or services operations by foreign companies across the continent.

By using the “perceived” attractiveness of Europe and its competitors by foreign investors, we define the “perceived” attractiveness of Europe and its competitors by foreign investors. We define the attractiveness of a location as a combination of image, investors’ confidence and the perception of a country or area’s ability to provide the most competitive benefits for FDI. The field research was conducted by CSA Institute in February and March 2014, via telephone interviews, based on a representative panel of 840 international decision-makers.

About EY Romania
EY is one of the world's leading professional services firms with approximately 190,000 employees in 700 offices across 150 countries, and revenues of approximately $27.4 billion in the fiscal year that ended on 30 June 2014. Our network is the most integrated at global level and its vast resources allow us to help our clients benefit from every opportunity. In Romania, EY has been a leader on the professional services market since its set up in 1992. Our over 500 employees in Romania and Moldova provide seamless assurance, tax, transactions, and advisory services to clients ranging from multinationals to local companies. Our offices are based in Bucharest, Cluj-Napoca, Timisoara, Iasi and Chisinau. From 1 July 2013, Ernst & Young becomes EY, the logo has been modified in response to this change and the company's new tagline becomes "Building a better working world". The new visual identity reflects the new strategy of EY, Vision 2020. For more information, please visit www.ey.com.

Members & Partners about AmCham

Members 2 members

Member of the AmChams in Europe Network Member of the AmChams in Europe Network
Coalitia pentru Dezvoltarea Romaniei Coalitia pentru Dezvoltarea Romaniei
U.S. Business Visa Facilitation Program for AmCham Romania Members U.S. Business Visa Facilitation Program for AmCham Romania Members
U.S. Commercial Service U.S. Commercial Service