Romania is economically on a very good way

Interview with RUDOLF LUKAVSKY- Commercial Counsellor at the Austrian Embassy in Romania.

What is the value of the investmentsmade by Austrian companiesin Romania last year?

By the end of 2012 Romaniaregistered EUR 10.9 bn of Austriandirect investment. That is 18.5% ofthe overall foreign direct investment,making Austria the secondlargest investor in Romania behindthe Netherlands. This means thatAustria invests in Romania asmuch as France, Italy, USA and theUK combined. Over 6,600Romanian companies have registeredcapital from Austria, we estimatethat over 100.000 jobs aredirectly created from Austrianinvestment

Compared to 2010 and 2011,is Romania still one of the mostinteresting business destinations of the region for Austrian businesssector? Please give us arguments for your opinion, regardlessif it is yes or no.

Romania is a very importantmarket for Austria. Austrianinvestors are very active in SouthEast Europe, and Romania is thebiggest market of the region.Recent figures show that Romaniais economically on a very good way.The Romanian economy is amongthe fastest growing economies ofthe EU. Austrian companies havebeen a reliable and steady partnerof Romania. Even in the times ofcrisis, no major investor pulled outof the market. Now that the economyis picking up pace, we areproud to contribute to the positivedevelopment and growth of thiscountry.

What are the major negativeissues which Austrian companiesin Romania are confrontedwith?

Political stability and predictabilityare most probably thebiggest concerns of foreigninvestors. An investment requireslong term planning and calculation.With the frequent changes ofgovernment personnel in the leadingpositions, it becomes very difficultfor investors to rely on a steadystrategy. Additionally, emergencyordinances seem to have becomethe instrument of choice for theRomanian government to implementtheir policies. This makespolicies even less predictable. Amore parliamentarian approachwould help to make the decisionmaking processes more transparentand predictable. Further, overwhelmingbureaucracy is an issue,not unique to Romania, but nonethe less a severe impediment forforeign investors. High pervasionof black labour and tax evasionmake it difficult to compete forinternational corporations.There is a very high demand ofskilled professional workers inRomania. Here the Austrianapproach of a dual education systemcould serve as a role model forvocational training in Romania.Romania and Austria are alreadyengaged in a constructive dialogueand joint projects on this issue. TheRomanian transport infrastructureis severely underdeveloped, costingtime and money to local and internationalbusiness and weakens theattractiveness of Romania as a businesslocation, despite the closevicinity to its major investors.Austrian companies, such as Porr,STRABAG or Swietelsky are heavilyinvolved in the modernizationprocess. Just recently STRABAGtogether with other consortiummembers has been awarded thecommission to construct the highwayfrom Comarnic to Brasov on aPPP basis. PPP is an extremelyinteresting option for Romaniathat could offer a widespread ofproject opportunities, provided,however, the Romanian governmentcan prove itself as a predictableand reliable partner.

Which were the most prominentsectors of interest for Austrian investments in Romania these years?

Austrian companies are activein a very broad spectrum of industriesin Romania. Austrianinvestors are particularly strong inthe sectors of banking and insurance,oil and gas, renewable energy,wood processing, packaging, constructionmaterial and services,environmental technology andservices, transport and logistics, realestate, agriculture and retail.Recently major investment projectscame from established investorswho aim to enlarge their presencein Romania. Schweighofer forinstance, one of the largest Austrianinvestors in Romania, invests EUR150 mil. in a new sawmill inCovasna, or the Austrian Postacquired the rest of the 74% ofPostmaster SRL. The participationof STRABAG in the Comarnic-Brasov consortium can also be seenas a milestone of the bilateral economicrelationship. With the generaleconomic growth picking up,we expect to see more investmentscoming in, also from new investors.

What are the perspectives for2014 and how important is thestability of the political environmentfor any foreigninvestor in Romania?

A stable political environmentis key for any investor looking forlong term commitment, which isexactly what Romania should beaiming for. It becomes virtuallyimpossible to calculate the costs ofinvestment, if the legal frameworkand the political focus and directionare changing too frequently. Asdescribed above, a more parliamentarianapproach and a more transparentprocess of decision makingwould help international investorsto adjust their strategies in time andrespond to changes in the legal orpolitical environment.

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