Romania is the largest country in the Balkan Peninsula of Southeast Europe with a land mass of 238,400 square kilometres stretching from Oradea on its border with Hungary, 620 kilometres across the Carpathian Mountains and Danube River to Constanta on the Black Sea. Its population in 2019 is around 19.5 million with 1.8 million living in the capital Bucharest, considered to be one of the leading financial and industrial centres in Eastern Europe. Romania is a semi-presidential republic with the President as head of state and Prime Minister as head of government. The country became a member of the European Union (EU) on 1 January 2007, and holds the revolving presidency of the EU Council from 1 January to 30 June 2019.
The Romanian Government’s priorities for 2018-20 include the improved absorption of EU funds and a focus on securing investments in infrastructure and development projects, simplifying tax administration and improving public health. Its programs reconfirm Romania’s roadmap for achieving the Europe 2020 objectives for smart, sustainable and inclusive growth and prioritises the use of EU funds in line with the European Structural and Investment Funds envelope for 2014-20 (EUR 40 billion). Political stability and continuing structural reforms will be important in the Government achieving its goals.
Romania has developed a market economy and is proceeding with programs to privatise public enterprises. Its robust economic growth in 2017 of 6.9 per cent was one of the highest in the region fuelled by strong exports and private consumption that was aided by expansionary fiscal policy and continued growth in real wages. Growth however slowed in 2018 to 4.1 per cent and this trend is expected to continue over the near term in line with the prevailing European economic climate.
Romania’s economy is mainly centred on the services sector which represents 56 per cent of GDP and employs 48 per cent of the workforce. Tourism in particular contributes 5.3 per cent to GDP and has the potential for significant growth. The technology sector has also seen immense growth in recent years due to emergence of a highly qualified and lower cost workforce, and is expected to expand from 6.2 to 12 per cent of GDP by 2025. The industrial sector contributes to 30.1 per cent of GDP with foreign direct investors involved in heavy industry (steel and metallurgy), vehicle parts manufacturing, building and construction, petroleum refining and textiles. Agriculture represents 4.4 per cent of GDP. Romania has limited energy dependence with large natural reserves of coal, oil, gas and uranium.
Economic Indicators – 2018[supsystic-tables id=25]
Foreign Direct Investment (FDI) in Romania
Romania actively seeks foreign direct investment and offers a market of around 20 million consumers, a well-educated and skilled workforce at relatively competitive wages, a strategic location and an abundance of natural resources.
Since Romania’s accession to the EU in 2007 it has progressively introduced prudent monetary measures that have enabled the Country to gain the confidence of foreign investors and build FDI stock to EUR 73.3 billion. Benefit for FDI investors include:
- The government has taken steps to strengthen tax administration, improve transparency and create legal means to resolve contractual disputes expeditiously;
- Romanian legislation provides national treatment for foreign investors, guarantees free access to domestic markets and allows foreign investors to participate in privatisation of state-owned enterprises (SOE). There is no limit on foreign participation in commercial enterprises;
- Foreign investors are entitled to establish wholly foreign-owned enterprises and to convert and repatriate 100 per cent of after-tax profits;
- The application of a new tax code adopted in September 2015 enabled the introduction of numerous tax adjustments in favour of liberalisation of the economy including a reduction in the VAT rate from 24 to 19 per cent in 2017 and a reduction in dividend tax from 16 to 5 per cent;
- Standard corporate tax is a fixed rate of 16 per cent with concessions for certain businesses;
- Standard individual personal income tax is a flat rate of 10 per cent;
- The Public Private Partnership (PPP) law was revised in 2011 and amended again in 2016, and envisions the creation of contractual public-private partnerships as an alternative to the formation of a project company and also deals with issues of liability;
- Romania has concluded double taxation treaties with over 90 countries; and
- Investromania and the Ministry of Business Climate, Trade, and Entrepreneurship have resources available to assist foreign investors.
Tourism in Romania
Romania has an abundance of rich and diverse natural and built tourism assets offering countless unique travel experiences. A car or train journey can transport travellers from a cruise on the Danube River to beautiful, intact medieval towns – from vibrant Bucharest to a luxurious Black Sea beach resort. And from Southern Transylvania and the perfectly preserved hilltop citadel of Sighisoara to the historic regions of Buconina with its unique painted monasteries or Maramures with authentic, centuries old villages. Romania’s Danube Delta is recognised as the world’s third most biologically diverse area and has been recognised by UNESCO for its outstanding universal value. Romania also boasts 8 UNESCO inscribed World Heritage sites.
While Romania is known for its outstanding heritage tourism including the notoriety of Transylvania, it offers tourists many more experiences to enjoy. Cruising the Black Sea and beyond from Constanta or river cruises on the Danube with overnight stays in traditional villages. Travelling Romania by stream train exposes the unique cultures and rural tourism of the country, exploring its gastronomical experiences and its spa and health retreats. There are many museums and opportunities to immerse in the vibrant and flourishing arts scene.
The ecotourism offering includes hiking or biking the dramatic landscapes of the Bucegi and Carpathian Mountains, National Parks, cave complexes and the Danube Delta wetlands. Sinaia tops Romania’s 93 snow ski resorts with over 18 kilometres of ski slopes. The 220 kilometres Black Sea shoreline attracts 8.6 per cent of tourists each year staying in the wide range of accommodation available including 4 and 5-Star resorts.
Foreign Visitor arrivals reached 11.72 million in 2018, a major proportion of who were same day travellers. Around 2.78 million international tourists, an increase of 6.3 per cent over 2017 stayed overnight in registered accommodation. Domestic tourism still dominates the sector with international tourists accounting for 21.5 per cent of total tourist arrivals. Of the non-resident tourists visiting Romania during the first three quarters of 2018, 57.3 per cent arrived for business – attending meetings, incentives, conferences and exhibitions (MICE) and their expenditure accounted for 60.8 percent of tourist receipts for the period.
Romania’s diverse tourism offering has so much potential. Elevating the country’s tourism brand in the competitive global tourism market, tapping into new markets and investing in the country’s infrastructure and accommodation will collectively strengthen growth in the tourism sector.
Tourist Arrivals and Overnight Stays over past 5 Years[supsystic-tables id=26] Note: Romania’s Institutul National De Statistica defines tourists as not conducting a paid activity as the main reason for their travel.
Accommodation Profile (International and Domestic Tourists) – 2017 & 2018
[supsystic-tables id=29] Source: Romania Institutul National De Statistica