Romania’s government is busy getting ready to launch its new agency for investment and foreign trade. The new agency, which will report into the prime minister’s office, will incorporate the country’s existing agency InvestRomania, which is part of the ministry of entrepreneurship and tourism.
One of the agency’s architects is George Agafitei, state counsellor to prime minister Nicolae Ciucă, who has spent the past year developing the country’s investment policy and strategy and now expects it to be operational within “a few months”.
He spoke with fDi about the new agency, Romania’s record 2022 in foreign direct investment (FDI), and why the country’s image lags behind its reality.
Q: Why is the government establishing this new agency?
A: I’ve been speaking extensively with investors about what must improve, and from this we identified the need for a single point of contact within the government. It was important to cut the red tape, so we have created this new agency — known as Arice — to help firms from the very early stages of investment. The final piece of legislation was approved in February, but it will take a few months to employ people and set it up.
Q: How will it interact with Romania’s existing investment promotion operations?
A: The investment promotion authority InvestRomania will be integrated into this new agency. They have done a good job, but they need more power to support the volume of investment coming into the country. We also want to expand the network of economic diplomats in our foreign embassies, to help them attract more FDI.
Q: FDI into Romania surged last year. What is the forecast for 2023?
A: Central bank data shows that FDI in Romania hit €10.7bn last year, which is the highest volume on record. My objective for 2023 is €14bn to €15bn. There’s a lot of EU money coming in through the National Recovery and Resilience Plan (NPPR) and the government’s 2023 budget had one of its biggest allocations for investment in history (112bn lei; €22.8bn).
Q: fDi Markets figures show that renewables, software and IT were the biggest sector recipients last year. What does Romania offer in these areas?
A: The renewables sector came naturally. We have a good geography for this and a lot of funds via the NPPR. The energy crisis and the understanding that we can’t depend on Russian energy have accelerated things.
The IT sector represents 7% of our gross domestic product and its fiscal incentives have worked well. For example, there’s no income tax in the IT sector nor within research and development. The philosophy behind this is to increase Romania’s creation of value-added products.
Q: In November, Finland’s Nokian announced it was investing €650m in Oradea to build the world’s first carbon-neutral tyre factory. How important is this for Romania?
A: It’s very important. Nokian decided on this location after scouting eight countries and meeting Romania’s prime minister. The state aid scheme, which is available for investments of at least €1m or with 100-plus employees, also helped. Romania’s government is in the process of obtaining EU approval of its decision to grant Nokian €99.5m in state aid.
The company is planning to hire 500 people and it will help Romania’s automotive industry, which is growing very quickly. In the country’s south we have a Ford factory and Renault’s Dacia plant.
Q: In the past, investors cited corruption and bureaucracy as hurdles to operating in Romania. Is this still an issue today?
A: Romania’s image lags behind its reality, as things have improved hugely. In 2022, the European Commission lifted its monitoring of the country under the Cooperation and Verification Mechanism and we’ve started the OECD accession process, which is not available to every country. Digitisation is one of the government’s main focuses and we’ve just started to issue electronic ID cards.
George Agafitei is state counsellor to the prime minister of Romania. This interview has been edited for clarity and brevity.