Total trade in goods and services (exports plus imports) between the UK and Romania was reported at £8.7 billion in the four quarters to the end of Q3 2022, an increase of 47.9%, according to data from the Department for Business and Trade in Great Britain. In particular, Romanian exports to the United Kingdom reached a record figure of 6.2 billion pounds in 2022, an increase of 54.9% compared to the previous year, positioning the UK the 32nd largest trading partner for Romania in the same period and accounting for 0.5% of total UK trade.
Despite the impact of Brexit on Great Britain and especially the complicated geopolitical context caused by the Russian-Ukrainian conflict, Romanian-British trade is still on an upward trend. Romania is thus consolidating its status as a stable investment environment for British companies and not only.
“The evolution of Romania, from the status of curiosity for foreign investors, as it could be perceived 25 years ago, when the Romanian-British Chamber of Commerce was born, to that of a serious destination for investments, it is probably among the most remarkable aspects of this period. This raised, on the one hand, the standards of commercial collaborations between Romania and Great Britain, but also the expectations of British investors and not only, towards Romania. A closer collaboration between the business environment and the public authorities in Romania is the key factor that can further stimulate this evolution”, claimed Colin Lovering, president of the Romanian-British Chamber of Commerce.
What are the key attraction points of Romania for foreign investors
The elements considered by foreign investors when looking at Romania include a couple of factors such as infrastructure, political and fiscal stability, as well as labor force issues. At the same time, the state aid offered by the government represents a determining factor for foreign companies that choose to invest in Romania. Thus, Romania allocated 7% of GDP for investments, meaning over 100 billion lei.
„We have people with European background, when we speak about points of attraction for foreign investors related to human resources. In terms of politics, the projects that started 1 year and a half ago, will be continued, although some ministries will change this year, the coalition will remain for another 1 year. In terms of financial stability, we need to emphasis that the banking sector in Romania is well capitalized, despite all the crisis we faced over the last years. It’s worth mentioning that over 7% of Romania`s GDP is allocated for investments, meaning over 100 billion lei. Moreover, it Is the first time the Government allocated such an amount for investments. This comes over the already known sums within the National Resilience plans, over 29 billion Euro. A very important key point in attracting foreign investors is that Romania, as part of the EU, we have access to the same instruments and conditions as any European country, such as European Investment Bank. The main challenge is the capacity building, being able to develop technical assistance within the Government to unlock strategic investments for Romania. Having a strong legislation and being open to the private sector to unlock private-public partnerships is the key” said Mihai Precup, Secretary of State within the Romanian the Ministry of Finance.
Romania attracted 11 billion Euros from foreign investments in 2022
“The number and scale of investments has grown steadily over the past 15 years, leading to the year 2022 being the year with the highest volume of investments to date. However, the budget allocated for state aid on an annual basis seems no longer sufficient, and the authorities must increase it and adapt it to the new investment context, simply €150 million per year is no longer enough. The forecast shows increasingly higher investment volumes in the coming years and Romania should have enough money allocated to state aid to remain competitive in the region. Investors shortlisting Romania always consider a few criteria such as infrastructure, political and fiscal stability, labor cost and availability and, in many cases, non-refundable state aid money that makes the difference. And one of the reasons is that that state aid in Romania offers one of the highest percentage – a rate of 60% in almost half of the country paid only in cash”, claimed Iulian Sorescu, Noerr Partner, state aid expert and investments.
At the same time, the conflict in Ukraine did not diminish the interest of foreign investors towards Romania, as our country is still viewed as a stable environment for investments by foreign companies.
“2022 was the best year for Romania to attract foreign direct investments, with almost 11 billion euros. Romania has proven to be a stable country from an economic, political and monetary point of view for investors. At InvestRomania we also promote investments in cities outside of Bucharest, such as Iași, Suceava, Craiova, Brăila, Constanța and more. Such cities have good labor resources and competent engineering talent”, said Alexandru Mitroi, Senior Adviser InvestRomania.
The governments of Romania and Great Britain must discuss a new taxation treaty
”When we speak about international business and investments, taxation is a key point of discussion. When UK left the EU, it lost all the tax incentives, especially when we speak about passive income, which means that British businesses will be taxed differently than businesses based withing EU. This will be a minus for the British companies. At the same time, the double taxation treaty between UK and Romania is obsolate, dating from the `70s and has nothing to do with the economic reality. The two governments should sit around the table and to negotiate a new treaty”, stated Dan Schwartz, Managing Partner RSM Romania.
Romania’s energy independence, an attractive factor for foreign investors
With a 31% increase in renewables by 2030, most energy production is 100% state-owned in Romania. On the positive side, energy prices remain below EU averages, despite significant increases in recent years. Total energy consumption increased by 5% in 2021, the country is counting on new oil and gas fields, as well as new power and gas interconnections to improve its supply – a new nuclear unit could be commissioned at Cernavoda for 2031.
‘’Specialists and leaders in the field talked at this event about trends and legislation, risks and opportunities, investments and the green transition, education and human resources, and about the impact in concrete projects in the industry. Attracting new investments depends on our ability as a state to capitalize on the advantages we have or can acquire, on the existence of a partnership between the private sector and the authorities. Time is short and the financial and human effort is considerable’’, stated Adela Jansen, BRCC Board Member.
