Posts Tagged ‘Why Romania’


Investment in Romania’s economy is expected to pick up this year, now that the country is beginning to recover from its worst recession in 22 years.
Putting the country on the path to recovery has required some strong medicine in the form of strict austerity measures. Public sector wages have been cut by a fifth, value-added tax increased by 5% to 24%, and the retirement age rose to 63 for women and 65 for men.

These actions have not endeared the government to the voting public, who, until the global crisis, had enjoyed the rewards of nearly a decade of economic growth. But the tough measures have persuaded the World Bank and the International Monetary Fund to approve a series of loans to keep the economy running smoothly. The new fiscal discipline has also helped reassure potential investors of the Bucharest government’s determination to turn the economy around.

Last year there was foreign direct investment worth $4.6 billion—considerably less than in previous years, but it took the total amount invested in the economy to almost $68.7 billion. Financial analysts believe there is more to come as the world recovery intensifies.

Mugur Isarescu, governor of the National Bank of Romania, highlights four areas that offer great potential for investment: rural development, infrastructure, the environment and education.

There has been fierce competition in the education sector since the end of the state monopoly, and today more than half of the country’s 112 universities are privately run.

“The market will decide whether 100 universities is too many,” says Dr. Ovidiu Folcut, the rector of the Romanian American University (RAU). “It will come down to a question of quality.”

As its name implies, a central aspect of RAU’s mission is to cultivate a mutually rewarding collaboration with American universities while at the same time increasing its compatibility with the European education system.

Several U.S. universities have reached long-term agreements with RAU. As a result, it benefits from the presence of American academics within its faculty, and students from both countries profit from exchange programs.

“My trip to Romania was an eye-opening experience that has provided me with a global outlook that I could never have achieved in a classroom at home,” wrote one U.S. student.

As it celebrates its 20th anniversary this year, RAU has launched Romania’s first M.B.A. program in project management. Over the past two decades, it has graduated more than 12,000 students, and it continues to foster relationships with other universities in the U.S., Europe and South America.

Location, Location

One of Romania’s competitive advantages, according to bank governor Isarescu, is its location as the easternmost country in the European Union.

“Being a border country has positive aspects, because it offers us a door to new markets,” he says. Therefore, Romania needs to present itself as a gateway for trade to and from the EU. Its port in Constanta on the Black Sea connects Europe to Russia, Ukraine, Georgia, Turkey and beyond to Central Asia.

The Alexandrion Group—the country’s largest distributor of wines and spirits, both domestically and internationally—can vouch for the value of the location. In addition to its exports within the EU—Greece, Italy, Spain and Germany—it has extended its market to Ukraine, Serbia, China and Brazil.

The Alexandrion Group is looking to expand and is open to new projects even outside the alcohol industry. “Our target is to expand geographically and invest in logistics,” says George Christoforidis, the company’s founder and managing director. “We are continuously looking for free markets.

“There are opportunities here in Romania, but only for those that have a serious business plan,” says Christoforidis. “There are a lot of sectors that need to be developed, such as healthcare, IT and energy systems.”

He concedes that the environment for new investors is now harder than it once was and emphasizes the importance of maintaining high standards of quality within affordable prices for consumers.

 Excerpt from ForbesCustom.com


Read Full Post »