Eduard Pavel
Tax partner at Kreston Romania

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Investing in Romania

January 12, 2024

Sector: ESG

Investing in Romania is attracting budget-focused businesses eyeing expansion in Eastern Europe. Eduard Pavel from Kreston Romania sheds light on the current economic trends, investment climate, and the opportunities that Romania presents to the global business community.

2022 FDI Surge

In 2022, Romania witnessed a rise in foreign direct investment (FDI), marking a phase of steady economic growth. Despite this progress, Pavel points out a significant gap when compared to Germany’s FDI inflows. He states, “Romania did experience growth in 2022, but the amount is still significantly less than that of Germany.” This observation highlights Romania’s growing, yet comparatively modest, position in the European investment landscape.

A Cautious Perspective on Investment Trends

After a shift in investment patterns, Pavel provides a cautious assessment of the general trend towards diversifying supply chains, a direct pivot from China to Europe, specifically Romania, isn’t definitively established.

“We cannot confirm that [clients] have shifted away from China and towards European suppliers.”

The Role of Green Energy

Romania’s green energy initiatives, while not the primary attractor, are influencing business decisions. According to Pavel, these initiatives are a contributing factor, albeit not the main reason behind multinational corporations’ interest in Romania. “The country’s green initiatives do play a role in attracting businesses,” he notes, indicating that Romania’s environmental commitments are resonating with the global business ethos. “Despite the emphasis on green energy, there hasn’t been a significant increase in inquiries from multinationals looking to relocate or start businesses in Romania due to these initiatives.”

Digitalisation and automation

One of the most pronounced trends observed in the past year is the shift towards automation and digitalisation. Pavel attributes this change to the pandemic, which has altered business practices globally. “Clients are paying more attention to automation and digitalisation,” he remarks, highlighting a broader trend that is influencing business strategies in Romania and beyond.

Outlook for 2024

Looking ahead to 2024, Eduard Pavel offers practical advice for international businesses considering expansion into Romania. He emphasises the importance of understanding local market dynamics and the regulatory environment. “Make sure to research the market, understand the legislation, and pay attention even to the nuances,” Eduard advises, underlining the need for a well-informed approach. He also stresses the significance of building long-term relationships in Romania’s relationship-driven business culture.

If you are interested in doing business in Romania, please get in touch.