11 Aug

Romanian Investment Environment

BusinessWeek online is running an article analyzing investment environment and opportunities of Romania and Bulgaria.

analysts say the countries are catching up [with the other ex-communist countries], and their economies have been expanding rapidly since 2000. Economic growth is expected to hover at around 6 percent for the next three years in both countries, with Bulgaria seeing lower inflation.

“Romania and Bulgaria are perceived as the new forces,” said Radu Craciun, an analyst at ABN Amro. “They have low labor costs, and due to their geographical positions have better access to the Middle East, Russia and the Balkans.”

Both are scheduled to join the European Union in 2007, but could face one-year delays if they fail to reform their inefficient justice systems and crack down on corruption.

While both countries already have easy access to EU markets, a postponement would delay EU funds for infrastructure improvements and rural development. But it wouldn’t have a major impact on large investors, Craciun said, as they take a long-term view.

This year, however, direct foreign investment reached euro951 million (US$1.16 billion) from January to May, a 12 percent rise compared to the same period last year, according to official figures.

The article sees also another aspect of Romanian’s development and investments trend:

The economic boom is not evenly distributed, however, with a strong concentration of investment in urban areas and around Bulgaria and Romania’s Black Sea coasts, while few foreigners venture in rural, poorer regions of eastern Romania.

This is confirmed by a recent study conducted by the Romanian Centre for Economic Modelling, which is showing increasing differences in terms of entrepreneurial activity among Romania’s eight regions with Bucharest and Western regions of the country heading as regarding to the pace of entreprenurial development.

Also it seems that fears that the introduction of a 16% flat tax in January would depress revenues are not real as corporate tax revenue increased by 21.1% in the first half of the year, while tax receipts rose by 17.3%.

Techorati tag: Romanian Investments

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