FIC: Foreign investment fell by 60% in 2020, the relationship with investors should be prioritized

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Bogdan Tudorache

The report on foreign direct investment (FDI) made by the Foreign Investors’ Council (FIC), now in its second edition in 2020, shows that in Romania FDI flows recorded a negative net value of -338 million euros in the first five months of 2020, compared to a positive net value of +2.059 billion euros in the same period of 2019. In addition, according to NBR data, FDI decreased in 2020 by 60.38% compared to 2019.

“It would be appropriate a more intense presence of Romania on international markets, especially in this period, through government agencies for attracting investment and promoting exports, such as Invest Romania. With a proactive attitude, they could coordinate contacts with potential investors, facilitating the relationship with local governments in implementation investment projects,” is shown in the report consulted by energynomics.ro.

Romania benefited from 0.45% of total FDI flows globally, of about 81.12 billion euros, in 2018. Data from the National Bank of Romania (BNR) show that FDI companies performed 75% of exports and 68% of total imports. The number of employees in FDI companies represents 26% of the total number of employees in Romania, slightly decreasing compared to previous years.

Even if FDI stocks have increased in Romania every year since 2008, the differences remain significant compared to other countries in the region, if the level of FDI is compared to GDP or population. Although less exposed to the US-China trade war, Romania may be indirectly affected, by increasing uncertainty, declining investor confidence and postponing investment decisions.

The services sector has the largest share of FDI stocks in Romania, of about 47% out of the total. In contrast, in the high-tech sector stocks of FDI as a share of the total industry processing plants are only 5%, the lowest level in the region.

Romania attracted in 2016 only 5% of the total volume of FDI related to high-tech industries and knowledge-intensive services in the region. Instead, 52% of volume focused on Hungary, 18% on Poland and 14% on the Czech Republic, the regional specialization thus acting in to the detriment of Romania.

Romania’s competitiveness deficiencies are also reflected in the regional index of competitiveness. None of the 8 development regions in Romania rises to the level European Union (EU) performance environment, including the Bucharest-Ilfov region, is also shown in the study.

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