Accustomed with paradox

The most recent climate survey for Romania drafted by the Romanian-German Chamber of Commerce shows that only 7% of German companies consider Romanian economy as a good move for investments. Yet, over 80% of German investors would place, again, some of their capital in Romania. This apparent paradox has an explanation that has to do with trust and routine – being accustomed with instability, to be more precise.

The German business people look at the Romanian investments from two different angles. This is the reason of this apparent paradox of the German businessmen`s most recent climate survey. At least, this is the opinion of Sebastian Metz, General Director of the Romanian-German Chamber of Commerce. “When asked ‘how would you appreciate the current economic situation’, the German companies surveyed have answered that it is not good; and afterwards, when asked whether they are happy with the investment they have made, their answer was yes. Therefore, we can say that the investment placement is good, most of the deciding factors for an investment are appreciated and the companies would re-invest here”, explained Metz.

Then what is the problem? Some of the companies that have invested in Romania also depend on the international climate and not only on the things that take place in Romania. According to the Chamber of Commerce`s Chief, these companies obviously prefer a Romanian economy more functional, but they invest here because the investment placement as a whole provide the arguments they need. “If we were to analyze the assessments regarding their own company’s situation and the perspectives, these assessments are usually positive. And last, but not least, I`d say that the current economical situation is not in very good state but, looking to the future and to the future of the companies, we see that the things are fine”, added Metz.

Between speculations and a business plan

After joining the EU, Romania attracted foreign capitals which, in most part, were speculative; this reality was often emphasized by the BNR Governor himself, Mugur Isărescu. The German businessmen’s representative in Romania also said there are some German investors who carried out speculative affairs in Romania. “During the economic boom, especially in the real estate, there were some German companies which speculated. But when it comes to industrial companies – processing and production – we cannot speak of speculative business. The German companies present in Romania are active in areas like automobiles, commerce, constructions and services – and these are all fields that do not produce speculative bubbles”, said Sebastian Metz. He also says that the German investments are currently growing, despite the recent developments in Ukraine.

Despite of having the best score in the region regarding the degree of integration into global economy, Romania is pulled downwards by the other factors considered in the Bloomberg study – starting with the perception on corruption, taxation, protection of copyrights and the accounting system to infrastructure and necessary costs and procedures for starting a business. According to the Bloomberg report, Romania is better off Slovenia and Slovakia – countries that are part of the Euro area – in terms of business climate appeal, the main reason being the lower cost of work. In fact, the report carried out by the Romanian-German Chamber of Commerce shows that one of the most important investments criteria the companies take into account is the available human resources and the conditions of the labor market. “The low costs related to employment – under the level of Western Europe – represent only one reason to invest in Romania. It is rather a combination between costs, competencies and productivity – this is what makes this investment placement interesting. According to the opinion of most, costs and productivity have a good ratio and this provides German companies a reason to be active in Romania”, shows the report.

Pros and cons

The conflict in Ukraine does not attract the investors who are unfamiliar with this part of Europe. But, there are also some exceptions as well. In Metz`s opinion, the more structured and wiser investors, the investors who appreciate the international agreements signed by Romania and the fact that the country is a member of NATO and of the EU, consider that Romania has a good situation, especially against the Ukraine crisis. “For those who are considering Eastern Europe for making investments, Romania becomes even more attractive because they are avoiding Ukraine right now and they pay more attention to Romania. Certainly, there are some matters that frighten the investors because of the economical instability, but those who know the country are aware that Romania`s situation cannot be compared with Ukraine`s. And, the investors who are no longer choosing Ukraine are now targeting Romania. Although, the greatest obstacle faced by the foreign investments is the lack of infrastructure and bureaucracy, matters that were repeatedly emphasized in the last years reports.