EY Romania presented the Attractiveness Survey Romania study, at its third edition in Romania, within an event organized by EY.
After two years of pandemic and the situation in Ukraine, Romania remained a preferred location for investors in Eastern Europe. Positioning itself on the 16th spot (4%) out of 32 as the most attractive to invest country in 2022, Romania overtook countries such as Hungary (2%), Czech Republic (2%) and it is close to Poland, whose percentage is set to 6%.
For 2022, 56% of the foreign businesses surveyed intend to establish or expand operations in Romania, putting the country on the 4th place with 56%, on the same spot with France, and after Portugal (62%), Lithuania (60%), UK (58%). Romania overshot the European average of 53%.
Nevertheless, Romania should focus its attention on the long term, where the attractiveness is anticipated to decrease from 41% in 2021 to 34% in 2022 in terms of how the attractivity will look like over the next three years. However, the current situation could create a paradox as this country has many opportunities ahead. One of them is the relocation of multinational companies from Ukraine and Russia. Romania is on pole-position at the European level when it comes to executives’ plans to relocate their business support services and supply chain functions into Europe (re-shore and near-shore) to minimize future disruptions.
“With one crisis at its closure – the pandemic and one in full effect – the war in Ukraine, our economy is once again tested, but we are also faced with an opportunity to support as many businesses possible from affected areas, businesses which might seek to move abroad and choose our country as a possible destination. At the same time, the European support packages destined for member countries will help Romania to ensure the necessary means in creating a stable environment which should attract even more foreign investors”, says Bogdan Ion, Country Managing Partner EY Romania & Moldova and Chief Operating Officer for EY South-East & Central Europe and Central Asia (CESA).
Across Europe, Bucharest places 25th among 44 cities, outranking capital cities such as Budapest, Vilnius, Riga, but also important cities from Europe, namely, Munich, Porto, Rotterdam, Geneva and Valencia.
In 2021, Bucharest was clearly the most targeted city in Romania for foreign direct investment (FDI), leading the top with 38,9%, while the West region totaled up 19,5% from the FDI, with the counties of Bihor and Timiș being the only representants.
The pandemic has impacted the supply chain & logistics operations across Europe prompting the companies to relocate their activities close to their parent market and to their local customers. Compared to 2020 when 595 projects were recorded, in 2021 a total 655 logistics projects were recorded. In 2021, the number of industrial projects exceeded its pre-level crisis, reflecting a rebound effect and a global reorganization of the supply chains.
The “back to Europe” movement doubled in 2021: in 2020, only 20% of executives were thinking to repatriate operations to their home regions, compared to 53% in 2022.
The Romania Attractiveness 2021 survey envisaged Romania as a growing logistics and manufacturing hub in Eastern Europe. This can attract important players from the industry due to its cost-competitiveness and labor supply. Currently, Romania is the most desired location for investing in 2022 in terms of supply chains and logistics. In 2021, investors said Romania should focus on supporting small and medium-sized enterprises (SMEs), encouraging environmental policies and improving the quality of its products and the value added.
Encouraging environmental policies and attitudes were selected for the second year in a row as the second main important aspect that Romania should focus on the future in order to remain competitive in the global economies. However, when asked how Romania can remain attractive in terms of sustainability, around 59% of the executives said there is a need for regulation to support sustainable business practices (e.g., recycling obligations, biodiversity protection regulation, green building standards). Also, 45% of them said Romania should improve the potential to decarbonize the supply chains (e.g., through transport reduction, access to sustainable materials).