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Romania: Market Profile

Picture: Romania factsheet
Picture: Romania factsheet

1. Overview

Romania achieved one of the highest growth rates in the European Union (EU) in 2017. However, the challenge for the government is to remove structural obstacles to the economy and ensure that the benefits of prosperity reach all citizens. The Government’s priorities for 2018-20 include the improved absorption of EU funds and a focus on securing investments in infrastructure, improving health care, reforming the pension system, and simplifying tax administration. The Government’s program reconfirms Romania’s roadmap for achieving the Europe 2020 objectives for smart, sustainable and inclusive growth and prioritises the use of EU funds in line with the European Structural and Investment Funds envelope for 2014-20, which amounts to approximately EUR40 billion.

Sources: World Bank, Fitch Solutions

2. Major Economic/Political Events and Upcoming Elections

May 2016
A Nato missile defence system was installed.

January 2017
Sorin Grindeanu was appointed prime minister after the Social Democratic Party had won the December 2016 elections. He tried to form a coalition with the Alliance of Liberals and Democrats.

June 2017
Prime Minister Grindeanu lost a vote of confidence after the leadership of the Social Democratic Party and the coalition partner called for his resignation. Economy Minister Mihai Tudose took over.

January 2018
Viorica Dăncilă of the ruling Social Democratic Party became the third head of government in a year and the country’s first woman prime minister.

May 2018
In May 2018, Romania's telecommunications regulator confirmed that it plans to hold a 5G tender by the end of 2019 and opened a public consultation on the measure plan and the timetable for the allocation of the 470-790MHz frequency band, together with the associated regulatory options.

June 2018
A citizens’ initiative aimed at changing the electoral law was launched by opposition parties Save Romania Union (USR), the Romania Together Movement (RO+), the Free People’s Party and 24 civic NGOs.

December 2018
Romania's telecommunications regulator introduced the EU's WiFi4EU scheme. Under this scheme, 224 Romanian municipalities were selected to receive vouchers to set up WiFi hotpots in public spaces.

May 2019
The government of Romania has sanctioned the technical and economic indicators for the construction of a regional hospital in Iasi. The project required an investment of EUR500.3 million (USD559.2 million).

Sources: BBC Country Profile – Timeline, Fitch Solutions

3. Major Economic Indicators

Graph: Romania real GDP and inflation
Graph: Romania real GDP and inflation
Graph: Romania GDP by sector (2017)
Graph: Romania GDP by sector (2017)
Graph: Romania unemployment rate
Graph: Romania unemployment rate
Graph: Romania current account balance
Graph: Romania current account balance

e = estimate, f = forecast
Sources: IMF, World Bank, Fitch Solutions
Date last reviewed: June 15, 2019

4. External Trade

4.1 Merchandise Trade

Graph: Romania merchandise trade
Graph: Romania merchandise trade

Source: WTO
Date last reviewed: June 15, 2019

Graph: Romania major export commodities (2018)
Graph: Romania major export commodities (2018)
Graph: Romania major export markets (2018)
Graph: Romania major export markets (2018)
Graph: Romania major import commodities (2018)
Graph: Romania major import commodities (2018)
Graph: Romania major import markets (2018)
Graph: Romania major import markets (2018)

Sources: Trade Map, Fitch Solutions
Date last reviewed: June 15, 2019

4.2 Trade in Services

Graph: Romania trade in services
Graph: Romania trade in services

e = estimate
Source: WTO
Date last reviewed: June 15, 2019

5. Trade Policies

  • Romania has been a member of the EU since 2007. The EU is an economic and monetary union comprising of 28 member states, which means that Romania is part of a customs union and single market (which provides for the freedom of movement of goods, capital, services and labour between member states).

  • The EU provides various funding for EU farmers to improve the competitiveness of EU agricultural exports. Romania is not a huge importer of agricultural products. All of the country’s major importing partners are EU member states and, therefore, benefit from the same EU funding benefits for farmers.

  • The EU imposes import quotas on a variety of food products coming from non-EU member states. All of Romania’s five top importing partners are within the EU, but its sixth-highest importing partner is China. These quotas are barriers for Chinese exporters to Romania.

  • Various anti-dumping measures are imposed on certain import products from China, India, Malaysia, Russia and other South East Asian countries.

Sources: WTO - Trade Policy Review, Fitch Solutions

6. Trade Agreement

6.1 Multinational Trade Agreements


  1. EU: As an EU member state since January 1, 2007, Romania benefits from tariff-free trade with its 27 peers across Europe and several other countries, including several countries in the Western Balkan region.

  2. European Free Trade Association: Although none of its four member countries are Romania’s top trading partners, the organisation enhances regional trade flows.

  3. EU-Turkey Customs Union Agreement: The customs union membership agreement with the EU that came into force on December 31, 1995, provides tariff-free access to the European market for Turkey, benefitting both exporters and importers. As Turkey has steady trade flows with Romania (it is the country’s sixth-highest exporting partner and ninth-highest importing partner), this agreement has greatly enhanced trade flows between the two countries.

  4. EU-South Korea: South Korea is one of Romania’s top 20 import partners. The agreement, the EU’s first trade deal with an Asian country, has applied since July 2011 and was formally ratified in December 2015. Most import duties have been removed.

  5. EU Association Agreements with Algeria (in force since September 1, 2005), Morocco (since March 1, 2000) and Tunisia (March 1, 1998): All three agreements establish a free trade area under which two-way trade in industrial products is free of tariffs, while for agricultural, agro-food and fisheries products, a progressive opening of the respective markets for select products has been agreed. Morocco is one of Romania’s top 20 exporting partners.

  6. EU-Canada Comprehensive Free Trade Agreement (FTA) (CETA): This agreement entered into force provisionally on September 21, 2017 and will benefit Romania by reducing or eliminating tariffs in several important export areas, notably machinery where the tariff will go from 9% to zero. Canada is not currently one of Romania’s top 20 exporting or importing partners, but Romanian exports to Canada grew by 40% between 2015 and 2016.

  7. In January 2018, Romania’s Business Environment Minister announced that Romania was seeking to increase its bilateral trade with the United States, Canada, Germany, China and Russia.

  8. EU-Egypt Association Agreement: In force since 2004, the agreement creates a free trade area by removing tariffs on industrial products and making it easier to trade agricultural products. Egypt is one of Romania’s top 20 exporting partners.

Under Negotiation

  1. EU-India FTA: Given that Romania currently has a trade deficit with India, an FTA would benefit Romania’s overall trade balance. Given its large population and robust economic growth, India could be an important trading partner for Romania.

  2. EU-Egypt Deep and Comprehensive FTA (DCFTA): In June 2013, discussions began on a DCFTA between Egypt and the EU that would extend beyond the association agreement and deepen trade and investment relations.

Sources: WTO Regional Trade Agreements database, European Commission, Fitch Solutions

7. Investment Policy

7.1 Foreign Direct Investment

Graph: Romania FDI stock
Graph: Romania FDI stock
Graph: Romania FDI flow
Graph: Romania FDI flow

Source: UNCTAD
Date last reviewed: June 15, 2019

7.2 Foreign Direct Investment Policy

  1. Romania has significant potential as an international investment destination, exhibited by the fact that the country has the third highest levels of FDI in the South East Europe region. The government maintains a welcoming attitude towards FDI, with governmental policy being that foreign investors are treated equally with domestic ones. This is demonstrated by the fact that there are no strict limits imposed on foreign business ownership in the country or on which sectors foreign businesses are allowed to participate in. Foreign businesses in Romania are allowed to open a branch office without a domestic partner or sponsor, and 100% foreign ownership of new businesses is allowed.

  2. Since 2014, EU nationals have been permitted to own agricultural land as individuals in Romania, as opposed to owning such land through a business incorporated in the country.

  3. The major sectors which attract FDI in Romania include autos, banking and finance, ICT, telecommunications, tourism, manufacturing and retail. Due to the country’s EU membership, which allows for EU firms, all of the sources of FDI in Romania originate from EU member states.

  4. Foreign companies can own land in Romania (as a corporate entity), which is required in order to be able to achieve the company’s business goals.

  5. Should foreign companies want to hire non-Romanian or other nationals from EU/European Free Trade Area member states, they are required to prove that no national from these regions can fill the available vacancy before they are permitted to hire a foreign national.

  6. While Romania has embarked on a privatisation programme, state-owned entities still dominate sectors such as power, oil and gas, transportation and mining.

  7. Despite significant drives by the government, corruption remains a huge barrier to FDI in Romania. This is paired with high levels of bureaucratic red tape for business operation and poor protection of intellectual property rights.

  8. Controversial fiscal and judicial policy reforms being implemented and proposed by the Romanian government continue to cause headwinds for investment flows and equity gains. Romania has experienced around three changes in government since parliamentary elections were held at the end of 2017.

Sources: WTO – Trade Policy Review, ITA, US Department of Commerce

7.3 Free Trade Zones and Investment Incentives

Free Trade Zone/Incentive ProgrammeMain Incentives Available
FTZs located at: Constanta South Free Zone, Basarabi Free Zone, Giurgiu Free Zone, Arad-Curtici Free Zone, Sulina Free Zone, Galati Free Zone, Braila Free Zone- Visa-free entry for foreign nationals

- Freedom to repatriate profits and obtain foreign currency

- 100% foreign ownership permitted

- Customs duties exemption on capital goods

- Fewer bureaucratic procedures

Sources: US Department of Commerce, Fitch Solutions

8. Taxation – 2019

  • Value Added Tax: 19%
  • Corporate Income Tax: 16%

Sources: National Sources, Fitch Solutions

8.1 Important Updates to Taxation Information

  • The victory of the Social Democrats (PSD)-led coalition in the November 2016 elections has seen numerous tax cuts over 2017-2019. Romania's fiscal code has seen 261 amendments in 2017, against a EU average of 50, according to the National Council for Small and Medium-Sized Companies.

  • For January 2019-December 31, 2028, certain payroll-related tax incentives have been introduced in the construction sector, which can be applied if certain conditions are met.

  • Law no. 285/2018, which came into force on December 6, 2018, has modified the definition of the term “building” in the local tax section of the Tax Code to include the pillars of wind turbines. As a result, wind farm owners must pay a building tax ranging between 0.2% and 1.3% per year on the value of these pillars.

  • The application of the VAT reverse charge mechanism has been prolonged until 30 June, 2022 for the following: supplies of cereals and industrial crops, transfer of allowances to emit greenhouse gases, supplies of electricity, green certificates, mobile telephones, integrated circuit devices, game consoles, tablet PCs and laptops.

8.2 Business Taxes

Type of TaxTax Rate and Base
Corporate Tax- 16% flat rate

- The corporate taxation for companies in Romania includes all income derived in Romania and all income received in Romania from outside sources for resident companies.

- As of January 1 2018, all companies which have a turnover of EUR1 million or less will be required to pay the micro-company tax of 1% on turnover (3% if the entity has no employees) as opposed to paying the 16% flat corporate tax. A micro-company tax is a type of tax which means small businesses only pay one type of tax and essentially replaces different types of taxes such as corporate tax, VAT, capital gains tax and dividends tax.
Capital Gains TaxTreated as ordinary profits and as such are taxed at 16%
Property Tax- Residential buildings: between 0.08% and 0.2%

- Non-residential buildings: between 0.2% and 1.3%; in the case of a building used for agricultural purposes, the applicable tax rate is 0.4%

- Local authorities have been allowed to increase local tax allowances by 50%

- The increased tax rate for building tax due by legal entities is 5%

- Building tax is paid annually, in two equal instalments, by 31 March and 30 September

- The payment of the entire annual tax by 31 March, a reduction of up to 10% is granted by the Local Council

Sources: National Sources, Fitch Solutions
Date last reviewed: June 15, 2019

9. Foreign Worker Requirements

9.1 Foreign Worker Permits

A highly skilled non-EU foreign worker who wants to stay in Romania longer than 90 days has to apply for an EU Blue Card, which serves as both a work and residence permit and is valid for the length of their employment contract. In Romania work visas are usually issued for a period of about a year, at a fee of about EUR200, and are automatically renewable with a valid work contract. These permits usually take about 30 days to be issued.

9.2 Localisation Requirements

In 2014, legislation was passed that introduced a labour market test for the employment of foreign workers. This stipulates that before a foreign worker is hired, businesses must first demonstrate that the vacancy cannot be filled with a Romanian national, EU/European Free Trade Association national or a Romanian permanent resident. Furthermore, in 2014, new regulations were issued for the hiring of seasonal workers in the EU, which makes conditions for non-EU seasonal workers more stringent. For example, workers must now have an offer of employment before they arrive and changes have been made to how long they are allowed to stay in the country.

9.3 Visa/Travel Restrictions

All EU/European Economic Area/Swiss citizens can travel to Romania visa-free. Citizens from Argentina, Australia, the Bahamas, Barbados, Brazil, Brunei, Chile, Costa Rica, El Salvador, Guatemala, Honduras, Hong Kong, Israel, Macao, Malaysia, Mauritius, Mexico, Nicaragua, New Zealand, Panama, Paraguay, San Marino, Seychelles, Singapore, South Korea, Tonga, Trinidad and Tobago, Uruguay, Vanuatu and Venezuela can stay in Romania for up to 90 days in a six-month period without needing a visa.

Sources: Government websites, Fitch Solutions

10. Risks

10.1 Sovereign Credit Ratings

Rating (Outlook)Rating Date
Baa3 (Stable)24/08/2018
Standard & Poor'sBBB- (Stable)16/05/2014
Fitch Ratings
BBB- (Stable)10/05/2019

Sources: Moody's, Standard & Poor's, Fitch Ratings

10.2 Competitiveness and Efficiency Indicators

World Ranking
Ease of Doing Business Index
Ease of Paying Taxes Index
Logistics Performance Index
Corruption Perception Index
IMD World Competitiveness50/6349/6349/63

Sources: World Bank, Transparency International

10.3 Fitch Solutions Risk Indices

World Ranking
Economic Risk Index RankN/A38/20240/202
Short-Term Economic Risk Score68.365.462.7
Long-Term Economic Risk Score66.168.568.9
Political Risk Index RankN/A66/20268/202
Short-Term Political Risk Score63.361.963.1
Long-Term Political Risk Score70.670.670.6
Operational Risk Index RankN/A47/20147/201
Operational Risk Score62.862.662.9

Source: Fitch Solutions
Date last reviewed: June 15, 2019

10.4 Fitch Solutions Risk Summary

Romania's economy looks set to outperform most regional peers over the coming years, suggesting that the country will gradually converge with historically more-developed countries and settle down to more moderate rates. Growth will be relatively broad-based, with private consumption, exports and investment all performing well. However, loose monetary and fiscal policies have contributed to the strong economic performance of late, and with inflationary pressures building and the trade deficit rapidly widening, risks of overheating are mounting. Romania will benefit from an educated workforce, low labour costs relative to Western peers, low public and household debt levels compared to peers and geographical access to eurozone markets in the West and emerging markets in the East. Robust wage growth will remain one of the key drivers of domestic demand. This, along with progress in implementing structural reform, should anchor the country's economic development over the coming years. However, surpassing the 3.0% budget deficit limit as per the EU's Stability and Growth Pact may result in punitive action being taken against Romania.

Romania's strong potential as a South East Europe manufacturing and ICT hub is boosted by its growing number of tertiary graduates in the science, technology, engineering and mathematics fields. Moreover, Romania has some of the highest levels of research and development expenditure in the region. Businesses and investors will face low levels of overall operating risks in this market because of the country's low levels of security risk, its increasing attractiveness as a trade and investment destination and its favourable labour market. However, there may be a mismatch in the longer term as qualified workers migrate to other parts of the EU in search of higher pay and better employment opportunities. The most salient risks come from Romania's comparatively limited logistics profile when compared to many other EU member states, and political risk. The country has embarked on an impressive anti-corruption drive over the past few years, which could provide significant gains in the regulatory environment in the years ahead.

Source: Fitch Solutions
Date last reviewed: June 15, 2019

10.5 Fitch Solutions Political and Economic Risk Indices

Graph: Romania short term political risk index
Graph: Romania short term political risk index
Graph: Romania long term political risk index
Graph: Romania long term political risk index
Graph: Romania short term economic risk index
Graph: Romania short term economic risk index
Graph: Romania long term economic risk index
Graph: Romania long term economic risk index

100 = Lowest risk; 0 = Highest risk
Source: Fitch Solutions Economic and Political Risk Indices
Date last reviewed: June 15, 2019

10.6 Fitch Solutions Operational Risk Index

Operational RiskLabour Market RiskTrade and Investment RiskLogistics RiskCrime and Security Risk
Romania Score62.959.1
Southeast Europe Average57.9
Southeast Europe Position (out of 12)3
Emerging Europe Average57.655.959.158.656.8
Emerging Europe Position (out of 31)10
Global Average49.7
Global Position (out of 201)47

100 = Lowest risk; 0 = Highest risk
Source: Fitch Solutions Operational Risk Index

Graph: Romania vs global and regional averages
Graph: Romania vs global and regional averages
Operational Risk Index
Labour Market Risk Index
Trade and Investment Risk IndexLogistics Risk IndexCrime and Security Risk Index
North Macedonia55.745.364.256.257.3
Bosnia and Herzegovina46.846.346.448.545.9
Regional Averages57.954.058.859.559.4
Emerging Markets Averages46.048.146.544.744.8
Global Markets Averages49.750.349.849.0

100 = Lowest risk; 0 = Highest risk
Source: Fitch Solutions Operational Risk Index
Date last reviewed: June 15, 2019

11. Hong Kong Connection

11.1 Hong Kong’s Trade with Romania

Graph: Major export commodities to Romania (2018)
Graph: Major export commodities to Romania (2018)
Graph: Major import commodities from Romania (2018)
Graph: Major import commodities from Romania (2018)

Note: Graph shows the main Hong Kong exports to/imports from Romania (by consignment)
Date last reviewed: June 15, 2019

Graph: Merchandise exports to Romania
Graph: Merchandise exports to Romania
Graph: Merchandise imports from Romania
Graph: Merchandise imports from Romania

Note: Graph shows Hong Kong exports to/imports from Romania (by consignment)
Exchange Rate HK$/US$, average
7.75 (2014)
7.75 (2015)
7.76 (2016)
7.79 (2017)
7.83 (2018)
Sources: Hong Kong Census and Statistics Department, Fitch Solutions
Date last reviewed: June 15, 2019

Growth rate (%)
Number of Romanian residents visiting Hong Kong12,797

Source: Hong Kong Tourism Board

Growth rate (%)
Number of European residents visiting Hong Kong1,929,824

Source: Hong Kong Tourism Board
Date last reviewed: June 15, 2019

11.2 Commercial Presence in Hong Kong

Growth rate (%)
Number of EU companies in Hong Kong2,053N/A
- Regional headquarters4592.5
- Regional offices685-2
- Local offices9094.1

Sources: Hong Kong Census and Statistics Department, Fitch Solutions

11.3 Treaties and Agreements between Hong Kong and Romania

  • Hong Kong and Romania have a Double Taxation Agreement (DTA) that came into force on November 21, 2016.
  • Mainland China and Romania have a Bilateral Investment Treaty (BIT) that came into force on September 1, 1995.

Sources: Department of Justice in Hong Kong, UNCTAD

11.4 Chamber of Commerce (or Related Organisations) in Hong Kong

Romanian Chamber of Commerce in Hong Kong
Address: 10B Nam Pak Hong Building, 24, Bonham Strand West, Sheung Wan, Hong Kong
Email: info@rochamhk.com

Source: Romanian Chamber of Commerce in Hong Kong

Consulate General of Romania in Hong Kong
Address: 03A Unit, 21/F, 148 Electric Road, North Point, Hong Kong
Email: hongkong@mae.ro
Tel: (852) 2523 3813
Fax: (852) 2523 3815

Source: Consulate General of Romania in Hong Kong

11.5 Visa Requirements for Hong Kong Residents

Hong Kong SAR passport holders do not need a visa to enter Romania if the duration of stay is less than 90 days during any period of 180 days. A visa is required for stays exceeding 90 days.

Source: Hong Kong Immigration Department
Date last reviewed: June 15, 2019

Content provided by Picture: Fitch Solutions – BMI Research
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