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  Nr. 3872 de marti, 6 martie 2007 
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Romania Becomes the Business Opportunity of the Year
It is no surprise that Romania is nowadays an attractive country for foreign investors. A flat tax of only 16%, the rating of the "investment grade" awarded by some of the most important evaluation agencies and the continuous economic growth for the last 7 years give enough incentives to any investor interested in an emerging market potential such as Romania.
Moreover, as a fresh member of European Union, Romania will be offering substantial business opportunities in the next years, in relation to the structural and cohesion funds reaching up to 30 billion Euro. Things have not always been that simple. Even if Romania was even on investors' "radar" for some time, it must be said that it has never had a very favourable image in their eye. Corruption problems, bureaucracy and lagging reforms shadowed the real potential of Romanian economy for years.But in the last two years things have changed substantially. In 2006 national currency - the Romanian "leu", an absolute champion of inflation in the '90s - was declared to be the best performing currency in the world. The "health" of national currency was certainly maintained by an exceptional inflow of over 9 billion Euro, the result of some important privatizations and an increase of foreign direct investments.Although it may seem surprising, due to the balance between sustained economic growth and the inherent risks of a market in the making helped Romania reach the top of investors' preference very quick. And this is not a biased opinion. The latest research by Ernst&Young, one of "The Big Four" in consultancy at a global scale, officially described Romania as "the most attractive destination for investments in South-Eastern Europe". The strong points marked in this report are the low cost of labour force and the growth potential of productivity, while the telecommunication and transport infrastructure is included in the areas that still need improvements.Interestingly enough, investors are no longer afraid of the political instability and they are interested in a stable tax and legal terms rather than in the absence of political turmoil.
Although multinational companies are in high numbers in Romania, a market of 22 million people is hard to ignore and a challenge such as the attraction of the second wave of investors is still present - small and medium companies, suppliers of the giants already on the market. The prevailing tendency is greenfield investments, opportunities offered by the quite low privatization process. Investors grow more and more reluctant to taking over companies with old debts and oversized personnel.75% of Romania's GDP is nowadays achieved by private companies.
After the privatization of the Petrom, the BCR (Romanian Commercial Bank) and the electricity and natural gas suppliers, there are few options available to investors interested in privatizations.Basically, the last "trophies" still in property of the AVAS (Authority for State Assets Recovery) are already for sale and they will be soon taken over. The Antibiotice Iasi, a producer of medicine, together with Daewoo Craiova, a car producer, and the chemical factory of Oltchim and Electroputere Craiova, a producer of electric train engines, will be the hits of 2007.Privatization in banking is mainly over. The CEC (Romanian Savings Bank) is the only state-owned bank left, as it has failed to attract the interest the Romanian government has been targeting. As for the energy field, privatization has still got potential. Electricity distribution in Transylvania and a number of electricity plants, those still in need of substantial environment protection investments, are some of the opportunities. Last but not least, the capital market in Romania may be an opportunity surprisingly profitable for individual or institutional investors willing to diversify their stock portofolio. Even if it is not that liquid at the moment, Bucharest Stock Exchange is one of the most efficient in this part of Europe. Romania's EU membership achieved in the 1st of January 2007 has been fueling the stock exchange. Since the beginning of 2007 the BET index of the BSE has reached some historical levels.
The long-awaited listing of the Romtelecom, the national telephony operator, and BCR, the largest Romanian commercial bank, will throw light and make foreign investors notice the market.
Eduard IVASCU 
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