Banca Naţională a României

The statistical survey regarding Foreign Direct Investment (FDI) was conducted by the National Bank of Romania and the National Institute of Statistics. The major goal of the statistical survey was to determine the stock of FDI as of 31 December 2008 based on the stock outstanding at the beginning of 2008 and on the flows during 2008 into the resident direct investment enterprise.

1. FDI net flow in 2008

EUR 9,496 million of which:

• EUR 4,873 million - equity stakes* (51.3 percent);
• EUR 4,623 million - net credit received from foreign investors (48.7 percent).

2. FDI stock as of 31 December 2008

EUR 48,798 million , of which:

• EUR 34,892 million equity stakes, including reinvested earnings (71.5 percent);
• EUR 13,906 million net credit received from foreign investors (28.5 percent).

2.1. FDI stock by main economic activity

By economic activity (according to NACE Rev. 2), the bulk of FDI went to manufacturing (31.3 percent of total), out of which the largest recipients were: metallurgy (6.9 percent), food, beverages and tobacco (4.6 percent), oil processing, chemicals, rubber and plastic products (4.3 percent), transport equipment (4.0 percent) and cement, glassware, ceramics (3.6 percent).

Other activities that have also attracted significant foreign direct investment are financial intermediation and insurance, which include banking and insurance and account for 20.5 percent of total FDI stock, construction and real estate (12.6 percent), trade (12.4 percent), and information and communication (6.7 percent).

Tangible and intangible fixed assets stood at EUR 22,046 million at end-2008 and accounted for 45.2 percent of total FDI, thus inducing a considerable degree of foreign investment durability.

Substantial FDI in tangible and intangible fixed assets was recorded in industry (25.3 percent of total FDI), namely manufacturing (18.6 percent of total FDI, out of which metallurgy held 4.0 percent of total FDI), trade (5.6 percent), construction and real estate (4.8 percent), information and communication (3.8 percent), which largely overlap the fields benefiting from most of FDI .

2.2. FDI stock by development region

From a territorial point of view, FDI went mainly to Bucharest-Ilfov region (62.7 percent). Other development regions benefiting from significant FDI inflows were CENTER region (8.5 percent), SOUTH – EAST region (7.3 percent), SOUTH region (7.0 percent) and WEST region (5.4 percent).

2.3. FDI stock by country of origin

The distribution took into account the country of origin of the direct holder of at least 10 percent in the resident direct investment enterprises' share capital on an "immediate country basis".

Top 5 countries by the share of FDI stock as at 31 December 2008 were: Austria (18.8 percent of total stock at the end of 2008, down from 21.4 percent a year earlier), the Netherlands (17.2 percent, down from 16.3 percent in 2007), Germany (15.4 percent compared with 11.7 percent in 2007), France (8.8 percent, staying flat year on year), and Italy (7.3 percent compared with 6.1 percent in 2007).

* countries which invested less than EUR 500 million.

3. FDI types

The flow of equity capital into FDI enterprises is divided into: greenfield, mergers and acquisitions and corporate development.

In 2008, out of the total FDI equity flow, 66.8 percent (EUR 3,517 million) went to corporate development, 32 percent (EUR 1,683.5 million) were destined to mergers and acquisitions and only 1.2 percent (EUR 64.2 million) to greenfield investment.

The accumulation of foreign direct investment in enterprises established as greenfield investment companies, called greenfield enterprises, was highlighted in order to assess the lasting impact of greenfield investment on the economy.

The distribution of the FDI stock in greenfield enterprises by main economic activity at end-2008 was as follows:

4. Exports and imports of FDI enterprises

NOTE: Exports and imports are aggregated by the activity of companies, according to NACE Rev. 2 excluding exports and imports of NACE divisions (release 2): 84 Public administration and 97/98 Household activities.

The activity of foreign direct investment enterprises as a whole had a positive impact on Romania's trade balance, its contribution to total exports and total imports standing at 73.0 percent and 62.6 percent respectively.

METHODOLOGICAL ISSUES

Foreign direct investment: long-term investment relationship between a resident entity and a non-resident one; it usually involves a significant degree of influence from the investor on the management of the direct investment enterprise in which he/she invested.

Foreign direct investment is considered the following: paid-up capital and the reserves related to a non-resident investor owning at least 10 percent in the subscribed share capital of a resident enterprise, the loans between the investor and the direct investment enterprise as well as the reinvested earnings.

Foreign direct investor: legal entity, private person or group of entities acting jointly and owning at least 10 percent of the subscribed share capital (or of endowment capital in case of unincorporated entities) or at least 10 percent of voting power in an enterprise located outside the country of residence .

Direct investment enterprise: an incorporated or unincorporated enterprise where a foreign investor owns at least 10 percent in the subscribed share capital or voting power, or the endowment capital in case of unincorporated entities (branches). A participation of at least 10 percent of subscribed share capital or voting power, or of endowment capital, is the prerequisite for the establishment of the direct investment relationship.

Reverse direct investment: the investment relationship opposite to the foreign direct investment between a resident direct investment enterprise and a foreign direct investor, where the former holds a participation of less than 10 percent in the share capital of the foreign direct investor.

FDI components:

• Equity capital includes subscribed and paid-up capital, both in cash and through in-kind contributions, held by non-residents in resident enterprises, as well as the related share in reserves; in case of branches, the available endowment capital shall be taken into account accordingly.
• Net credit , namely the direct investment enterprise's borrowings from the foreign direct investor or from the group of non-resident companies that the former belongs to, less the loans extended by the direct investment enterprise either to the foreign direct investor or to another entity within the group of companies.

Types of FDI (by contribution to the equity flow in direct investment enterprises):

• Greenfield: establishment of enterprises by or together with foreign investors (ex nihilo investment);
• Mergers and acquisitions: partial or full takeovers of enterprises by foreign investors from residents;
• Corporate development: foreign direct investors' increase in the capital of direct investment enterprises.

A number of 6,473 FDI enterprises were subject to a comprehensive survey, including enterprises with 20 or more employees (6,242 entities), all credit institutions with foreign capital (40 entities), all insurance undertakings with foreign capital (34 entities), as well as enterprises referred to as atypical (all foreign direct investment enterprises whose turnover or share capital is of at least RON 30 million, i.e. 157 entities).

Representativeness at the level of development region and NACE division is ensured by direct investment enterprises subject to the comprehensive survey holding 87.3 percent of total FDI stock as at 31 December 2008.

The direct investment enterprises that were not subject to the comprehensive survey (around 36,900) were represented by a sample comprising 1,050 entities. The total number of entities subjected to the survey (comprehensively + sample) equaled 7,523.

The final results of the FDI survey at end-2008 (flows and stocks) have an error margin of ±3 percent, a probability of 97 percent being warranted.

* less the net loss which amounted to EUR 392 million.

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