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 FDI stock as of 31 December 2009 based on the stock outstanding at the beginning of 2009 and on the flows during 2009 financial year into the resident direct investment enterprises.

1. FDI net flow in 2009 stood at:

EUR 3,488 million of which:

• EUR 1,729 million - equity stakes* (49.6 percent);
• EUR 1,759 million - net credit from foreign investors (50.4 percent).

2. FDI stock as of 31 December 2009 amounted to:

EUR 49,984 million, of which:

• EUR 35,600 million equity stakes, including reinvested earnings (71.2 percent);
• EUR 14,384 million net credit received from foreign investors (28.8 percent).

2.1. FDI stock by main economic activity

By economic activity (according to NACE Rev. 2), the bulk of FDI went to manufacturing (31.1 percent of total), out of which the largest recipients were: oil processing, chemicals, rubber and plastic products (6.3 percent), metallurgy (5.2 percent), transport means (4.7 percent), food, beverages and tobacco (4.1 percent) and cement, glassware, ceramics (3.3 percent). Despite their large potential, certain sectors, such as textiles, wearing apparel and leather goods (1.4 percent of total FDI), still hold a rather small share of FDI.

Apart from industry, activities that have also attracted significant FDI are financial intermediation and insurance, which include banks, non-bank financial institutions, and insurance corporations and account for 19 percent of total FDI stock, construction and real estate transactions (12.9 percent), trade (12.3 percent), and information technology and communications (6.5 percent).

Tangible and intangible fixed assets stood at EUR 23,272 million at end-2009 and held 46.6 percent of total FDI, thus leading to considerable foreign direct investment stability.

Substantial FDI in tangible and intangible fixed assets was recorded in industry (24.3 percent of total FDI), namely manufacturing (17.3 percent), construction and real estate transactions (7.4 percent), trade (6.2 percent), information technology and communications (3.5 percent).

2.2. FDI stock by development region

From a territorial point of view, FDI went mainly to Bucharest-Ilfov region (63.4 percent). Other development regions benefiting from significant FDI inflows were: CENTER region (7.4 percent), SOUTH region (7.2 percent), WEST region (6.2 percent) and SOUTH-EAST region (5.9 percent).

2.3. FDI stock by country of origin

The distribution of FDI stock by country of origin took into account the country of origin of the direct holder of at least 10 percent in the share capital of resident FDI enterprises on an “immediate country basis”.

Top 5 countries by share of FDI stock as at 31 December 2009 were the Netherlands (21.8 percent, up from 17.2 percent in 2008), Austria (18.1 percent of total stock at the end of 2009, down from 18.8 percent a year earlier), Germany (13.4 percent down from 15.4 percent in 2008), France (8.5 percent, the same as in 2007), and Greece (6.6 percent, staying flat year on year).

* countries which invested less than EUR 500 million.

3. Types of FDI

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

In 2009, out of the total FDI equity flow, 98.3 percent (EUR 3,065 million) went to corporate development, 1.1 percent (EUR 34 million) were destined to mergers and acquisitions and only 0.6 percent (EUR 19 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 FDI stock in greenfield enterprises by main economic activity at end-2009 was as follows:

4. Exports and imports of FDI enterprises

The activity of 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 69.8 percent and 60.1 percent respectively.

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.

METHODOLOGICAL NOTES

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

  Foreign direct investment includes the following: paid-up capital and the reserves related to a non-resident investor holding at least 10 percent of the subscribed share capital of a resident enterprise, the loans between the investor or other foreign enterprise in the group to which the investor belongs and the direct investment enterprise as well as the reinvested earnings.

  Equity in a resident enterprise on which a foreign investor has indirect significant influence is also considered foreign direct investment. This includes equity in the subsidiaries and affiliates of a resident enterprise in which a foreign investor holds at least 10 percent of subscribed share capital.

• Foreign direct investor: legal entity, individuals or group of entities acting jointly and holding at least 10 percent of the subscribed share capital (or of endowment capital in case of unincorporated entities) or at least 10 percent of the voting power in an enterprise located outside the country of residence.
• Direct investment enterprise: an incorporated or unincorporated enterprise in which a foreign investor holds at least 10 percent of the subscribed share capital or the voting power, or the endowment capital in case of unincorporated entities (branches). A participation of at least 10 percent in the subscribed share capital or the voting power, or in the endowment capital, is the prerequisite for the establishment of the direct investment relationship.
• Indirect direct investment enterprise: subsidiaries and affiliates of a direct investment enterprise.
• 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 the 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 the group of non-resident companies the former belongs to, net of 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: increase in foreign investors’ equity capital in direct investment enterprises.
  
  

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  A number of 6,022 FDI enterprises were subject to a comprehensive survey, including enterprises with at least 20 employees (5,777 entities), all the credit institutions with foreign capital (39 entities), all the insurance undertakings with foreign capital (37 entities), as well as enterprises referred to as atypical, namely all the foreign direct investment enterprises whose turnover or share capital is of at least RON 30 million (169 entities).

  The direct investment enterprises that were not subject to the comprehensive survey (around 38,000) were represented by a sample comprising 1,199 entities. The total number of entities subject to the survey (comprehensive + sample) equaled 7,221.

  The final results of the FDI survey at end-2009 (flows and stocks) have an error margin of ±3 percent, a probability of 97 percent being warranted.

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  *increase in capital and reserves of EUR 3,118 million less the net loss which amounted to EUR 1,389 million.

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