1. 1 MINISTRY OF ECONOMY AND COMMERCE MINISTRY OF ECONOMY AND COMMERCE ROMANIA ROMANIA Member of the European Union Member of the European Union ECONOMIC DEVELOPMENTS AND OPPORTUNITIES IN ROMANIA ECONOMIC DEVELOPMENTS AND OPPORTUNITIES IN ROMANIA by by Varujan VOSGANIAN, Minister Varujan VOSGANIAN, Minister

2. 2 Benefits of EU Accession Removal of any obstacles in the trade with EU Member States Removal of any obstacles in the trade with EU Member States Common trade policy with third countries Common trade policy with third countries Harmonization of entire legislation, capital market regulations, taxation, accounting rules => higher transparency and simplification Harmonization of entire legislation, capital market regulations, taxation, accounting rules => higher transparency and simplification Structural funds (31 billion euro for 2007-2013) Structural funds (31 billion euro for 2007-2013) Open gate for EU towards CIS, Asia, Middle East, Northern Africa Open gate for EU towards CIS, Asia, Middle East, Northern Africa Participation in major projects in the Black Sea Extended Area and in the Central & Eastern European Region Participation in major projects in the Black Sea Extended Area and in the Central & Eastern European Region Romania-important role in assuring the energy security for Europe (major transit pipelines, energy production & supply) Romania-important role in assuring the energy security for Europe (major transit pipelines, energy production & supply)

3. FLAT TAX 16% VAT19% DIVIDENT TAX 10% SOCIAL SECURITY 43.5% 39.5% by the end of 2008 AVERAGE WAGE (netto) 272 euro MINIMUM WAGE 115 euro Competitive Taxation Country Corporate Tax Romania16% Hungary16% Slovakia19% Poland19% Croatia20.32% Slovenia25% Czech Rep. 28%

4. 4 Macroeconomic Performance GDP real growth

5. 5 Macroeconomic Performance Inflation rate

6. 6 Macroeconomic Performance Unemployment rate

7. 7 COUNTRY RATINGS ROMANIA COUNTRY RATINGS ROMANIA Fitch - A- (August 2006) Fitch - A- (August 2006) Coface- A4 (January 2006) Coface- A4 (January 2006) JCR- BBB+ (November 2006) JCR- BBB+ (November 2006) Moody’ s - Baa3 (September 2006) Moody’ s - Baa3 (September 2006) Standard & Poors - BBB- (September 2006) Standard & Poors - BBB- (September 2006) World Bank Report 2006: Romania – the most reforming country in the business field

8. 8 Foreign direct investments - million Euro -

9. FOREIGN DIRECT INVESTMENT FOREIGN DIRECT INVESTMENT Total FDI’s until 31.12.2006: 31 billion euro 1. The Netherlands - 21,06% 2. Austria - 12,94% 3. France - 10,27% 4. Germany - 10,24% 5. Italy - 5,56% 6. U.S.A. - 4,72% 7. United Kingdom - 4,43% 8. Netherlands Antilles – 3,65% 9. Greece – 3,61% Source: National Trade Register Office No.No.No.No. Country of origin Number of companies Share-capital in Romanian companies - mil. EURO - 1Netherlands26553112 2 Austria 4192 1979 3France46441583 4Germany141161516 5 Italy 21252845 6USA4871705 7UK2657681 8 Dutch Antilles 12567 9 Greece 3569543

10. 10 DIRECT INVESTMENT WITH SIGNIFICANT IMPACT ON ROMANIAN ECONOMY, BY MAIN FIELDS, IN 2006 Source: Romanian Agency for Foreign Investment

11. 11 Foreign Investor Advantages foreign investment allowed in all sectors of economy foreign investment allowed in all sectors of economy possibility to freely manage the company with full ownership rights possibility to freely manage the company with full ownership rights full repatriation of capital and profits full repatriation of capital and profits protection against expropriation and nationalization protection against expropriation and nationalization national treatment for foreign investors national treatment for foreign investors

12. New Investment Law New Investment Law Draft under public debate Objectives:  Determines the principles, terms and modalities of stimulating investments in Romania, aiming at contributing to the sustainable country development  Full compliance with the EU legislation  The Government will issue also legal/administrative acts in order to regulate the state aids schemes for each objective  The goals, objectives, timing, budgets, beneficiaries, eligibility and selection criteria, competent authorities responsible to grant incentives will be established  A responsible authority for implementing and monitoring the legal provisions will be set up

13. 13 FOREIGN TRADE, IN THE PERIOD 2001 – 2006 Source: National Institute of Statistics (www.insse.ro)

14. GEOGRAPHICAL ORIENTATION OF THE ROMANIAN EXPORTS, IN 2006 Top export markets percentage of total export Italy17,9 Germany15.7 Turkey7.7 France7.5 Hungary4.9 Great Britain 4.7 Bulgaria2.8 Austria2.6 USA2.5 Netherlands2.4 Spain2.3 Greece1.9 Poland1.8 Belgium1.6 Serbia1.5 Source: National Institute of Statistics (www.insse.ro)

15. 15 GEOGRAPHICAL ORIENTATION OF THE ROMANIAN IMPORTS, IN 2006 Top import partner countries percentage of total import Germany15.06 Italy14.6 Russian Federation 7.9 France6.5 Turkey4.9 China4.2 Austria3.7 Hungary3.2 Kazahstan3.2 Poland2,7 Great Britain 2.5 Czech Republic 2.5 USA2.4 Spain2.3 Netherlands1.8 Source: National Institute of Statistics (www.insse.ro)

16. 16 TRADE BETWEEN ROMANIA AND AUSTRIA, IN THE PERIOD 1999 – 2006

17. 17 STRUCTURE OF THE BILATERAL COMMERCE, BY MAIN GROUPS OF PRODUCTS, IN 2006 Romanian Exports Machinery and electrical equipment – 42,5 % Machinery and electrical equipment – 42,5 % Furniture, toys and other – 10,8 % Furniture, toys and other – 10,8 % Textile and garments - 8,9 % Textile and garments - 8,9 % Metals and articles thereof – 7,9 % Metals and articles thereof – 7,9 % Transport equipment - 7,6 % Transport equipment - 7,6 % Romanian Imports Machinery and electrical equipment – 35,1 % Machinery and electrical equipment – 35,1 % Plastics and rubber – 14,9 % Plastics and rubber – 14,9 % Metals and articles thereof – 9,5 % Metals and articles thereof – 9,5 % Transport equipment - 7,3 % Transport equipment - 7,3 % Chemical products – 5,3 % Chemical products – 5,3 %

18. 18 Austrian FDI’s in Romania Austria – ranking 2nd among the foreign investors in Romania – 2 billion euro share-capital in Romanian companies / 7 billion euro effective investments, according to Austrian sources Austria – ranking 2nd among the foreign investors in Romania – 2 billion euro share-capital in Romanian companies / 7 billion euro effective investments, according to Austrian sources 4192 companies with Austrian capital registered in Romania 4192 companies with Austrian capital registered in Romania Main sectors for Austrian investments: banking, petrochemical industry, wood procesing, food industry Main sectors for Austrian investments: banking, petrochemical industry, wood procesing, food industry

19. 19 Market & Location Advantage : Second largest market in Central and Eastern Europe (over 21 million inhabitants) Easy access to the countries of the former CIS countries, Balkans, the Middle East and Northern Africa Junction of three prospective European transportation corridors nos. 4, 7 & 9 Resource Advantage: Skilled labor force, with solid knowledge in technology, IT and engineering Rich natural resources, including fertile agricultural land, oil and gas Important potential for tourism TOP REASONS TO INVEST IN ROMANIA (1)

20. 20 Economic Advantage Sustainable economic growth Functional Market Economy status Competitive tax policy Decreasing inflation Permanent financial assistance for SME's Development Structural funds Improving Infrastructure Advantage Well-developed networks of mobile telecommunications in GSM systems Highly developed industrial infrastructure, including oil and petrochemicals Branch offices and representatives of various well-known international banks Newly developed highway infrastructure Commitment to improve the highway infrastructure to EU standards Extensive maritime and river navigation facilities TOP REASONS TO INVEST IN ROMANIA (2)

21. 21 Potential Sectors for Investment  Manufacturing  Automotive parts  IT & Communication  Electric & Electronics  Wood processing  Construction materials  Textile  Food processing  Infrastructure  Outsourcing and logistics

22. 22 MINISTER OF ECONOMY AND COMMERCE ROMANIA Phone: +40 21 202 51 40 Fax: +40 21 202 51 77 E-mail: varujan_vosganian@minind.ro Website: www.minind.ro THANK YOU !