Romania – Top Destination for Investment romanian agency for foreign investment Romania – Top Destination for Investment by Sorin VASILESCU Director Luxembourg, February 27, 2008

Structure of the Presentation Geo-strategic position Macroeconomic outlook Valuable human potential FDI performance Infrastructure development Investment legal framework Potential sectors for development ARIS – one stop shop

1. Geo-strategic position

Romania’s Geo-strategic Position Area 238,391 km2 92,043 sq mi. the 9th in EU Population 21.6 mill inhabitants the 7th in EU Capital city Bucharest 1.9 mill inh Member of EU, WTO, IMF, WB, NATO Our friend the wind

Romania’s Strategic Location Helsinki – Kiev - Bucharest – Odessa/Alexandropoulos IX The Danube river 2,300 km long VII Dresden/Nuremberg - Bucharest Constanta/Thessaloniki/ Istanbul IV Pan European Transport Corridors The Eastern border of the inland European Union Strategic position at the turning point where EU meets the Balkans and CIS countries

2. Macroeconomic outlook

Significant Potential for Growth Q3 2007 GDP Growth Rate Slovakia 9.4% Slovenia 6.3% Czech Republic* 6.1% Poland 5.8% Romania 5.7% Bulgaria 4.5% Hungary 1.1% Source: EUROSTAT, *forecast Source: National Institute of Statistics Rapid & sustainable GDP growth; 6.5% forecast for 2008; 5.7% in Q3 2007, based on increases in final consumption by 7.7% and decrease in net export by 8.6%; EU27 GDP growth rate of 3% in Q3 2007.

Source: National Bank of Romania Inflation Rate Annual Inflation Rate Dec'07/Dec'06 Bulgaria 11.6% Hungary 7.4% Romania 6.7% Slovenia 5.7% Czech Rep 5.5% Poland 4.2% Slovakia 2.5% Inflation Rate Source: EUROSTAT Devierea s-a produs în principal „ca urmare a unor şocuri exogene acţionând asupra ofertei agregate performanţa nefavorabilă a sectorului agricol datorată secetei severe, dar şi creşterea preţurilor produselor alimentare şi ale combustibililor la nivel mondial. Presiunile inflaţioniste astfel generate au fost amplificate de persistenţa excesului de cerere agregată în condiţiile majorării puternice a veniturilor şi ale dinamicii înalte a creditului acordat sectorului privat”, se spune într-un comunicat al BNR. Source: National Bank of Romania EU annual inflation was 3.2% in December 2007; Sustainable disinflation since 2000 to continue in the following years; Higher rate in 2007 due to drought, wage raising and significant increased of oil, technical plants and cereals prices.

3. Valuable Human Potential

Availability of Human Capital Demographics Young population (more than 55% is under the age of 40 and 37% is between 25 and 49 years old) Almost 21.7 million people Talent pool 104 higher education institutions 112 thou university graduates Availability of technical engineers High industrial experience Flexibility Cities with more than 100,000 inhabitants more than 1,000,000 inhabitants 300,000 – 400,000 inhabitants 200,000 – 300,000 inhabitants 100,000 – 200,000 inhabitants Source: National Institute of Statistics

University graduates in Romania Valuable Human Potential high performances in international competitions high percentage of technically competent professionals (23% are engineering graduates out of 720 students enrolled) highest growth rate of IT specialists in the region (Annually 7000 university graduates in the software field & More then 3.000 students in 105 local Cisco academies) University graduates in Romania (by education field) Source: National Institute of Statistics strong language skills (English, French, German, Italian, Spanish, Russian, etc.) large skilled labor force at comparatively low wage rates

Labor Cost – A debated topic Regional Comparison 2006 - EUR Gross monthly wages EUR Source: Vienna Institute of International Economic Studies; National Institutes of Statistics Significant discrepancies in terms of sectors (1120 euro in banking and 186 euro in wood processing) and different regions of Romania It was expected to grow by 12.3% in 2008, and to reach 580 by 2010 Productivity in industrial sector increased by more than 10%

4. FDI Performance

Source: National Bank of Romania Inward FDI Flows Q3 2007 Annual Inward FDI 1 Poland 5721 2 Romania 5138 3 Bulgaria 4117 4 Czech Republic 3547 5 Hungary 1828 6 Slovakia 1315 7 Slovenia 665 EUR million Source: Vienna Institute of International Economic Studies Source: National Bank of Romania FDI Stock over EUR 41 bill (1990 –2007); The forecast for 2008 refers to over 7 bill euro;

FDI by Field of Activity (1990-2006) Main Activities – 21.9 bill EUR Manufacturing – 8.2 bill EUR Source: National Bank of Romania

Major Investing Countries Source: National Bank of Romania (1990-2006) Austria the Netherlands Germany France Greece 7.94 bill EUR 5.89 3.47 2.77 2.68 Switzerland Italy Cyprus Hungary USA 2.37 2.32 1.67 0.66 0.63 1 2 3 4 5 Exista anumite diferente intre clasamentul pe tari in functie de tara de provenienta a capitalului social, si clasamentul in functie de valoarea investitie, dar in principal tarile europene sunt principalii investitori in Romania. Cele doua tari prezente in acest clasament fata de cel anterior sunt Elvetia si Ungaria, Elvetia detinand peste 1,5 mld de euro, iar Ungaria, a carei pozitie in top 10 ilustreaza interesul deosebit manifestat de tarile integrate in UE in anul 2004 de a investi in Romania, careia i se alatura Cehia si Polonia. 6 7 8 9 10 Source: National Bank of Romania

Luxembourg Investment in Romania Nr of companies 521 % of the total no. of companies 0.35% Ranking by no. of companies 31 Social capital subscribed in companies with German participation 251 mill EUR % of the total value of capital 1.44% Ranking 16 Source: National Trade Register Office; 1990 – November 2007

5. Infrastructure Development

Highway Infrastructure Development - 2013 ORADEA IASI PIATRA NEAMT BORS MIHAILESTI SABAOANI SOVATA BICAZ CAMPIA TURZII TARGU MURES ALBITA CLUJ NAPOCA GHEORGHIENI PRAID NADLAC SIGHISOARA ARAD DEVA SEBES FAGARAS SIBIU TIMISOARA ORASTIE FOCSANI CRISTIAN GHIMBAV BRASOV LUGOJ PREDEAL COMARNIC BUZAU PLOIESTI DROBETA TR. SEVERIN PITESTI DRAJNA CERNAVODA BUCURESTI CONSTANTA CRAIOVA FETESTI GIURGIU CALAFAT

Ports and Airports International flights Domestic SATU MARE BAIA MARE SUCEAVA IASI ORADEA CLUJ NAPOCA TARGU MURES BACAU ARAD TIMISOARA SIBIU GALATI BRAILA CARAS-SEVERIN SULINA TULCEA ORSOVA OTOPENI BANEASA M. KOGALNICEANU DROBETA TR. SEVERIN CRAIOVA CONSTANTA CORABIA OLTENITA CALARASI MANGALIA GIURGIU

Map of Industrial Parks More than 40 Industrial Parks Both private & public Greenfield & Brownfield Access to utilities Package of services offered by the park administration Wide variety of activities to be developed Some created for high-tech activities

6. Investment Legal Framework

Competitive Taxation Corporate Tax VAT Social Contributions Employee Employer Bulgaria 10% 20% 12.43% 24-24.7% Romania 16% 19% 17% 29.34% Hungary 13.5% 33.5% Poland 22% 18.71% 17.23-20.12% Slovakia 13.4% 34.4% Czech Rep. 24% 12.5% 35% Slovenia 25% 22.1% 16.10% Source: CEE-CIS Tax Notes - PriceWaterhouseCoopers Many Central and Eastern European countries reduced considerably their corporate tax in order to diminish the fiscal burden

Structural funds channeled by Operational Programmes Managing Authority Increasing Competitiveness Ministry of Economy and Finance Regional  Tourism Ministry of Development, Public Works and Dwellings Ministry of SMEs, Trade, Tourism and Self-Employed Development of Human Resources Ministry of Labour, Family and Equal Opportunities Transport  Inter-modal transport Ministry of Transport Operational Programmes of interest to business

State Aid State Aid granted for stimulating investments; granted to enterprises for achieving an initial investment of more than Euro 30 million, creating at least 300 new jobs Regional state aid schemes granted for investments in industrial parks; “de minimis” state aid for developing and modernizing enterprises and developing activities in the SMS sector I would like to call your attention on the two fastest growing sectors in Romania: automotive sector ITC sectors. Over 30 years of experience in car manufacturing, along with the trend of huge car makers to cut costs determined the feeding frenzies of automotive manufacturers to benefit from Romanian opportunities. The low cost and availability of the workforce, the highly trained specialists, the availability of suppliers and subcontractors and the R&D centers are the strengths that guarantied the success of these companies that represent strong examples. The interest is doubled by the fact that they established more than one production facilities, as for example Lisa Draxlmeyer has 4 capacities, Michelin and Sumitomo has three and so on. 25

7. Potential Sectors for Development

Potential Sectors for Investment Manufacturing Wood processing Automotive components Construction materials IT & Communication Textile industry Energy (non-conventional) Food processing Electric & Electronics Pharmaceuticals Real Estate Infrastructure Recently, ARIS conducted an diagnosis inventorying investments resources and opportunities, and more important the potential sectors for investment- on a regional and county level of economic development - which will be promoted toward the identified target countries, and I am proud to let you know that Belgium is one of these countries. 27

Automotive Industry Opportunities Experience in the field of car makers Automotive component parts – rapidly growing sector: currently over 175 major manufacturers Availability of labor force Labor cost: monthly average salary approx. Euro 250; Total number employed: 600.000; Trained work force 7 colleges in vehicle technology – 500 graduates each year; 25 colleges in mechanical engineering – 1.000 graduates / year; Availability of suppliers and subcontractors Presence of R&D centers Successful investment stories in the field I would like to call your attention on the two fastest growing sectors in Romania: automotive sector ITC sectors. Over 30 years of experience in car manufacturing, along with the trend of huge car makers to cut costs determined the feeding frenzies of automotive manufacturers to benefit from Romanian opportunities. The low cost and availability of the workforce, the highly trained specialists, the availability of suppliers and subcontractors and the R&D centers are the strengths that guarantied the success of these companies that represent strong examples. The interest is doubled by the fact that they established more than one production facilities, as for example Lisa Draxlmeyer has 4 capacities, Michelin and Sumitomo has three and so on. 28

Automotive top-tier investors 2006 1 bill € investment 1.6 bill € turnover 12 thou employees 2007 230.500 cars sold New projects A gear boxes facility 217 mill € of Renault-Nissan Alliance A R&D Centre "Renault Tehnologie Roumanie" – 456 mill € - 2012 Ford took over the state-owned shares of Automobile Craiova (72.4 %) for €57 million, and pledged to invest €675 mill to modernize the factory and increase the number of employees Ford is awaiting for the results of the EC investigation on the Romanian government helping the takeover Automotive component parts sector the fastest growing sector in Romania; 5.8 bill € investment inflows to increase up to 9-10 bill until 2010; Huge presence of international top-tier players: TYRES (Michelin, Pirelli, Continental); WIRES (Yazaki, SEWS, Leoni, Lear, Valeo, Delphi); BEARINGS (SNR, Ina Schaeffler, Koyo), SOFTWARE (Siemens VDO); SEATS (Johnson Controls), etc. I would like to call your attention on the two fastest growing sectors in Romania: automotive sector ITC sectors. Over 30 years of experience in car manufacturing, along with the trend of huge car makers to cut costs determined the feeding frenzies of automotive manufacturers to benefit from Romanian opportunities. The low cost and availability of the workforce, the highly trained specialists, the availability of suppliers and subcontractors and the R&D centers are the strengths that guarantied the success of these companies that represent strong examples. The interest is doubled by the fact that they established more than one production facilities, as for example Lisa Draxlmeyer has 4 capacities, Michelin and Sumitomo has three and so on. 29

Major Foreign Investment In Automotive Industry Germany CONTINENTAL AUTOMOTIVE PRODUCTS – (Timisoara, Sibiu) CONTINENTAL AUTOMOTIVE SYSTEM tyres, software CONTI TECH LISA DRAXLMAIER – (Pitesti, Satu-Mare, Timisoara) cable and wires PHOENIX AG - (Carei) - rubber car parts KROMBERG & SCHUBERT - (Timisoara)-car cables DAIMLER-CHRYSLER – (Cugir) gear boxes INA SCHEAFFER – (Brasov) – bearings; LEONI WIRING SYSTEMS - (Arad, Bistrita) – wires&cables BAUMEISTER & OSTLER - (Arad) – aluminium and plastic car parts SIEMENS AUTOMOTIVE – (Timisoara, Iasi ) – software SCHLEMMER – (Satu Mare) MARQUARD SCHALTSYSTEME – (Sibiu) HELLA – (Timisoara) electronics -Continental Automotive = producing 7000 tyres per day in a plant in Timisoara. Total investment reached 75 million USD. They created 1000 new jobs and the total output will be 8 million units per year -Lisa Draxlmayer is owning four manufacturing plats in Romania (Timisoara, Pitesti, Brasov, Satu Mare) producing mainly cable and wiring as well as interior items. They employing 800 workers and the total investment reached so far 50 million USD - Thysse Krupp established two succesfully JV with Romanian spare parts producer COMPA Sibiu producing shock absorbers and springs. The total investment account 27 million USD -Phoenix Automotive set up a rubber car parts plant in Carei- Satu Mare, in the North East part of Romania in order to produce automotive hoses, creating 400 new jobs and targeting a 50 million Usd export by 2001. -Kromberg and Schubert has an investment of 3 millionUSD and employing 800 workers for the production of car cables for BMW, Mercedes and VW -Leoni Wiring Systems- producing wires and cables for automotive industry with the main client Rover and MG, invested 8 million USD, employing 1400 workers -Baumaister & Oustler started a 4 million investment for alluminium and plastic car parts. 30

Major Foreign Investment In Automotive Industry FRANCE MICHELIN - (Floresti, Zalau, Bucharest) - tires VALEO - (Pitesti) - electric wiring systems SNR ROULEMENTS - (Sibiu) - bearings FAURECIA - (Sibiu) - seats covers AUTO CHASSIS INTL. – (Mioveni) - auto chassis RENAULT-NISSAN – (Pitesti) – gear boxes JAPAN SUMITOMO ELECTRIC WIRING SYST. - (Hunedoara, Deva, Orastie) - wiring systems YAZAKI CORP. - (Ploiesti, Arad) - wiring systems KOYO SEIKO - (Alexandria) - ball bearings TAKATA CORP. - (Arad) - airbags and steering wheels CALSONIC KANSEI – (Poiesti) - air condition and cooling units -Continental Automotive = producing 7000 tyres per day in a plant in Timisoara. Total investment reached 75 million USD. They created 1000 new jobs and the total output will be 8 million units per year -Lisa Draxlmayer is owning four manufacturing plats in Romania (Timisoara, Pitesti, Brasov, Satu Mare) producing mainly cable and wiring as well as interior items. They employing 800 workers and the total investment reached so far 50 million USD - Thysse Krupp established two succesfully JV with Romanian spare parts producer COMPA Sibiu producing shock absorbers and springs. The total investment account 27 million USD -Phoenix Automotive set up a rubber car parts plant in Carei- Satu Mare, in the North East part of Romania in order to produce automotive hoses, creating 400 new jobs and targeting a 50 million Usd export by 2001. -Kromberg and Schubert has an investment of 3 millionUSD and employing 800 workers for the production of car cables for BMW, Mercedes and VW -Leoni Wiring Systems- producing wires and cables for automotive industry with the main client Rover and MG, invested 8 million USD, employing 1400 workers -Baumaister & Oustler started a 4 million investment for alluminium and plastic car parts. 31

Major Foreign Investment In Automotive Industry USA JOHNSON CONTROLS - (Mioveni, Ploiesti) - seats HONEYWELL GARETT - (Bucharest)- spare parts for turbochargers ALCOA FUJIKURA INC. - (Chisineu-Cris and Caransebes) - wire harnesses DOW AUTOMOTIVE - (Pitesti) - chemical compounds BORLA ROMCAT - (Curtea de Arges) - mufflers, catalizers LEAR CORPORATION - (Pitesti) - wiring systems DELPHI PACKARD - (Sannicolau) - wiring systems TRW – (Timisoara) – steering wheels DURA AUTOMOTIVE - (Timisoara) ITALY MAGNETTO GROUP - (Dragasani) - wheels MOMO - (Brad) - steering wheels PIRELLI - (Slatina) – steel cord and tires -Continental Automotive = producing 7000 tyres per day in a plant in Timisoara. Total investment reached 75 million USD. They created 1000 new jobs and the total output will be 8 million units per year -Lisa Draxlmayer is owning four manufacturing plats in Romania (Timisoara, Pitesti, Brasov, Satu Mare) producing mainly cable and wiring as well as interior items. They employing 800 workers and the total investment reached so far 50 million USD - Thysse Krupp established two succesfully JV with Romanian spare parts producer COMPA Sibiu producing shock absorbers and springs. The total investment account 27 million USD -Phoenix Automotive set up a rubber car parts plant in Carei- Satu Mare, in the North East part of Romania in order to produce automotive hoses, creating 400 new jobs and targeting a 50 million Usd export by 2001. -Kromberg and Schubert has an investment of 3 millionUSD and employing 800 workers for the production of car cables for BMW, Mercedes and VW -Leoni Wiring Systems- producing wires and cables for automotive industry with the main client Rover and MG, invested 8 million USD, employing 1400 workers -Baumaister & Oustler started a 4 million investment for alluminium and plastic car parts. 32

Major Foreign Investment In Automotive Industry OTHER COUNTRIES: EYBL INTL. - Austria (Timisoara) - steering wheels SOLVAY INERGI - Belgium (Pitesti) - plastic components AUTOLIV INC. - Sweden (Brasov) - seat belts COFICAB – Tunis (Arad) – wire harnesses COINDU – Portugal (Arad) CAUCHO METAL PRODUCTOS – Spain (Sibiu) MANUFACTURA MODERNA DE METALES – Spain (Turda) BAMESA-ARCELOR – Spain (Topoloveni) -Continental Automotive = producing 7000 tyres per day in a plant in Timisoara. Total investment reached 75 million USD. They created 1000 new jobs and the total output will be 8 million units per year -Lisa Draxlmayer is owning four manufacturing plats in Romania (Timisoara, Pitesti, Brasov, Satu Mare) producing mainly cable and wiring as well as interior items. They employing 800 workers and the total investment reached so far 50 million USD - Thysse Krupp established two succesfully JV with Romanian spare parts producer COMPA Sibiu producing shock absorbers and springs. The total investment account 27 million USD -Phoenix Automotive set up a rubber car parts plant in Carei- Satu Mare, in the North East part of Romania in order to produce automotive hoses, creating 400 new jobs and targeting a 50 million Usd export by 2001. -Kromberg and Schubert has an investment of 3 millionUSD and employing 800 workers for the production of car cables for BMW, Mercedes and VW -Leoni Wiring Systems- producing wires and cables for automotive industry with the main client Rover and MG, invested 8 million USD, employing 1400 workers -Baumaister & Oustler started a 4 million investment for alluminium and plastic car parts. 33

Romanian ITC Industry Trends High density of Romanian IT specialists (five times higher than in Russia, and seven times than in India). Romanian Olympic students are usually placed in top 4 with China, US and Russia. In Microsoft the second spoken language is Romanian; Low brain drain phenomenon in Romania; IT sector is constantly growing; Major multinational IT companies such as Microsoft, HP, Oracle, Cisco, Intel and Motorola are present in Romania - many of them use Romania as regional headquarters.

A Top European Location for product R&D, outsourcing, customer service and BPO In 2006 Microsoft opened a Global Technical Support Center creating around 700 jobs One GE group companies established an IT outsourcing, financial services and supply chain BPO HP set up a BPO in Bucharest for financial and administrative services, dedicated to EMEA region - up to 1200 employees In 2006 WIPRO decided to set up a BPO center in Bucharest for IT services covering the East European market - 700 employees Ericsson will open in Romania, in July this year, a New Global Service Delivery Center - 70% of the employees will be young graduates BPO aiming to offer outsourcing services in HR, finance and procurement to work

8. ARIS – one stop shop for foreign investors

Who is A.R.I.S? Governmental body under the authority of Prime Minister In charge with attracting and retaining foreign direct investment Interface between investors and central & local authorities Providing free of charge SERVICES for foreign investors in Romania SERVICES Search and advice on the best location in Romania to fulfill the company' needs including site search, analysis & touring around Value added information on incentives and other administrative procedures Search for industrial and service suppliers

Thank you for your attention! tel: +40 21 233.91.03 fax: +40 21 233.91.04 email: aris@arisinvest.ro website: www.arisinvest.ro