At present, Romania is mainly orientated towards restructuring and privatising large state-owned enterprises and ensuring stable economic growth.

The main competitive advantages offered to foreign investors in Romania are:

• the domestic market (about 23 million consumers), the second largest market in Central and Eastern Europe;
• convenient positioning at the crossroads of the main traditional commercial routes, which allows access to over 200 million consumers in a 1,000 kilometre radius;
• extensive sea and river navigation facilities through The Black Sea ports and Rhine-Main-Danube canal;
• skilled labour force which is relatively cheap and well trained in engineering and technology;
• a wide range of natural resources and fertile farming land;
• a great deal of potential with regards to tourism;
• a diversified industrial structure.

According to Romanian legislation, foreign investors can invest in Romania by:

• setting up new companies with full foreign capital or in association with Romanian natural or legal persons (companies, co-operatives, associations), branches, subsidiaries;
• contributing to the increase of an already existing company's registered capital or acquiring shares, bonds or other securities of such companies;
• acquisition of concessions, leases or agreements to manage economic activities, public services or production units belonging to regies, autonomous or companies;
• acquisition of ownership rights over movable and immovable property, and other ownership rights, except land ownership;
• acquisition of industrial and intellectual property rights;
• acquisition of claim rights or other rights referring to carrying out economic activities associated with investment;
• contracting out the works of exploration, exploitation and distribution of production in the field of natural resources.

The contribution of a foreign investor can take a variety of forms:

• capital in foreign currency;
• equipment, means of transport, sub-components, spare parts and other goods;
• services, industrial and intellectual property rights, patents, licences, know-how, company and trademarks;
• proceeds and profits from business activities carried out in Romania, as well as goods and assets acquired after paying the taxes and fees stipulated in the legislation in force.

According to Law No.241/14 December 1998 for approving Ordinance No. 92 regarding stimulation of direct investments, investors in Romania can benefit from common guarantees and facilities such as:

• the possibility of investing in any field of activity and under any legal form provided by the law. There are permitted investments in all economic sectors including industry, exploitation of natural resources, agriculture, infrastructure, communications, civil and industrial construction, scientific research and technological development, trade, tourism, banking, insurance and other services. The investments must comply with certain conditions; environmental requirements, national security and defence interests, public health and ethical considerations;
• guarantees against nationalisation, expropriation or other measures with similar effect;
• the right of converting the amount in lei derived from the investment into the investment currency, as well as the transfer of the Foreign Exchange Regime;
• the possibility of deducting the advertising and promotion expenses from the taxable profit;
• the possibility of hiring foreign persons according to the legal regulations in force.

The law stipulates the guarantees and facilities for foreign or non-resident investors in Romania:

• if based on a bilateral agreement for mutual guarantee and promotion of investments and ratified according to the law, an investor, natural or legal foreign person is entitled to more favourable treatment, the investor shall enjoy that treatment;
• non-resident investors enjoy the right to transfer abroad, without any restriction, after the payment of legal taxes and duties, the following incomes are in freely convertible currency:
  - the dividend or profit obtained by a company, Romanian legal person, in case they are shareholders or partners;
  - the incomes obtained by a partnership type of association, as well as incomes resulting from selling the shares or social parts;
  - the amounts obtained from company liquidation according to the Bankruptcy Law.

Investors shall enjoy the following tax and custom duties incentives:

• the possibility of using accelerated depreciation;
• total deduction from the taxable profit of advertising and promotion expenses;
• recovering the annual loss declared by taxpayers in their fiscal statements from the taxable profit obtained during the next five consecutive years;
• exemption from payment of custom duties and value added taxes (VATs) for the import of equipment as participation to the social capital;
• exemption from payment of custom duties and VAT for the import and exemption from payment of VAT for acquisition from the internal market of technological equipment*;
• exemption from the income tax for the reinvested profit*.

*These incentives are suspended for 1999 according to the Budget Law.

According to Ordinance No.24/30 September 1998 regarding the unfavoured areas, investors shall benefit within these areas of other facilities:

• the total restitution of custom duties for machinery, installations, equipment, means of transport (other than cars), know-how and raw materials;
• exemption from payment of profit taxes;
• exemption from payment of taxes on changing the destination or taking out from the agricultural circuit of the lands.

For the present, The National Agency for Regional Development (a new governmental body) declared three areas as unfavoured: Balan, Brad and Valca Jiului.

Recently reorganised, the Romanian Development Agency has new attributes:

• it provides assistance to potential investors;
• it elaborates and promotes the new privatisation strategy;
• it promotes Romania's image at international events.

Romanian Development Agency

As a specialised body of the central public administration, the Romanian Development Agency is directly subordinate to the Prime Minister and implements the development strategy and the economic policy of the Government in the field of attracting foreign investment and promoting privatisation strategies.

For the achievement of its object of activity, the Romanian Development Agency has the following tasks:

• to initiate, prepare and present to the Government drafts of legislation regarding the attraction of foreign investment in Romania;
• to provide a comprehensive package of consultancy services and assistance to potential investors;
• to offer 'after care' to foreign investors already operating in Romania;
• to co-operate with ministries, other specialised bodies of the central public and local administration, non-governmental organisations,and economic agents in order to establish a favourable environment for the development of a privatisation programme;
• to provide general data and information on Romania's economic structure, priority sectors for foreign investment and business opportunities;
• to study the nature and type of investments made in Romania;
• to monitor, interpret and disseminate data on foreign investment evolution and trends in Romania.