Romania – Top Destination for Investment Bucharest, October 2007 romanian agency for foreign investment by Oana Nisioi Head of Investment Promotion Department

2 Structure of the Presentation 1.Geo-strategic position 2.Macroeconomic outlook 3.Valuable human potential 4.FDI performance 5.Infrastructure development 6.Investment legal framework 7.Potential sectors for development 8.ARIS – one stop shop

1. Geo-strategic position

4 Romania’s Geo-strategic Position Our friend the windArea 238,391 km 2 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

5 Romania’s Strategic Location Helsinki – Kiev - Bucharest – Odessa/AlexandropoulosIX The Danube river 2,300 km longVII Dresden/Nuremberg - Bucharest Constanta/Thessaloniki/ IstanbulIV 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 Strategic position at the turning point where EU meets the Balkans and CIS countries

2. Macroeconomic outlook

7 Significant Potential for Growth 2006 Rapid & sustainable GDP growth; 7.7% in 2006, based on increases in final consumption by 11.5% and in investment by 16.1%; Highly comparable with EU25 GDP growth rate of 2.9% in Source: EUROSTAT, *forecastSource: National Institute of Statistics GDP Growth Rate Slovakia8.3% Romania7.7% Czech Republic*6.1% Bulgaria6.1% Poland5.8% Slovenia5.2% Hungary3.9%

8 Declining Inflation Consolidation of low inflation (sustainable disinflation); 3.66% ( Mar ' 07/Mar ' 06 ), a record low for the post-1990 period; Source: EUROSTATSource: National Bank of Romania Inflation Rate Annual Inflation Rate Dec'06/Dec'05Hungary6.6% Bulgaria6.1% Romania4.9% Slovakia3.7% Slovenia3.0% Czech Rep 1.5% Poland1.4%

3. Valuable Human Potential

10 Human Capital 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 Demographics Talent pool 160 higher education institutions 109 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

11 University graduates in Romania (by education field) 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 students in 105 local Cisco academies) Source: National Institute of Statistics strong language skills (English, French, German, Italian, Spanish, Russian, etc.) large skilled labor force at comparatively low wage rates

12 Competitive Labor Cost Regional Comparison EUR Gross monthly wages EUR Source: Vienna Institute of International Economic Studies; National Institutes of Statistics The average gross monthly wage in Romania is the second lowest after Bulgaria It is expected to grow by 16.7% in 2007

4. FDI Performance

14 Inward FDI Flows 2006 Record value in 2006; FDI Stock over EUR 30 bill (1990 –2006); In the first 7 months of 2007 – EUR 3.6 bill Source: Vienna Institute of International Economic Studies Source: National Bank of Romania Annual Inward FDI 1Poland Romania9082 3Hungary4874 4Czech Republic4752 5Bulgaria4105 6Slovakia3324 7Slovenia303 EUR million

15 the Netherlands AustriaGermanyGreeceFrance 4.26 bill EUR SwitzerlandItalyCyprusUSAHungary Major Investing Countries ( ) Source: National Bank of Romania

5. Infrastructure Development

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

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

19 Mobile Communication Infrastructure – coverage area - Consolidated market; Major international players; More than 90% network coverage.

20 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

22 Competitive Taxation Corporate Tax VAT Social Contributions EmployeeEmployer Bulgaria10%20%12.43% % Romania16%19%17% % Hungary16%20%13.5%33.5% Poland19%22%18.71% % Slovakia19% 13.4%34.4% Czech Rep. 24%19%12.5%35% Slovenia25%20%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 Many Central and Eastern European countries reduced considerably their corporate tax in order to diminish the fiscal burden

23 New Investment Law Incentives for investments in Romania in: regional development (including infrastructure) environment protection research and development human resources and social inclusion, including training Directed according to economic status of each region Law expected to be passed by end of this year, beginning of next year

24 EU grant programmes – Structural Instruments and Agriculture Funds European Fund for Regional Developm ent (EFRD): infrastructur e + local development job creation + maintaining heath + education European Social Fund (ESF) employmen t + training Cohesion Fund (CF) large transport + environment projects Structural Instruments (1+2+3) Structural Funds (1+2) European Fund for Agriculture and Rural Development (EFARD) Fisheries Fund Agriculture Funds For post accession funds - the total amount allocated for the period refers to more than Euro 33 billion; For structural & cohesion funds, the allocations are estimated around 19 bill euro & for agriculture, rural development and fisheries more than 7 bill euro.

25 Structural funds channeled by Operational Programmes Operational ProgrammeManaging 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 Operational Programmes of interest to business

7. Potential Sectors for Development

27 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

8. ARIS – one stop shop for foreign investors

29 Who is A.R.I.S? Gove rnme ntal body unde r the auth ority of Prim e Minis ter In charge with attract ing and retaini ng foreig n direct invest ment Interfa ce betwe en invest ors and centra l & local author ities Providi ng free SERVIC ES of charge SERVIC ES for foreign invest ors in Roman ia Search and advice on the best location in Romani a to fulfill the compan y' needs includin g site search, analysis & touring around Search for industria l and service suppliers Value added informatio n on incentives and other administra tive procedure s SERVICES

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