Romania - Top Destination for Investments DEPARTMENT FOR INFRASTRUCTURE PROJECTS AND FOREIGN INVESTMENTS

Romania - the largest market in South-Eastern Europe Area: 238,391 sqm (ranking 9th in the EU) Population: 20 million (ranking 7th in the EU) Capital city: Bucharest 1.7 million Status within the European Union Member State as of 1 January 2007 Affiliation: NATO, WTO, WB, IMF Rate of exchange: LEU (RON) 1 EUR = RON 1 USD = RON Official language:Romanian Credit rating by Standard & Poor's BB+. Moody’s rating for the national debt in foreign currency Baa3 Credit rating by FitchBBB-

Significant growth potential Rapid GDP growth rate between 2001 and 2008; Prognosis for 2013: 1.6% According to the initial estimates, the economic growth for Quarter was 2.2% Poland2.0% Slovakia2.0% Bulgaria0.8% Romania0.7% Czech Republic -1.3% Hungary-1.7% Slovenia-2.3% EU % GDP growth rate Source: National Institute of Statistics; GDP EU 27

Inflation rate Target: 2013: 2.5% Annual average Inflation rate 2012 Hungary5.7% Slovakia3.7% Poland3.7% Czech Republic 3.5% Romania3.4% Slovenia2.8% Bulgaria2.4% EU % Source: National Institute of Statistics Inflation rate

Unemployment rate in Romania The unemployment rate in Romanian is lower than the European average (11% in May 2013, according to Eurostat). The unemployment rate reported in July 2013 was 7.60%

Investment climate Competitive edge The larges market in South-Eastern Europe The second largest market in Central and Eastern Europe. One of the largest domestic markets in the EU (9th as size and 7th among the EU Member States) 16% flat rate 24% standard VAT rate 5% reduce VAT rate applicable to provision of social housing state aid schemes to support investments

Investment climate Which are the most attractive countries in Europe in the next three years? Romania is well positioned to attract foreign investments in the next three years, according to a Ernst&Young study Source: Ernst&Young European attractiveness survey 2012 Total respondents: 840 Countries were assessed on a scale from 1 to 5 by the top representatives of certain international companies

Investment climate Romania is a very good place for medium to high return projects, in a business environment with low structural risk. Romania offers many investment opportunities in industries such as: Infrastructure (motorways, ports, railways) Energy (development of the energy production capacity: nuclear power plant in Cernavoda, hydro power plant in Tarnita-Lapustesti) Manufacturing (auto, IT&C, industrial parks) Agriculture Education Environmental protection Natural resources (mining, exploitation of non- coventional resources, share gas prospecting activities, non-ferrous (gold, copper) metals exploitation)

Top 10 investing countries Source: National Bank of Romania 21.7%17.5%11.4%9.1%6.1% 5.3%4.6%3.3%2.6%2.3% the NetherlandsAustriaGermanyFranceItaly LuxembourgUSASwitzerlandCyprusGreece

2012 Direct Foreign Investments First 6 months of 2013: EUR 666 mil. Inventory (1990–2012): EUR 56.7 billion Source: Source: Vienna Institute for International Economic Studies Annual flows Hungary Czech Republic 8244 Poland 2663 Slovakia 2199 Romania 1613 Bulgaria 1479 Slovenia 112 Source: National Romanian Bank

Competitive taxation Profit tax VAT Social contributions EmployeeEmployer Bulgaria10%20%12.9% % Romania16%24%16.5% % Slovenia18%20%22.1%16.1% Poland19%23%22.71% % Slovakia19%20%13.4%35.2% Czech Republic 19%20%12.9% % Hungary19%27%18.5%28.5% Many of the Central and Eastern European countries increased their VAT rates to cope with the economic crisis Romania has maintained the flat profit tax rate Source: Deloitte

The Ministry of Public Finance is currently running state aid schemes to support regional development and investments with economic impact G.D. no. 1680/2008 instituting a state aid scheme to ensure sustainable economic development G.D. no. 753/2008 instituting a state aid scheme to support regional development through investment incentives G.D. no. 797/2012 instituting a state aid scheme to support the investments which aim to promote regional development through the use of new technologies and job creation 12

G.D. no. 1680/2008 instituting a state aid scheme to ensure sustainable economic development Total budget: EUR 1 billion Duration of the state aid scheme: 5 years (2009 – 2013) Areas: are granted in all areas except for: fishery and agriculture, primary production of agricultural products, fuel, iron and steel, ship building and synthetic fibers 13

It applies to the companies which invest in Romania as follows: Make an initial investment whose value range between EUR 5 and 10 million and create at least 50 new jobs Make an initial investment whose value range between EUR 10 and 20 million and create at least 100 new jobs Make an initial investment whose value range between EUR 20 and 30 million and create at least 200 new jobs Make an initial investment which exceed EUR 30 million and create at least 300 new jobs 14

The value of the state aid which can be granted accounts for maximum 50% of the value of the eligible costs (for Bucharest- Ilfov region, 40%), without, however, exceeding EUR million (for Bucharest-Ilfov region, without exceeding EUR 22.5 million) 15

G.D. no. 753/2008 instituting a state aid scheme to support regional development through investment incentives Total budget: EUR 575 million Duration of the state aid scheme: 5 years (2009 – 2013) Areas: are granted in all business areas except for: fishery and agriculture, primary production of agricultural products, fuel, iron and steel, ship building and synthetic fibers 16

It applies to the companies which invest in Romania and fall into the following categories: Make an initial investment which exceed the equivalent in lei of EUR 100 million and the value of the eligible costs exceeds the equivalent in lei of EUR 50 million Create at least 500 new jobs as a result of the investment 17

The value of the state aid which can be granted is calculated using a formula relying on both the value of the eligible costs and the value of the adjusted regional threshold. The state aids which exceed the equivalent in lei of EUR 30 million (Bucharest-Ilfov) and EUR 37.5 million, for the other regions, are reported individually to the European Commission 18

G.D. no. 797/2012 instituting a state aid scheme to support the investments which aim to promote regional development through the use of new technologies and job creation Total budget: lei 440 million, equivalent of EUR 100 million Duration: 6 years (2012 – 2018) Areas: processing industry (except for alcoholic beverage and tobacco products manufacturing), production and supply of electric power, heat, gas, hot water and conditioned air, software development activities, telecommunications and IT services, computer-related activities and services, research and development 19

It applies to the companies whose investments in Romania make use of new technologies. create at least 200 new jobs and: either lead to obtaining of innovative products, services and technologies or include an ITC component accounting for at least 20% of the value of the investment plan 20

The investments which can benefit of state aid must aggregately meet the following eligibility criteria: to be an initial investment to be an innovative investment or investments which include an ITC component accounting for at least 20% of the value of the investment plan to lead to creation of at least 200 jobs to prove the viability of the project and economic efficiency to prove contribution to regional development (through actual payment of taxes and dues during the investment implementation term and for 5 more years after its completion) 21

The value of the state aid which can be granted accounts for maximum 50% of the value of the eligible costs (Bucharest-Ilfov region, 40%), without, however, exceeding EUR million (for Bucharest-Ilfov region, without exceeding EUR 22.5 million) 22