ROMANIA: INVESTMENT OPPORTUNITIES

Transcription

1 ROMANIA: INVESTMENT OPPORTUNITIES

2 Macroeconomic indicators Eurobond minimum interest rates Outcomes In 2013, Romania has borrowed at historical minimum rates, on the domestic and foreign markets (for example, 4.15% for the 7-year Eurobond issuance). Foreign Direct Investments EUR 59,126 million ( ) Exports Business environment in Romania (1) FOB EXPORTS (MIL. EURO) 1.I-31.VII 2014 Intra EU 28 21,687.5 Extra EU 28 8, Structural Funds and Cohesion Funds absorption rates approx. 37% (August 2014) Economic growth 2013: 2.2% 2014 (estimated): 2.2% Inflation June 2014: 0.66%. Competencies Industry IT&C Foreign languages 2

3 Business environment in Romania (2) Key sectors: infrastructure (transport and energy), industry, agriculture and fishery, education, environment protection, IT&C, research-development-innovation; Advantages: a privileged geographic location, legislative and political stability, highly qualified workforce at competitive costs, developed IT&C infrastructure etc.; Attractive tax policy: - Low corporate income tax rate (16%) - Low employer s social contribution rate (15.8%) - Tax exemption for the reinvested profit - Industrial park investments exempted from the tax on land and buildings - Access to stimulating funds in accordance with the domestic and EU 3

4 Policies encouraging foreign investments Romania developed additional instruments to encourage foreign investments, in accordance with EU regulations. STATE AID Transfer from government resources Economic advantage Selectivity Effect on competition and trade Grants; Guarantees; Tax incentives. Public land purchased/leased below market level; Wage costs subsidized; Access to no-tax infrastructure; etc. A limited number of recipients which meet the requirements and objectives. Reduced if EU regulations are observed 4

5 State Aid Policy of MofPF Overall purpose: regional development through - stimulating investments - stimulating the use of innovative technologies - job creation Types of state aid: Direct allocation of eligible costs Eligible costs: - tangible assets (buildings, equipments) - non-tangible assets (copyright, licenses, know-how or unpatented technical knowledge, software) or - wage costs for 2 years associated with directly created jobs as a result of an investment. 5

6 State Aid Policy of MofPF Total budget allocations 2.3 billion Euro Number of approved investments 71 Total investment amount Over 3 billion Euro Total amount of approved state aid Over 800 million Euro Number of new jobs to be created by the state aid recipients as a result of the investments Over 25,400 Total amount in contribution to regional development Over 1.7 billion Euro 6

7 State Aid Policy of MofPF MAIN MAIN SECTORS - - Automotive - - Railway transport equipment - - Aeronautics - - Renewable energy - - Health - - Tourism - Food - Food industry - - Mining industry equipment - Home - Home appliances - - Cellulose and and paper paper - IT&C - IT&C - - R&D&I MAIN BENEFICIARIES - Renault - Daimler - Ford - Pirelli - Bosch - Continental - Arcelik - DeLonghi - ETI - IBM - Microsoft - Deutsche Bank - Siemens 7

8 State Aid Policy of MofPF - Conclusions - Attract sustainable foreign investments; Create jobs (suppliers/customers); Multiplying effect in the economy; Contribution to the import/export balance in Romania; Development of traditional industries; Industrial know-how; Highly qualified professional training; Improved living standards. 8

9 State Aid Policy of MofPF Selection of priority investments which help regional development; Secure adequate financial resources from the state budget; Monitoring of funded investments; Develop new state aid schemes to support regional development. The state aid scheme for wage expenditures, effective in , for which the applications are received in a first session from September 22 through October 17, 2014 The state aid scheme for the purchase of assets, effective in , was adopted in the government s meeting of September 17,

10 Government Decision nr. 332/2014 Government Decision nr. 807/ Aims at the creation of 10 jobs in each location as a result of the implementation of an investment - The eligible expenditures are the wage costs incurred 2 years in a row - Aims at supporting investments of minimum 10 million Euro - Eligible costs: *construct new buildings; *lease existing buildings; *purchase tangible and non-tangible assets 10

11 Government Decision nr. 332/2014 introducing a state aid scheme to support investments which promote regional development by creating jobs 11

12 Purpose of the state aid scheme REGIONAL DEVELOPMENT NEW INVESTMENTS NEW JOBS CREATION EFFECT Reduce unemployment and economic gaps among regions 12

13 Main particulars of the state aid scheme Scope - Companies of all sectors (except for those referred to in the EU Regulations) How is the state aid disbursed - Non-reimbursable funds from the state budget - Up to the maximum allowed intensity according to the Regional Map Duration December 31, 2020 issuance of funding approvals disbursement of approved state aid Budget Estimated number of Recipients /new jobs - RON 2.7 billion (equivalent of EUR 600 million) - Maximum RON 450 million (echivalent of EUR 100 million) - 1,700 companies / 35,000 new jobs 13

14 Maximum state aid amount /intensity Region Intensity / MAXIMUM state aid amount Bucharest Region West Region Ilfov Region 15% of the eligible expenditure (maximum million Euro) 35% of the eligible expenditure (maximum million Euro) 10% of the eligible expenditure (maximum 7.5 million Euro) The rest of the country 50% of the eligible expenditure (maximum 37.5 million Euro) 14

15 Eligible expenditures (1) Eligible expenditures are the wage costs incurred in a time span of 2 consecutive years, for the new jobs enabled by the investment. Wages costs consist of: Total gross* annual wage expenditure + Total attached contributions paid by employers * Up to the limit of the gross average wage approved in the annual social security law and valid in the year in which the financing application is registered. It includes the contributions and the income tax paid by the employees, too. 15

16 Eligible expenditures (2) The state aid for eligible expenditures shall be disbursed if the below requirements are fulfilled: jobs are directly created by an investment project; jobs are created after the date on which the financing agreement is received, but within maximum 3 years after the investment completion date; no work relations between the employers or their associated companies and the employees within the 12 months before the date on which the financing application was registered. 16

17 Eligible expenditures (Example) Let s assume a company which creates 10 jobs in Iaşi, a city on the North-East Region map, for which the maximum state aid share is 50%, and which pays to its employees a wage higher than, or equal to, the average wage paid in the economy. The state aid shall be calculated as follows: Indicator Formula Calculation Total expenditures with the annual gross wages Monthly gross average wage x nr. of newly created jobs x nr. of months lei x 10 x 12 = lei Total annual contributions paid by the employers Total annual gross wage expenditure x 22.75% lei x 22.75% = lei Total annual amount of wage costs Total annual gross wage expenditures + Total employers contributions lei lei = lei Maximum amount of the annual state aid Total annual amount of wage costs x maximum intensity lei x 50% = lei Total maximum state aid amount Maximum annual state aid amount x 2 consecutive years lei x 2 = lei 17

18 Eligibility criteria for companies cumulative (1) a) the companies must be registered according to Law 31/1990; b) the companies undertake an initial investment in Romania in one of the eligible sectors; c) there are no outstanding obligations to the component budgets of the general consolidated budget; d) the companies are not included in the category companies in difficulty ; e) the companies are not subject to any enforcement, insolvency, bankruptcy, judicial reorganization, dissolution, operational closure, liquidation or temporary activity suspension procedures; f) the companies are not subject to any state aid recovery rulings or any similar rulings have already been executed; g) the companies have not received other regional state aid funds for eligible costs of tangible or non-tangible assets nature under the same single investment project; h) the companies have not closed an identical or similar activity in the European Economic Area within the two years prior to the year in which the funding application was registered and, at the time of registration, the companies do not have any specific plans to close such an activity within the 2 years after the completion of the initial investment, in the region under consideration. 18

19 Eligibility criteria for companies cumulative (2) + Old companies: a) the return on sales is equal to, or higher than, 1% in the last closed financial year; b) the own equity is positive in the last closed financial year. + Start-ups: a) the subscribed share capital is minimum 30,000 lei; b) do not belong to shareholders who hold or were holding, in the past two year prior to the registration of the funding application, another business which is or has been in the line of business for which the funds are being requested. 19

20 Eligibility criteria for investments cumulative a) it has to be considered an initial investment, or an initial investment for a new economic activity, in the case of large companies in the Bucharest region; b) result in the creation, in each investment location, of at least 10 new jobs, of which minimum 3 for disadvantaged people; c) must be viable and cause the company to be efficient in economic terms. 20

21 Registration of funding applications In sessions of 20 business days, which can be extended The registration sessions shall be communicated in advance by the Ministry of Public Finance, at and Documents shall be sent out by either registered mail or courier, to the General Registration Desk of the Ministry of Public Finance at 17, Apolodor Street, sector 5, Bucharest 21

22 State aid approval procedure STAGE 1 - Verification of the eligibility of undertakings and calculation of a score în order to select the eligible undertakings under the budget scheme STAGE 2 - Technical and economic analyze of the investment projects of the pre selected undertakings în order to determine their viability 22

23 How to calculate the score (Example) Let s assume an active company, with the return on sales in the latest closed financial year of 1.7%, making an investment in the Argeş county which creates 35 jobs over 8 months from the estimated date of receipt of the funding approval. The score shall be calculated as follows: Total score: 23.5 points. Assessment criteria Judgment Score Number of jobs created 35/ points. The period in which minimum 10 jobs are created. 8 months < 1 year 10 points. Investment location According to the Monthly Statistics Bulletin nr. 2/2014, at end-january. Unemployment rate in Argeş County: 7.2% Unemployment rate in the country: 5.8% 7.2> points. Return on sales in the latest closed financial year, for active companies. ROS = 1.7% 1.7% < 2% 0 points. Subscribed share capital (for startups) N/A N/A 23

24 State aid disbursement The state aid is disbursed to recipient companies on a quarterly basis, after part or all of eligible expenditures have been incurred First disbursement is subject to the creation of 10 jobs in the same location of an investment, of which minimum 3 for disadvantaged workers 24

25 Time limits The state aid approval application First assessment stage shall be completed in maximum 30 business days from the day on which the application registration session is closed. The second assessment stage shall be completed in maximum 30 business days from the date on which the full documentation is considered complete The state aid disbursement application The state aid shall be disbursed within maximum 45 business days from the date on which the application is considered complete 25

26 Preservation of the investment and jobs Classification at the time of registration of the state aid approval application Initial investment -years- Jobs created -years- Large companies 5 5 SMEs

27 Government Decision nr. 807/2014 introducing a state aid scheme to support investments of major economic impact 27

28 Purpose of the state aid scheme REGIONAL DEVELOPMENT INVESTMENTS IN HIGH TECHNOLOGY FIXED ASSETS TO ENABLE HIGH VALUE-ADDED PRODUCTS EFFECT Reduce economic gaps among regions and recovery of the Romanian economy 28

29 Main particulars of the state aid scheme Scope - Companies of all sectors (except for those referred to in the Community Regulations) How is the state aid disbursed Duration - Non-reimbursable funds from the state budget - Up to the maximum allowed intensity according to the Regional Map December 31, 2020 issuance of funding approvals disbursement of approved state aid Budget - RON 2.7 billion (equivalent of EUR 600 million) - Maximum RON 450 million (echivalent of EUR 100 million) Estimated number of recipients companies 29

30 Maximum state aid amount /intensity Region Intensity / MAXIMUM state aid amount Bucharest Region West Region Ilfov Region 15% of the eligible expenditure (maximum million Euro) 35% of the eligible expenditure (maximum million Euro) 10% of the eligible expenditure (maximum 7.5 million Euro) The rest of the country 50% of the eligible expenditure (maximum 37.5 million Euro) 30

31 Eligible expenditures Build new constructions; Lease existing buildings; Purchase tangible assets* (technical installations, new machinery and equipment); Purchase non-tangible assets* (patents, licenses, know-how or other intellectual property rights). * NEW + PURCHASED IN MARKET CONDITIONS 31

32 Eligibility criteria for companies - cumulative - a) the companies must be registered according to Law 31/1990; b) the companies undertake an initial investment in Romania in one of the eligible sectors; c) there are no outstanding obligations to the component budgets of the general consolidated budget; d) the companies are not included in the category companies in difficulty ; e) the companies are not subject to any enforcement, insolvency, bankruptcy, judicial reorganization, dissolution, operational closure, liquidation or temporary activity suspension procedures; f) the companies are not subject to any state aid recovery rulings or any similar rulings have already been executed; g) the companies have not received other regional state aid funds for eligible costs of tangible or non-tangible assets nature under the same single investment project; h) the companies have not closed an identical or similar activity in the European Economic Area within the two years prior to the year in which the funding application was registered and, at the time of registration, the companies do not have any specific plans to close such an activity within the 2 years after the completion of the initial investment, in the region under consideration. 32

33 Eligibility criteria for companies - cumulative - + Old companies (based on the latest closed financial year): Net Profit /Sales x100 > 0% Own equity > = 0 + Start-ups: Sales >= RON 100,000 NO new firms of shareholders who hold or have held, within the two years prior to the current application, another company in the same line of business as the one for which the funding is now requested NO outstanding obligations to the component budgets of the general consolidated budget YES shareholders/managers experienced in the line of business for which the funding is requested 33

34 Eligibility criteria for investments - cumulative - The investments must be initial investments, for: - setting up of a new unit; - developing a new economic activity; - increasing the capacity of an extant unit; - diversifying the range of products of an extant unit; - making a fundamental change in the general production process of an extant unit; * Bucharest, large companies = initial investment to start an economic activity; Total investment amount = RON 44 million ( EUR 10 million); The investment has to: - be viable and cause the company to become efficient; - to confirm the stimulating effect of the state aid; - to create contributions to the regional development; - to induce other related investments in the region. 34

35 Approval procedure Applications can be received in a continuous session to provide a permanent funding facility to investors; Registration is suspended on the date on which the total funding requested is found to have reached the maximum annual budget allocated to the scheme; Reasonable assessment time 45 working days for issuing the financing agreement *) *) as of the date on which the full documentation is considered complete. 35

36 Disbursement of state aid State aid shall be disbursed to recipient companies after all or part of eligible expenditures are incurred The state aid shall not exceed the level of the project s direct contributions * to the regional development (implementation time + preservation of the investment) Preservation of the investment * taxes to the general consolidated budget and local budgets (contributions associated to the employee s wage income +employer, corporate income tax, tax on land and buildings ) The initial investment must be preserved functional for at least 5 years after its completion, along with the new working places created 36

37 The Government s State aid Policy in Conclusions - Prioritize investments; Complementarity with other funding programs at national level; Attract foreign investments + redeployment from outside the EU area; Encourage the transfer of know-how and modern technology; Create as many as possible sustainable jobs which bring contributions to the state budget; Secure, through the state budget, the sources of funds to pay the approved state aid, on the agreed deadlines; Permanent monitoring of investments. 37

38 Ask a question, request clarifications, report a problem During the period in which the state aid scheme is valid, as of the time of opening the application registration session, the Ministry of Public Finance shall provide all the applicants with a dedicated platform for questions, clarifications and problem reporting, at: 38

39 MINISTRY OF PUBLIC FINANCE 17 APOLODOR STREET, SECTOR 5, BUCHAREST