Slide1 : MINISTRY OF ECONOMY AND COMMERCE
Export Promotion Department
ROMANIA OUTSOURCE WORLD
TECHXNY - NEW YORK
5-7 October 2004
IT & C sector: One of the Romanian economy priorities : IT & C sector: One of the Romanian economy priorities Dumitru ANCA, Counselor
Export Promotion Department
Slide3 : Area: 238,391 sq.km.
Population: 21,700,000
Counties: 41
Capital: Bucharest
- Area: 228 sq.km.
- Population: 1.9 million
Macroeconomic Performance : Macroeconomic Performance Source: National Institute of Statistics, NBR
Pre-accession Economic Program 2003 GDP Real Growth %
Slide5 : Macroeconomic Performance Source: National Institute of Statistics, NBR
Pre-accession Economic Program 2003
Slide6 : Source: National Institute of Statistics, NBR
Pre-accession Economic Program 2003 Macroeconomic Performance
Slide7 : Economy on the Move Credit rating convergence Source: ING Bank, Rating agencies
Foreign promotion of the economy : Foreign promotion of the economy Among the totality of targets of economic promotion meant to improve the business environment of the companies, foreign economic promotion policy in Romania has, as major objectives:
- to put in touch businesses,
- to give consultancy and information to the economy,
- to promote it abroad ….. and
- mainly, to boost exports.
Export promotion, key issue for economic promotion : Export promotion, key issue for economic promotion Export is considered an engine for the Romanian economic growth and a chance for sustainable development;
More export means enhanced competitiveness for Romanian companies ;
More exports may improve the balance of payment situation;
Export in EU is an indicator of more economic integration for Romania and the beginning of a intra-region specialization.
Slide10 : Romanian trade exchanges 2003/2002 Source : CRPC
Slide11 : Geographical distribution of the Romanian exports 2003/2002 Source : CRPC
Slide12 : Geographical distribution of the Romanian imports 2003/2002 Source : CRPC
Top 10 Romania’s trade partners (% from total 2003) : Top 10 Romania’s trade partners (% from total 2003) IMPORTS
1. ITALY- 19.5%
2. GERMANY- 14.8%
3. RUSSIA – 8.3%
4. FRANCE – 7.3%
5. TURKEY – 3.8%
6. HUNGARY - 3.6%
7. AUSTRIA –3.5%
8. UK – 3.3%
9. CHINA – 2.8%
10. Poland – 2.3%
TOTAL 10 - 69.2% EXPORTS
1. ITALY – 24.1%
2. GERMANY-15.7%
3. FRANCE – 7.4%
4. U.K. – 6.7%
5. TURKEY – 5.1%
6. HOLLAND – 3.6%
7. USA - 3.5%
8. HUNGARY – 3.5%
9. AUSTRIA – 3.2%
10. GREECE – 1.8% TOTAL 10 - 74.6% Source : CRPC
Structure of the Romanian exports to USA - 2003 - : Structure of the Romanian exports to USA - 2003 - Source : CRPC - USD 619.1 million -
Structure of the Romanian imports from USA - 2003 - : Structure of the Romanian imports from USA - 2003 - Source : CRPC - USD 554.1 million -
Structure of the Romanian exports to USA - July 31st 2004 - : Structure of the Romanian exports to USA - July 31st 2004 - Source : CRPC - USD 352.5 million -
Structure of the Romanian imports from USA - July 31st 2004 - : Structure of the Romanian imports from USA - July 31st 2004 - Source : CRPC - USD 491.0 million -
CONCLUSIONS - related to figures - : CONCLUSIONS - related to figures - trade flows concentrated with European countries on two levels:
a) general European
b) sub regional for central and south-eastern countries;
need for more added-value exports and Romanian brands;
enlarging the base of Romanian export companies, especially the SME-s;
increasing the competitiveness of Romanian companies;
better access to the foreign markets and more knowledge about them;
better diversification of exports, geographically (off-shore outsourcing in the US market, a viable solution).
FDI Annual Inflows 1999 –2003 : FDI Annual Inflows 1999 –2003 At the end of July 2004, FDI Inflow increased by 37% as against the same period of 2003, reaching around USD 1600 million. Source: ARIS
Number of Projects and Value of Engaged Investments over 1 million USD Q4/ 2001 - Q2/2004 : Number of Projects and Value of Engaged Investments over 1 million USD Q4/ 2001 - Q2/2004 Source: ARIS
IT&C sector in Romania : IT&C sector in Romania Expansion of the internal market: 15-20% per year, higher than the GDP growth (4.5% last year);
Expansion of the IT export: 50-60% per year, higher than total export growth rate (21.8% last year);
Targets: USD 1 billion, export in 2004 through more aggressive marketing ;
Export is a big chance for this sector and for Romanian economy
SWOT Analysis IT&C sector : SWOT Analysis IT&C sector STRENGHTS:
Good quality human resource in the sector ;
High qualification level of the working force in big number : among the first in the world as number of certified specialists in informatics according to “Brain-Bench”-Global IT IQ report (16 122 diplomas in 2001)
Labor force relatively cheap;
The economy adapting to EU integration and more and more interconnected with the European economic flows ;
National infrastructure sufficiently developed;
Universities centres dynamics and spread uniformly in the regions;
Supportive Government for the sector in certain key areas.
SWOT Analysis IT&C sector : SWOT Analysis IT&C sector OPPORTUNITIES:
Romania is part of EU integration and extension process;
EU attaches great importance to the new economy and to the IT&C sector;
Increase of the managerial and marketing abilities;
Existence of relatively developed electronic and automatic industries which can be integrated in the sector to meet the digitalization challenges;
Good knowledge of foreign languages which might give opportunities to develop delocalized call centers and other IT&C services.
SWOT Analysis : SWOT Analysis WEAKNESSES:
Romanian business environment still to be improved;
Lack of synchronization between companies, research institutions and public sector;
Little knowledge about foreign markets;
Lack of coagulation at national level of the associations of industries;
Lack of understanding about quality and certification;
Lack of Romanian brands and a national brand for this sector;
THREATS:
Lack of market information and marketing skills;
Lack of coherent sector image;
Brain drain;
Lack of networking within the industry ;
IT&C market : IT&C market USD million
Legal framework : Legal framework In force (regulations and laws, consistent with those in the EU):
electronic commerce
electronic signature
e-tax and e-procurement
intellectual property rights
protection of private data
access to public information
cyber crime
transparency at governmental level through electronic means
To follow:
Web Accessibility Initiative
“Look and Feel Standard” for governmental web sites
Slide27 :
2002 - a team of students from the POLITEHNICA University
Bucharest won the Computer Society International Design
Competition
2000, 2001 and 2002 - Romania won first place among nations at the World Innovations Research and New Technology EUREKA Show
2002 - 34 Romanian pupils gained international Olympic prizes in IT and mathematics
By 2008, Romania will be the only country in Europe which will dispose of excellent IT specialists - World Electronics Forum (Paris 2000), “Worldwide ICT Professionals Market Situation Study”
Romania holds first place in Europe regarding the number of certified IT persons - Brainbench study Acknowledged human resources
Slide28 :
English language – spoken by everyone working in the
IT&C sector;
Good knowledge of German language due to cultural and historical reasons ( German minority in Transylvania etc);
The French, Spanish and Italian languages – Romanian language has Latin origin ;
Good frequency of persons speaking Russian, Hungarian, Greek, Turkish, Ukrainian, Bulgarian, Serbian and other European languages; Absence of linguistic barriers
Human Resources for off-shore outsourcing : Workforce engaged in software export activities: 3,460 (2000) and 4,700 (2002), around 1/4 of total industry employees;
Total software and services industry personnel 25,000 (2004)
Universities IT graduates yearly: 5,000-6,000;
50%- 66% join the IT industry: 4,800 companies - software and services industry;
370 companies exporting IT services;
250 companies exclusively dedicated to export (> 90% of turnover)
70% of total export. Human Resources for off-shore outsourcing Source: ARIES
Slide30 :
2001 - OMNIS GROUP was the winner of the Microsoft
Retail Application Developers European Contest
2002 - The European Commission declared SOFTWIN the most innovative high-tech company in Eastern Europe
2003 - Microsoft acquired RAV product of GeCAD, for its utilization in the Microsoft Security Solutions.
2003 - National Electronic System (www.e-guvernare.ro) was the only European e-Government application that received the World Summit Award (WSA) at the World Summit for Information Society (WSIS).
2004 - Romsys is the only enterprise in Central Eastern Europe, which has received the certification “Star Supplier” from the American corporation Lockhead Martin Experienced and dynamic companies Source: ARIES
Slide31 :
Romania is ranked before Poland - International Institute for Development Management, IDM (Laussane, Switzerland), “world’s competitiveness ranking” study
GDP’s rate of growth = 5%.
Software industry rate of growth > 25%
Software exports rate of growth > 50%
Standards of mobile telecommunications: GSM, CDMA, UMTS
Decrease of piracy rate by 20% Romanian Microsoft branch holds one of the first places in the world in terms of rate of growth Attractive and competitive
business environment
Developing the infrastructure through industrial parks : Developing the infrastructure through industrial parks Purpose: stimulate the investments for the improvement of the regional economic infrastructure, especially industrial, scientific and technological parks
Period of implementation: 2002-2005
Funds allocated from the state budget: ROL 583 billion
Program type: co-financing
The state offers:
- Grants for the beneficiaries;
- Technical assistance for implementing and monitoring the project.
Slide33 : Scientific and technological parks Benefits for entrepreneurs :
Good location
Facilities when using the infrastructure and communications
Payment rates guaranteed by the administrator for a determined period
Lower fees or free of charge policy for certain services
Cities where the process of building scientific and technological parks has already started:
- Braşov
- Cluj
- Galaţi
- Sibiu
- Slobozia
- Bacau
Export promotion services for IT&C : Export promotion services for IT&C Efficient management of the outside commercial representatives and of the business flows in – out and out- in;
Putting in touch outside businesses with inside companies, mainly exporters;
Assisting in many ways participation in international fairs and exhibition;
Assisting or organizing trade missions abroad;
Study of markets, strategies for target markets;
Regional or branch marketing;
Benchmarking for best promotional practices;
Advisory and consultancy activities for exporters;
Partnerships for export promotion ;
Attracting foreign assistance in export promotion activities;
Trade agreements and turning into account of their provisions in the benefits of exporters.
Instruments to stimulate IT&C exports by the public sector : Instruments to stimulate IT&C exports by the public sector From the budget (bounds, direct or indirect payments to exporters);
Fiscal instruments (exemptions, reduction of taxes);
Banking and financial instruments of Eximbank;
Macro-intervention for legal framework (international agreements), trade representation network, assistance to the businesses etc.
The program of DFT to support IT&C : The program of DFT to support IT&C Assisting participation in fairs and exhibition by paying part of the expenses from the budget;
Organizing foreign trade missions and paying part of the expenses ;
Helping creating outside marketing centers as private-public partnerships with the businesses (others that the ones existing in the diplomatic representations) by paying part of the expenses;
Paying part of the expenses for market studies at the request of the businesses ;
Total budget funding for printing, disseminating and advertising promotional materials with the export offer;
Branding IT&C : since May 20, 2002 : Branding IT&C : since May 20, 2002 A Committee of initiative (AURO IT) for branding was settled with the associations in the sector along with the public sector (Department of Foreign Trade and IT&C Ministry);
An agenda of promotional activities was discussed.
Branding seminars with the participation of companies started
Steps in brand building : Steps in brand building Distinctive credible proposals were discussed;
Platform of promotion and common activities were accepted ;
The Coalition Tech 21, bringing together all the national association in the branch;
Mark of the coalition = the brand
IT&C- Investments Promoting Legislation : IT&C- Investments Promoting Legislation
Telecom and IT related investments considered as having significant economic impact
Incentives available to small and medium enterprises (SMEs)
Income tax exemption for software developers
Special facilities for underdeveloped zones investments
Law on profit tax exemption for hardware production enterprises with sales of over USD 1 billion/year
Target : boosting investments in the sector
Slide40 : Industrial Park Incentives Exemption from payment of taxes
- For converting agricultural land to industrial
Deduction of 20 % of the value of the new investments
- For construction, transport and distribution of electric and thermal power, natural gas and water
Carrying forward the fiscal loss from the taxable profit, during the following 5 years
Other incentives granted by the local authorities
Slide41 : Incentives for investments
over USD 1 million Exemption from paying custom duties
- Technological machinery, installations, equipment, measuring and control apparatus, automation equipment and software products purchased
Deduction of 20 % of the value of the new investments
- Fiscally registered in the month the investment is completed
Carrying forward the fiscal loss from the taxable profit, during the following 5 years
Accelerated depreciation
The Local Council may approve the exemption or reduction of the tax on land, no more than 3 years from the works starting date
Slide42 :
foreign investment allowed in all sectors of the economy;
possibility to freely manage the company with full ownership rights;
full repatriation of capital and profits;
protection against expropriation and nationalization;
national treatment for foreign investors; Foreign Investor Rights
Slide43 : TOP 10 REASONS TO INVEST IN ROMANIA ROMANIA has sustainable economic growth and declining inflation ROMANIA has the highest GDP growth rate in the region ROMANIA represents the largest market in SE Europe ROMANIA possess competitive high skilled labor force ROMANIA is committed to continuously improve the infrastructure quality ROMANIA characterized by political stability and consensus for EU accession ROMANIA is committed to develop a modern economy ROMANIA was granted by the USA the “Market Economy” status and “Country of the year” by USTDA ROMANIA is granting incentives to foreign investors ROMANIA has a competitive location, bridging East & West, North & South
Slide44 : MINISTRY OF ECONOMY AND COMMERCE
Export Promotion Department
Phone: +40 21 401 0542
Fax: +40 21 315 0961
E-mail: doe@dce.gov.ro
Website: www.dce.gov.ro THANK YOU !