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Romania

Basic Information

Area: 237,500 km²

Calling code: +40

Population: 22,246,862

Official Language: Romanian

Time zone: EET (UTC+2), Local time: 10:50

Overview

Romania is located in southeastern Europe on the coast of the Back Sea and borders Hungary and Serbia to the west, Ukraine and Moldova to the northeast and Bulgaria to the South. The country’s capital and largest city is Bucharest.

According to the CIA Factbook, Romania covers a total area of 238,391 square kilometres and is the 82nd largest country in the world. Estimates in 2010 put the population at 22,215,421 with 90% Romanian, Hungarian 7%, Roma 2.5% and the remainder a mix of German, Russian and Turkish. The official language of Romania is Romanian, with a small proportion of people speaking Hungarian and Romany.

The country has a population density of 90/km2, ranking it 104th versus other countries across the globe.

With the fall of the Iron Curtain and the Revolution in 1989, Romania has undergone a number of political and economic reforms. Today the country is a semi presidential republic with its own constitution adopted in by national referendum in 1991. It joined the European Union in 2007.

Romania participates in a number of international organisations including The EU, United Nations, The World Bank and the IMF.

The official currency of Romania is the Romanian Leu (RON). The country hopes to adopt the Euro in 2014.

Economy

The CIA estimated Romania’s GDP in 2009 at $161.5 billion and a GDP (PPP) $254.7 billion. Romania’s GDP per capita is estimated at $11,500 ranking it the 97th richest country in the world.

Having undergone a transformation from its days under communist rule and since joining the European Union, Romania today is considered to have an upper middle income income economy. The country has a large services sector that generates 53% of the national GDP and a strong industry sector accounts for around 35% of GDP.

Romania’s main industries include electric machinery and equipment, textiles and footwear, light machinery, auto assembly, mining, timber, construction materials, chemicals, food processing and petroleum refining.

Romania was once Europe’s breadbasket and continues to benefit from a small and dynamic agricultural sector that generates around 12.4% of national GDP. Food stuffs produced include wheat, corn, sugar beets, sunflower seeds, potatoes, grapes, eggs and meat products.

Trade with other EU countries accounts for over 40% of Romania’s imports and exports. Commodities are exported primarily to Germany 19%, Italy 15%, France 8%, Turkey 5% and Hungary 4%.

Austria also imports a number of products, primarily machinery and equipment, fuels and minerals, chemicals, textiles and products, metals and agricultural products with 17% coming from Germany, Italy 12%, Hungary 8%, France 6% and China 5%.

Infrastructure

Romania has a fairly extensive infrastructure that is undergoing significant improvement to support economic exchange in the region. Its location makes it a major transport route between leading business centres in Central Europe.

The country is connected by a large road system that stretches 198,817 kilometres, 60,043 kilometres are paved with some 281 kilometres of expressways. The number of privately owned vehicles has more than tripled in twenty years to 4.24 million in 2009.

Romania’s railways are run by state owned CFR and operate a dense network of train stations that links Romania with international cities. The CIA Factbook estimates that the railways throughout the country stretch over 10,788 kilometres, one of the most extended in Europe. Official government statistics estimated that the railways transport around 105 million tons of goods and 216 million passengers per year.

Bucharest has its own extensive public transport network consisting primarily of trolleybuses, trams, buses and the country’s only metro system.

Romania has over 50 airports, several of which are international - with Henri Coandă International Airport being the largest and busiest. Located in the town of Otopeni some 17 kilometres North West of Bucharest, the airport offers flights to many domestic and European destinations. In 2009 it was estimated that the airport moved over 3.8 million passengers.

Workforce

The CIA Factbook in 2009 estimated Romania’s labour force at 9.33 million. The labour force is predominantly Romanian with a small proportion being made up of Hungarian, Roma and German people.

47% of the labour force work in services sector which is comprised of a diverse portfolio of industries including retail, financial services, real estate, communications and tourism. A significant proportion of the work force (30%) are employed in agriculture producing grain, vegetables and meat products. 23% work in the industrial sector which is dominated by machinery and auto assembly, but also includes mining, petrochemicals and construction.
Small and Medium Sized enterprises take the largest share of the manufacturing sector.

Notably in 2008, Romania produced 245,000 vehicles, making it Europe’s 12th largest producer of automobiles.

The Romanian government spends an estimated 4.4% of GDP (2007) on education and its focus results in a skilled work force and a high literacy rate of 97%. School attendance is compulsory for nine years, with students graduating age 16 or 17. Higher education is aligned with European Higher Education Area (EHEA) and is offered by numerous public and private institutions.

Bucharest is home to Spiru Haret University that enrolled 311,928 students in 2009 and is considered one of world’s largest universities.

In 2009 the CIA Factbook estimated Romania’s unemployment rate at 7.8%

Business Costs

Romania’s individual income tax rates work off a flat fixed rate of 16%.

Corporate tax is also fixed at 16%, although certain small businesses are only expected to pay 3% of their turnover. Capital gains are set at 16%, whilst the tax rate for gains from the sale of real estate is between 1% and 3%.

The standard VAT rate in Romania is 19%, whilst a reduced VAT of 9% and 5% can be applied to insurance companies, banks, financial services and buildings supply. There have been recent 2010 talks by the government to raise the VAT rate in an effort to generate further revenues.

There are two minimum wage levels set in Romania. Unskilled workers are guaranteed RON 600 per month (working 170 hours), whilst skilled workers with a higher education certificate earn around 120% more via minimum wage.

Research carried out by Cushman and Wakefield in 2009 revealed that Romania offered competitive location cost versus many other European cities. The average cost of office rental in Bucharest €279/sq.m per year.
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