I was mentioning yesterday about the Romanian government's problem of promoting the business environment and the ooportunities an investor may find here nowadays. It seems that the Romanian strategy in this sense is at least strange, since the Agency in charge for doing this exact job (ARIS) has the fabulous budget of $55,000. For the entire year.
This is a ridiculuos amount especially since the governement estimated about EUR 2bn foreign direct investments in Romania for 2004. Of course there are the long-expected 2 privatizations (Petrom and BCR) but even so, the $55k cover the most the Romanian participation at a show including the promotional materials. Take for comparison the 2004 marketing budget of some companies acting in Romania -- Flanco EUR 16 mil., Electrolux EUR 3 mil and Tuborg EUR 1 mil. And they expect some tens of millions in sales in return, not a billion or two.
UPDATE: It seems that in spite of that, in January there were some EUR 116m in foreign investments in Romania. This is what one may call a great ROI (return on investment).
You might want to talk to someone -- anyone -- who attended the OPIC conference at the Bucharest Marriott a couple of weeks ago. Half of one day was a "beauty pageant", in which representatives from 12 Eastern European countries gave 20 minute presentations on, basically, why foreigners should invest there. The Romanian presentation... did not shine, no. It's bad news when the Bulgarian really outshines you. It's really bad news when the Macedonian really outshines you. And when the Albanian gets more questions than you do, it's time to start reconsidering your strategy. Doug M.
Why is it that we're not going after the big guys? Why are we waiting for them to come and not do something ourselves? A couple of months ago, if I recall correctly, Hyunday decided to build a factory in Slovakia. Why not us? Why not just go to Hyunday and offer them a deal? (like no taxes for X years, etc. It's better to have them here without them paying taxes for a while than not have them here AT ALL) Is it not legal?
You cannot go after big guys with a $55k marketing budget. It is as if I asked my business development manger to generate $2 mill in sales for Krogos of by offering him a budget of $55. The answer in Hyunday's case may seem trivial - my guess is that if they were interested inthe first case in Romania they didnot offer "any motivation" to the officials in charge. Just a while ago BEA turned down Romania for opening a software development office on "corruption" grounds. Doug is so right, besides the corruption thing, we have no idea how to market ourselves. But again, this is definitely not lacking a strategy but not having the people to make it happen. I have one question about the OPIC, though. Did it look like Romanians understood at all the situation? My 2 cents are that the answer is no.
Well, WRT Hyundai, Slovakia has a special advantage -- it's becoming the car manufacturing center of Eastern Europe. There are several large car factories there already, so there are whole constellations of support industries (parts manufacturers, etc.). So it's more attractive than a greenfield in Romania. That said -- no, Romania is not doing a great job of going after the big guys. BTW, the best presentation at OPIC was Estonia's. (Bulgaria's was a close second.) The Estonian guy, very slick, went through an excellent PowerPoint presentation in about 15 minutes: lowest taxes in Europe, clickety click, very productive workforce, improving infrastructure, friendly regulatory environment, clickety click, highest FDI in any accession country, click click click. Then at the end, he said, "And now, a list of our special incentives for foreign investors." Click -- and the last slide was completely blank. "We don't have any. We don't need them." Good stuff, and very effective. Doug M.
Hyunday tested the waters in Romania a while ago with investing in Dacia, before Renault coming into the picture. And they decided they were not interested. And you're right, the Czech Republic and Slovakia are forming now a regional cluster for the auto industry. The story about Estonia doesn't surprise me, I have a very good opinion about them. Perhaps you know that Estonia was the first country from the East to embark on the e-government initiative. And they succeded to do it in one year (it should be noted that they're only 2 million souls though). I think they are open minded, I have an Estonian friend actually, and boy, she is very proud of being one. "We do that, we have that" all the time, she is very good at marketing her country. If you talk to Romanians, they're likely to complain about what we have here, than priding themselves. By the way, Romanians need visa to go to Estonia. I found out that last night from a friend of mine who was supposed to take a business trip and she had to cancel because she had found out 3-4 days before going that she needed visa and the issuance takes exactly 30 days. No more, no less.