Tuesday, February 8, 2005

Bucharest, Romania – According to the Economist Intelligence Unit, Romania was the 14th most preferred country in the world for foreign companies looking to relocate their activities. This confirms Romania’s growing attractiveness for foreign investment.

The study examined the conditions in sixty countries, and took into account nine categories of indices: geographical proximity, political and security risks, economic stability, legislation, taxation, labour costs and skills level, and infrastructure. The scores given to the countries ranged from 1 to 10, 10 being the highest. The final composite score was calculated as a weighted average of the scores of the nine indicators. Some indicators, such as labour costs, had more weight than others.

Romania’s final score was 7.08 points, edged out in Europe by only Bulgaria (7.08 points), Slovakia (7.12 points) and Czechia (7.26 points). Romania’s strengths lay in the workforce cost category, where it received a score of 9.49, and in the geographical proximity chapter, where is received 8.35 points. It also scored well in the categories of economic stability and political and security risks, with 7.2 points each. The country’s weaknesses were mainly in the infrastrucutre chapter, where it received just 4.6 points.

Romania is further expected to improve its score in the coming years, as the effects of its new 16% flat tax rate on personal income and corporate profit come into effect, and as the country joins the European Union in 2007.

The worldwide leader in attractiveness for business relocation was India, with 7.76 points, due mainly to very low labour costs, high skill levels and a stable legal system. India edged out China by a considerable margin, with China being ranked second, with 7.34 points. China lags behind India mainly due to its lack of a well-developed legislative system.

Surprisingly, wealthy countries such as Japan, Norway and Denmark ranked very low, mainly due to their very high cost of labour.