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OUTSOURCE WORLD

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Source: National Institute of Statistics, NBR. Pre-accession ... Source: ARIES. 30. 2001 - OMNIS GROUP was the winner of the Microsoft ... Source: ARIES. 31 ... – PowerPoint PPT presentation

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Title: OUTSOURCE WORLD


1

MINISTRY OF ECONOMY AND COMMERCE Export Promotion
Department ROMANIA
  • OUTSOURCE WORLD
  • TECHXNY - NEW YORK
  • 5-7 October 2004

2
IT C sectorOne of the Romanian economy
priorities
  • Dumitru ANCA, Counselor
  • Export Promotion Department

3
Area 238,391 sq.km. Population
21,700,000 Counties 41
Capital Bucharest - Area 228 sq.km. -
Population 1.9 million
4
Macroeconomic Performance
GDP Real Growth
Source National Institute of Statistics, NBR
Pre-accession Economic Program 2003
5
Macroeconomic Performance
Source National Institute of Statistics, NBR
Pre-accession Economic Program 2003
6
Macroeconomic Performance
Source National Institute of Statistics, NBR
Pre-accession Economic Program 2003
7
Economy on the Move
Credit rating convergence
Source ING Bank, Rating agencies
8
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.

9
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.

10
Romanian trade exchanges 2003/2002
Source CRPC
11
Geographical distribution of the Romanian exports
2003/2002
Source CRPC
12
Geographical distribution of the Romanian imports
2003/2002
Source CRPC
13
Top 10 Romanias 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 1.8TOTAL 10 - 74.6

Source CRPC
14
Structure of the Romanian exports to USA - 2003 -
- USD 619.1 million -
Source CRPC
15
Structure of the Romanian imports from USA -
2003 -
- USD 554.1 million -
Source CRPC
16
Structure of the Romanian exports to USA - July
31st 2004 -
- USD 352.5 million -
Source CRPC
17
Structure of the Romanian imports from USA -
July 31st 2004 -
- USD 491.0 million -
Source CRPC
18
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).

19
FDI Annual Inflows1999 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
20
Number of Projects and Value of Engaged
Investments over 1 million USDQ4/ 2001 - Q2/2004

Source ARIS
21
ITC 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

22
SWOT Analysis ITC 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.

23
SWOT Analysis ITC sector
  • OPPORTUNITIES
  •  Romania is part of EU integration and extension
    process
  •  EU attaches great importance to the new economy
    and to the ITC 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 ITC services.

24
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

25
ITC market
USD million
26
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

27
Acknowledged human resources
  • 2000, 2001 and 2002 - Romania won first place
    among nations at the World Innovations Research
    and New Technology EUREKA Show
  • 2002 - a team of students from the POLITEHNICA
    University
  • Bucharest won the Computer Society International
    Design
  • Competition
  • 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

28
Absence of linguistic barriers
  • English language spoken by everyone working in
    the
  • ITC 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

29
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 (gt
    90 of turnover)
  • 70 of total export.

Source ARIES
30
Experienced and dynamic companies
  • 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

Source ARIES
31
Attractive and competitive business environment
  • Romania is ranked before Poland - International
    Institute for Development Management, IDM
    (Laussane, Switzerland), worlds competitiveness
    ranking study
  • GDPs rate of growth 5.
  • Software industry rate of growth gt 25
  • Software exports rate of growth gt 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

32
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.

33
Scientific and technological parks
Cities where the process of building scientific
and technological parks has already started -
Brasov - Cluj - Galati - Sibiu - Slobozia
- Bacau
  • 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

34
Export promotion services for ITC
  • 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.

35
Instruments to stimulate ITC 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.

36
The program of DFT to support ITC
  • 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

37
Branding ITC 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 ITC Ministry)
  • An agenda of promotional activities was
    discussed.
  • Branding seminars with the participation of
    companies started

38
Steps in brand building
  • Distinctive credible proposals were discussed
    with the associations
  • 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

39
ITC- Investments Promoting Legislation
Target boosting investments in the sector
  • 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

40
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

41
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

42
Foreign Investor Rights
  • 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

43
TOP 10 REASONS TO INVEST IN ROMANIA
ROMANIA represents the largest market in SE Europe
ROMANIA characterized by political stability and
consensus for EU accession
ROMANIA has sustainable economic growth and
declining inflation
ROMANIA has the highest GDP growth rate in the
region
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 possess competitive high skilled labor
force
ROMANIA is committed to continuously improve the
infrastructure quality
ROMANIA is granting incentives to foreign
investors
ROMANIA has a competitive location, bridging East
West, North South
44
THANK YOU !
MINISTRY OF ECONOMY AND COMMERCE Export Promotion
Department Phone 40 21 401 0542 Fax 40 21 315
0961 E-mail doe_at_dce.gov.ro Website
www.dce.gov.ro
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