10 Reasons Why You Should Invest in Craiova, Romania

Known as one of the fastest growing secondary cities in Europe, Craiova is set to become one of the most promising business opportunity locations the CEE can offer in the coming years. With its rich experience in cars and aircraft manufacturing, a wide range of universities, and a vibrant urban development, Craiova is turning into one of the most competitive cities in the European Union.

The Craiova Growth Pole benefits from several upcoming infrastructure development projects, providing key untapped business opportunities for strategic foreign investors. As in the case of other Romanian secondary cities, Craiova provides favorable tax incentives, state support for strategic businesses, and a skilled multilingual talent pool.

Take a look below at some of the remarkable business opportunities this city can provide, along with RISE Consortium’s commitment to ensure the best support for foreign investors, throughout all stages of the process.

1. EUR 1.5 bn invested in local car manufacturing by Ford Motor Company

On May 2018, Ford confirmed an additional EUR 200 million investment in its Craiova assembly plant. According to the plan, as many as 1,500 new jobs will be created, as the manufacturer expands production at the plant to accommodate the assembly of a second vehicle.

Steven Armstrong, president and CEO of Ford of Europe, Middle East and Africa: The addition of this second vehicle is a testament to the operational flexibility of our Craiova plant and reflects the strong partnerships we have with local suppliers and the community.

The investment announced on May 2018 brings Ford’s overall investment in its Romanian manufacturing operations to nearly EUR 1.5 billion since it acquired the Craiova facility in 2008. Significant upgrades have been made recently to Craiova’s vehicle operations, with more than 550 robots installed at the facility to further improve efficiency and quality in the paint, trim and chassis, and body shops.

2. Aviation sector receives EUR 124 million for a new development program

Avioane Craiova S.A. is one of the few remaining aviation factories in Romania, established in 1972 for developing, manufacturing, and providing product support for military aircraft of the Romanian Air Force.

Its capabilities cover a wide range of areas: from engineering, maintenance, testing, and certification to production engineering, design and manufacturing of tools and jigs, manufacturing of aircraft, and product support.

In mid 2018, the Supreme Council of National Defense approved a EUR 124 million program to upgrade avionics for the existing IAR-99 Soim advanced training and design its cockpit as the F-16 Fighting Falcon.

As the F-16 aircraft procurement program develops, Avioane Craiova is set to gradually boost the Romanian aviation sector, as it will seek additional suppliers and service providers.

3. Expanding industrial parks

The growing industrial activity, large university centers, and labor force migration to Craiova have created local demand for developing several industrial parks, business clusters, and Competitiveness Poles.

Craiova currently operates two public industrial parks (Craiova Industrial Park and High-Tech Industry Park) that received additional land for expansion in 2018 from the Dolj County Council.

2018 also marked the completion of the first private industrial park in Craiova – Southern Industrial Park – which rented 100% of its available spaces in record time. After the local media marked it as an “investor magnet,” the Southern Industrial Park plans to further expand in 2019.

4. Developing infrastructure

As Craiova has been hosting Ford for the last decade, its importance to national governance has gradually increased over the years. In 2016, the Romanian Government approved the General Transport Master Plan, a strategic infrastructure development program for the country.

The document includes the following infrastructure developments for Craiova:

  • Highway connection with Bucharest via Craiova-Pitesti-Bucharest;
  • Expressway Bucharest-Craiova-Turnu Severin (with connection to western borders);
  • 5 railway modernization projects;
  • Airport modernization project;
  • Craiova multimodal platform modernization.

Map of future infrastructure developments according to the General Transport Master Plan

 

5. Pioneering GDP growth

Of the 256 largest cities in the EU, Craiova has registered one of the fastest growth rates between 2000 and 2013. In this time frame, Craiova grew faster than the national economy, indicating it is starting to become an economic growth engine for the entire country.

GDP per capita growth rate in selected EU cities, between 2000 and 2015

Source: The Craiova Growth Pole Integrated Urban Development Strategy (2017)

6. Skilled Labor Force

Around 79,946 people were gainfully employed in the Craiova Growth Pole at the end of 2015, according to data provided by the National Trade Registry Office.

Much of the Craiova labor force works in manufacturing (26%), retail (23%), construction (9%), administrative services (8.5%), and IT&C (5%).

The main sectors of employment for the private labor force in the Craiova Growth Pole at the end of 2015

Source: The Craiova Growth Pole Integrated Urban Development Strategy (2017)

7. Competitive Salaries

In 2017, the average monthly net salary in Craiova was 2,128 Romanian Lei (around 470 Euro, or around $530). When compared to average 2017 monthly net salaries in other EU countries, Constanța is very competitive from the point of view of an accessible, skilled labor force.

The highest salaries are offered in the following sectors: air transport (~$2,040); manufacture of coke and refined petroleum products (~$1,390); extraction of crude petroleum and natural gas (~$1,280); public administration and defense (~$1,050); publishing activities (~$905); computer programming, consultancy and related activities (~$900).

The lowest monthly salaries were offered by sectors such as: water transport (~$252); textiles (~$290); industrial activities (~$300); manufacture of basic pharmaceutical products (~$310); furniture (~$315); accomodation and food service activities (~$320).

 

The evolution of the average salary in Craiova, and other Romanian cities, between 2008 and 2017

Source: National Institute of Statistics

8. Cost of Living

The cost of living in Romania – especially in secondary cities like Craiova – is approximately 50% lower than in other comparable (in terms of population) western cities from EU Member States (Nuremberg, Bordeaux, Bologna, Utrecht) and at least 15% cheaper than other cities from CEE countries (Katowice).

Maintaining the same standard of life from Country with a salary of… in Craiova, you need a monthly salary of…  
Nuremberg 3,292 Euro 1,433 Euro
Consumer Prices 108.83% higher than in Craiova  
Consumer Prices Including Rent 129.80% higher than in Craiova  
Rent Prices 230.56% higher than in Craiova  
Restaurant Prices 141.94% higher than in Craiova  
Groceries Prices 92.80% higher than in Craiova  
Bordeaux 3,423 Euro 1,433 Euro
Consumer Prices 119.74% higher than in Craiova  
Consumer Prices Including Rent 138.96% higher than in Craiova  
Rent Prices 231.33% higher than in Craiova  
Restaurant Prices 158.49% higher than in Craiova  
Groceries Prices 138.69% higher than in Craiova  
Bologna 3,314 Euro 1,433 Euro
Consumer Prices 111.59% higher than in Craiova  
Consumer Prices Including Rent 131.30% higher than in Craiova  
Rent Prices 225.97% higher than in Craiova  
Restaurant Prices 183.72% higher than in Craiova  
Groceries Prices 111.32% higher than in Craiova  
Bilbao 2,891 Euro 1,433 Euro
Consumer Prices 73.32% higher than in Craiova  
Consumer Prices Including Rent 101.80% higher than in Craiova  
Rent Prices 238.62% higher than in Craiova  
Restaurant Prices 113.45% higher than in Craiova  
Groceries Prices 59.43% higher than in Craiova  
Utrecht 3,948 Euro 1,433 Euro
Consumer Prices 132.22% higher than in Craiova  
Consumer Prices Including Rent 175.63% higher than in Craiova  
Rent Prices 384.25% higher than in Craiova  
Restaurant Prices 220.55% lower than in Craiova  
Groceries Prices 110.61% higher than in Craiova  
Gent 3,538 Euro 1,433 Euro
Consumer Prices 129.75% higher than in Craiova  
Consumer Prices Including Rent 146.98% higher than in Craiova  
Rent Prices 229.74% higher than in Craiova  
Restaurant Prices 212.35% higher than in Craiova  
Groceries Prices 122.89% higher than in Craiova  
Katowice 1,747 Euro 1,433 Euro
Consumer Prices 15.35% higher than in Craiova  
Consumer Prices Including Rent 21.95% higher than in Craiova  
Rent Prices 53.63% higher than in Craiova  
Restaurant Prices 19.06% lower than in Craiova  
Groceries Prices 2.14% higher than in Craiova  

9. Supporting Private Investment

Romania has one of the lowest tax rates on the continent: the standard corporate tax rate is 16%, about half the tax you would pay in France, Germany or Italy. Fiscal incentives include tax exemption for the reinvested profit.

For companies settling in Craiova, the maximum available State Aid is 37.5 million EUR, and the gross percentage of the state aid cannot exceed 50% of eligible expenditures.

Local authorities can also support private investment projects that go above a certain ceiling of job creation and investment values, within the framework of the local de minimis aid schemes. The Municipality of Craiova applies such a scheme, reducing the property tax by 50% for companies that invest in the tourism sector.

Details on state aid schemes can be obtained here: http://investromania.gov.ro/web/state-aid/

10. Growth Drivers in Craiova

The most developed economic sectors in the Craiova Growth Pole in terms of turnover for 2015 were: trade (33.8% of total turnover), manufacturing (29.9% of total turnover), production and supply of energy (11.9% of total turnover).

 

The economic sectors in the Craiova Growth Pole at the end of 2015

Source: The Craiova Growth Pole Integrated Urban Development Strategy (2017)