“Investors look very pragmatically when it comes to investing and we have noticed in practice that a country with which we are in real competition is Poland. And there are a lot of investments that balance Romania vs. Poland”, said Ramona Jurubiță, Managing Partner of KPMG Romania at the CFA Forecast Dinner.
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Poland offers investors a legislative framework with fiscal and non-fiscal instruments that is much more attractive than Romania, Jurubița admits, stating, however, that Romania's approach to investments has changed a lot lately. “We have noticed in recent months a much more pragmatic openness on the part of the Government, but this approach must be accompanied by a greater efficiency of the Agency for attracting foreign investments”
Poland is the big bet, Romania is the fast bet. Basically, this is the comparison foreign investors make today when looking at Central and Eastern Europe. Both countries are in the European Union, have economies of comparable size and ambitions, have competitive workforces and are integrated into European industrial chains. But in the eyes of big investors, the two markets are not interchangeable.
Poland is perceived as an “infrastructure” country: stable, large, predictable. Romania, as a country of “opportunity”: cheaper, faster, but more unpredictable.
The Poles made the necessary reforms many years before us, and now they are reaping the benefits. Unlike them, Romania is only now beginning – in a hesitant manner – certain reforms.
“The reform of state companies cannot be done in a month, not even in a year. In Poland, the reform of state companies lasted about 15 years. And if we are not careful, even after 15 years we can feel a setback. We are trying this reform of state companies and we are trying to make the entire political class understand what governance means”, said Deputy Prime Minister Oana-Clara Gheorghiu at the same event. Gheorghiu admits that although we are talking about governance since 2011, no one knows exactly what to do, not even at the level of the ministries.
What investors check before putting money on the table
Before signing an investment, a fund or a multinational does not ask “how much is the tax?”.
He asks something else, much more pragmatically:
1) How easily can I plan 5–10 years out?
2) How quickly can I execute the project?
3) What hidden risk exists in the state, taxation, infrastructure and labor market?
Then it almost all boils down to a simple equation: Poland offers stability and scale. Romania offers yield and room for growth.
Poland: the country where investors buy predictability
Poland has an advantage that investors instinctively understand: size.
With a population of almost 38 million inhabitants and a strong domestic market, Poland can support industrial investment, retail, services and logistics on a scale that Romania cannot replicate.
But even more important than the size is the feeling that in Poland things rarely change “overnight”. Poland has better infrastructure, mature industrial ecosystem, more robust institutions, a deeper financial market, easier access to local financing. For an investor, this means lower risk costs.
Romania: the country where investors buy yield (and buckle up)
Romania, on the other hand, has a type of attractiveness that Poland has gradually lost: undervaluation.
In many areas, Romania still resembles a market where: you enter cheaper, you grow faster, you gain market share more easily, the returns are higher.
But this “yield” comes with a condition: investors must accept that Romania has several uncontrollable variables.
“Low taxes” no longer an argument. “Foreseeable charges” are
In recent years, Romania has lost one of the most important intangible assets: fiscal predictability.
For large investors, it is not just the level of taxes that matters, but the risk of change: taxes introduced or changed suddenly, temporary exemptions that become permanent, caps and interventions in markets, legislation changed in an emergency
In Poland, taxation is not necessarily “friendlier”, but it is perceived as more stable.
And stability is, for capital, a form of profit.
Twin deficits: the signal investors are reading as a warning
Another major criterion in the Romania-Poland comparison is the so-called “twin deficits”: large budget deficit and large current account deficit
For investors, the combination is toxic not because it immediately produces a crisis, but because it suggests an inevitable end: At some point, the correction comes — through higher taxes, spending cuts or an economic slowdown.
Poland also has fiscal problems. But Romania has a structural weakness: low tax revenues relative to the economy. That means the state has less room to maneuver.
“Looking at the countries in the region, they have already been actively pursuing foreign investment for more than 10 years. We are therefore leaving with a rather large gap. Some of these countries have made bets that have so far not yielded results; for example, Hungary with electric vehicles. But some have managed to diversify their economy. Poland has developed a lot towards the area of services. Poland has a very large energy deficit, energy that is also expensive and comes a lot from coal, but somehow managed to diversify production in such a way that Poland has a budget deficit of 7% – not very far from ours, but it has a current account deficit of not even 1%, i.e. I think that we need to see the change here in Romania as well – in addition to this fiscal change that we are witnessing. I don't think that we will be able to increase consumption for another decade because we no longer have globalization that will lift all boats at the same time. Bucșa, macro strategist at Wellington Management, one of the largest asset managers in the world.
Infrastructure: the invisible cost that makes Romania more expensive than it seems
Romania may seem cheap on paper. But investors don't just buy salaries. Buy time.
And this is where the difference comes in: in Poland, transport, logistics chains and connectivity reduce operational risks. In Romania, infrastructure remains a hidden cost, especially for production and distribution
An investor may accept a higher salary if he receives logistical predictability in return. Romania is still paying the “infrastructure tax” in the form of delays and indirect costs.
Also, the difference between the two capital markets is huge.
“The biggest limitation of the institutional investors is the liquidity of the market and when I say that I mean the fact that the daily liquidity is quite limited if I make a comparison with Poland Poland transacts somewhere around 300 million euros daily we transact in an average day somewhere around 15, maximum 20 million euros in fact in the last months it has improved, but it is clear for institutional investors how pension funds are becoming more and more difficult”, says Dan Gheorghe, Chief Investment Officer of NN Private Pension Fund.
The difference between them is not just GDP. It is reliable.
Two cases that show the real difference between Romania and Poland
Case 1: German automotive component manufacturer
A German company wants to build a new factory.
In Poland: find good infrastructure, find local suppliers, find enough staff, tax risk is lower
Decision: Poland.
In Romania: salary costs are competitive, but infrastructure and staff shortages raise the execution risk. Decision: Romania becomes plan B or a smaller project.
Case 2: US energy investment fund
A fund seeks high returns in the region. In Poland: the market is mature, yields are lower, competition is strong.
In Romania: assets are cheaper, the market is less consolidated, energy potential is high, yields can be higher
The decision: Romania, but with protection clauses and a risk discount.
Romania's advantages: where we still beat Poland
Romania remains attractive in several key points:
1) Higher returns in many sectors. Romania is still a market where “you can win fast”, if you manage the risk.
2) Energy: a strategic advantage. Gas, renewables, infrastructure, regional position.
3) Rapid growth in unconsolidated markets. In retail, services, private health, logistics, fintech — Romania still has room for “leaps”.
4) Good talent in service and technology. Even if the mass is limited, the quality remains an asset.
Romania's disadvantages: the 3 brakes that scare big capital
1) Fiscal unpredictability. It is, for large investors, the main reason for the discount.
2) The twin deficits + weak tax revenues. Inevitable correction signal.
3) Infrastructure + administrative execution. Romania is wasting time, and time costs money.
In short, Poland sells stability. Romania sells potential.
