Proud of Romania: Romanian industry to be revived with state aid

Proud of Romania: Romanian industry to be revived with state aid. Over 2 billion lei (450 mEUR) will be allocated to investment projects.

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Recently, the Romanian Ministry of Finance announced a State Aid Financing Scheme for major investments in traditional industries in Romania.?The new state aid scheme has as its legal basis the European regulatory framework in force until December 31, 2026.

The Romanian Government recently approved the State Aid Financing Scheme according to which commercial companies that plan to carry out major investments, worth more than 10 mEUR in traditional industries in Romania, can benefit from a state aid scheme totaling approx. 450 mEUR, administered by the Ministry of Finance.

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According to a press release from the Ministry of Finance, the project registration session will begin on? July 29, 2024 , and requests for approval for financing accompanied by supporting documents can be submitted online,? until September 9, 2024.

The financing agreements will be issued until December 31, 2026, and the payment of the state aid will be made in the period 2025-2032, the Ministry also announced.

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Who are the beneficiaries of the State Aid Financing Scheme???

The state aid scheme is addressed to newly established enterprises (start-ups) or enterprises in activity, both SMEs and large enterprises, with legal personality, established according to the Companies Law no. 31/1990, republished, with subsequent amendments and additions.

It is expected and desired that the co-financing of such investments will help revive the Romanian industrial manufacturing and processing.

According to the National Bank of Romania, the FDI (foreign direct investment) in Romania reached in the first two months of 2024 the total of 1225 mEUR.

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What are the eligible sectors for the State Aid Financing Scheme???

Investments made in one of the following sectors are eligible:

• Manufacture of preparations for animal feed;
• Manufacture of beverages;
• Woodworking;
• Manufacture of paper and paper products;
• Manufacture of chemical substances and products;
• Manufacture of basic pharmaceutical products and pharmaceutical preparations;
• Manufacture of other products from non-metallic minerals;
• The industry of metal constructions and metal products, excluding machinery, equipment and installations;
• Manufacture of computers and electronic and optical products;
• Manufacture of electrical equipment;
• Manufacture of road vehicles, trailers and semi-trailers;
• Manufacture of other means of transport;
• Furniture manufacturing;
• Collection, treatment and disposal of waste; activities for the recovery of recyclable materials;
• Other industries.

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The cumulative eligibility criteria that an enterprise must meet to receive funding are as follows:

• To be registered according to the Companies Law no. 31/1990, republished, with subsequent amendments and additions;
• To make an initial investment in Romania, within a maximum of 3 years from the date of its start, in one of the eligible sectors provided by the state aid scheme in annex no. 1;
• Not to fall into the category of "enterprises in difficulty";
• Not to be in enforcement proceedings, insolvency, bankruptcy, judicial reorganization, dissolution, operational closure, liquidation or temporary suspension of activity and not to be the subject of decisions to recover state aid;
• Not to benefit from other regional state aid for eligible costs of the nature of salary costs within the same single investment project;
• Not to relocate to the unit where the initial investment is to take place.

In addition, companies that have completed at least one financial year must have a return on turnover greater than zero in one of the last three completed financial years and positive equity in the last completed financial year.

At the same time, in order to be eligible, in addition to the general criteria, newly established companies must have paid-up subscribed capital of at least 100,000 lei and not have shareholders who own or have owned in Romania in the last 2 years prior to the date of registration to the request an enterprise with the same object of activity for which it requests financing.

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Cumulative investment eligibility criteria for the State Aid Financing Scheme:

a) to be considered initial investments (new unit/expansion/diversification/fundamental change) or initial investments that create a new economic activity (new unit/diversification in the case of Ilfov county);

b) have a total value, without VAT, of the eligible costs associated with the initial investment, of at least 50 million lei;

c) demonstrate its economic efficiency and viability during the investment implementation period and 5 years from the date of its completion;

d) to fulfill the condition regarding the stimulating effect;

e) to meet the quantitative and qualitative indicators provided by the scheme;

f) generate a quantifiable multiplier effect in the economy.

Stages of the selection process:

Requests for approval for funding submitted are ordered in descending order based on a calculated score and are analyzed within the budget of the session, the Ministry of Finance announced.?

The analysis of requests for approval for financing is completed with an approval for financing (if all conditions and eligibility criteria are cumulatively met) or a letter of rejection.?

The payment of the state aid is made after the partial or total completion of the eligible expenses incurred according to the financing agreement, within the limit of the approved annual budget credits. State aid will be granted on the basis of eligible expenses, such as construction, purchase of equipment and intangible assets, and the assets related to the investment must be new.

"Entrepreneurs interested in large-scale investments, with important effects on the economy, oriented towards top activity sectors, now have at their disposal the Applicant's Guide on the basis of which they can prepare their projects. On July 29, we officially open the first registration session. The business environment has this two-month respite in which to prepare their documentation, during which they will receive assistance whenever they need it from the Ministry of Finance. We are betting not only on the modernization of the private sector, but also on the revitalization of traditional Romanian industries. By integrating new and sustainable technologies, new opportunities are opened for these industries, strengthening their competitiveness and contributing to the creation of a more efficient and sustainable production chain", explained the Romanian Finance Minister.

Are you a Foreign Buyer looking to?acquire a local company in Romania and the Region? Perhaps the FRD Center team can be of assistance to you. Email us [email protected]?for more details.