Our May FDI Monitor shows continued strong investment throughout the CEE. Certain media had reported a dip in Romanian FDI, and while this was briefly the case, things have turned around.

While we've tried to capture as much information on Foreign Direct Investment as we can, there will always be deals we have missed, or planned ones we haven't yet heard about - that's your chance to flag up anything you may have heard about via the forums.

ROMANIA

Pepsi Americas Romania, the bottler of PepsiCo for the Republic of Moldova and the Romanian market, has scheduled investments worth around $34m (€25m) for a new plant in Bucharest. The company has recently bought an 80,000sqm plot in Militari, on the outskirts of Bucharest, for around $4m, and will invest $25 to $30m in the construction of a soft drinks plant, according to representatives of Pepsi Americas Romania. Works on the new plant are scheduled to start midway through next year, and could be completed within 12-18 months.

Dawnay Day PanTerra, a part of British investment and financial services group "Dawnay Day", will invest €55 million in a shopping and entertainment centre in Baia Mare. Dawnay Day PanTerra bought the 6-hectare plot in Baia Mare, through Atrium Centers. The construction works will start at the beginning of next year, with the opening planned for April 2009. This investment has brought total value of funds invested by the group in Romania to €190 million. The investment company also has two real estate projects in Cluj and Arad planned for the next two years, worth €135 million.

With an investment of €10 million, DIY store Praktiker has opened its 17th Romanian unit in Galati. The new store covers a total of 6,500 sqm sale area and brings the total investment by the German group in Romania to almost €150m and about 100,000 square metres in sales areas.

German-based brake systems manufacturer TMD Friction will invest €10 million in building an equipment production facility in Caransebes, Caras-Severin County. The firm has bought a 67,500 sqm plot and works are scheduled for completion by 2009.

Government IT services provider InterLogics has opened a local office in Romania, following a decision to expand its sales and implementation in Eastern Europe. Officials said talks are already underway with several local authorities to implement, modify or improve the eGovernment activities currently used.

Israeli cleaning product brand Sano is investing €4m in a logistic park for warehousing and a distribution center in Pantelimon, east of Bucharest, scheduled for completion in July this year. "It is possible that we could invest another two or three million Euro in the coming years in a production facility next to this," country manager Doru Iosef told The Diplomat.

Construction materials manufacturer Isopan Romania, owned by Italian-based Isopan, is investing €30m in an insulating panel factory in Popesti-Leordeni, Ilfov County. The plant has a production capacity of five million sqm per year and mainly targets industrial buildings.

Microchip Technology has opened a new design centre in Bucharest, as part of the firm's worldwide network of design centres located in India, Switzerland, California and Arizona (USA). "Our customers are increasingly turning to eastern Europe for design and manufacture," said Rich Simoncic, vice president of Microchip's Analog and Interface Products Division.

The European Investment Bank is to open office in Romania on June 7, according to the institution's representatives. The inauguration will also be the key moment for launching two major European projects: JASPERS (Joint Assistance in Supporting Projects in European Regions) for consultancy on big infrastructure projects, and JEREMIE (Joint European Resources for Micro to medium Enterprises) to provide assistance for SME's. Romania and the European Investment Bank signed a memorandum last year that entailed up to €1 billion financing for Romanian projects to be granted as co-financing. JASPERS provides the authorities with free assistance from the EIB for the development and the implementation of infrastructure projects.

Over the next three years Romanian Continental Hotels intends to put some €130 million in the development of new hotels and another €50 million in the upgrading of some existing two-, three- and four- star hotels. The hotels, which are located in Timisoara, Targu Mures, Sibiu, Bucharest, Brasov, Cluj-Napoca and Iasi, will be opened in the period between September 2008 and May 2010.

2007 FDI Forecast
The level of foreign direct investments will stand at €7.6 - €8 billion this year estimates the National Forecasting Commission (CNP).

According to the estimates, 2007 could see foreign direct investments reach the second highest level ever, after last year saw an all-time high, with foreign direct investments standing at €9.1 billion. If excluding the €2.2 billion collected last year by the Romanian state from the privatisation of BCR, last year's foreign direct investments amounted to €6.9 billion, lower than this year's officially estimated figure.

So far, the €8 billion estimate is optimistic, and exceeds the forecasts of €5-6.5 billion, made by international financial institutions for Romania. "The estimate we have reached so far is of €7.6 billion, but we will make a final reappraisal of the capital and financial account (a chapter of the balance of payments, which includes foreign direct investments), which may put the final figure close to €8 billion," Ion Ghizdeanu, chairman of the CNP told ZF, a Bucharest financial newspaper.

The National Bank (the institution that publishes monthly data on foreign investments) has reported that foreign investments witnessed a decline in the first two months of the year, compared with the same period last year.

HUNGARY

British mobile phone giant Vodafone is set to open a Ft 9 billion ($48.75 million/€36million) shared services centre in Budapest, the CEO of the company's Hungarian unit said on Friday. The centre will employ 700 people by 2009, Beck said in a joint news conference with Hungary's Minister of Economy and Transport János Kóka. Simple business transactions, such as business-to-business billing and accounts payable, would be carried out in the centre, Vodafone said in a statement. The centre will provide services for all of Vodafone's worldwide operations, including human resources. Many international firms, such as IBM and Morgan Stanley, already operate shared services centers in Budapest, and Beck said this expertise as well as the qualified workforce and good infrastructure played a part in the decision.

The consortium led by German construction concern Hochtief signed a contract with British airport operator BAA about the purchase of BAA's majority stake in Budapest Airport Zrt (BA). Hochtief said the purchase price was €1.9 billion ($2.57 billion) which BAA will receive in two installments in 2007 and 2011. The price is roughly the same as the amount Hochtief offered for Budapest Airport's stake at the privatization tender in 2005.

CZECH REPUBLIC

It was announced on May 10th that the Billa supermarket chain is to take over the Czech outlets of rival Belgian retailer Delvita at the beginning of June. Billa, owned by the German REWE-group is to pay 2.8 billion Czech crowns or 135 million US dollars for 97 Delvita supermarkets around the Czech Republic. Billa already operates 83 outlets in the country.

POLAND

The European Commission has approved Poland's national plan and priorities for the 2007-2013 cohesion policy which guides Polish spending of €67 billion in EU funds.

The largest operating programme is 'infrastructure and environment,' which has been allocated €28 billion in funds.

BULGARIA

German construction materials group Knauf plans to build a €62 million plasterboard plant in southern Bulgaria. The new plant, to be located in the Maritsa East mine and thermal power complex, will have a capacity of 30m sqm and will be put into operation next October.

The decision the investment was made because of Bulgaria's accession to the European Union and the construction boom in the country. The plant will use plaster waste from the desulfurization process in the two thermal power plants existing in the Maritsa East complex. This is Knauf's second building materials plant in Bulgaria after it acquired 60% of Bulgarian Gipsfazer in 1997 and has gradually increased its stake since then. More than 30% of Bulgaria's €4 billion in foreign direct investment last year was used for construction and property deals.

SLOVAKIA

Slovenia's leading insurance group, Triglav, has entered the Slovak insurance market. It started operations in Slovakia on April 18. The Slovenian insurer is already doing business in the Czech Republic and former Yugoslav states, including Croatia, Serbia, Bosnia and Herzegovina, and Montenegro, and it has Macedonia, Kosovo and Albania in its sights in the near future. In Slovenia, Triglav is the insurance sector's market leader with a 45% share.

FDI Data 2006
Recently published data indicate that Foreign Direct Investment in Slovakia reached Sk58 billion (US$ 2.35 billion/€1.72 billion) in 2006.

ESTONIA

Alta Capital, Estonia's rapidly expanding investment firm, announced last week that it has acquired an 80 percent stake in Riga's Piensaimnieks (Riga Dairy Farmer), one of Latvia's largest dairies. The acquisition was in the works for several months and is part of Alta Capital's ambitious plan to take over a range of brand name manufacturers and producers in the Baltics.

Commentary

Again this month Romania is making the news with considerable investments to the country. Estimates for foreign direct investment to the country in 2007 have been revised upwards from the estimated €5.6 - €6 billion closer to €8 billion.

Significant news for Hungary was the announcement that Vodafone will open a shared services centre in Budapest and is expecting to employ 700 people by 2009.

A major investment was announced for Bulgaria with German construction materials group Knauf planning to build a €62 million plasterboard factory in the country. FDI is continuing to be assigned to the construction industry with more than 30% of Bulgaria's €4 billion in FDI last year allocated to the construction and property industry.