This guide to investment in the Central and Eastern European (CEE) region is intended to help potential investors understand what incentives are available when investing in the leading countries in CEE. It gives information on the process of entering into an investment agreement in order to access funds, and also covers key real estate, competition, infrastructure, tax and employment considerations.

Since the fall of the Berlin Wall, the countries of CEE have attracted significant foreign direct investment in greenfield operations. Indeed many manufacturing businesses have focused on expanding capacity in CEE countries, sometimes at the expense of Western Europe. By way of example, in the automotive sector many Original Equipment Manufacturers (OEMs) have developed additional capacity in the region. Over the last decade or so there have been noteworthy investments by Hyundai, KIA, and Volkswagen Group and, more recently Jaguar Land Rover has constructed a factory in the region. Many component suppliers including Bosch, Delphi and Honeywell have set up manufacturing facilities to serve these operations, as well as customers in Western Europe. We have also seen significant investments in manufacturing in electronics, IT, life sciences and consumer products.

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However, it would be simplistic to regard the CEE region as merely providing relatively low-cost manufacturing facilities. Since the admission of many countries in the region to the European Union, there has been a significant move by companies from all sectors to set up shared services operations. These range from an accounting back office for IBM in Poland to a call centre for AIG in Bulgaria. We have also seen a number of companies create IT operations in the region. This has been particularly marked in Romania, where there is a strong emphasis on the technology sector.

Over the coming years this trend is likely to increase. Many governments in the region realise that for their economies to catch up with Western European income levels, it will be necessary for there to be more in the way of ‘valueadded’ input. This is likely to mean that CEE countries will be keen to attract more R&D centres and engineering bases.

International companies wishing to invest in the CEE region will inevitably look at a number of different markets before selecting a suitable location. Often potential investors run beauty parades and seek offers from local investment agencies regarding incentives packages. In conjunction with this process, investors normally organise site trips to identify suitable land plots, ascertain the availability of skilled labour and assess the transport links. We have structured this guide in such a way that potential investors can compare incentives and other key criteria in respect of the major markets.