More and more Austrian direct investments in CEE countries

According to the latest survey of the Östereichische Nationalbank (OeNB) almost half of all Austrian foreign direct investments (FDI) go to the CEE area. ”The eastward trend continues”, explained Aurel Schubert, director of the statistics department of the OeNB.

Measured by the employment growth, Austrian foreign participations concentrated on Russia and Romania, followed by Serbia and Ukraine in 2006. At the beginning of 2007 more than half of the 3.273 surveyed foreign participations were in the central, eastern and south-eastern European region. 72 per cent of the 479.000 foreign employees of Austrian enterprises worked in Central and Eastern Europe. The capital invested abroad is high yielding in deed: Austrian subsidiaries achieved € 7,5 billion in 2006, which is a return on equity of 12,5 per cent.

The survey also shows the growing internationalization and interlinkage of the Austrian economy: At the turn of 2006/07 Austrian strategic business participations abroad amounted to € 80 billion- valued at market prices. With new investments of more than € 20 billion in 2007, participations may, meanwhile, already have exceeded the 100-billion-margin, Schubert explains. For the first time Austria’s function as bridgehead for foreign companies has been analyzed. It reveals that about one third of all active Austrian direct investments go back to regional headquarters of multinational companies, while two thirds of the investments come from ”true” Austrian companies.

For several years now Austrian investments have concentrated on Eastern and South-eastern Europe. Germany (€ 2,1 billion) in the lead is followed by Ukraine, Russia, Croatia, the Czech Republic and Romania, ranking second to sixth. Most of the Austrian investments abroad are market-based, thus aiming at local market sales in the receiving countries, Gabor Hunya from the Vienna Institute for International Economic Studies reports. This is especially true for real estate and financial services. Investments to lower wage costs, which lead to moving the production, play a lesser part. Even in the Czech Republic, Hungary and Slovakia this held only good for five to seven per cent of all investment projects. Nevertheless, the wage level does play a certain part in Romania.  According to the National Bank of Romania FDIs amounted to € 7,25 billion last year. With a share of 21,4 per cent Austria was the largest investor.

According to Hunya it has not been decided yet whether Austrian investments will remain limited to the countries of Eastern Central Europe or whether the regional player will develop into a global one. 60 to 70 per cent of the Austrian investors are small and medium-sized enterprises. But they only control a relatively small part of the capital invested abroad. With the most profitable investment targets lying beyond the Austrian neighbouring states, the small size of the enterprises might turn out unfavourable for future FDI-growth, the expert analyzes. Austria does not belong to the most important global investors, but it is an important regional player in Central and South-eastern Europe. The rapid growth of Austrian investments especially in Poland and recently in the CIS-countries is explained by the good profitability of the subsidiaries. Other countries like Romania and Bulgaria, which do not yield high profit yet but offer high potential, also count among the new favourites.

Zitat:
"Most of the Austrian investments abroad are market-based, thus aiming at local market sales."
Gabor Hunya, WIIW