Romania is one of the fastest-growing information technology (IT) markets in eastern Europe. The coun­try has made significant progress in all of the informa­tion and communications technology (ICT) subsec­tors, including basic telephony, mobile telephony, the Internet and IT. The country’s telecoms sector has been deregulated, expanded and modernized over the past 15 years. Public operators have been granted autonomy and are scheduled to be fully privatized; private operators have proliferated in mobile telepho­ny, cable television, radio broadcasting, data transmis­sion and very small aperture terminal (VSAT) commu­nications spaces, which are satellite communications.

Speaking of demand, the largest group of end-users of these products and services in Romania are government bodies, public corporations, banks and some state-owned compa­nies. The Romanian government is implementing some of the largest IT programmes in the country, which should stimulate faster growth.  The system is being upgraded constantly, but demand is growing at least as fast as supply. The sector is already benefiting from increased foreign investment and lower tariffs as a result of liberalisation. The govern­ment plans to invest US$7bn-8bn over 15 years in a programme that is supported by the World Bank and the EBRD. The programme includes provisions for the installation of 500,000 new telephone lines and the introduction of digital systems.

The Government has been thinking for months about implementing some important reforms, such as:

1. Make internet cheaper, faster and safer, especially for researchers and students.
2. Stimulate the Electronic commerce through higher security of transactions and B2G push.
3. Stimulate Internet banking, by having a significant impact on the ecommerce development.
4. eGovernment projects, such as on-line public services for citizens, on-line public services for companies, intra-governmental use of ICT.
5. Create the eHealt system.
6. ICT based services for transport.

If we want to talk about supply in Romania, we should consider  two different issues:

1. technology: The ICT sector is one of the strongest components of Romania’s economy. It has received attention from the government, resulting in impressive development, offering Romania the latest technologies in most sub­sectors. The rapid growth in ICT is sustained by the strength of Romania’s large pool of skilled labour in engineering and electronics manufacturing, as well as by the high number of software developers. Romania is the leader in Europe, and sixth in the world, in terms of the number of certified IT special­ists, with density rates per 1000 inhabitants greater than in the US or Russia. There are about 64,000 spe­cialists in the IT sector. Approximately 5,000 of the 30,000 engineers graduating every year in Romania are trained in ICT. The Romanian system market is divided between desktops (86%), laptops (12%) and servers (2%). About 45% of the computer hardware market is supplied by local system integrators, of which many have the status of original equipment manufacturers (OEMs). Imports make up 55% of the market, and come mainly from traditional US suppliers, including Hewlett-Packard (HP), IBM and Cisco.
2. telecoms: Romania is potentially the second-largest tele­coms market in central and eastern Europe, and offers significant growth potential in the fixed, mobile and Internet sectors, especially now that the market has been liberalised and is becoming more competitive. The country’s short-term plans emphasise further digitalisation of its network in order better to support services, including ISDN, V0IP and the Internet. Following the market’s deregulation, those in the best posi­tion to offer fixed telephony are cable TV opera­tors, Internet service providers (ISPs), mobile commu­nications operators, and large public utilities. Although Internet penetration is low (around 23% in 2005), the growth rate of the sector is significant, at about 5-6% per month. There are about 200 ISPs, most of which are re-sellers of services provided by ten larg­er ISPs. The country is looking forward to further devel­opment of broadband applications, as well as of data-transmission technologies, including terrestrial trunked radio and general packet radio service (GPRS).

Several distinct measures are taken to stimulate the development of local ICT industry. Among those we mention:

• The tax exemption for the wages of software developers was introduced in 1998 and is estimated to contribute by no less than 30% to the increase in the export of software.
• Another fiscal policy component with indirect effect on the software industry, where the overwhelming majority of companies are employing 2-10 people, is the new taxation regime of micro-enterprises. A step forward in this respect was made in 2001, by introduction of various facilities for this category, among which the most important refer to the profit tax which can be replaced by a 1.5% turnover tax.
• Increasing the governmental demand. The strategic actions promoted by PGIT and MCIT are based on the governmental demand for IT products and services and proved to be a very successful strategy in developing the local market. The new governmental services presently implemented will lead also to an increased local demand for ICT products and services coming from both private sector and from the population. If we take into account the value of projects approved by PGIT we expect that the impact on the growing rates of ICT market in Romania could be significant.