Foreign investment was negligible before the overthrow of the Communist regime. A new 1991 foreign investment law was enacted in 1991. Incentives to foreign investors include tax holidays and reduction, full foreign ownership of an enterprise, and full conversion and repatriation of after-tax profits.
However, the latter is a drawn-out process because of the central bank's shortage of hard currency.
In 1997, the inflow of foreign direct investment (FDI) reached $1.2 billion, and then rose to a record of over $2 billion in 1998. Affected by the Russian financial crisis of August 1998, FDI inflow fell to a little over $1 billion in 1999. Annual FDI inflow averaged about $1.1 billion from 2000 to 2002. As of 2002, cumulative FDI in Romania since 1991 was about $8 billion. France, South Korea, the Netherlands, Germany, the United States, and Italy have been the largest sources of FDI. The largest foreign operations are in the automobile industry.