Foreign investors have growth expectations this year. However, bureaucracy is still excessive

Foreign Investors Council (FIC) shows, according to its latest business sentiment index, that the majority of members (60 percent) expect their revenues to grow in 2016 and only 15 percent are anticipating a contraction, a press release informs.

Despite expectations of growth, FIC members report that they face a number of problems already well known to the general public: 90 percent say that bureaucracy is excessive compared to other countries in the region; 85 percent rated infrastructure as uncompetitive and 75 percent have had problems due to the lack of legislative predictability.

“A qualified labor force remains a strength and a competitive advantage for Romania (75 percent). Because they are anticipating an expansion of their activity nearly half of respondents plan to do more hiring in 2016 (43 percent) and a third (34 percent) will make significant capital investments this year. More than half of those surveyed (55 percent) expect significant increases in their exports,” business sentiment index shows.

Despite the reduction in taxes in force since January 1, 2016, 70 percent of FIC members FIC describe the taxation system in Romania as uncompetitive compared with other countries. The result may seem surprising but it is due largely to excessive bureaucracy in the interaction with fiscal authorities. This conclusion is supported by the fact that 70 percent of all respondents consider that regulation in Romania is burdensome.

Romania’s economy recorded a significant growth in this period and this is also being felt by the business environment, however, FIC believes this growth rate will not be sustainable in the medium and long term in the absence of infrastructure investments and reduced administrative burden.

“As the Romanian economy grows in complexity, significant long term investments are needed and they will not materialize in an unpredictable regulatory environment,” FIC notes.

Unlike infrastructure, increasing regulatory predictability does not require additional budgetary costs and therefore FIC urges the authorities of Romania to make rapid progress in this area.

“In this regard, the single point of information for draft laws in public consultation and the publication in open source of the budget execution, are steps in the right direction which must be extended in other areas,” foreign investors also say.

The questions in the business index refer to the sentiment and expectations for the following 12 months. Only FIC members have been surveyed.