Whoever creates a job in Romania, is a friend,” Romanian Prime Minister Victor Ponta declared at a new plant opening near Cluj earlier this month. He has followed on this statement by announcing a new government action plan for boosting US investments in Romania, aimed at increasing predictability and transparency of government legislation and regulation. These factors are critical to attracting new, and renewed investment that will lead to job creation. The government's action plan demonstrates a firm commitment to help Romania forge new and more deep-rooted friendships across the business community.
Romania’s recent economic landscape coupled with improving macroeconomics has attracted increased foreign investor interest. The country enjoys relatively strong domestic demand among its 20 million citizens, abundant natural resources, and a well-educated and dedicated workforce. Romania is currently leading the EU in GDP growth at 3.8% in 1rst quarter of 2014. Recently, the European Bank for Reconstruction and Development revised its estimate for Romania’s 2015 GDP growth by 0.2 percent to 2.6 percent. Deficits and inflation remain stable and relatively low compared to Romania’s European neighbors.
The new government action plan is a welcomed signal on the back of Romania’s recent economic progress. Putting aside statistics, Prime Minister has acknowledged that Romania continues to struggle with a bad image abroad. Far too many companies feel ignored during the drafting of legislation with little time to adapt and comply with new regulations. Mr. Ponta and his Cabinet are looking beyond short-term politics to promote long-term legislation that provide an attractive landscape for would-be investors over the long term.
Simultaneously, foreign companies are seeking long-term friendships. Returns on investment take years that requires legislative stability and predictability. The commitment by the Government of Romania to reduce the number of Emergency Ordinances by strictly defining what qualifies an “emergency” will be a significant step forward to assure investors that today’s decisions will remain valid over the long term. Publishing procedural guidelines for emergency Ordinances provides investors a better understanding of the legislative parameters. We expect our friends to keep their word, and companies need to know that governments will play by their own rules.
All businesspersons understand that we live in a dynamic, fast paced, ever-changing environment. Absolute stability is unlikely and perhaps ill-advised. The most important values for a friendly business climate is transparency and consultation when the rules need to change. We are happy to see that the government is seeking to further enhance its willingness to engage with the public in its legislative process.
The action plan’s focus on consultation programs and technical advisory committees already engaged in dialogue with stakeholders will improve the quality of public policy in Romania. Decision makers will benefit from the crucial experience of industry experts when drafting legislation in the public interest – it is free, qualified advice. Additionally, guaranteeing the appropriate public access to draft legislation and conducting proper impact assessments prior to adopting new rules will allow the business community and other stakeholders to flag potential unintended consequences that can harm ordinary Romanians. Regular and forthright communication is key to maintaining a good relationship. No one likes a friend who ceases to listen.
We would like to point out that yesterday’s signing and announcement of the action plan is not enough to attract new friends by itself. The promise of on-the-ground improvements in government decisions and efficiency will only be realized through a sustained political commitment to carry out and make good on what is being promised. Investors, both new and current, will be keenly watching for demonstrable outcomes. As we have always believed, action speaks louder than words.
Additionally, the current plan addresses only the broadest of concerns with the business climate in Romania. We hope that a successful execution of this action plan will provide a framework for future commitments to address more specific challenges in all sectors.
We are proud to represent through both organizations, the best of American companies doing business in Romania. All of our members are committed to the strength of the Romanian economy and the prosperity of its citizens.
Implementing the action will be a clear message from the Government of Romania that it is committed to building lasting, mutually-beneficial relationships with all investors, foreign and domestic. To that, on behalf of all of our companies, we say, let’s be friends.
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Valeriu Nistor, President AmCham Romania (Camera de Comerţ Americană în România)
Erict Stewart, President AMRO (Romanian-American Business Council)
May 22, 2014
