Foreign investors lose confidence in Romanian business environment

Over 70% of the respondents to the FIC Business Sentiment Index said that events in the past 6 months have lowered their trust in the local business environment, which has deteriorated. Some 54% of the questioned investors expect their businesses to grow on the short term. However, the survey carried out by the Foreign Investors Council (FIC), one of the biggest business organizations in Romania, shows that there are several structural constraints that are hindering new investments. Some 68% of respondents believe the available workforce is not competitive enough compared to other peer locations, 85% believe the Romanian fiscal system is uncompetitive, 96% said they face difficulties in operating their business due to regulation that is unclear and in constant flux, 92% characterized the available infrastructure as uncompetitive and 100% of respondents have said bureaucracy is a burden compared to other locations in Europe where they do business. The respondents have also unanimously complained about the transparency and consistency of public policy. “As long as existing investors harbor the current perception regarding the local business environment, the chances of attracting significant new investments will be slim. With this level of trust, it is unlikely Romania will attract new investments in areas with continued high unemployment, in key economic sectors like utilities or in public-private partnerships which the Government is currently championing,” according to FIC. Foreign investments reached a level of EUR 4,5 billion in 2017, slightly higher compared to 2016 and 2015 but still, only half the volumes recorded in 2007-2008 before the crisis. A significant part of these investments has been carried out by existing investors which are adapting to the growth recorded by the local, European and global economies. However, FIC points out that Romania needs new investors to bring more capital and technology to the market as World Bank data shows that the foreign direct investment in Romania only accounted for 2.8% of the country’s GDP, compared to 8% in the region. Coalition for Romania’s Development: Lack of legislative predictability, bureaucracy impact businesses editor@romania-insider.com