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These are not the only problems. “Con- tinued lack of infrastructure, increased shortage of adequate workforce, regulatory and fiscal uncertainty and
a sentiment that the business environ- ment is deteriorating will lead to less investments, local or foreign, and this in turn will lower growth and take the economy below its potential,” claimed the FIC study published in October.
Representatives of other international investors’ organisations such as Amcham Romania and the Romanian-German Chamber of Commerce and Industry
regard to their implementation procedure,” AmCham said.
For employees, the changes are also
a source of concern, as they fear a fall in take-home pay as social security contributions are shifted from the employer to the employee. Romanian trade union confederation CNSLR Fratia announced on November 2 it has decided to start procedures to launch a general strike after failing to persuade the government to drop the plans. At the same time controversial judicial reforms that, if adopted, will
The government sought to respond to the criticism from the business commu- nity. Speaking on behalf of the govern- ment, prime ministerial adviser Ramona Ivana Lohan stressed that while Roma- nia has achieved strong growth, “we don’t want to fall into the pro-cyclical trap” and that with Romania behind its true potential, “accelerating investments is our highest priority.” She also talked of the need for more investment in infrastructure, and to take urgent action to tackle the brain drain.
Referring to the recent policy changes, Lohan admitted that, “we know the measures had a negative reaction from business, but we hope that with discus- sion [we] can overcome these so you can do business in a friendly and honest environment.”
Her speech met with a mixture of relief and scepticism from business leaders. “That was one of the best government speeches I have heard,” commented Anas- tasiu, saying the list of all the problems businesses are facing “means they got it”. However, he questioned whether this understanding will translate to support for business in practice: “We all know what we have to do but our views on the way to get there are completely different ... we feel there is no trust in us.”
The other major issue that is just coming to the fore is the workforce. For a number of years it has been precisely the availabil- ity of educated, skilled workers coupled with low costs that has drawn investors in sectors from automotive components manufacturing to IT to set up shop in Romania. Now, however, wages are rising and Romania is following the countries of the CEE region that have already seen
“Foreign investors say they are putting new projects on hold due to the lack of policy predictability”
(AHK) also deplored the situation in the country at the Business Review For- eign Investors’ Summit in Bucharest on October 31-November 2, with a special emphasis on policy predictability.
AHK president Dragos Anastasiu told the conference that “on paper we are doing well, but at the same time a survey of our members shows that feeling for busi- ness in Romania is going down.”
Dutch ambassador to Bucharest
Stella Ronner-Grubacic, whose country accounts for the largest share of invest- ment into Romania, had a similar story to tell, saying that, “in many conversa- tions with Dutch businesses we hear concerns about changes to legislation, the business climate, lack of investment in infrastructure and education.”
Meanwhile, a new report from
AmCham Romania expresses con-
cern over the impact of the recently announced fiscal policy measures, both in terms of increased costs for taxpay- ers and budgetary sustainability.“[T]
his package of measures is proposed shortly after many fiscal changes were introduced, also adopted hastily, thus creating instability and confusion in the business environment with regard to the impact of such measures as well as with
increase political control over the judiciary and make it easier for corrupt officials to avoid prosecution are likely to lead to more protests following the mass demonstrations earlier this year.
“Hard to invest”
The fear is that all these problems could lead investors to exit or at best postpone committing more funds
to Romania. AHK’s research shows that, “almost all new projects and expansions by German investors are on hold because of two problems: predictability and workforce. When you put those two problems together you see it’s hard to invest in such an environment,” Anastasiu stressed.
Jorg Menzer, partner and head of law firm Noerr’s CEE offices put it even
“IT and outsourcing firms in particular have been forced to hike wages”
more bluntly, saying that “time is of the essence” if Romania is to capitalise on its current strong growth to secure invest- ment for the longer term. “If investors don’t get what they want immediately they will go elsewhere,” he said.
a dramatic fall in unemployment and related squeeze of their labour markets.
IT and outsourcing firms in particular have been forced to hike wages and become creative in offering additional
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