HomeReportsBureau of Economic and Business Affairs2018 Investment Climate Statements…Romania

# 					2018 Investment Climate Statements: Romania			

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													Executive Summary											

                -  Executive Summary 
                -  1. Openness To, and Restrictions Upon, Foreign Investment   
                -  2. Bilateral Investment Agreements and Taxation Treaties   
                -  3. Legal Regime   
                -  4. Industrial Policies   
                -  5. Protection of Property Rights   
                -  6. Financial Sector   
                -  7. State-Owned Enterprises   
                -  8. Responsible Business Conduct   
                -  9. Corruption   
                -  10. Political and Security Environment   
                -  11. Labor Policies and Practices   
                -  12. OPIC and Other Investment Insurance Programs   
                -  13. Foreign Direct Investment and Foreign Portfolio Investment Statistics   
                -  14. Contact for More Information   

## Executive Summary

Romania welcomes all forms of foreign investment. The government provides national treatment for foreign investors and does not differentiate treatment due to source of capital. Romania’s strategic location, membership in the European Union (EU), relatively well-educated workforce, competitive wages, and abundant natural resources make it a desirable location for firms seeking to access European, Central Asian, and Near East markets. United States (U.S.) investors have found opportunities in the information technology (IT), automotive, telecommunication, energy, services, manufacturing, consumer products sectors, and banking.

The investment climate in Romania is a mixed picture, and potential investors should undertake due diligence when considering any investment. The EU’s 2018 Country Report for Romania found that cumbersome administrative procedures, slow progress on the provision of e-government solutions, complex insolvency procedures and frequent regulatory changes with limited use of impact assessment and consultation procedures weigh on the business climate. Although the pace of economic reforms has slowed, Romania remains a regional leader in judicial efforts to combat high and medium-level corruption. However, efforts since January 2017 to undermine Romania’s anticorruption prosecutors and weaken judicial independence have shaken investor confidence in the government’s commitment to combat corruption. Some government leaders accused “multinational companies” of sponsoring large street protests against these moves, adding to occasional political rhetoric scapegoating foreign companies for domestic companies’ alleged dire circumstances.

The Government of Romania’s (GOR) mandatory transfer of payroll taxes from employers to employees in January 2018 negatively impacted all companies through additional administrative costs resulting from negotiation and registration of new labor contracts. The GOR’s sale of minority stakes in several state-owned enterprises (SOEs) in key sectors, such as energy generation and exploitation, has stalled since 2014. The GOR has weakened enforcement of its SOE corporate governance code, exempting several SOEs from the code in December 2017.

Consultations with stakeholders and impact assessments are required before enactment of legislation. However, this requirement has been unevenly followed, and public entities generally do not conduct thorough impact assessments. Since 2017, frequent government changes have led to rapidly changing policies that serve to complicate the business climate. Romania has made significant strides to combat corruption to date, but it remains an ongoing challenge. Inconsistent enforcement of existing laws, including those related to the protection of intellectual property rights, also serves as a disincentive to investment. Continuing to attract and retain additional investment will require further progress on transparency, stability, and predictability in economic decision-making, and a reduction of non-transparent bureaucratic procedures.

Although women in Romania have equal access under the law to investment development and protections, women continue to face societal challenges. Despite the lowest gender wage gap in the EU (5.2 percent in 2016 according to a March 2018 Eurostat report) and a high level of participation in STEM professions, Romania continues to have a large gender employment gap. In 2016, this gap was 16.4 percent compared to the 10.5 percent EU average. The problem is worse in rural areas and for Roma women. According to the World Bank, almost half of rural women in Romania have not completed upper secondary education and 43 percent are in the poorest quintile.

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