HomeReportsBureau of Economic and Business Affairs2023 Investment Climate Statements…Romania

# 					2023 Investment Climate Statements: Romania			

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													EXECUTIVE SUMMARY											

                -  EXECUTIVE SUMMARY 
                -  1. Openness To, and Restrictions Upon, Foreign Investment                    -  Policies Towards Foreign Direct Investment 
                  -  Limits on Foreign Control and Right to Private Ownership and Establishment 
                  -  Other Investment Policy Reviews 
                  -  Business Facilitation 
                  -  Outward Investment 
                -  2. Bilateral Investment and Taxation Treaties 
                -  3. Legal Regime                    -  Transparency of the Regulatory System 
                  -  International Regulatory Considerations 
                  -  Legal System and Judicial Independence 
                  -  Laws and Regulations on Foreign Direct Investment 
                  -  Competition and Antitrust Laws 
                  -  Expropriation and Compensation 
                  -  Dispute Settlement                      -  ICSID Convention and New York Convention 
                    -  Investor-State Dispute Settlement 
                    -  International Commercial Arbitration and Foreign Courts 
                  -  Bankruptcy Regulations 
                -  4. Industrial Policies                    -  Investment Incentives 
                  -  Foreign Trade Zones/Free Ports/Trade Facilitation 
                  -  Performance and Data Localization Requirements 
                -  5. Protection of Property Rights                    -  Real Property 
                  -  Intellectual Property Rights 
                  -  Patents 
                  -  Trademarks 
                  -  Copyrights 
                -  6. Financial Sector                    -  Capital Markets and Portfolio Investment 
                  -  Money and Banking System 
                  -  Foreign Exchange and Remittances                      -  Foreign Exchange 
                    -  Remittance Policies 
                  -  Sovereign Wealth Funds 
                -  7. State-Owned Enterprises                    -  Privatization Program 
                -  8. Responsible Business Conduct (RBC)                    -  Additional Resources 
                  -  Climate Issues 
                -  9. Corruption                    -  UN Anticorruption Convention, OECD Convention on Combatting Bribery 
                  -  Resources to Report Corruption 
                -  10. Political and Security Environment 
                -  11. Labor Policies and Practices 
                -  12. U.S. International Development Finance Corporation (DFC), and Other Investment Insurance or Development Finance 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. U.S. investors have found opportunities in the information technology, automotive, telecommunications, energy, defense, services, manufacturing, healthcare, consumer products, insurance, and banking sectors.

Since the 1989 revolution, Romania has embarked on an uneven, but ascending, economic growth path. Romania’s economy expressed resilience during the COVID-19 pandemic, declining by only -3.7 percent in 2020 and rebounding to 5.8 percent growth in 2021. On March 9, 2022 Romania lifted all COVID-19 restrictions. Minimal trade and investment ties have limited the direct effects of Russia’s war on Ukraine on the Romanian economy, which grew by an estimated 4.9 percent in 2022. Due to rising regional energy prices exacerbated by Russia’s war, Romania’s annual inflation averaged 13.8 percent in 2022 and rose to 16.4 percent by end-of-year. As of January 2023, Romania had facilitated the export of more than 12.7 million tons of Ukrainian grain.

Romania is eligible to receive up to $81 billion (€77 billion) in EU funding by 2030, including $31 billion (€29 billion) in grants and loans from “Next Generation EU” funding via the National Resilience and Recovery Plan (NRRP) between 2021-2026. NRRP funding aims to support Romania’s green transition, digitalization efforts, and health system resilience. However, a demonstrated lack of administrative capacity to absorb and implement projects using EU funding may impact Romania’s ability to absorb these funds and dampen the NRRP’s impact. The European Commission’s 2022 European Semester Country Report for Romania noted that administrative capacity at all government levels remains a challenge, coordination between institutions was poor, and already weak collaboration between the central government and local administrations was subject to heavy political interference.

In January 2022, the Organization for Economic Cooperation and Development (OECD) opened accession discussions with Romania. The OECD technical review process, a multi-year assessment of Romania’s candidacy against OECD standards and policies in areas such as the investment climate, governance, and environmental protection, began on December 15, 2022.

As an EU member state, Romania’s climate objectives align with EU strategies, including the 2030 Agenda and the European Green Deal. However, legacy environmental issues limit Romania’s ability to deliver on biodiversity and clean air goals. Environmental challenges include poor air quality, inadequate waste management practices, and insufficient protective measures for natural areas. Illegal logging remains a concern despite progress towards improved traceability of extracted wood.

The investment climate in Romania remains a mixed picture, and potential investors should undertake due diligence when considering any investment. The European Commission’s 2022 European Semester Country Report for Romania noted that excessive red tape, inefficient public administration, and an unpredictable legislative framework were detrimental to the business environment and limited investment opportunities.

Government sales of minority stakes in state-owned enterprises (SOEs) in key sectors, such as energy generation and exploitation, have stalled since 2014. Successive governments have weakened enforcement of the SOE corporate governance code by resorting to appointments of short-term interim managers to bypass the leadership requirements outlined in the corporate governance code. Management instability has hindered the abilities of SOEs to plan and invest.

Consultations with stakeholders and impact assessments are required before enacting legislation. However, these requirements have been unevenly followed, and public entities generally do not conduct impact assessments. The government’s shifting priorities often result in rapidly changing policies and legislation, leading to an unpredictable business climate. Romania has made significant strides to combat corruption, but it remains an ongoing challenge.

							1. Openness To, and Restrictions Upon, Foreign Investment					

### Policies Towards Foreign Direct Investment

Romania actively seeks foreign direct investment and offers a market of around 19 million consumers, a relatively well-educated workforce at competitive wages, a strategic location, and abundant natural resources. To date, favored areas for U.S. investment include IT and telecommunications, energy, services, manufacturing – especially in the automotive sector, defense, healthcare, consumer products, insurance, and banking.

Through a government decision on February 23, 2023, the government established the Romanian Agency for Investment and Foreign Trade (ARICE) as a new lead agency to promote and facilitate foreign investment in Romania. ARICE, as part of the Prime Minister’s office, will have a broader mandate than its predecessor InvestRomania. Whereas InvestRomania was limited to providing promotional and advisory services to support foreign investors, ARICE will be able to serve as a point-of-contact for investors with government officials and will contribute to public and legislative policy processes on investments and foreign trade.

Romania’s accession to the EU on January 1, 2007, helped solidify institutional reform. However, the lack of legislative and regulatory predictability and impact assessments, as well as low institutional capacity, continue to negatively affect the investment climate. As in any foreign country, prospective U.S. investors should exercise careful due diligence, including consultation with competent legal counsel, when considering an investment in Romania. Governments in Romania have repeatedly allowed political interests or budgetary imperatives to supersede accepted business practices in ways harmful to investor interests.

The energy sector, in particular, suffers from frequent, unanticipated changes. The windfall profit tax instituted in 2018, and amended in 2022, applies to both onshore and offshore natural gas producers, who must pay royalties on gas they extract in Romania based on the Vienna Central European Gas Hub (CEGH) price. As energy prices surged in 2021-2022, Romania capped electricity and natural gas prices until April 2025. To comply with EU regulations, the government levied a windfall tax on natural gas and electricity producers’ profits and instituted in December 2022 a two-year solidarity contribution of 60 percent on profits over 120 percent of a producer’s last four-year average for companies with at least 75 percent of their turnover from crude petroleum, natural gas, coal extraction, treatment, and/or refining. Both Parliament and the government passed most of this legislation with little public consultation or regulatory impact assessments.

In March 2021, the Romanian Parliament passed a bill reinforcing the government’s authority to vet transfers of petroleum agreements to companies from non-EU countries, and to determine if a transfer poses a threat to Romania’s national security. Transfer of a petroleum agreement must be approved through a government decision.

Investments involving public authorities can be more complicated than investments or joint ventures with private Romanian companies. Large deals involving the government, particularly public-private partnerships, can be stymied by vested political and economic interests or delayed by a lack of coordination between government ministries.

Designed to recoup drug reimbursement costs that exceeded state-budgeted amounts, Romania’s claw back tax was 27.65 percent in 2019. In May 2020, the Romanian government approved a revised and differentiated claw back tax, capped at 25 percent for innovative medicines, 20 percent for generic medicines, and 15 percent for locally produced medicines. While the 2020 legislation provided some relief to pharmaceutical companies, the claw back tax continued to negatively affect the availability of drugs in the Romanian marketplace. In February 2022, the Romanian Competition Council fined five plasma therapies producers for allegedly colluding to limit immunoglobulin supplies in the Romanian market between 2015 to 2018.

### Limits on Foreign Control and Right to Private Ownership and Establishment

Foreign and domestic private entities are free to establish and own business enterprises, and to engage in all forms of remunerative activity. Romanian legislation and regulation provide national treatment for foreign investors, guarantee free access to domestic markets, and allow foreign investors to participate in privatizations. There is no limit on foreign participation in commercial enterprises. Foreign investors are entitled to establish wholly foreign-owned enterprises in Romania (although joint ventures are more typical), and to convert and repatriate 100 percent of after-tax profits.

Romania has established legal parameters to resolve contract disputes expeditiously. Mergers and acquisitions are subject to review by the Romanian Competition Council. Under the Competition Law, the Competition Council must notify Romania’s Supreme Council of National Defense (CSAT) of mergers or acquisitions of stocks or assets that could affect national security. CSAT then reviews the referred mergers and acquisitions for potential threats to national security. The Romanian capital account was fully liberalized in 2006, prior to joining the EU in 2007. Foreign firms are allowed to manage and administer their investments, and to assign their contractual obligations and rights to other Romanian or foreign investors.

In 2022, Romania transposed EU Regulation (EU) 2019/452 into national legislation on foreign direct investment (FDI) screening, establishing a screening mechanism for FDI from non-EU countries or through entities controlled directly or indirectly by non-EU individuals or entities. The screening generally applies to FDI above $2.16 million (€2 million) in strategic sectors. Screening can also apply to investments below the threshold that could jeopardize national security or public order. FDI screening can apply to new investments in sectors CSAT has identified as strategic. These sectors include citizens’ security; border security; energy security; transport security; supply of vital resources; critical infrastructure; information systems; communications systems; financial, fiscal, banking, and insurance security; production and circulation of weapons, ammunition, explosives and toxic substances; industrial security; disaster protection; protection of agriculture; environmental protection; and privatization and management of state-owned enterprises (SOEs).

### Other Investment Policy Reviews

In January 2022, the Organization for Economic Cooperation and Development (OECD) opened accession discussions with Romania, and published an economic survey with initial recommendations on how Romania can further its socioeconomic development. Among other findings, the OECD recommended that Romania continue to digitalize and modernize its tax administration to raise tax collection and improve tax compliance; to strengthen its administrative capacity to absorb EU funds; and to address gaps in transportation infrastructure.The OECD technical review process, a multi-year assessment of Romania’s candidacy against OECD standards and policies in areas such as the investment climate, governance, and environmental protection, began on December 15, 2022.

### Business Facilitation

The National Trade Registry has an online service available in Romanian at https://portal.onrc.ro/ONRCPortalWeb/ONRCPortal.portal. ARICE, replacing InvestRomania, will offer assistance to foreign investors and will maintain the investment agency’s website at http://www.investromania.gov.ro/web/.

In addition to the procedures required of a domestic company, a foreign parent company establishing a subsidiary in Romania must authenticate and translate its documents. As of 2022, foreign companies must comply with investment screening reviews. A Trade Registry judge must hold a public hearing on a company’s application for registration within five days of submission of the required documentation. Applicants can submit and monitor the status of their registration documents online.

Companies in Romania are free to open and maintain bank accounts in any foreign currency. In practice, Romanian banks offer services only in the Romanian leu (RON) and certain hard currencies (euros and U.S. dollars). The minimum capital requirement for domestic and foreign LLCs is RON 1 ($0.22). Areas for improvement include making all registration documents available to download online in English.

Romania defines microenterprises as having an annual turnover of less than $539,000 (€500,000) and less than nine employees, small and medium-sized enterprises (SMEs) as having net annual turnover of less than $54 million (€50 million), or holding total assets less than $46 million (€43 million) and less than than 250 employees. Regardless of ownership, microenterprises and SMEs enjoy “de minimis” and other state aid schemes from EU funds or from the state budget. Business facilitation mechanisms provide for equitable treatment of women in the economy.

### Outward Investment

There are no restrictions or incentives on outward investment.

							2. Bilateral Investment and Taxation Treaties					

The U.S.-Romanian Bilateral Investment Treaty (BIT) on the Reciprocal Encouragement and Protection of Investment (signed in May 1992 and ratified by the United States in 1994) guaranteed national treatment for U.S. and Romanian investors. The agreement provided a dispute resolution mechanism, liberal capital transfer, prompt and adequate compensation in the event of an expropriation, and the avoidance of trade-distorting performance requirements. To reconcile inconsistencies between the pre-existing BIT and Romania’s impending EU obligations, the U.S. Senate and the Romanian Parliament ratified a revised BIT in 2004 that took effect on February 9, 2007.

On January 1, 2007, Romania began enforcing EU common commercial policies, namely the EU common customs tariff, the EU generalized scheme of preferences (GSP), EU trade safeguards, EU commercial and cooperation preferential accords with third countries, and EU commercial commitments within the World Trade Organization (WTO).

Romania’s bilateral taxation treaty with the United States was signed in 1973 and entered into force in 1974. It is available at https://www.irs.gov/businesses/international-businesses/romania-tax-treaty-documents.

Romania is a member of the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS); and party to the Inclusive Framework’s October 2021 deal on a two-pillar solution to address global tax challenges.

							3. Legal Regime					

### Transparency of the Regulatory System

Romanian law requires consultations with stakeholders, including the private sector, and a 30-day comment period on legislation or regulation affecting the business environment (the “Sunshine Law”). However, public comments are not published. The Sunshine Law’s public consultation timelines do not have enforceable penalties or sanctions, and thus public authorities regularly bypass its provisions without harm. The EC’s 2022 European Semester Report for Romania stressed that evidence-based policymaking remains a long-standing structural challenge. Public consultations and impact assessments remain limited, with hasty changes to legislation passed in extraordinary proceedings.

Some draft pieces of legislation pending with the government are available in Romanian at the General Secretariat of the Government’s website ( https://sgg.gov.ro/1/). However, proposed items for cabinet meetings are not always publicized in advance or in full. Generally, the agenda of cabinet meetings includes links to the legislation drafts (government decisions, ordinances, emergency ordinances, or memoranda) slated for government decision, but this is not always the case. Pending parliament legislation is available at the Chamber of Deputies’ (http://www.cdep.ro/pls/proiecte/upl_pck.home) and the Senate’s (https://www.senat.ro/legis/lista.aspx) websites. The Chamber of Deputies is the decision-making body for economic legislation.

Foreign investors point to excessive time required to secure zoning permits, environmental approvals, property titles, licenses, and utility hook-ups.

### International Regulatory Considerations

As an EU member state since 2007, Romanian legislation is largely driven by the EU Acquis Communautaire, the accumulated body of EU legislation. European Commission (EC) regulations are directly applicable while national legislation implements directives at the national level. Romania’s regulatory system incorporates European standards. Romania has been a WTO member since January 1995 and a member of the General Agreement on Tariffs and Trade (GATT) since November 1971. Technical regulation notifications submitted by the EU are valid for all Member States. The EU signed the Trade Facilitation Agreement (TFA) in October 2015. Romania has implemented all TFA requirements.

### Legal System and Judicial Independence

Romania recognizes property and contractual rights, but enforcement through the judicial process can be lengthy, costly, and difficult. Foreign companies engaged in trade or investment in Romania often express concern about the Romanian courts’ lack of expertise in commercial issues. Romania has no specialized commercial courts, but it does have specialized civil courts. Judges generally have limited experience in the functioning of a market economy, international business methods, intellectual property rights, or the application of Romanian commercial and competition laws. As stipulated in the Constitution, the judicial system is independent from the executive branch and generally considered procedurally competent, fair, and reliable. Affected parties can challenge regulations and enforcement actions in court. Such challenges are adjudicated in the national court system.

Inconsistency and a lack of predictability in the jurisprudence of the courts or in the interpretation of the laws remains a major concern for foreign and domestic investors and for wider society. Even when court judgments are favorable, enforcement of judgments is inconsistent and can lead to lengthy appeals. Failure to implement court orders or cases where the public administration unjustifiably challenges court decisions constitute obstacles to the binding nature of court decisions.

Mediation as a tool to resolve disputes is gradually becoming more common in Romania, and a certifying body, the Mediation Council, sets standards and practices. The professional association, the Union of Mediation Centers in Romania, is the umbrella organization for mediators throughout the county. Court-sanctioned and private mediation is available at recognized mediation centers in every county seat.

Romania has no legal mechanism for court-ordered mediation, but judges can encourage litigants to use mediation to resolve their cases. If litigants opt for mediation, they must present their proposed resolution to a judge upon completion of the mediation process. The judge must then approve the agreement.

### Laws and Regulations on Foreign Direct Investment

Since joining the EU in 2007, Romania has worked assiduously to create an EU-compatible legal framework consistent with a market economy and investment promotion. At the same time, implementation of these laws and regulations frequently lags or is inconsistent, and lack of legislative predictability undermines Romania’s appeal as an investment destination.

Romania’s legal framework for foreign investment is encompassed within a substantial body of law largely enacted in the late 1990s and subject to frequent revision. Fiscal legislation is revised frequently, often without scientific or data-driven assessment of the impact the changes may have on businesses and the economy.

Given the state of flux of legal developments, investors are strongly encouraged to engage local counsel to navigate the various laws, decrees, and regulations as several pieces of investor-relevant legislation have been challenged in both local courts and the Constitutional Court. Few hostile takeover attempts have been reported in Romania. Romanian law has not focused on limiting potential mergers or acquisitions. When considering association in joint ventures with foreign investors, private firms may want to review the FDI screening legislation.

### Competition and Antitrust Laws

Romania has extensively revised its competition legislation, bringing it closer to the EU Acquis Communautaire and corporate best practices. As of 2014, companies with a market share below 40 percent were no longer considered to have a dominant market position. This eliminated the need for the Romanian Competition Council (RCC) to conduct full investigations, saving considerable time and money for all parties involved. Resale price maintenance and market and client sharing are still prohibited, regardless of the size of either party’s market share. The authorization fee for mergers or takeovers ranges between $10,764 (€10,000) and $53,820 (€50,000). The Fiscal Procedure Code requires companies that challenge an RCC ruling to front a deposit while awaiting a court decision on the merits of the complaint.

Romania’s Public Procurement Directives outline general procurements of goods and equipment, utilities procurement (“sectorial procurement”), works and services concessions, and remedies and appeals. An extensive body of secondary and tertiary legislation accompanies the four 2016 laws and has been subject to repeated revisions. Separate legislation governs defense and security procurements. In a positive move, this body of legislation moved away from the previous approach of using lowest price as the only public procurement selection criterion, allowing authorities to use price, cost, quality-price ratio, or quality-cost ratio. The revised laws also allow bidders to provide a simple form (the European Single Procurement Document) to participate in the award procedures. Only the winner must later submit full documentation. As of April 2021, only companies from EU member states or signatory countries of the WTO Public Procurement Agreement have been allowed to bid on public procurements in Romania.

Public procurement laws stipulated that challenges regarding procedure or an award can be filed with the National Complaint Council (NCC) or the courts. Disputes regarding execution, amendment, or termination of public procurement contracts can be subject to arbitration. The revised laws also stipulated that a bidder must notify the contracting authority before challenging either the award or procedure. Not fulfilling the notification requirement can result in the NCC or the courts rejecting the challenge. Public procurement laws allow contracting authorities to exclude bidders that previously infringed competition rules.

The EC’s 2022 European Semester Country Report for Romania noted that quality of public procurement in Romania remains a major challenge. Transparency, competition, and efficiency in procurement processes remain problematic.

### Expropriation and Compensation

The law on direct investment includes a guarantee against nationalization and expropriation or other equivalent actions. The law allows investors to select the court or arbitration body of their choice to settle disputes. Several cases involving investment property nationalized during the Communist era remain unresolved. In doing due diligence, prospective investors should conduct a thorough title search to ensure land or assets are not subject to any pending restitution claims.

### Dispute Settlement

#### ICSID Convention and New York Convention

Romania is a signatory to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Romania is also a party to the European Convention on International Commercial Arbitration (Geneva) and is a member of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID). Romania’s 1975 Decree 62 provides for legal enforcement of awards under the ICSID Convention.

#### Investor-State Dispute Settlement

**Investors brought 22 cases against Romania in the International Center for Settlement of Investment Disputes (ICSID). Three of them involved U.S. investors. The arbitral tribunal ruled in favor of Romania in two of them. Twelve investor-state arbitration cases against Romania are currently pending with the ICSID. Local courts recognize and enforce foreign arbitral awards against the government. Romania has no history of extrajudicial action against investors. On September 2, 2021, the Court of Justice of the European Union (CJEU) ruled that intra-EU arbitrations based on the Energy Charter Treaty (ECT) violate EU law. The decision is likely to affect pending intra-EU arbitrations brought under the ECT.**

#### International Commercial Arbitration and Foreign Courts

Romania increasingly recognizes the importance of investor-state dispute settlement and has provided assurances that the rule of law will be enforced. Many agreements involving international companies and Romanian counterparts provide for the resolution of disputes through third-party arbitration. Local courts recognize and enforce foreign arbitral awards and judgments of foreign courts. There are no statistics on the percentage of cases in which Romanian courts ruled against state-owned enterprises (SOEs).

Romanian law and practice recognize applications to other internationally known arbitration institutions, such as the International Chamber of Commerce (ICC) Paris Court of Arbitration and the United Nations Commission on International Trade Law (UNCITRAL). The Chamber of Commerce and Industry of Romania (CCIR) administers the International Commerce Arbitration Court. In November 2016, the American Chamber of Commerce in Romania (AmCham Romania) established the Bucharest International Arbitration Court (BIAC). This arbitration center focuses on business and commercial disputes involving foreign investors and multinationals active in Romania.

Arbitration awards are enforceable through Romanian courts under circumstances similar to those in other Western countries, although legal proceedings can be protracted.

### Bankruptcy Regulations

Romania’s bankruptcy law contains provisions for liquidation and reorganization that are generally consistent with Western legal standards. These laws usually emphasize enterprise restructuring and job preservation. To mitigate the time and financial cost of bankruptcies, Romanian legislation provides for administrative liquidation as an alternative to bankruptcy. However, investors and creditors have complained that liquidators sometimes lack the incentive to expedite liquidation proceedings and that, in some cases, their decisions have served vested outside interests. Both state-owned and private companies tend to opt for judicial reorganization to avoid bankruptcy.

In December 2009, Company Voluntary Agreements (CVAs) were introduced as a debt settlement mechanism for creditors and debtors to establish partial debt service schedules without resorting to bankruptcy proceedings. The global economic crisis prompted Romania to shorten insolvency proceedings in 2011.

							4. Industrial Policies					

### Investment Incentives

Currently, customs and tax incentives are available to investors in six free trade zones. State aid is available for investments in free trade zones under EU regional development assistance rules.

In 2007, Romania adopted EU regulations on regional investment aid and instituted state aid schemes for large investments, SMEs, and job creation. Both Romanian and EU state aid regulations aim to limit state aid in any form, such as direct state subsidies, debt rescheduling schemes, debt for equity swaps, or discounted land prices. The European Commission (EC) must be notified of and approve Romanian state aid that exceeds the pre-approved monetary threshold for the corresponding category of aid. To benefit from the remaining state aid schemes, the applicant must secure financing separate from any public support for at least 25 percent of the eligible costs, either through his own resources or through external financing, and must document this financing in strict accordance with Ministry of Finance guidelines. Under amendments passed in 2010, the state aid scheme for regional projects scores applications based not only on the economics of the project, but also on the GDP per capita and unemployment rate for the county of intended investment. When granting state aid, the Ministry of Finance requires that the state revenues through taxes equals the state aid granted. Numerous foreign and U.S. firms have successfully applied for and received Romanian state aid. However, the government remains delinquent on reimbursing promised tax breaks or rebates to some foreign companies, for example, in the film industry. When applying for state aid, companies should be aware that state budget funding availability and regulatory compliance could affect disbursements.

The green certificate system, part of the Renewable Energy Law, provided incentives for certain types of renewable energy. The incentives are not available for renewable energy investments made after January 1, 2017, but investors that qualified under can trade certificates until 2032. Green certificates are traded in parallel with the energy produced. They are intended to provide an additional source of revenue for renewable energy producers. Repeated revisions to the support system – including deferring release of the certificates and lowering the mandatory green certificate quota that consumers and suppliers must acquire – have created instability in the renewables investment climate. Energy intensive industrial consumers receive exemptions from acquiring green certificates. Romania responded to the international energy crisis in winter 2021-2022 by suspending the green certificate system between April and December of 2022.

As an EU member state, Romania must receive EC approval for any state aid it grants that is not covered by the EU’s block exemption regulations. The Romanian Competition Council acts as a clearinghouse for the exchange of information between the Romanian authorities and the EC. The EC has launched formal investigations into several privatizations where the state aid grantors failed to properly notify the EC of aid associated with the privatizations. Investors should ensure that the government entities with which they work fully understand and fulfill their duty to notify competition authorities. Investors may wish to consult with EU and Romanian competition authorities in advance to ensure a proper understanding of notification requirements.

Companies operating in Romania can also apply for aid under EU-funded programs that are co-financed by Romania. When planning a project, prospective applicants should note that a project cannot start before the financing agreement is finalized. The application, selection, and negotiation process can be lengthy. Applicants also must secure financing for non-eligible expenses and for their co-financing of the eligible expenses. Finally, reimbursement of eligible expenses – which must be financed upfront by the investor – is often very slow. Procurements financed by EU-funded programs above a certain monetary threshold must comply with public procurement legislation. To increase the rate of EU funds absorption, Romania has amended regulations to allow applicants to use the assets financed under EU-funded programs as collateral. However, Romanian public institutions’ understaffing and lack of management expertise, cumbersome procedures, and applicants’ difficulty obtaining private financing still significantly impede the absorption and implementation of EU funds.

### Foreign Trade Zones/Free Ports/Trade Facilitation

Free Trade Zones (FTZs) received legal authority in Romania in 1992 under the authority of the Ministry of Transportation. General provisions include unrestricted entry and re-export of goods, and exemption from customs duties. The law further permits the leasing or transfer of buildings or land for terms of up to 50 years to corporations or natural persons, regardless of nationality. Foreign-owned firms have the same investment opportunities as Romanian entities in FTZs. Currently six FTZs, primarily located on the Danube River or close to the Black Sea, operate in Sulina, Constanta-Sud Agigea, Galati, Braila, Curtici-Arad, and Giurgiu. The administrator of each FTZ is responsible for all commercial activities performed within the zone.

### Performance and Data Localization Requirements

The government generally does not mandate local employment. A notable exception is the Offshore Law (Law 256/2018), which requires that at least 25 percent of the employees of offshore titleholders be Romanian citizens with fiscal residence in Romania. No excessively onerous visa, residence, work permit, or similar requirements inhibit mobility of foreign investors or their employees. The government imposed no conditions on permission to invest. The government does not require investors to establish or maintain data storage in Romania. Romania neither follows nor has legislation requiring localization in relation to goods, technology, or data. Romania does not require foreign IT providers to turn over source code or provide access for government surveillance. Romania has no measures preventing or unduly impeding companies from freely transmitting customer or other business-related data outside the country. The government imposed no performance requirements as a condition for establishing, maintaining, or expanding an investment.

							5. Protection of Property Rights					

### Real Property

The Romanian Constitution, adopted in December 1991 and revised in 2003, guarantees the right to ownership of private property. Mineral and airspace rights, and similar rights, are excluded from private ownership. Under the revised Constitution, foreign citizens can gain land ownership through inheritance. With EU accession, citizens of EU member states can own land in Romania, subject to reciprocity in their home country.

Companies owning foreign capital may acquire land or property needed to fulfill or develop company goals. If the company is dissolved or liquidated, the land must be sold within one year of closure and may only be sold to a buyer(s) with the legal right to purchase such assets. Investors can purchase shares in agricultural companies that lease land in the public domain from the State Land Agency. However, legislation passed in Fall 2020 imposed additional restrictions and limitations on the purchase of agricultural land by foreign investors.

The 2006 legislation that regulates the establishment of specialized mortgage banks also makes possible a secondary mortgage market by regulating mortgage bond issuance mechanisms. Commercial banks, specialized mortgage banks, and non-bank mortgage credit institutions offer mortgage loans. Romania’s mortgage market is now almost entirely private; the state-owned savings bank (CEC Bank) also offers mortgage loans. The Electronic Archives of Security Interests in Movable Property (AEGRM) oversees the filing of transactions regarding mortgages, assimilated operations, or other collateral provided by the law as well as their advertising. Most urban land has clear title, and the National Cadaster Agency (NCA) is slowly working to identify property owners and register land titles. According to NCA data, the cadaster registry contained 52 percent of the estimated building registry as of January 2023.

Romania has marginally improved implementing digital records of real estate assets, including land. However, the cadaster property registry is far from complete; inaccurate and incomplete information for land ownership continues to challenge private investors ‎and SOEs alike.

### Intellectual Property Rights

Romania was removed from the Watch List of the U.S. Trade Representative’s Special 301 Report in 2022 after taking significant action to improve intellectual property (IP) protection and enforcement. In January 2022, Romania appointed its first-ever national IP enforcement coordinator, who is charged with developing a national IP strategy and coordinating interagency efforts. Romania has also taken other actions to improve efforts to investigate and prosecute IP crime. For example, in 2021, the Economic Police established a department dedicated to online piracy cases and dedicated a minimum of two additional officers per county to IP investigations. Moreover, the General Prosecutor Office’s Intellectual Property Coordination Department resumed coordination of monthly IP working group sessions, comprising 17 public institutions, to develop the national IP strategy, including action items and an implementation timeline. The United States will continue to monitor Romania’s efforts to finalize and implement the strategy and to take specific actions to prioritize IP protection and enforcement.

Romania is a signatory to international IPR-related conventions, including the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), and has enacted legislation protecting patents, trademarks, and copyrights. Romania passed broad IPR protection enforcement provisions as required by the WTO, yet gaps remain in enforcement. Romania signed the Internet Convention to protect online authorship. In 2020, Romania passed a law to enhance the transparency of collective rights management of copyrights. In 2020, Romania passed legislation implementing the EU Trademark Directive, and in March 2022, approved legislation to implement the EU Copyright Directive. The new legislation introduced a series of changes, including removal of requirements for graphic representation of trademarks and allowing for registration of sound marks, multimedia marks, and holograms. To increase transparency, the law included provisions to clarify dates of completed trademark registration and their entry into force.

Romania is both a transit and destination country for counterfeit goods. The People’s Republic of China is the top country of origin for counterfeit goods arriving by sea or air, while Turkey is the primary origin point for goods crossing the Bulgaria-Romania border. Customs officers can seize counterfeit products ex-officio and destroy them upon inspection and declaration by the rights holder. The government is responsible for paying for the storage and destruction of the counterfeit goods. The National Customs Directorate reported the seizure of 683,804 million items of counterfeited goods in 2022, with a value of $1.2 million. Major categories of seized goods included clothing, perfumes and cosmetics, technical accessories and parts, and toys. Customs authorities closely coordinate their efforts with the European Commission’s Anti-Fraud Office (OLAF), the European Observatory on Infringements of Intellectual Property Rights, and other stakeholders to increase transborder cooperation in line with the EU’s IPR action plan.

### Patents

Romania is party to the World Intellectual Property Organization (WIPO) Patent Cooperation Treaty, the Paris Convention, and the European Patent Convention. Romanian patent legislation generally meets international standards with foreign investors accorded equal treatment with Romanian citizens under the law. Patents are valid for 20 years. Patent applications can be filed online. Since 2014, Romania has also enforced a distinct law regulating employee inventions. The right to file a patent belongs to the employer for up to two years following the departure of the employee.

### Trademarks

Romania is party to the Madrid Agreement, the Singapore Treaty, and the Trademark Law Treaty. Romania’s trademark and geographical indications law was amended in 2010 to make it fully consistent with equivalent EU legislation at that time. The EU has since adopted the Trademark and Geographic Indications Directive (EU Directive 2436/2015). Romania implemented the directive under Law 84/1998, which entered force in 2020. An update to the trademark and geographical indications law in December 2022 allowed trademark invalidation and revocation requests to be made directly with the Romanian State Office for Inventions and Trademarks (OSIM).

### Copyrights

Romania is a member of the Berne Convention, the WIPO Copyright Treaty, and the WIPO Performances and Phonograms Treaty. The Romanian Copyright Office (ORDA) promotes and monitors copyright legislation (https://orda.ro/). The Trademark and Copyright Office (OSIM) is responsible for copyright registration (https://osim.ro/). The General Prosecutor’s Office (GPO) provides national coordination of IPR enforcement. Many magistrates still tend to view copyright piracy as a victimless crime, and this attitude has resulted in weak enforcement of copyright law.

For additional information about treaty obligations and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/.

							6. Financial Sector					

### Capital Markets and Portfolio Investment

Romania welcomes portfolio investment. In September 2019, the Financial Times and the London Stock Exchange (FTSE Russell) promoted the Bucharest Stock Exchange (BVB) to Emerging Secondary Capital Market status from Frontier Capital Market classification.  The Financial Supervision Authority (ASF) regulates and supervises securities and insurance markets as well as private pension funds. The ASF implements the registration and licensing of brokers and financial intermediaries, the filing and approval of prospectuses, and the approval of capital market mechanisms.

The BVB resumed operations in 1995 after a nearly 50-year hiatus. The BVB operates a two-tier system with the main market consisting of 83 companies. The official main index, BET, is based on an index of the 20 most active stocks. BET-TR is the total return on market capitalization index, adjusted for the dividends distributed by the companies included in the index. Overall, the BVB calculates and distributes in real time 12 indexes. In 2015, the BVB opened an alternative trading system (MTS-AeRO) with relaxed listing criteria. MTS-AeRO has 275 listed companies, which are mostly small- and medium-sized enterprises (SMEs). The BVB allows trade in corporate, municipal, and international bonds. Investors can use gross basis trade settlements, and trades can be settled in two net settlement cycles. The BVB’s integrated group includes trading, clearing, settlement, and registry systems. The BVB’s Multilateral Trading System (MTS) allows trading in local currency of 14 foreign stocks listed on international capital markets.

Public institutions do not impose restrictions on payments and transfers. Country funds, hedge funds, private pension funds, and venture capital funds continue to participate in the capital markets. Minority shareholders have the right to participate in any capital increase. Romanian capital market regulation complies with EU standards with accounting regulations incorporating EC Directives IV and VII.

### Money and Banking System

Thirty-four banks and one credit cooperative national union currently operate in Romania. The largest is the privately-owned Transilvania Bank (19.1 percent market share), followed by Austrian-owned Romanian Commercial Bank (BCR-Erste, 13.9 percent); French-owned Romanian Bank for Development (BRD-Société Générale, 10.2 percent); Dutch-owned ING (9.0 percent); Austrian-owned Raiffeisen (8.8 percent); state-owned National Savings Bank (CEC Bank) (8.8 percent); and Italian-owned UniCredit (8.7 percent).

The banking system is stable, well-provisioned, and profitable relative to its European peers. According to the National Bank of Romania (BNR), despite the COVID-19 pandemic, NPLs accounted for 2.8 percent of total bank loans as of September 2022. And as of September 2022, the banking system’s solvency rate was 21.5 percent, which has remained steady over recent years, while the banking system’s return on equity was 16.6 percent compared to an EU average of only 7.9 percent.

The government and the BNR have encouraged foreign investment in the banking sector, and mergers and acquisitions are not restricted. The only remaining state-owned banks are CEC Bank and EximBank, comprising 12.1 percent of the market combined, which grew after the latter’s 2020 acquisition of Banca Romaneasca from Greek-owned NBG.

While the BNR must authorize all new non-EU banking entities, banks and non-banking financial institutions already authorized in other EU countries need only notify the BNR of plans to provide local services based on the EU passport.

### Foreign Exchange and Remittances

#### Foreign Exchange

Romania does not restrict the conversion or transfer of funds associated with direct investment. All profits made by foreign investors in Romania may be converted into another currency and transferred abroad at the market exchange rate after payment of taxes.

Romania’s national currency, the Leu, is freely convertible in current account transactions, in accordance with the International Monetary Fund’s (IMF) Article VII.

#### Remittance Policies

There is no limitation on the inflow or outflow of funds for remittances of profits, debt service, capital gains, returns on intellectual property, or imported inputs. Proceeds from the sales of shares, bonds, or other securities as well as from the conclusion of an investment, can be repatriated.

Romania implemented regulations liberalizing foreign exchange markets in 1997. The inter-bank electronic settlement system became fully operational in 2006, eliminating past procedural delays in processing capital outflows. Commission fees for real-time electronic banking settlements have gradually been reduced.

Capital inflows are also free from restraint. Romania concluded capital account liberalization in September 2006, permitting non-residents and residents abroad to purchase derivatives, treasury bills, and other monetary instruments.

### Sovereign Wealth Funds

In January 2020, the government repealed plans to establish a Sovereign Development and Investment Fund (SDIF).

							7. State-Owned Enterprises					

According to Ministry of Finance data reported to the OECD, Romania held stakes in 860 enterprises, of which 410 were majority-owned, as of the end of 2020. There is no published list of all SOEs, as some are subordinated to the national government and some to local authorities. SOEs are governed by executive boards under the supervision of administration boards. Implementation of the Corporate Governance Code (Law 111/2016) remains incomplete and uneven.

SOEs are required by law to publish an annual report. Majority state-owned companies that are publicly listed, as well as state-owned banks, are required to be independently audited. Many SOEs are currently managed by interim boards, often with politically appointed members that lack sector and business expertise. The EC’s 2022 European Semester Country Report for Romania noted discretionary board appointments limit SOEs’ efficiency and effectiveness. The appointment of interim boards has become standard practice. Administrative offenses carry symbolic penalties, which do not change behavior. Successive governments have resorted to distributing the dividends of profitable SOEs to increase state budget revenues.

SOEs competing in the domestic market generally operate in accordance with commercial considerations, on terms that other market participants would offer or accept and generally provide non-discriminatory treatment in their purchase and sale of goods or services. Romanian SOEs do not compete internationally nor invest in the United States.

### Privatization Program

Privatization has stalled since 2014. The government has repeatedly postponed the initial public offering (IPO) for hydropower producer Hidroelectrica. Fondul Proprietatea, a minority owner in Hidroelectrica, plans to divest its 15 percent stake of the company through a separate IPO tentatively scheduled for 2023.

As an EU member state, Romania must notify the EC’s General Directorate for Competition of significant privatizations and related state aid. Prospective investors should seek legal counsel to ensure compliance with relevant legislation. In previous privatizations, the government’s failure to consult with and then formally notify the EC resulted in delays and complications. State aid schemes aim to enhance regional development and job creation through financial support for new jobs or investment in new manufacturing assets. The Ministry of Finance issues public calls for applications under the schemes.

Private enterprises compete with public enterprises under the same terms and conditions with respect to market access and credit. Energy production, transportation, and mining are majority state-owned sectors. The Romanian government retains majority equity in electricity and natural gas transmission. The Ministry of Energy has authority over energy generation assets and natural gas production. According to the EU’s Third Energy Package directives, the same entity cannot control generation, production and/or supply activities, and at the same time control or exercise any right over a transmission system operator (TSO). Consequently, natural gas carrier Transgaz and national electricity carrier Transelectrica are under the Government’s General Secretariat. The Ministry of Transport and Infrastructure has authority over the entities in the transportation sector, including rail carrier CFR Marfa, national air carrier Tarom, and the Constanta Port Administration. Romania currently has no plans to privatize companies in the transportation sector.

Romanian law allows for the inclusion of confidentiality clauses in privatization and public-private partnership contracts to protect business proprietary and other information. In some high-profile privatizations, Parliament has compelled the public disclosure of such provisions.

							8. Responsible Business Conduct (RBC)					

Romania adhered to the OECD Declaration on International Investment and Multinational Enterprise in 2004. The government regularly sends representatives to the working sessions of the OECD Investment Committee and its Working Party on Responsible Business Conduct. Romania established an OECD National Contact Point in 2005 to promote the OECD Guidelines for Multinational Enterprises. Romania’s new investment promotion agency ARICE will replace InvestRomania as the contact point.

Several NGOs in Romania monitor, advocate, and raise concerns on RBC issues. No high-profile cases of private sector impact on human rights were recorded in 2022. However, the National Council for Combating Discrimination (CNCD), the government agency responsible for applying domestic and EU anti-discrimination laws, imposed several fines on companies for discrimination against their own staff or prospective employees. The cases involved discrimination based on gender, disability, HIV status, or ethnicity and harassment over labor union membership and childcare leave. Romania does not participate in the Extractive Industries Transparency Initiative (EITI) but has adhered to the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas since 2012.

Organized crime investigators conducted inquiries related to lack of due diligence and non-transparent supply chains for timber and other wood products. Violence against environmentalists and journalists monitoring the forestry sector has been well-documented. On September 16, 2021, a group attacked two journalists and an environmental activist while they were documenting illegal logging in Romania. In May 2022, Romanian courts sentenced the defendant in a 2019 killing of a forest ranger by illegal loggers to 17 years in prison. According to forestry worker unions, more than 650 rangers and technical workers were attacked, threatened, or had their property destroyed between 2017-2019, and six died during the same period.

### Additional Resources

**Department of State

- Country Reports on Human Rights Practices ( https://www.state.gov/reports-bureau-of-democracy-human-rights-and-labor/country-reports-on-human-rights-practices/ );
- Trafficking in Persons Report ( https://www.state.gov/trafficking-in-persons-report/ );
- Guidance on Implementing the “UN Guiding Principles” for Transactions Linked to Foreign Government End-Users for Products or Services with Surveillance Capabilities ( https://www.state.gov/key-topics-bureau-of-democracy-human-rights-and-labor/due-diligence-guidance/ ) and;
- North Korea Sanctions & Enforcement Actions Advisory ( https://home.treasury.gov/system/files/126/dprk_supplychain_advisory_07232018.pdf ).

Department of Labor

- Findings on the Worst forms of Child Labor Report ( https://www.dol.gov/agencies/ilab/resources/reports/child-labor/findings  );
- List of Goods Produced by Child Labor or Forced Labor ( https://www.dol.gov/agencies/ilab/reports/child-labor/list-of-goods );
- Sweat & Toil: Child Labor, Forced Labor, and Human Trafficking Around the World ( https://www.dol.gov/general/apps/ilab ) and;
- Comply Chain ( https://www.dol.gov/ilab/complychain/ ).

### Climate Issues

Romania’s climate objectives align with EU strategies, including the 2030 Agenda and European Green Deal. Romania has introduced policies and incentives to mitigate and reduce carbon emissions, but climate and environmental policies are seldom implemented and enforced consistently. In 2020, Romania had the second lowest greenhouse gas emissions (GHG) in the EU (4 tons per capita compared to an EU average of 7 tons). However, the emissions intensity of the economy is still twice as high as the EU average. In December 2020, the European Commission updated the Nationally Determined Contributions (NDC) targetting emission reduction to at least 55 percent from 1990 levels by 2030. The new NDC superceded Romania’s 43 percent emissions reduction target from the 2030 Climate and Energy Framework.

Romania struggles with an extensive list of legacy environmental challenges, such as poor air quality, inadequate waste management practices, and insufficient protective measures for natural areas. These legacies may hamper Romania’s ability to achieve policy outcomes that preserve biodiversity and clean air. A September 2022 Romanian Presidency report on the country’s climate change challenges highlighted the need to improve institutional capacity and to base environmental policies on science.

Romania has taken steps to improve its climate and environment framework: http://www.mmediu.ro/categorie/strategia-nationala-pentru-paduri-2030/430. It boasts a diverse geography, with many protected areas in biologically diverse areas such as mountains, plains, and coastal wetlands. Romania has more than 300 square miles of old-growth forests, the most in the EU. Romanian forests and woodlands represent a substantial carbon sink and cover six percent of the total forest and woodland carbon dioxide uptake at the EU level. Adopted in October 2022, the 2030 National Strategy for Forests, promised to further increase forests, expand strictly protected areas, create payments for conservation easements, and acknowledge forests as carbon sinks. Romania plans to reforest over 55,000 hectares by 2026 with NRRP funds. Owners planting new forests are eligible for a $456 per hectare per year carbon storage bonus for 20 years. Romania adopted a Circular Economy Strategy in September 2022 and is also updating its biodiversity, climate change, draught and land degradation strategies to allow for improved policy coordination. Romania’s 2023-2030 National Strategy for Environment and Climate Change Education aims to improve awareness on climate and environment issues.

Recurrent and underreported illegal logging remains a concern despite progress by the government to improve wood traceability. Public investigations into non-compliant wood shipments are frequent. In 2018, the Romanian government excluded non-governmental organizations from the management of protected natural areas, which diminished the quality of management of affected sites. Unpredictability remains a concern as Parliament can amend environmental legislation with insufficient consultation, which sometimes leads to misalignment and noncompliance with EU biodiversity provisions and goals.

Overall environmental taxes remain low, representing 1.96 percent of GDP and 7.21 percent of Romanian tax revenue in 2021, up from 1.9 percent and 7.07 percent in 2020. Sectoral regulatory incentives are in place to limit carbon emissions and promote more sustainable business and consumer practices. Romanian legislation upholds the EU principle of extended producer responsibility, applicable to all waste generated via the purchases of electric and electrical appliances as well as for plastic, glass, metal, and paper packaging. Producers and municipalities inconsistently uphold recycling quotas and targets. In October 2021, Romania adopted a legislative framework to create a Deposit Return System (DRS) for beverage packaging. The DRS, which is expected to become fully operational by 2025, requires consumers to pay a guarantee, as part of the purchase price, that they recover when they return packaging to retailers.

Romania aims to replace 250,000 cars older than 15 years by 2026. Companies or individuals that trade in older vehicles are eligible to receive vouchers up to $3,454 (RON 15,000) to purchase a hybrid vehicle or up to $13,126 (RON 57,000) to purchase an electric vehicle. Romania has used EU-funded programs to improve energy efficiency in buildings, both privately and publicly owned. It also has run programs to incentivize replacement of low-efficiency household appliances with new energy-efficient ones.

In 2022, the EC Complementary Delegated Act defined technical screening criteria for specific nuclear and gas activities covered by EU taxonomy. Inclusion of these activities, under strict conditions, created opportunities for Romania to further adopt advanced technologies, construct and operate new nuclear power plants (NPPs), and upgrade existing NPPs. The Delegated Act recognized nuclear energy would play a role in the green energy transition beyond 2050. It also limited permits to 2045 for new NPPs and 2040 for NPP upgrades. It stipulated that gas-fired power generation should transition to renewable gas or low carbon emissions by 2035. Covered natural gas activities included gas-fired power generation, high efficiency cogeneration, and centralized heating and cooling. The Delegated Act affirmed the right of the EU member states to develop energy programs based on national priorities and available energy resources.

							9. Corruption					

Romania’s fight against high- and medium-level corruption, a model in Southeastern Europe over the past decade, suffered significant setbacks between 2017 and late 2019 due to a concerted campaign under a previous Social Democratic Party (PSD)-led government that aimed to weaken anti-corruption efforts, the criminal and judicial legislative framework, and judicial independence. Professional associations, NGOs, the EU, and NATO-allied governments raised concerns about legislative initiatives that furthered this trend during that period. In Transparency International’s 2022 Corruption Perceptions Index, Romania placed 63 out of 180, placing Romania among the lowest ranked of the EU member states. The current governing coalition lists justice reform and the fight against corruption among its official priorities, but it remains to be seen whether it will achieve tangible results. In 2022, the EC noted that Romania had made sufficient progress in its efforts to combat high level corruption to recommend the lifting of the Cooperation and Verification Mechanism (CVM), which was established in 2007 as a condition of Romania’s accession to the European Union.  The EC will continue to monitor Romania’s efforts to reform its judiciary through the Rule of Law Mechanism, which applies to all member states.

Domestic and international rule-of-law experts and law enforcement observe that many of the amendments to the criminal code introduced by the former PSD-led government between 2017-2019 remain in place today and continue to weaken the investigative tool kit in the fight against corruption. New amendments to the Criminal Codes are pending debate in Parliament. Revised justice laws were enacted by President Iohannis in December 2022 and are in the process of being implemented. Critics have alleged that the new laws do not go far enough to reverse the provisions of the 2017-2019 Justice Laws.

The Group of States against Corruption (GRECO) 2021 report noted that Romania had made progress towards Council of Europe recommendations, in particular the passing of the revised justice laws. While acknowledging some progress, it assessed Romania’s compliance with its recommendations for fighting corruption as “very low.” The OECD 2022 economic survey also warned that corruption remained a major problem in Romania, arguing that past modifications of justice laws and the pressures targeting DNA prosecutors have weakened anticorruption efforts.

In March 2022, President Iohannis signed into law a bill dismantling the controversial Section to Investigate Offenses in the Judiciary (SIIJ). Monitoring institutions such as the CVM report and the Venice Commission welcomed the move. However, the Venice Commission issued an advisory opinion which criticized the government’s hasty adoption of the bill and its decision to create a new structure to deal with the same category of cases rather than returning the corruption and organized crime files to the National Anti-corruption Directorate (DNA) and the Directorate for Investigating Organized Crime and Terrorism (DIICOT), as per previous Venice Commission recommendations. Civil society representatives and the main opposition party, Save Romania Union (USR), warned that the new structure envisioned to take the place of SIIJ could be even more damaging to judicial independence.

In December 2021, the Government adopted an Anticorruption Strategy for 2021-2025. The document represents a political commitment to support all relevant institutions fighting corruption and was a NRRP milestone. The strategy focuses on asset recovery and strengthening the National Agency for Managing Seized Assets (ANABI). Conflicts of interest, respect for standards of ethical conduct, and integrity in public office remained concerns for all three branches of government. Romania’s National Integrity Agency (NIA) is responsible for verifying civil servants’ compliance with integrity protocols. The PREVENT IT system, an NIA-led initiative, identifies conflicts of interest in public procurement before contracts are awarded. In 2022, the PREVENT system analyzed 19,355 public procurement procedures. During that period, NIA issued 22 integrity warnings for potential conflicts of interests identified by the PREVENT system, representing $150 million (RON 704 million ).

Romania implemented the revised EU Public Procurement Directives in 2016 by passing new laws to improve and make public procurements more transparent. The National Agency for Public Procurement (ANAP) has general oversight over procurements and can draft legislation, but procurement decisions remain with the procuring entities. State entities as well as public and private beneficiaries of EU funds are required by law to follow public procurement legislation and use the e-procurement system. Sectoral procurements, including private companies in energy and transportation, must follow the public procurement laws and tender via the e-procurement website.

National laws prohibit bribery and other acts of corruption, both domestically and for Romanian companies doing business abroad. The judiciary remains mostly paper-based and inefficient although digitization progressed some during the pandemic. Romania loses several cases each year in the European Court of Human Rights (ECHR) due to excessive trial length. The National Agency for Fiscal Administration (ANAF) has a mandate to ensure that all taxes are collected and prevent fiscal and customs frauds. Asset forfeiture laws exist, but a functioning regime remains under development.

While private joint stock companies use internal controls, ethics, and compliance programs to detect and prevent bribery, since 2017 the government has rolled back corporate governance rules for SOEs and has repeatedly resorted to profit and reserves distribution to bolster the budget. U.S. investors have complained of both government and business corruption in Romania, most frequently naming the customs service, municipal officials, and local financial authorities. According to the EC’s 2022 European Semester Country Report for Romania, corruption remains a concern for the country’s businesses. According to a July 2022 Special Eurobarometer on Corruption, 72 percent of Romanians thought corruption was widespread in their country, 69 percent said favoritism and corruption hampered business competition in Romania, and 64 percent said corruption was part of the business culture in the country.

Romania is a member of the Southeast European Law Enforcement Center (SELEC). NGOs enjoy the same legal protections as any other organizations, but NGOs involved in investigating corruption receive no additional protections. The United States welcomes participation from private and public sector entities on anti-corruption programs and trainings.

### UN Anticorruption Convention, OECD Convention on Combatting Bribery

Romania is a member of the UN Anticorruption Convention and the Council of Europe’s Group of States Against Corruption (GRECO). Romania is not a member of the OECD Anti-Bribery Convention but is in the process of adhering to this framework as part of its OECD accession bid.

Romania’s National Anticorruption Strategy (2021-2025), approved in December 2021, is spearheaded by the Ministry of Justice and has an enhanced focus on environmental crime.

### Resources to Report Corruption

Contact at government agency responsible for combating corruption:

National Anticorruption Directorate (DNA)Str. Stirbei Voda nr. 79-81, Bucuresti+40 21 312 73 99anticoruptie@pna.rohttp://www.pna.ro/sesizare.xhtml?jftfdi=&jffi=sesizare

Contacts at “watchdog” organizations:

Laura StefanExecutive DirectorExpert ForumStrada Semilunei, apt 1, Sector 2, Bucuresti,+40 21 211 7400laura.stefan@expertforum.rooffice@expertforum.ro

Cristina GusethDirectorFreedom House RomaniaBd. Ferdinand 125, Bucuresti+40 21 253 2838guseth@freedomhouse.ro

Elena CalistruPresidentFunky CitizensColivia, Pache Protopopescu 9+40 723 627 448elena@funkycitizens.org

							10. Political and Security Environment					

Romania does not have a history of politically motivated damage to foreign investors’ projects or installations. Major civil disturbances are rare, though some have occurred in past years. The current coalition, one in a series of coalitions over the past two years, supports a business-friendly environment, but it is uncertain how much progress the coalition will make on its goals. There were no major civil disturbances in 2022. The political environment was generally stable, despite discontent due to a sluggish economy and surging energy prices.

							11. Labor Policies and Practices					

Romania has traditionally boasted a large, skilled labor force at comparatively low wage rates in most sectors. The labor pool has tightened in highly skilled professions, in particular the information technology and health sectors, due to emigration and a deteriorating primary and secondary education system that fails to adequately prepare many graduates, particularly in rural areas, for university. The university system is generally well regarded, particularly in technical fields, though foreign and Romanian business leaders have urged reform of outdated higher education curricula to better meet the needs of a modern, innovation-driven market. Payroll taxes remain steep. As a result, an estimated 25 to 30 percent of the labor force works in the underground economy as “independent contractors” where their salaries are neither recorded, nor taxed. Even for registered workers, underreporting of actual salaries is common.

The total unemployment rate in Romania increased during the COVID-19 pandemic to 6.1 percent in 2020 and 5.6 percent in 2021. It was 5.4 percent as of Q3 2022. The registered unemployment rate, which covers jobless individuals registered with the labor offices, stood at 3 percent in November 2022, up from 2.7 percent the previous year. At 65.6 percent in 2021, the labor force participation rate – the portion of the working age population (15-64 years) who are employed or actively seeking employment – remained among the lowest in the EU. Romanian employers in the engineering, machinery, IT services, and healthcare sectors reported difficulties in hiring and retaining employees as Romania faces a shortage of medium- to high-skill workers. As Romania’s emigration crisis deepens, other industries, including food service and construction, also face worker shortages. The EC found Romanians were the largest working age group of EU citizens residing in other member states in 2021 (three million or 24 percent of all citizens living in another EU country). Many emigrants are young and well-qualified, constraining the supply of skilled labor remaining in Romania. Romania faces a shortage of healthcare staff as doctors and nurses continue to seek work abroad, motivated by higher salaries and the country’s antiquated medical system.  According to the Ministry of Health, roughly 10,000 doctors left Romania between 2017 and 2018.

The government lacks a comprehensive strategy to remedy labor shortages despite taking steps in recent years to attract and retain talent. Employees in some sectors benefit from fiscal incentives. For example, IT professionals are eligible for certain income tax exemptions. In 2018, Romania introduced an additional income tax and social contributions exemption for a period of 10 years for construction sector employees. The provision also introduced a specific monthly minimum wage of $728 (RON 3,000) for construction workers. As of 2022, the same minimum wage rate and tax exemptions were extended to agriculture and food industry workers. In 2017, Romania adopted a unitary wage law to establish a more consistent framework for wages across the public sector. The law provided for a salary increase of at least 25 percent for most public sector employees; wages for some workers in the healthcare sector doubled in nominal terms as of March 2018. Unions and businesses continue to debate specific applications of the Unitary Wage Law.

The Labor Code regulates the labor market in Romania, controlling the contracting, jurisdiction, and application of regulations. It applies to both national and foreign citizens working in Romania or abroad for Romanian companies. As an EU member state, Romania has no government policy that requires the hiring of nationals, but it has annual work permit quotas for other non-EU nationals. As of 2020, employers are exempt from obtaining General Immigration Inspectorate (IGI) approval for nationals from Moldova, Ukraine, and Serbia for full-time labor contracts of up to nine months per year. In accordance with EU measures, Ukrainian nationals benefit from temporary protection status, and may register with local labor offices, and self – attest for earned qualifications and certifications. For 2023, the government maintained the 2022 annual quota of 100,000 work permits for non-EU workers. Work permits are valid for one year and are renewable with an individual work contract. Employers pay a $106 (€100) tax for most foreign workers, except for seasonal workers and those present in Romania on student visas, for whom the tax is $26 (€25). The government also reduced the cost of employing non-EU citizens in 2018, no longer requiring employers to pay a minimum wage equivalent to the gross average wage. Normal minimum wage law applies with the exception that highly skilled non-EU workers must receive at least twice the gross minimum wage. Foreign companies still resort to expensive staff rotations, special consulting contracts, and non-cash benefits.

Since the 1989 revolution, labor-management relations have occasionally been tense, the result of economic restructuring and personnel layoffs. Trade unions, much better organized than employers’ associations, are vocal defenders of their rights and benefits. Employers are required to make severance payments for layoffs according to the individual labor contracts, company terms and conditions, and the applicable collective bargaining agreements. The Labor Code discerns between layoffs and firing; severance payments are due only in case of layoffs. There is no treatment of labor specific to special economic zones, foreign trade zones, or free ports.

Romanian law allows workers to form and join independent labor unions without prior authorization, and workers freely exercise this right. Labor unions are independent of the government. Unions and employee representatives must notify the employer before striking and must take specific steps provided by law before launching a general strike, including attempting reconciliation with management representatives and organizing a warning strike. Companies may claim damages from strike organizers if a court deems a strike illegal. Labor dispute mechanisms are in place for the conciliation, mediation or arbitration of conflicts between employers and employees regarding economic, social, and professional interests. Unresolved conflicts are adjudicated in court according to the civil code. An employee, employer, or labor union may initiate proceedings. In 2022, employees from the automotive manufacturing, shipyard industry, and medical sectors went on strike or protested publicly. They sought higher pay, better working conditions, and sufficient staffing.

Union representatives allege that few incidents of anti-union discrimination are officially reported because it is difficult to prove that employers laid-off employees in retaliation for union activities. The government generally respects the right of association. Union officials state that registration requirements stipulated by law are complicated, but generally reasonable.

The Romanian government enacted Social Dialogue Law 367 on December 19, 2022. Among other provisions, the law requires employers with more than 10 employees to negotiate a collective labor agreement.  Collective labor agreements can also be concluded within a company, by groups of workplaces, at the collective bargaining sector level, or at the national level. According to the Ministry of Labor, companies and employees had finalized 5,344 collective labor agreements as of Q3 2022 compared to 3,690 in 2021.

As an EU and International Labor Organization (ILO) member state, Romania observes international labor rights. National law prohibits all forms of forced or compulsory labor, but enforcement is not uniform or effective. As penalties are insufficient to deter violations, reports indicate that such practices continued to occur, often involving Roma, disabled persons, and children. The minimum age for most forms of employment is 16, but children may work with the consent of parents or guardians at age 15, provided the tasks correlate with their abilities. Employment in harmful or dangerous jobs is forbidden for those under the age of 18; the government maintains a list of dangerous jobs in which the employment of minors is restricted.

Romania does not waive or derogate labor laws and regulations to attract or retain investments. Since 2011, employers have had more flexibility to evaluate employees based on performance, and hiring and firing procedures have been significantly relaxed. According to the National Labor Strategy for 2021-2027, Romania aims to ensure that its labor market is dynamic, sustainable, resilient, and based on quality employment by 2027 with a 75 percent employment rate for people aged 20-64.

The minimum wage has more than quadrupled in nominal terms since 2012, rising from $170 (RON 700) to $600 (RON 3,000) per month in 2023. Starting in 2022, employers can only pay the minimum wage for the first two years of an employment contract. Minimum-wage employees impacted by the new law will be eligible for wage increases in 2024. In 2021, Romania had the highest rate of employed persons at risk of poverty (15.6 percent) among EU member states.

Wage increases have outpaced productivity growth since 2016. This has led to a marked growth in hourly labor costs, which posted a 10.9 percent nominal increase in Q3 2022 as compared with the same period in 2021. On January 31, 2021, the Romanian Competition Council opened an investigation into unlawful wage setting practices by the automotive industry. The Council investigated informal “no-poach” agreements that decreased competition among companies and created artificial labor market access barriers, particularly for automotive engineers.

In December 2017, Romania shifted the burden of mandatory payroll deductions for pensions, healthcare, and income taxes from employers to employees. To avoid reductions in employee net pay and retain labor in a tight market, many companies increased salaries to reduce employee losses.

As of August 2022, part-time contracts mandatory payroll taxes are computed at the value of at least a minimum wage, unless part-time workers declare they are engaged in multiple labor contracts equating a full-time workweek.

							12. U.S. International Development Finance Corporation (DFC), and Other Investment Insurance or Development Finance Programs					

A 1992 bilateral agreement authorized the Overseas Private Invesment Corporation (OPIC), now the U.S. International Development Finance Corporation (DFC), to do business in Romania. As a high-income country, the DFC is limited to supporting only energy-related investments in Romania per the European Energy Security and Diversification Act of 2019.

							13. Foreign Direct Investment and Foreign Portfolio Investment Statistics