FIC Business Sentiment Index
Bucharest, 8th of October, 2015
The Foreign Investors Council - FIC has continuously provided input for policy makers in their effort to achieve a better business environment that will result in improved economic results for Romania. FIC represents a significant business segment in respect of investments in Romania and its members account for approximately two thirds of all total foreign investments in Romania with a significant contribution to the country’s GDP.
In their effort to provide further input FIC developed its business sentiment index to bring its members assessment of their 1) expectations of results of operations and growth expectations 2) capital investment outlook for the coming year 3) attractiveness of Romania compared to other similar geographic locations of their respective group companies 4) workforce plans and 5) administrative, legislative and fiscal environment when conducting their businesses.
The questions in the business index refer to the sentiment and expectations for the following 12 months.
The FIC Members for the period between March 2015 and September 2015, noted their business sentiment as follows:
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Result of operations and business outlook
The number of respondents seeing revenue growth remains close to 60% compared to March 2015 of 62%, pointing towards a stable and positive sentiment. However the number of respondents that felt a significant growth have gone down from 14.28% to 7.4% compared to an increase from 48.5 % to 51.9 % of respondents who expect a moderate revenue growth. Another positive aspect noted is that none of the FIC members that responded expect a significant contraction, but FIC members expecting somewhat contraction grew from 2.86 % to 7.4%, indicating sector specific challenges.
From a market growth perspective a significant change is noted in the composition of domestic and export market. The overall domestic market growth expectation has gone down from 58% to 53%, whereas from export market growth perspective, growth expectations have gone down from 45.8% to 40%. Similarly, the overall growth perspective including results expectations have gone down between March 2015 and September 2015 from 68.5% to 53.2% with an increased number of respondents feeling that overall business will remain substantially the same. The overall number of FIC members responding that it will remain the same, have gone up from 20.69% to 38.3%.
Capital investments and workforce plan
The overall outlook for capital investments remain substantially the same from March 2015 to September 2015. However, there is a marked increase in respondents noting the higher level of attractiveness of Romania compared to their group peer locations. 44.4% of FIC members that responded noted improved attractiveness in September 2015 compared to 28% in March 2015, indicating the potential Romania has to offer.
From availability of workforce perspective, 58.5% respondents note availability of competitive workforce while 22.6% note availability of highly competitive workforce, making it an overall 80% respondents acknowledging good workforce availability.
Legislative environment and administrative burden
The fiscal, legislative and administrative capacity issue is still one of the biggest challenges. Given the relative economic potential, there is still a large number of FIC member businesses that are concerned with the legislative and administrative burden and consider it be one of the key hurdles in achieving the potential. An overwhelming number of respondents feel that the lack of competitive bureaucracy and transparency is limiting the achievement in business. 85% of the respondents feel bureaucracy to uncompetitive and 80% of the respondents feel there is a lack of transparency in legislative developments and initiatives. 65% of the respondents said the regulatory burden is uncompetitive. A similar sentiment is voiced in the availability of good infrastructure whereby 67.9% voiced their concern on the lack of competitive infrastructure with 26.4% feeling it to be very inadequate and 41.5% noting it as moderately uncompetitive. The lack of confidence in both the legislative framework and infrastructure points towards the need for public policy and resource allocation in improving the legislative framework and developing a good infrastructure, to help Romania achieve the economic potential that it has on offer.