FIC Business sentiment index
, 16th of March, 2016
The Foreign Investors Council (FIC) publishes twice a year the results of a business sentiment index survey conducted among its members. FIC member companies represent a significant share of foreign direct investment in Romania, summing up about two-thirds of the total, with a significant contribution to Romania's GDP.
The results of the latest FIC business sentiment index shows that the majority of members (60%) expect their revenues to grow in 2016 and only 15% are anticipating a contraction. Despite expectations of growth, FIC members report that they face a number of problems already well known to the general public: 90% say that bureaucracy is excessive compared to other countries in the region; 85% rated infrastructure as uncompetitive and 75% have had problems due to the lack of legislative predictability.
Expectations of revenue growth have been constant in the past two years since FIC began publishing the index but unfortunately so have been the complaints regarding infrastructure, bureaucracy and legislation.
A qualified labor force remains a strength and a competitive advantage for Romania (75%). Because they are anticipating an expansion of their activity nearly half of respondents plan to do more hiring in 2016 (43%) and a third (34%) will make significant capital investments this year. More than half of those surveyed (55%) expect significant increases in their exports.
Despite the reduction in taxes in force since 1 January 2016, 70% of FIC members FIC describe the taxation system in Romania as uncompetitive compared with other countries. The result may seem surprising but it is due largely to excessive bureaucracy in the interaction with fiscal authorities. This conclusion is supported by the fact that 70% of all respondents consider that regulation in Romania is burdensome.
Romania's economy recorded a significant growth in this period and this is also being felt by the business environment, however, FIC believes this growth rate will not be sustainable in the medium and long term in the absence of infrastructure investments and reduced administrative burden. As the Romanian economy grows in complexity, significant long term investments are needed and they will not materialize in an unpredictable regulatory environment. Unlike infrastructure, increasing regulatory predictability does not require additional budgetary costs and therefore FIC urges the authorities of Romania to make rapid progress in this area. In this regard, the single point of information for draft laws in public consultation and the publication in open source of the budget execution, are steps in the right direction which must be extended in other areas.
The results of the FIC business sentiment index are also confirmed by the recent Country Report published by the European Commission.
The questions in the business index refer to the sentiment and expectations for the following 12 months. Only FIC members have been surveyed.