German companies ask Romanian Government to speed up investments in infrastructure and education

Aurel Dragan 20/09/2018 | 15:03

The German companies reunited under AHK Romania (German-Romanian Chamber of Commerce) are looking with distrust into the future. The modifications, sometimes overnight, of the fiscal regime is worrying for the German companies, used to have a stable business environment and predictability over the years.  

In order to be successful abroad, companies need a stable business environment and public authorities open to a real dialogue with business representatives. Factors such as the predictability of economic policies, public administration, labor availability, infrastructure, legal stability, the fight against corruption or public auctions remain decisive in making an investment decision. Numerous German companies have benefited from the right business conditions in Romania, have invested constantly and in the long run, have opened and expanded production units, thus greatly contributing to job creation and employment.

Given the good conjunctural situation, most companies are now happy with the situation of their own firm, want to hire staff and continue investments. This is also apparent from the current conjuncture report. The current good business situation is due to the positive development of the main partners, especially those in Germany. The percentage of those who see their business as good today is 56 percent (2015: 54 percent, 2016: 50 percent, 2017: 55 percent). And with regard to the company’s situation over last year, 60 percent of companies are of the opinion that this year’s situation will improve (2015: 75 percent, 2016: 61 percent, 2017: 53 percent).

But many companies are increasingly worried about the country’s evolution as an investment site, because the sustainability and positive effects of government measures are questioned, and investments in important factors for investors that would ensure long-term stability of the site are not achieve or delay.

In the last year uncertainty and unpredictability in economic life have increased, confidence in the Government has fallen, and with it has diminished and hope that the necessary steps will be taken to continue reforms such as the modernization of administrative structures together with the reduction of bureaucracy, the continuation of the fight against corruption, a better absorption of European funds, the privatization of state-owned companies, respectively the efficiency of these enterprises and the increase of competitiveness. The growing lack of personnel, legal and political instability hinder business activity. In addition, the vast majority of German companies in Romania complain about road infrastructure. The frequent tax changes and the overthrow of public sector reforms and the decline in public investment in favor of wage growth have created a negative atmosphere among German investors.

In the conjuncture questionnaire I conducted this spring among Romanian companies with German capital, the current economic situation as well as the economic evolution of German companies is appreciated worse than last year. This appreciation of the economic evolution is surprising at first sight, given the last year’s growth of almost 7 percent. Companies and economic experts, however, expect the economy to slow down significantly, as investments in infrastructure, education and health are delayed. For half of the companies with German capital in Romania surveyed (50 percent) the economic situation of the country is satisfactory and only 18 percent (2015: 15 percent, 2016: 30 percent, 2017: 31 percent) appreciates the current economic situation as better than in 2017.

“Against this background, AHK Romania asks the Romanian Government once again to speed up investments in key areas such as education, infrastructure, health, take steps to stop labor migration to reduce the current staff crisis and step up the modernization of public administration. We remain a trustworthy partner for the public authorities and reaffirm our willingness to engage in a constructive dialogue.”

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