US investors decry over-politization of government

American companies investing in Romania are grappling with government officials that are still involving their political backers in the decision-making process, while excessive bureaucracy in the public generates additional expenditure of time, energy and funds for companies, according to a high-ranking US diplomat.

Jim Cunningham, commercial counselor at the US Embassy Bucharest, says that American firms expect to be able to compete and operate on a level playing field which includes a consistent legislative and regulatory framework. Furthermore, US investors want predictability and straight answers from government authorities in the countries where they invest.

“Firms complain that even when Romanian government officials are fully authorized by their mandates, they will seek a higher level of political approval, even informally, before making decisions,” Cunningham told BR. He added that a lack of predictability in government decision-making makes planning difficult for investors.

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“There is also a poor consultation process regarding new regulations and other changes affecting the business environment,” complained the commercial counselor.

The US representative said that Romania has to focus on the development of its roads, rail, airports, and water and wastewater systems, and on its connections with the rest of the EU’s transportation infrastructure to attract foreign investments.

According to Cunningham, Romania’s human capital is its “strongest competitive advantage”. He said Romanians are highly skilled and work for competitive salaries, compared to other markets. He added that local workers are well educated and should continue to embrace education, which is a critical factor influencing investments.

“Romania is second to none in Information Technology, and I say that after having served three years in India, which prides itself on its prowess in the IT sector. Romania is very well positioned to compete with India and other countries focusing on IT. Also, many people here – particularly in urban areas – speak English, which provides Romania with a significant advantage in attracting more investment from the United States,” said the counselor.

In 2012, US merchandise exports to Romania surpassed USD 830 million, while Romania exported goods worth USD 1.6 billion to the US.

US direct investments in Romania exceeded USD 1.12 billion as of May 2013, according to the Romanian Ministry of Justice. Cunningham commented that the official figures provide only a partial picture of investments, as many American companies invest in Romania through their European subsidiaries and their investment is recorded as coming from the European country in which the subsidiary is located.

Ovidiu Posirca