UK gives market A-OK despite long-standing obstacles

There are positive signs that the local economy is on the right track to recovery, albeit at a measured pace, argued company representatives present at the second British Business Forum organized by Business Review last week.

Simona Bazavan

Almost all the drawbacks to doing business in Romania pointed out by businesspeople present at the event are the same as more than ten years ago. Unsuitable infrastructure, unpredictability and volatility persist and the reason why these deep-rooted issues have still not been solved lies in the lack of medium- to long-term planning by the public authorities.

Raymond Breden, president-elect of the British Romanian Chamber of Commerce (BRCC), who moderated the discussions, argued that short-termism is also common among Romanian companies and businesspeople.

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Is the local economy out of the woods and on the right path to sustainable recovery? While there are positive signs, the recovery can only be gradual from this point on, was the opinion of company representatives at the event. We are looking at another three to five tough years ahead and people will have to get used to spending money more wisely, argued Brian Davies chairman of the BRCC, at the BR event.

One positive sign is a shift in companies’ priorities from defensive action to finding new business opportunities and ways to further grow their business, said Kurt Weber, managing director at Horvath & Partners.

“Things are definitely getting better. Our clients’ priorities have changed. While in the last two years it was about liquidities, risk management and non-performing loans, now it is about developing new business, being more client-oriented and improving sales. It is about, let’s say, being more aggressive, more active and visible on the market side,” he added.

Iulian Patrascanu, managing partner with Fine Law, Patrascanu & Associates, also voiced his view that local companies are becoming more proactive and the time of large-scale restructuring projects is over.

Addressing market rumors that RBS could be selling its local subsidiary, Johan Gabriels, the bank’s CEO, said at the event that there has been interest from other players but no actual offer has been made so far.

Presently, the bank’s operations in Romania are not of strategic importance to the RBS Group.

Nevertheless, RBS Romania’s results last year were positive, with the lender reporting a profit of a little over RON 150 million.

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“Foreign direct investments are a little bit like banking. It gives you an umbrella when the weather is fine; when the rain comes, it goes back home,” said Davies.

Romania does need more foreign direct investments but the focus should not be just bringing companies here but also a clear strategy as to what should be done with the money that comes to Romania. And right now the country’s best chance for future growth is exports, Davies added.

In 2010 Romanian exports to the UK went up by 50 percent against the previous year while British exports to Romania increased by only 13 percent.

Commenting on this disparity, Kurt Weber noted that Romanian exports have increased to all countries, not only the UK, fueled by the faster recovery of external markets.

Also, exports have been driven by local companies, especially multinationals, who looked for new business opportunities outside the country.

The second British Business Forum was held last week at JW Marriott Grand Hotel Bucharest and gathered around 70 attendees. The event was sponsored by RBS, Fine Law, Patrascanu & Associates and Horvath & Partners and was organized with the support of BRCC and Interdean.