HAMMOND, MINCIU & ASSOCIATES
Romania was a very different country when I came in 1990 to what it is today. In fact, Romania has come a long way in the last twelve to eighteen months and an even longer way since 1990 both in economic as well as political and social terms.
The technocrat Government imposed on the Country following the resignation of the former PSD Prime minister has seen Romania enter a period of quiet economic expansionism although there have been problems on the way. The efforts of the various bodies dealing with corruption and organised crime are also now bearing fruit. The perceived level of corruption is falling and it is becoming easier to do business. The down side is that Government officials sometimes delay making decisions so as not to be thought corrupt. The sight of former oligarchs on their way to prison and having sequestration orders made against them and their assets is encouraging the new breed of business men and women to take bold action to develop new businesses. It can however present the wrong impression to potential investors. They may see this as a sign that the corruption is increasing rather than a sign that the action of these authorities is a positive step towards cleaning up the system. If DNA and DIICOT are allowed to pursue and obtain convictions, then it means that the legal system and the rule of law is improving.
Much has been written about the effects of the development of the computer industry in Romania and there is no doubt that this field of activity has expanded exponentially and will continue to expand over the next few years. The centres of development in Bucharest and Cluj are now being mirrored in other University cities.
Despite the initial revulsion against the politicians after the Collectiv fire the political climate seems to have settled somewhat although still based around the two existing main political groupings. It is encouraging to see that a number of independent groups and individuals have appeared. One question this summer will be “” Will the former president (Trian Basescu) stand for parliament?”
The elections in November/December date to be decided might produce a stable Government for a period of time to enable further steps towards a normal political atmosphere be evolve. Perceived wisdom is that the PSD will be returned as the largest party although the size of the majority cannot currently be visualised. The opposition is weak and fractured and perhaps the return of the PSD will give the extension of stability needed for the continued economic development. The only worry for the European Union and Western Governments is to how deep does the influence (and corruption) of the PSD go and will their re-election to power open the gates to further corruption and influence peddling.
Although the Romania state is still involved in many areas of economic life the governments and by extension the PSD’s influence is slowly being reduced. This means that the private sector is becoming more influential and it is easier to do business with a more level playing field.
Romania has over the last period returned to high growth and is now part of high growth Europe though it continues to suffer from a lack of investment trust. The framework is in place in the Romanian economy to allow further expansion over the next few years. Both private and public bodies are trying to encourage foreign investors to come to Romania as Romania still represents a good market to invest in.
The question also has to be asked as to whether the upheaval in Turkey will affect Romania as will Britain’s exit from the European Union.
As regards Turkey there are already large Turkish investments in real estate, financial services and industry in Romania from Turkey. This has taken place over the last twenty-five years despite the changes in Government in Ankara. There should be no real change provided the Bosporus is kept open and trade continues to flow into the Black Sea. Provided the Turkish economy is not drastically affected by the recent event the Turkish investment should continue.
As to Brexit the United Kingdom will have to push hard for exports and take imports in exchange. This can only be good for Romanian industry and business people with an outward vision. The new government in London appears to be taking a pragmatic view as to what it can and cannot negotiate. We do not see a slowdown of Romanians wishing to go to the United Kingdom to study, set up businesses and live. This will be balanced by the returning Romanians who never intended to settle in the United Kingdom for ever. This return of know-how an experience can only benefit the Romanian economy.
Based on all the above the future looks good for Romania provided there are no internal shocks. It is still a good place to do business and everyone should look at the possibilities in Romania.
An examination of the true position will produce pleasant surprises which should encourage everyone to invest.