Learn about barriers to market entry and local requirements, i.e., things to be aware of when entering the market for this country.
Romania overthrew its communist regime almost thrity years ago, yet the Romanian government still plays an oversized role in the economy in terms of employment, ownership of assets, and influence on the business environment. State-owned enterprises shape many industries, acting as dominant customers, suppliers, or, in some cases, competitors. Despite pleas from the international finance and business community, state-owned enterprises in the country do not regularly utilize private management.
While some progress has been made since joining the EU in 2007, companies in Romania still report challenges regarding the independence and efficiency of the judicial system, corruption, bureaucracy, and political instability. Romania’s poor infrastructure continues to negatively impact business costs, productivity, public safety, and the country’s ability to attract foreign investment. The country’s connections to the rest of the EU’s transportation infrastructure are still underdeveloped, which holds back the country’s ability to realize its full potential for new investment, trade, and tourism.
Romania is not a member of the “Euro Zone”, so payments are made in local currency – the New Romanian Lei (RON). However, many companies and consumers have debt denominated in euros, and most big-ticket consumer items (i.e., real estate, cars, and major appliances) are priced in euros. This creates trade inefficiencies due to higher transaction costs and exchange rate fluctuations.
Many U.S. firms opperating in Romania face ongoing challenging with recruiting and retaining employees. A fast growing economy, increasing investments and the ability for Romanians to work for higher wages elsewhere in the EU had led to a labor shortage. This shortage is more pronounced in north and western parts of the country where employers often bus in workers from villages. While unemployment rates are higher in the Moldova region, companies report that skilled works are harder to find in the lesser-developed eastern portions of the country.
All companies opperating in Romania report complaints with frequent legistative changes without prior private sector consultantions. Regulatory Impact Assements (RIAs) are very rare and laws can change with little notice.
Romania’s economy is projected to recover from the COVID-19 pandemic by 2021 with positive quarterly growth beginning in late 2020 or early 2021.
Economists expect Romania to contract between 3% and 6% of GDP in 2020, due largely to Q2 2020 when the country was subject to a state of emergency.