Business confidence in the investment climate in Romania is at a record level in 2021: AmCham
AmCham Romania presented the results of the 2021 survey on the quality of the Romanian investment and doing business climate. The survey reveals a record level of companies’ trust in the investment environment offered by Romania, 49 percent of the participating companies rating it good and very good. Similarly, the estimates for revenue, number of employees and investments shows a strong upward trend, with companies anticipating increases close to the 2018 performance for the same indicators.
“The positive business outlook at a record level, the anticipation of very good business results in 2021, as well as the planned investments and expansion of the Romanian operations in the coming years, confirm the economic growth prospects secialists estimate for our country. The signals from the private sector are positive, but they come with the responsibility of ensuring stability and predictability, of implementing key reforms and projects, such as digitizing the administration and investing in infrastructure, both for transport and for other critical sectors. At the same time, firm and coherent measures are needed to maintain the competitive advantage of human capital, as many sectors have indicated that they are facing an acute shortage of skilled labor. We are at a turning point, we have many financial resources available in the future, but also many pressing needs that have been dragging on for too many years. We need political will and competence to access resources, to implement reforms, to close the gaps, but also to build Romania’s mid and long term development vision” Ionuț Simion, AmCham Romania President stated.
About 75 percent of the surveyed companies expect to end the financial year 2021 with a higher level of revenue, 47 percent with more employees than at present and 59 percent with a higher volume of investments, unlike last year when most respondents estimated major decreases for each of these three indicators. Despite the economic challenges and uncertainty we faced in 2020, most companies managed to maintain or increase their operations in Romania, and 41 percent even recorded revenue increases.
Regarding the turnover evolution, 85 percent of companies anticipate an increase compared to 2020, of which 44 percent are working in a growth scenario of more than 10 percent.
Beyond the resilience demonstrated during the crisis, when close to 40 percent of the surveyed companies did not access any of the available support measures, more than half of the companies participating in the survey even managed to seize the opportunities generated by the crisis, 64 percent of them indicating that adapting to the pandemic context led to the increase of their services and products offers and of their customer base.
In terms of business financing, most companies, 82 percent, still rely mainly on own funds, supplemented for about a third of respondents by bank loans or loans from shareholders. The share of the capital market as a source of financing registered a positive evolution in this interval, from 3 percent last year, to 8 percent this year.The share of the capital market as a source of financing registered a positive evolution in this interval, from 3 percent last year, to 8 percent this year.
This positive trend is owed on one hand to the very good performance of the stock market in 2020, but also to the intensified efforts to promote the stock market as a source of financing among entrepreneurs. However, the growth potential is very high and we hereby reiterate the need to continue the development of the capital market so that it becomes an accessible and accessed financing source for the Romanian companies.
For the third consecutive year, the quality of digital infrastructure ranks highest in the top of the most appreciated market conditions offered by Romania, being rated good and very good by 53 percent of companies, followed by the quality of human capital, considered good & very good by 48 percent of respondents and the level of taxation of companies which is at about the same level of appreciation as in last year’s edition.
The top of the competitive advantages that remain relevant for Romania in the current economic context continues to be led by Romania’s EU membership, selected by 82 percent of the respondents, closely correlated with financing opportunities, with the series of reforms that condition access to new generations of European funds, with the coordinated response at EU level in dealing with the health crisis, but also with the defense of the rule of law.
Regarding human capital, a central element of the competitive advantages mix offered by Romania, the survey indicates an intensification of the tension faced by most companies, given that this year 82 percent of the companies, up from 60 percent in 2020 complains about the lack of skilled labor in their industries. The fact that demographic changes stand out in the top of macroeconomic factors that may pose a risk for the Romanian economy, calls for firm measures aimed at avoiding the erosion of this competitive advantage, and implicitly of Romania’s ability to support investment projects that require additional labor.
Regarding the post-pandemic economic recovery, AmCham members believe that the main components of this process, in order of cummulated responses, must be: investments in infrastructure (82 percent), accelerating the digitalization of public administration (71 percent), health care reform (53 percent), maintaining the flat tax system (44 percent) and reducing the tax burden on labor (37 percent).
Regarding the working regime anticipated for the post-pandemic context, 62 percent of the companies expect most of the employees to return to the office, and for 29 percent of the respondents, most of the activity will take place remotely.
Overall, the results of the survey confirm the priorities and recommendations that AmCham Romania advances in the dialogue with central authorities on Romania’s economic recovery and growth and highlight the importance of stability, predictability and constructive public-private partnership.