The moment when Dacia will leave Romania is not very far from now, businessman Ioan Niculae stated.
The wealthiest man in Romania and owner of Interagro Group, Ioan Niculae, with ties to agriculture, energy and the food industry, stated yesterday, at a meeting of “Local Investors’ Forum” Association, that investors in Romania are “disappointed” and “the moment when French Group Renault will leave Romania is not far from now,” businessmagazin.ro notes. “I have noticed that the government is doing nothing to diminish the effects of the crisis, despite positive hopes at the start of the year, when we established the Romanian Investors’ Council. Nine months later, we can only see coercive measures and no measures to stimulate the economy. Over 17,000 companies have become insolvent in 2013 and we hope at least now, in the 14th hour, someone will listen to us,” Ioan Niculae stated. He also stated for Antena 3 that the reason why a lot of companies became insolvent in recent months is because the measures adopted by the new government were, more often than not, coercive and did not contribute to the economic relaunch. Moreover, the strain on honest companies is increasing day by day, causing serious financial difficulties. Given these circumstances, the Romanian Investors’ Council has submitted a set of measures for public debate, aimed at diminishing tax evasion by reducing taxation, bureaucracy and the inefficiency of collection and control authorities, the owner of InterAgro Company Group and Romanian Investors’ Council Chairman said further. “It is no secret that increasing VAT to 24 percent has not even by far resulted in beneficial results for our economy, but instead, has generated an avalanche of negative effects, culminating with a significant increase in tax evasion,” Radu Timis, owner of CrisTim Company Group and member of the Romanian Investors’ Council said.
Niculae stated further that, while Romanian investors expected the authorities to take measures for stimulating the economy at the start of the year, those expectations have not been fulfilled, and despite the current crisis, which not only did not subside, but in fact deepened in some sectors, the government has only taken coercive measures resulting in the closing down of entire industry branches.
The crisis is deepening in some sectors of local economy and the only business that is actually growing in Romania is opening supermarkets, businessman and chairman of the Romanian Investors’ Council, Ioan Niculae, stated. “For the first time in 23 years, all my fertilizer factories are closed,” he said. “No measure has been taken so far to relaunch the economy. The government is afraid to take such measures because of unpredictable effects. They should not be afraid; only by working together can be devise an economic relaunch project,” Alin Burcea, chairman of Paralela 45 tourism company and co-founder of the Local Investors’ Forum, stated. Burcea added that some of the measures the government adopted in order to help the economic environment did not have the intended effect. “The Prima Casa program, for instance, was designed for new constructions only. But, in the end, it enabled those who had purchased a house from ICRAL for EUR 6,000 – EUR 7,000 to sell it for EUR 60,000. We are experiencing stagnation, although Romania’s macroeconomic indicators are better than other states’,” Alin Burcea said further.
Cut-back in VAT for meat, one of the topics on the authorities’ agenda
In the same forum, Secretary of State for the Ministry of Agriculture, Achim Irimescu, stated that VAT will most likely decrease in the meat sector as well, where evasion has increased after the tax was raised to 24 percent. According to Irimescu, the next decision with regard to applying the VAT cut-back in other food products depends on whether the measure is successful in the bread sector and tax evasion is diminished, as well as on budget incomes.
The agriculture official also pointed out that the analysis conducted by the Ministry of Agriculture in the meat industry has revealed two problems, related to real and unreal imports, and the Romanian black market, respectively. “Our numbers show that the situation is quite dire. Following the VAT increase to 24 percent, tens of thousands of tons of meat and meat products have simply vanished, most likely through underground economy. Around 71,000 tons of pork have disappeared into the underground economy between 2011 and 2012,” Irimescu added. “The VAT level is indirectly proportional to the administration’s efficiency and directly proportional to evasion. On average, Romania has a VAT collection rate of 52 percent, which means Romania collects a 12.5 percent VAT, that is half the quota we all think we are paying for,” Gabriel Biris, lawyer at Biris Goran law practice, stated in turn. He continued by saying Bulgaria’s collection rate is 85 percent, which means Bulgarians actually cash in 17 percent of a 20 percent VAT.
The representatives of Romanian investors who convened at the Local Investors’ Forum requested the government to reintroduce the 19 percent VAT and cut back the tax to 9 percent for other food products as well. According to the investors, cutting back the VAT for bread alone is a marginal measure with no significant impact on the economy, Mediafax reports.
Romania, the main beneficiary of EU program for the disadvantaged
According to Achim Irimescu, Secretary of State for the Ministry of Agriculture and Rural Development (MADR, Romania is the main beneficiary of the European Union program for the disadvantaged (PEAD), although the structural fund absorption rate is not even close to the EU average, Agerpres notes. “Through the European Union’s program for the disadvantaged, Romania has received EUR 55 million in aid, from a total of EUR 500 million allocated at EU level,” the Secretary of State said further at the national conference of the Romanian Investors’ Council. “Unfortunately, Romania’s main (e.n. financial) resource has not been used appropriately,” the MADR official added.