The latest results of the FIC Business Sentiment Index (BSI) bring significant changes compared with the last iteration from March 2020, capturing the impact on Romania’s business environment due to the coronavirus crisis. According to the BSI from September 2020, there is a significant perception regarding the COVID impact on business: 68.2% of the respondents estimate a moderate decrease and 13.6% a rather significant decrease.
Moreover, more than a third of our respondents (38,7%) believe the Romanian business environment has worsened recently and half of responses mark the Romanian market attractiveness low compared to peer locations (e.g. CEE). The investment plans of foreign companies were considerably affected and deteriorated by the current crisis, a fact also noticed in the change of plans of our members regarding capital investments (38.6% respondents estimated a decrease of their capital investments for the next 12 months) or workforce plans (40.9% respondents estimated a decrease in their plans for employment for the next 12 months).
Even though the general perception of FIC members is that businesses have suffered and there is evidence of how the real economy has been affected in the past 9 months, the FIC Board of Directors highlights the opportunities available in this context. In this regard, by focusing on the main areas of the economy, FIC drafted a paper with specific solutions and recommendations which the country can focus on in the next period for restarting the economic growth.
Therefore, in the last period, FIC worked on elaborating a document with policy recommendations that could provide solutions to the negative effects of the pandemic, entitled “The challenge to restart economic growth.” The document highlights the necessity of adding more transparency and predictability to the legislative process, the core value/cornerstone of policymaking. Every stakeholder affected by the crisis should be consulted in order to overcome this crisis together and find solutions through dialogue. The current context also emphasized the important role of investments, both public and private, domestic and foreign. When the country has unforeseen spending, investments represent an adequate source of capital and a support element for important areas such as employment. Moreover, along with the negative trends that the pandemic accelerated, we have witnessed positive developments in the digitalization realm, with multiple benefits in the field of health, education, taxation, labor and financial services, developments that were truly enforced by the pandemic and now are part of our daily lives.
Furthermore, FIC members remain committed to the long-term development of the Romanian economy and share the belief that the disruption triggered by the current pandemic can be tackled and resolved by working together (authorities, business environment and citizens), by creating a partnership of stakeholders which can aim towards the improvement of the areas in which Romania did not make significant progress, such as: bureaucracy, fiscal burden, legislative and regulatory obstacles. These issues are also among the most salient problems indicated by the FIC members in the BSI survey, and no progress was seen in the last 6 months. Now it is the time to change our approach on the economic crisis and to better use our resources and even be more efficient than ever in order to minimalize the future negative impact. In areas such as taxation, where a more efficient collection of taxes by the Romanian state and combating tax evasion could bring significant increases to the state budget, further adoption of digitization measures would streamline the public administration and also facilitate interaction with the business environment and citizens, financial literacy programs would help Romanian citizen take smarter decisions regarding their finances and maintain healthy spending and saving habits, which over time can lead to financial wellness.
FIC believes that this is a good time to take advantage of the new opportunities, created by this context which was generated by the sanitary crisis in the last months and that through constructive dialogue between the business community and authorities, many obstacles can disappear and positive results will be reflected in the economy.