As a Romanian law firm, we have seen that the ongoing hostilities in Ukraine have impacted the business life of Romania. From the initial shock and surprise at the invasion of Ukraine to an uneasy realisation that it is a front-line country, Romania has had to look at its position in the business world again.
As a leader with Poland of the Bucharest Nine, Romania has found itself in a position it has not been in before. It has become a leader and influencer regarding what is happening rather than being a follower. This has brought about a renewed interest in Romania and its potential. The untapped resources of the country, both in minerals and people, can be released.
The result is that, as lawyers in Romania, we now see it reflected in the way business is conducted in Romania. This has resulted in a continued inflow of direct foreign investment, entrepreneurial companies seeking new markets, and existing companies continuing to expand their current businesses in Romania.
We have seen an increase of interest both in the fields of the old industries – transport – manufacturing – agriculture as well as new industries such as computing – outsourcing – and the production of high-worth products. It is interesting how many unicorns Romania has been able to produce over the last two or three years. We have also seen consolidation in computing and programming as smaller and smaller companies are brought out. This is happening even though major companies are sometimes reducing their head count.
The requirements for programmers do not seem to have diminished and indeed seem to have increased. To take advantage of these trends, the Government has brought in direct changes and, in some cases small changes to the laws of taxation which may be reflected in the future in a greater tax income for the Government.
Attempts by the Government to make the business environment more user-friendly have taken place. There have been improvements in dealing with Government organisations. Certain Government filings both in relation to taxation and corporate matters can now be done electronically rather than filing manually pieces of paper. Will this improve business administration – only time will tell. It certainly has improved the incorporation of companies from the legal perspective, as the filings can now be done electronically.
Several pieces of recent legislation have been introduced into Romanian law. These legislative changes have been driven by Romania’s membership in the European Union. Some belated acts should have been in force some time ago but have only recently been introduced. Other are more up-to-date.
Where does this leave Romania as a potential business market? The War in Ukraine will continue to have an effect on the Romanian business environment. The introduction into Romania of foreign armed forces, if only a limited number, will attract arms suppliers who will see the business opportunities.
As the numbers of foreign servicemen increase, so will the demand for local services to support them. Already a number of manufacturers and service companies are bringing in personnel from other countries to support their businesses already here. They will be bringing in staff and support from other EU countries as well as non-EU countries. Local business will also benefit, and the companies more interested in the long-term future will also be able to take advantage of know-how from abroad.
There are also other advantages for companies investing in Romania. At the same time as the effect of the War, the Romanian economy continues to expand on its own merits. A number of surveys have shown that Romania will continue to be an expanding market both at the personal and business level ahead of other EU countries for some time and is, therefore a country which all businesses should look at again if they wish to expand. Employment opportunities are there and continue to grow. International companies are continuing to invest in human capital in Romania as well as opening new facilities.
The old adage of the 1880’s “go west, young man” should now be replaced with the words “go east young man” especially if you wish to grow your business.
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