Executive Summary

Romania welcomes all forms of foreign investment. The government provides national treatment for foreign investors and does not differentiate treatment due to source of capital. Romania’s strategic location, membership in the European Union (EU), relatively well-educated workforce, competitive wages, and abundant natural resources make it a desirable location for firms seeking to access European, Central Asian, and Near East markets. United States (U.S.) investors have found opportunities in the information technology (IT), automotive, telecommunication, energy, services, manufacturing, consumer products sectors, and banking.

The investment climate in Romania is a mixed picture, and potential investors should undertake due diligence when considering any investment. The EU’s 2018 Country Report for Romania found that cumbersome administrative procedures, slow progress on the provision of e-government solutions, complex insolvency procedures and frequent regulatory changes with limited use of impact assessment and consultation procedures weigh on the business climate. Although the pace of economic reforms has slowed, Romania remains a regional leader in judicial efforts to combat high and medium-level corruption. However, efforts since January 2017 to undermine Romania’s anticorruption prosecutors and weaken judicial independence have shaken investor confidence in the government’s commitment to combat corruption. Some government leaders accused “multinational companies” of sponsoring large street protests against these moves, adding to occasional political rhetoric scapegoating foreign companies for domestic companies’ alleged dire circumstances.

The Government of Romania’s (GOR) mandatory transfer of payroll taxes from employers to employees in January 2018 negatively impacted all companies through additional administrative costs resulting from negotiation and registration of new labor contracts. The GOR’s sale of minority stakes in several state-owned enterprises (SOEs) in key sectors, such as energy generation and exploitation, has stalled since 2014. The GOR has weakened enforcement of its SOE corporate governance code, exempting several SOEs from the code in December 2017.

Consultations with stakeholders and impact assessments are required before enactment of legislation. However, this requirement has been unevenly followed, and public entities generally do not conduct thorough impact assessments. Since 2017, frequent government changes have led to rapidly changing policies that serve to complicate the business climate. Romania has made significant strides to combat corruption to date, but it remains an ongoing challenge. Inconsistent enforcement of existing laws, including those related to the protection of intellectual property rights, also serves as a disincentive to investment. Continuing to attract and retain additional investment will require further progress on transparency, stability, and predictability in economic decision-making, and a reduction of non-transparent bureaucratic procedures.

Although women in Romania have equal access under the law to investment development and protections, women continue to face societal challenges. Despite the lowest gender wage gap in the EU (5.2 percent in 2016 according to a March 2018 Eurostat report) and a high level of participation in STEM professions, Romania continues to have a large gender employment gap. In 2016, this gap was 16.4 percent compared to the 10.5 percent EU average. The problem is worse in rural areas and for Roma women. According to the World Bank, almost half of rural women in Romania have not completed upper secondary education and 43 percent are in the poorest quintile.

Table 1

Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2017 59 of 175

(down 2 spots)

World Bank’s Doing Business Report “Ease of Doing Business” 2017 45 of 190

(down 9 spots)

Global Innovation Index 2017 42 of 128

(up 6 spots)

U.S. FDI in partner country ($M USD, stock positions) 2016 USD 2.6 billion http://www.bea.gov/
World Bank GNI per capita 2016 USD 9,480 http://data.worldbank.org/

Policies Towards Foreign Direct Investment

Romania actively seeks foreign direct investment (FDI), and offers a market of around 19 million consumers, a relatively well-educated workforce at competitive wages, a strategic location, and abundant natural resources. To date, favored areas for U.S. investment include IT and telecommunications, energy, services, manufacturing – especially in the automotive sector, consumer products, and banking. InvestRomania is the government’s lead agency for promoting and facilitating foreign investment in Romania. InvestRomania offers assistance and advisory services free of charge to foreign investors and international companies for project implementation and opening new offices or manufacturing facilities.

Romania’s accession to the EU on January 1, 2007 has helped solidify institutional reform. However, legislative and regulatory unpredictability, as well as weak public administration continue to negatively impact the investment climate. As in any foreign country, prospective U.S. investors should exercise careful due diligence, including consultation with competent legal counsel, when considering an investment in Romania. Governments in Romania have, on occasion, allowed political interests or budgetary imperatives to supersede accepted business practices in ways harmful to investor interests. For example, a temporary 2013 windfall profit tax on natural gas and electricity liberalization was initially due to expire in December 2015, but was repeatedly extended and made permanent in December 2017.

Investments involving public authorities (central government ministries, county governments, or city administrations) can be more complicated than investments or joint ventures with private Romanian companies. Large deals involving the government – particularly public-private partnerships and privatizations of key SOEs – can be stymied by vested political and economic interests, or bogged down due to a lack of coordination between government ministries. The Public-Private Partnership (PPP) Law was revised repeatedly, including in 2017, but the implementation rules have not been published, making the law ineffective. The contribution of the public partner can now be both in-kind and cash, provided the public contribution complies with state aid rules and with public finance legislation. The public partner can cover costs for stages prior to project implementation, including expropriation, feasibility studies, and permitting, and can assume payment obligations to the project company. According to the new law, the public partner initiates the public-private partnership projects and awards them according to public procurement rules. How the PPP law is implemented will be of considerable interest to investors over the next few years, but the Ministry of Business Climate, Trade, and Entrepreneurship has yet to indicate when it will complete and/or begin public consultations on the implementing regulations.

Limits on Foreign Control and Right to Private Ownership and Establishment

Foreign and domestic private entities are free to establish and own business enterprises, and to engage in all forms of remunerative activity. Romanian legislation and regulation provide national treatment for foreign investors, guarantee free access to domestic markets, and allow foreign investors to participate in privatizations. There is no limit on foreign participation in commercial enterprises. Foreign investors are entitled to establish wholly foreign-owned enterprises in Romania (although joint ventures are more typical), and to convert and repatriate 100 percent of after-tax profits.

Romania has taken established legal parameters to resolve contract disputes expeditiously. Mergers and acquisitions are subject to review by the Competition Council. According to the Competition Law, the Competition Council notifies Romania’s Supreme Defense Council regarding any merger or acquisition of stocks or assets which could impact national security. The Supreme Defense Council then reviews these referred mergers and acquisitions for potential threats to national security. To date, the Supreme Defense Council has not blocked any merger or acquisition. The Romanian capital account was fully liberalized in 2006, prior to gaining EU membership in 2007. Foreign firms are allowed to participate in the management and administration of the investment, as well as to assign their contractual obligations and rights to other Romanian or foreign investors.

Other Investment Policy Reviews

Romania has not undergone any third-party investment policy reviews through multilateral organizations in over 10 years. The Heritage Foundation’s 2017 Index of Economic Freedom report indicates that secured interests in private property are recognized. The report also notes low scores for government integrity and property rights, which outweigh improvements in labor freedom and government spending. It also identifies labor shortages and political instability as the greatest economic risks.

Economic growth rates have increased, but the benefits have not been felt by all Romanians. Progress on implementing reforms and improving the business environment has been uneven. The World Bank’s Doing Business Report indicates that Romania continues to rank below the world average in processing construction permits and establishing utility services. The government’s January 2017 passage of emergency ordinance 13 provoked wide-spread public protests against what was seen as an attempt to roll-back anti-corruption efforts. In February 2017, Transparency International called on the Romanian government to focus on strengthening anti-corruption efforts, including introducing stronger corporate ethics standards and implementing existing anti-corruption legislation.

Business Facilitation

The National Trade Registry has an online service available in Romanian at https://portal.onrc.ro/ONRCPortalWeb/ONRCPortal.portal . Romania has a foreign trade department within the Ministry of Business Climate, Trade, and Entrepreneurship and an investment promotion department in the Ministry of Economy. InvestRomania is the government’s lead agency for promoting and facilitating foreign investment in Romania. InvestRomania offers assistance and advisory services free of charge to foreign investors and international companies for project implementation and opening new offices or manufacturing facilities. More information is available at http://www.investromania.gov.ro/ .

According to the World Bank, it takes seven procedures and 11 days to establish a foreign-owned limited liability company (LLC) in Romania. This is twice as fast as the regional average for Europe and Central Asia (eight procedures and 22 days). In addition to the procedures required of a domestic company, a foreign parent company establishing a subsidiary in Romania must authenticate and translate its documents abroad. Foreign companies do not need to seek an investment approval. The Trade Registry judge must hold a public hearing on the company’s application for registration within five days of submission of the required documentation. The registration documents can be submitted, and the status of the registration request monitored, online.

Companies in Romania are free to open and maintain bank accounts in foreign currency, although, in practice, Romanian banks offer services only in certain currencies (including Euros, U.S. dollars, and Swiss francs). The minimum capital requirement for domestic and foreign LLCs is RON200 (USD65). Areas for improvement include making all registration documents available to download online in English. Currently only some are available online, and they are only in Romanian.

Romania defines microenterprises as having less than nine employees, small enterprises as having less than 50 employees, and medium sized enterprises as having less than 250 employees. Regardless of ownership, microenterprises and SMEs enjoy “de minimis” and other state aid schemes from EU funds or from the state budget. Business facilitation mechanisms provide for equitable treatment of women in the economy. According to the World Bank Doing Business Report, women are able to register a LLC with the same amount of time, cost, and number of procedures as men.

Outward Investment

There are no restrictions or incentives for outward investment.

The U.S.-Romanian Bilateral Investment Treaty (BIT) on the Reciprocal Encouragement and Protection of Investment (signed in May 1992 and ratified by the U.S. in 1994) guarantees national treatment for U.S. and Romanian investors. The agreement provides a dispute resolution mechanism, liberal capital transfer, prompt and adequate compensation in the event of an expropriation, and the avoidance of trade-distorting performance requirements. In 2004, the U.S. Government negotiated a political understanding with the EU and eight accession countries, including Romania, to cover any possible inconsistencies between pre-existing BITs and the countries’ impending EU obligations. A resulting revised BIT was ratified by the U.S. Senate and the Romanian Parliament in 2004, and went into effect on February 9, 2007. Other bilateral trade agreements with third countries were terminated upon Romania’s EU accession. Romania has a bilateral taxation treaty with the United States; the treaty was signed in 1973 and entered into force in 1974. It is available at https://www.irs.gov/pub/irs-trty/romania.pdf .

As an example of changes to the taxation regime and ongoing systemic tax disputes between the government and foreign investors, the Ministry of Health (MOH) announced in February 2018 an increase in the clawback tax for Q4 2017, from 19.42 percent to 23.45 percent. Pharmaceutical companies pay the clawback tax on all sales of drugs reimbursed through the public health system. The MOH calculates the tax to recover the cost for reimbursed drug sales in the previous quarter that exceed its budget. The pharmaceutical industry, both generic and innovative, immediately decried the tax increase. Industry sees itself as financing the growth in drug consumption in Romania while the MOH’s budget has remained flat since 2011. The International Innovative Pharmaceutical Producers Association (ARPIM) issued a press release noting that from 2013-2017, pharmaceuticals paid USD1.75 billion in clawback taxes, exceeding one year of the MOH’s annual budget for drugs in the public health system. Since implementation of the clawback tax in 2009, the pharmaceutical industry has suggested numerous solutions to address the lack of predictability and transparency in the National Health Insurance House’s computations, but the GOR has shown no interest in increasing government spending for medicine to reduce the tax burden on private companies.

In April 2018, the Foreign Investors Council (FIC) issued an open letter to the Prime Minister, Minister of Finance, and speakers from both chambers of Parliament decrying ongoing uncertainty in the business environment from the GOR’s failure to finalize Emergency Ordinance (EO) 79. In 2017, EO 79 shifted the burden of mandatory payroll deductions for pensions, healthcare, and income taxes from employers to employees. Parliament has yet to confirm or modify the law, leaving employers in the lurch over the final outcome. To avoid reductions in employee net pay, many private businesses and organizations voluntarily increased salaries to offset employee losses. Other companies, wary of further changes, offered monthly bonuses rather than formally amending contracts. In the public sector, the measure counteracted long-promised wage increases, undermining an important component of the GOR’s legislative program. FIC’s letter signals the business sector’s growing frustration with the GOR’s tendency to publish new laws without impact analysis or stakeholder consultation.

Transparency of the Regulatory System

Romanian law requires consultations with stakeholders, including the private sector, and a 30-day comment period on legislation or regulation affecting the business environment (the “Sunshine Law”). Some draft pieces of legislation pending with the government are available in Romanian at http://www.sgg.ro/acte-normative/ . Proposed items for cabinet meetings are not always publicized in advance or in full. As a general rule, the agenda of cabinet meetings should include links to the draft pieces of legislation (government decisions, ordinances, emergency ordinances, or memoranda) slated for government decision. Legislation pending with the parliament is available at http://www.cdep.ro/pls/proiecte/upl_pck.home  for the Chamber of Deputies and at https://www.senat.ro/legis/lista.aspx for the Senate. The Chamber of Deputies is the decision-making body for economic legislation. Regulatory impact assessments are often missing, and Romanian authorities do not publish the comments they receive as part of the public consultation process.

Foreign investors point to the excessive time required to secure necessary zoning permits, environmental approvals, property titles, licenses, and utility hook-ups. In January 2018, the Public Consultation Ministry was downgraded to a directorate within the Ministry of Labor and Social Justice. Except for occasional mentions in the Single Registry of Transparency of Interests (RUTI), the Ministry has had no recorded activity. The ruling coalition has now installed its third Prime Minister in 14 months, which has resulted in frequent changes to government leadership, including mid-level officials and associated staff, and changes to some agencies’ jurisdictions. This lack of both personnel and institutional stability has raised concern among the business community. With one or two exceptions, the current government has had almost no public or media engagement to present their agendas. Government agencies’ websites still have information dating back to the previous government, or provide only scarce information about the current leadership.

Public comments received by regulators are not made public. The Sunshine Law (Law 52/2003 on Transparency in Public Administration) requires public authorities to allow the public to comment on draft legislation and to set the general timeframe for stakeholders to provide input. However, there is no penalty or sanction if the public authority does not follow the Sunshine Law’s public consultation timelines. There have been cases when the public authorities have set deadlines much shorter than the standards set forth in the law. There were no transparency enforcement regulatory reforms announced or implemented in 2017.

International Regulatory Considerations

As an EU member state, Romanian legislation is largely driven by the EU acquis, the body of EU legislation. EC regulations are directly applicable, while implementation of directives at the national level is done through the national legislation. Romania’s regulatory system incorporates European standards. Romania has been a World Trade Organization (WTO) member since January 1995 and a member of the General Agreement on Tariffs and Trade (GATT) since November 1971. Romania has been a member of the EU since 2007. Technical regulation notifications submitted by the EU are valid for all member states. The EU signed the Trade Facilitation Agreement (TFA) in October 2015. Romania has implemented all TFA requirements.

Legal System and Judicial Independence

Romania recognizes property and contractual rights, but enforcement through the judicial process can be lengthy, costly, and difficult. Foreign companies engaged in trade or investment in Romania often express concern about the Romanian courts’ lack of expertise in commercial issues. There are no specialized commercial courts, but there are specialized civil courts. Judges generally have limited experience in the functioning of a market economy, international business methods, intellectual property rights, or the application of Romanian commercial and competition laws. As stipulated in the Constitution, the judicial system is independent from the executive branch and generally considered procedurally competent, fair, and reliable. Affected parties can challenge regulations and enforcement actions in court. Such challenges are then adjudicated in the national court system.

Inconsistency and a lack of predictability in the jurisprudence of the courts or in the interpretation of the laws remains a major concern for foreign and domestic investors and for wider society. Even when court judgments are favorable, enforcement of judgments is inconsistent and can lead to lengthy appeals. Failure to implement court orders or cases where the public administration unjustifiably challenges court decisions constitute obstacles to the binding nature of court decisions.

Mediation as a tool to resolve disputes is gradually becoming more common in Romania and a certifying body, the Mediation Council, sets standards and practices. The professional association, the Union of Mediation Centers in Romania, is the umbrella organization for mediators throughout the country. Court-sanctioned and private mediation is available at recognized mediation centers in every county seat.

There is no legal mechanism for court-ordered mediation in Romania, but judges can encourage litigants to use mediation to resolve their cases. If litigants opt for mediation, they must present their proposed resolution to the judge upon completion of the mediation process. The judge must then approve the agreement.

Laws and Regulations on Foreign Direct Investment

Since becoming an EU member, Romania has worked assiduously to create an EU-compatible legal framework consistent with a market economy and investment promotion. At the same time, implementation of these laws and regulations frequently lags or is inconsistent.

Romania’s legal framework for foreign investment is encompassed within a substantial body of law largely enacted in the late 1990s. It is subject to frequent revision. Major changes to the Civil Code were enacted in October 2011 including replacing the Commercial Code, consolidating provisions applicable to companies and contracts into a single piece of legislation, and harmonizing Romanian legislation with international practices. The Civil Procedure Code, which provides detailed procedural guidance for implementing the new Civil Code, came into force in February 2013.

In 2010, Romania passed a judicial reform law with the objective of improving the speed and efficiency of judicial processes, including provisions to reduce delays between hearings. The Mediation Law, revised in October 2012, provides alternative dispute resolution options. The new Criminal Code, that includes provisions applicable to the economic felonies, came into effect in February 2014. In 2018, Parliamentary leaders announced plans to amend both. The 2003 Fiscal Code and Fiscal Procedure Code, amended several times since their passage, was revised in December 2017. Fiscal legislation is revised frequently, often without scientific or data-driven assessment of the impact the changes may have on the economy.

Given the state of flux of legal developments, investors are strongly encouraged to engage local counsel to navigate the various laws, decrees, and regulations, as several pieces of investor-relevant legislation have been challenged in both local courts and the Constitutional Court. There have been few hostile takeover attempts reported in Romania, yet Romanian law has not focused on limiting potential mergers or acquisitions. There are no Romanian laws prohibiting or restricting private firms’ free association with foreign investors.

Competition and Anti-Trust Laws

Romania has extensively revised its competition legislation, bringing it closer to the EU Acquis Communautaire and best corporate practices. A new law on unfair competition came into effect in August 2014. Companies with a market share below 40 percent are no longer considered to have a dominant market position, thus avoiding a full investigation by the Romanian Competition Council (RCC) of new agreements, saving considerable time and money for all parties involved. Resale price maintenance and market and client sharing are still prohibited, regardless of the size of either party’s market share. The authorization fee for mergers or acquisitions ranges between EUR10,000 (USD12,303) and EUR50,000 (USD61,520). The Fiscal Procedure Code requires companies that challenge an RCC ruling to front a deposit while awaiting a court decision on the merits of the complaint.

Romania’s Public Procurement Directives outline general procurements of goods and equipment, utilities procurement (“sectorial procurement”), works and services concessions, and remedies and appeals. An extensive body of secondary and tertiary legislation accompanies the four laws. Separate legislation governs defense and security procurements. In a positive move, this new body of legislation differs from the previous approach of using lowest price as the only public procurement selection criterion. Under the new laws, an authority can use price, cost, quality-price ratio or quality-cost ratio. The new laws also allow bidders to provide a simple form (the European Single Procurement Document) in order to participate in the award procedures. Only the winner must later submit full documentation.

The public procurement laws stipulate that challenges regarding procedure or an award can be filed with the National Complaint Council (NCC) or the courts. Disputes regarding execution, amendment, or termination of public procurement contracts can be subject to arbitration. The new laws also stipulate that a bidder has to notify the contracting authority before challenging either the award or procedure. Not fulfilling this notification requirement results in the NCC or court rejecting the challenge.

The March 2018 European Semester Report for Romania notes that the share of negotiated public procurement procedures without prior publication was 17 percent in Romania in 2017, among the highest in the EU. More than 40 percent of contracts awarded by public institutions in 2017 were single bids. This raised concerns among businesses about corruption in public procurement, which reduces competition, and decreases efficiency of public spending.

Expropriation and Compensation

The law on direct investment includes a guarantee against nationalization and expropriation or other equivalent actions. The law allows investors to select the court or arbitration body of their choice to settle disputes. Several cases involving investment property nationalized during the Communist era remain unresolved. In doing due diligence, prospective investors should ensure that a thorough title search is done to ensure there are no pending restitution claims against the land or assets.

Dispute Settlement

ICSID Convention and New York Convention

Romania is a signatory to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Romania is also a party to the European Convention on International Commercial Arbitration concluded in Geneva in 1961 and is a member of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID). Romania’s 1975 Decree 62 provides for legal enforcement of awards under the ICSID Convention.

Investor-State Dispute Settlement

Romania is a signatory to the New York Convention, the European Convention on International Commercial Arbitration (Geneva), and the ICSID. There have been 13 ICSID cases in total against Romania. Three of them involved U.S. investors. The arbitral tribunal ruled in favor of Romania in two of them. Four investor-state arbitration cases against Romania are currently pending with the ICSID. Local courts recognize and enforce foreign arbitral awards against the government. There is no history of extrajudicial action against investors.

International Commercial Arbitration and Foreign Courts

Romania increasingly recognizes the importance of investor-state dispute settlements and has provided assurances that the rule of law will be enforced. Many agreements involving international companies and Romanian counterparts provide for the resolution of disputes through third-party arbitration. Local courts recognize and enforce foreign arbitral awards and judgments of foreign courts. There are no statistics on the percentage of cases in which Romanian courts ruled against SOEs.

Romanian law and practice recognize applications to other internationally-known arbitration institutions, such as the International Chamber of Commerce (ICC), Paris Court of Arbitration, and the United Nations Commission on International Trade Law (UNCITRAL). Romania has an International Commerce Arbitration Court administered by the Chamber of Commerce and Industry of Romania. Additionally, in November 2016, the American Chamber of Commerce in Romania (AmCham Romania) established the Bucharest International Arbitration Court (BIAC). This new arbitration center will focus on business and commercial disputes involving foreign investors and multinationals active in Romania.

According to the World Bank’s Doing Business report, it takes on average 512 days to enforce a contract, from the moment the plaintiff files the lawsuit until actual payment. Associated costs can total around 26 percent of the claim. Arbitration awards are enforceable through Romanian courts under circumstances similar to those in other Western countries, although legal proceedings can be protracted.

Bankruptcy Regulations

Romania’s bankruptcy law contains provisions for liquidation and reorganization that are generally consistent with Western legal standards. These laws usually emphasize enterprise restructuring and job preservation. To mitigate the time and financial cost of bankruptcies, Romanian legislation provides for administrative liquidation as an alternative to bankruptcy. However, investors and creditors have complained that liquidators sometimes lack the incentive to expedite liquidation proceedings and that, in some cases, their decisions have served vested outside interests. Both state-owned and private companies tend to opt for judicial reorganization to avoid bankruptcy.

In December 2009, the debt settlement mechanism Company Voluntary Agreements (CVAs) was introduced as a means for creditors and debtors to establish partial debt service schedules without resorting to bankruptcy proceedings. The global economic crisis did, however, prompt Romania to shorten insolvency proceedings in 2011.

According to the World Bank’s Doing Business report, resolving insolvency in Romania takes 3.3 years on average and costs 10.5 percent of the debtor’s estate, with the most likely outcome being a piecemeal sale of the company. The average recovery rate is 35.6 cents on the dollar. Globally, Romania stands at 51 in the ranking of 190 economies on the ease of resolving insolvency.

Investment Incentives

Currently, customs and tax incentives are available to investors in six free trade zones. State aid is available for investments in free trade zones under EU regional development assistance rules. Of the 36 companies that applied for state aid in 2016, only six were selected. As of December 31, 2017, 63 percent of the 38 applications for regional development aid were rejected, and the rest were under review. Large companies may receive aid up to 50 percent of their eligible costs. The ceiling is 35 percent in the counties of Ilfov, Timis, Arad, Caras Severin, and Hunedoara. In Bucharest, the ceiling is 10 percent. The ceiling for small and medium-sized enterprises (SMEs) is 10 percent higher than permissible aid for large companies, and for the smallest category of companies the ceiling is higher by 20 percentage points. Prospective investors are advised to thoroughly investigate and verify the current status of state incentives.

In 2007, Romania adopted EU regulations on regional investment aid, and instituted state aid schemes for large investments and SMEs. Both Romanian and EU state aid regulations aim to limit state aid in any form, such as direct state subsidies, debt rescheduling schemes, debt for equity swaps, or discounted land prices. The EC must be notified of, and approve, GOR state aid that exceeds the pre-approved monetary threshold for the corresponding category of aid. To benefit from the remaining state aid schemes, applicants must secure financing that is separate from any public support for at least 25 percent of the eligible costs, either through their own resources or through external financing, and must document this financing in strict accordance with Ministry of Finance guidelines. Amendments made in 2010 to the state aid scheme for regional projects score applications based not only on the economics of the project, but also on the GDP per capita and unemployment rate for the county of intended investment. When granting state aid, the Ministry of Finance requires that the state revenues through taxes equal the state aid granted. Numerous foreign and American firms have successfully applied for and received Romanian State Aid.

The Green Certificate System, part of the Renewable Energy Law, provides incentives for certain types of renewable energy. The Green Certificates are traded in parallel with the energy produced. Although the Green Certificates are intended to provide an additional source of revenue for renewable energy producers, repeated revisions to the support system including deferring release of the certificates, and lowering the mandatory green certificate quota that consumers and suppliers have to acquire have created instability in the renewables investment climate. Energy intensive industrial consumers receive exemptions from acquiring green certificates. In March 2017, the government revised the renewable energy support legislation. The changes include extending the validity of tradable green certificates to allow trading until 2032 and requires green certificates trading to be done anonymously, with the intention of leveling the playing field for all green certificates sellers on the market.

As a member of the EU, Romania must receive European Commission (EC) approval for any state aid it grants that is not covered by the EU’s block exemption regulations. The Romanian Competition Council acts as a clearinghouse for the exchange of information between the Romanian authorities and the EC. The failure of state aid grantors to notify the EC properly of aid associated with privatizations has resulted in the Commission launching formal investigations into several privatizations. Investors should ensure that the government entities with which they work fully understand and fulfill their duty to notify competition authorities. Investors may wish to consult with EU and Romanian competition authorities in advance, to ensure a proper understanding of notification requirements.

Companies operating in Romania can also apply for aid under EU-funded programs that are co-financed by Romania. In 2017, Romania obtained EC accreditation for its management authorities for 2014-2020 programs and met outstanding ex-ante conditions. These are the preconditions for Romania to start absorbing EU funds from the 2014-2020 budgetary cycle. When planning a project, prospective applicants must bear in mind that the project cannot start before the financing agreement is finalized; the application, selection, and negotiation process can be lengthy. Applicants also must secure financing for non-eligible expenses and for their co-financing of the eligible expenses. Finally, reimbursement of eligible expenses – which must be financed upfront by the investor – is often very slow. Procurements financed by EU-funded programs above a certain monetary threshold must comply with public procurement legislation. In an effort to increase the absorption rate of EU funds, Romania has amended regulations to allow applicants to use the assets financed under EU-funded programs as collateral. However, understaffing and a lack of expertise on the part of GOR management entities, cumbersome procedures, and applicants’ difficulty obtaining private financing still remain significant obstacles to improved absorption of EU funds and project implementation by Romania.

Foreign Trade Zones/Free Ports/Trade Facilitation

Free Trade Zones (FTZs) received legal authority in Romania in 1992. General provisions include unrestricted entry and re-export of goods, and exemption from customs duties. The law further permits the leasing or transfer of buildings or land for terms of up to 50 years to corporations or natural persons, regardless of nationality. Foreign-owned firms have the same investment opportunities as Romanian entities in FTZs.

Currently there are six FTZs, primarily located on the Danube River or close to the Black Sea: Sulina, Constanta-Sud Agigea, Galati, Braila, Curtici-Arad, and Giurgiu. The administrator of each FTZ is responsible for all commercial activities performed within the zone. FTZs are under the authority of the Ministry of Transportation.

Performance and Data Localization Requirements

The government does not mandate local employment. There are no excessively onerous visa, residence, work permit, or similar requirements inhibiting mobility of foreign investors or their employees. There are no government imposed conditions on permission to invest. The government does not require investors to establish or maintain data storage in Romania. Romania neither follows nor is there legislation requiring a “forced localization” policy for goods, technology or data. Romania does not have requirements for foreign IT providers to turn over source code or provide access for government surveillance. Romania’s Constitutional Court has twice ruled such specific legislative drafts are unconstitutional. There are no measurements that prevent or unduly impede companies from freely transmitting customer or other business-related data outside the country. There are no performance requirements imposed as a condition for establishing, maintaining or expanding an investment.

Real Property

The Romanian Constitution, adopted in December 1991 and revised in 2003, guarantees the right to ownership of private property. Mineral and airspace rights, and similar rights, are excluded from private ownership. Under the revised Constitution, foreign citizens can gain land ownership through inheritance. With EU accession, citizens of EU member states can own land in Romania, subject to reciprocity in their home country.

Companies owning foreign capital may acquire land or property needed to fulfill or develop company goals. If the company is dissolved or liquidated, the land must be sold within one year of closure, and may only be sold to a buyer(s) with the legal right to purchase such assets. Investors can purchase shares in agricultural companies that lease land in the public domain from the State Land Agency.

The 2006 legislation that regulates the establishment of specialized mortgage banks also makes possible a secondary mortgage market, by regulating mortgage bond issuance mechanisms. Mortgage loans are offered by commercial banks, specialized mortgage banks, and non-bank mortgage credit institutions. Romania’s mortgage market is now almost entirely private. The state-owned National Savings Bank, CEC Bank, also offers mortgage loans. Since 2000, Romania has had in place the Electronic Archives of Security Interests in Movable Property (AEGRM) that represents the national recording system for the priority of mortgages structured by entities and assets, ensuring the filing of transactions regarding mortgages, assimilated operations, or other collateral provided by the law, as well as its advertising. Most urban land has clear title, and the National Cadaster Agency (NCA) is slowly and deliberately working to identify property owners and register land titles. According to the National Cadaster Plan, 2023 is the deadline for full registration of lands and buildings in the registry. According to NCA data, 10.9 million (27 percent) of the estimated real estate assets (land and buildings) were registered in the cadaster registry as of March 2018.

Romania has made marginal improvement in implementing digital records of real estate assets, including land. The 2018 World Bank Doing Business Report ranks Romania 45th for the ease of registering property up from 57th in the 2017 report. The cadaster property registry is far from complete, and the lack of accurate and complete information for land ownership continues to be a challenge for private investors ‎and SOEs alike.

Intellectual Property Rights

Romania is on the U.S. Trade Representative’s Special 301 watch list. As elsewhere in the EU, Internet piracy – both Torrent site peer-to-peer (P2P) file sharing and business-to-consumer piracy – remains a top intellectual property rights (IPR) concern. Despite the low priority placed on IPR enforcement at the policy level, cooperation between law enforcement authorities, including prosecutors and police officers, and intellectual property-based private industry continues to exist at the working level. This cooperation leads to innovative approaches to prosecuting IPR crimes within a constrained legal and fiscal environment: to increase the odds of IPR cases being heard in court, law enforcement authorities, when appropriate, are bundling related charges of fraud, tax evasion, embezzlement, and organized crime activity with IPR violations. Not only has this increased the odds of IPR cases going to court, it also strengthens the evidence of “social harm” stemming from IPR violations, as lack of social harm was often cited as a reason for dismissing IPR cases in the past.

Romania’s Customs Authority reported the seizure of approximately 1.40 million pieces of counterfeit goods in 2017 compared to 1.52 million pieces in 2016 and 6.17 million pieces in 2015. The declining trend continues at an accelerated pace, in line with growing purchasing power and demand for genuine physical goods. Batteries (other than car batteries), toys, sweets, cigarettes, clothing, stickers, footwear, pens, accounted for the majority of those seizures. The amount of seized pharmaceuticals had fallen from 370 pieces in 2016 to zero in 2017. While there was a significant increase in seized quantities of batteries, candy, bracelets, caps, clothing, glasses and glass accessories, there was a significant drop in seized quantities of footwear, cosmetics, mobile phone accessories, car parts, cigarettes, toys, headphones, and memory cards. According to both the National Customs Authority and the national police, the vast majority of counterfeit goods seized in Romania originate in China.

Romania is a signatory to international conventions concerning IPR, including Trade-Related Aspects of Intellectual Property Rights (TRIPS), and has enacted legislation protecting patents, trademarks, and copyrights. Romania has signed the Internet Convention to protect online authorship. While the IPR legal framework is generally good, enforcement remains weak and ineffective, especially in the area of internet piracy. The once-flagrant trade of retail pirated goods has largely been eliminated, but unlicensed use of software and personal use of pirated audio-video products remains high. Romania has passed broad IPR protection enforcement provisions, as required by the WTO, yet judicial enforcement remains lax.

Romania is on the Special 301 Watch List primarily due to weak enforcement efforts against online copyright piracy. Customs officers can seize ex-officio, and then destroy counterfeit goods after the rights holder first inspects the goods and drafts a declaration. The government is responsible for paying for the storage and destruction of the counterfeit goods. Counterfeit goods are not prevalent in the local market. Romania is not listed in the notorious market report.


Romania is a party to the Paris Convention for the Protection of Industrial Property, and subscribes to all of its amendments. Romanian patent legislation generally meets international standards, with foreign investors accorded equal treatment with Romanian citizens under the law. Patents are valid for 20 years. Romania has been a party to the European Patent Protection Convention since 2002. Patent registration can be filed online. Since 2014, Romania has also enforced a distinct law regulating employee inventions. The right to file a patent belongs to the employer for up to two years following the departure of the employee.


In 1998, Romania passed a trademark and geographic indications law, which was amended in 2010 to make it fully consistent with equivalent EU legislation. Romania is a signatory to the Madrid Agreement relating to the international registration of trademarks and the Geneva Treaty on Trademarks. Trademark registrations are valid for ten years from the date of application and renewable for similar periods. Beginning 2014, trademark registrations can be filed online. In 2007, Romania ratified the Singapore Treaty on the Law of Trademarks.


Romania is a member of the Bern Convention on Copyrights. The Romanian Parliament has ratified the latest versions of the Bern and Rome Conventions. The Romanian Copyright Office (ORDA) was established in 1996, and promotes and monitors copyright legislation. The General Prosecutor’s Office (GPO) provides national coordination of IPR enforcement, but copyright law enforcement remains a low priority for Romanian prosecutors and judges. Many magistrates still tend to view copyright piracy as a “victimless crime” and this attitude has resulted in weak enforcement of copyright law. Due to the popularity of downloading pirated content, copyright infringement of music and film is widespread throughout Romania.

For additional information about treaty obligations and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/ .

Capital Markets and Portfolio Investment

Romania welcomes portfolio investment and is working to increase the efficiency of its capital markets. In September 2016, the FTSE included Romania on its “Watch List” to possibly reclassify the country to “Emerging Market” status. Currently FTSE states that Romania still fails to meet the turnover velocity criteria. The Financial Regulatory Agency (ASF) is responsible for regulating the securities market. The ASF implements the registration and licensing of brokers and financial intermediaries, the filing and approval of prospectuses, and the approval of market mechanisms.

The Bucharest Stock Exchange (BVB) resumed operations in 1995, after a hiatus of nearly 50 years. The BVB operates a two-tier system. The main market lists a total of 87 companies. The official index, BET, is based on a basket of the 10 most active stocks listed. BET-TR is the total return on market capitalization index, adjusted for the dividends distributed by the companies included in the index. Since 2015, the BVB also has an alternative trading system (ATS) with 283 listed companies targeting small and medium-sized enterprises (SMEs), and requesting more relaxed listing criteria. The BVB allows trade in corporate, municipal, and international bonds, and in 2007, the BVB opened derivatives trading. Starting July 2015, investors can use gross basis trade settlement, and beginning March 2015, trades can be settled in two net settlement cycles. The BVB’s integrated group includes trading, clearing, settlement, and registry systems. The BVB’s Alternative Trading System (ATS) International allows trading in local currency of six foreign stocks listed on international capital markets.

Despite a diversified securities listing, the situation on the international capital and financial markets has adversely affected the Romanian capital market, and liquidity remains low. Neither the government nor the Central Bank imposes restrictions on payments and transfers. The red tape associated with capital market access, still high trading fees, and inconsistent enforcement of corporate governance rules have kept Romania within the frontier market tier. Country funds, hedge funds, and venture capital funds continue to participate in the capital markets. Minority shareholders have the right to participate in any capital increase. Romanian capital market regulation is now EU-consistent, with accounting regulations incorporating EC Directives IV and VII. The BVB has been since September 2016 on the FTSE-Russell watch list for a possible upgrade to emerging capital market status.

Money and Banking System

There are 35 banks and credit cooperative national unions currently operating in Romania. The largest, Romanian Commercial Bank (BCR), was privatized in 2006 by sale to Austria’s-owned Erste Bank and has a 16.3 percent market share according to the National Bank of Romania. The second-largest is the privately-owned Transilvania Bank (13.1 percent), followed by French-owned Romanian Bank for Development (BRD-Société Générale) with 12.9 percent market share, Austrian-owned Raiffeisen (8.5 percent), and Italian-owned UniCredit (8.3 percent).

The banking system is stable and well-provisioned. According to the National Bank of Romania, as of February 2018, non-performing loans account for 6.2 percent of total bank loans and interest. As of December 2017, the solvency rate of the banking system is 18.9 percent.

The GOR has encouraged foreign investment in the banking sector, and there are no restrictions on mergers and acquisitions. The only remaining state-owned banks are the National Savings Bank (CEC Bank) and EximBank, comprising 8.3 percent of the market combined. Parliament is considering draft legislation to establish a state-owned development bank that would focus on SME financing and large infrastructure projects.

While the National Bank of Romania must authorize all new non-EU banking entities, banks, and non-bank financial institutions already approved in other EU countries need only notify the National Bank of Romania of plans to provide local services based on the EU passport.

The Romanian Association of Banks has promoted a dialogue with interested parties – institutions, representatives of consumers’ associations, businesses, and the media –to improve the legal framework to allow adoption of digital technologies in the financial and banking sectors. The current stance of Romania’s regulators toward bitcoin and digital currencies is one of caution. The National Bank of Romania is reserved about bitcoin and has issued several statements warning users about digital currencies. The National Bank of Romania has stated they will not permit risky products that could undermine consumer protection or the banking sector.

Foreign Exchange and Remittances

Foreign Exchange Policies

Romania does not restrict the conversion or transfer of funds associated with direct investment. All profits made by foreign investors in Romania may be converted into another currency and transferred abroad at the market exchange rate after payment of taxes.

Romania’s national currency, the Leu, is freely convertible in current account transactions, in accordance with the International Monetary Fund’s (IMF) Article VII.

Remittance Policies

There is no limitation on the inflow or outflow of funds for remittances of profits, debt service, capital gains, returns on intellectual property, or imported inputs. Proceeds from the sales of shares, bonds, or other securities, as well as from the conclusion of an investment, can be repatriated.

Romania implemented regulations liberalizing foreign exchange markets in 1997. The inter-bank electronic settlement system became fully operational in 2006, eliminating past procedural delays in processing capital outflows. Commission fees for real-time electronic banking settlements have gradually been reduced.

Capital inflows are also free from restraint. Romania concluded capital account liberalization in September 2006, with the decision to permit non-residents and residents abroad to purchase derivatives, treasury bills, and other monetary instruments.

Sovereign Wealth Funds

Romania does not have a sovereign wealth fund. The current government has indicated an intention to create two sovereign wealth funds, the National Fund for Development and Investment (NFID), and a National Investment Fund. The Ministry of Finance has the lead in drafting the implementation blueprints.

According to the World Bank, there are approximately 1,200 SOEs in Romania, of which around 300 are majority-owned by the GOR. There is no published list of all SOEs since some are subordinated to the national government and some to local authorities. SOEs are governed by executive boards under the supervision of administration boards. The 2016 Corporate Governance Code (Law 111) improved implementation of corporate governance in SOEs. However, the government exempted several SOEs from the Code in 2017, and implementation of the Code remains incomplete.

SOEs are required by law to publish an annual report. Majority state-owned companies that are publicly listed, as well as state-owned banks, are required to be independently audited. The Corporate Governance Code (enacted through Government Emergency Ordinance 109 / 2011 and revised through Law 111 / 2016) does not have language requirements for SOE executive and non-executive board members. Enforcement of the Corporate Governance Code has been uneven; many SOEs are currently managed by interim boards, often with politically appointed members that lack sector and business expertise. The March 2018 European Semester Report for Romania noted that corporate governance of SOEs was substantially weakened in 2018 and points to a significant backtracking on past reforms.

Privatization Program

The Ministry of Energy oversees energy generation and distribution assets, and uranium and coal mining. The Ministry of Economy has authority over state-controlled natural gas carrier Transgaz, national electricity carrier Transelectrica, national salt company Salrom, national waters company SNAM, and copper mining company Cuprumin. The Ministry of Transportation (MOT) has authority over the entities in the transportation sector, including rail carrier CFR Marfa. Romania’s privatization law permits the responsible authority to hire an agent to handle the entire privatization process, though ultimate decision-making authority remains with the government. Joint ventures between state-owned energy companies and private investors for electric power production have been stalled due to decreasing energy consumption and declining energy prices.

The terms of Romania’s 2013-2015 precautionary stand-by agreement with the IMF included the sale of minority stakes in several state-owned energy companies through initial public offerings (IPOs) and secondary public offerings (SPOs) on the Bucharest Stock Exchange (BVB). To date, successful transactions have included a 15 percent SPO for natural gas transmission operator Transgaz in April 2013 (following a 10 percent IPO in November 2007), an IPO for 10 percent stake in nuclear power producer Nuclearelectrica in September 2013, an IPO for a 15 percent stake in natural gas producer Romgaz in October 2013, and an IPO on the BVB and London Stock Exchange for the majority privatization of state-controlled electricity distributor Electrica in June 2014. Privatization has stalled since 2014. The government has repeatedly postponed IPOs for hydropower producer Hidroelectrica and integrated coal mining and coal-fired power production company Oltenia Energy Complex.

Romania has implemented the Electricity Directive and the Gas Directive of the EU’s Third Energy Package, introducing a structural separation between transmission system operator activities, and generation, production, and supply activities. Ownership unbundling rules apply to investors with participation in energy transmission, generation, production, and/or supply activities. According to the Third Energy Package directives, the same entity cannot control generation, production and/or supply activities, and at the same time control or exercise any right over a transmission system operator (TSO). Furthermore, the same entity cannot control a TSO and at the same time control or exercise any right over generation, production and/or supply activities. Consequently, the Ministry of Economy oversees the national natural gas carrier Transgaz and national electricity carrier Transelectrica, while the Ministry of Energy has authority over state-controlled electricity producers. Prospective investors are strongly advised to conduct thorough due diligence before any acquisition, particularly of state-owned assets.

As a member of the EU, Romania is required to notify the European Commission’s General Directorate for Competition regarding significant privatizations and related state aid. Prospective investors should seek assistance from legal counsel to ensure compliance with relevant legislation. The state aid schemes aim to enhance regional development and job creation through financial support for new jobs or investment in new manufacturing assets. The Ministry of Finance issues public calls for applications under the schemes. GOR failure to consult with, and then formally notify, the European Commission properly has resulted in delays and complications in some previous privatizations.

Private enterprises compete with public enterprises under the same terms and conditions with respect to market access and credit. Energy production, transportation, and mining are majority state-owned sectors, and the government retains a monopoly on electricity and natural gas transmission.

Investors receiving state aid, whose investments have been affected by the global economic crisis, have found renegotiation of their state aid agreements to be cumbersome, in part due to local authorities’ failure to acknowledge that market conditions have changed. Some investors have experienced problems due to the occasional failure of GOR entities to fully honor contractual obligations following conclusion of privatization agreements.

Romanian law allows for the inclusion of confidentiality clauses in privatization and public-private partnership contracts to protect business proprietary and other information. However, in certain high-profile privatizations, parliamentary action has compelled the public disclosure of such provisions.

Romania adhered to the OECD Declaration on International Investment and Multinational Enterprise in 2004. The government regularly sends representatives to the working sessions of the OECD Investment Committee and its Working Party on Responsible Business Conduct. Romania established an OECD National Contact Point in 2005 to promote the OECD Guidelines for Multinational Enterprises. Romania’s investment promotion agency InvestRomania currently serves as the contact point.

Romania defines responsible business conduct (RBC) in its National Anticorruption Strategy (NAS) as promoting a competitive business environment with integrity and implementing international standards and best practices in the public and private sector. The Ministry of Justice organized a second round of NAS cooperation meetings in May 2017 with stakeholders from public institutions, independent agencies, civil society, and the business community. These meetings established evaluation criteria for whistleblower protections and the declaration of gifts.

Several NGOs in Romania monitor, advocate, and raise concerns on RBC issues. No high-profile cases of private sector impact on human rights were recorded in 2017. However, the National Council for Combating Discrimination, the government agency responsible for applying domestic and EU anti-discrimination laws, imposed several fines on companies for discrimination against their own staff or prospective employees. The cases involved gender-based discrimination and harassment over labor union membership and child care leave. The government has not fully implemented a law which prohibits discrimination against persons with physical, sensory, intellectual, and mental disabilities in employment, education, transportation, and access to health care.

Romania does not participate in the Extractive Industries Transparency Initiative (EITI), but is an adherent to the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas since 2012.

Romania’s fight against high and medium-level corruption has become increasingly credible, with significant numbers of prosecutions and convictions of corrupt public officials in recent years. Its prosecutorial efforts have become a model in Southeastern Europe. Romania was ranked 59 of 180 countries in Transparency International’s 2017 Corruption Perception Index, still among the lowest ranked EU member states, but ahead of Bulgaria and Hungary. Over the past year, judicial institutions, NGOs, the EU, and NATO allied governments have all raised concerns about GOR legislative initiatives that, if implemented, could significantly weaken anti-corruption efforts and judicial independence.

The European Commission’s (EC) 2017 Report on Progress under the Cooperation and Verification Mechanism (CVM) in Romania, which measures progress in the area of judiciary reform and anti-corruption since 2007, stated that in 2017 reform momentum was lost, challenges to judicial independence were a source of concern, and the government had implemented only one of a dozen EC recommendations. As in previous CVM reports, Parliament emerges as the worst offender, with members adopting amendments that weakened conflict of interest rules and introducing “problematic or uncoordinated proposals” without consultation with stakeholders. Despite opposition from stakeholders and judicial leaders, and without any impact assessments, the government pushed through several judicial statutes, repeatedly challenged over constitutionality, which the judicial community feared would weaken judicial independence, professional standards, and quality. In an ad hoc report, the Group of States against Corruption (GRECO) warned the statutes will weaken judicial independence. A report by the Venice Commission adopted in March 2018 warned that proposed changes to the NGO legislative framework would place onerous reporting requirements on the civil society sector.

Despite numerous attacks by Romanian politicians and allied media organizations, the National Anticorruption Directorate (DNA) continued to investigate and prosecute corruption cases involving medium- and high-level political, judicial, and administrative officials throughout 2017, with nearly 1,000 indictments, of which one-third held senior public offices and 189 were on abuse-of-office charges. Both the national cabinet and Parliament adopted codes of conduct, yet their overly general provisions have so far rendered them inconsequential. Conflicts of interest, respect for standards of ethical conduct, and integrity in public office in general remained a concern for all three branches of government. Individual executive agencies were slow in enforcing sanctions, and agencies’ own inspection bodies were generally inactive. Changes at several key regulators’ and tax agencies’ leadership raised concerns of politicization.

Progress on the implementation of the national anti-corruption strategy for 2016-2020, which the previous government adopted in 2016, has been slow, especially as far as its prevention component is concerned. The strategy focused on strengthening administrative review and transparency within public agencies, preventing corruption, increased and improved financial disclosure, conflict of interest oversight, more aggressive investigation of money laundering cases, and passage of legislation to allow for more effective asset recovery. The strategy includes an increased focus on corruption prevention, including education in civics and ethics for civil servants, a requirement for peer reviews of state institutions, stepped-up measures to strengthen integrity in the business environment, a significant decrease in public procurement fraud, and an increased role for ethics advisors and whistle-blowers. There has been little action in these areas, especially on the prevention component. Absent political support from the top, the new National Agency for Managing Seized Assets (ANABI) has only made limited progress.

In March 2002, to reduce corrupt practices in public procurement, the GOR inaugurated a web-based e-procurement system (http://www.e-licitatie.ro/ ) designed to provide a transparent listing of both ongoing and closed solicitations with the names of the winners and the closing prices made available to the public. The use of “e-licitatie” has increased government efficiency, reduced vulnerability to corruption, and improved fiscal responsibility in government procurement. State entities, as well as public and private beneficiaries of EU funds, are required by law to follow public procurement legislation and use the e-procurement system. Sectorial procurements, including private companies in energy and transportation, also have to follow the public procurement laws and tender via the e-licitatie website.

Romania implemented the revised Public Procurement Directives with the passage in May 2016 of four new laws to improve and make the public procurement process more transparent. The National Agency for Public Procurement has general oversight over procurements and can draft legislation, but procurement decisions remain with the procuring entities. The 2016 CVM report points to low acceptance and even resistance to integrity rules within a substantial number of local authorities, with implications for public procurement. In October 2016, the “Prevent” IT system, an initiative sponsored by the National Integrity Agency for ex-ante check of conflicts of interests in public procurement, was signed into law. The mechanism aims to avoid conflicts of interest by automatically detecting conflict of interests in public procurement before the selection and contract award procedure. The March 2018 European Commission Country Report for Romania, points to low efficiency in project preparation and prioritization of public investments and public procurements.

The laws extend to politically exposed persons, yet, at the same time, criticism of magistrates by politicians and in the media and lack of respect of judicial decisions remain frequent. Laws prohibit bribery, both domestically and for Romanian companies doing business abroad. The judiciary remains paper based and inefficient, and Romania loses a number of cases each year in the European Court of Human Rights (ECHR) due to excessive trial length. Asset forfeiture laws exist, but a functioning asset forfeiture regime remains under development. Fully 80 percent of cases in the court system are property related.

While private joint stock companies use internal controls, ethics, and compliance programs to detect and prevent bribery, since 2017 the Government has rolled back corporate governance rules for SOEs. U.S. investors have complained of both government and business corruption in Romania, with the customs service, municipal officials, and local financial authorities most frequently named. The European Commission Country Report and reports from companies point to concerns about corruption in the procurement of medical devices, and in the authorization and procurement of pharmaceuticals. In environmental projects, the use of obsolete feasibility studies has resulted in favoring existing businesses already operating locally. In some cases, demands for bribes by low- to mid-level officials reach the point of harassment. For example, companies report demands for bribes when local infrastructure improvements are needed to facilitate business operations, especially for roads which are funded from the local budget.

Romania is a member of the Southeast European Law Enforcement Center (SELEC). NGOs enjoy the same legal protections as any other organization, but additional protections are not provided to NGOs involved in investigating corruption. Recent regulations have increased costs and administrative burdens for NGOs and reduced the pool of potential donors.

UN Anticorruption Convention, OECD Convention on Combatting Bribery

Romania is member of the UN Convention Against Corruption. Romania is not a member of the OECD Anti-Bribery Convention.

Romania expressed interest to join the new anti-corruption working group of the Open Government Partnership initiative.

Resources to Report Corruption

Contact at government agency responsible for combating corruption:

National Anti-corruption Directorate (DNA)
Str. Stirbei Voda nr. 79-81, Bucuresti
+40 21 312 73 99

Contact at “watchdog” organizations:

Expert Forum
Strada Semilunei, apt 1, Sector 2, Bucuresti,
+40 21 211 7400

Freedom House Romania
Bd. Ferdinand 125, Bucuresti
+4021 253 28 38

Funky Citizens
Colivia, Pache Protopopescu 9
+40 0723 627 448

Romania does not have a history of politically motivated damage to foreign investors’ projects or installations. However, anti-shale gas protestors invaded the site of a U.S. energy company’s exploratory well in October 2013, damaging the perimeter fence and some equipment. Major civil disturbances are rare. During the February 2017 anti-government protests, and off and on since then some government leaders pointed to “multinationals” as among the orchestrators. As of March 2018, there has been no tangible effect of this claim, and there has been no retribution taken against “multinational” companies by the government or protestors. However, the GOR started an effort in 2017 aimed at questioning the validity of the CVM mechanism and EU institutions as a whole.

Romania has traditionally boasted a large, skilled labor force at comparatively low wage rates in most sectors. The labor pool has tightened in highly-skilled professions, in particular the IT and health sectors, as a result of emigration. The university system is generally regarded as good, particularly in technical fields, though foreign and Romanian business leaders have urged reform of outdated higher education curricula to better meet the needs of a modern, innovation-driven market. Payroll taxes remain steep, resulting in an estimated 25-30 percent of the labor force working in the underground economy as “independent contractors,” where their salaries are neither recorded nor taxed. Even for registered workers, underreporting of actual salaries is common.

The unemployment rate in Romania declined by one percent to 4.9 percent in 2017, but additional data show a shrinking labor supply. At 63.4 percent in the fourth quarter of 2017, the labor force participation rate, the portion of the working age population (15-64 years) who are either employed or actively seeking employment, remains among the lowest in the EU. Romanian employers in the engineering, machinery, IT services, and healthcare sectors report difficulties in hiring and retaining employees, as Romania faces a shortage of medium- to high-skilled workers. Approximately 3.4 million Romanians work abroad. Many emigrants are younger and more qualified than the remaining population, constraining the supply of skilled labor. While the unemployment rate among youth aged 15-24 declined from 20 percent in 2016 to 17.3 in 2017, the number of young people neither in education, employment nor training (NEETs) remains very high. Long-term unemployment affected 3 percent of the labor force in 2016 and 2.1 percent in 2017.

Romania faces a shortage of healthcare staff as doctors and nurses continue to seek work abroad, motivated not only by the higher salaries, but also by the country’s antiquated medical system. About 15,700 Romanian physicians work abroad and nearly a third of domestic hospital positions are currently vacant. The GOR lacks a comprehensive strategy to remedy staff shortages, despite having taken some steps in the past years to attract and retain talent. Employees in some sectors have benefitted from fiscal incentives; for example, IT professionals are eligible for certain income tax exemptions. In 2016, the GOR launched a program to encourage relocation as part of its National Mobility Program, which identified marginalized cities and localities eligible for employment subsidies and transport allowances. In 2017, it adopted a unitary wage law to establish a more consistent framework for wages across the public sector. The law provided for a 25 percent salary increase for most public sector employees, though wages for some workers in the healthcare sector will double in nominal terms as of March 2018. Discussions with unions and businesses continue on the specific applications of the Unitary Wage Law.

The Labor Code regulates the labor market in Romania, controlling contracting, how regulations are applied, and jurisdiction. It applies to both national and foreign citizens working in Romania or abroad for Romanian companies. As an EU-member state, Romania has no government policy that requires the hiring of nationals, but has annual work permit quotas for other, non-EU nationals. For 2018, Government Decision no. 946/2017 set the annual limit at 7,000 new work permits, up from 5,500 in 2017. Work permits are issued for a maximum of one year for a fee of about 200EUR (payable in the RON equivalent of that day’s exchange rate) and are automatically renewable with a valid individual work contract. However, current legislation makes it very costly to hire non-EU citizens in Romania. Foreign companies often resort to expensive staff rotations, special consulting contracts, and non-cash benefits.

Since Romania’s revolution in December 1989, labor-management relations have occasionally been tense, the result of economic restructuring and personnel layoffs. Trade unions, much better organized than employers’ associations, are vocal defenders of their rights and benefits. Employers are required to make severance payments for layoffs according to the individual labor contracts, company terms and conditions, and the applicable collective bargaining agreements. The Labor Code differentiates between layoffs and firing; severance payments are due only in case of layoffs. There is no treatment of labor specific to special economic zones, foreign trade zones, or free ports.

Romanian law allows workers to form and join independent labor unions without prior authorization, and workers freely exercise this right. Labor unions are independent of the government. Unions and employee representatives must typically notify the employer before going on strike, and must take specific steps provided by law before launching a general strike, including holding discussions and attempting reconciliation with management representatives. Companies may claim damages from strike organizers if a court deems a strike illegal. Labor dispute mechanisms are in place to mediate any conflicts between employers and employees regarding economic, social, and professional interests. Unresolved conflicts are adjudicated in court according to the civil code. Proceedings can be initiated by the employee, employer, or labor union. Several public sector strikes took place in Romania during 2017, bringing doctors, nurses, teachers, civil servants, prison guards and local policemen to the streets. The protestors sought higher pay, better working conditions, and sufficient staffing, especially in the healthcare sector, in which staff often work excessive overtime due to personnel deficits.

Union representatives alleged that few incidents of anti-union discrimination are officially reported because it is difficult to prove legally that employers laid off employees in retaliation for union activities. The government has generally respected the right of association, and union officials state that registration requirements stipulated by law were complicated, but generally reasonable. The current law permits, but does not impose, collective labor agreements for groups of employers or sectors of activity. Collective bargaining is used for companies with more than 21 employees and provides for written agreements between employees and the employer or employer’s association. According to the Ministry of Labor, 9,366 collective labor agreements were concluded at the company level in 2016. Since 2014, parliament has periodically considered a bill to reintroduce collective bargaining at the national level, a practice which previously established minimum pay and working conditions for the entire economy, but was eliminated in 2011 by the new Social Dialogue Act.

As an EU-member state and ILO-affiliated country, Romania observes international labor rights. The law prohibits all forms of forced or compulsory labor, but is not uniformly and effectively enforced. Such practices often involving Roma and children continue to occur in Romania, as penalties are insufficient to deter violations. The minimum age for most forms of employment is 16, but children may work with the consent of parents or guardians at age 15, provided the tasks are correlated with their abilities. Employment in harmful or dangerous jobs is forbidden for those under the age of 18; the government maintains a list of dangerous jobs in which the employment of minors is restricted.

Labor laws and regulations are not waived or derogated to attract or retain investments. Since 2011, employers have had more flexibility to evaluate employees based on performance, and hiring and firing procedures have been significantly relaxed. The main objective for Romania’s national labor strategy for 2014-2020 is the development of an efficient, dynamic, and flexible workforce. Romania aims to ensure that, by 2020, 70 percent of people aged 20-64 will have access to a quality workplace which rewards them based on their capacity and competence and ensures a decent standard of living. The minimum wage has more than doubled since 2012. The monthly gross minimum wage increased from RON700 (USD186) in 2012 to RON1,450 (USD385) in 2017 and RON1,900 (USD505) in 2018, including employees’ social contributions. However, at 18.9 percent, Romania has the highest rate of employed persons at risk of poverty among all EU member states, nearly twice the EU average of 9.6 percent.

The GOR adopted and changed a number of labor laws and regulations in 2017. In January 2017, the government removed the cap on social welfare contributions, imposing these mandatory payroll deductions for pensions, healthcare, and income taxes on employees’ entire gross salary. In June, the GOR passed the Unitary Wage Law with the dual aim to raise and standardize public sector salaries across the government, resulting in a 25 percent wage increase across the board for most public workers starting January 1, 2018. However, some sectors including health and education are scheduled for larger increases effective March 1, 2018, while some individual government employees have seen a reduction resulting from standardization.

In July, the GOR then announced that it would shift the burden of paying social contributions and payroll taxes, approximately 22.5 percent of salary, from employers to employees, effective January 1, 2018. The measure applies to both the public and private sectors. Although not required by the law, many businesses have voluntarily increased employee salaries to cover the cost of social contributions and avoid reductions in employees’ net pay. However, the rapid pace of change and the government’s tendency to change laws without consultation with the private sector has created an uncertain environment. Some companies have preferred to temporarily offer monthly bonuses rather than amend employee contracts to reflect higher gross wages, hoping to avoid problems in the event the law is changed again.

Separately, in an effort to curtail underreporting of work, the GOR increased the minimum required payroll taxes that employers must pay for their part-time employees to equal those of a full-time employee earning minimum wage. Coupled with the change in the legal tax incidence of social contributions described above, the new law has had the unintended consequence that some employees owed more in social contributions than their monthly earnings. Subsequently, the GOR issued a government ordinance in February 2018 to allow part-time workers to pay social contributions for their actual gross income only, mandating that the employer make up the difference.

OPIC has been authorized to do business in Romania since the signing of the 1992 bilateral agreement. OPIC-supported investment funds in Romania and Southeast Europe include the 2013 Treetops Capital Agribusiness Fund (Romania), and the 2012 Accession Mezzanine Capital (Poland, Romania, Bulgaria, Ukraine, and Czech Republic). The 2009 OPIC-supported non-bank financial institutions in Romania included CAPA Finance, Verida Credit, and Express Finance. Third country governments do not provide significant investment financing or insurance to their firms in Romania to a level that makes it difficult for U.S. firms to compete.

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy

Host Country Statistical Source*

USG or International Statistical Source

USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other

Economic Data





Host Country Gross Domestic Product (GDP) ($M USD)


$211.4 billion


$186.7 billion



Host Country Statistical Source**

USG or International Statistical Source

USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other

U.S. FDI in partner country ($M USD, stock positions)


$1,137.81 million


$2.6 billion

BEA data available at

Host country’s FDI in the United States ($M USD, stock positions)



$85 million

BEA data available at

Total inbound stock of FDI as percent host GDP





*Source: National Statistics Institute (INS).
**Source: National Office of the Trade Register (ONRC).

Table 3: Sources and Destination of FDI

FDI domestic data from the National Office of Trade Register are below CDIS and National Bank of Romania data. Tax havens sources of inward FDI, i.e., Cyprus, are domestically reported as such, without mentioning the ultimate source as another possible country of origin. The CDIS source does not report outward direct investments from Romania.

Direct Investment from/in Counterpart Economy Data
From Top Five Sources/To Top Five Destinations (US Dollars, Millions)
Inward Direct Investment 2016 Outward Direct Investment: N/A
Total Inward 73988 100% The CDIS source does not report outward direct investments from Romania.
Netherlands 18003 24% N/A
Germany 9768 13%
Austria 8797 12%
France 5140 7%
Cyprus 4776 6%
“0” reflects amounts rounded to +/- USD 500,000.

Table 4: Sources of Portfolio Investment

Portfolio Investment Assets
Top Five Partners (Millions, US Dollars) end-June 2017
Total Equity Securities Total Debt Securities
All Countries 4,153 100% All Countries 1,681 100% All Countries 2,472 100%
Luxembourg 936 23% Luxembourg. 844 50% The Netherlands 391 16%
Austria 729 18% Austria 352 21% Austria 377 15%
Netherlands 493 12% The Netherlands 102 6% International Organizations 238 10%
International Organizations 238 6% Germany 101 6% Turkey 158 6%

Romania did not attract significant FDI until after the 1990s, due to delays in post-Communist economic reforms. According to data provided by the National Office of the Trade Registry, the cumulative net stock of FDI from January 1990 to December 2017 totaled USD61.03 billion. n direct investments abroad from January to December 2017 totaled USD5.11 billion.

Major sectors for foreign investment include:

  • Automobile and automotive components (Renault, Daimler Benz, Ford, Siemens, Continental, Alcoa, Delphi Packard, Johnson Controls, Adient, Honeywell Garrett, Michelin, Pirelli);
  • Banking and finance (Citibank, Société Générale, MetLife, ING, Generali, Raiffeisen, Erste Bank, Unicredit, Alpha Bank, , Intesa Sanpaolo, Garanti Bank, Credit Agricole, Allianz, Fairfax);
  • Information Technology (Amazon, Hewlett Packard, Adobe, Intel, Microsoft, Oracle, Cisco Systems, IBM);
  • Telecommunications (Orange, Deutsche Telekom, Telesystem International Wireless Services, Vodafone, Liberty Media/UPC);
  • Hotels (Hilton, Marriott, Best Western, Crowne Plaza, Accor, Ramada, Radisson, Sheraton);
  • Manufacturing (Timken, General Electric, Cameron, LNM, Marco, Flextronics, Holcim, Lafarge, Heidelberg, Plexus, Toro);
  • Consumer products (Procter and Gamble, Unilever, Henkel, Coca-Cola, PepsiCo, Parmalat, Danone, Lactalis);
  • Retail chains (Metro, Delhaize, Kingfisher, Dm Drogerie, Carrefour, Cora, Selgros, Auchan, Kaufland, Praktiker, Leroy Merlin).

According to Romanian Trade Registry statistics, the value of U.S. direct investment in Romania as of December 2017 was about USD1.13 billion. The U.S. is the 14th-ranked foreign investor nation, after the Netherlands, Austria, Germany, Cyprus, France, Italy, Greece, Spain, Luxemburg, Czech Republic, Switzerland, UK, and Hungary. U.S.-source investment represented 1.9 percent of Romania’s total FDI. As official statistics do not fully account for the tendency of U.S. firms to invest through their foreign, especially European-based, subsidiaries, the actual amount of U.S. FDI is higher. Romanian statistics also over-emphasize physical, capital-intensive investments, while overlooking the impact of foreign investment in services and technology.

Significant U.S. direct investors (including investments made through branches or representative offices) include:

  • Advent Central and Eastern Europe – investment fund;
  • AECOM – engineering and design;
  • Adient – automotive;
  • MetLife – life insurance;
  • Alcoa – automotive, aluminum processing;
  • Bunge – grain trading;
  • Cargill – grain export and food processing;
  • Citibank – banking;
  • Coca-Cola – beverage, food;
  • Cooper Cameron – gas field equipment manufacturer;
  • Delphi – automotive parts;
  • EuroTire – mining and heavy equipment tires;
  • Flextronics – medical, telecom, automotive;
  • Ford – automotive assembly;
  • General Electric – diversified industrial products;
  • Hewlett Packard – IT equipment, services;
  • Hoeganaes – iron powder for automotive;
  • Honeywell – automotive;
  • IBM – IT equipment;
  • Intel – software development services;
  • JC Flowers – investment fund;
  • McDonald’s – food;
  • Microsoft – software services;
  • New Century Holding – investment fund;
  • Office Depot – office and business supplies;
  • Oracle – IT services, consulting;
  • Pepsico – beverage;
  • Philip Morris – tobacco products;
  • Procter and Gamble – consumer products;
  • Qualcomm – telecommunications;
  • Timken – industrial bearings;
  • Liberty Media UPC – cable television operator;
  • Visa – financial services;
  • URS – engineering;
  • Hunt Oil, Stratum Energy, Mazarine – oil and gas production.

In addition to these companies, the European Bank for Reconstruction and Development (EBRD) remains the single largest investor (debt plus equity) in Romania, with some USD9.54 billion invested. The United States is a 10 percent shareholder in the EBRD.

Monica Dragan
IRC Director
B-dul Dr. Liviu Librescu 4-6

2018 Investment Climate Statements: Romania
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