Ladies and Gentlemen,
It’s a pleasure to be here today to discuss the challenges and opportunities faced by investors coming to Romania and I thank Franklin Templeton for hosting such an important event.
At the start of this century, the Romanian economy was characterised by high growth, low unemployment and declining inflation – a testament to the economic reforms implemented in the wake of the collapse of Communism which in Romania was even more centralising and uncompromising than elsewhere in Eastern Europe.
Romania, like every other European nation, has had to deal with the effects of the global economic turbulence after 2008.
The government has earned international credit for its handling of the recession. Austerity measures have been harsh but as a result Romania has one of the lowest budget deficits in Europe and one of the lowest public debts.
These efforts, which have involved some difficult decisions, are creating a platform for future economic growth and stability. One that will enable the Government to increase its investment and to attract foreign funds by capitalising on its assets, including:
- a well trained and educated work force, among whom English is widely spoken
- a strategic location offering access to countries of the former Soviet Union, the Balkans & the Middle East
- and a domestic market of 20 million consumers, the second largest market in the region after Poland.
More than 4,000 UK companies have seen these opportunities. But this is not a one-way traffic: last year, bilateral trade in goods between our countries was worth over £1.9 bn. Around £1.2 bn of that were imports from Romania to the UK.
But there is still much work to be done in promoting Romania abroad, as lack of understanding and information about Romania in the UK can deter investors. We are currently running campaigns to promote opportunities in infrastructure, energy, security, life sciences, advanced engineering and services.
In infrastructure, we expect over the next six years to see unprecedented investment into transport infrastructure across Central & Eastern Europe (CEE). The main driver is EU funding - the region will receive €150 billion between 2014 and 2020 while in Romania 9 billion euro is earmarked for infrastructure projects alone. Major projects are underway across the region to build and upgrade essential rail, road, air, and sea and water infrastructure.
This money is much needed as it comes after many years of under-investment. The situation around rail transport, for example, has become critical in Romania. The average speed is the same as in the nineteen fifties, and it wasn’t fast then, discouraging passengers and firms to use Romanian trains.
Energy is an area of great opportunities for investors. It is expected that almost €740 billion will be spent between now and 2035 across Central and Eastern Europe to improve energy efficiency, ensure security of supply and complete the internal energy market.
We have been and will remain active in promoting the opportunities this region and specifically Romania present to British investors. Only yesterday the Embassy hosted an event to introduce 15 British healthcare companies, who have developed innovations ranging from new techniques for the testing of tuberculosis infection to non-invasive technologies to heal injuries, to representatives of the public and private healthcare systems in Romania. British innovation is supporting the modernisation of Romanian healthcare. Next week in London, with assistance from the Confederation of British Industry we will introduce opportunities in all six of our campaigns to an audience of 300 British companies. Next March, we hope to bring to Romania and Bulgaria 60 companies interested in investing in energy and infrastructure. Our aim is that this will be the largest British trade mission which has yet come to Romania.
Scores of British companies provide an expertise recognised and respected across the region. The many British companies that are thriving here are evidence of that. Let me give you a few examples: Mott McDonald has helped to deliver approximately 10 EU funded projects. Balfour Beatty has helped the National Railway company in developing their rail infrastructure. AMEC are delivering a project for Cernavoda Nuclear Plant while AECOM has delivered the Transport Master Plan. Kingfisher entered Romania last year, and we would love to see more British entries in the retail market. Smaller companies can succeed too. I was delighted to attend last month the opening of the third plant in Romania, in Cluj, by Neal Brothers, experts in export packaging.
As you know, financial services are a key sector for the UK economy. The City of London has helped Romania in attracting more capital and good publicity. We welcome the listings of Romgaz and Electrica in London and we fully support the secondary listing of Fondul Proprietatea there. Fondul Proprietatea is one of the largest such funds in the world; a London listing will help generate wider interest around the potential for investment in Romania.
The Government has to play its part in attracting investors too. This is partly about showcasing what Romania has too offer. It is also about taking concrete measures to ensure a more predictable and transparent business climate. The UK strongly supports the Romanian authorities’ efforts to improve the business climate by combating corruption and increasing transparency in the public sector. Significant steps have already been taken to improve the conditions for business, including new Civil and Civil Procedure Codes, and the National Anti-Corruption Strategy. It is important to engage widely with business stakeholders, and ensure that engagement takes place early, so that business needs are understood from the outset. A multi-faceted effort is vital – a strong legal framework is not enough. An effective judicial system, a transparent institutional culture and a lively public dialogue are all essential to tackle the enabling environment for corruption.
Investors can be discouraged by frequent, unpredictable and poorly signposted legislative changes. We think that emergency ordinances should only be used in emergencies. Parliament is the place to debate new legislation.
We are encouraged by Romania’s progress in taxation. According to the World Bank Report on Competitiveness, the Government has done a good deal to ease the payment of taxes by facilitating online payment with banking cards. Firms are starting to spend less resource on time-consuming paperwork. But there is still much to do in improving fiscal predictability. Firms can be discouraged by frequent unexpected tax changes. And, as someone who has over the past few weeks been inching towards success in the matter of the purchase and registration of a private car I can testify, there is still much to be done in cutting red tape. According to the same report, a firm in Romania still needs on average 255 days to get a construction permit and 223 days to get electricity.
Tackling bureaucracy requires work at the EU as well as national level. There are tens of billions of euros to be saved by cutting back on unnecessary EU red tape. We have pushed the Commission to go further and faster to streamline regulation. We have a common interest in ensuring that the EU eliminates all the structural barriers that threaten to keep our economies in prolonged stagnation. This is an important area for shared activity between the UK and Romania: it is in our common interest, and will benefit the pockets of our citizens.
Ninety percent of global growth is due to come from outside the EU in coming years, so it is imperative that we expand our trade, using the clout of the world’s biggest marketplace to secure the best deals.
The UK has championed the Transatlantic Trade & Investment Partnership (TTIP) that could be worth £10 bn a year to the UK; the EU-Japan deal that could be worth £5bn a year; and the EU-Canada deal that could be worth £1.3 bn a year. The EU is also working with China on an investment deal, and the UK is pushing to start talks on trade with China. All of these trade deals will have a substantial positive impact on companies in Romania that seek new markets to expand their business.
The UK is an active promoter of business opportunities and reforms. One occasionally hears the refrain that “Britain lacks a vision for Europe”. This could not be more wrong. We have an exciting vision, an ambitious vision. Of a Europe that is confident in its own abilities and capable of exporting its products and values to the rest of the world. A Europe that is able to deliver on its promise of a brighter future for our children.
In the greatest changes that the EU has experienced over the last 40 years, the UK played a central role. We pushed to create a real Single Market. We pushed for the Eastwards expansion of the EU to countries like Romania, bringing freedom and prosperity to more Europeans than ever before. In the coming years, we will be pushing again for changes to complete the EU Single Market, destroy red tape and free up entrepreneurial initiatives. They are not changes that will just benefit the UK. They will benefit Romania too. They are changes that will mean that Europe remains a byeword for freedom and prosperity.
Thank you very much!