FIC report: Romania's attractiveness compared to similar locations reaches lowest level in last 6 years

  Romania's attractiveness compared to similar locations has reached its lowest level in the last six years, with more than half of respondents considering Romania less attractive than similar locations in Europe or other countries (more than double the 24% in the previous edition), according to the latest Business Sentiment Index (BSI) report, conducted by the Foreign Investors Council (FIC)."Romania is uncompetitive in terms of transparency and consistency of policy application (88%), regulatory burden (86%), bureaucracy (78%), tax burden (61%) and infrastructure (47%). The availability of an adequate workforce is the only area still considered competitive (60%). Capital investments planned by FIC companies for 2025 are lower than in the autumn edition, with only 35% of respondents planning more investments for the next 12 months. 30% of companies intend to reduce investments, showing a decrease in investor sentiment by 8 percentage points compared to the previous year (a level comparable to the COVID period and the beginning of the war in Ukraine). 88% of FIC respondents are also considering cost reductions in the coming period", according to the BSI report, presented on Friday at an FIC event dedicated to strategic dialogue on Romania's economic prospects.The results of the report also showed a trend of investment postponement due to political uncertainty, geopolitical context, budget deficit and fiscal uncertainties.As to workforce planning, half of respondents expect the number of employees to remain stable in 2025, indicating a period of stagnant hiring activity. At the same time, 27% anticipate a reduction in the size of the workforce, signaling a potential cooling of labor market dynamics.However, investors remain optimistic when it comes to business, with more than half of respondents expecting growth in the domestic market and only 12% expecting a contraction. In the export market, 30% expect growth, while 57% expect stagnation. Overall, almost half of respondents expect business growth, while 39% expect stagnation, FIC shows."At the same time, investors are confident in Romania's opportunities: the new economic context of the EU, with Western European companies relocating some of their activities and production to Eastern Europe to reduce costs; the energy transition, if properly supported by the authorities, has the potential to generate business expansion; EU funds also remain a key opportunity for business development in Romania," the quoted source informs.According to FIC, Romania's accession to the OECD would represent another important step in attracting foreign investments to Romania and in improving the efficiency of the government sector. In addition, the EU has the opportunity to become stronger by focusing on increasing the competitiveness of EU businesses and reducing bureaucracy. This shift could realign the coordinates for the European economy to grow in the future, with an emphasis on the new industrial landscape for Romania (defense, aerospace and cybersecurity, critical raw materials, energy, etc.).At the event hosted by FIC, international institutions presented brief reports on Romania, highlighting concerns similar to the BSI findings regarding the budget deficit, political instability and the delay in the tax reform that is expected to be implemented since last year."The rapid increase in government spending is one of the most worrying trends observed by all institutions. It was stressed that our country should focus on the PNRR reforms - taxation, energy transition, education, improving the business climate (clear and predictable environment) to ensure medium-long-term economic development. The government must take all measures to ensure that it does not lose EU funds. All institutions pointed out the possible negative impact of the new tariffs announced by the US administration not only on the Romanian and EU economies, but also indirectly, through the effect on international trade", FIC emphasizes.As to OECD accession, both national and OECD representatives highlighted the significant progress made by Romania in areas such as education, taxation, governance and anti-corruption."Romania has good prospects for OECD accession in 2026. Romania still has the potential to reverse the negative economic trends captured by the macroeconomic outlook, if the Government urgently prepares reforms anchored in transparency and dialogue, in key areas, such as reducing spending, achieving fiscal consolidation and capitalizing on new opportunities in investment, energy, critical raw materials, and defense. At the same time, Romania's membership in the EU and NATO, together with potential OECD accession, remain strong advantages for stimulating and attracting investment," FIC representatives said.The organization remains committed to remaining a trusted partner in advancing reforms, supporting predictability, and consolidating Romania's position as a competitive and attractive investment destination.The Foreign Investors Council (FIC) hosted a high-level event on April 4, bringing together CEOs of member companies, ambassadors and embassy representatives, senior officials of the Romanian Government, international and national financial institutions, rating agencies and representatives of the European Commission and the Organization for Economic Cooperation and Development (OECD). The meeting provided a platform for international dialogue on Romania's macroeconomic outlook and investment climate.FIC has been monitoring how investors respond to various policy initiatives and the broader macroeconomic context through the Business Sentiment Index (BSI) since 2013. The results of this spring's edition were presented at the event and indicate a moderation in members' optimism.The Foreign Investors Council is the association that brings together the most important foreign investors in Romania, approximately 110 of the largest companies in the country with a cumulative turnover representing approximately one fifth of the gross domestic product and which have a significant contribution to the state budget. In the over 25 years since the organization was founded, FIC member companies have always supported the importance of dialogue between the business community and authorities.