RBL warns: Public investment void will be paid over the next two years. The growing consumption hides an alarming economic reality

Romanian Business Leaders (RBL) warns that the lack of concern towards investments in the last almost two years of governance is a weakness that affects the trust of the entrepreneurs in economy, eroding at the same time the living standard of the employees in the Romanian companies. Romanian entrepreneurs believe that the real consequences will be felt only in two years, and therefore a new cycle of governance will be sacrificed from the perspective of trust and investments in the future. Romanian entrepreneurs noticed that in the last two years, the Romanian state wasn’t able to give an optimistic signal in economy by achieving long-term investments, instead oversized budget allocations to consumption were preferred. After the last year, when the public investment level was the lowest in the history, the growth rate of the investment expenses is insignificant in 2018. “The lack of investments has brought us in a paradoxical situation, in which the growing consumption hides an alarming economic reality. The modest investments as a weight in GDP are a barometer for the future living standard of the people. We expect the today’s lack of investments to be felt only in two years. All the Romanian taxpayers, not only the entrepreneurs, will pay on a medium term the bill of the personnel and social care costs of today”, stated Dragos Rosca, the RBL President. 2018 should have been the year of the public investments, but the statistical reality and the lack of the investment projects in the real economy show in fact that the last two years of governance are missed in terms of public investments, which represent 3% of the GDP, namely the lowest level in the history of the country. Besides, the last budget review of September 2018 has cut EUR 41.5 million from the allocations for the transport infrastructure. This is a confirmation that the state lets the private sector to be responsible for new investments. If the future is sacrificed by the lack of investments, the present causes difficulties to the business sector due to the bureaucracy that hampers the development of the domestic capital, blocking the professional development of the employees. Thus, the specialists in the Romanian companies – who are harder and harder to be recruited given the lack of personnel – are blocked in activities that do not produce value, but papers required by the bureaucracy. The entrepreneurs gathered within RBL also warn that the state authorities’ behavior is unreasonable and irrational in certain situations and recommend that certain dysfunctions must be corrected by a dialogue based on trust between authorities and entrepreneurs. For instance, the investigation manner of the Competition Council could be improved by consulting the investigated parties during the investigation, in order to provide alternative explanations on factual issues which, in the view of the authority, prove a violation. As for the sanctions, the calculation base is much higher in Romania than in other EU member states and the methodology of the European Commission (EC), whose reference is the turnover achieved on the relevant market of the product/service where the violation occurred. It would be appropriate to align with the EC criteria, in order to observe the principle of proportionality – adaptable sanctions depending on the relevant market, the seriousness of the offense and the peculiarities of the perpetrator. The RBL members also appreciate that it is the duty of the public institutions to start education campaigns among the citizens. An example could come from the Financial Supervisory Authority (ASF), which should initiate an awareness campaign regarding the possibility to inform on what is happening to the individual account, by which people can find out how much each of them has contributed to the 2nd Pillar. Thus, ASF could follow a good practice of the RBL members, who inform their employees on the situation of their individual accounts, in the context in which there are between 500,000 to one million Romanians who don’t know that they have RON 10,000 in the 2nd Pillar account, being sure that they have less or nothing. In order to avoid compromising the economic competitiveness on a long term, the RBL entrepreneurs and managers are asking the Government to urgently prioritize public investments and digitalize the public administration, speeding up the dialogue with the private sector, including by following the best practices of the entrepreneurs and non-governmental organizations.