Nastase offers stability, not incentives

PM Adrian Nastase on Tuesday said granting incentives was not “the top priority” for foreign investors. He feels that political, legislative and fiscal stability are the main requirements the Romanian authorities have to meet in order to attract foreign investors.

The PM on Tuesday had lunch with officials of the Foreign Investors Council in Romania. Discussions focused on the future law on supporting direct foreign investments.

A draft presented by the Development minister two months ago stipulated fiscal incentives of at least $10 million for those companies to make green-field investments.

The International Monetary Fund has repeatedly opposed incentive granting feeling it would only distort the market.

“The Government will ask for a vote of confidence in Parliament for this law, but we must be certain we will get at least the foreign investors’ vote,” the PM said before speaking with the Foreign Investors Council representatives.

At the end of the meeting, he deemed the discussion as “a most useful one” but did not volunteer any details as to what suggestions the foreign investors might have made.

Salvatore Candido, chairman of the Foreign Investors Council and representative of the European Bank for Reconstruction and Development (EBRD) in Bucharest, had some critical comments to make before the meeting with Adrian Nastase, referring to the slow pace of reforms and privatisation and to the underground economy still alive.

“Ever since 1997, when the Foreign Investors Council was set up, a lot of progress has been made in many fields, but the speed of the changes is still low; accelerated privatisation can be a major signal to businessmen abroad. Along with the political changes, it is important for investors to rest assured of the stability in the country,” Salvatore Candido said.

He specified that the 85 foreign companies belonging to the Foreign Investors Council had invested more than $4 billion. Total foreign investments made in Romania over the past ten years reach $6.5 billion.

At the end of his meeting with the PM, the Foreign Investors Council chairman estimated that the modification of the country risk operated by Standard & Poor’s last week was an acknowledgement of the progress Romania had made.

He added, “Romania is going in the right direction and is becoming more and more attractive.”

Neither PM Adrian Nastase, nor the foreign investors representative cared to mention the law on the protection of minority shareholders. An ordinance enacted by the Isarescu Cabinet, which stirred criticism from the Foreign Investors Council, was abrogated by Nastase Government.

The Cabinet announced it would draft a new ordinance to reconcile majority and minority shareholders. The two parties have yet to reach an agreement about the stipulations to be included in the new ordinance.