World Bank on Romanian business environment

It takes 170 days to register a property in Romania, compared with a regional average of 133 days, and 34 days in the OECD member countries. When considered in terms of procedures, it takes eight steps instead of the four that it takes in Western economies.

The rigidity of employment index stands at 63 compared with 41.8 in the region and 34.4 in the OECD.

The disclosure index, reflecting transparency towards investors, is low, standing at just 2 points compared with 5.6 in the OECD countries. The enforcement of a commercial contract in Romania takes 335 days, requiring no less than 43 procedures, over against an average of 229 days and 19 procedures in OECD. This is how the Romanian business climate looks, according to the latest assessments of the World Bank conducted half way through this year. The quality of the business environment, where red tape still prevails, will be analysed in the 2004 country report of the European Commission, as this chapter includes many of the characteristics entailed by the functioning market economy status, so eagerly awaited by Bucharest.

Even though it has managed to significantly narrow the gap compared with the regional average, if one looks at the conditions prevailing in the Western business climate, Romania is still lagging far behind.

The weakest scores were those registered for the ease/difficulty of enforcing commercial contracts, for the ease with which businesses can secure property rights, and for the transparency of the information on the financial situation of a company.

The World Bank experts constantly criticised the rigidity of the regulations on the labour-force market, substantiating the complaints of foreign investors. The rigidity of the employment index assigns values from 0 to 100; the higher the value, the worse the situation is for employers. The widest gaps in comparison with the OECD countries are registered in terms of how difficult it is to dismiss a redundant worker.

Investor protection, through the proper disclosure of information about the financial situation of a company, is gauged using an index that varies from 0 to 7, with lower values indicating less disclosure. Romanian businesses will start to extensively apply the International Accounting Standards and financial auditing procedures in 2005, which is bound to improve disclosure, as well as bank and investor confidence.