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A HotNews.ro analysis

Investment Law: a list of good intentions

de     HotNews.ro
Luni, 18 septembrie 2006, 0:00


The Romanian Government has submitted for public debate a new piece of legislation aimed at encouraging investments in the country. The draft law is quite generous in terms of facilities for investors: preferential interest loans, subsidies, exemptions, payment cuts and spread-outs.

While investors welcome the draft law, analysts such as Cristian Badescu believe its provisions can be easily used for personal purposes.

The law is a list of good intentions as its official goal is to support the economic development of Romania and bringing its investment provisions in line with European standards, state assistance included.

One of its novelties is that there would be no difference made between foreign and domestic investments or between direct and indirect investments. „All investment is good. What is important is that it brings a benefit for the country and for its people”, deputy PM Bogdan Pascu said when the law was first presented.

Still, some economic analysts are rather skeptical about the law. Cristian Badescu, editor-in-chief at the “Piata” economic magazine, believes such a law should not even exist.

“There is no need for a special law on investments as long as every time Romania became a target for business people, they arrived here without hesitation and with focus kept on profit, not on facilities”, Badescu says.

He argues that the big hypermarket chains and other major retailers have invested massively in Romania despite a lack of official support.

“I believe this draft law would rather be the creation of governmental structures interested in justifying their existance”, he says.

Among the advantages pushed in the law to lure investors one can note the recovery of fiscal losses from profit obtained in the five years that follow the proper investment. For such a facility, investors are forced to maintain investments for 15 years since its conclusion for projects bigger than 75 million euro.

In the case of investments of 25-75 million euro, investors must keep their investment for 10 years since its conclusion, while a period of five year is provided for investments of up to 25 million euro.

If such support is sought, business projects should focus on regional development, research-development activities, development of human resources - each conditioned by a series of factors such as the absence of debts to the state budget.

State assistance may go as high as 100% in case projects focus on research&development.

The Association of Business People in Romania (AOAR) has welcomed the draft law, but says it still needs improvement. According to AOAR secretary general Cristian Parvan,, the law does not establish clear procedure to be effective as it does not specify who and based on what criteria selects the projects that would benefit from its provisions.

For his part, Badescu says he finds the law “incredibly generous with investors as Romania does not have a reason any more to provide direct assistance like subsidised interests or guaranteed loans”.




















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