TRANSILVANIA BUSINESS CENTER

Cluj-Napoca, 18 April 2004

CONFERENCE: How will small countries such as the Baltic States compete in EU single Market?

Riga, 23-24 April 2004, http://www.biceps.org

www.e-cat.ro/radu.html

CHAPTER A - Romanian Government Policies and Strategies: www.guv.ro

A- Objectives for promoting a favourable business environment and a competitive economy in Romania:

1. development of market competition in Romania in accordance with EU regulations, for a gradual harmonisation with the requirements of ensuring the free movement of goods and services;
2. ensuring the conditions for effective corporate governance;
3. achieving flexibility and debureaucratisation of the central administration and of the staff involved in Romania’s official international relations so as to stimulate international trade and to harmonise the domestic and global business environments.

B- Sectorial policies

1. Industrial sector adjustment will be consistent with the objective of increasing external competitiveness and domestic productivity in terms of all production factors. In this respect, the following directions will be pursued:

1. extending the process of redesigning industrial capacity and structure, including by developing and encouraging co-operation with EU partners, backed by the market economy consolidation and the establishment of a competitive environment; stimulating potentially competitive small- and medium-sized enterprises;
2. sequencing the process of selection and rescaling of the economic agents involved in restructuring in view of ensuring a proper business environment capable of fulfilling the increasing internal demand and that can also significantly spur the volume and efficiency of exports of goods and services;
3. completing the privatisation of industrial companies; exposing the remaining state-owned industrial units to market forces, on the background of strengthening the legal discipline concerning competition issues (including the Bankruptcy Act);
4. restructuring of the energy- and material-intensive sectors, as well as of those with under-utilised capacities by diminishing losses and recording substantial productivity gains; promoting technologies which enable the cut in energy consumption;
5. the revival and efficient deployment of the national research and technological development potential, including the microeconomic R&D;
6. increasing competitiveness by promoting strategic alliances, holdings, and group companies in view of including the Romanian industry in the globalisation process, including by developing complex exports;
7. the rapid development, outsourcing and specialising of production-related services;
8. accelerated growth in the volume and efficiency of exports by encouraging exports of high value-added manufactured products; setting as a priority, within the limits traced by international legislation, the support for globally expanding industries or high-tech industries insufficiently developed in Romania;
9. taking advantage of Romania’s geographic position by directing exports also to neighbouring areas that may become strategic markets for EU.

2. Agricultural sector results need to be consolidated in the coming years, taking into account the issue of food security and the necessity of rural development.

1. The development of optimal sized, efficient farms shall be stimulated. The policy in this field will be aimed at increasing plot size, by association, exchange and acquisition, discouraging property division below a certain limit. Simultaneously, family associations and partnerships for integration and management will be promoted, based on farmers' interests and competitiveness, and long-term leasing will be encouraged in order to spur technical progress in agriculture.
2. Structural reforms will be deepened, the emphasis lying on farm development and privatisation of rural companies where the state is the major shareholder. The Government will improve the legal and institutional framework for the functioning of essential agrarian and rural markets: the farm produce markets, raw material market, agriculture-related services market, credit market, and the land market. The Government will also support the improvement of the infrastructure necessary for the functioning of these markets.
3. Product-based policies to spur the increase in economic effectiveness over the entire agricultural activity chain, starting with production and ending with trading on the domestic and foreign markets, will be promoted.
4. The rural development policy, based mainly on the financial support under the EU SAPARD Programme is aimed primarily at:

• the modernisation and co-ordination of production and trade sectors in line with EU norms and quality standards;
• the consolidation of optimal sized farms and diversification of complementary non-agrarian activities;
• the development of social infrastructure;
• providing advisory and training services to farmers, to land and forest owners.

3. Infrastructure development need taking into account both the National Programme for Territorial Planning and the connections with the European infrastructure system, to play a major part in economic recovery and the creation of new work opportunities.

In the context of increased EU financial support (through the pre-accession instrument ISPA) and by attracting private resources, the modernisation, rehabilitation, and development of transport infrastructures are envisaged. In this field, the priorities are the following:

1. the start of highway building, in accordance with the provisions of the TINA Final Report, in order to integrate the Romanian transport infrastructure into the Pan-European Transport Network;
2. the modernisation of railway and road infrastructure, the building of bridges and beltways around cities along the pan-European transport corridors No. IV and IX, in order to ensure an increase in the mobility of population, goods and services;
3. changing the current tax and tariff systems regarding railway and road transport, in order to increase service accessibility, and achieve harmonisation with European Union standards;

4. A more effective exploitation of the tourism potential represents a primary objective for medium-term development.

5. The strategy envisages the rebound of housing, the rehabilitation, consolidation, and modernisation of the existing buildings, including earthquake protection.

6. Development of a country-wide IT network by promoting actions aimed at developing information technology and communications, linking Romania to information flows, especially to those of the EU member states.

7. Policies for SMEs small- and medium-sized enterprise sector consolidation and development In view of exploiting the substantial economic growth and job-creation potential of the SME sector, the Government will focus on:

• providing incentive facilities (credit guarantees, interest subsidies, grants, etc.);
• organising government-assisted advisory and training centres, entrepreneurial training, technological parks and business incubation centres, which should provide free or low-priced services to SMEs;
• supporting SMEs’ participation in projects based on public investment or on foreign borrowing.

8. Policies for science and technology. The medium-term priority objectives aim at:

• The development of skills and capabilities for scientific and technological know-how generation through: support to the formation and expansion of excellence centres and networks in fields considered a priority; increase in research resources through R&D programmes as well as the research grant programmes of ANSTI, the Ministry of National Education and the Romanian Academy; improvement in access to information sources; improving research and development project management; integration of Romanian specialised organisations in the relevant international programmes and networks.
• The microeconomic potential for research development and innovation shall be developed through projects with specialised institutes and centres, and implementation of attractive co-financing schemes
• The main requirements for the increase in the quality and efficiency of research and development units are:

• the reduction in technological gaps concerning the material base;
• the development of informational infrastructure;
• implementing standard procedures for the appraisal of research and development organisations, activities and personnel, in line with international standards;
• the improvement in selection procedures, managerial practices and market orientation of research and development units;
• implementing a remuneration system consistent with the scientifically or technologically recognised value of the activities and results;
• developing the ability to disseminate scientific and technological know-how by expanding marketing services, the network of industry contact offices, etc; the development of public promotion activities;
• enhancing the ability to absorb innovation in the economic environment; supporting the migration of researchers, experts and students from institutes and universities towards companies; the improvement in firms’ access to informational facilities and scientific and technological assistance services.

9. Fiscal policy objectives for 2003 focus on:

• gradually reducing the fiscal pressure, especially on labor, up to a level that will assure long-lasting increases in productivity and investments by reducing:

• social security contributions by 5%, distributed between the employer and the employee, as follows:
• 2.67% for employees; and
• 2.33% for employers;
• the development tax by 1% (included in electric power prices);

• gradually increasing taxes on profits from export income;
• increasing excise taxes on a schedule that will gradually reach European rates; and
• improving fiscal transparency, by including in the State budget -as revenues and expenditures with special purposes - funds for the development of the energy system and public roads, as well as own revenues retained by credit holders.

10. Budget policy is closely tied to tax policy and economic and structural reforms and has as its primary targets:

• establishing expenditure priorities at functional and institutional levels based on objectives and results;
• maintaining a level of budget expenditures that is realistically tied to budget revenue collections; and
• extending and enhancing program budgeting by developing the budget and allocating public funds based on programs.

 In order to meet the 2.65% deficit target, the main structural changes in the 2003 General Consolidated Budget were:

• a decrease in expenditures (personnel salaries, materials and services, interest on the public debt and subsidies) as share of GDP; and
• the allocation of a greater share of funds for social protection measures, to stimulate and promote exports, and to provide co-financing for EU grants.

• social security, children’s allowances, and pension benefits and stipends (10.3% of GDP);
• education (4% of GDP);
• health (3.8% of GDP );
• industry (0.9% of GDP);
• agriculture and forestry (1.6% of GDP);
• transportation and communications (3.4% of GDP);
• national defense (1.9 % of GDP); and
• public order and national security (1.9 % of GDP).

For the increase of the economy’s competitiveness is needed to be continued a deep analysis of all branches and activities, of each company, region, and local community (town, commune, village). Such an analysis to establish the could be carried out using the mobile research and survey techniques based on IC&T to identify:

• best strategic branches:

• high competitive ( especially those based on local resources: human; energy;
• commodities: agricultural, wood, oil, gas…, water, landscape …)
• medium competitive
• low competitive
• short time competitiveness
• medium time
• long time
• with sustainable growth potential
• with traditional growth potential
• with low and contingent growth potential
• high innovative capacity
• medium innovative capacity
• low innovative capacity

• competitive communities/regions – towns – villages
• competitive individuals/people
• competitive mBIZ based on mKM – mobile Knowledge Management (mGuv, EDU-CULTmanagement…),

The main indicators could be:

• Macroeconomic stability: state of the reforms, privatizations, FDI opportunities, co-operation framework;
• Political stability: political system, political risk, government efficiency, civil right;
• Administration: corruption, administrative delay, inefficiencies, transparency;
• Legal environment: - legal stability and implementation – aquis;

• Business environment:

- DEMAND-oriented factors:

• Market: dimension, structure, prices, growth.
• Revenue per capita
• Access to local and regional markets
• Specific needs and preferences of consumers – Product quality

- SUPPLY-oriented factors:

• Competition level on the local market,
• Raw materials and resources availability
• Human resources: availability, qualification, competencies, skill, education (universities, research groups), experience, productivity (unitary cost level), attitudes and values, local labor market;

- BUSINESS EFICIENCY- the extent to which enterprises are performing in an innovative profitable and responsible manner (productive- trade)

• Infrastructure: transport network (roads, railways airports, ports); construction, industrial, agricultural, tourism, science&technologies, education&culture, health and environment…

• Life quality: innovative behavior, ambiental living, mobile working, services, medical care, security for expatriates…

• EU trust and confidence: - trade with EU members; trans-European project; technological transfer within Framework Programs 5- 6; pre-accession programs: PHARE, SAPARD, ISPA … phisycal&virtual image in EU and the world.

18 April 2004 , www.ClujNapoca.ro

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