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Monday, September 13, 2004
Business in Romania blog
A new law under consideration by the Romanian Parliament could affect thousands of small businesses run by foreigners.
By Razvan Amariei for Southeast European Times in Bucharest – 13/09/04

Many small businesses will be affected if the law is passed.

Under new draft legislation proposed by the Romanian government, foreign investors will have to prove a minimum contribution in cash or technology in order to have their staying permits released or renewed.

They will also have to comply with conditions requiring that their investment create a minimum number of full-time jobs.

The bill sets 70,000 euros as the minimum monetary contribution and 15 jobs as the employment minimum in cases where the foreigner is the only owner of a company, and a minimum of 50,000 euros when he is a shareholder.

"The economic environment needed a clarification regarding the status and the seriousness of the foreign investors. Without any doubt, there will be negative reactions," the weekly Capital quoted Romanian Agency for Foreign Investments head Alexandru Popa as saying. "Companies and people will be affected."

Currently, 102,000 companies with foreign owners do business in Romania. Many were established with comparatively small investments of money and technology. For example, the 8,300 Chinese firms in Romania have invested an average of 13,000 euros per company. The 5,800 Iraqi firms have invested an average of 5,454 euros. Western investors -- including Italian, Austrian, French, American and Canadian businessmen -- could also be negatively affected.

"I have a restaurant in Arad County and I used all my savings -- more than 35,000 euros, to build it," says Italian businessman Nino Melone. "I think the limits they suggested are exaggerated, especially in a country where the medium monthly wage is about 140 euros."

Muhammed Al-Khatar, a Jordanian entrepreneur living in Bucharest, describes the legislation as a "bad thing".

"I came to Romania 12 years ago. I have two rented stores here, I bought a house, and I have friends … Now I should leave anything and go … And I don't want to go back to my country," he says.

But officials are adamant. "If a foreigner doesn't have 70,000 euros and if he cannot create 15 jobs, it's hard to believe his presence is really significant," according to Popa. "Moreover, our studies proved that such investors interacted mainly with the grey and black markets."

Meanwhile, foreign businessmen who meet the new requirements stand to benefit. Under the legislation, they will enjoy the same rights as Romanian citizens, including tax reductions and exemptions, as well as the chance to buy real estate.

Posted by Mihai : 9/13/2004 06:25:00 pm Romania Plans Stricter Conditions for Small Businesses Run by Foreigners
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