romania en

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Enterprise

and Industry

Enterprise and Industry

ROMANIA

2014 SBA Fact Sheet

In a nutshell

Romanias economy is dominated by small and medium-sized enterprises and has proportionally fewer micro-firms

than the EU on the whole. Despite an increase in the number of business start-ups in recent years, the impact of

micro-firms on the economy is still lower than average, providing about 23 % of private sector employment and only

13 % of economic added value. The manufacturing sector is very important for SMEs, accounting for a proportion of

employment 30 % higher than the EU average. SMEs in the service sector dominate the economy far less. They

focus on less knowledge-intensive activities such as retail and wholesale trade, food services and accommodation,

travel agencies, rental and leasing services, land transport and courier services.

The economic crisis has badly affected the business sector. SMEs in particular were badly affected, with real GDP

decreasing sharply during the crisis (-6.6 %) and post-crisis recovery setting in late, with modest growth of 2.2 % in

2011 and 0.7 % in 2012. However, growth picked up to 3.5 % in 2013, the highest rate of economic growth in the last

five years. In general, large enterprises appear to recover from the crisis much faster than SMEs. This is because

Romanian SMEs are less competitive, less innovative and have a weaker technological base than their larger

counterparts.

Romania had a catching up profile in 2013, with most areas scoring below average, but some progress in the past

few years. Romania performs above average only in entrepreneurship, albeit by a large margin. The lack of

innovation and a shortage of specialised skilled labour are the main obstacles to the business sectors

competitiveness. Poor administrative capacity continues to hamper the growth of business.

About the SBA Fact Sheets1 The Small Business Act for Europe (SBA) is the EUs flagship policy initiative to support small and medium-sized

enterprises (SMEs). It comprises a set of policy measures organised around 10 principles ranging from

entrepreneurship and responsive administration to internationalisation. To improve SBA governance, the 2011

review of the Act called for better monitoring. The SBA Fact Sheets are published annually and aim to improve

understanding of recent trends and national policies affecting SMEs.

2014 SBA Fact Sheet Romania 2

1. SMEs in Romania basic figures

EU28 EU28 EU28

Number Proportion Proportion Number Proportion Proportion Billion Euros Proportion Proportion

Micro 373 944 87.4% 92.4% 931 091 22.9% 29.1% 7 13.4% 21.6%

Small 44 682 10.4% 6.4% 929 499 22.9% 20.6% 9 16.3% 18.2%

Medium-sized 7 669 1.8% 1.0% 848 216 20.9% 17.2% 10 19.7% 18.3%

SMEs 426 295 99.7% 99.8% 2 708 806 66.7% 66.9% 26 49.4% 58.1%

Large 1 455 0.3% 0.2% 1 349 456 33.3% 33.1% 26 50.6% 41.9%

Total 427 750 100.0% 100.0% 4 058 262 100.0% 100.0% 52 100.0% 100.0%

These are estimates for 2013 produced by DIW Econ, based on 200811 figures from the Structural Business Statistics Database (Eurostat). The data cover the 'business

economy', which includes industry, construction, trade, and services (NACE Rev. 2 sections B to J, L, M and N), but not enterprises in agriculture, forestry and fisheries

and the largely non-market service sectors such as education and health. The advantage of using Eurostat data is that the statistics are harmonised and comparable

across countries. The disadvantage is that for some countries the data may be different from those published by national authorities.

Number of enterprises Number of employees Value added

Romania Romania Romania

Romanias economy is dominated by small and

medium-sized enterprises and has proportionally

fewer micro-firms than the EU on the whole. Despite

an increase in the number of business start-ups in

recent years, the impact of micro-firms on the

economy is still lower than average, providing about

23 % of private sector employment and only 13 % of

economic added value. The distribution of SMEs

across sectors is comparable to the average EU

distribution, with most of them active in wholesale and

retail trade, manufacturing and construction. The most

noticeable disparity is in employment in the

manufacturing sector, where SMEs account for a

proportion of employment 30 % higher than the EU

average. The reason for this is the historical structure

of the economy, in which for generations the industrial

sector, including manufacturing, has generated much

of Romanias gross added value. SMEs in the service

sector dominate the economy far less than in other

EU Member States. They are mainly knowledge-

intensive activities such as retail and wholesale trade,

food services and accommodation, travel agencies,

rental and leasing services, land transport and courier

services.

The economic crisis has badly affected the business

sector. SMEs in particular were badly affected, with

real GDP decreasing sharply during the crisis (-6.6 %)

and post-crisis recovery setting in late, with modest

growth of 2.2 % in 2011 and 0.7 % in 2012. However,

growth picked up to 3.5 % in 2013, the highest rate of

economic growth in the last five years2

3.

Nevertheless, real GDP in 2013 was still below its

2008 pre-crisis level. So far the recovery has mainly

been driven by good results in the agriculture sector,

the performance of export activities (+10 % higher in

2013 compared to 2012, a difference of almost EUR

50 billion) and good industrial production4. In general,

large enterprises seem to recover from the crisis

much faster than SMEs. This is because they are less

competitive, less innovative and have a weaker

technological base5 than their larger counterparts.

The growth of value added in the SME sector can be

attributed to many sectors. The two exceptions are

construction, in which there has been a 16 %

decrease in the added value of SMEs since 2009, and

trade, with a lower decrease of 3 %. SMEs in

construction were badly affected by the economic

crisis in 20096 and investment in the sector continued

to decline after that. Even in 2013, investment in new

private construction decreased by 17 % compared to

20127, mainly because there is a large existing stock

of buildings. Government investment in new public

building has also decreased since 2012.

The 2010 decline in wholesale and retail trade was

triggered by a reduction in consumption due to

massive cuts in the salaries of public employees.

These only came to a halt at the beginning of 2013,

when approximately 80 000 new vacancies were

created in the sector.

Despite the good economic situation in 2013, the

number of registered new businesses8 was more or

less similar to the previous years (60 507 in 2013 and

61 744 in 2012). Most of these are active in trade

(28.7 % of total registered businesses) and agriculture

(17.4 %), a stable sector thanks to the potential of the

domestic retail market, government policy and

consistent financial support. In contrast, the energy

sector lost its importance in 2013 compared to

previous years. The number of registered businesses

doubled between 2011 and 2012, mainly due to


investments in renewable energy sources and public

funding. Nevertheless, the government reduced its

support for investments in renewable energy through

structural funds. As a result, the number of newly

registered businesses decreased to 967 in 2013

compared to 1 488 in 2012.

For 2014, the government estimates economic

growth of 3 % compared to 2013, with the greatest

increase in gross added value expected to come

from construction (+5.2 %), services (+2.1 %),

industry (+1.6 %) and agriculture (+1.0 %).

Over 40 % of Romanias business leaders9 are

optimistic about the growth of their business in 2014.

This is significantly higher than the 25 % recorded in

2012. Most of them (67 %) expect their business to

grow moderately (an increase of up to 10 % in

turnover and a profit increase of between 1 % and

10 %). They also expect to be able to increase their

number of employees by 10 %-30 % in 201410

. Their

main goals for 2014 are to increase productivity and

reduce costs.

SME trends in Romania11


2. Romanias SBA profile12

In 2013, most of the areas scored below average but

have registered progress in the past few years.

Romania performs above average only in

entrepreneurship, albeit by a large margin. This is due

to a high number of business start-ups and a positive

entrepreneurial culture, in which entrepreneurs are

admired and have high social status. The lack of

innovation and a shortage of specialised skilled labour

are the main obstacles to the business sectors

competitiveness. Poor administrative capacity

continues to hamper the growth of business.

The Department for SMEs, the Business Environment

and Tourism of the Ministry of the Economy is

responsible for implementing the SBA by developing

modern policies to support SMEs and integrating SME

policy into government policy. The new Strategy for

the development of the SME sector and the business

environment 201420 should be adopted this year.

Developed with the principles of the Small Business

Act in mind, it proposes to extend the think small first

principle by shifting policymakers attention from the

central to the local or regional level (Look at the local

level first). It also aims to support entrepreneurial

initiatives aimed at foreign markets (Act local, think

global) and to improve the public procurement

process (Value for money).

A new law on SMEs was passed in May 2014. It

introduces the mandatory application of the SME

test13

, creates a group to assess the economic impact

of regulations on SMEs and allocates about 0.4 % of

GDP a year to programmes supporting SMEs.

However, it is difficult to enforce due to the limited

availability of the human and financial resources

needed to do so.

In 2013, all SBA principles were addressed through

policy measures or actions. They include tax

measures to stimulate business growth, legislative

amendments to streamline public administration and

make it less bureaucratic, measures to enhance

innovation and creativity and action to further

encourage entrepreneurship. Business stakeholders

say that this only partly lives up to their expectations.

They think that one of the main priority areas for SME

policy should be to ensure that there is adequate

financial support for business development through

various financial tools (business angels, private

equity, venture capital, etc.). Something else that

could be done to improve the situation is setting up a

more structured, efficient system to monitor the

implementation of the SBA.


Romanias SBA performance: status quo and

development between 2008 and 201414

Think small first principle The think small first principle aims to ensure that SME concerns are integrated into EU and national legislation

and policies. Policy-makers at all levels are expected to consult small businesses and keep their needs and

limitations in mind at all stages of the legislative and policy processes. The aim is to ensure that regulations do

not unnecessarily or excessively burden SMEs or hamper their competitiveness.

In Romania, all significant legislative proposals should be backed up by a regulatory impact assessment (RIA),

but this is not always the case. In general, RIAs are only just beginning to be carried out and their quality is

questionable. Line ministries lack expertise and comprehensive guidelines still need to be developed. The lack

of planning and the unpredictability of new legislative proposals make it difficult to develop comprehensive RIAs.

Stakeholders complain that many legislative proposals are insufficiently justified and proposed for adoption

without prior consultations, undermining democracy. In 2013, in collaboration with the World Bank, the general

government secretariat began a pilot project which should result in an action plan for implementing impact

assessment procedures, including developing a common methodology for impact assessments and the SME

test.

Under the new SME law, SME-related assessments (the SME test) are integral, mandatory components of RIAs

since May 2014. The new law is considered a big step in the right direction, but business stakeholders think it

will be difficult to enforce. Consultations with SMEs do take place but are considered more informative than


consultative. Meetings with stakeholders take place through various consultative and advisory committees, but it

seems that continuous, structured dialogue on SBA issues is still lacking. This situation could be improved by

increasing the representativeness of SMEs and business stakeholders.

Business stakeholders have also expressed concerns about the governments and line ministries sometimes

inefficient and delayed consultation process on important measures recently adopted or proposed for adoption

on taxation, insolvency, public procurement and other matters that affect SMEs.

Entrepreneurship

-2.0 -1.5 -1.0 -0.5 0.0 0.5 1.0 1.5 2.0

Media attention given to entrepreneurship (%); 2013; Romania: 61.3; EU avg: 49

High status given to successful entrepreneurship (%); 2013; Romania: 72.6; EU avg:65.5

Entrepreneurship as a desirable career choice (%); 2013; Romania: 73.6; EU avg:56.9

Degree to which school education helped develop an entrepreneurial attitude; 2012;Romania: 73; EU avg: 50

Entrepreneurial intentions (percentage of adults who intend to start a business within3 years); 2013; Romania: 23.7; EU avg: 13.5

Opportunity-driven entrepreneurial activity (%); 2013; Romania: 31.6; EU avg: 47

Established business ownership rate (%); 2013; Romania: 5.3; EU avg: 6.4

Early stage entrepreneurial activity for female population (%); 2013; Romania: 8; EUavg: 6

Early stage entrepreneurial activity (%); 2013; Romania: 10.1; EU avg: 8

Note: Data bars pointing right show better performance than the EU average and data bars pointing left show weaker performance.

Variation from the EU average(measured in standard deviations, EU average=0)

Entrepreneurship is by far the best performing SBA

area, with steady progress made over the past few

years. Being an efficiency-driven economy (compared

to the innovation-driven economy of most Member

States), Romania has a high number of business

start-ups but fewer established efficient businesses.

Early stage entrepreneurial activity rates are above

the EU average for men and women, while

established entrepreneurial activity rates are below

average. Despite the numerous obstacles and

difficulties it is likely those who want to start a

business in the near future will face, future

entrepreneurial intentions are the highest in the EU at

almost 24 %. This is probably the result of a positive

entrepreneurial culture, in which entrepreneurs are

admired and have high social status, with frequent

media reporting of stories about successful

entrepreneurial ventures. Most Romanians (73 %

compared to 50 % in the EU) also believe that school

education cultivates an entrepreneurial mind-set in

students.

However, only 32 % of Romanian entrepreneurs,

compared to 47 % of European entrepreneurs, say

that a market opportunity, and a desire to be

independent and increase their income, led them to

start a business. The remaining 68 % decide to start a

business for the want of better alternatives to earn a

living.

In 2013, the government put a number of support

schemes in place to stimulate entrepreneurship and

create jobs. Most of them were continued from 2012

and some will be continued in 2014. For example, the

scheme put in place to encourage young people to

start a business and develop microenterprises was

continued. In 2013, 576 young entrepreneurs received


support and advice on developing their business skills

and obtaining finance for their business plans.

The START scheme helps young people develop

business skills and obtain funds to set up a new

company or improve the economic performance of

existing ones. The scheme was continued into the first

quarter of 2014 to foster entrepreneurship in

Romania.

Second chance

-2.0 -1.5 -1.0 -0.5 0.0 0.5 1.0 1.5 2.0

Fear of failure rate (%); 2013; Romania: 37.3; EU avg: 39.8

Degree of support for a second chance (%); 2012; Romania: 86; EU avg: 82

Cost of resolving insolvency (cost of recovering debt as percentage of the debtor'sestate); 2014; Romania: 11; EU avg: 10.29

Time to resolve insolvency (in years); 2014; Romania: 3.3; EU avg: 2



Although mixed, the indicators measuring second

chance show that the conditions for re-starters are

relatively unfavourable. Entrepreneurs whose

business has failed face lengthy insolvency

procedures, lasting about 3.3 years in Romania

compared to two years in the EU, although the cost

(11 % of the debtors estate) is similar to the EU

average. According to World Bank data, Romania

ranks last in the EU in terms of the effectiveness of its

insolvency proceedings.

Nevertheless, these lengthy insolvency procedures do

not seem to deter people from starting a business.

The high level of entrepreneurial activity and the less

pronounced fear of failure among Romanian

entrepreneurs reflect this. This may be partly because

the level of public support aimed at giving a second

chance to entrepreneurs who have gone bankrupt in

the past is higher than average.

Policy progress in 2013 was very modest. In an

attempt to reform the insolvency framework, a new

insolvency code was adopted in October 2013. The

need for a new code arose out of the current

economic context, which requires a legislative and

administrative framework to make the economic

process simpler, more transparent and more secure in

order to make the Romanian market more attractive to

investors.

The legislation introducing the new insolvency code

was declared unconstitutional, because it had

retroactive provisions and introduced the automatic

cancellation of the broadcasting licence of any audio-

visual company which began insolvency proceedings.

It was therefore repealed and the provisions of the old

law became applicable again. In December 2013, the

government amended the law by removing the

unconstitutional provisions and then submitted it to

parliament for debate and adoption. Business

stakeholders have expressed their concern about the

content of the proposal and the manner in which it

was adopted. They claim that it does not correct the

deficiencies of the old law. They also feel that 10 days

was not enough time for public debate of the proposal

and that very few of their comments and observations

were taken into account in the proposal submitted to

parliament.


Responsive administration

-2.0 -1.5 -1.0 -0.5 0.0 0.5 1.0 1.5 2.0

Burden of government regulations (1=burdensome, 7=not burdensome); 2013;Romania: 2.8; EU avg: 3.2

Licenses and permit systems (1=lowest level of complexity, 26=highest level ofcomplexity); 2011; Romania: 19.4; EU avg: 15.77

SMEs interacting online with public authorities (%); 2013; Romania: 64.54; EU avg:87.58

The complexity of administrative procedures is a problem for doing business(percentage of respondents who agree); 2013; Romania: 82; EU avg: 63

Fast-changing legislation and policies are a problem for doing business (percentageof respondents who agree); 2013; Romania: 88; EU avg: 70

Cost of enforcing contracts (percentage of claim); 2014; Romania: 28.9; EU avg:21.49

Time it takes to pay taxes (hours per year); 2014; Romania: 200; EU avg: 192.57

Number of tax payments per year; 2014; Romania: 39; EU avg: 12.54

Cost required to transfer property (percentage of property value); 2014; Romania:1.6; EU avg: 4.7

Time required to transfer property (in calendar days); 2014; Romania: 20; EU avg:27.7

Paid-in minimum capital (percentage of income per capita); 2014; Romania: 0.7; EUavg: 10.42

Cost of starting a business (in euros); 2013; Romania: 112.5; EU avg: 318

Time to start a business (in calendar days); 2013; Romania: 3; EU avg: 4.2



Conditions for SMEs in Romania are less business-

friendly than they are in the EU on average, despite

the comparatively good start-up and property

registration and transfer conditions. In Romania it is

possible to start a business in three days for around

EUR 100-125. This is faster and cheaper than the EU

average. The county trade registers are the

governments point of single contact for entrepreneurs

and businesses. The formal procedures for registering

and transferring property have improved in recent

years. It now takes only 20 days to transfer property

and costs less than the EU average to do so.

Despite reducing the number of annual tax payments

to 39, this is well above the EU average of only 12

annual tax payments. Studies done by the

Department for SMEs, the Business Environment and

Tourism in the Ministry of the Economy, together with

the National Institute of Statistics and consulting firms,

show that the greatest administrative barriers are tax

administration and procedures, checks and

inspections, public procurement regulations and

requirements for obtaining licences. Bureaucracy,

which is increasingly burdensome, particularly for

SMEs, must also be cut down. Romanias licensing

system is very complex, with costly, inefficient and

time-consuming procedures to get the licences to start

operating a business. A business survey carried out in

2013 shows that many Romanian companies think the

complexity of administrative procedures and the lack

of stability and predictability of the legislative

framework are major hindrances to doing business.

Policy progress is limited. The governments Horizon

2020 strategy for developing SMEs and the business

environment, expected to set out its strategic plans for

the growth of the SME sector, is in line with the SBA

initiative and Entrepreneurship 2020 action plan. The

strategy was to be put into practice during the first half

of 2014.

A project to measure the administrative burden arising

out of all existing legislation that affects the business


environment began in 2009 and measurements

started in 2011. The final results are expected in

2014. They should serve as a basis for assessing the

extent to which property registration procedures and

procedures in the construction sector were simplified.

They can also help to identify opportunities for

simplifying procedures and monitoring the trend in

administrative costs over time.

State aid and public procurement

-2.0 -1.5 -1.0 -0.5 0.0 0.5 1.0 1.5 2.0

Percentage of businesses submitting proposals in a public electronic tender system(e-procurement) (%); 2013; Romania: 14.53; EU avg: 12.85

Average delay in payments from public authorities (in days); 2013; Romania: 20; EUavg: 28.05

Percentage of businesses participating in public tenders (%); 2013; Romania: 30; EUavg: 37

Percentage SMEs account for in the total value of public contracts awarded (%);2013; Romania: 44; EU avg: 29



Romanias performance in state aid and public

procurement is average. SMEs share in the value of

public procurement contracts is increasing, having

reached 44 %, already much higher than the EU

average of 29 %. However, the gains from these

contracts are concentrated in fewer businesses.

Compared to 37 % on average in the EU, only 30 % of

businesses in Romania said that they had participated

in a public procurement procedure in 2013. Romanian

SMEs also make better use of e-procurement services

than their EU counterparts and public authorities take

less time to pay them.

In 2013, the government put a number of support

schemes in place to help private entities participate in

public procurement procedures and to grant state aid.

State aid to increase investments in SMEs, create

new jobs and make industrial products more

competitive was approved. Below is the list of what

the grant schemes supported.

- Investments in SMEs (financial support of up to EUR

100 000 for developing an SME 90 % grant of total

project budget).

- Making industrial products more competitive (up to

EUR 200 000 for each beneficiary).

- Investments in support of regional development (by

attracting investment, using new technologies and

creating new jobs).

Other measures to help SMEs participate in public

procurement were also introduced, such as the

simplified procedure for awarding goods, services and

works to private beneficiaries; a web application to

make it easier for private entities to participate in

public procurement under the structural funds; the

measure increasing the threshold for direct

acquisitions or public procurement and a better

payment claims settlement mechanism for

beneficiaries of structural funds.

In 2013, the National Authority for Regulating and

Monitoring Public Procurement organised information

sessions and courses on trading for beneficiaries.

These will continue in 2014. A public procurement

manual was published and distributed to beneficiaries.

The manual presents operating procedures, examples

of good practice and of problems encountered in the

course of acquisition and possible solutions to these

problems. The authority has also set up an online

helpdesk to answer questions about public

procurement procedures.


Access to finance

-2.0 -1.5 -1.0 -0.5 0.0 0.5 1.0 1.5 2.0

Strength of legal rights index (0-10); 2014; Romania: 9; EU avg: 6.82

Venture capital investments (percentage of GDP); 2012; Romania: 0; EU avg: 0.04

Bad debt loss (percentage of total turnover); 2013; Romania: 6.1; EU avg: 3.83

Total amount of time it takes to get paid (days); 2013; Romania: 34; EU avg: 50.76

Cost of borrowing for small loans relative to large loans (%); 2013; Romania: 15.12;EU avg: 23.82

Willingness of banks to provide a loan (percentage of respondents that indicated adeterioration); 2013; Romania: 15.6; EU avg: 24.6

Access to public financial support including guarantees (percentage of respondentsthat indicated a deterioration); 2013; Romania: 10.5; EU avg: 17.3

Rejected loan applications and unacceptable loan offers (percentage of loanapplications by SMEs); 2013; Romania: 18.4; EU avg: 14.4



SMEs access to bank loans stopped deteriorating in

2013, but it is still hard for them to access alternative

sources of finance, in particular equity funding through

business angels or venture capital funds. Banks have

started using the new financing schemes more flexibly

to meet market needs and those of entrepreneurs.

The 2013 figures on bank loans show that the

proportion of Romanian entrepreneurs who report that

banks are less willing than before to provide loans has

dropped from 41 % in 2011 to 15 % in 2013.

Nevertheless, 18 % of SMEs applying for bank loans

consider the conditions they impose unacceptable.

The conditions for accessing public financial support,

including guarantees, have also become less

restrictive. Access to structural funds also improved in

2013 because work procedures were simplified, funds

reimbursed more quickly and reporting procedures

and reimbursement checks simplified.

SME stakeholders identified late payments as a major

issue, even though the statistics show that payments

take less time than the EU average.

The Mihail Kogalniceanu Programme for SMEs

access to guarantees and credits, providing

subsidised interest for credit lines and state

guarantees, was well received, with applications from

4 000 firms.

The programme for developing and modernising

marketing activities for market products and services

was continued in 2013. It supported private entities,

SMEs and cooperatives by giving them access to

financing programmes to procure equipment and

consulting services.

The national multiannual programme supporting

SMEs in the arts and crafts sector helped small-scale

craftspeople promote their products at the National

Arts and Crafts Fair organised in Bucharest.

A legal measure (VAT cash-in system) that entered

into force in 2013 was updated in 2014. It aims to

improve the cash-flow of businesses with a turnover of

less than EUR 500 000.

Fiscal incentives for research, development and

innovation (R&D&I) activities (reducing the taxable

income of eligible taxpayers by deducting 50 % of the

expenses incurred in the previous fiscal year for

R&D&I activities) were provided for businesses whose

R&D&I activities account for at least 15 % of their

yearly expenditure.


Single market

-2.0 -1.5 -1.0 -0.5 0.0 0.5 1.0 1.5 2.0

Number of pending infringement proceedings; 2013; Romania: 25; EU avg: 30

Average transposition delay for overdue directives (in months); 2013; Romania: 6.1;EU avg: 8

Number of single market directives not yet transposed; 2013; Romania: 14; EU avg:8.69

Public contracts secured abroad by SMEs (percentage of total value of publiccontracts); 2013; Romania: 0.5; EU avg: 2.6

SMEs with intra-EU imports of goods (percentage of SMEs in industry); 2011;Romania: 24.03; EU avg: 17.47

SMEs with intra-EU exports of goods (percentage of SMEs in industry); 2011;Romania: 14.17; EU avg: 13.89



Romania is below the single market average, but its

performance across different indicators is mixed.

More than 14 % of manufacturing SMEs reported

exports of goods within the single market, mirroring

the performance of their EU counterparts. However,

exports of services do not match the performance of

the manufacturing sector, although statistics for SME

exports are not available. Business stakeholders say

that there has recently been a shift in the way

companies behave. Aware of the advantages of

entering foreign markets, firms have increased their

promotion activities and begun to form partnerships in

order to access foreign markets. Romanias Chamber

of Commerce and Industry has supported this

approach by organising several events on accessing

foreign markets. It has also developed the national

business information system (www.snia.ro), giving

free access to all those interested in finding Romanian

and foreign partners to develop businesses with.

Companies can enter and search for new business

opportunities posted on the site, which provides data

for companies who want to present their products and

services.

The country has not yet transposed many single

market directives, although the deadline for doing so

has passed. It also has about 25 infringement cases

in which transposition is considered not to comply with

the directive it transposes or single market rules. Most

of these cases concern atmosphere pollution, waste

management, direct and indirect taxation, etc.

Romanian SMEs are less successful than their EU

counterparts in securing public contracts in other EU

countries.

In 2013 the National Export Strategy 201420 was

developed and is expected to be put into practice this

year. It will address certification and standards

aspects by proposing institutional development of the

national standardisation body and increasing the

capacity of testing labs to assess the characteristics

and performance of exported material. The

government also plans to help companies deal with

the increase in requests.


Skills and innovation

-2.0 -1.5 -1.0 -0.5 0.0 0.5 1.0 1.5 2.0

Percentage of all enterprises that train their employees; 2010; Romania: 24; EU avg:66

Turnover from e-commerce; 2013; Romania: 5.87; EU avg: 13.98

Percentage of SMEs purchasing online; 2013; Romania: 17.95; EU avg: 26.31

Percentage of SMEs selling online; 2013; Romania: 9.03; EU avg: 13.87

Sales of new-to-market and new-to-firm innovations (percentage of turnover); 2010;Romania: 14.28; EU avg: 14.37

Percentage of innovative SMEs collaborating with others; 2010; Romania: 2.93; EUavg: 11.69

Percentage of SMEs innovating in-house; 2010; Romania: 10.75; EU avg: 31.83

Percentage of SMEs introducing marketing or organisational innovations ; 2010;Romania: 25.54; EU avg: 40.3

Percentage of SMEs introducing product or process innovations; 2010; Romania:13.17; EU avg: 38.44



The lack of innovation and a shortage of specialised

skilled labour are the countrys main problems with

regard to competitiveness. Romania lags very far

behind in this area, covering skills, training and

innovation.

All core innovation indicators are below the EU

average, some of them very much below it. Romanian

SMEs are overall less likely to introduce innovations in

products or processes, to collaborate with each other

or to innovate in-house. This situation worsened

during the economic crisis. One of the Council of the

European Unions key recommendations in the

context of the Europe 2020 strategy is for Romania to

forge closer links between research, innovation and

industry, in particular by prioritising research and

development activities that have the potential to

attract private investments.

Romanian SMEs also perform below the average in

other areas, such as IT-readiness, defined as the

ability to sell products and make purchases online.

At only 24 %, the proportion of businesses that

provide vocational training for their employees is far

below the EU average of 66 %.

The government provided support for business

growth, the creation of business incubators and the

development of the existing ones. In 2013 14

incubators received support, 10 of which are existing

and four of which are new.

The innovation voucher scheme provided an efficient

tool for supporting productive SMEs in technological

development and increasing their innovation by

fostering cooperation with research institutions. The

vouchers were available for any economic and

scientific sector, to increase or accelerate the

technological transfer between research units and the

private sector or SMEs. The national programme for

R&D&I/partnership sub-programme helped set up joint

applied research projects (with R&D units in the

private sector) to increase the competitiveness and

pace of the development of solutions to socio-

economic problems. Calls for proposals under this

measure were also published in previous years

The programme for developing private R&D

infrastructure and creating new jobs, implemented in

2008, 2010 and 2012, was continued to enable the

development of private (including SME) research and

development infrastructure to further encourage SMEs

to cooperate with public institutions, make them more

competitive and create new jobs in SMEs.

An important measure implemented in 2013 was the

law on internship for graduates of higher education. It


aims to ensure that the qualifications of higher

education graduates are better adapted to the skills

needs of the market.

Environment

-2.0 -1.5 -1.0 -0.5 0.0 0.5 1.0 1.5 2.0

Percentage of SMEs that have benefited from public support measures for theirproduction of green products; 2013; Romania: 60; EU avg: 26

Percentage of SMEs with a turnover share of more than 50% generated by greenproducts or services; 2013; Romania: 27; EU avg: 22

Percentage of SMEs that offer green products or services; 2013; Romania: 22; EUavg: 26

Percentage of SMEs that have benefited from public support measures for theirresource-efficiency actions; 2013; Romania: 23; EU avg: 35

Percentage of SMEs that have taken resource-efficiency measures; 2013; Romania:89; EU avg: 95



Romania scores below average in this area, but its

performance varies across the individual indicators.

Romanian SMEs are less likely to take steps to

increase their resource efficiency than SMEs in the

rest of the EU. This is partly because they do not

receive as much public support to do so as their

European counterparts. Compared to the EU average

of 26 %, only 22 % of companies have begun to exploit

the opportunities offered by the demand for green

products and services. But those who have done so

are more successful in generating a significant

proportion of their revenue from selling such products

than their EU counterparts. Public support seems to

have played an import role, since 60 % of Romanian

SMEs say that they have benefited from support for

producing green products.

Two finance facilities to help SMEs invest in energy

efficiency and renewable energy solutions were set

up, offering support based on loans, grants and free

technical assistance for SMEs who want to invest in

energy efficiency and renewable energy. The facilities

are

- the SMEs Sustainable Energy Finance Facility, set

up to help SMEs invest in energy efficiency;

- the Energy Efficiency Finance Facility, providing a

grant-supported credit line for SMEs through the EU

and the European Bank for Reconstruction and

Development, to help them invest in energy efficiency

actions.


Internationalisation

-2.0 -1.5 -1.0 -0.5 0.0 0.5 1.0 1.5 2.0

Number of documents required to export; 2014; Romania: 5; EU avg: 4.25

Time required to export (in days); 2014; Romania: 13; EU avg: 11.82

Cost required to export (in USD); 2014; Romania: 1485; EU avg: 1034.64

Number of documents required to import; 2014; Romania: 6; EU avg: 4.68

Time required to import (in days); 2014; Romania: 13; EU avg: 10.71

Cost required to import (in USD); 2014; Romania: 1495; EU avg: 1069.89

SMEs with extra-EU imports of goods (percentage of SMEs in industry); 2011;Romania: 7.09; EU avg: 8.18

SMEs with extra-EU exports of goods (percentage of SMEs in industry); 2011;Romania: 4.45; EU avg: 9.68



Romania is well behind the EU average here. Without

exception, the general framework conditions for

trading are less favourable than those in other EU

countries on average. The indicators for the goods

trading of manufacturing SMEs in markets outside the

EU are also poor. However, 2013 data show that the

Romanian economys export performance was an

important driver of economic growth. It was able to

achieve growth in 2013 (mainly due to growth in non-

EU markets), reaching a historical high (+10 %

compared to 2012). This means that exports in 2013

were worth EUR 49.6 billion and imports EUR 55.2

billion. Compared to 2012, exports increased by

10.0 % and imports by 1 %. However, because these

statistics do not differentiate between the size of

companies, it is very likely they are the results of the

good performance of the large companies that

dominate Romanian exports. In 2013, the value of

trade in goods between Romania and EU countries

was EUR 34.5 billion for exports and EUR 41.86

billion for imports, 69.6 % of total exports and 75.7 %

of total imports. The three sectors accounting for

74.4 % of total exports are machinery and transport

equipment (42.0 %), manufactured products mainly

classified by raw material (17.1 %) and miscellaneous

manufactured articles (15.3 %).

In 2013 several older schemes aiming to support

exporting SMEs were further developed. Among them

are the portal for external trade

(www.portaldecomert.ro), incentives for export

promotion offered through an EXIM Bank scheme and

the services offered by the Enterprise Europe Network

(with partners such as the Chambers of Commerce,

banks, NGOs and local authorities). Together with the

local chambers of commerce, the Chamber of

Commerce and Industry organised trade missions to

help identify new foreign partners and develop

business activity in foreign markets.

Despite these efforts, business stakeholders say that

there is a lack of strategic and operational support for

internationalisation activities (i.e. a lack of training and

information on external markets, standards, legal

procedures, tax matters, etc.). The inefficiencies

caused by the overlapping of responsibilities and

activities between various support organisations

highlight the need for better coordination and

collaboration.


3. Good practice Below is an example of an interesting policy practice from Romania to show what governments can do to

support SMEs:

The practice firm and business plan competition

The concept of the practice firm was introduced in technical and vocational education and training in

Romania through a project begun under the Stability Pact and run in cooperation with the Austrian Ministry of

Education and Culture since 2001 the ECO NET project.

The concept has been a compulsory part of the technological high-school curriculum (services profile, grades

XI and XII) since 2006. The curriculum contains the general and specific competences to be acquired, the

values and attitudes to be developed and methodological and evaluation suggestions.

From 2010 to 2013, through a SOPHRD project, 600 teachers from technological high-schools were trained

and certified to teach entrepreneurial skills using the practice firm method and guidelines on setting up and

running practice firms were developed.

The business plan competition, for all registered practice firms, was introduced in the 200809 school year

as a joint initiative of the Ministry of National Education, the National Centre for the Development of

Vocational and Technical Education, KulturKontakt Austria and social partners (PTIR and EURO 26). The

competition is run in economic high-schools by a partnership involving the Ministry of National Education and

the business community. It has been organised at local, county, regional and national level every year since

2008.

The learning objectives of the project are to develop an entrepreneurial mind-set, to provide better

entrepreneurial skills for the business environment and to support creativity, initiative and innovation.

Some quantitative results: in the 201314 school year, the following numbers of students and teachers took

part in the competition:

at local level: 379 practice firms ( 758 students and 379 teachers)

at county level: 93 practice firms (186 students and 93 teachers)

at regional level: 39 practice firms (78 students and 39 teachers)

at national level: 8 practice firms ( 16 students and 8 teachers).

References:

http://firmaexercitiu.tvet.ro/index.php/achizitii

http://firmaexercitiu.tvet.ro/

http://www.roct.ro/competitia-business-plan/

http://www.ptir.ro/

Important remarks The Small Business Act (SBA) Fact Sheets are produced by DG Enterprise and Industry as part of the SME

Performance Review (SPR), which is its main vehicle for economic analysis of SME issues. They combine the

latest available statistical and policy information for the 28 EU Member States and nine non-EU countries which

also contribute to the EUs Competitiveness and Innovation Framework Programme (CIP). Produced annually, the

Fact Sheets help to organise the available information to facilitate SME policy assessments and monitor SBA

implementation. They take stock and record progress. They are not an assessment of Member States policies but

should be regarded as an additional source of information designed to improve evidence-based policy-making. For

example, the Fact Sheets cite only those policy measures deemed relevant by local SME policy experts. They do


not, and cannot, reflect all measures taken by the government over the reference period. More policy information

can be found on a database accessible from the SPR website. Please also see the end notes overleaf.

For more information SME Performance Review:

http://ec.europa.eu/enterprise/policies/sme/facts-figures-analysis/performance-review/index_en.htm

Small Business Act:

http://ec.europa.eu/enterprise/policies/sme/small-business-act/index_en.htm

The European Small Business Portal:

http://ec.europa.eu/small-business/index_en.htm

[email protected]

1 The 2014 SBA Fact Sheets benefited substantially from input from the European Commissions Joint

Research Centre (JRC) in Ispra, Italy. The JRC made major improvements to the methodological approach,

statistical work on the dataset and the visual presentation of the data.

2 AMECO Annual Macroeconomic Database of the European Commission:

http://ec.europa.eu/economy_finance/ameco/user/serie/SelectSerie.cfm.; accessed: 25.02.2014

3 Romanian Government website

http://gov.ro/fisiere/stiri_fisiere/GUV_evolutii_importante_in_economie.pdf; accessed: 24.02.2014.

4 Press conference given by the Prime Minister of Romania: http://gov.ro/ro/stiri/primul-ministru-victor-ponta-

a-prezentat-intr-o-conferinta-de-presa-rezultatele-economice-in-anul-2013-tintele-pentru-2014-

2015&page=1; accessed: 12.02.2014.

5 Government of Romania, website of the Department for SMEs, the Business Environment and Tourism

article http://www.imm.gov.ro/CMS/0/PublicMedia/GetIncludedFile?id=133, ; accessed 28.02.2014 p. 1, first

paragraph.

6 Report Situatia curenta a IMM-urilor din Romania, 2012 edition, Fundatia Post-Privatizare, p. 11.

7 http://www.business24.ro/companii/investitii/consilier-ponta-scaderea-investitiilor-este-cauzata-de-

reducerea-lucrarilor-din-constructii-1534870.; accessed: 24.03.2014.

8 Only legal or juridical persons (except physical persons or individuals).

9 Ernst & Youngs study on the perception of the Romanian business environment in 2014 is based on a

survey on the perceptions of 117 top executives from local organisations in various industries. Most

respondents (52 %) were from companies with a turnover of over EUR 50 million.

10 Ernst & Youngs study (A vision for growth) on the perception of the Romanian business environment in

2014:http://www.ey.com/Publication/vwLUAssets/Press_release_Business_Outlook_Survey_11_Feb_2014_(

EN)/$FILE/Press%20release_Business%20Outlook%20Survey_10Feb14_EN.pdf; accessed: 13.02.2014.

11 The three graphs below present the trend over time for the variables. They consist of index values for 2008

to 2015, with the base year 2008 set at a value of 100. As from 2012, the graphs show estimates of the

development over time, produced by DIW Econ on the basis of 200811 figures from the Structural Business

Statistics Database (Eurostat). The data cover the business economy, which includes industry, construction,

trade and services (NACE Rev. 2 sections B to J, L, M and N). They do not cover enterprises in the financial


sector, agriculture, forestry and fisheries or largely non-market service sectors such as education and health.

A detailed methodology can be consulted at: http://ec.europa.eu/enterprise/policies/sme/facts-figures-

analysis/performance-review/index_en.htm.

12 The policy measures presented in this SBA Fact Sheet represent only a selection of the measures taken

by the government in 2013 and the first quarter of 2014. The selection was made by the national SME policy

expert contracted by CARSA Spain (DG Enterprises lead contractor for the 2014 Fact Sheets). The experts

were asked to select only those measures that, in their view, were the most important, i.e. were expected to

have the highest impact in the specific SBA area. The complete range of measures that the experts compiled

in producing this years Fact Sheets will be published alongside the Fact Sheets in the form of a policy

database on the DG Enterprise website.

13 The methodology for carrying out the SME test has been approved by the Minister for SMEs, the Business

Environment and Tourism.

14 The quadrant chart combines two sets of information: first, it shows the status quo performance based on

data for the latest available years. This information is plotted along the x-axis measured in standard

deviations of the simple, non-weighted arithmetical average for the EU-28. Secondly, it reveals progress over

time, i.e. the average annual growth rates for 200814. The growth rates are measured against the individual

indicators which make up the SBA area averages. Hence, the location of a particular SBA area average in

any of the four quadrants provides information not only about where the country is located in this SBA area

relative to the rest of the EU at a given point in time, but also about the extent of progress made in 2008-14.

romania en

Documents

growth of business

romanian smes

mediumsized enterprises

sba fact sheet romania

proportion of employment

small business act

industry romania

sba fact sheets1