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Official Name: Romania

National Symbol: Golden Eagle

Internet Domain: .ro

International Dialing Code: +40

Table of Contents

Location and Size Economy Business Climate
Government Comparative Indicators Business Protocol
Legal System Credit and Collections Other Sources of Info
Interesting Facts Risk Assessment

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Location and Size

Romania occupies the greater part of the lower basin of the Danube River system and the eastern regions of the middle Danube basin. It lies on either side of the mountain systems collectively known as the Carpathians, which form the natural barrier between the two Danube basins. Its total area is 238,391 sq km, making it slightly larger than the U.S. State of Oregon.

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Government

Romania is a republic made up of 41 counties and 1 municipality.

Branches:

  • Executive: chief of state Acting President Crin ANTONESCU (since 7/6/2012); head of government Prime Minister Victor-Viorel PONTA; Deputy Prime Minister Florin GEORGESCU (since 5/7/2012); cabinet
  • Legislative: bicameral parliament consisting of the Senate (137 seats, members elected by popular vote to serve 4-year terms); Chamber of Deputies (3334 seats, members elected by popular vote to serve 4-year terms)
  • Judicial: Supreme Court of Justice (11 judges appointed for 3-year terms); Constitutional Court (9 members serving 9-year terms)

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Legal System

Romania has a civil law legal system based on the Napoleonic Code. The judiciary is independent, and judges appointed by the president are not removable.

The rule of law is not applied evenly and contracts are not always strongly upheld. The judicial system suffers from political interference, inefficiency, and excessive workloads. Legal and economic education and the training of judges and lawyers lag behind law making, which often results in inconsistent outcomes.

The country has not submitted an International Court of Justice (ICJ) jurisdiction declaration. Romania does accept International Criminal Court jurisdiction.

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Five Interesting Facts About Country

  1. Irish author Bram Stoker based his horror novel Dracula on the fifteenth century Wallachian Prince, Vlad Dracul of Romania. The Bran Castle, associated with Vlad Dracul, is Romania's  most popular tourist attraction.

  2. A Romanian professor in the capital city of Bucharest was the first to see nerve cells with a microscope.

  3. Romania’s main mineral resource is oil. Beginning in 1857, the Romanian oil fields were among the very first in the world to be developed.

  4. At the 1976 Montreal Olympic Games, Romanian Nadia Comaneci was the first in the history of gymnastics to receive a perfect score of 10.00. Interestingly, the computer reporting the score was not prepared for this outcome, so the screen posted a 1.00 on the screen -- initially confusing the watching world.

  5. Sighisoara, one of the few medieval towns in Europe still existing and inhabited, is located in Romania. It was founded by Transylvanian Saxons during the 12th century A.D.

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Economy

Romania, which joined the European Union on January 1, 2007, began the transition from Communism in 1989 with a largely obsolete industrial base and a pattern of output unsuited to the country's needs. The country’s macroeconomic gains have only recently started to spur creation of a middle class and to address Romania's widespread poverty.

As a result of the global financial crisis, Romania’s GDP fell more than 7% in 2009. Due to strong export performance, the economy returned to positive growth in 2011, but in a deflationary environment caused by bountiful crops and weak domestic demand. 

Leading Markets (2011): Germany 18.9%, Italy 13.1%, France 7.6%, Turkey 6.2%, Hungary 5.7%

Leading Exports-commodities: machinery and equipment, metals and metal products, textiles and footwear, chemicals, agricultural products, minerals and fuels

Leading Suppliers (2011): Germany 17.2%, Italy 11.4%, Hungary 8.8%, France 5.8%, China 4.6%, Kazakhstan 4.2%, Austria 4%

Leading Imports-commodities: machinery and equipment, chemicals, fuels and minerals, metals, textile products, agricultural products

Top Industries: electric machinery and equipment, textiles and footwear, light machinery and auto assembly, mining, timber, construction materials, metallurgy, chemicals, food processing, petroleum refining

Top Agricultural Products: wheat, corn, barley, sugar beets, sunflower seed, potatoes, grapes; eggs, sheep

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Comparative Economic Indicators – 2011

Romania Bulgaria Hungary Moldova Serbia Ukraine
Population (millions) 21.8 7.0 10.0 3.7 7.3 44.9
Population growth rate (%) -0.3 -0.8 -0.2 -1.0 -0.5 -0.6
Age Structure (%)
(15 to 64 years old)
70.4 57.9 68.2 4.0 68.5 70.8
Age Structure (%)
(65+ years old)
14.8 18.2 16.9 10.4 16.5 15.5
Literacy (%) 97.3 98.4 99.4 99.1 96.4 99.4
Unemployment rate (%) 5.1 9.6 10.9 6.7 23.4 7.0
Inflation (%) 3.1 4.0 3.9 7.6 7.0 9.0
Population below poverty line (%) 21.1 21.8 13.9 26.3
(2009)
8.8
(2010)
35.0
GDP** (USD billions) 270.6 102.3 198.1 12.2 79.9 333.7
GDP real growth rate (%) 2.5 1.7 1.7 6.4 1.8 5.2
GDP per capita** (USD) 12,600.0 13.800.0 19,800.0 3,400.0 10,800.0 7,300.0
Public debt (% of GDP) 38.6 17.5 82.6 29.3 41.0 44.8
Industrial production growth rate (%) 5.6 5.9 5.4 7.1 2.1 7.6
Exports (USD billions) 62.5 26.1 103.1 1.9 11.8 60.7
Imports (USD billions) 70.8 28.4 93.9 4.3 20.1 72.1
Reserves of foreign exchange and gold (USD billions) 48.4 17.7 48.8 2.0 16.9 38.1
Currency New Lei
RON>
Lev
BGN
Forint
HUF
Leu
MDL
Dinar
RSD
Hryvnia
UAH
Exchange rates (per USD) 07/24/2012 3.8 1.6 237.0 12.2 96.1 8.0
Exchange rates (per EUR) 07/24/2012 4.6 2.0 287.1 14.8 116.5 9.7
Rating in 2011 Corruption Perceptions Index*** 3.6 3.3 4.6 2.9 3.3 2.3
Rating in 2012 Index of Economic Freedom*** 64.4 64.7 67.1 54.4 58.0 46.1

** PPP – Purchasing Power Parity
*** 2011 Corruption Index: 10=Very Clean; 0=Highly Corrupt
**** 2012 Index of Economic Freedom: 100-80 = Free; 49.9-0 = Repressed

Economic Data from CIA World Factbook
2011 Corruption Perceptions Index, Transparency International
2012 Index of Economic Freedom, Heritage Foundation

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Credit and Collections

Collecting in Romania

It is best to base sales on confirmed, irrevocable letters of credit, using local banks that are correspondents of western banks.

Statutes of limitations:

  • Open Accounts:  not available
  • Promissory Note: 3 years
  • Written Contracts: 3-4 years
  • Oral Agreements: 3 years

Bankruptcy: Romania's bankruptcy law contains provisions for liquidation and reorganization that are generally consistent with Western legal standards. These laws emphasize enterprise restructuring and job preservation.

Court System: The Romanian judicial system suffers from corruption, inefficiency, lack of expertise, and excessive workloads. Divergent and often contradictory rulings are not uncommon, complicating normal commercial activities. Companies routinely complain that commercial disputes take too long to resolve through the court system and, once a verdict is reached, court orders may not be enforced.

Dispute Resolution

Information from the U.S. Department of State 2011 Investment Climate Statement -- Romania

Arbitration: Romania increasingly recognizes the importance of arbitration in the settlement of commercial disputes. Many agreements involving international companies and Romanian counterparts provide for the resolution of disputes through third-party arbitration. Romania is a signatory to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Romania is also a party to the 1961 European Convention on International Commercial Arbitration and is a member of the International Centre for Settlement of Investment Disputes (ICSID).

Mediation: Mediation as a tool to resolve disputes is gradually becoming more common in Romania. There is no legal mechanism for court-ordered mediation but judges can encourage litigants to use mediation to resolve their cases. If litigants opt for mediation, upon completion of the mediation process they must present their proposed resolution to the judge for approval. The Romanian Union of Mediation Centers is a member of the European Mediation Network Initiative and is recognized by the European Union and other regional bodies

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Risk Assessment

Coface Country Rating: B -- Political and economic uncertainties and an occasionally difficult business environment can affect corporate payment behavior. Corporate default probability is appreciable. 

Coface Business Climate Rating: A4 -- A somewhat shaky political and economic outlook and a relatively volatile business environment can affect corporate payment behavior. Corporate default probability is still acceptable on average.

Ducroire Delcredere Political Risk Rating: 1 -- lowest risk
Ducroire Delcredere Commercial Risk Rating: C -- highest risk

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Business Climate

Romania is a country of considerable potential: rich agricultural lands, diverse energy sources (coal, oil, natural gas, hydro, and nuclear), a substantial industrial base encompassing almost the full range of manufacturing activities, an educated work force, and opportunities for expanded development in tourism on the Black Sea and in the Carpathian Mountains.

A member of the European Union since January 1, 2007, the country has worked assiduously to create a legal framework consistent with a market economy and investment promotion, and has largely concluded its efforts to enact EU-compatible legislation. At the same time, implementation of these laws and regulations frequently lags or is inconsistent.

Economic Freedom: Romania’s 2012 Index of Economic Freedom score is 64.4, giving it a world rank of 62 out of 179 countries. Its score is 0.3 points lower than last year due to a deterioration in freedom as a result of corruption and the increase in government management of the business sector. The country is ranked 28th of the 43 countries in Europe and its overall score is higher than the world average.

Market Access: The trade weighted average tariff rate is low as in other members of the European Union, but layers of non-tariff barriers increase the cost of trade.

Regulatory System: Cumbersome and non-transparent bureaucratic procedures are a major problem in Romania. Foreign investment is encouraged officially but discouraged in practice by regulatory inconsistency, unpredictability, and non-transparency. Foreign companies engaged in trade or investment in Romania often express concern regarding the Romanian courts' lack of expertise in commercial issues. Judges generally have limited experience in the functioning of a market economy, international business methods, intellectual property rights, or the application of Romanian commercial and competition laws.

Intellectual Property Rights: Romania is a signatory to international conventions concerning intellectual property rights, but enforcement of legislation protecting patents, trademarks, and copyrights is very weak.

Exchange Control: Romanian legislation does not restrict the conversion or transfer of funds associated with direct investment. All profits made by foreign investors in Romania may be converted into another currency and transferred abroad at the market exchange rate -- after paying applicable taxes.

Corruption: Despite some improvement, corruption remains a serious problem and mistrust of the government continues due to widespread public-sector corruption.

Political Violence: There have been no reported incidents of politically-motivated damage to foreign investments (projects and/or installations) in Romania. Major civil disturbances are not expected to occur in the country in the near future.

For more detailed information on these topics, visit the 2011 Investment Climate Statement - Romania, U.S. Department of State

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Business Protocol in Romania

  • Business in Romania is governed by a large bureaucracy. It is crucial to have personal relationships in the country if you want to cut through the red tape.
  • Romanians focus on using proper etiquette in all situations and expect others to do the same. Start out in a formal style and allow your Romanian business colleagues to move the relationship to a more personal level.
  • Decision-making power is held at the top of the Romanian company and most decisions require several layers of approval.
  • Hire interpreters for meetings and negotiations.
  • Avoid confrontational behavior or high-pressure sales tactics as they will backfire.

More information on Business Protocol: Kwintessential

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Sources for further information on doing business in Romania

American Chamber of Commerce in Romania

Doing Business, Economy Profiles: Romania, The Word Bank International Finance Corporation  (PDF)

Embassy of Romania, Washington, DC

Embassy of the United States, Bucharest, Romania

Doing Business in Romania: 2012 Country Commercial Guide for U.S. Companies

FITA – Romania, The Federation of International Trade Association

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This information is provided by ABC-Amega Inc. Providing international receivable management and debt collection services for exporters to more than 200 countries including Romania. For further information, contact info@abc-amega.com.

This report represents a compilation of information from a wide variety of reputable sources.

Comparative Economic Indicators: CIA World Factbook

Risk Assessment information: Coface Country Rating, Ducroire/Delcredere and Political Risk Insurance Center.

Exchange Rates: OANDA.com The Currency Site.