To reach a parity in terms of living standards with western economies, Romania needs at least two decades of strong economic growth. The current growth rate will be impossible to maintain in the medium and long term without immediate and massive investments in infrastructure, the organization said.
Romania’s transport infrastructure development has been slow over the past decades due to a combination of lack of prioritization, discontinuity of decision making and poor planning and execution, it said.
According to the Global Competitiveness Report 2016-2017, Romania ranks 88th out of 139 countries when it comes to the quality of its infrastructure, down two spots compared with the 2015-2016 ranking. Also the European Commission’s 2017 country report on Romania shows the country has the highest rate of public investment in the EU in the last decade and although overall performance improved, it ranks last in the EU in the perceived quality of infrastructure.
The organization said it is vital for Romania to change the way it approaches the infrastructure sector and suggested several key points that authorities should address:
– Clear objectives. It is still not clear which are the priorities for the next 3 to 5 years and how these projects will be financed and implemented.
– The National Road Investment Company (CNIR) needs an appropriate corporate governance structure in order to ensure that it is properly managed; the new investment entity should comply with Law No. 111/2016 regarding corporate governance. It is also important to clarify the scope and objectives of CNIR, as well as the unit that will manage the projects, because the lack of professional management and expertise has sometimes led to delays in projects for minor reasons.
– Key issues of clarity, hierarchy and funding schemes are extremely important and relevant, not only to facilitate the development of strong infrastructure but also to overcome existing bottlenecks that lead to delays in the development of projects. An inter-institutional joint effort is needed to achieve this.
– The Sovereign Fund for the Development of Romania (FSDI) investment criteria and priorities will need to be clearly defined.
– The new PPP (public-private partnership) law should provide a coherent framework, which former versions of the law did not.
– The absorption rate of EU Funds is too slow and authorities should take all necessary steps to accelerate it. Without these funds, it will be almost impossible for Romania to develop large infrastructure projects.
FIC added infrastructure is key for Romania’s future development and it is also one of the three pillars the country must focus on if it is to become one of the top 10 EU economies.
FIC consists of 123 member companies whose total investments in Romania amount to nearly EUR35 billion, which represents nearly two thirds of all foreign direct investments to Romania since 1990.