the business environment's perception of the economy research report conducted for the chamber...

The Business Environment's perception of the economy

Research Report

Conducted for

The Chamber of Commerce and Industry of Romania

March 2015•S

Study conducted on a representative national sample of 500 companies, with respondents in leadership positions.

• The margin of error is ± 4.4% with a confidence level of 95%

• Data collection period: 12-26 March 2015.

©TNS CSOP 2015

The main issues of the Romanian business environment

Q1. What is currently the most important issue faced by your company? Single Response.

The main problems faced by companies in Romania are represented by high taxes (38%), finding customers (14%), legislation (11%) and competition (9%). The four items were indicated by 70% of respondents.

©TNS CSOP 2015

Competition

Q2.Who is the main competitor for your business? How about the second one? And the third?

1 of 2 businesses see local companies with operations in the same region and field as the their main competitors (51%). For this indicator, there has been a greater response frequency in companies with turnover up to 1 million euro than for those with more than 1 million. Instead, foreign companies in our country (multinational) have been indicated by 31% of respondents as the their main competitors, this being the case of companies with a turnover of over 10 million euro. Also, compared with the ones in the productions sector, trade and transport companies have indicated more often foreign firms as major competitors.

51%

31%

11%

6% 2%Local firms operating inthe same region andthe same field with me

Foreign companiesoperating in Romania /Multinationals

Companies withoperations at national /regional

Importers of productsfrom the EuropeanUnion

Importers of productsfrom countries outsidethe European Union

I. The main competitor

73%

45%

40%

20%

10%

Local firmsoperating inthe sameregion and

the same fieldForeign

companiesoperating inRomania /

MultinationalsCompanies

withoperations at

national /regional

Importers ofproducts fromthe European

Union

Importers ofproducts from

countriesoutside theEuropean

TOTAL Competitors

©TNS CSOP 2015

The impact of external factors on businesses(I)

Q3. How much does this negatively affect your company…? One answer per line!

The main factors with negative impact (much /very much) on the activity of the companies are frequent changes in legislation (82%), the high level of taxation (81%) and the condition of the infrastructure (68%).Corruption in the administration is a negative factor as well as the skill level of the workforce. 63% of companies consider corruption in administration as a factor that negatively affects their activity.

9%

7%

18%

18%

18%

24%

12%

10%

18%

18%

82%

81%

68%

63%

60%

55%

2%

1%

2%

9%

5%

3%

7%

11%

Unstable legislativeframwork

The level of taxation

The situation of roadinfrastructure

Corruption inadministration

The country'spolitical stability

The skill level of thelabor force

Little/ Not at all No more, no less Much/ Very I do not know / No answer

©TNS CSOP 2015

The impact of external factors on companies’ activities (II)

Q4. How much does this negatively affect your company…?One answer per line!

20%

22%

19%

26%

42%

39%

15%

20%

19%

14%

58%

58%

52%

43%

31%

28%

5%

6%

14%

12%

9%

19%

18%

14%

Regulations state imposedunnecessarz but costly

Mismatch databases ofpublic institutions

Duration of businessprocesses

Support for businessdevelopment authorities

Access to bank loan

Access to public auctions

Little/ Not at all No more, no less Much/ Very I do not know/ No answer

58% of companies believe that the state maintains numerous unnecessary and costly regulations. For example: "Mandating that each employee has to follow courses for 4 days, 8 hours a day for PSI" or "Physical safety" or “the low level of travel allowance, both for national and international travels". At a similar level is also the mismatch of the national databases of the public institutions (58%). It represents the ineffectiveness of the state that businesses encounter in their activates. This means lost time, instead of a better coordination of the databases by the state.

©TNS CSOP 2015

Areas with legal regulations with a real impact on the economic activity of companies

Q5. In which of these areas are the most burdensome legal regulations for your company … ? (I can tick several variants within 3)

Continuing the same trend, the main areas of with legal regulations burdensome for companies are taxation (80%), competition (30%) and labor (29%).

80%

30%

29%

20%

14%

4%

Fiscality

Competition

Workforce

Legislation onconsumers

Environment

Other

Base 500 respondents

Factors adversely impacting the company's activity

Q6. List the top 5 negative factors affecting your company's activity. Open answer.

57%

37%

22%

20%

19%

14%

10%

7%

7%

7%

7%

6%

6%

6%

6%

6%

35%

8%

Tax / Higher taxes

Competition

Legislation / Legislation ambiguous

Legislative changes / legislative instability

The level of workforce training

Infrastructure

Bureaucracy

The price of fuel / energy / gas

Labor costs

Access to finance

The cost of raw material / production

Liquidity / financial J ams

Workforce / labor shortages

Political instability / Politics

The purchasing power of the population

instability ecnonomica

Other *

Do not know / Can not say* In the Other category there are included all the responses with 5% or less

Almost 60% (3 of 5 decision makers) of companies have spontaneously mentioned taxation as a factor negatively affecting the company's activity. At the same time, they have spontaneously mentioned both the instability and the ambiguity of the legislation – aprox. 20% of respondents.

The level of education of the labor force is a factor with negative impact on Romanian companies, especially those in the fields of production (manufacturing, agriculture, construction)


©TNS CSOP 2015

Assessment of 2014(I)

Q7. Which of the following indicators, relevant to your activity, have decreased, remained unchanged or increased over the past year in your company?One answer per line!

If it is estimated that direct costs have increased in 2014, the proportion of those who believe that profits have risen is just 1% higher than those who believe that they have decreased. Rising profits have mentioned in particular by companies with turnover of 10 million Euro.The highest percentage of those who felt the increased direct costs (labor and materials) is given by the companies in the areas of production compared with those from trade and transportatin.

60%

60%

47%

37%

27%

28%

30%

22%

22%

40%

10%

6%

30%

36%

13%

5%

2%

4%

1%

19%

Labour cost,including taxes

Material costs(energy, raw

materials, etc.)

Turnover

Net profit after tax

Interest expenses

Has grown He remained unchanged A scazut I do not know / No answer

The main indicators Net Increase(„It grew up” – „Fell”)

©TNS CSOP 2015

Assessment of 2014 (II)

Q8. For each of the following factors, would you say that they have improved, remained unchanged or deteriorated in the past year?One answer per line!

The perception of company decision makers is that in 2014, sales had had a positive growth in 45% of cases and a negative for approx. 30%. In addition, we can also observe a rising openness

of banks towards lending (33%).Overall, only 30% of respondents have perceived an improvement of the general economic

situation; compared with the services sector, the trade and transportation companies consider the economy has worsened.

The main indicators Net Improvement(„Improved” – „Worsened”)


45%

33%

30%

28%

18%

24%

26%

35%

59%

42%

30%

14%

33%

12%

21%

22%

10%

1%

1

1%

7%

1%

2%

6%

Your company'ssales

The desire of banksto grant loans

General economicsituation

The equity capital ofthe company

The offer tradecredit from partners

Was improved A remained unchangedWas worsened Not applicableI do not know / No answer

15%

19%

- 3%

18%

6%

©TNS CSOP 2015

Assessment of 2014 and Expectations for 2015

Q9. In the last year, how much has your company increased in terms of ...? One answer per line!Q10. In the next year, what is your estimate regarding your companies growth in...?One answer per line!

Comparing the situation in 2014 with the expectations for 2015, we can distinguish a moderate optimism regarding the positive evolution of companies, the growth rates being small and when

considering the employment level, there are slightly pessimistic.Those from the production sector expect to have in 2015 an increase in the employment level,

while the companies from trade and transportation are more cautious in this regard.

-27%-12%

-32%

-13% -16%-8%

21% 26% 20%28%

48% 54%27%

30%27%

31%

21%21%

22%24%

16%

21%14%

12%Growth of overr10% per year

Growth of under10% per year

Growth 0%

Negative growth

2014* 2015

Turnover

2014 2015

Profitability

2014 2015

Number of employees

* The difference up to 100% is given by Do not know / No answer


©TNS CSOP 2015

Trust in institutions (I)

Q11. Personally, how much do you trust … ? One answer per line!

Trade register (68%), CCIR (60%) and DNA (60%) trusted by the Romanian business environment.

40%

64%

27%

21%

60%

36%

60%

68% 11%

The Chamber ofCommerce and Industry

of Romania

Banks from Romania

National AnticorruptionDirectorate

National Trade RegisterOffice

Not at all/ Very little/ Little Much/ Very much I can not estimate


©TNS CSOP 2015

The interaction of companies with public institutions

Q12. On a scale of 1 to 5, where 1 = Very difficult 5 = very easy, how do you asses the conduction of these activities in Romania?One answer per line!

In the relation between the entrepreneurs and the institutions we can observe that the easiest interaction is with the National Trade Register (60%) and at the other end is the procurement of permits and licenses (49%), followed by the procedure for closing down a company, unfreezing of

accounts and accessing European funds (~40%).

10%

20%

30%

49%

42%

41%

41%

25%

23%

27%

28%

17%

19%

60%

46%

36%

20%

18%

12%

12%

5%

8%

3%

27%

27%19%

11%

23%

Interacting with the Trade Register

Opening a new firm

Interacting with ANAF

In general, obtaining approvals and permits required

Closing a business

Unlocking accounts garnishment or seizure

Accessing European Funds

Difficult / Very No easy / Not difficult Easy / Very I do not know / No answer


©TNS CSOP 2015

The interaction of companies with public institutions

Q13. How much time do you consider that your companies’ interaction with the state institutions consumes… ? Single response.

The interaction with the state is not perceived as a time consuming activity by half of respondents, however 44% have declared that this interaction is time consuming. Comparing the last number with the number that have declared that it consumes very little time – only 7% - we

can conclude that the interaction with the public institutions is time consuming.

48%

44%

7%

2%

What is required /no more nor less

Long time

Shortly time

I do not know / Noanswer


©TNS CSOP 2015

Control authorities

Q14. Do you consider that a single inspection body that will group the existing ones after the German model will be….Single response.

87% of the interviewed entrepreneurs consider that the introduction of a single inspection body

that will group the existing ones after the German model will represent a very good measure.

41%

46%

5%1%

3% 3%

Very good Good Fool Very Bad I know this system I do not know / No answer

Merging control bodies


©TNS CSOP 2015

Impact of legislative measures stimulus economic (I)

Q15. What impact did the following governmental measure have had on your company? One answer pe line!

Out of all the legislative measures with economic impact, the CAS reduction has been perceived as beneficial by ¾ of respondents. These are predominant from companies with a turnover of less than one million euro, while the companies with turnover of more than one million euro consider that this measure has had no effects on their activity.The additional excise is considered to have a negative impact (75%), followed by the tax on fixed assets – 39%.

1% 20%

52%

19%

48%

41%

65%

67%

77%

25%

5%

4%

53%

22%

19%

2%

2%

8%

4%

10%

10%

21%

75%

39%

2%

3%

3%

2%

Reducing CAS

Increasing the minimum wage

Supra fuel excise

Tax assets (post tax)

The tax exemption for reinvested profit

Credit guarantee program for small and mediumenterprises

Rescheduling of debts by the other organs andtransmitted to the ANAF recovery

Negative effect No effect Positive effect I do not know / No answer

The main measures


©TNS CSOP 2015

Promoting the Romanian business potential

Q16. How satisfied are you by the way that the State promotes abroad the potential of the Romanian business environment? Single response.

The promotion abroad of the Romanian business environment in perceived as very good by 21% of respondents, over half (54%) considering it as unsatisfactory and 24% declaring that they can not evaluate.

54%

21%

24%

Dissatisfied / Very Satisfied / Very I can not say

Promoting the business environment

53%

21%

20%

21%

27%

58%Exporters (n

= 152)

Importers (n= 187)

Dissatisfied / Very Satisfied / Very I can not say

Companies with foreign activities


©TNS CSOP 2015

Joining the Eurozone

Q17. As you know, Romanian intends to join the Euro. Do you believe that this will have a positive impact on your business? Single response.Q18. You consider that joining the Eurozone should take place….?Single Response.

Joining the Eurozone will have a positive impact for 40% of companies, 30% consider that will not influence their business and 24% consider it will have a negative impact. 60% of respondents say that joining the euro should be done after 2019.

40%

30%

24%

6%

positive No positive / no negative

negative I do not know / No answer

Joining the Eurozone

41% 59%

Earlier 2019 Later 2019

Year of joining the Eurozone


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