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Romania's instability in managing SOEs, legislative unpredictability hinder investment - US State Dept.

Romania's instability in managing SOEs, legislative unpredictability hinder investment -  US State Dept. Bucharest aerial view Source: pixabay.com

BUCHAREST (Romania), July 23 (SeeNews) - Instability in managing state owned enterprises (SOEs) and an unpredictable legislative climate are hindering investment in Romania, the US Department of State said.

"The investment climate in Romania remains a mixed picture, and potential investors should undertake due diligence when considering any investment," the State Department said in a report published on Wednesday.

The government’s sale of minority stakes in SOEs in key sectors, such as energy generation and exploitation, has stalled since 2014. A bill passed in 2020 instituted a two-year ban on the sale of state assets and state equity in SOEs, but the government is in the process of drafting legislation that will terminate the ban.

"Successive governments have weakened enforcement of the state-owned enterprise (SOE) corporate governance code by resorting to appointments of short-term interim managers to bypass the leadership requirements outlined in the corporate governance code," the report added.

Consultations with stakeholders and impact assessments are required before enactment of legislation, but this requirement has been unevenly followed, and public entities generally do not conduct impact assessments, the State Department noted. Frequent government changes have led to rapidly changing policies and priorities that serve to complicate the business climate, it added.

The executive department of the U.S. federal government noted that the December 2020 parliamentary elections resulted in a pro-investment, center right coalition government with a parliamentary majority, providing increased political stability. In its view, Romania has made significant strides to combat corruption, but it remains an ongoing challenge.

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