Romania climbs 23 positions in top of business-friendly countries

The 2007 report includes Romania among countries which made positive reforms in fields such as loan granting and tax payment, and negative reforms in the area of starting a new business.

The best position Romania obtained (13th place) was on loan granting, while the lowest (145th place) was on hiring personnel. Romania ranked in the top half of the list on investor protection (33rd place), international commerce (38th place), and contract applicability (37th place). Despite a significant advance in the 178-country top, Romania is still surpassed by states such as Estonia, Latvia, Hungary, and Bulgaria.

The “Doing Business 2008” study does not include Romania among top ten reforming countries. In the 2007 report, Romania ranked second among world countries with best performances in terms of economic reforms between 2005-2006, and first in a regional top. Countries in Eastern Europe and the former Soviet Union, together with several emerging countries, including China and India, developed most reforms in the business environment between 2006-2007.

In terms of taxes, one third of the 178 countries developed reform programs in 2006 and 2007, and tax cuts was the most popular reform method. The second-best was lowering the number of taxes followed by simplifying payment procedures by introducing online statements and payments. The report indicates that Bulgaria made the most numerous fiscal reforms in 2006-2007 by cutting the profit tax ratio to 10 percent from 15 percent.

Reforms in Eastern Europe were based on these countries’ need to compete with the more developed economies of EU members, said the World Bank, adding that these measures put pressure on the West, which had to take a similar stand.

Fiscal reforms are accompanied by political debates, which swing between the temptation to cut back taxes to attract votes, on the one hand, and the need to earn higher income, by maintaining or increasing taxes, decision which would clearly lose votes, on the other hand, according to the report.

Romania ranked among top five East-European countries in terms of hours allocated for tax payment, with an annual 202 hours, compared to 81 hours in Estonia, and 930 hours in the Czech Republic.