The level of foreign investments attracted in Romania may come to a halt due to the lack of a developed infrastructure and education.
Serban Toader, a senior partner with KPMG, the domestic arm of one of the world's largest consulting and audit services provider, says the poor infrastructure and training of personnel are the main obstacles in the way of Romania's economic development.
Covering the current account deficit and keeping inflation under control have become the main challenges the Finance Ministry is trying to address. As for infrastructure and workforce, no solutions have been found yet, believes Toader.
"Risks related to inflation and the current account deficit are mentioned frequently. Macroeconomic risks are permanently considered by the central bank and the Finance Ministry. I believe inflation must be seen as the biggest threat to any economy, because it is treated with medicines that are not easy to swallow," says Toader.
The first solution to Romania's two "hot" issues would be "going beyond the stage of complaining about shortages and taking immediate action". The more active involvement of the private sector in the public education of young people could also solve some of the problems of the educational system.
Despite risks related to infrastructure and workforce, the Romanian economy has still managed to lure foreign investors.
"The reasons they came here are not related to taxation only, but also to the fact that we have a functional market economy, an appropriate institutional framework and that we are EU members," the head of KPMG explains.
Another advantage Romania has is the progress the Romanian legislation has made towards ensuring ownership rights for foreign investors.
Major consultancy and audit groups' decision to come to Romania was not necessarily based on factors such as the friendly taxation or the regulation of ownership rights. In fact, they just "followed" their international clients to the states they chose to open offices in.
"(...) However, the structure of the market has changed, while the weight of Romanian clients in our portfolio is on the up, after they became increasingly interested in audit services," says Toader.
The share of Romanian clients in KPMG's portfolio ranges between 40% and 60%, but the company wants half of its clients to be Romanian.
The sector of listed companies also has a high growth potential for auditors. Besides this, KPMG has also identified a high potential on the segment of consulting services for IPOs.
The low number of domestic IPOs has not prevented it from getting involved in preparing companies for floatation. So far, KPMG has assisted in the floatation of A&D Pharma on the London Stock Exchange and of Transelectrica on the Bucharest Stock Exchange, as well as in BCR's and Raiffeisen Bank's bond issues.
KPMG
The share of Romanian clients in KPMG's portfolio ranges between 40% and 60%, but the company wants half of its clients to be Romanian
Besides the sector of listed companies, KPMG has also identified a high potential on the segment of consulting services for IPOs
The low number of domestic IPOs has not prevented it from getting involved in preparing companies for floatation
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