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EU Enlargement – the case of Romania Magda R Tepoi, Istambul , April, 1 6 th , 2009

EU Enlargement – the case of Romania Magda R Tepoi, Istambul , April, 1 6 th , 2009. EU Enlargement.

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EU Enlargement – the case of Romania Magda R Tepoi, Istambul , April, 1 6 th , 2009

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  1. EU Enlargement – the case of Romania Magda R Tepoi, Istambul, April, 16th, 2009 Magda R Tepoi, April 2009, Turkey

  2. EU Enlargement Enlargement is one of the European Union most powerful policy tools.It is a carefully managed process which helps the trasformation of the countries involved, extending peace, stability, prosperity, democracy, human rights ad the the rule of law across Europe. It began with the Inner Six, who founded the European Coal and Steel Community (the EU's predecessor) in 1951. Since then, the EU's membership has grown to twenty-seven with the most recent expansion to Bulgaria and Romania in 2007. There is more to come …Croatia and Turkey, Macedonia, Albania, Bosnia-Herzegovina…. Magda R Tepoi, April 2009, Turkey

  3. Snagov Declaration • Romania signed its Europe Agreement in 1993 and submitted its official application for membership in the EU in 1995, the third country to do so after Hungary and Poland. Along with its official EU application, Romania submitted the “Snagov Declaration,” signed by all fourteen political parties declaring their full support for EU membership. Magda R Tepoi, April 2009, Turkey

  4. Benefits of EU Accession • Removal of any obstacles in the trade with EU Member States • Common trade policy with third countries • Harmonization of entire legislation, capital market regulations, taxation, accounting rules => higher transparency and simplification • Structural funds (33 billion euro till 2013) • Open gate for EU towards CIS, Asia, Middle East, Northern Africa • Participation in major projects in the Black Sea Extended Area and in the Central & Eastern European Region • Romania-important role in assuring the energy security for Europe (major transit pipelines, energy production & supply) Magda R Tepoi, April 2009, Turkey

  5. 10 indicators where Romania is over the EU average Magda R Tepoi, April 2009, Turkey

  6. Pre-accession assistance granted to Romania by the EU • 1992-1999 amounted to approximately 1.2 billion euro • 2000-2003 Romania received approximately 660 million euro per year, through the three pre-accession instruments: PHARE, ISPA and SAPARD • 2004-2006 of up to 40% increase in 2006 (around 2.8 billion euro) Magda R Tepoi, April 2009, Turkey

  7. Absorption rate of pre-accession funds • PHARE, ISPA and SAPARD • Beginning of March 2009, from the total of 5.679.000.000 euro for the period 2000-2007, have been made contracts of 5.110.000.000 euro, absorption rate 90%. • The payments for these contracts represents 3.469.000.000 euro, absorption rate 70%. Magda R Tepoi, April 2009, Turkey

  8. Pre-accession and structural funds • Phare - Stuctural Funds (European Regional Development Fund (ERDF) and Social European Fund ESF) • Sapard - European Agriculture Fund for Rural Development (EAFRD) and The European Fishery Fund The EFF • ISPA - European Cohesion Fund Magda R Tepoi, April 2009, Turkey

  9. IPA Instrument for Pre-accession Assistance • From 2007 onwards EU is channeling its pre-accession funding through one single instrument called IPAIPA’s aim is to be a bridge between external assistance and internal policies. IPA objectives are the following: • Support Turkey in its bid for membership, including the necessary economic, political and social reforms • Help prepare the country for the management of structural funds. • As a consequence IPA also: • Readies Turkey for multi-annual planning • Supports Turkey in sound financial management of EU funds • IPA will provide countries seeking EU membership with a total amount of  € 11.5  billion in the seven-year term from 2007 onwards. The preliminary EC draft budget for 2007 envisages that Turkey could get over € 2 billion for the first four years of IPA (2007-2010) IPA’s five components are: • Transition Assistance and Institution Building – Component 1 • Regional and Cross-Border Co-operation – Component 2 • Regional Development – Component 3 • Human Resources Development – Component 4 • Rural Development – Component 5 Magda R Tepoi, April 2009, Turkey

  10. Structural Funds for Romania • Romania will benefit of more than 30 billion Euro structural and cohesion funds from the EU for the 2007-2013 period. • 19.7 billion Euro under Convergence objective • 13.3 billion Euro under Common Agricultural Policy • The structural funds are managed by the European Commission and the goal is to finance the structural measures from the community for helping regions with a delay in their development, for reconversion of affected area's where there is a industrial decline and to fight against long time unemployment. Magda R Tepoi, April 2009, Turkey

  11. Structural Funds for Romania There are 4 types of structural funds. Each one handles specific domains and they have specific aims. • European Regional Development Fund (ERDF) - intended to reduce regional imbalance and assist less favoured regions via local development (local development, create and safeguard sustainable jobs and support SME's). • European Social Fund (ESF) - focuses mainly on training and job creation, the reintegration of the work force and the fight against unemployment. There is a specific topic: this funds finances projects for training and assistance to hire people. European Cohesion Fundcontributes to very large infrastructure projects, such us the trans-European transport networks (TEN-T) and large-scale investments in the environment sector. In Romania, the investments from the structural funds will be complemented by the Common Agricultural Policy funds. These are: • The European Fishery Fund The EFF (2007-2013) will have a financial contribution to adapt and to modernize this sector. • FEADR = European Agriculture Fund for Rural Development (EAFRD)will finance the rural development measures and support agriculture (especially in the regions that are under developed). Magda R Tepoi, April 2009, Turkey

  12. Structural Funds for Romania The National Development Plan (NDP) is a specific concept for the European economic and social cohesion politics that provide a stable and coherent concept for the development of the member states. The first step to access the funds for Romania is the approval of the national development plan. NDP 2007-2013 is a strategic planning and multi annual financing document approved by the Romanian Government. The primary objective of the Romanian NDP is to reduce the economical and social gap between the members states and Romania as quickly as possible. The global objectives are based on 3 specific objectives: • To increase the competitiveness of the Romanian economy (long term) • To develop the European standards for basic infrastructure • To optimize the efficient use of the autochthon human capital Magda R Tepoi, April 2009, Turkey

  13. 14 domains that can be financed with structural funds and cohesion funds from the EU • Technical Research and Development • Informatization (ICT) of the society • Transport • Energy • Environmental protection and prevention of risks • Tourism • Culture • Urban and rural development • Support for SME's and entrepreneurs • Access to stable work places • Social inclusion for disfavoured persons • Development of the human capital and resources • Investments in social infrastructure including those in health and education • Promoting the development of partnerships Magda R Tepoi, April 2009, Turkey

  14. Responsable authorities The Ministry of Public Finance from Romania is the authority responsible for the coordination of the national authorities in charge of the administration of the structural funds. The operational programmes will be coordinated by the following national authorities: Ministry of Economy and Trade: Increase of Economic Competitiveness- Ministry of Transport, Construction and Tourism: Transport Infrastructure- Ministry of Environment and Water Management:  Environment Infrastructure- Ministry of Labour, Social Solidarity and Family: Human Resources Development- Ministry of Agriculture, Forests and Rural Development: Agriculture and Rural Development- Ministry of European Integration: Regional Development and European Territorial Cooperation- Ministry of Public Finances: Technical Assistance- Ministry of Administration and Interior: Administrative Capacity Development Magda R Tepoi, April 2009, Turkey

  15. Sectoral Operational Programmes2007 -2013 • Technical Assistance Operational Programme 0.9% • Sectoral Operational Programme (SOP) “Increase of Economic Competitiveness” 13.3% • Sectoral Operational Programme for Environment 23.5% (audited by the Commissionon on 16 Jan 2009) • Sectoral Operational ProgrammeTransport (SOPT) 23.7% • Regional Operational Programme 19.4% • Operational Programme: Administrative Capacity Development 1.1% • Sectoral Operational Programme- Human Resources Development 18.1% Magda R Tepoi, April 2009, Turkey

  16. Obstacles in the way of a better use of Structural Funds 1. The in-efficiency of civil servants - almost 20.000 civil servants (> half in ministries, the other in county councils, prefectures, town halls; in 2007 and 2008, Romania absorbed structural funds of 176 millions euro, but the civil servants from public administration received 300 millions euro a lot of consumtion, smqll investments) 2. Bureaucracy Almost all applicant guides are full of too many specific and technical terms Business people should be concentrated on the business project not on understanding a complicated process 3. Lack of experience In certain situations for instance big contracts, which are international auctioned, the authorities try to contract local experts or consultants to help or to train the permanent personal. The companies that participate to the auction are looking for the cheapest not the best experts. This aspect make most of the times, that the projects that are going to improve the performance of the people employed in the organisations that are responsible for the European fund to have a limited impact. The legal framework does not help at all those who wants to make projects. 4. National obstacles 5. Time formalities 6. Errors in funds demanding Not only state institutions are responsible of the low level of European Structural Funds absorption. (The OP -do not answer to a development vision we are aiming at and do not indicate stong and distinctive directions of development; -rather seem to feel some gaps and refresh an exhausted economy then to look after a deep srtuctural reform) the mentality (CCI work) pre-accession assistance especially Phare component helped us a lot in building the adm. capacity for structural funds. Over 30 handbooks and procedures required for managing and implementing structural assistance were made with the help of foreign experts; and projesct preparation benefit from the support of the pre-accession assistance. the way in which a program is running, the payment conditions are quite restrictive. in the case of the private companies this kind of financing is accessible for those which could implement the project by their own, with own resources or with credits, but with the help of European funds they will implementing faster. this aspect should be explained very clearly. For this reason, there are still many companies that has very low profitability and limited resources, who hope that they will make mirracols with the help of an European fund. Magda R Tepoi, April 2009, Turkey

  17. Countries from the first wave and the use of European Funds Magda R Tepoi, April 2009, Turkey

  18. Structural funds use • First year of membership • Cehia* 41,5 absorbtion 0,18 • Polonia* 42,8 0,19 • Slovacia* 41,6 0,24 • Ungaria* 42,9 0,38 • România 21,7 (2007) contribution-0.36 Magda R Tepoi, April 2009, Turkey

  19. Challenges for a better use of Structural Funds • The maintain of an increasing economic growth over 5% yearly till the Euro adoption • Building an effective administrative capacity in order to increase the number of the eligible projects (training, change mentality, to make a long term strategy) (see the European Innovation Scoreboard 2006, Romania occupies the lowest position among the European countries in what concerns the innovation capacity, and this fact represent a concern; tourism see Spain ) the OP do not answer to a development vision we are aiming at and do not indicate stong and distinctive directions of development; -rather seem to feel some gaps and refresh an exhausted economy then to look after a deep srtuctural reform • The possibility for the general consolidated budget to generate co financing of almost 1% yearly GDP, without the exceeding of 3% of the fiscal deficit • The insurance of a proper level of co-financing both through private sources and also credits Magda R Tepoi, April 2009, Turkey

  20. Chambers of CommerceIssues from Romanian businesses(in the implementation of pre-accession funds) 1) Programme Administration The financing programmes are managed at central level, by the public administration, yet often responsibilities for coordination – also as intermediaries –, management, monitoring and reporting are separate and applied by different institutions for different programmes, which makes funding accession procedures both bureaucratic and difficult to evaluate and monitor, as a whole. Magda R Tepoi, April 2009, Turkey

  21. Chambers of CommerceIssues from Romanian businesses(in the implementation of pre-accession funds) 2) Applying for Funds • The business community in Romania was often confronted with a number of concrete problems in accessing community funding which do not differ to European businesses: • burdensome and bureaucratic procedures and documentation while applying for funds • too detailed reporting procedures, consuming an important amount of time and resources • a slow decision process that may lead to losing opportunities for businesses • the projects must be financed in advance and refunding is often delayed of the actual payment • approval competencies are raised at too high levels, losing sight of the real needs in planning and running the businesses Magda R Tepoi, April 2009, Turkey

  22. Chambers of CommerceIssues from Romanian businesses(in the implementation of pre-accession funds) • general problems”, the business community the need for training and education in drafting of projects and financing mainly in view of preparing the use of European funds (example CCRUNER VPN) • insufficient consultancy in the field • the credit market is underdeveloped which makes difficult to ensure the required co-funding Magda R Tepoi, April 2009, Turkey

  23. Regional Economic Development by Continuous Entrepreneurs Improvement • The main purpose of the project was to increase the regional economic development by: improving the quality of the staff of Chambers in providing services of professional trainingimproving the quality of enterprises management specialists from the North-East Region in the following fields:assimilation of hi-technology novelties;assimilation of good practicing and international commerce management; applying the management of quality.so that to be ensured the development of the local area business environment and integration of regional business environment in European area. • In the first section of the project will be organized seminars of improvement regarding the staff of the Chambers from the North-East Region, provided by European and Romanian specialists, in the following fields:foreign trade TQMe-signcommercial arbitration project management in international economic cooperationEuropean politics and strategy for SMEsEuropean economic legislation for international cooperation. • In the second section of the project, beneficiaries are the companies from the North-East Region willing to expand their businesses across the borders, in EU. • The seminars have been organized in a Virtual Private Network system, in the following Romanian counties: Iasi, Neamt, Suceava, Bacau and Botosani. Magda R Tepoi, April 2009, Turkey

  24. Chambers of CommerceIssues from Romanian businesses(in the implementation of pre-accession funds) • 3) Market Failure and Displacement • Establishing the fields in which additional funding is necessary is difficult to make unless businesses are dully consulted. However analyses that are carried to this purpose, are often based on incomplete or outdate information, while, between the assessment period and the actual allocation of funds market conditions may change. • To ensure a better allocation of funding, the chambers of commerce and industry initiate a mechanism of regular consultation with the business community on the real needs for financing, through specialized public hearings, questionnaires and a market surveillance mechanism Magda R Tepoi, April 2009, Turkey

  25. Chambers of CommerceIssues from Romanian businesses(in the implementation of pre-accession funds) • 4) Administration of Funds • The cooperation between the public administration and the chambers must be based on the understanding of the role that chambers of commerce and industry play in supporting the enterprises, their capacity to work in a structural, professional network of centers for information, consultancy, representation and coordination of the business community. • The chambers of commerce and industry make the necessary efforts to create mechanisms and instruments for communication, cooperation and partnership with the public administration and NGOs that have responsibilities in regional development issues.  Magda R Tepoi, April 2009, Turkey

  26. THE ROLE OF THE ROMANIAN CHAMBERS OF COMMERCE AND INDUSTRY IN DEVELOPING THE REGIONAL POLICIES and implementing the European Funding • Lobbying and …advising national governments on the formation of regional policies • The chambers of commerce and industry from Romania (CCIT) participate in regional programming, within the mechanism of elaboration in partnership of the multi-annual Regional Development Plans. • The Chamber of Commerce and Industry of Romania and Bucharest Municipality (CCIRB) was a member of the National Transparency Committee for Monitoring the Community Funds. • CCIRB participates to the social dialogue, both at national level (as a permanent guest, in the Economic and Social Council and the Social Dialogue Committees of the economic ministries) and at local level – Social Dialogue Committees of the counties Prefectures. • CCIRB participates to the Consultative Council for the Negociation of Romania’s Accession to the EU and the Working Groups, on negociation chapters, established within the Council. EPE bringing companies closer to Lisbon agenda (the movie) Magda R Tepoi, April 2009, Turkey

  27. Some facts & figures on EPE companiesINVOLVEMENT OF EU INSTITUTIONS • EU political representatives involved in national programmes & EPE(11programmes received): • Members of the European Parliament: Approx. 115 • European Commission: 7 EU commissioners • Other representatives from EU institutions (Commission’s DGs, EESC, etc.): Approx. 35 • 740 MePs have received an information letter on the companies’vote Magda R Tepoi, April 2009, Turkey

  28. THE ROLE OF THE ROMANIAN CHAMBERS OF COMMERCE AND INDUSTRY IN DEVELOPING THE REGIONAL POLICIES and implementing the European Funding • Representing businesses on regional partnership groups In Romania, the chambers of commerce and industry were nominated as members in the Regional Development Councils (having responsibilities in: programming and implementation of  the regional development policies; aproval of the regional programming documents; monitoring of the funds use). In the meantime Chambers of Commerce and Industry in Romania closely cooperate with the Regional Development Agencies (NGOs set up as “executive” entities of the Regional Development Councils, for the elaboration and implementation of the programming documents; implementation of the regional development programmes; technical monitoring of the funds use) Magda R Tepoi, April 2009, Turkey

  29. THE ROLE OF THE ROMANIAN CHAMBERS OF COMMERCE AND INDUSTRY IN DEVELOPING THE REGIONAL POLICIES and implementing the European Funding • Carrying out of regional policy and implementing local initiatives for the benefit of the area • CCIRB and the local chambers of commerce and industry participate to the organization of networks of centers for information and consulting, in cooperation with the National Agency for SMEs and Cooperation, Minister of Environment and local public administration. • Romanian Business School of the Chambers of Commerce and Industry participates to a series of projects, mostly with European funding in the field of education for businesses, entrepreneurship and continuous vocational training. • Very important is the training for EPSO (European Selection Personal Office) competition for those who wants to become public servants in European Institutions. Magda R Tepoi, April 2009, Turkey

  30. THE ROLE OF THE ROMANIAN CHAMBERS OF COMMERCE AND INDUSTRY IN DEVELOPING THE REGIONAL POLICIES and implementing the European Funding • Advising businesses on the access to funds and projects • Chambers of Commerce and Industry trains specialists and sets up information and consultancy structures for entrepreneurs, in projects evaluation and applying for pre-accession funding • Through the programs initiated by Eurochambres (CAPE I, CAPE II and CAPE III) local Chambers of Commerce and Industry in Romania have been given assisstance and training in order to better advise their members on EU matters. • Through the Euro Info Centres network chambers of commerce and industry in Romania contribute to the readiness of businesses for EU integration, with information and advice on the acquis communautaire issues, Internal Market, explaining of community mechanisms and policies.  Magda R Tepoi, April 2009, Turkey

  31. Romania’s Geo-strategic Position Our friend the wind Magda R Tepoi, April 2009, Turkey

  32. Pan European Transport Corridors IV Dresden/Nuremberg - Bucharest Constanta/Thessaloniki/ Istanbul VII The Danube river 2,300 km long IX Helsinki – Kiev - Bucharest – Odessa/Alexandropoulos Romania’s Strategic Location • The Eastern border of the inland European Union • Strategic position at the turning point where EU meets the Balkans and CIS countries Magda R Tepoi, April 2009, Turkey

  33. Competitive Taxation Magda R Tepoi, April 2009, Turkey

  34. Macroeconomic Performance GDP real growth Source: National Institute of Statistics Magda R Tepoi, April 2009, Turkey

  35. Macroeconomic Performance Inflation rate Magda R Tepoi, April 2009, Turkey Source: National Bank of Romania

  36. Macroeconomic Performance Unemployment rate 36 Magda R Tepoi, April 2009, Turkey

  37. Foreign direct investments- million Euro - Source: National Bank of Romania Magda R Tepoi, April 2009, Turkey

  38. Foreign Investors Advantages • foreign investments allowed in all sectors of economy • possibility to freely manage the company with full ownership rights • full repatriation of capital and profits • protection against expropriation and nationalization • national treatment for foreign investors Magda R Tepoi, April 2009, Turkey

  39. Main trade partners - 2007 - Magda R Tepoi, April 2009, Turkey

  40. Top reasons to invest in Romania (1) Market & Location Advantage : • Second largest market in Central and Eastern Europe (over 21 million inhabitants)                     • Easy access to the countries of the former CIS countries, Balkans, the Middle East and Northern Africa • Junction of three prospective European transportation corridors nos. 4, 7 & 9 Resource Advantage: • Skilled labor force, with solid knowledge in technology, IT and engineering • Rich natural resources, including fertile agricultural land, oil and gas • Important potential for tourism Magda R Tepoi, April 2009, Turkey

  41. Top reasons to invest in Romania (2) Economic Advantage • Sustainable economic growth • Functional Market Economy status • Competitive tax policy • Decreasing inflation • Permanent financial assistance for SME's Development • Structural funds Improving Infrastructure Advantage • Well-developed networks of mobile telecommunications in GSM systems • Branch offices and representatives of well-known international banks • Commitment to improve the highway infrastructure to EU standards • Extensive maritime and river navigation facilities Magda R Tepoi, April 2009, Turkey

  42. Map of Industrial Parks • More than 40 Industrial Parks • Both private & public • Greenfield & Brownfield • Access to utilities • Package of services offered by the park administration • Wide variety of activities to be developed • Some created for high-tech activities Magda R Tepoi, April 2009, Turkey

  43. Manufacturing Automotive parts IT & Communication Electric & Electronics Wood processing Construction materials Textile Food processing Infrastructure Outsourcing and logistics Potential Sectors for Investment Magda R Tepoi, April 2009, Turkey

  44. AutomotiveIndustry Opportunities Experience in the field of car makers Automotive component parts – rapidly growing sector: currently over 175 major manufacturers Availability of labor force Labor cost: monthly average salary approx. Euro 250-300; Total number employed: 600.000; Trained work force 7 colleges in vehicle technology – 500 graduates each year; 25 colleges in mechanical engineering – 1.000 graduates / year; Availability of suppliers and subcontractors Presence of R&D centers Successful investment stories in the field Magda R Tepoi, April 2009, Turkey

  45. Automotivetop-tier investors Magda R Tepoi, April 2009, Turkey

  46. High density of Romanian IT specialists (five times higher than in Russia, and seven times than in India). Romanian Olympic students are usually placed in top 4 with China, US and Russia. In Microsoft the second spoken language is Romanian; Low brain drain phenomenon in Romania; IT sector is constantly growing; Major multinational IT companies such as Microsoft, HP, Oracle, Cisco, Intel and Motorola are present in Romania - many of them use Romania as regional headquarters. RomanianITC Industry Trends Magda R Tepoi, April 2009, Turkey

  47. A Top European Location for product R&D, outsourcing, customer service and BPO Magda R Tepoi, April 2009, Turkey

  48. Demographics Talent pool Availability of Human Capital • Young population (more than 55% is under the age of 40 and 37% is between 25 and 49 years old) • Almost21.7million people • 104 higher education institutions • 112 thou university graduates • Availability of technical engineers • High industrial experience • Flexibility Magda R Tepoi, April 2009, Turkey

  49. ValuableHuman Potential high performances in international competitions high percentage of technically competent professionals(23% are engineering graduates out of 720 students enrolled) highest growth rate of IT specialists in the region(Annually 7000 university graduates in the software field & More then 3.000 students in 105 local Cisco academies) University graduates in Romania (by education field) Source: National Institute of Statistics • strong language skills(English, French, German, Italian, Spanish, Russian, etc.) • large skilled labor force at comparatively low wage rates Magda R Tepoi, April 2009, Turkey

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