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Strategy and policy
Reform Support

Comprehensive redesign of the licensing system in Romania

Comprehensive redesign of the licensing system in Romania banner

Supporting reforms to foster an attractive business environment and increase competitiveness

Funding Programme
Year
  • 2019

Comprehensive redesign of the licensing system in Romania

The European Commission supported Romania in redesigning the country’s licensing system which plays a critical role in creating a regulatory environment that is conducive to doing business, creating jobs and facilitating investments.

Context 

Romania has a heavy and cumbersome licensing system characterized by over-regulation, uneven performance at subnational level, ineffective inspections, in addition to limited availability of e-government solutions. The project’s inventory documented 111 business licences issued by 43 different authorities. These factors hamper entrepreneurship, competition, innovation, investments, productivity and job creation and Romania's poor performance is repeatedly flagged in international benchmarking exercises and analyses (EC - Study on Business Licenses 2014, Country Report Romania 2018, OECD - Product Market Regulation indicators, WB - Doing Business). At the same time, the OECD has made a rough estimate of the GDP per capita effects of reforming Romania’s licenses system, which suggests that moving Romania’s system to international best practice will raise the level of GDP per capita by almost 4% in the long run.

Support delivered   

The project helped identify reform options for simplifying business licensing procedures in the industrial sector, attracting investments, and strengthening entrepreneurship. The outputs of the project are the following:

  • a Stocktaking Report that provided an inventory of legislation and regulation of licensing-related procedures;
  • a Technical Report on the implementation of new legislation on industrial licensing that in particular settled out options in the industrial sector from zero licensing to simplifying procedures; 
  • a Legislative Roadmap which set out a blueprint for concrete legislative actions. The Legislative Roadmap proposed a Single Industrial Licence (“SIL”); by anchoring itself in “silent is consent” and “once-only” principles; and by introducing a Single Electronic Point of Contact. An Inter-ministerial Body was proposed to coordinate the Legislative Roadmap, which was incorporated in Component 9 of the National Recovery and Resilience Plan *Milestones 243, 244 and 246 [1]);
  • a Technical Workshop for the sharing of best practice on licensing reform from Estonia and Spain.

Results achieved

The project helped identify reform options for simplifying business licensing procedures, attracting investments and strengthening entrepreneurship. The recommended reforms concluded to the adoption of a Single Industrial Law (SIL) for manufacturing and industrial activities (Publication in the Official Gazette – Law 98/2023 approving GEO 140/2022 – 18.04.2023), the introduction of “silence is consent” and “once-only” principles and a Single Electronic Point of Contact. These reforms, which have been included in Romania’s National Recovery and Resilience Plan, will significantly facilitate procedures for businesses and investors in the industrial sector especially taking into consideration that the country “has one of the largest shares of industry in Gross domestic product (GDP)among EU member states (23.6% in 2018), contribution to economic growth… while the labour force in the sector is well above EU average (22.1% in the same year)”.

A key finding of the project analysis was that simplifying business licensing procedures in the manufacturing sector should be prioritised. Addressing this sector first is expected to bring significant benefits to the economy, especially in the aftermath of the COVID pandemic, positively impacting the broad business environment as some actions will also simplify procedures that are common to other economic sectors. A follow-up technical support project will assist with the implementation of the industrial licensing law, as well as with additional simplification to the licensing sector for commerce and services.

More about the project

 

[1] Entry into force of the law “Single Industrial Licence” – Q4 2022 (Milestone 243); Digital platforms set-up, connected to a Single Electronic Point of Contact and fully operational – Q4 2023 (Milestone 246); Reduction of the average time needed to perform business environment related regulatory requirements (Goal – 50% reduction) – Q4 2025 (Milestone 244).