Country Risk and Strategic Planning - Romania

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1. Political, legal, and regulatory risks
Political Risks: Romania has been facing a continuous political quarrel which threatens its stability. The political instability along with lack of infrastructure, lack of research centers, and inadequate standard of living has caused investors to be concerned about Romania as a potential investment region. The risks in the political environment are a result of dissentions within the governing coalition which may lead to sudden elections and slowing reforms.
Legal Risks: Romania's legal risk rating has been revised from 2.75 to 2.5 due to steps taken to meet accession requirements and ongoing improvement in the judicial system. Ongoing piracy issues, lack of IPR protection, lack of enforcement have improved. There is a lack of litigation but important laws have been put in place including e-commerce laws, copyright, and electronic signatures.
Regulatory Risks: Regulatory authorities in Romania decide who stays in the financial market and who moves out by adjusting the capital adequacy requirements. The regulatory environment is not so favorable; however the government is taking initiatives to improve transparency in processes via the Foreign Investors Council and other bodies representing investor interests.
2. Exchange and repatriation of funds risk
Exchange risk-The supervision of foreign exchange risk in Romania is accomplished by
• Banks
• National Bank of Romania on the basis of foreign exchange position indicators reported by banks
The banks are obligated to limit the exchange risk in Romania by determination of adjusted individual foreign exchange positions and the total ...