Thank you very much for your kind welcome and this excellent opportunity to address key members of our government in both the executive and legislative branches.
There will be many topics under discussion today, among which is the critical issue of how our countries can strengthen economic ties under the auspices of our bilateral strategic partnership.
We all know that our partnership in the U.S-Romania Strategic Dialogue touches upon many crucial areas, including our robust political military relationship, excellent law enforcement cooperation, rule of law issues, and economic and commercial affairs.
And when we look at that economic and commercial relationship, it’s important to recognize that American companies have already expressed a keen interest in and have put forth investments in Romania.
Although the official U.S. Foreign Direct Investment in Romania is two to three percent of the total (around USD 1.5 billion in 2013 and growing in 2014), this number hides investments from U.S. headquartered companies that invest through their European subsidiaries, as well as those traditional American brands that may have moved their headquarters.
Top U.S. Companies located here include HP, GE, Oracle, IBM, Ford, Honeywell and others. These companies recognize the potential that Romania possesses to be a regional leader. But to fully realize this potential Romania must continue to make progress on business and investment climate issues.
American companies seek out investment opportunities that offer a promising return. Romania has already done much to attract FDI, including that coming from U.S. companies, but we can still do more.
American companies, like all companies, are looking for a stable, transparent and predictable market place — with clear and predictable costs and benefits — contributing to their internal calculations regarding the optimal production and investment levels.
Romania’s location within the EU combined with its educated workforce is attractive for U.S. companies, especially those companies interested in expanding their European market share.
Given that the Romanian state is a shareholder in many strategic enterprises, corporate governance issues are of paramount importance to our economic and commercial relationship.
Corporate governance involves balancing the interests of all stakeholders in an entity – whether they are shareholders, management or the government. It can be a difficult task, requiring a solid system of rules, practices and processes by which an entity is directed and controlled.
The first step towards good corporate governance is having the right people — competent, experienced and professional — on the boards of directors. The Romanian government must ensure that state controlled entities are run by professional, private managers, selected via a transparent and competitive process, free from any political influence.
Secondly, the Romanian government should empower those managers to make sound business decisions, without fear of interference by governmental officials in the entity’s internal affairs. Sound decision making as part of the corporate governance approach has additional, often unspoken benefits – it shores up a company against the threat of corruption and helps a country’s economy to grow.
Good corporate governance practices set clear ‘rules of the game’ and establish ‘checks and balances’. Corrupt acts are then more difficult to conceal and accountability is more easily accomplished.
Properly managed state controlled entities are the underlying basis for supporting government efforts to combat economic corruption. By reducing the opportunities for corruption, state controlled entities will no longer be a drag on the state’s limited resources.
As Assistant Secretary Nuland has noted in her trips to Bucharest, working against corruption and for the rule of law — while increasing transparency, predictability and stability — are all essential for improving the business and investment climate. It is critical for the government and the parliament to be reliable investment partners.
They must have transparent, across the board, consultations with all stakeholders on each piece of legislation. Stakeholders must be given the time necessary to provide meaningful input, and need assurances from the government that their input will be considered.
Furthermore, the government must ensure stability in the investment climate, by avoiding rushed short-minded decisions.
Last year, the Romanian government endorsed an Action Plan to improve economic governance, and just last week signed a second Action Plan.
We look forward to the Romanian government working closely with stakeholders, including the Coalition for the Development of Romania, to implement and build upon these Action Plans.