IN ORDER TO FINANCE RESEARCH The electronic industry is asking for a domestic bank

The electronic and electrotechnical industry are requesting the creation of a bank with Romanian capital that would finance competitive activities of applied research, innovation and production.

This sector is currently faced with major difficulties in accessing loans, according to Ph D Gheorghe Ion Gheorghe, the president of the Professional Association of for Precision Machining, Optics and Mechatronics.

He said: "We are seeing major difficulties, banks aren't helping us in any way. The National Institute which I am leading, which is self-financed, is forced to put up its own money, to continue the projects which are conducted using European funds. We are being obstructed by the governmental institutions, that don't reimburse the expenses for those projects. Even though we should receive the money for the reimbursement requests within a maximum of 45 days, we've had delays of up to 300 days under the POSDRU program. Because, under these circumstances, we are unable to implement our projects, we have tried to raise funding from banks. We talked to BCR, to Banca Transilvania, but every bank asked for the contracts signed for the European grants, and we couldn't give them those, because there is a clause that says they can't be assigned. We have tried to use our assets as collateral, but the banks don't accept that. That is why a bank dedicated to financing applied research projects would be a breath of fresh air for us. We are in a desperate situation".

But Cristian Pârvan, the secretary general of the Association of Romanian Businessmen (AOAR) thinks that any other bank would work according to the same financing rules currently in effect.

"In order to set up a new bank we would need at least a year. And where the money for its creation come from? The state?", he wonders.

The fact that some of the beneficiaries have failed to come up with all the co-financing they committed to as part of the projects financed using European funds represents one of the biggest issues encountered in this type of projects, according to Mirela Şerban, Managing Partner of R&M Audit Contabilitate.

In her opinion, European financing is entering a difficult period, because in summer and autumn this year, many projects that were implemented as part of the 2007-2013 operational programs will reach their end.

Mirela Şerban said: "The biggest problem encountered by R&M Audit Contabilitate was that a number of beneficiaries failed to raise the entire co-financed amount they had committed to; furthermore, in the case of these projects which received a pre-financing of 35%, if its deduction through the reimbursements requests failed because various criteria were not met, the beneficiaries now have to repay the prefinancing they received, which clearly creates cash-flow problems. Also, in the case of POSDRU, it is very important to reach, at the end of the project, the target group in the weight stipulated in the budget of the project (...), namely achieving the full technical ratios, which significantly influence the degree of completion and implementation of the project and which can therefore reduce the financing which was initially granted. The failure to meet these ratios can lead to significant penalties for the beneficiaries, which will impact the amounts requested for reimbursement, amounts which can be then be cut due to the failures to meet the ratios and/or the target group. If the degree of the meeting of indicators and of the target group is less than 100%, the adjustment will apply to the eligible value of the project, and in the case of beneficiaries which have signed additional agreements for the reimbursement of VAT, and adjustment ratio will be applied to the VAT amount as well".

Monitoring the activities schedule in terms of the signed contracts is also critical, because the expenses need to be proportional until the moment of the closing of the implementation period, and this includes particularly leases, utilities, communications etc.

• The electronics industry: "Romania is among one of the few countries in the EU that pays VAT on imports in advance"

As part of the consultations with the Ministry of the Economy, in order to elaborate the Industrial Policy Document (the Strategy for the Reindustrialization of Romania), the specialists in the electronic and electrotechnical industry have also requested the tax exemption for reinvested profits in the case of investments in technology and equipment.

At the same time, the drafting of some regional and national strategies concerning innovation, and the creation, in the Ministry of the Economy, of an entity specializing for the drafting, promoting and monitoring of CDI (research-development-innovation) programs dedicated to the industry are seen as priority for the industrialists in electronics and electrotechnics.

They have proposed the simplification of the procedures for accessing European funds and conducting an awareness campaign when it comes to the need to buy Romanian products.

Ensuring financing for R&D activities through funds from the state budget of up 2% of the GDP until 2016 and the allocation based on national continuous programs represents another request made at the meeting with the Ministry of the Economy.

Another thing would be the gradual taxation of newly created SMEs over for at least three years: 0% in the first year, 50% in the second year and 100% starting in the third, as well as exemption from the payment of dividend tax, for a period of 3-5 years, in the case of companies that reinvest their profit in technologies, equipment and research and innovation, are other necessities in the sector.

Specialists in the area of electronics and electrotechnics consider that Romania should align its practices with those of the majority of European countries when it comes to VAT on imports, especially for the raw materials/subcomponents used in production.

"Romania is among the few countries (if not the only one) in the EU that pays VAT on imports in advance", the quoted sources say.

Other elements which are necessary in this sector would be the elimination of unfair competition of price policies supported through tax evasion and/or non-payment of taxes; maintaining a predictability of fiscal policies; reducing the number of taxes, especially the parafiscal ones.

Among other things, industrialists in the sector request the passing of a draft law to increase the allowed level of deductible expenses pertaining to research and development, from 20% to 50%, for projects which generate results which are immediately transferable to the industry, the creation of a risk fund for CDI (research-development-innovation) activities), supported using public funds, private and EU funds raised for that purpose; increasing the level of training, which is generally low; the elimination or the increase in the transparency of state aids secured by foreign investments and/or the granting of similar aids to the companies with Romanian equity.

The electronics and electrotechnical sector are two industries which have potential and need to be stimulated, in order to help our country's goal to develop top industries, their officials say, who claim that the complexity of the products they create should also receive a lot of attention, in order to improve the added value and labor productivity.