Crisis Takes Heavy Toll On Arad Businesses

Paula Bulzan,Arad

The Arad County Trade Registry reported that no less than 895 companies filed to suspend their operations in the first six months of the year. Only 672 new companies were established in the same period. The situation is rather critical in specific sectors of the economy, according to representatives of the Arad County branch of the National Council of Small- and Medium-Sized Enterprises.

"The freight forwarding business has suffered a dramatic decline. Imports have reduced to almost nothing, while exports consist mainly of some firewood and raw materials and almost no finished products," said Mircea Purcaru, President of the Romanian Federation of Small- and Medium-Sized Enterprises (FRIMM). He added that the construction sector was in a peculiar situation, as the number of dissolved companies was nearly equal to the number of newly registered companies.

Statistics made by the FRIMM for the western part of Romania indicate that private companies are facing increasingly bigger problems, with production and services being the most seriously affected sectors. "In addition to this x-ray of the business environment in the western part of the country, we have also prepared a number of proposals regarding measures that would help economic recovery. The list includes measures to expedite payments that the State owes to private companies, VAT returns within 30 days and a decrease in bank interest rates, because interest rates continue to grow, regardless of what politicians are saying," Purcaru added.

The representatives of small- and medium-sized enterprises believe that the Government"s decision to reduce the number of taxes was purely theoretical, as the only taxes they cancelled were sporadic taxes for which the cost of collection was often higher than the collected amount. Also referring to the Government"s policy, Mihaela Breaz, Executive Director of SNIPMMR - Arad said: "The State was wrong to start supporting layoffs. Even if some companies were not paying too much profit tax, they were still paying contributions to the mandatory welfare budgets for the employees they had. Now that the employees have become jobless, those payments are no longer made and the people have started collecting unemployment benefits."

A statistic for the entire Development Region West indicates that, between January and May 2009, 1,065 companies were struck off the Trade Registry, 2,410 companies applied for suspending operations and 1,361 companies were dissolved.