Government Blocks Exporter Expansion This Year

Romanian exporters have less money to participate and promote their products in fairs and exhibitions held abroad, as the budget has been cut to 36 million RON this year from 42 million RON in 2008, according to Mihai Ionescu, president of the National Association of Exporters and Importers in Romania (ANEIR).

Some 45 projects have been approved for this year, while 34 have been rejected because the Foreign Trade Department of the Ministry for Small- and Medium-Sized Enterprises, Commerce and Business (MIMMCA) received from the Finance Ministry only an amount equal to the Y2008 budget for everything related to fairs and exhibitions. However, the actual disbursement made in 2008 was by approximately six million smaller than planned, so the disbursement for this year will be impacted, too, according to Mihai Ionescu.

Moreover, the money allocated for 2009 was partially used for urgent payments of the invoices for the fairs held in 2008, which were overdue. That means another 3 million RON was subtracted from the funds actually available for fairs and exhibitions this year, Ionescu added. The depreciation of the RON against the EUR is causing further problems, considering that the reference exchange rate was 3.55 RON/EUR in 2008 and is 4 RON/EUR in 2009. This reduces the value of the EUR-equivalent budget by approximately 45%.

According to Ionescu, the participation of Romanian exporters in international fairs and exhibitions is very important, considering the overall plunge of export orders from E.U. countries since the beginning of the ongoing financial crisis. Given the Romanian Government"s lack of interest in this matter, Romanian exporters will have to give up on exhibitions such as those in Africa, Russia (Sankt Petersburg, Moscow), Iran, the United Arab Emirates (Abu Dhabi), Hong Kong, Thailand (Bangkok) etc., where they should actually be expanding in the current context, Ionescu added.

"Exporters are interested in such fairs but their potential participation would be the result of a financial partnership between the State and the companies. Such fairs are a very effective way to promote Romanian products. All previous fairs led to contracts. If the fairs were not effective, exporters would not be interested in going," Ionescu concluded.

Fear of smaller collections makes Finance Ministry reluctant to ANEIR proposals for crisis countermeasures

ANEIR has presented further measures to help Romanian exporters to the Finance Ministry, but the Ministry is rather reluctant to proceed as such measures would affect State revenue collection. However, the decision is not yet final. The measures include a scheme to offset due VAT against the taxes to be paid to the social security budget by the taxpayers which concluded 2008 with a turnover in excess of 1 million RON. Another measure would consist of a moratorium on ANAF-initiated foreclosures and a rescheduling of the debts owed by taxpayers who had no overdue debts by 30 June 2008. In both cases, the Finance Ministry responded that the impact would be quite strong on State revenue collections in terms of both volume of money and time of payment, the ANEIR president told BURSA.

Ionescu added that he had noticed better feedback on the proposal to offer VAT exemption for freight going through customs based on a certificate issued by the National Customs Authority. The measure would apply to tax payers who concluded 2008 with an export volume of at least 1 million RON, compared to the 150 million RON stipulated by the Finance Minister Order no. 500/2007. ANAF responded that the threshold could be reduced if the new threshold did not have a significant impact on the volume of money and the time of payment of VAT at customs checkpoint. As the number of certificates to be issued in such case would be very large (over 3,000), the easier measure would be to amend the Fiscal Code by renouncing the VAT payment at customs checkpoint.

The same "receptiveness" was displayed with regards to the ANEIR request to reimburse VAT (prior to audit) to the exporters who concluded 2008 with a turnover larger than 1 million RON. Ionescu added that the Ministry could consider reintroducing a special status for exporters similar to the one applied in 2007, provided that the relevant changes were made in the applicable laws.