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The government of Romania spends huge amounts for constructions, specifically nine billion euro a year, but despite that Romania has the worst roads in the European Union, said on Tuesday Mari Kiviniemi, Deputy Secretary-General of the Organisation for Economic Co-operation and Development (OECD).
Kiviniemi attended in Bucharest a conference for the presentation of the results of the project "Analysis of the impact of the legislation in force on key sectors of the Romanian economy" jointly carried out by the Competition Council, the Government of Romania and the OECD.
Together we selected three key areas, by the criterion of their importance for the Romanian economy: constructions, freight transport and food processing. These activities account for 12 percent of Romania's GDP and for 10 percent of the country's jobs. We analyzed over 800 pieces of legislation in these sectors. The project team made over 150 recommendations and if they were implemented, Romanian consumers would stand to gain 434 million euros a year. The effects will further ripple to an even greater impact on economy, through increased productivity, said Kiviniemi.
According to her, several OECD studies showed that removing competitive barriers will in time result in increased productivity, economic growth and job creation. In recent years, the Romanian government has spent about 9 billion euros a year for constructions. But it seems one can get better bidding prices. For example, according to a 2014 study by the World Economic Forum, the quality of Romania's roads was lower than in any other European Union member country, despite the significant expenses the government made in the sector, she added.
The OECD representative pointed out that one of the reasons that drove things to this point is the small number of participants in tenders. In the past, there was just one bidder in many of the tenders organised. Unfortunately, the fact that there are fewer participants in a tender may push the prices higher. Our project team has reviewed the 2013 and 2014 cases in Romania and realized that, on average, an extra bidder in a tender would result in a 4.4 percent reduction of the final price, ie of the money spent for this purpose. That means savings of approximately 420 million euros per year, said Kiviniemi. She added that the measures recommended by the OECD team to attract several bidders to tenders included extending certain deadlines and eliminating special participation requirements.
The final OECD report on the "Analysis of the impact of the legislation in force on key sectors of the Romanian economy" includes 152 recommendations in the three sectors covered by the project. The project started in early 2015, as a cooperative work of the Competition Council, the Government of Romania and the OECD. The three sectors to analyse were selected following consultations with the International Monetary Fund, the European Commission and the World Bank. "The government has included the implementation of the OECD recommendations in the National Reform Program and we will provide the necessary assistance for their effects to be felt as soon as possible in the Romanian economy. It won't be an easy task, we speak about 152 pieces of legislation that need to be amended by the end of the year, to increase competition in all three sectors," president of the Competition Council Bogdan Chiritoiu told the same conference.
