Several years ago, when I first began to meet various partners and investors in Western Europe or the US, I constantly heard the expression “business potential” when referring to Romania and other countries in Central and Eastern Europe. The increased population, surface and technological and institutional backwardness fuelled this potential.
As the years went by, the expression “business potential” turned into “business”. Because, let us not forget that, in the countries where my friends come from, the business potential is probably smaller, but business is being done. More precisely (in translation for the authorities), the significant difference between throwing money down the drain in order to try and educate partners and customers so as to develop a market and investing this money into a more lucrative activity, that can also bring profit.
Without any doubts, transport holds the lead. We are talking about a sector in which the interference between the will of private investors and state monopole leads to counter-productive situations within the sector and in other economic sectors that depend on transport. And when this is put together with the lack of quality of the hard and soft infrastructures, the “economic potential” is destroyed.
Recently, I was talking with a friend of mine who works in the freight logistics sector and we realized that the visible imbalance of the product flows which enter CEE through Atlantic Ocean ports versus Eastern borders and ports (1/12 ratio) generates useless additional costs in the transport chain. Despite the fact that demands have been made to transfer part of the freight flows in the Black Sea area, the unfriendly fiscal legislation, together with the lack of predictability of the act of transport caused by the poor state of the infrastructure pushes the end customer further away from these shorter and “potentially” cheaper routes. And when I say “potentially” cheaper, I cannot help but laugh and the example of two large companies (Honeywell and Dole) comes to mind when I think about the interaction between companies and the Romanian authorities. In the first case, the fact that the amount of EUR 20 Million which the company was supposed to recover from the VAT was blocked for two years led the company to believe that it would be cheaper to redirect international transport through French ports. In the second case, smuggling, favoured by the fiscal differences recorded for the products imported from EU and non-EU countries caused the same reaction, in the attempt to reduce losses.
The development of Pan-European, Pan-Asian and Eurasian transport corridors is not enough if it’s not supported by the elaboration of a proper legal and administrative framework that can support business initiative and create transport flows that justify the massive investments made for the modernisation and construction of railways and bridges.
by Ştefan Roşeanu
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