Joint Conference of the National Bank of Romania and the Romanian Construction Designers Employers’ Association: Supporting the quality of projects in the construction sector, the key to lasting and sustainable development in Romania

The National Bank of Romania (NBR) and the Romanian Construction Designers' Employers' Association (PPC) organised on Wednesday, 3 April 2024, the conference "Development - from planning to stability and sustainability", an event that brought together senior officials from government, parliament and regulatory bodies, as well as representatives of the National Bank of Romania and the Federation of Construction Employers.

The aim of the event was to bring together leaders and experts from the construction, design and architecture sectors, together with representatives from government and the financial sector, to discuss and develop a strategic vision that will drive the sustainable development of the construction sector in Romania.

In the opening speech, delivered by the Governor of the National Bank of Romania, Mugur Isărescu, the interest in developing studies and analyses on developments and trends in the construction sector was highlighted, taking into account the important role of the institution in the economic debate and the contribution of the sector to Romania's development. In this regard, the NBR Governor stated that the partnership with the PPC can be integrated into the NBR's already established programmes dedicated to the business environment, as such collaborations based on dialogue are at the basis of the country's economic progress.

"The construction sector as a whole is now a major component of economic growth in Romania. Therefore, the situation in this sector can be considered an important indicator of the overall economic state of the country. Today we are opening a platform for dialogue with representatives of this system. We are interested in developing in-depth economic studies and analyses of developments in this sector. The partnership we have concluded with the Construction Designers' Employers' Association can be integrated into the NBR's already established programmes (...) We encourage debate and the exchange of ideas. We believe that through dialogue we can make progress. We have a good example of what solid, well-designed and well-constructed buildings mean right here. We are in the Palaces of the National Bank, emblematic buildings of Bucharest and Romania since their construction, symbols of durability and stability" - Governor of the National Bank, Mugur Isărescu.

For his part, Alexandru Fulga, President of the Construction Designers' Employers' Association, highlighted the importance of the partnership with the NBR in underpinning public policies and ensuring adequate financing for construction investments. In this regard, he referred to the huge opportunities Romania has for absorbing significant resources to boost economic development, highlighting the significant contribution of the construction sector to Romania's economic success, which accounted for 8% of Romania's GDP in 2023 and supported half of the growth for the whole year. At the same time, Alexandru Fulga mentioned the importance of updating legislation to keep up with new technologies and to clarify the roles of each participant in construction activity. In addition, he highlighted the importance of massive investments from the private and public sector, supported by European funds, to stimulate growth and provide the necessary resources for development. Thus, the PPC President urged collaboration between all those involved in the modernisation process, pointing out that society needs an intelligent and sustainable vision of development in order to make the most of opportunities with the ultimate aim of bringing sustainable benefits to society.

"The role of money is to provide the resources for growth, and this first event organised in partnership with the National Bank of Romania aims to send a message of awareness. The Government and the Legislature are essential factors in the process of progress that society as a whole expects, but especially in the progress of this construction sector, in which design plays a leading role. This is the basis on which bridges, roads, residential buildings, hospitals, airports and schools are built. We need to regulate this process, and today we want to convey that our priorities are equally those of our partners and beneficiaries. Our efficiency depends on the quality of the legislation and we count on the support of decision-makers in this respect" - President of the Construction Designers' Employers' Association, Alexandru Fulga.

Regarding the financing opportunities for development, the interventions of the Minister of Finance, Marcel Boloș, the Minister of Development, Public Works and Administration, Adrian Vestea, and the Minister of Investment and European Projects, Adrian Câciu, highlighted that Romania is at a crossroads, with a huge budget of €70 billion available for development until 2027 from European funds, through the Cohesion Policy, the National Recovery and Resilience Plan, and a parallel budget allocated to the Anghel Saligny National Investment Programme, which is essential for the development of infrastructure at local level.

"I don't think there is a locality today that doesn't have at least one project being implemented with European funds. Out of the 3228 administrative territorial units that Romania has, we can say that more than 3100 already have contracts in progress. I think this is the biggest capital infusion we have to manage at the moment. There are a lot of opportunities that will lead to the development of communities in Romania." - Minister for Development, Public Works and Administration, Adrian Veștea.

Also mentioned was the recent approval by the Government of a state aid scheme to support mainly industrial production activities of more than €500 million, as well as the legal framework under preparation for Romania's strategic investments of more than €100 million, which will include tailor-made state aid schemes. In this regard, Finance Minister Marcel Bolos stressed the need for an innovative approach to support the business environment, coupled with a public policy of investment in infrastructure. This coupling would be a prerequisite for ensuring stability and sustainability, which are necessary to transform Romania into a modern country that can attract investors and be competitive at European level.

"The three pillars under debate today, namely planning, stability and sustainability, make Romania a country that will have, at the end of the implementation of the two budgets, a different face - a modern Romania, which we are talking about in the long term, with European competitiveness and an infrastructure that allows attracting investors and long-term economic development. I have often said that a correct public policy to support investments must be accompanied by a policy to support the business environment” - Minister of Finance, Marcel Boloș.

For his part, the Minister for European Investment and Projects, Adrian Câciu, said that Romania has left the "poverty paradigm" to enter the paradigm of development based on investment promotion. In this regard, the official said that the multiplier effect of investment is up to 1.5-1.7% per year, resulting in a change in the quality of economic growth, which thus becomes sustainable.  However, Minister Adrian Câciu pointed out that although we are currently experiencing an "inflation" of projects and funding, there is a lack of implementation capacity. In other words, there is a need for a qualitative human resource to implement projects, especially in the construction sector, which is an important contributor to GDP. He therefore advocates devising an implementation strategy based on a qualified human resource.

"This shift from one paradigm to another also requires a change of mentality. Mentalities have remained in the past area, but the funds available, the number of projects, the need, have become so strong that mentalities will certainly change now and in the years to come" - Minister for European Investment and Projects, Adrian Câciu.

The issue of human resources was also mentioned by the president of the Federation of Employers of Construction Companies, Cristian Erbașu, who warned that the crisis of skilled labour will generate a spiralling increase in labour costs, which may have a negative impact on efforts to reduce undeclared or grey labour. He also noted that staffing problems are caused by excessive bureaucracy, which strangles companies at the implementation level. However, Cristian Erbașu highlighted the contribution of the construction sector to the development of the economy as well as the potential for increased economic impact, pointing out that productivity in construction has come close to the European level, averaging 60,000 euros per worker per year.

The event also addressed the acute need for financing felt by the business environment. In this regard, Florin Dănescu, Executive President of the Romanian Banks Association, emphasized the strengthening of SMEs' confidence in banks as business partners, considered the engine of the Romanian economy. For her part, the Vice-President of the Financial Supervisory Authority, Gabriela Horga, praised the resilience of the construction sector in the face of crises, while pointing out the financing alternatives to basic banking services needed to promote and develop a sector considered vital for economic growth and sustainable development. In this regard, she presented the financing opportunities and advantages offered by the capital market, in particular, transparency, security and predictability for investors. However, Gabriela Horga highlighted the need to increase confidence in the capital market, which would be achieved by educating the business community about the financing instruments and mechanisms offered by the market.

The event also provided an opportunity for a constructive dialogue between construction and design experts and representatives of the legislature and financial regulators and the banking industry in the form of a panel on "Creating a stable environment for development". Speakers included Florin Nistor-Chinole, first vice-president of the Construction Designers' Employers' Association; Florin Dănescu, executive president of the Romanian Association of Banks; Ovidiu Petru, director general of the Financial Instruments and Investments Sector, Financial Supervisory Authority; Adrian Tănase, director general of the Bucharest Stock Exchange; Maricel Popa, secretary of the Public Administration Committee of the Senate; and Bogdan Toader, vice-president of the Public Administration and Spatial Planning Committee of the Chamber of Deputies.

The discussions highlighted the PPC's aim to bring to public attention the role of the designer and support the legislature, executive and administration to understand the life cycle of a building. In other words, the aim of PPC is to minimise if not eliminate moral hazard at all levels, i.e. administrative, fiscal, financial.

The demand for legislative stability and predictability was also highlighted following discussions with market players, either shareholders or companies authorised or about to be authorised, as well as the openness of representatives in the relevant committees of the Parliament to dialogue and identify solutions to the problems raised by designers and builders, assuring them that every effort is being made to harmonise legislation following the proposals and amendments that are being introduced and to ensure predictability for business people.

Last but not least, the desire of the Bucharest Stock Exchange to support investors with greater access to the stock exchange was underlined, more specifically by trying to unblock the mechanisms for the transmission of resources to the industry in the context of a consistent flow of money and the current listing of only two developers on the Stock Exchange.

The event thus provided an opportunity to identify challenges and opportunities in the sector and to formulate recommendations for policies and strategies that can support innovation in construction.