ROMANIA: Food and drinks industry, in the top 10 insolvent sectors of 2017 | Progresiv
The year 2017 brought 8,256 new insolvency procedures, up by 3% from 2016. Despite the minimum in the last 15 years, Romania reports an average level of insolvency companies against 1,000 active companies of 2.4%, almost two or above the average in Central and Eastern Europe. In the ranking of the top 10 insolvency sectors is also the food and beverage industry, according to the Romania 2018 Insolvency Survey made by Coface. 
Thus, the food and beverage industry is ranked sixth in the top 10 insolvent sectors of 2017, with 35 insolvencies reported to 1,000 active companies. The most important mistakes generally made by insolvent firms are poor financing of investments, aggressive dividend policy and inefficient investment.
On the other hand, 2017 saw a significant increase in newly established companies, with the number of registered companies close to 100,000, returning to the 2008 level before the impact of the global financial crisis at local level.
The evolution of registrations by sector of activity differs significantly from one industry to another. The largest increases in this perspective are in manufacturing (+ 122%), entertainment, cultural and recreational activities (+ 73%) and other activities and services (+ 60%).
Instead, trade and financial intermediation are the only sectors with a decline in newly registered companies, with -10% (to just 29,555) and -22% (to 1,455).
"From the perspective of the general business framework in Romania, I cannot find an explanation to justify the increase of the number of companies in 2017, because the average salary in the private sector increased by almost 15%, the fiscal and legal framework was unstable, the cost of financing increased at the end of the year, public investment fell by half compared to the previous year, while foreign investment stagnated in key sectors. The only explanation for the 32% increase in the number of newly established companies is the base effect. The local business environment has lost about a million companies over the past 10 years, with a number of firms quitting their business four times as opposed to the regional average. For each new company set up in 2008-2016, 2.2 companies ceased their activity. Romania has only 23 companies per 1,000 inhabitants, the lowest level in the EU after Serbia, which has 19 companies per 1,000 inhabitants. Currently, the local business environment is embryonic because half of the active companies are set up after 2009 and have not gone through the turmoil of the financial crisis. This destructive regeneration process has left a tremendous gap in business, which can now be taken over by newly established companies, given that very high level of economic growth and low financing costs create interesting opportunities at the moment”, said Iancu Guda, Services Director of Coface Romania.
