Business Licensing Reforms in Romania

Executive Summary

Efficient business licensing procedures influence the ease of doing business and play a critical role in attracting investment and foster economic growth. Licensing systems serve as regulatory gateways, ensuring that economic activities comply with safety, environmental, labour, and market standards. When well-designed and effectively managed, they form a cornerstone of a healthy economic environment. However, when these systems are fragmented, opaque, or overly burdensome, they can become significant barriers to entrepreneurship, investment, and formalisation, particularly for Small and Medium-sized Enterprises (SMEs). The process of obtaining licences is essential for entrepreneurs, and its efficiency can determine whether a business thrives or struggles to launch.

Romania has made notable progress in improving its business environment since joining the European Union (EU) in 2007. Regulatory alignment with Single Market standards and targeted reforms have facilitated business entry and expansion. Despite this progress, 82% of businesses consider the complexity of administrative procedures to be a problem for their company when doing business in Romania.

Romania’s performance in the OECD Product Market Regulation (PMR) indicators underscores how the complexity of business regulation continues to constrain productivity growth. In particular, the country shows weaker outcomes in the area of licences and permits, which remain a significant barrier for entrepreneurs and businesses. Progress has been made in facilitating procedures for obtaining licences for industrial and manufacturing activities through a Single Industrial Licence Law, that is simplifying procedures and has established an Office of Industrial Licensing to serve as a coordinating body and single window to apply for these licences. Action is also being taken to establish an electronic platform for applying and obtaining industrial licences. However, for other activities, entrepreneurs have to comply with multiple requirements and do not have access to a single source of information to understand their licensing requirements.

This report identifies the main barriers and possible ways forward to simplify procedures and extend some of the principles informing the Single Industrial Licence Law to the commerce and service sectors. It builds on an in-depth analysis of a Business Licensing Inventory, which contains detailed administrative and procedural information on 502 licences issued by 65 Romanian public institutions. The proposed policy actions complement the reforms already undertaken through the Single Industrial Licence law, which is not assessed in this report. Implementing the recommended licensing reforms is estimated to raise the level of potential GDP by around 0.6% after 10 years, 0.8% after 25 years, and 1.1% in the very long run.

As the experience from OECD countries shows, taken together and if effectively implemented, these reforms are expected to make Romania’s business licensing system more efficient and conductive to growth and investment.

Main findings

The licensing system is fragmented

• Institutional misalignment and weak coordination mechanisms act as a barrier to licensing reform. Entrepreneurs are often required to consult multiple sources and navigate multiple platforms and agencies to determine which licences apply to their activity and business model, increasing compliance costs. The absence of a central coordinating authority for all business licences exacerbates these inefficiencies, leaving businesses to navigate a complex and unpredictable system. Such institutional misalignment not only slows reform efforts but also undermines investor confidence and discourages entrepreneurship, limiting Romania’s ability to improve its business environment and competitiveness.

• When multiple licences are required to carry out an activity, the sequencing of these requirements is unclear. The absence of clearly defined sequencing for licensing procedures presents a significant challenge for entrepreneurs, particularly when multiple licences are required for a single business activity. Consequently, entrepreneurs are often compelled to visit various institutions or engage experts to comprehend the different administrative procedures, related costs and mitigate potential delays.

• The available licensing information is difficult to understand. The availability and clarity of licensing information in Romania remain uneven across institutions. While some institutions provide procedural guidelines, others offer only partial documentation lists, and many fail to supply comprehensive checklists. This inconsistency leads to confusion and uncertainty, particularly for new or small businesses. The complexity of the licensing terminology is further exacerbated by the interchangeable use of terms such as “licence", “permit", “approval”, “authorisation”, etc. Moreover, there are many other terms used, for instance aviz which could be translated as a non-binding opinion but in some cases has a mandatory character.

• Criteria for setting licensing fees are not clear or consistent. While licensing fees ensure that the associated costs of issuing the licences are recovered, their application does not consistently reflect the complexity or oversight requirements of the licensing process. In some cases, economic activities with more complex licensing requirements and which would normally incur higher fees, do not require a fee, whereas other licences that do not entail any administrative cost for oversight or control require a fee. This misalignment between fee structures and regulatory effort undermines predictability and fairness.

Use of digital tools to obtain licences is limited

• Digital application portals are not always available. Only 51% of the 502 licences included in the Business Licensing Inventory developed by the OECD to systematically track licensing requirements in the industrial, commerce and service sectors allow online applications, the other half require in-person submissions. For many of the licences where the online application is possible, this is through different websites and channels and not through Romania’s electronic single point of contact. Even for those where it is possible to apply online, the process remains somehow cumbersome. For instance, there is no automated system to inform applicants of the status of their requests.

• The fragmented digital infrastructure limits access to licensing information and hinders efforts to streamline regulatory compliance. Licensing information in Romania is scattered across the websites of various institutions, each presenting content in different formats and levels of detail. The absence of a standardised structure for how licensing requirements are communicated makes the system difficult to navigate and predict. An electronic single point of contact is being established for industrial licences. However, the lack of a centralised digital portal where all licensing information is consolidated, and where applications can be submitted also for commerce and service licences, significantly limits accessibility and efficiency.

• The absence of a unified online payment system for licensing fees impacts negatively the process. Entrepreneurs are required to navigate multiple payment procedures, each governed by different institutions with distinct requirements and timelines, leading to increased administrative burden.

Administrative requirements are cumbersome

• Licensing requirements remain cumbersome and vary by economic sector, adding to the complexity and uncertainty faced by entrepreneurs. When multiple licences are needed, a single submission to multiple agencies is not possible given that a centralised platform for all licences is not in place.

• The administration of licensing requests is managed independently by individual authorities, with limited coordination and exchange of information across institutions. While some agencies have established memorandums of understanding to facilitate cooperation, others lack formal mechanisms for collaboration and several have to rely on entrepreneurs to obtain such information, creating barriers to accessing and verifying licensing-related data and incurring in additional delays for entrepreneurs. In certain cases, institutions are required to pay other public bodies to obtain certificates or information needed for processing entrepreneurs’ licensing applications. This lack of institutional interoperability results in duplication of effort, inconsistent procedures, and delays in processing. The absence of a shared digital infrastructure or centralised data exchange mechanism undermines the efficiency and transparency of the licensing system, increasing the administrative burden on both businesses and public authorities.

• The "once-only" principle is not consistently applied, making the licensing procedures and information requests duplicative. Entrepreneurs are frequently confronted with the need to fill forms multiple times, repeating the same or similar information for different agencies. In some cases, several paper copies of the same document have to be submitted to a single issuing body. The principle will be more consistently applied to industrial licences but not to other business activities.

• The process of renewing licences can be lengthy and cumbersome, involving multiple steps and interactions with various government agencies. In addition, some licences require periodic visas or stamping. While renewal procedures may be necessary in some instances, they should be clearly justified. Article V of Government Ordinance 17/2015 eliminates the practice of stamping for all documents pertaining to natural and legal persons, however this is not applied consistently.

• Even though the legislation prescribes “silence is consent” for most of the administrative procedures, including licences, this principle is not applied in practice. Only 2% of the licences included in the Business Licensing Inventory explicitly mention the applicability of the "silence is consent" principle, and for 98%, is either not specified or not applied in practice. This creates uncertainty for entrepreneurs, who do not know whether a licence is granted in the absence of a formal response. Once the Single Industrial Licence law is fully implemented, the principle is expected to be applied for industrial licences but not for commerce and service activities.

• For around 20% of all licences, approval timelines required by law are longer than the actual time required to issue the licences. Romania could assess the approval timelines currently required in legislation to reduce them whenever possible. This could send an important signal to business on the speed and efficiency of the licensing system.

• Data on business licence applications, approvals, refusals, and processing times is not systematically collected or analysed. This absence of performance monitoring prevents authorities from identifying bottlenecks, assessing institutional efficiency, and designing targeted improvements to the licensing system.

Key recommendations

A predictable business licensing environment is one where regulations and procedures are clear, consistent, and transparent. In such an environment, businesses can easily understand the requirements and steps needed to obtain and maintain licences, reducing uncertainty and administrative burdens. This predictability allows businesses to plan and allocate resources more effectively.

Establish a single Business Licensing Framework

• To address the challenges outlined above, the establishment of a Business Licensing Framework can address the complexity of the system by addressing multiple aspects in a single law. Such law could be an Omnibus Law that would be first applicable to commerce and service licences and eventually subsume the Single Industrial Licence Law. An Omnibus Law would introduce some general principles and modify other specific regulations, minimising the risk of conflicts and overlapping regulation. An alternative to an Omnibus Law could be expanding the Single Industrial Licence Law to cover also commerce and service licences. The Single Industrial Licence Law could set some general principles but would not modify existing regulations, requiring additional legislation to do so. Whatever legislative instrument is chosen, the objective should be to create a coherent framework that makes it easier for businesses to understand and comply with licensing requirements for industrial, commerce and service activities.

• The Framework could combine various measures and amendments to existing regulations and legislation into one single legislative package. The legislation establishing the Framework should take precedence on any other laws and regulations regarding licensing, contributing to:

  i) rationalise the licensing system;

  ii) streamline and simplifying the regulatory framework for businesses by consolidating multiple regulations;

  iii) tackle the aforementioned inefficiencies of the system, including by streamlining procedures, removing duplications, applying the Silence is Consent and Once-Only principles, shortening legal deadlines whenever possible, rationalising licensing fees;

  iv) establish a centralised digital platform for licensing allowing for businesses to obtain information concerning the licences and the business licensing journey, apply for and manage licences; and,

  v) set-up an institutional coordination mechanism that enhances cross-issuing institution collaboration.

• The Framework could develop a risk-based business licensing approach for all the business activities. Under this system, business activities could be categorised into different risk levels (low, medium-low, medium-high, and high) based on the potential hazards they pose. It could also develop a framework to establish different application processes across different risk categories, for instance fast-track processes could be implemented for activities that fall under low-risk businesses categories. This approach will help to improve overall licensing efficiency and reduce the hurdles for low-risk activities.

• The Framework could amend the existing legislation establishing “silence is consent”, notably Emergency Ordinance No. 27/2003 on the tacit approval procedure, and clearly define the application of the “silence is consent” principle to all licences (and not only the industrial licences as it is the case through the Single Industrial Licence Law). For instance, the Framework could stipulate that the direct application of the “silence is consent” could be established for those licensing procedures which do not require environmental, sanitary and/or safety verifications, nor professional qualifications. It could include an Annex containing all the licensing and administrative procedures which can be subject to the direct application of silence is consent, as well as those excluded from the scope of applicability of this principle. This Annex could be regularly updated.

• The Framework could also establish the requirement of setting up a monitoring and evaluation system for business licences to enhance transparency and accountability by ensuring that licensing activities are tracked. Data collected through the platform can inform policy decisions, helping authorities to refine and improve licensing regulations and procedures to adapt to the evolving business environment.

Set up a centralised business licensing digital platform

• A centralised business licensing digital platform could build on the information collected through the Business Licensing Inventory. The platform would allow businesses to apply, renew and cancel licences online in a user-friendly manner while ensuring that businesses adhere to safety, environmental, and operational standards. It would also have an informative purpose, allowing interested parties to identify the necessary licences for prospective business enterprises and to determine the documentation which must be prepared for the application. The platform would provide relevant licensing information and include a business licensing simulator that can provide customised online information on licensing requirements by prompting applicants to respond to a question-and-answer wizard and enter details specific to their business. The business licensing platform could expand and build upon the Electronic Single Point of Contact for industrial licences (PCUEL) infrastructure currently under development for industrial licences to provide a single portal for all licences.

• The platform would allow for the application of the 'Once-only' principle by ensuring that businesses only provide information once to public authorities. This principle would contribute to reduce redundancy and minimise the administrative burden on businesses. This approach would also contribute to address the issue of interoperability between agencies, leading to more coordinated and effective service delivery.

• The platform could also contribute to improve the transparency and accountability as the entrepreneur can monitor the progress online as the system provides real-time updates allowing applicants to track their applications and act upon any request from public authorities. The centralised platform will act as a single one-stop shop for licensing and could consolidate licensing requests and simplify the experience for business that have to apply for multi-licences through a single portal.

• Implementing a unified online payment system in the business licensing platform would streamline the payment process, making it more efficient and user-friendly. It would also enhance transparency by providing a clear record of all transactions, thereby reducing the risk of errors and ensuring that businesses remain compliant with licensing requirements. Moreover, a centralised payment system would save time and resources for both businesses and public authorities.

• The platform could also integrate a message inbox that allows users to receive, manage, and respond to communications in real time related to their licensing applications. By including notifications, updates, and messages from licensing authorities regarding the status of applications, required documentation, deadlines, and other pertinent information. It would serve as a centralised location for all correspondence, ensuring that entrepreneurs could easily track and manage their interactions with various licensing bodies.

• The platform could also leverage the technology to streamline the renewal process through the implementation of an automated notification system to remind businesses of upcoming renewals and other important deadlines. This feature would contribute to increase compliance and reduce the administrative burden on businesses.

Ensure alignment across institutions to drive forward the licensing reform

• To drive forward licensing reform, Romania could adopt a robust coordination mechanism at the technical-policy level that promotes institutional alignment and accountability and ensures coherence in reform design and implementation of business licensing reforms. By embedding stakeholder engagement and technical expertise into the reform process, Romania can create a coordination model that encourages authorities to look beyond their individual mandates and adopt a system-wide perspective. This approach would ensure that licensing procedures are not treated as isolated administrative tasks but as interconnected components of a broader regulatory framework. This mechanism could build on the Interministerial Group for granting the single industrial licence with an expanded mandate to cover also commerce and services licences. This group could convene regular meetings with both technical and IT experts from licensing authorities, as well as representatives of business to collect also the views from users and facilitate continuous improvements of the business licensing platform.

• The implementation of the reform could be further strengthened by broadening the mandate of the Office for Industrial Licensing to become the Office for Business Licensing. The Office for Business Licensing would act as coordinator and would be responsible for the development of the centralised business licensing platform. The body would be responsible for facilitating back-office coordination for the issuance of licences through the digital platform and monitor the functioning of the licensing system.