Introduction

For seven years, Law 332/2001 has been Romania’s foreign investment law and, like most of its predecessors, it was burdened by vagueness and ambiguity, primarily caused by a myriad of amendments that parliament haphazardly tacked onto it. Some of those amendments were not even enforceable because they were in direct contradiction with European legislation regarding state aid offered to investors. The framework created by Law 332/2001 was a rickety jumble of economic provisions that did little to stimulate the massive investments that Romania needs. Yet despite this unfortunate law, real economic growth in the second quarter of 2008 rose to an almost record-breaking 9.3%. The highest levels of quarterly economic growth had been registered in July-September 2004, and October-December 2004, and were 9.8% and 9.5% respectively, making one wonder whether there is much point at all to Romania having a comprehensible general foreign investment law.

Certainly, a transparent and understandable investment law that targets specific areas of the economy for investment does make sense and that must have been the government’s thinking when, on June 27, 2008, it enacted the long awaited Government Emergency Ordinance no. 85/2008 (the “GEO”). The new GEO abrogates Law 332/2001 almost entirely (except for article 18) in an attempt to create a suitable and transparent framework for the promotion of investments. It is well-focused and contains provisions which eliminate discriminatory treatment between Romanian and foreign investors, redefines the nature of the “incentives” offered and the fields in which incentives are granted, and provides for the manner in which state or local authorities can support new investments. The GEO seeks to stimulate investment in areas that are needed by Romania such as the processing of agricultural products, the provision of