1. CHF Romania “MSME – CHF International Experience in Romania” Maria Sandor Manager Legal and Regulatory Reform www.chf.ro

2. Enterprise Development and Strengthening Program Access to Credit Legal & Regulatory Reform Increased Competitiveness Building Capacity of Romanian SMEs

3. CHF Consortium: –CHF International; – Shorebank Advisory Services; –Citizens Democracy Corps ; – Booz Allen Hamilton Funding agency: USAID 5 years ( 2003-2007) Enterprise Development and Strengthening Program

4. CHF Romania SME Loan Program $26 million provided as seed capital and housing loans to more than 20,000 beneficiaries more than 30,000 jobs created to date 9800 loans with an average value of 3100 USD per loan granted to date 45 member based business associations and housing NGOs as partners

5. CHF Romania - SME Loan Program

6. CHF International Romania Clients

7. Legal and Regulatory reform Scope : Romanian Legal and Regulatory framework stable and conducive to MSMEs Reduce administrative burdens and compliance costs for SME businesses ex: - best practice of EU VAT Law recommend SME arrangements (set minimum limits for VAT liability; allow cash accounting; allow annual or semiannual VAT returns; publish clear and simple guidelines) - SME labor arrangemnts Increase access to finance for MSMEs- microfinance law How? Providing for SME-friendly legislation (Legal and regulatory briefs; International best standards; Monitoring implementation progress; Cost benefit analysis; Regulatory impact evaluation) Lobbying for the passage of SME-friendly legislation Building sustainable advocacy Helping GOR with the implementation and execution of laws, including process streamlining and improvement ( public hearings; monitoring reports)

8. Legal and Regulatory reform Fiscal and Fiscal Procedure Code Labor Code Enterprise Registration and Business Initiation Enterprise Law Microfinance law Silent Approval Act

9. Why a special microfinance law? 1.Barriers encountered by microfinance providers: Limited access to capital due to their NGO status in spite of continuous growth of microfinance demand of the market Biased treatment of financial control bodies applied to microfinance organizations Discriminatory fiscal treatment to microcredit provided by microfinance organisations as opposed to bank loans. 2. Other : Increased risk of overregulation Formal recognition of MFI role and potential Increased demand for MFI tailored services

10. MFI legislative initiative process Bottom up initiative based on clear awareness and understanding Long and complicated process of other stakeholders identification and awareness raising ( workshops and seminars) Long internal and external negotiation process Create mechanism for efficient communication and networking (coalition technical secretariat and working group) Close partnership and cooperation with governmental bodies (NASMEs and MoE) Technical assistance provided through out the entire legislative process ( testifying in Parliament commissions) Coalition, Partnership and Perseverance during two consecutive governments