Moldova is a country with a favorable climate and production conditions. From an economic point of view, it remains at relatively low levels, but in terms of prospects and the choice of strategic sectors of the economy, there is tremendous potential. Investors are offered a wide range of areas for investment and profit. Let us take a closer look at the main areas of production and trade.
Agriculture
The Republic of Moldova is in a very advantageous geographical location, benefitting from very fertile soil which is ideal for growing various crops as well as supporting animal husbandry.
Chernozem – the fertile black-colored soil rich in humus – covers 75% of the total area of the country. There is also access to the sea, which provides the benefits of a marine climate and biodiversity.
Agri-food products have always been considered a key area of the Moldovan economy. In 2019, the value of their exports was $ 1.21 billion, due to the favorable agricultural conditions and traditions of growing fruit and vegetables. This segment offers many categories – grape growing and winemaking, walnuts, melons, oilseeds and fruits, grains, medicinal plants, to name just some. This specialization involves 21% of the labor force of the Republic.
This area is distinguished by the following parameters:
- Advanced agricultural practices. They are based on innovative technologies that are designed to protect the environment and efficiently use natural resources and soil.
- Using organic farming methods to increase yields. They apply technologies for irrigation, fertilization, protection from natural disasters.
- Control at every stage of production. The products meet international phytosanitary standards.
All this allows Moldovan enterprises to grow environmentally friendly products that are in demand on the international market, being exported to the European Union, Asia, the CIS and the Middle East. The share of exports of products and animals is 43% of the total exports of Moldova.
The state and prospects for the IT sector
IT is another strategic area along with agriculture, with more than 30 thousand specialists working in IT. Achievements and developments are regularly presented at various forums and conferences, from where partners are attracted.
Western companies open branches in Moldova because the conditions for IT businesses are favorable here:
- simple 7% sales tax
- 100% mobile network coverage
- fixed costs
- digitization of public services
- virtual park and IT ecosystem
- multilingual staff.
Moldova positions itself well in the field of telecommunications infrastructure because this dynamic industry is supported by the government. 2019 saw a staggering threefold annual revenue growth over 2019’s figure – over $ 380 million compared with $122 million, representing 3.1% of GDP. The export of these IT services in 2019 exceeded the value of wine exports at $255 million.
Such indicators confirm that the Republic of Moldova is guided by modern market needs and is actively developing in the direction of information and communication technologies.
Moldova ranks 4th in terms of coverage of the population with gigabyte Internet and 6th in terms of its availability.
IT companies serve the American and European markets with a specialization in banking, government and telecommunications services.
Development of the creative industry
Cultural and creative activities are also strong in Moldova. Recently, business communities have united into the Association of Creative Enterprises of Moldova (COR) which promotes the development of creative directions in the republic and provides training in these specializations. Across Europe this sector ranks 3rd in terms of engagement and employment with about 30 million employees, of which 13 thousand are in Moldova.
Sector Key Data:
- 3.31% contribution to GDP
- $ 74 million exports of creative services
- $186 million in sales.
This group of activities includes various categories – fine arts, music and dance, books and printing, advertising, journalism, cinematography, photography, arts and crafts.
The creative industry contributes to the development of fashion which creates demand for light industry to make products and also raises the level of fashion, highly relevant in the creative context. Moldovan manufacturers in the fashion industry take part in many events, exhibitions, and international shows. Brands present their products, find investors to introduce new technologies and develop their businesses.
Since 2017, the Republic has seen the growth of this sector and active entry into the world market. Many art studios, creative spaces, creative platforms, therapy rooms, and educational institutions are being created. The work of such enterprises is supported by partners from European countries and the USA. This is a profitable industry for investment, because it follows global trends, is filled with qualified specialists and is developing steadily.
The textile sector accounted for 10% of exports according to statistics for 2018. The value of this sector was $ 427 million.
In 2020, the export value of garments and their accessories, knitted or crocheted knitwear was $ 89 million.
TAFL production covers all product formats:
- clothes;
- textile products;
- footwear;
- leather goods;
- accessories.
Products are created for high street consumption as well as exclusive design models. Within the supporting light industry there are all sizes of companies from large enterprises to small and medium-sized businesses – ateliers, studios, mini-factories. Moldovan creators work in the sector, as well as branches of famous foreign brands – Prada, Armani, Calvin Klein, Dolce & Gabbana, Versace, Nike. More than 26 thousand employees of various specialties are involved in the process of creating and producing products – fashion designers, seamstresses, tailors, shoemakers, weavers, equipment customizers, administrators, etc.
This category of industry is suitable for investors looking to invest in an industry with a fast turnover cycle.
Renewable energy projects
Moldova, like other world countries, strives for an environmentally safe and efficient economy.
Enterprises are modernizing and implementing technologies that reduce ecosystem pollution and wasteful use of natural resources. Since 2016, green energy projects have been actively launched in the republic. Then their volumes accounted for 26.8% of the industry.
A popular 2018 project was “Energy and Biomass”, which aimed to popularize the use of biofuels in Moldova. It reaches 140 thousand residents. An energy efficiency agency informs people about the processes of energy production from renewable sources.
The renewable sector comprises:
- wind energy – 58% and 35.6 MW
- hydropower generates 26% with 16.3 MW
- biogas 9% provides 5.7 MW;
- solar power is only 7% at 4 MW.
FlyRen built a 1 MW photovoltaic farm in 2020, installing 3,700 solar panels.
At first, such energy was directed only to households, but gradually it began to be used for other needs of the state. Over the past 7 years, 300 state institutions have already switched to the economic “green” system. Therefore, the energy sector is also open to investment and cooperation.
Mechanical Engineering and Equipment Development Industry
Vehicle and equipment production is also valued by the Moldovan government. Starting a business and investing in existing mechanical engineering projects is profitable because:
- Exports of electrical machinery, equipment, apparatus and spare parts accounted for 19.2% of the export volume in 2020. Sales of the products reached 478 million dollars. Products of this category are in demand on the international market.
- GDP for 2019 increased to 14.2%. The government understands the importance of this industry for the economy and supports it. For the creation of jobs, a financial incentive of 2,000 euros per job has been established.
- Moldova has free trade zones and has access to important logistical and sales routes.
It is a competitive industry with a skilled workforce and a variety of products:
- refrigerators
- washing machines
- other machines
- TVs
- pumps and automation
- cars
- agricultural equipment
- sound recording equipment
- production tools.
There are Moldovan enterprises and representative offices of foreign automobile brands in the country. They also produce and supply spare parts for the creation of trucks and cars of well-known companies – Mercedes, BMW, Volvo, Ford, Renault.
Electronics Overview
Developments in this industry are also in demand in the market and are actively promoted to the countries of the European Union and the CIS. Since the days of the USSR, an extensive production of electronic equipment has been carried out in Moldova. The Republic was their third largest supplier.
Despite the financial crises, this sector of the economy is still being maintained at a high level. Therefore, there are favorable conditions for business:
- affordable 7% flat sales tax in the IT park
- production tax is also 7%
- income tax 12%
- financial incentive of 2,000 euros per job created
- qualified workforce – graduate specialists from technical universities and colleges with modern professional programs
- free economic zone of more than 500 hectares.
170 companies have been opened in this area, which are aimed at global trends and attracting foreign direct investment.
The companies specialize in manufacturing, as well as engineering research and development, and in the provision of services in this industry. This is a promising sector of the economy, in which innovative products are regularly released – smart meters, electronic components and devices, nano sensors, software.
The industrial field is vast, where you can invest in traditional and more modern projects.
BPO & SSC Moldova
The Ministry of the Republic of Moldova reports that in 2020 there was a threefold increase in the sales of services in the information and communication technologies sector. In our country, information technology and remote administration of business processes take the place of a locomotive in the economy. All this due to:
- preferential programs from the state
- supportive conditions for staff training
- developed infrastructure of telecommunications and the Internet.
The Business Process Outsourcing (BPO) segment now accounts for 12% of the total outsourcing market, and researchers forecast its growth by almost three times.
BPO & Shared Service Centre (SSC) companies provide services in the European and American markets. The service includes areas of logistics, legal outsourcing, travel, financial analysis and other categories.
Where is it more profitable to invest
Each of these sectors is of strategic importance to the Moldovan economy. It is supported at the state level where they are trying to create conditions that attract investors. For an investment project, you should choose an area based on many parameters:
- conducted research of market capitalization during the planning period of the project
- studying financial markets
- the amount of capital and the scale of the business.
Our investment fund performs an individual check of business and industry, selecting projects for investors with the desired criteria and expected profit.
