Moldova is one of the “developing economies”. Its economic condition has suffered many pressures. It was hit by a severe recession in the ‘90s – the decline in foreign investment during this period was halved, from $ 67 million to $ 31 million. It took till 2000 for the economy to start recovering. However, it has remained small and highly dependent on the state of international markets. GDP in recent years has been ranked last in the European table. However this opens up great business opportunities.
Financial market protection
The crises of 2009, 2012 and 2015 hit the financial market of the Republic of Moldova. This had a negative impact on GDP growth and the situation in general. All this became a motive and pushed the authorities and entrepreneurs to work to improve the situation. That is why we have seen:
1. The creation of a legal framework for investment protection. The laws protect freedom of investment activity, non-discrimination of investors, and transparency of transactions. They also guarantee the observance of the rights of investors and compensation for their losses.
2. Development of Western approaches to investing money in real estate, securities, and business projects.
3. Active work of the National Commission of the Financial Market (NCFM).
The National Commission of the Financial Market is a special supervisory body for overseeing the conduct of non-bank financial services. The NCFM acts on the basis of legislation and can intervene in insurance and non-bank lending processes.
The activities of this body ensure the safety and transparency of investment projects. This means that investment funds gained the opportunity to operate, develop the country and bring in foreign investors. Deposits in Moldova have become protected, and this is beneficial for investors and their interests.
International trade in the Republic of Moldova and its parameters
Our country has an advantageous strategic location for international activities. Moldova is located at the crossroads of trade routes, which facilitates imports and exports. This makes the delivery of goods fast – in 2 days it can be delivered to Europe and the CIS countries, and this has a positive effect on business.
In 2020, the republic has succeeded in exporting goods in relations with many countries.
Some key export figures:
- 28% to Romania
- 9.07% to Germany
- 8.72% to Russia
- 8.59% to Italy
- 6.9% to Turkey.
Just under 5% of exports were to each of Poland, Czech Republic, Ukraine, Belarus and Switzerland. The export value in 2020 was $ 2.48 billion.
Trade relations occupy a special place in the country’s economy. Moldova currently has 43 free trade agreements. They are concluded with the countries of the CIS, EU, GUAM, CEFTA, etc.
Moldova is also suitable for a successful business due to its access to the sea. The port of Giurgiulesti is key in this and maritime transport is actively used for the delivery and dispatch of products and raw materials.
Successful Investment Sectors in Moldova
The economic disruption of the ‘90s has opened up vast space for the development and launch of new projects. Thus, in the Republic of Moldova, entrepreneurial and financial activities have become more active. There is also an increase in innovation platforms.
According to recent data Moldova has:
- 8 industrial parks;
- 7 free economic zones;
- 16 multifunctional industrial platforms.
All areas are developing – the production of goods, foreign trade, transport activities, IT technologies and the agricultural sector.
Agriculture occupies a special place, since the republic has fertile soil and this makes it possible to invest in projects with an environmental focus. Organic agriculture or agro products are considered popular – cereals, vegetables, grapes, fruits, oilseeds and fruits. It also succeeds in the export of medicinal plants, and plants for technical needs – straw, fodder, forage.
You can also select other competitive industries:
- Electronics. This sector is one of the most promising in Moldova. Since the days of the Soviet Union, electronic equipment has been produced reliably in our country, and we ranked third in production in the USSR. Now the electronics industry is actively expanding, creating jobs, exporting products and this makes it a good investment.
- Energy. This sector focuses on renewable energy. The statistics of 2018 show such a distribution of primary energy – natural gas 29.5%, petroleum products 32.5%, biofuels and waste 25.5%, electricity 9.9%, coal 2.6%. To change the indicators in the region, special attention began to be paid to renewable energy sources, instead of traditional methods that pollute the environment. These approaches include wind power, hydropower, biogas, and solar photovoltaic energy.
- Mechanical engineering and automotive industry. In this area, one can notice a particular prosperity – 19.2% of exports are in this category. They produce electric cars, equipment of various types, and spare parts. Also equipment for sound-reproducing processes.
- Light industry. Textiles also occupy a great place in the economic sphere of the country. In 2009, the export of light industry goods reached 20%. In Moldova, they specialize in the specific production of TAFL. This is a traditional direction that has come under modernization. Now they actively manufacture textiles, clothing, footwear, leather goods and accessories. All goods are supplied to European countries and the CIS and are in high demand.
- ICT. The IT industry is one of the fastest growing and developing areas, covering science and business. Various research, creative and scientific developments, technical improvements are being carried out. Various projects are being created that open the way for funding. In 2019, the growth in revenue from sales of technologies in this area increased by $ 77 million, and ICT exports were $ 255 million. Moldova ranks 6th in the ranking of countries in the world for fixed-line communications.
- BPO and SSC. Business process outsourcing also plays a significant role in the economy of Moldova. This is a promising branch of activity, with investments bringing good returns. This includes outsourcing of legal, financial, engineering, human resources and business intelligence. There are enterprises founded by representatives of the United States, as well as Moldovan institutions with subsidiaries in other countries. This is a vast industry where you can select projects of the required level and direction.
- Creative spheres. In our region, the creative sector is also growing in numbers of businesses and employees, which extends to work, training and development. Creative industries include music, arts and crafts, decoration and design models. Many creative platforms, art spaces and offices are opening. Everything is developing, global trends are being introduced and new approaches are being created.
The vast field facilitates investment transactions, where investors can choose from a wide range of areas – more traditional industries or modern start-ups, technology creation, resource conservation. Employees of the National Investment Fund will help you choose a project that is interesting for you from a financial and thematic point of view.
Positive aspects of Moldovan business and why it can be chosen for financing
In recent years, medium and small enterprises have been steadily growing year on year. This is due to the favorable business environment. Some of the reasons behind this include:
- affordable prices for renting premises;
- relatively low utility costs;
- developed ICT network – 100% mobile communication coverage and 4th place in gigabit Internet in the world;
- profitable logistics routes for the supply and dispatch of goods;
- acceptable fiscal framework.
Also, in 2018, the country climbed to 14th place from 21st in terms of business registrations. The period of registration of a company in the standard mode takes 7 days, and in an expedited manner – 1 day. The most profitable and acceptable, according to the terms, is the launch of an enterprise that is associated with the production of cement, cattle breeding, winemaking or growing vegetables and fruits, textile production and generating electricity from alternative resources. Tourism and trade with the EU countries are also considered promising in 2021. Trade with the European Union is allowed by permits and signed contracts.
Funding for Moldovan projects is also worthwhile because they are led by responsible leaders.
Under their leadership:
- a staff of highly qualified has come about, with ongoing professional development;
- a broad employee training system continues to be implemented;
- multilingual staff – speaking Romanian, Moldovan, Russian, and English;
- able to develop and implement new technologies;
- innovative products have been created.
If you are striving to become a partner of such a reliable and modern project with high ambitions and potential, then our Fund will help you find an enterprise according to your parameters. We thoroughly check projects, study the prospects on the Moldovan market, the economic state of the business and the possibilities for its development. In Moldova, such projects are regularly created that need financial support for their functioning or modernization.
In addition, a moderate tax system allows businesses to be active and operate legally. Taxation is classified into the following categories:
- for farmers 7%;
- Free Economic Zones (or “FEZ”) 6%;
- Entrepreneurial Activity (“SPD”) 3%.
The general income tax is 12%.
Moldova also deploys a Value Added Tax at a standard rate of 20%. Within its framework, 6% is levied for natural gas, 8% for agro-food and pharmaceutical products, and a 0% tax is applies to international transportation.
The single tax for entrepreneurs in Moldova is 7%, there may also be insurance premiums that reach 23%, depending on the type of activity. All this is much more affordable than in other European countries.
All these characteristics make it possible to implement business projects with successful results which opens up wide opportunities for investment.
Banking system and business lending conditions
In our country, the banking system began to form in 1993. As in developed countries, it covered two areas:
- National Bank of Moldova;
- commercial financial institutions.
Banking went through many crises, with periods of decline. Nevertheless, the national bank was able to maintain control over capital. It is responsible for setting the quality requirements for the functionality of the financial system and the criteria for authorizing banks.
Loans for business have flexible terms and attractive interest rates. However, the conditions depend on the chosen financial institution and can vary from 13 to 17% per annum. The amount also depends on the project and the bank in which the loan is issued.
Entrepreneurs are increasingly giving preference to financing through investments. Cooperation with investors is more profitable because:
- there are no tedious bureaucratic aspects with loan processing;
- you can agree on acceptable conditions, and not be subject to standard loan terms;
- Investors become a partner for long-term cooperation.
Our investment Fund in Moldova helps to connect investors and projects that meet strict criteria. We work to protect investments and choose strategies with reduced risks. If you want to become a business investor in the Republic of Moldova, then our specialists will select a project for you with the desired direction and criteria.
