Opportunities in Moldova

Thursday 20 April 2023

Country presentation

CONFIDENTIAL AND PROPRIETARYAny use of this material without specific permission from State Chancellery of Moldova is strictly prohibited

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Republica Moldova în conştiinţa publică românească

* Studiul a fost realizat pe un eșantion de 1547 de persoane, reprezentantiv la nivelul populației adulte a României, cu o marja de eroare de +/-2,5%. Culegerea datelor s-a făcut în perioada noiembrie-decembrie 2010.

SOURCE: Source

2010, Cercetare realizată de Fundația Soros Romania, programul Bridging Moldova*

▪ 7,6% au avut o experiență directă, au efectuat o vizită în RM

Republica Moldova este puţin cunoscută

▪ 82% consideră că nu sunt deloc sau că ar fi puțin informaţi despre Republica Moldova

▪ 49,1% afirmă că “le place mult” felul în care vorbesc locuitorii din Republica Moldova

Graiul “mioritic” este pe plac

▪ 2,3% au declarat că “N-am înţeles aproape nimic din ce mi-a spus”

▪ 72% consideră că „Republica Moldova este o ţară europeană şi ar trebui să devină membră a Uniunii Europene”

Ţară cu valori Europene

▪ Topul caracteristicilor atribuite locuitorilor din Republica Moldova de către români se situează:

– 23% muncitori şi harnici

– 18% uniţi

– 17% toleranţi

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What is Moldova?

Moldova is a bridge between the EU markets and the growing CIS markets

Population 4 million

Average monthly wage EUR 190

Multilingual population 70%

An open economy with on-going negotiations for EU integration

Open economy

▪ Moldova is the only country with:– EU autonomous trade agreements – CIS countries free trade agreements

▪ International Centre for Settlement of Investment Disputes (ICSID) member

▪ World Trade Organisation (WTO) member

EU integration

▪ No visa requirements for EU nationals

▪ Ongoing negotiations on EU-Moldova Association Agreement and DCFTA

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Why is Moldova an attractive destination?

1 Free Economic Zones

Lowest wages in Europe for qualified, multilingual workforce1▪ Average monthly salary €190 for

relatively qualified professionals▪ Virtually all population is

bilingual (Russian/Romanian), with many speaking English, French, Italian, Spanish, German

2Globally attractive fiscal regime

▪ Attractive corporate tax rate (0% in 2011, expected 10% in 2012)

▪ Extensive network of double taxation treaties

▪ 10-year protection against any changes in the law that adversely affect FEZ1 residents

Relatively stable macroeconomic indicators3▪ Stabilisation of exchange rate to

Euro and US-dollar

▪ IMF agreement

4Access to EU and CIS growth markets (500m + 275m = 775m customers)

▪ Moldova is the only CIS country with autonomous trade agreements with the EU and FTAs with CIS countries

▪ 3 truck-days away to the port of Rotterdam

▪ International port access

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Average monthly wage, gross EUR/month

Average wage in Moldova is lower than neighbouring countries and lower than in China, for educated, multilingual workforce

SOURCE: National Bank of Moldova (2010); Chinese Government (July 16, 2010 data release)

1

€0 €1,000 €2,000 €3,000 €4,000 €5,000

Moldova

Ukraine

China (Zheijiang)

China (Shanghai)

Romania

Poland

Czech Republic

Germany

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Average wage in Moldova is lower than neighbouring countries1

€2.0/h

€4.0/h

€4.0/h

€1.1/h

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Education level, % of population with upper secondary education and above

Moldova has relatively qualified labour force

SOURCE: UNESCO Institute for Statistics (April 2011)

1 Educational attainment of the population aged 25 years and older, latest year available

0

20

40

60

80

100

Sw

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nd

Ge

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Sw

ed

en

Re

pu

blic

of

Mo

ldo

va

Au

stri

a

Bu

lga

ria

Ro

ma

nia

Hu

ng

ary

Cro

atia

Gre

ece

FY

RM

ace

do

nia

Bra

zil

Me

xico

Ma

lays

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Ind

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esi

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Tu

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Corporate tax rate, Percent, 2010

Globally competitive corporate tax rate in Moldova

SOURCE: National Bank of Moldova (2010); OECD Tax Database (2010); World Bank – Paying Taxes (2010)

2

* Corporate tax rate is currently 0%; expected 10-12% in 2012 and beyond

0% 15% 30% 45%

Moldova*

Bulgaria

Romania

Ukraine

Poland

China

Germany

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Exchange rate for the Moldovan currency

Stabilisation of exchange rate for the last several years

SOURCE: National Bank of Moldova

0

5

10

15

20

25

Jan 08 Jul 08 Jan 09 Jul 09 Jan 10 Jul 10 Jan 11

MDL/EUR

MDL/USD

3

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Trade agreements

Access to European and CIS markets4

EU

▪ Autonomous Trade Preferences (ATP) in its trade with the European Union, extended until 2015 (beyond likely to be replaced by DCFTA)

▪ Central European Free Trade Agreement (CEFTA), 2006

CIS

▪ Bilateral Free Trade Agreements (FTAs) with all CIS countries, except Tajikistan

▪ Organisation of the Black Sea Economic Cooperation, SECI, GUAM and other regional economic initiatives

World

▪ Member of the World Trade Organisation (WTO), 2001

▪ International Centre for Settlement of Investment Disputes (ICSID), 2011

500m

275m

#m Population, million

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Where? Numerous investment opportunities across sectors

Where and how to invest in Moldova?

Agriculture, wine & food processing▪ Free access on EU market w/o customer

duties and tariffs for most products▪ Fertile soil for corn, fruits and vegetables

Business process outsourcing/ICT▪ Call centres and back-offices to leverage

multi-lingual, highly educated, low wage workforce potential

Assembly and manufacturing▪ Assembly of items, mostly requiring labour

(e.g., car parts; electronics)

Energy▪ Expansion of power transmission capacity▪ Develop traditional and alternative energy

sources (e.g., small-scale biomass, wind)

Transport▪ Roads rehabilitation and maintenance▪ Public transport

Municipal utilities▪ Construction/modernisation of municipal

water and sewage systems▪ Waste management

How? A range of investment options are available

Direct investments▪ Direct investments in production assets

are supported by the Government through tax incentives and other facilities

▪ Free economic zones▪ Industrial parks

Privatisation programme▪ Plans to privatise several state-owned

companies in 2011-2012, including:– Telecom incumbent– Savings bank– Airports– Pharmaceutical company– Electricity distribution network– Power generation (CHPs)– Airlines

Public Private Partnerships▪ Public services and infrastructure are

underdeveloped, while public financial resources for their rehabilitation and modernisation are insufficient

▪ The Government promotes the PPP concept

Specific investment opportunities to be

developed jointly with the Investment Support Team

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Free Economic Zones – Predefined attractive conditions

Why free economic zones?

▪ Exemption from VAT

▪ Exemption from customs duties and excise duties on goods imported into the FEZ and subsequently exported

▪ 0% corporate tax rate

▪ 10-year protection against adverse changes in legislation

▪ Infrastructure in place (transport, water, gas, electricity)

Examples:▪ Draexlmaier Automotive▪ Lear Corporation▪ Danube Logistics

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Further contacts

Investment support team Investors willing to share their experience in Moldova

Doina Cebotari, Advisor to Prime-Ministerdoina.cebotari@gov.md+373.798.487.09 or +373.681.099.74

Dumitru Dediu, Advisor to Prime-Ministerdumitru.dediu@gov.md+373.79.273787 or +31.653.855.876

Full-time Investment Support Team

Leadership team

Vladimir FilatPrime-Minister of the Republic of Moldova

Valeriu LazarDeputy prime-ministerMinister of Economy of the Republic of Moldova

Industry

Financial Institutions

Telecommunications

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Supportingexhibits

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Industrial parks – Predefined attractive conditions

Why industrial parks?

▪ Free of charge change of the category of land with agricultural destination

▪ Right to privatize the public property land associated with constructions, at the land normative price;

▪ Optimization of state controls and minimization of bureaucratic barriers for investors

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Source countries of foreign direct investments 1994-2009

SOURCE: National Bureau of Statistics, FDI in Moldova for the period 1994-2009 (BNP Paribas Presentation, EU-Moldova Forum, 2011)

BACKUP

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Main sectors of the economy

SOURCE: NBS (2009)

2009, volume of production

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Examples of major Energy Infrastructure Projects

Sector Project Investment, €m

▪ 19▪ Gas pipeline with Romania

Power inter-connection capacity

▪ 25▪ Interconnection with Ukraine (121.5 km)

▪ 57

Details

▪ Build Ungheni-Iaşi gas pipeline

▪ OHPL 330 kV (2nd line), Novodnestrovsc-BaltiCapacity 955 MVA

▪ OHPL 400 kV Balti-SuceavaCapacity 1715 MVA

▪ Interconnection with Romania (115 km)

▪ 44▪ OHPL 400 kV Straseni-IasiCapacity 1715 MVA

▪ Interconnection with Romania (100 km)

Gas pipelines