Context
A lack of foreign direct investment by businesses in the Republic of Moldova is hindering efforts to increase domestic production, create jobs and reduce poverty. Given its ideal location between the two large economic areas of the European Union and the Commonwealth of Independent States, Moldova offers significant potential which has so far barely been tapped. The government is aware of this situation and intends to address it, for example by actively promoting Moldova as a place to do business and introducing reforms to encourage commercial activity in the country, thereby attracting investors. This is all taking place in the context of Moldova's increasing integration with the EU. After visa-free travel was introduced for Moldovan citizens within the EU and the country signed an EU Association Agreement, it is now necessary to implement numerous institutional and regulatory reforms in order to meet EU standards.
Objective
Conditions are more conducive to foreign direct investment and Moldova’s EU approximation process.
Approach
Foreign direct investment has a number of positive knock-on effects. For example, it boosts employment, raises tax revenue, transfers modern production technologies and, last but not least, increases salaries. On behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ), the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, working from the offices of the Cabinet of the Prime Minister, cooperates with a number of state partners, Moldovan and international businesses and business associations in five fields of activity:
1. Field of activity I: Creating a positive image of the Republic of Moldova abroad
2. Field of activity II: Providing better support to potential investors, thereby encouraging fresh investment
3. Field of activity III: Offering professional assistance and support to enable existing investors to overcome bureaucratic and technical hurdles
4. Field of activity IV: Fostering political dialogue among partners involved in developing the political and economic conditions for improving the business climate, and coordinating their activities
5. Field of activity V: Supporting the government with the EU approximation process
Results
With GIZ's help, several foreign companies have opened branches in the Republic of Moldova, commencing operations in the textile and agricultural industries. GIZ worked with the Moldovan Investment and Export Promotion Organization to support and advise these enterprises. A number of local firms have made new business contacts and concluded contracts with them to supply items such as apples, textile covers and metal goods.
The state was advised on a dozen or so governmental and legislative decisions to improve the business climate. For example, the minimum capital requirements for private limited companies were reduced, and a number of tax and tariff regulations were modified to make them more conducive to business. The project is helping to create over 1,500 new jobs and to secure many more.
Key sub-goals in Moldova's EU approximation process were achieved by working with numerous other partners. One of these goals was the creation of a new education act that provides for a business-focused dual vocational training system.