Moldovan authorities unveil plans to increase FDI attractiveness

01 May 2014

Regulatory reform is the key to unlock Moldova's huge potential for investment, an UNCTAD Investment Policy Review concludes in findings backed by the nation's government and marked at high-level investment event in Geneva.​

Mr. Octavian Calmîc, Vice Minister of Economy of Moldova, has endorsed the findings of UNCTAD’s Investment Policy Review (IPR), which is expected to help mobilize support for improving the investment environment in the Republic of Moldova, and contribute to sustainable development in the long term.

“The Investment Policy Review of the Republic of Moldova is another important milestone that contributes to both the improvement of Moldovan investment policies and its foreign direct investment (FDI) promotion system,” Mr. Calmîc said.

The findings of the IPR of the Republic of Moldova were discussed with country authorities during the sixth session of the Investment, Enterprise and Development Commission of UNCTAD, in the presence of the organization's member States and foreign investors.

Mr. Petko Draganov, Deputy Secretary-General of UNCTAD, recognizing challenges Moldova faces, emphasized that “the analysis of the IPR singles out the country as a location in which unexploited opportunities exist to attract FDI in sectors such as agribusiness, information and technology, and logistics services, as well as in several export-oriented manufacturing activities”.

Moldova is a small, landlocked country endowed with limited natural resources, but has potential to be an attractive place for investment. Fertile land has been used by agribusiness to produce and export wine, fresh fruits and vegetables. Labour costs are low and competitive when compared with neighbouring countries, and the telecommunications infrastructure offers good ground for business activities.

However, the country's potential to make FDI work for its sustainable development has not been fully tapped. As highlighted in the IPR, new investors in the country face a shortage of skilled labour, as many Moldovans have migrated abroad in search for better work opportunities. This creates bottlenecks when firms wish to hire on a larger scale.

Additional challenges include poor roads, the limited capacity of the port on the River Danube, and problems in the business environment concerning rules for granting construction permits, labour market regulations and competition policy.

The IPR presented a strategy to both improve the regulatory framework for investment and to unlock the country's potential. Reforms to improve the security of tenure of real estate, as well as better training for commercial justice and competition policy authorities, receive priority attention with respect to the regulatory framework.

Meanwhile, efforts to improve FDI inflows should be linked to broader development policies, the IPR suggested. Investment attraction could be leveraged against different trade agreements that give preferential access to key markets, and against Moldova’s free economic zones, which offer incentives for export-oriented producers. Good public-private dialogue is also essential to ensure such policy-making is effective.

A draft of the IPR was earlier discussed at a high-level workshop in Chisinau, attended by public officials and private-sector representatives, in June 2012.