Free Trade Agreements
The Republic of Moldova is an emerging market economy in the heart of Europe, bordered by Romania to the west and Ukraine to the north, east and south. Republic of Moldova is a member of the World Trade Organization since 2001, and also benefits from free or preferential trade with 47 countries. Among trade associations and partnerships Moldova has subscribed to, mind the most important ones:
- DCFTA (Deep and Comprehensive Free Trade Area with the European Union)
- FTA with CIS countries (Armenia, Azerbaijan, Tajikistan, Uzbekistan, Russia)
- FTA with Turkey
- CEFTA UNMIK (Kosovo)
- EFTA – (Iceland, Liechtenstein, Norway, Switzerland)
- GUAM Organization for Democracy and Economic Development (Georgia, Ukraine, Azerbaijan and Moldova)
- SPTC – Strategic Partnership, Trade and Cooperation Agreement between The United Kingdom of Great Britain and Northern Ireland and The Republic of Moldova.
These economic-trade agreements allow Moldova resident companies to access markets that bring together more than 1 billion potential customers
Trade potential
The European Union is the main trade partner of the Republic of Moldova. In 2022, the total volume of Moldovan exports to the EU amounted to 2.53 billion USD. Since the DCFTA was signed in 2014, Moldova has managed to double the value of its goods exported to EU markets. The most exported goods to the EU countries were machinery and electrical appliances, foodstuffs and beverages, cereals and oils, clothing, fruit and vegetables as well as furniture. Meanwhile, imports from the EU countries increased by 38.6% in 2022, to 4.36 billion EUR (mainly mineral fuels, machinery and appliances, chemical and related products).
Total volume of exports and imports, USD billion
Data from The Export Potential Map generated by International Trade Center estimates the Moldova has an unrealized export potential of around 2.0 billion USD. This is an additional argument to create export-oriented production facilities in Moldova, with the largest contribution coming from high and moderate complexity manufacturing products ( i.e. car seats, insulated electrical wire, among others), ICT, and some high value-added agribusiness products.
The main economic sectors are agriculture - with a strong focus on fresh produce; wine-making - with internationally-acclaimed brands; light industry - especially textiles and footwear; meat and dairy; constructions; cosmetics; automotives. Services account for more than 60% of all.
Information and Communication Technology (ICT) is one of the most promising economic sectors in Moldova, accounting for more than 10 percent of GDP. IT companies export about 80 percent of their total production. Major Moldovan partners in this area are the United States, the UK, France, Germany, the Netherlands, and Romania.
Foreign Direct Investment
Despite the proximity of the war in Ukraine, in 2022 the Republic of Moldova recorded the highest volume of FDI inflows and the highest net FDI inflow in the last decade. The largest share of FDI inflows of USD 867 million came from reinvestment of profits (54%), which indicates an increased confidence to do business in Moldova from existing investors in the market.
In 2022, the stock of foreign direct investment in Moldova's economy reached USD 4926 million, an increase of 15% compared to the previous year. Investors come to Moldova from many different countries, the EU and Russia make up for large shares of the total investments. This shows that Moldova is open for business for everyone. In terms of sectoral distribution, FDI is dominated by finance, energy, manufacturing, trade and ICT.
The Netherlands
Italy
Romania
Russia
Germany
USA
Austria
Great Britain
Switzerland
Turkey
A Foreign Investors Association has been registered in Moldova to look after investors’ rights and to advise the Government in public policy. In addition, investors have a number of regional umbrellas to pursue their goals - just a few to count among them: the European Business Association, the American Chamber of Commerce, the Italian-Moldovan Chamber of Commerce, the French-Moldovan Chamber of Commerce, and the Romanian Chamber of Commerce branch in Moldova.
Investors and business leaders also sit in an Economic Council that advise the prime minister of Moldova in economic matters. Currently, the Economic Council under the Prime Minister has 142 members: 68 business associations, 11 representatives of the research community, 14 representatives of international organizations active in the field of business environment reforms and 49 representatives of public authorities and institutions.
Operational costs
Moldova offers a highly - skilled, competitively - priced workforce. Labor costs are amongst the lowest in the region and low enough to ensure cost-effective operations.
Public utilities too claim among the lowest expenses in Europe: electricity costs 0.13 EUR/kV; one cubic meter of water costs 0.57 EUR; one cubic meter of natural gas costs 0.93 EUR, and sewerage services charge 0.79 EUR for one cubic meter.
Office and industrial space varies in price depending on the location but stays between 1 and 5 euros for one square meter or under 1 euro in a free economic zone or an industrial park.
Moldova’s labor force combines low-cost with high productivity, thus reflecting the key factor for a strong business performance.