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. The country is a member of the World Trade Organization since 2001; it’s the first ex-Soviet state to join this international club. Moldova also benefits from free or preferential trade with 43 countries. Among trade associations and partnerships Moldova has subscribed to, mind the most important ones:
- DCFTA - the Deep and Comprehensive Free Trade Agreement: 28 Member States
- CEFTA - the Central European Free Trade Agreement: North Macedonia, Albania, Bosnia-Herzegovina, Montenegro, Serbia, Kosovo, Moldova
- GUAM Free Trade Agreement: Georgia, Ukraine, Azerbaijan, Moldova
- BSEC - Black Sea Economic Cooperation: Albania, Azerbaijan, Georgia, Russia, Turkey, Armenia, Bulgaria, Greece, Romania, Serbia, Ukraine, Moldova
- CIS Free Trade Agreement: Russia, Belarus, Armenia, Azerbaijan, Uzbekistan, Kazakhstan, Kyrgyzstan, Tajikistan
- Free Trade Agreement with Turkey
- The Republic of Moldova also benefits from the U.S. Generalized System of Preferences.
These economic-trade arrangements allow Moldova resident companies to access markets that bring together more than 880 million potential customers.
The Republic of Moldova is also negotiating with the People’s Republic of China and EFTA countries (Iceland, Liechtenstein, Norway and Switzerland) to sign similar accords.
The DCFTA is based on the following principles
- Liberalized exchanges of goods and services
- Free export of labor
- Lower duties
- None or low non-tariff or technical barriers
- Reformation and modernization of economies
- Harmonization of Moldova’s legislation with the legislation and regulations enforced in the EU.
In the 2021 index of Economic Freedom, Moldova’s score is 62.5, making its economy the 85th freest in the world, ahead of Greece (96), Russia (92), China (107), and Ukraine (127). Its overall score has increased by 0.5 point, primarily because of an improvement in the tax burden score.
The 2019 Global Competitiveness Report awarded Moldova 56.7 points and the 86th place in a list of 141 surveyed countries. The country advanced two positions in the general standing. In 2017 it showed the strongest evolution in the Euro- Asian region.
In the 2020 Ease of Doing Business report Moldova ranked 48, with a DB score of 74.4, ahead of its neighbors Romania (DB score - 73.3) and Ukraine ( DB score - 70.2), which ranked 55th and 64th respectively. Moldova has also outperformed such countries as Hungary, Italy, Luxembourg, and Bulgaria. Last year Moldova made dealing with construction permits easier having a leap of 13 positions at this indicator.
Moldovan exports in 2019 amounted for almost 2.78 billion US dollars, which is a 7.1% boost compared with the previous year. The European Union is the main destination for exports (65.9%) and source of imports (49.5%) for Moldova
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.
Data for 2019 show that exports of IT services increased by about a third compared to the previous year - up to 198 million US dollars, exceeding sales abroad of alcoholic beverages and wines. The IT sector’s share is already comparable to the entire agricultural sector of the country, which continues to play an important role in the economy.
Moldova’s growth in 2019 was 3.6% and its nominal GDP reached almost 11.7 billion dollars or around 3,300 USD per capita. Its currency reserves amounted to over 2.9 billion USD at the end of the same year
In 2019, according to the World Bank, net foreign direct investments in Moldova’s economy amounted to 593 million US dollars, which is almost twice as much as in the previous year and an absolute record for the past decade. FDIs increased by 9.4% in comparison with year 2018.
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. This body counts among its members 41 representatives of the business community, 43 representatives of state institutions, and 16 representatives of science and research. Foreign investors also have a voice in six taskforce groups that are chaired by business associations. AmCham for example deals with the elimination of constraints in entrepreneurial activity, EBA handles the facilitation of transborder trade, and FIA tackles the stimulation and retention of private investments.
An argument why the Republic of Moldova is the right choice for investment is its operational costs offer. For the competences and skills local labor has accrued, wages are one of the most completitive in the region: on average 2.7 euros per hour or some 350 euros a month.
Public utilities too claim among the lowest expenses in Europe: electricity costs 9-10 eurocents for one kilowatt per hour; one cubic meter of water costs 73 eurocents; one cubic meter of natural gas costs 34 eurocents, and sewerage services charge 58 eurocents 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.