Regional Economic Integration of the Republic of Moldova: Opportunities and Challenges Octavian CALMÎC, Deputy Minister of Economy of the Republic of Moldova, Chişinău 2015
Republic of Moldova: geo - economic favorable position
Regional Integration Efforts of RM FTA Moldova- Turkey (Ongoing) WTO Member EU ATP+ GSP CEFTA Member CIS Member Association Agreement RM-EU DCFTA EU 508.2 millions CEFTA 22 millions CIS 279 millions FTA s provide access to markets in 44 countries with 809 million consumers
Trade flows of the Republic of Moldova with the main trading blocks (EU-CEFTA-CIS) mln. USD 4000.0 3500.0 3000.0 2500.0 2000.0 1500.0 3 609 2 595 1 715 3 813 2 185 1 620 2 360 EU CIS Other countries CEFTA 1000.0 1 109 922 500.0 0.0 24 37 18 2013 2014 2015 (9 months) 4
Export share of the main trading blocks (EU-CEFTA-CIS) % 60 50 40 47.3 48.9 40.5 41.5 EU CEFTA CIS Other countries 46.9 46.8 42.9 38 53.3 62.1 30 31.5 25.3 20 10 0 15.1 15 11.7 9.3 9.96 0,5 0,3 0,3 0,1 0,2 0,2 2010 2011 2012 2013 2014 2015 12.4 5
Regional integration in the context of the implementation of the Association Agreement and DCFTA European integration remains a key priority, which marks the entire set of policies promoted by the Republic of Moldova. We are aware that the political, economic and social modernization of the country can only be achieved as a result of the implementation of all commitments and obligations undertaken by the Republic of Moldova in the process of European integration. Ministry of Economy of the Republic of Moldova 6
Results of the implementation of the RM commitments under the Association Agreement and DCFTA Technical barriers to trade, standardization, metrology, accreditation and conformity assessment: It was approved a series of Governments decisions on market surveillance, general safety of products, technical regulations fields; A total of 10500 European standards were adopted so far as national ones ; Was consolidated and enhanced the cooperation with the EU institutions in the field of standardization, accreditation and conformity assessment. Sanitary and phytosanitary issues: Have been transposed a series of important European Directives referring to measures necessary for protection of health and life of humans, animals orplants. 7
Results of the implementation of the RM commitments under the Association Agreement and DCFTA Customs and Trade Facilitation: 2014 - Implementation of the Authorised Economic Operator (AEO) with green lines for AEOs at all border crossing points; 2015-89 companies successfully registered as AEOs; 1st July 2015 - Launching of the pilot project of the recognition of the AEO at the ost Leuseni Albita; Curently, the Customs Service implements a quality management system certified according to ISO 9001:2008. May 2015 -The PanEuroMediterranian Convention on preferential rules of origin was adopted (Law nr.111, 28 May 2015); Market access for goods: 1st January 2015 - came into force the Combined Nomenclature of Goods, based on the EU classification (HS2012); The implementation of ASYCUDA WORLD 8
Results of the implementation of the commitments under the Association Agreement and DCFTA Intellectual Property Rights: At the date of signing of the EU-Moldova Association Agreement, the Republic of Moldova s IP legislation was to a large extent harmonized with the EU one. Moreover, the Republic of Moldova is party to all international treaties and agreement on IP issues the parties committed to accede to and its legislation was brought in line with the respective standards. Competition: In 2015, the main efforts in the competition sector were directed to strengthen the State Aid legislative and normative base mainly by the creation of a viable informational system and approving 10 different Regulations on State Aid for various key economic sectors. Information society: Important progress in legal approximation related to the electronic signature and electronic document; Single National Emergency Call 112; the Program on the transition from analogue terrestrial television to digital terrestrial and information technology industry parks. 9
Moldova s comparative advantages Corporate income tax (CIT) Moldova Romania Ukraine Russia Italy Slovakia 12 16 19 20 20.3 23 12 % 6 % 0 % CIT rates Value added tax standard rate Russia Moldova Ukraine Slovakia Italy Romania 18 20 20 20 21 24 20 % 8 % 0 % VAT rates Social insurance contributions Moldova Italy Romania Russia Slovakia Ukraine 23 23.81 27.75 30 35.2 49.7 Source: PriceWaterhouseCoopers 10
Investment opportunities in Moldova There are numerous investment opportunities Agriculture & Food Processing Fertile soil for corn, fruits & vegetables; Free access on EU market w/o custom duties & tariff quotas for most products; Wine Great potential for the wine industry; Ideal conditions: climate, latitudes 46-48 (France & northern Italy), slopes; Banking Banking system has been mostly privatized and streamlined, but still offers opportunities; ICT ICT products export; Well trained work force; Taxes incentives for IT companies; Energy Upgrade power-generating facilities; Develop alternative energy sources; Transport Roads rehabilitation and maintenance; Public transport; Utilities infrastructure Construct/modernize water and sewerage systems; Waste management; Business infrastructure Free Economic Zones; Industrial parks; Business and Innovation Incubator; Government support programs to boost equity investments Privatization Public-Private Partnership 11
Benefits of Investing in Moldova Geo economical advantageous position Benefits from public-private partnership Equal rights for all investors International collaboration benefits Free Economic Zones incentives Industrial Parks opportunities Fiscal facilities (Exemption from tax payments (VAT and customs duties) of imported raw material used for the production with export destination (deferred payment for 180 days)
Free Economic Zones 50% of national corporate income tax 3 and 5 years income tax exemption if investing 1 and 5 million USD VAT and excise duties exemption 13
Industrial Parks (4 th year of development) 25 20 15 10 5 Volume of investments, mil. USD 2.2 6.9 7.2 21.2 0 2011 2012 2013 2014 9 month 2015 Income from sales, mil. USD 35 31.5 30 25 23.2 20 15 10.7 10 6.7 5 0 2011 2012 2013 2014 9 month 2015 14
Thank you! Octavian CALMÎC, Deputy Minister of Economy of the Republic of Moldova octavian.calmic@mec.gov.md 15