Due to its favorable geographical position, the Republic of Moldova is an attractive location for international organizations, transnational corporations and private investors and becoming increasingly important as a place to conduct business between western and eastern markets.
Why investing in Republic of Moldova?
- According to The World Bank Report "Doing Business 2020", Republic of Moldova is ranked 48 out of 191 4 rankings higher than in 2016, 52 out of 189.
- Geographical position: Moldova is a bridge between Europe, Russia, Ukraine and many other States. Moldova is also a logistic center for companies trading between States.
- Investor friendly Government: Governmental organizations are promoting international investors.
- Investor friendly regulations: Both domestic and international regulations are in favor of investors
- Stable and efficient banking system: Republic of Moldova has an efficient banking system in participation with the European banks
- Investment promotions: Country has many promotion opportunities for foreign investors. In addition, European Union in connection with the The European Bank for Reconstruction and Development (EBRD) is promoting such investment opportunities through Moldovan banks
- Stable economy and growth: Unlike other neighboring countries, Moldova has a stable economy with a sustainable growth.
- Easy to access raw material and cheap labor opportunities
- New startup opportunities: Republic of Moldova has become an investor attraction in last years but there are many opportunities and possibilities waiting for investors to discover and invest.
Key locations for investments
Moldova has designated areas where domestic and foreign investors can carry out entrepreneurial activities under preferential terms and conditions (i.e. favorable tax, customs and other regimes).
- FEZ (Free Economic Zone)
- Industrial Parks
- IT Parks
FEZ are parts of the Moldovan customs territory, separate from the economic perspective, in which local and foreign investors may carry out entrepreneurial activities under a preferential regime, i.e. benefiting from special guarantees and facilities (tax, customs, regulatory, immigration, etc.).
Republic of Moldova has 7 free economic zones (FEZ), which have a significant contribution in national economics. As a result of the actions taken since the launch of their activity, the total volume of investment in free economic zones amounted to 285.3 million US dollars, of which in 2016 - 55.2 million US dollars were invested. The total volume of net sales of industrial production in that period amounted to 4.5 billion lei or 10.4% more than the previous year. The total volume of investments in the International Port, during its entire period of activity, as of October 1, 2016, amounted to 67.9 million US dollars, including 4 million US dollars for the management period.
According to data published by the National Bank of Moldova, during 2015 the net flow of foreign direct investment in the national economy amounted to USD 182.5 million, down USD 18.1 million from the previous year. Similarly, the stock of foreign direct investment in the national economy decreased by 147.7 million USD, compared to 2014.
An industrial park may be created for 30 years either on the territory of state or private enterprises, through green field investments or by means of public private partnerships. In practice, an industrial park is created by means of obtaining the title of industrial park by an enterprise on the basis of Government decision. This enterprise becomes the administrator of the industrial park, i.e. it can also act as the resident of the industrial park.
Any legal entity registered in Moldova (legal entities with local, mixed or foreign capital) can become an industrial park resident on the basis of a contract concluded with the administrator-enterprise, aiming to carry out such activities as industrial production, service provision, implementation of the scientific researches and / or technological development within the industrial park.
IT Park is similar to industrial parks or estates, an area where buildings and facilities are designed for housing information science and technology related firms, and which provides an infrastructure for very high speed telecommunications.
An IT Industry Park might be created at the request of companies and individuals both registered in Moldova as a subject of entrepreneurial activity. To become a resident of an IT industry park, companies and individuals have to comply with the requirements established by the law and conclude an adherence agreement with the park Administration.
Double Tax Treaties and Mutual Protection of Investments Treaties
" Moldova has signed comprehensive double taxation agreements with 50 countries, of which 48 are in force.
" The Double Tax Treaties may provide for more favorable tax regimes than those provided by the local legislation. As guidance on the interpretation of Double Tax Treaties and, correspondingly, for tax administration purposes, the Commentaries to the OECD Model Tax Convention on Income and on Capital are used by the tax authorities and taxpayers.
" Additional guarantees and support to investors are offered by 39 bilateral treaties signed between Moldova and various countries for the mutual protection of investments.
Legal system The Republic of Moldova is a civil law country. Its legal framework is based mainly on statutory law. The leading legal acts are the Constitution, organic and ordinary laws approved by the Parliament, as well as other normative acts issued by the Government and other public authorities. Under the Constitution, the Republic of Moldova undertakes to respect the treaties and conventions to which it is a party. In the event of any discrepancies between the national and international legislation applicable for the Republic of Moldova, the latter prevails.
Investment climate Foreign and domestic investors are treated equally under the Moldovan legislation and the legal framework is the same for foreign investments. One of the primary tasks of the Government is to attract investments and create a favorable business climate for all investors, both foreign and local. Moldovan law generally allows investments in any field of entrepreneurial activity on the entire territory of the Republic of Moldova, provided that national security interests, anti-trust legislation, norms of environmental protection, people's health and public order are respected. Free economic zones, whose residents are provided with a range of tax and customs incentives and state guarantees, are attractive for industry investment projects.
Foreign investors' guarantees and rights According to the Moldovan Constitution, the state must ensure the inviolability of foreign investments. The Government is keen to establish coordinated policies and well-balanced legislation in order to stimulate both domestic and foreign investments.
The legal framework for the protection of foreign investments consists of the Law on investments in entrepreneurial activity and international bilateral treaties for the facilitation and mutual protection of investments.
The law prohibits discrimination against investments based on citizenship, domicile, residence, place of registration, place of activity, state of origin or any other grounds. The law provides for equitable and level-field conditions for all investors. It rules out discriminatory measures hindering the management, operation, maintenance, utilization, acquisition, extension or disposal of investments.
At the same time, certain restrictions are provided for residents of zones that do not implement the international standards of transparency (e.g. prohibition to hold shares in banks, insurance companies) and for the acquisition of agricultural and forested land.
Public authorities intending to develop a new investment policy are required to organize public consultations before implementing such policies. Investments cannot be subject to expropriation or to any other similar measures which can directly or indirectly deprive investors of their property right or the right to control investments, unless the following conditions are met: The measure is undertaken for the general public good; The measure is not discriminatory; Preliminary and equivalent compensation of damages is given. Investors have the right to sue public authorities for damages caused due to illegal actions and decisions. Compensation is paid in the currency of the investment.
By ratifying the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention) in 2011, Moldova undertook to recognize any decision (award) issued by ICSID as being mandatory and committed to ensuring the enforcement of the pecuniary sanctions imposed by the award on its territory. This means that foreign investors have right to pursue direct remedies against state in international organizations.
One of the growing-interest programs lead by the Government is the Public-Private Partnership (PPP), regulated by the Law on public-private partnerships and the Law on concessions. Since the adoption of the necessary framework, the Government has turned to the private sector and promoted the PPP concept to provide a wide range of public services previously delivered solely by the public sector. Public services and infrastructure in the Republic of Moldova are underdeveloped, while public financial resources for their rehabilitation and modernization are insufficient. Thus, the Government is eager to join forces with the ideas, projects and resources of the private sector to increase the quality and efficiency of public services.
The Moldovan Investment and Export Promotion Organization (MIEPO)
The Moldovan Investment and Export Promotion Organization (MIEPO) is the coordinating public institution in the field of implementing policies dedicated to competitiveness, promoting exports from the Republic of Moldova and attracting investments, in which the Ministry of Economy has the quality of founder.
MIEPO can be considered as a reliable partner for all potential investors and importers of Moldovan products. Its main objectives are:
- Export promotion;
- Foreign direct investment attraction;
- Provides assistance to companies in order to expand to other markets, promote investments and support companies wishing to expand their business in the Republic of Moldova;
- Contributes to the development of enterprises, by supporting them in efforts to diversify markets and increase exports, as well as to increase international competitiveness;
- Provides assistance in promoting the image / brands, according to the competencies, and in managing the related information resources.
With geographic destination, investor friendly regulations and rapidly growing economy Republic of Moldova is a great country to invest. Investors from different countries can safely invest in Moldova and grow their business here.
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