Investment Climate in Moldova: Uneven Achievements Hinder Development | WPN World People News

Moldova has made significant progress in simplifying its business regulations and improving the investment climate and business environment, but the progress has been uneven and more can be done. These are the findings of the Doing Business Report 2015, Cost of Doing Business 2014 and Business Environment and Enterprise Performance 2013 surveys, presented and discussed among the participants of the “Investment Climate in Moldova” workshop on April 9.

“We highly appreciate the constructive partnership with the World Bank Group and its support for Moldova, which contributes to the country's economic development. However, more reforms are needed that are vital for the growth of the economy, particularly in the private sector to enhance its competitiveness.” – said Stephane Cristophe BRIDE, Deputy Prime Minister, Minister of Economy. “Public and state institutions need to do more in helping the private sector overcome the current difficulties and building a more sustainable base for growth.”

The Doing Business Report 2015: Going Beyond Efficiency ranks Moldova 63rd out of 189 economies, an improvement of 19 places compared to the previous year. Moldova made starting a business easier by abolishing the minimum capital requirement. In addition, it made paying taxes easier for companies by introducing an electronic system for filing and paying social security contributions. On the other hand, it increased the minimum salary used for calculating the environmental tax liability. Furthermore, Moldova increased the employers’ health insurance contribution rate and introduced new filing requirements for value added tax. Thus Moldova has become closer to global best practices measured by the Doing Business indicators, moving from 55.9 in 2006 to 66.0 in 2015, on 0 to 100 scale.

The Business Environment and Enterprise Performance Survey 2013 (BEEPS) results show an improved business sentiment for all 16 areas of business climate measured by the Survey, except for the two lowest-rated areas, namely corruption and political instability. This reflects a need to make the business environment more transparent and predictable.

The Cost of Doing Business Survey 2014 shows that despite a series of improvements for Moldova, management of Moldovan companies is spending a greater time dealing with public agencies than in recent years – 11.3% of their time in 2014, compared to 10% from 2010 through 2012 and 10.7% in 2013. The report also shows a worsening of the situation in the areas of construction permits and other authorisation documents necessary for starting and operating a business; procedures for imports and exports; inspections and tax administration.

“It is easier to do business in Moldova today than it was five years ago.” – commented Mr. Alexander Kremer, World Bank Country Manager for Moldova. “But the improvement in some areas has made more conspicuous the lack of progress on political stability and corruption. It is striking that percentage of businesses, who think that bribery is important, was 4 times higher in 2014 than in 2005.”

Since Moldova joined the World Bank in 1992, over US$1 billion has been allocated to about 50 projects in the country. Currently, the World Bank portfolio includes 8 active projects with total commitment of US$245.74 million. Areas of support include regulatory reform and business development, education, social assistance, e-governance, healthcare, agriculture, environment, and others. The International Finance Corporation has invested US$259 million in 24 projects in various sectors, and the Multilateral Investment Guarantee Agency has provided guarantees totaling US$95 million. Both institutions are members of the World Bank Group.

Source: World Bank