Resilience and determination for better future – “Moldova is at a decisive moment in our history”
Kuvituskuva:
Moldova has turned a corner in recent years.
Text Toivo Kivikoski
Having been granted EU candidate status in June 2022, the prospects of Moldova’s EU accession create newfound business potential for firms interested in the Moldovan market. Deputy Prime Minister, Minister of Economic Development and Digitalization Dumitru Alaiba sees Moldova’s future following a similar path to the countries of Central and Eastern Europe. The EU accession process of countries like Poland, Czechia, and the Baltic states and its importance in creating dynamic and growth-oriented national economies is what lies ahead for Moldova as well.
Moldova is a young country and at the beginning of this process, according to Minister Alaiba. However, this also presents lucrative opportunities for investors in the long run, with the next decades looking very profitable for companies now entering the market.
– Moldova is at a decisive moment in our history. We realize that the economy is crucial in consolidating the pro-EU support in Moldova and that EU integration provides further economic opportunities in Moldova, tells Minister Dumitru Alaiba.
“Moldova is at a decisive moment in our history.”
Moldova has historically struggled with issues of corruption, transparency, and bureaucracy. In recent years Moldova’s economy has undergone significant deregulation processes, including reducing bureaucracy by 0.5% of national GDP value in 2023. The work being done to improve the economic conditions in Moldova is encouraging, but there is still more to be done.
Nevertheless, Alaiba strongly believes that Moldova will overcome these barriers and can provide investors with an easily accessible and efficient business environment. One concrete action to enhance business activity is a focus on digitalization, which has seen rapid improvements in recent years.
The IT sector in Moldova accounts for 7% of GDP, and the tax environment is very favorable for IT companies, only claiming a 7% flat tax rate on company turnover. Along with developing the IT industry, Moldova’s digitalization eases business in other sectors with more transparency and less bureaucracy for foreign entities looking to operate in Moldova.
The Russian invasion of Ukraine has also been felt in Moldova. Moldova’s GDP shrank by 5% in 2022 but rebounded in 2023 and avoided recession. Moldova wants to continue this upwards trend of economic growth, and for that foreign investment and business is warmly welcomed.
Moldova shows determination
Ambassador of Finland to Romania and Moldova, Leena Liukkonen, shares similar views on Moldova’s development as Minister Alaiba, stating that Moldova has shown resilience and determination in pursuing economic reforms.
Ambassador Liukkonen emphasizes that EU integration is a positive force in Moldova’s developmental goals. The upcoming presidential election in October 2024 is likely to further strengthen Moldova’s European path.
Liukkonen continues by highlighting Moldova’s strengths for further economic growth. Moldova is very well located between Romania and Ukraine, providing access to key markets in Eastern Europe. Industries such as IT and digital solutions are emerging as key drivers of economic growth.
– Moldova presents many opportunities worth looking into for Finnish companies seeking to expand their presence in Eastern Europe. With its ongoing economic reforms and EU integration as well as the strategic location and market potential, Moldova is set for growth and development, summarizes Ambassador Liukkonen.
“Moldova is set for growth and development.”
Moldova’s progress can be seen in various international rankings. In just 2019, Moldova ranked 120th on Transparency International’s Corruption Perceptions Index. In 2023, Moldova ranked 76th. Similarly, on the World Press Freedom Index Moldova ranked 91st in 2019 and ranks 31st in 2024.
As a neighbor of Ukraine, the Russian invasion is a current risk in the Moldovan market. Russia is known to target Moldova with different kinds of hybrid maneuvers. Moldova, together with international partners, is working to improve and manage the risks. Moldova is investing in its security, including support from the EU into its armed forces.
Moldova is further mitigating the Russian threat by minimizing its economic dependency on Russia. Just 15 years ago, 70% of Moldovan foreign trade was conducted with Russia. Currently, 65% of Moldovan foreign trade is with EU member states. Moldova has significantly reduced its dependence on Russian gas since 2022. These developments provide strong support for the notion that further European integration is the future in Moldova.
Minister Alaiba and Ambassador Liukkonen were speaking in EastCham’s webinar on Moldovan market on 30th May. As a business case, also Sergey Zoubarev, Senior Business Development Manager of Wärtsilä, spoke for the audience.