Start to Set Up a Business in Moldova
Wedged between Romania and Ukraine, Moldova is a landlocked Eastern European country once known as Bessarabia. Moldova covers an area of 33,850 km, and it is home to a population of 3 million. Despite its small country size, Moldova’s location has the geopolitical significance – the strategic location in the lowlands of South-Eastern Europe between the Carpathian Mountains and the Black Sea. Throughout history, many powers have sought to conquer this position as a part of an invasion route from the Balkans into Russia.
Why Invest in Moldova
Moldova gained its independence from Soviet rule in 1991. The government of Moldova has since put in an effort to improve and create a transparent and supportive business environment for foreign and local investors. The efforts include upholding international law and protecting the market economy, private property, provisions against unjust confiscation of property as well as the separation of power between government departments.
1. Good Trade Relationship With Many Countries and International Organisations
Moldova has maintained good trade relationship with many countries and international organisations. It signed and ratified the Partnership and Cooperation Agreement with the European Union (EU) in November 1994. Moldova benefited from the Generalised System of Preferences Plus (GSP+) in its trade with the European Union since January 1, 2006. Besides that, Moldova is a party to the Central European Free Trade Area (CEFTA) – which entered into force on July 28, 2007. In addition to this, Moldova is a member of the following international organisations:
- World Trade Organisation(since 2001)
- Commonwealth of Independent States (CIS)
- Council of Europe
- European Bank for Reconstruction and Development
- International Monetary Fund
- International Development Association
- The International Finance Corporation
- International Bank for Reconstruction and Development
- Multilateral Investment Guarantee Agency and
- Stability Pact for South-Eastern Europe
- The Organisation of the Black Sea Economic Cooperation
2. Steady Growth in FDI
Despite a decade-long economic decline (that ended in 2000), Moldova maintained macroeconomic stability and has achieved consistent economic growth, as evidenced by the significant increases in foreign direct investment (FDI). The country’s FDI increased by 20.7 USD million in Jun 2018, compared with an increase of 107.8 USD million in the previous quarter. The processing industries; energy, gas and water; finance; wholesale and retail trade; transport and communications and real estate transactions, are the major contributors that brought in FDI.
Moldova liberalised its foreign trade regime in 1994. Businesses may freely trade a wide range of goods with certain exceptions of some specific product categories, like weapons, precious metals, explosives, poisons, medicines, as well as medical items and equipment.
3. Strong Export Industry
The main export destinations of Moldova are Russia, Romania, Ukraine, Italy, Belarus, Germany, Poland, the United Kingdom, and France. Food, beverages, tobacco, wine, textile products and vegetable products are the major items in Moldova’s exports. On top of that, base metals, machinery and spare parts, footwear and apparel, animal and vegetable oils, and mining-related products such as glass and cement, also make up a large bulk of its exports.
Moldova is a country that is actively integrating into the global economy. There are reasons that appeal to global investors. These are the favourable location at the crossroads of commercial routes, the close proximity to large world markets (EU and CIS), as well as the robust business environment. If you are planning to tap into the large EU and CIS markets, Moldova is one of the best places for you to gain a foothold and expand your business portfolio. 3E accounting can guide you to start a business in Moldova, contact us now.