● MONDAY, June 12

Opportunities to start businesses in Edinet

The municipality of Edinet invested 6 million lei in creating a business incubator. Twelve beginner entrepreneurs will be able to develop their businesses in facilitated market conditions. Mayor of Edinet Constantin Cojocaru has that in a year or two the incubator will host up to 20 small businesses and later the young entrepreneurs will be able to develop independently and to cope with competition on the market. Constantin Cojocaru said the entrepreneurs during the first few years of work will pay a symbolic rent. “Our goal is not to earn money from running this incubator. We aim to offer the entrepreneurs the possibility of developing so that they are later able to pay taxes and salaries to employees. The incubator will provide consultancy assistance, software and other services. We accept business proposals from young entrepreneurs,” stated the mayor. Edinet has won US$ 20,000 worth of grants for stimulating local businesses from the Government of Switzerland within the Migration and Local Development Project implemented by UNDP Moldova.

Number of permissive documents to be cut again

The number of permissive documents required for starting and developing businesses will be decreased again, this time by 150, according to a bill approved by the Cabinet. Prime Minister Pavel Filip, in the June 12 meeting of the Cabinet, reminded that the number of such documents at the first stage was cut from over 400 to under 300, but continues to be high. The documents were reviewed again with the involvement of international and national experts and over 100 required certificates, authorizations and licenses remained as a result. Pavel Filip said the move is aimed at reducing the costs incurred by entrepreneurs and also the spent time. The new daft nomenclature of permissive documents has three components: authorizations, certificates and license. These will be issued by the authorities in accordance with the area of activity of the business entity. The changes ban the authorities from groundlessly rejecting the application submitted by an entrepreneur. If this is filled out inappropriately or not all the required documents are attached, the authority will inform the applicant and will extend the period for issuing the document for up to 30 days. The document is to be submitted to Parliament for examination.

New IFAD program to support farmers proposed for ratification

The executive approved a bill to ratify a new financing agreement with the International Fund for Agricultural Development for implementing the Inclusive Rural Economic and Climate Resilience Program – IFAD VII. The budget is of US$ 23.7 million, US$5.5 million of which is a grant. The loan of US$18.2 million is repayable in 25 years at a fixed interest rate of 1.23% and with a grace period of five years. A number of 24 water supply networks for irrigation intended for 75 agricultural producers will be built within the project. There will be rehabilitated 12 road segments to facilitate farmers’ access to production areas. These will benefit 50 enterprises and over 1,200 households in 12 villages. Grants to improve resilience to climate change will be provided to about 420 farmers, while over 450 small entrepreneurs, 150 young entrepreneurs and at least 20 small and medium-sized enterprises will get preferential loans. To diminish the effects of social erosion and the impact of climate change, rainwater accumulation lakes will be built or rehabilitated on an area of over 30 hectares. Also, 200 hectares of forest strips and 200 hectares of grasslands will be rehabilitated. The agreement will be implemented during six years until 2022. The process will be managed by the current IFAD Consolidated Programs Implementation Unit.

● THURSDAY, June 13

Automotive sector has potential, MIEPO director

The automotive sector of the Republic of Moldova has potential. During the last few years, it became one of the most dynamic sectors, Vitalie Zaharia, director of the Moldova Investment Attraction and Export Promotion Organization (MIEPO), said in the ceremony to open the international forum “Moldova Automotive Days” on June 13. According to Vitalie Zaharia, the presence of international automotive parts manufacturers in the Republic of Moldova has a beneficial effect. The sector contributed to the development of the Moldovan economy and to the creation of a significant number of jobs. “The automotive sector in Moldova has become more attractive for foreign investors. That’s why we decided to come together for discussions, experience exchange and to develop project proposals, business partnerships in the long run. The potential is enormous,” stated the MIEPO director. According to the Ministry of Economy, Moldova’s exports of car parts in 2016 totaled over €350 million, which is almost thrice more than in 2012.

Lower price ceilings for gasoline and diesel fuel

The National Agency for Energy Regulation on June 13 announced the new fuel price ceilings for the next two weeks. Thus, during June 14-27 the price ceiling per liter of gasoline will be by 0.57 lei lower, while of diesel fuel by 0.73 lei lower. The price ceiling per liter of gasoline will be 16.57 lei, as opposed to 17.14 lei until now. The diesel fuel will cost at most 13.96 lei, as against 14.69 lei during the past two weeks. The Agency calls on the people to report cases when the gas stations post higher prices than the ceilings on the green line +373 800 10 800 or through the email address anre@anre.md.

Experts explain necessity of reforming state securities market

The reform of the state securities market would reduce the costs of servicing the state debt and would mobilize resources for infrastructure-related projects, say the authors of a study that was presented by the Independent Analytical Center “Expert-Grup”. According to the experts, in the national economy there is now no competitor comparable with the commercial banks, which would be able to take over important duties needed to ensure the circulation of capital in the economy. The banks dominate the market of securities issued by the Ministry of Finance in proportion of 78% and make profit that is about 200 times higher than that of all the capital market participants taken together. The short maturity term of the state securities in circulation (mainly of up to one year) and the current regulatory framework favor the banking sector and generate impediments to the implementation of investment projects, making this sector non-attractive to private investors. The experts recommend reviewing the fiscal normative framework, eliminating any preferential provisions on the investment of money, adopting modern technological trading solutions and increasing the financial education level of the population.

●WEDNESDAY, June 14

Free trade agreements with China, Egypt and EFTA states will create new export chances

The signing of eventual free trade agreements with Egypt, China and the EFTA states (Iceland, Liechtenstein, Norway and Switzerland) would create new investment opportunities so that Moldova could become a platform for processing raw material and could later export finished products. Currently, the Ministry of Economy is in the process of obtaining the mandate for opening negotiations on the free trade agreement with China, Deputy Prime Minister Octavian Calmac, Minister of Economy, stated in a roundtable meeting entitled “Export opportunities of Moldovan business entities offered by eventual free trade agreements with China, Egypt and EFTA states”. According to a feasibility study conducted by experts of the German Society for International Cooperation (GIZ), the signing of an agreement with Egypt would be advantageous to Moldova as almost all the products with export potential could be fully liberalized, except for the alcoholic and tobacco products. The access to the Egyptian market is rather difficult namely owing to the taxes of up to 40%, especially on textile products. Currently, Moldova exports to Egypt mainly wine and tobacco products.

●THURSDAY, June 15

Salary system in Moldova is inappropriate, “Expert-Grup”

The salary system in the Republic of Moldova is inappropriate and the authorities should hasten the reform in the field, Dumitru Budianschi, programs director at the Independent Analytical Center “Expert-Grup”, said in a news conference, where a relevant study was presented. According to Dumitru Budianschi, the current salary system in Moldova is complex and confused. The remuneration of budget-funded employees generates social inequity and do not provide the state institutions with skilled personnel. “In our country, there is such a practice that the people who work in the public sector should do it gratis, with very low salaries. Highly-qualified persons work in the budget-funded sector, but their salaries are at the level of the average official pay,” stated Dumitru Budianschi. The Center’s economist Tatiana Savva said the current salary system is non-attractive, non-transparent and discriminatory against the personnel from the real sector, first of all young specialists. “This does not meet the main requirements of employers and employees owing to the complex legal framework. The institutional framework has limited capacities to manage the system and to set tasks and priorities for this,” stated Tatiana Savva. The experts said the reform of the salary system should come with substantial amendment proposals and should clearly name the main player that can take systemic financial decisions. They recommend adjusting the salaries of budget-funded employees to the realities on the labor market both in terms of requirements and performance and of pays closer to the salaries in the real sector of the economy.

● FRIDAY, June 16

Sergiu Cioclea: We will soon start to recover money embezzled from banking system

A group of experts of Kroll company will come to the Republic of Moldova to discuss the strategy for recovering the money embezzled from the Moldovan banking system, National Bank governor Sergiu Cioclea announced in the program “Moldova live” on the public TV channel Moldova 1. “It is not within our remit to recover the money. There are competent institutions. We will provide information about the foreign accounts to which the stolen money was transferred and will prepare the files for being submitted to the jurisdictions where the money went. Towards the end of summer or the start of autumn, we will start to recover the money,” stated Cioclea. The governor said the second Kroll report will not be made public as the Kroll experts also asked for this. “The Kroll experts recommended not to publish the report until all the accounts to which the stolen money was transferred are identified,” he stated. Sergiu Cioclea noted that this year the National Bank of Moldova will work out a “constitution” of the banking system, which will provide the framework needed to manage risks. “The Republic of Moldova is the only country in Europe where the bank risk surveillance level is at the level characteristic of the 1980s. We should make these machines, the banks, to move and provide healthy loans to the economy,” he said. The governor also said that it was decided to sell the three banks that are under the special supervision of the central bank – “Moldova Agroindbank”, “Moldindconbank” and “Victoriabank”. “We are waiting for investors. It is for the first time in the Republic of Moldova that banks’ shareholders with problems will be replaced,” stated Sergiu Cioclea. He noted that in the near future the National Bank of Moldova will start the audit of commercial banks to identify affiliated loans.

This year’s wheat harvest estimated to be lower

The harvesting of grain crops of the first group is to start at the end of June. The winter and spring wheat harvest is expected to total 940,000 tonnes. Productivity per heater will be 3.3-3.5 tonnes. In a response to an inquiry, the Ministry of Agriculture and Food Industry says the areas sowed with grains this year are smaller than in 2016. Owing to the unfavorable weather in autumn, the gains were sowed mainly with delay. However, the projected harvest will enable to ensure the country’s food security. The agricultural enterprises and peasant farmsteads sowed grains of the first group and legumes on an area of 375,670 ha. Winter and spring wheat was sowed on 268,910 ha, winter and spring barley on 60,170 ha, pea on 15,550 ha, while winter and spring rape on 29,500 ha. The barley harvest is projected at 163,000 tonnes, with the average productivity per hectare being estimated at 3.59 tonnes. The areas sowed with pea are by 6,000 larger than last year. About 40,000 tonnes of peas are planned to be gathered this year.

Agreement to provide Japanese grant for Moldova’s agriculture promulgated

President Igor Dodon signed the decree to promulgate the law on the ratification of the grant agreement concluded by exchange of notes between the Government of Moldova and the Government of Japan for implementing the project “Conservation agriculture, development of a sustainable soil management system in the Republic of Moldova”. The decree was published in the June 16 number of the Official Gazette. Under the grant agreement, the Government of Japan will offer Moldova US$4.8 million in non-repayable funding for developing conservation agriculture in the Republic of Moldova, in particular for purchasing agricultural equipment and machinery. In particular, the Japanese grant will enable to increase the volume of humus and to conserve soil moisture given that Moldova often experiences droughts. The project will be managed by the 2KR Increase of Food Production Project Implementation Unit during two years of the coming into force of the accord.

Public call to put natural gas networks into economic circulation

The natural gas distribution networks built within the National Gasification Program haven’t been yet fully put into economic circulation. A large part of the infrastructure constructed through the people’s contribution remained without a definite ownership status. Those who financed this infrastructure weren’t recognized as owners and there is thus the risk that the gas pipelines without an owner will be claimed by third parties. Such conclusions were reached by experts of the independent think tank “Expert-Grup”. These made a public call, requesting the central public authorities to put the natural gas networks built within the National Gasification Program into economic circulation and to ensure transparency in the process and protect the interests of people who invested in the distribution networks. In a news conference “Expert-Grup” economist Sergiu Gaibu said the Government in 2001-2002 approved a series of documents concerning the extension of the distribution networks. But these didn’t stipulate the sources from which the necessary investments were to be made. Within the program, a separate chapter on the investment sources was introduced, but the registration mechanism and the status of private investors, especially citizens and the local public authorities, weren’t specified. The expert noted that despite the shortcomings at the adoption phase, the project trebled the length of the gas distribution networks, but also generated a series of problems that haven’t been yet solved. Among these is the tariff inequity in relation to associations or groups of consumers that claimed ownership of gas pipelines. These have to pay the same price as the other consumers, without being compensated for the made investment. The investment costs (capital repair) of the gas pipelines built by citizens and the local public authorities are not included in the tariff and the necessary funds are not accumulated. To solve the existing problems, the experts proposed a roadmap that underlines the necessity of inventorying and updating the value of the whole infrastructure build within the National Gasification Program, with the consent of the owners. Another step is to create an investment society that would take over all the given assets, issuing securities to investors, proportional to the updated value of the made investment. The experts suggest reconciling the assessment of the distribution assets of the enterprises affiliated to SA “Moldovagaz” and of the investment society valued by an independent assessor. The natural gas distribution assets should be later transferred to one enterprise with two founders – SA “Moldovagaz” and the investment society. Expert Dionis Cenusa said there is also another aspect related to the Iasi-Ungheni-Chisinau gas pipeline that is expected to be put into operation in 2019. The distribution problem should be solved until then. “It is one thing to bring the gas up to Chisinau, but this should be later distributed and, when it is not clear who and how manages the distribution networks, we could have another problem related to distribution,” stated the expert. In the same news conference, executive director of the Congress of Local Authorities of Moldova Viorel Furdui said the gas pipes are important property to which the local public authorities made an enormous contribution. But the legal status of this property is not clear and it is not clear how this should be managed. The concept proposed by “Expert-Grup” is new and the authorities should take this into account.

“Expert-Grup”: A national gas distributor is needed

Experts of the independent think tank “Expert-Grup” propose creating an enterprise that would manage all the natural gas distribution networks with the status of national distributor. The new body would incorporate all the distribution assets and would have two founders – SA “Moldovagaz” and an investment society that would take over the distribution infrastructure built within the National Gasification Program that is now mainly without a clear ownership status. “Expert-Grup” economist Sergiu Gaibu, in a news conference, said the natural gas distribution networks built within the National Gasification Program haven’t been fully put into economic circulation. A large part of the infrastructure constructed through the people’s contribution remained without a definite ownership status. Those who financed this infrastructure weren’t recognized as owners and there is thus the risk that the gas pipelines without an owner will be claimed by third parties. The expert noted that the authorities should inventory and update the value of the whole infrastructure build within the National Gasification Program, with the owners’ consent. An assessment should be carried out for each community apart. Another step is to create an investment society that would take over all the given assets and would issue securities to investors, proportional to the updated value of the made investment.  The given society would promote the interests of investors in the other stages of the process. Sergiu Gaibu said they propose merging the distribution assets of the enterprises affiliated to SA “Moldovagaz” and of the investment society with the involvement of an independent assessor. There should be created one enterprise with two founders – SA “Moldovagaz” and the investment society. This enterprise would obtain a license for the distribution of natural gas and would manage the given infrastructure, integrating it into the normal economic circulation. According to “Expert-Grup”, these measures offer a legal framework for giving ownership rights to those who contributed to building natural gas distribution networks within the National Gasification Program, ensuring thus social-economic equity.  They also ensure an additional source of income for all those who invested in the distribution infrastructure as well as leverage to influence the national gas distributor. The measures will enable to put the distribution networks built within the National Gasification Program into economic circulation, in accordance with the legislation. This will facilitate the capital repair and subsequent development of the gas networks. A new important issuer could thus appear on the capital market.

Economic forum of Arad was a real success, Antoniu Martin

The economic forum of Arad, which was the first forum of representatives of small and medium-sized enterprises staged by the Interregional Advocacy and Diplomacy Center, was a real success. The results exceeded expectations, the Center’s head Antoniu Martin said in a news conference. Representatives of enterprises operating in the building sector, agriculture and food processing industry from Hungary, Romania, Serbia, Italy, Moldova and Switzerland came together in Arad for the forum that was held during April 21-23. The presence of Moldovan companies was slightly affected by the April tempest and some of the participants could not arrive, but it was possible to transmit their intentions to the other participants from Western Europe. “It was a special event in Arad, even if it was the first edition. The expectations in terms of international participation were exceeded. During these days, we had guests from top international companies, representatives of banks ranked among the top 100 at world level and of companies operating in the financial services sector,” stated Antoniu Martin. More than 120 firms took part in the Arad Forum. Antoniu Martin assured that the impact of this event will be noticed soon in Moldova as well. Important partnerships were established through the Interregional Advocacy and Diplomacy Center, namely: Romania-Sweden Chamber of Commerce; two Romania-Italy Chambers of Commerce. This generated also opportunities for Moldova. “This forum, even if it was at its first edition, achieved its objectives and the results exceeded the expectations. We have a feeling of satisfaction and, besides cultural diplomacy, we can also speak about economic diplomacy between Romania and the Republic of Moldova,” stated Antoniu Martin.

Investment interest in Moldova after Arad forum

A number of economic delegations will visit Moldova in the near future with the intention of starting businesses here following the Economic Forum of Arad. In a news conference at IPN, the head of the Interregional de Advocacy and Diplomacy Center for Romania Antoniu Martin said an air health insurance services company from Switzerland expressed its intention to enter the Moldovan market. Antoniu Martin said the Swiss, Italian and Serbian businessmen who took part in the Economic Forum of Arad, which was the first forum of representatives of small and medium-sized enterprises staged by the Interregional Advocacy and Diplomacy Center, expressed great interest in different areas of activity in the Republic of Moldova. The foreign investors were familiarized with the tax concessions offered by Moldova and with what makes it attractive to those who want to start businesses here. A delegation of an important building and realty services company of Switzerland announced its intention to come to Moldova in the immediate future. A similar intention was stated by representatives of companies based in northern Italy, who are ready to pay a visit to Moldova thorough the agency of the Romania-Italy Chambers of Trade. “The Republic of Moldova is attractive through the products it possesses and through its farming way. Agriculture was a component of the Arad forum. This brought together large agricultural producers from the region of which we form part,” stated Antoniu Martin. The head of the Interregional Advocacy and Diplomacy Center for Romania also said that Moldova has very attractive and interesting areas and towns in terms of tourism and wine offers and foreign businessmen should visit them personally. In this connection, Antoniu Martin said that through the agency of the Arad forum, the organizers transmitted the message that Moldova is an increasingly attractive state from economic viewpoint.

IMF: Leanca Government didn’t act as we recommended

The International Monetary Fund denies the assertions of ex-Premier Iurie Leanca, who said that the guarantees provided by the Government to the National Bank in 2014 were discussed with the World Bank and the IMF. In response to media inquiries, the IMF Resident Representative in Moldova Armine Khachatryan said the then Government decided to act differently and did not follow the IMF’s recommendations. According to Armine Khachatryan, the IMF held regular consultations with the authorities on issues related to restructuring of Banca de Economii (BEM) and also BEM group banks. At the same time, IMF has provided intensive technical assistance on these matters. “Various issues and risks were flagged in our reports at that time, publicly available at our website. For example, the July 2014 staff report clearly stated: the fragile status of BEM and two mid-sized banks believed to be affiliated to it; the presence of indications of active concealment of banks ultimate beneficial owners and controllers; the importance of respecting the independence of regulators from political interference and advised to urgently pass legislation to fully restore the NBM and NCFM’s regulatory powers; the need to strengthen the legal protection of board members and employees of these agencies should also be strengthened,” said Armine Khachatryan. “However, the government ultimately decided to act differently and did not follow the IMF’s recommendations. In the absence of an IMF program with Moldova at that time, the Fund was only able to provide advice and could not impose any conditionality”. Earlier, the World Bank also announced officially that it didn’t know about the Government’s intention to provide guarantees to the National Bank of Moldova after the banking fraud and thus this couldn’t have been based on the WB’s recommendations. The positions were stated after Iurie Leanca asserted publicly that he signed the decision as Prime Minister following consultations and based on the recommendations of the international financial institutions – the World Bank and the International Monetary Fund. The Government headed by the current Deputy Speaker of Parliament Iurie Leanca in September 2014 voted for the National Bank to provide loans to the three banks that faced problems under the Government’s guarantee. In November the same year, the Leanca Government issued state guarantees to the National Bank for releasing a loan of 9.5 billion lei at an interest rate of 0.1% to the three banks.

● SATURDAY, June 17

GDP in January – March up 3.1% compared with similar period last year

PrintSend by email05:05, 17 Jun 2017

The Gross Domestic Product (GDP) in the first quarter of this year rose by 3.1% compared with the corresponding period last year. The growth stemmed from the rise witnessed in agriculture, industry, building, retail and wholesale trade. According to the Ministry of Economy, retail and wholesale trade increased by 11.8% compared with the first quarter of last year, while the gross value added in agriculture grew by 1.8%. The rise in the production volume in agriculture was due to the augmentation of animal production. The foreign demand for such industrial sector goods as food and furniture led to a 1.2% increase in the gross value added and this had a 0.2% contribution to the GDP growth. According to the Ministry of Economy, the risks related to the difficult situation in Ukraine and the economic recession in the Russian Federation persist, negatively influencing Moldova’s economy through the export of Moldovan products, remittances and investment. The resumption of external financing led to a rise in investment, while the higher remittances positively influenced consumption. As a result, the domestic demand increased, being by 34.3% higher than the GDP. This shows that the economy’s necessities are much higher than its production capacity, the difference being satisfied from foreign sources.

Central bank proposes introducing 1 leu and 2 lei coins

The National Bank of Moldova suggests introducing coins with the nominal value of 1 leu instead of the banknotes with the same value. This is necessary because the 1 leu bills become swiftly worn-out. These have a short life and do not respect a number of security criteria. There could also be introduced coins with the nominal value of 2 lei, even if a bill with such a value does not exist now. The announcement was made by the National Bank governor Sergiu Cioclea in the program “Moldova live” on the public TV channel Moldova 1. “We tried to determine how much printing the banknotes will cost and realized that it is very expensive given that their nominal value is very low. We initiated discussions with the Government, but felt particular reticence. Our role is to explain and convince them and we will also explain to journalists and businessmen,” stated Sergiu Cioclea. According to the governor, introducing national coins with the nominal value of 1 leu and 2 lei was proposed following recommendations made by the International Monetary Fund for ensuring the security of the national currency.