ECO-BUS WEEKLY DIGEST November 23-29. Most important Economy & Business news by IPN
● MONDAY, November, 23
Budget is based on massive investments in infrastructure and major social payments, PM
The draft budgetary-fiscal policy and draft budgets for 2021 will be examined and approved by the Government on November 30 or December 1, Prime Minister Ion Chicu informed after the meeting of senior state officials. According to him, the drafts must be adopted by Parliament by this yearend so that the planned costs could be covered as from January 1. According to the Premier, after the drafts are approved by the Cabinet, they will be immediately submitted to parliament for examination in commissions and adoption in the first reading so that in ten days the Government could examine MPs’ amendments and the bills could be given a final reading on December 20-21 or when Parliament decides.
Cristina Florov named director of National Office of Vine and Wine
The National Office of Vine and Wine has a new director. This is the ex-manager general of “Castel MIMI” winery Cristina Frolov, who was chosen by six voters to eight in a contest held by the Ministry of Agriculture, Regional Development and Environment. Cristina Frolov takes up on Novembers 23 and will hold the post during a four-year term. During eight years, Cristina Frolov managed the whole process of renovating the MIMI Castle as the manager general of the winery that was later included again into the national and regional tourist circuit. She was a member of the Coordination Board of the National Office of Vine and Wine, representing the Winking and Winegrowing Association of the “Codru” Delimited Geographical Region, and held the post of president of the National Inbound Tourism Association of (ANTRIM), whose mission is to promote the national tourism industry. She graduated from the Academy of Economic Studies of Bucharest. She is married and has two children.
CNPF: Constitution of crisis cell in case of SA “Moldasig” is crucial
The National Commission for Financial Markets (CNFP) reiterates the stated option concerning “the case of SA Moldasig” and counts a lot on the reaction of the authorities and responsible institutions, saying the constitution of a crisis cell is crucial. It said that as of November 20, the CNPF has been physically prevented from exercising its prerogatives in the special administration of SA “Moldasig”, the nonbanking surveillance authority being thus unable to apply the law. In a press statement, the CNPF says the special administration instituted in July 2019 at SA “Moldasig” and the subsequent administration bodies of the given entity managed during a short period of time to order and manage correctly and responsibly the operational activities, including through firm measures to recover the assets lent by the decision of the former managers.
VAT rate for hospitality industry to be decreased form 15% to 12%
The VAT rate for the hospitality industry is proposed to be reduced from 15% to 12%. Such a provision was introduced in the draft budgetary-fiscal policy following public consultations and the approval of the fiscal and customs policy measures for 2021. The Ministry of Finance said the process of public consultation and appraisal of the documents is over. Following the received proposals, the bill was supplemented with a number of provisions, such as extension of the right to deduct the costs paid by taxpayers in the form of admission taxes and dues for all the associations for representing the entrepreneurial activity in the amount of 0.15% of the labor remuneration fund, permission to deduct health insurance premiums from the income of nonresident private individuals obtained from work done in accordance with the work contract2.
Authorities give up incorporating road taxes into fuel excise duties
The incorporation of the road taxes into the excise dries on fuel products was excluded from the draft fiscal and customs policy measures for 2021. This way, the current system of road taxes will be maintained, the Ministry of Finance had said following public consultations. The provisions concerning the standardization of the taxes on the income earned from the leasing out of real estate between private individuals wasn’t included either. The rate of 7% will be thus kept. The provisions to exclude the tax for dogs and the tax for organizing tender contests and lotteries on the territory of territorial-administrative units and those that refer to the exclusion of payments for pollutant emissions at stationary sources and payments for discharges of pollutants also weren’t incorporated.
● TUESDAY, November, 24
MĂR: Hospitality industry is not a hotbed of COVID-19
The National Association of Restaurants and Recreational Facilities of the Republic of Moldova (MĂR) is concerned that as a result of the unplanned inspections carried out last weekend, both the authorities and media outlets resorted to generalization and labeled the hospitality industry as a hotbed of COVID-19. This is not true and the Association will accept any invitation to a dialogue and expects that the responsible authorities will adopt assumed and efficient decisions that would guarantee the proper functioning of the sector, IPN reports, quoting a press release of the MĂR. According to the Association, since the start of the COVID-19 pandemic until now, it has always exhibited its openness and repeatedly showed to the authorities that it is a reliable partner. It always pleaded for a constructive dialogue on subjects that affect the activity of the hospitality industry. Regrettably, they weren’t always listened to and heard and this led to a series of confused decisions with many omissions adopted by the authorities. MĂR noted that some of the violations committed by business entities represent consequences of these confused decisions and the responsible authorities should assume responsibility for this.
Agreement to sub-finance loan for “Solid Waste Chisinau” project
The Chisinau Municipal Council (CMC) approved the agreement to sub-finance the non-reimbursable €9 million loan for implementing the project “Solid Waste Chisinau” signed by the Ministry of Finance and the Chisinau City Hall. Earlier, the CMC approved the lending agreement to the value of €9 million between the road maintenance company “Autosalubritate” and the European Bank for Reconstruction and Development and €5 million of grant funding for implementing the project. The loan is repayable in 12 years, with a grace period of three years since the signing of the contract. The general financing plan of the project provides that the EBRD will offer a loan of €9 million, while the EIB – €2 million which the municipality will receive as a non-reimbursable loan through the agency of the Ministry of Agriculture, Regional Development and Environment, as an integral part of the Waste Management Program, plus the €5 million worth of grants. The municipality’s contribution is €7.96 million, €1.5 million of which has been already invested.
● WEDNESDAY, November, 25
State Labor Inspectorate to ensure control in labor safety
The State Labor Inspectorate was again empowered to ensure control in the field of safety and health at work and in the labor relations, ensuring the functional integrity of this. A bill to this effect was given two readings by Parliament. The National Confederation of Trade Unions of Moldova said the changes refer to the ensuring of the functionality of the system of control in safety and health at work. The bill contains amendments also to other laws. This way, the Labor Code will be supplemented with the norm that will empower the Inspectorate to insect safety and health at work. The amendments to the Contravention Code enable the Inspectorate to ascertain contraventions in the field of safety and health at work. Also, the Inspectorate will not be excluded from the law on state control of entrepreneurial activity.
Japanese companies invited to invest in Moldova’s IT sector
Prime Minister Ion Chicu invited the Japanese companies to invest in the IT sector of the Republic of Moldova, presenting the advantages of developing IT businesses in Moldova. He mentioned the macro-economic stability, fiscal and regulatory predictability, stability of the budgetary and financial-banking systems, free trade agreements and accelerated digitization that became a reality in the Republic of Moldova, IPN reports, quoting the Government’s press service. The advantages of developing IT businesses were presented in a Japan-Moldova business webinar that was initiated by the Japane External Trade Organization and the Organization for the Development of the SME Sector (ODIMM). The event involved Japan’s Ambassador to Moldova Katayama Yoshihiro, executive vice director of JETRO Tokyo Hoshino Yoshitaka and representatives of responsible state institutions.
SMEs should be helped to avoid bankruptcy, Maia Sandu
President-elect Maia Sandu said the 2021 fiscal policy and state budget should include real not declared assistance for business entities as the economic system goes through a very difficult period. The small and medium-sized enterprises should be helped to avoid bankruptcy and layoffs. Maia Sandu noted the PAS MPs will propose measures that would enable the business entities to agree state payments rescheduling plans without facing penalties. They will suggest exempting employers from paying salary taxes during a year if they reemploy persons who lost their jobs owing to the crisis and introducing the zero tax on reinvested profit. The President-elect also insists on the earlier proposed measures, namely the loan guarantee fund and the compensation of salaries of employees amid the imposed restrictions.
Moldova Cyber Week: Cyber-attacks increased in number during COVID-19 pandemic
In the context of the COVID-19 pandemic, the rapid pace of digital transformation and remote access infrastructure created a favorable environment for new cybersecurity threats. In the first half of this year alone, over 46% of companies globally were subject to at least one cyber-attack. The figures were presented in the eight “Moldova Cyber Week”, the 2020 edition, which was held online. According to Prime Minister Ion Chicu, one of the lessons learned by Moldova in the current context is that you can never be fully prepared for such events as the COVID-19 pandemic and that the effects have a large-scale impact on each aspect of life and the economy. “We should become more agile in adapting or developing national cybersecurity strategies and the legal and regulatory framework on cyberspace. More than ever, cybersecurity necessitates international cooperation and increased trust at all the levels, between countries and industries,” stated the official.
Money transfers in October up over 23% on last year
Money transfers made to private individuals in Moldova from abroad through the agency of licensed banks this October came to US$136.52 million, up 23.6% compared with last October, IPN reports, quoting the National Bank of Moldova. In terms of the geographical origin, the transfers from the European Union represented 48.8% (US$66.63m) of the total, from the CIS – 13.4%, while from the rest of the world – 37.8%. Transfers from Israel made up 17.9% (US$24.45m), from Italy - 13.2% (US$17.99m), from Russia – 12.3% (US$16.75m).
Decision to contract ISUZU to supply 100 buses annulled
The National Dispute Resolution Agency annulled the decision by which the municipality contracted the ISUZU company to supply 100 buses for the capital city after other participants in the tender contest challenged the result and the Agency ordered to reassess the bids, IPN reports, quoting the municipality. The Chisinau City Hall reacted, saying the working group responsible for the assessment of bids submitted at the tender contest for the purchase of the 100 buses is to examine the Agency’s decision. Mayor general Ion Ceban said the representatives of the group and other persons involved in the process will come together for a meeting so as to identify the necessary solutions.
First tranche of EU loan transferred to Finance Ministry’s account
The Republic of Moldova received the first tranche of €51.6 million under the lending agreement with the EU for macro-financial assistance (Omnibus) that was signed by the sides on July 21, IPN reports, quoting the Ministry of Finance. The lending agreement is valid for at most 12 months, while the loan is repayable in 15 years. The interest rate on each tranche will depend on the costs incurred by the European Commission for borrowing money from the international financial market. The loan is to be used to diminish the country’s external financial constraints, to attenuate the balance of payments and budget needs and to support the Republic of Moldova in the current financial situation.
● THURSDAY, November, 26
Ion Chicu: Moldova hasn’t been isolated internationally
The Republic of Moldova hasn’t been isolated internationally. According to Prime Minister Ion Chicu, during his first year in office, he had tens of constructive meetings with a number of resident ambassadors, among who were the U.S. ambassador, the ambassador of Romania, the ambassadors of Russia and other CIS states. Asked about the agenda pursued by the West and the United States in the Republic of Moldova, Premier Chicu said everything is relative. “Everything is relative, including the influence of countries that have a bigger or lesser potential. Everything is relative in this world. One thing is clear: in a world in which the economies are closely connected, where a country depends on another one through a number of indicators, it is important that namely the small countries with a small potential have good relations with all the parties,” Ion Chicu stated in the talk show “Key issue” on NTV Moldova channel.
Socialist MPs will support 2021 draft budgetary-fiscal policy and state budget
The Socialist MPs will support the draft budgetary-fiscal policy and draft state budget. In a press release, the Party of Socialists says that at the insistence of the Socialist MPs and of incumbent President Igor Dodon, the 2021 draft budgetary-fiscal policy does not include rises in taxes. It was insisted on the necessity of fiscally stimulating particular sectors of the economy so as to help them recover from the crisis caused by the COVID-19 pandemic. In a meeting of the Socialist parliamentary group, which was attended by Igor Dodon, the Socialists decided that they will support the introduction of a reduced VAT rate of 12% on fertilizers in parallel with the use of the same VAT rate on primary agricultural production. They will also back the increase in the VAT refund rate on the export of agriculture production from la 8% to 12% of the value of exports.
Ednateric Trans SRL and Transeric Tur continue to be harassed, lawyer
The transport operators Ednateric Trans SRL and Transeric Tur continue to be harassed by the investigation bodies, said the lawyer for the two carriers Angela Istrate. In a news conference at IPN, the lawyer stated that even if the political regime was changed and society banks on the fact that the judiciary system will work legally, this hasn’t happened regrettably. The lawyer noted that Ednateric Trans SRL and Transeric Tur form part of the road carriers market, have passenger databases and have the most modern buses. The prices of their services are reasonable and the provided services are of a high quality. But the careers’ activity is disrupted by the criminal proceedings instituted against them, including for blackmail, arson and hooliganism. The criminal cases were started even if the investigated deeds happened in the Czech Republic and the Russian Federation. “The investigation bodies, disregarding the territorial competence and becoming involved in the internal affairs of other states, brought criminal proceedings even if it was known that criminal cases were started in the Russian Federation and in the Czech Republic,” stated Angela Istrate.
Lawyer reports attempts to appropriate business of her clients
Lawyer Angela Istrate said that attempts are being made to appropriate the business of her clients – road transport operators “Ednateric Trans” and “Transeric Tur” – by order of rivals. In a news conference at IPN, Angela Istrate related that in February 2020, the founders of the two companies were investigated in a criminal case started over illegal migration of persons. The managers of the firms were also investigated. There were ordered 17 searches that cannot be classed as legal. According to the lawyer, the searches involved the special police in the absence of a relevant court judgment. Buses belonging to the companies were stooped on national roads. Employees of the Prosecutor’s Office for Organized Crime and Special Cases and of the Center for Trafficking in Human Beings ordered all the passengers to get out and interrogated them as witnesses, intimidating them. Later, the interrogated persons were phoned and told to present themselves and give testimony, without being issued with summons.
Shareholders of SA “Gemeni”: We are target of denigration campaign
The majority shareholders of SA “Gemeni” said they became the target of a denigration and manipulation campaign. According to them, the goal is to exert pressure on the Supreme Court of Justice and public opinion, with the final goal being to expropriate them of the business that they acquired legally as bona fide purchasers. “Controversial lawyer Lupu Mihail, for the minority shareholders that actually own 1.6% of SA “Gemeni” and aim to appropriate about 72% of the business – misleads public opinion about the essence of the case and about aspects of maximum importance related to the current stage of examination of the dispute. Evidently, these actions by the lawyer will not remain without a response and SA “Gemeni” announces that it will sue him for the disseminated false information,” says a press statement. The majority shareholders express their conviction that any professional investigation will determine the manipulative character of the information disseminated and statements made by the lawyer for the minority shareholders.
EBRD and MAIB offer €17.5m to support SMEs
The European Bank for Reconstruction and Development (EBRD) and the European Union (EU) are providing new finance to small and medium-sized enterprises (SMEs) in Moldova. A €17.5 million loan to Moldova Agroindbank (MAIB) will offer much-needed access to finance to this critical business segment. The funds are part of the EU4Business-EBRD credit line and will help companies to invest in modern production equipment and technologies to meet EU standards in terms of product quality, health and safety measures and environmental preservation. Following these investments, companies will be able to offer high-quality products on the local market and benefit from trade opportunities with the European market. The loan is the third provided to MAIB for on-lending to support businesses across the country and increase their competiveness. The joint EBRD-EU support comes at a critical time for firms in Moldova, which have been hit hard by the economic impact of the coronavirus pandemic.
Mayors to protest against capping of local taxes
A number of mayors and head of branches of the Congress of Local Authorities of Moldova (CALM) are against the Government’s initiative to cap local taxes as they consider enormous damage will be caused to local communities this way. The Constitution of the Republic of Moldova, the principle of local self-government and international agreements are violated. Not the citizens or businesses, but particular obscure interest groups will benefit from such changes. The mayors announced a protest march for November 27, starting at 10am. They intend to go from the Ministry of Finance up to the Government Building. In a news conference, CALM president Tatiana Badan said the capping of taxes is a serious violation of local self-government and of Moldova’s commitments concerning decentralization. She voiced hope that a respectful attitude will be adopted towards the local authorities and the citizens and called on the MPs not to support such a measure.
● FRIDAY, November, 27
Activity of freelance veterinarians to be regulated
The MPs gave a second reading to a bill that will regulate the activity of freelance veterinarians. The bill introduces benefits for young veterinarian specialists for motivating them to work in rural areas, creating this way a staff basis in the field. The bill to amend the law on sanitary-veterinary activity aims to improve the implementation of the statutory action program for supervising and fighting animal diseases, for preventing the transmission of animal diseases from animals to humans and for protecting the environment. The new provisions refer to the ensuring by the state of minimum guaranteed veterinary services intended for the citizens who keep animals for own consumption.
Mandate of commission of inquiry into sale of trade unions’ property extended
Parliament extended the mandate of the commission of inquiry into the elucidation of the sale of property of trade unions. The commission will work until February 1, 2021. After all the parties are questioned and the information provided by the responsible institutions is examined, it will present a report in Parliament. The extension of the mandate was requested because the commission was unable to work due to the pandemic. The commission of inquiry into the elucidation of the sale of property of trade unions was constituted in the middle of this February at the suggestion of the PAS and PPPDA MPs and was to complete its duties in May.
Higher than allowed pesticide residue levels in buckwheat imported from Russia
The National Food Safety Agency in a consignment of buckwheat imported from the Russian Federation identified pesticides that exceeded the norm even 57 times. The Federal Service for Veterinary and Phytosanitary Supervision of Russia Rosselkhoznadzor said it received a notice to this effect from the National Food Safety Agency of Moldova. According to Rosselkhoznadzor, the responsible authorities of the Republic of Moldova said the maximum pesticide residue level was exceeded in consignments of buckwheat exported by four enterprises based in Kursk, Leningrad, Bryansk and Voronej regions.
Commission of inquiry to investigate Laundromat scheme
A commission of inquiry was set up to elucidate the circumstances that led to money laundering through courts of law and financial-banking institutions of Moldova. The commission will be led by PPPDA MP Inga Grigoriu, who is the author of the initiative.The author of the bill said the problems of the financial and judicial sectors led to the implementation of an international scheme to launder money of a doubtful origin that went through the Republic of Moldova and was legalized through courts of law. The bases of the money laundering scheme were laid in 2010, with fictitious companies being founded and thousands of accounts being opened in Moldova during 2011-2014 with the aim of legalizing huge sums of money coming from the Russian Federation. It is presumed that criminal organizations, real estate and banking businesses of Russia transferred over US$ 20 billion in ill-gotten gains through the money laundering complex consisting of tens of offshore companies, banks and proxy agents.
27 years of introduction of Moldovan leu
The Moldovan lei, which is at its 27th anniversary, was a witness to the formation of the independent state Republic of Moldova and was marked by all the events that took place during its history. But the national currency is not only a symbol. It is first of all an important pillar of the national economy. The currency is strong as long as it is backed by a healthy and robust economy. The building of such an economy should be of national interest, National Bank governor Octavian Armașu stated in an event held to celebrate the 27th anniversary of the introduction of the Moldovan leu. The governor noted that the national currency is not only an attribute of the state. It plays a very important role in the economy. The number of cashless payments during the last few years has increased. More than 18 million payments with cards issued by licensed banks were made in the third quarter of this year, an increase of 39% on the corresponding period last year.
Mayors ask to be allowed to set local taxes
Mayors and representatives of the Congress of Local Authorities of Moldova (CALM) protested in front of the Ministry of Finance and then marched to the Government Building, protesting against the Cabinet’s intention to cap local taxes. They said the initiative runs counter to the Constitution and the international commitments, being an attack on local self-government. CALM executive director Viorel Furdui said the Government, by the budgetary-fiscal policy, is trying to impose limits on the local power. This is violation of the Constitution, of the decentralization principle. The local authorities are limited in their right to independently design and implement the fiscal policy. This will lead to the limitation of the resources for supplementing the local budgets and, consequently, to the reduction of the possibilities of solving people’s problems.
“Deoffshorization law” adopted by Parliament
The MPs gave a final reading to the amendments to a number of legislative acts – the so-called deoffshorization law – which are designed to protect the public sector from security risks posed by local and international criminal groups. The authors of the bill, the MPs of the Party “Dignity and Truth Platform”, said the financial security of the Republic of Moldova, which refers to financial transactions involving commercial companies, especially financial institutions, and to the stability of the national budget, the rights and principles guaranteed by the Constitution, necessitates appropriate measures to prevent the participation by subjects that come from jurisdictions that do not obey the international transparency standards in any kind of activities that can endanger the national interests of the state and of the Moldovan citizens.
● SATURDAY, November, 28
Government will remit bill to cap local taxes to Parliament, PM
The Government will submit to Parliament the bill that envisions the capping of local taxes and will insist on its adoption, Prime Minister Ion Chicu posted on Facebook. “Any cheap political speculation on the issue is costly (for economy and investors). The attraction of investors to the 18 industrial platforms form districts and to the other localities of the country is not possible without clear predictability in terms of taxes,” wrote the Premier, being quoted by IPN. Ion Chicu reminded that the mayors are remunerated from the taxes paid by the signatories of the Declaration of the Business Community (which supports capping of local taxes) and called on the mayors to return to work and work for the benefit of the people who elected them.
