ECO-BUS WEEKLY DIGEST February 14-20. Most important Economy & Business news by IPN
●TUESDAY, February 15
Gasoline to be sold for over 24 lei/liter
The price of a liter of gasoline “95” will exceed 24 lei. The National Agency for Energy Regulation for February 16 set a price ceiling of 24.04 lei/liter for this type of fuel. The price of diesel fuel will be at most 20.90 lei/liter, up almost 0.1 lei. A day ago, the Agency said the prices of oil products continue to be significantly influenced by the more accentuated rise in crude oil quotations on international stock exchanges. Amid discussions on the imminence of military actions in Ukraine, the price of Brent grew above US$96 per barrel, this being the highest price in the last seven years and a half. The Platts quotations for the main oil products exceeded US$910 per tonne for gasoline and US$820 per tonne of diesel fuel, up US$250 and, respectively, US$220 compared with the beginning of last December.
Steps for successful startups discussed on parliamentary platform
The activity of startups should be regulated by law, starting from the stipulation of the definition of this activity. Those who found startups and those who invest in these should benefit from a state guarantee. In public consultations held by the Parliament’s committee on economy, budget and finance, Olga Melniciuc, president of the Association of Women Entrepreneurs of Moldova, said that this is a risky activity that can fail. Therefore, a startup should be registered after 12 months of work. It is very easy to register a business, even during several hours, but the closure procedure in case the business fails is very difficult. The entrepreneur spoke about the necessity of eliminating the registration tax for startups. Private investments in such businesses can be stimulated by providing exemptions on the tax on the income invested in a startup. It is opportune to create a private investment guarantee product so as to stimulate investors’ interest. Dumitru Lungu, the administrator of two companies, said a state information one-stop shop should be set up. A person who wants to start a company should not be obliged to make tens of approaches to different institutions. During the first year of activity, inspections at startups should be rather informative in character and no penalties for noncompliance should be imposed. It would be useful to create special applications for startups, like a virtual cash register. The relevant data should be made accessible by the state institutions, as they do in other states.
Base rate raised to 10.5% to slow down inflation
The National Bank’s board has decided to raise the base rate by two whole points to 10.5% per annum. Overnight rates have also increased by two points to 12.5% for loans and 8.5% for deposits. The central bank said this is due to “external inflationary tendencies” that have “a significant impact domestically”. This is in particular the case of raw material, food, and energy prices, compounded by disruptions in production and supply chains. National Bank head Octavian Armașu noted during a press conference today that prices in Moldova are vulnerable to foreign factors, in addition to local ones. “The upward inflation trend has been driven by rising international food and energy prices, which led to rising domestic prices and tariffs. The adjustment of tariffs, the increase in fuel prices, but also the upward dynamics of wages have led to increased costs for businesses, which have gradually introduced these additional costs into prices.”
●WEDNESDAY, February 16
Alexei Gherțescu to be proposed for Competition Council chairman
Lawyer Alexei Gherțescu will be suggested for the post of chairman of the Competition Council. Today the candidate will be questioned by the Parliament’s committee on economy, budget and finance. “Alexei Gherțescu is a lawyer by profession, being specialized in business law. He has a separate passion for competition law. I’m sure he will cope. He has international experience, including in international organizations. I’m glad when professionals accept our invitations to join the public service and to contribute, to help this country develop in the right direction,” the head of the committee on economy, budget and finance Dumitru Alaiba, PAS MP, posted on his Facebook page. According to pro.juridicemoldova.md, Alexei Ghertescu is a managing partner of the law firm “Gherțescu Rogac”. In 2003, he graduated from the Faculty of Law of the Moldova Free International University, while in 2006 he gained a master of laws from the same institution. He started his career at the law firm “Brodsky Uskov Looper Reed & Partners” and then continued his professional activity as a legal consultant at a trading company operating in the building sector.
Annual inflation rate will rise considerably until third quarter, NBM
Inflation will continue to be affected by both demand and supply shocks. The annual inflation rate will register a pronounced upward trajectory until the third quarter of 2022, after which it will decelerate, returning in the range of the target in the second quarter of 2023, the governor of the National Bank of Moldova (NBM) Octavian Armașu stated when presenting the inflation forecast adjustment. The forecast adjustment is based on pro-inflationary factors, such as imported inflation, rising international food prices, energy and oil resources, positive domestic demand, a possible increase in electricity tariffs during the first and second quarters of 2022, and excise duty adjustment, along with the low annual base effect. Octavian Armașu noted that the NBM will do its best to efficiently manage this extraordinary situation so as to continue to ensure the country’s macroeconomic and financial stability and to make sure the effects of inflation are felt by the citizens and the economy less. “The central bank’s approach is pragmatic, based on a complex analysis of the phenomena and developments in these uncertain times, not only at country level, but also at the level of each citizen, and this phenomenon is witnessed not only in the Republics of Moldova, but all over the world. Even the largest economies are now hit by unprecedented inflation,” stated the governor.
Required reserves ratio attracted in Moldovan lei up 2.0 percentage points from today
The required reserves ratio attracted in Moldovan lei and in non-convertible currency starting with the period of application of the required reserves in MDL - February 16, 2022 – March 15, 2022 - were raised by 2.0 percentage points to 28.0 percent of the calculation base. The decision was taken back in mid-January. The required reserves ratio from the attracted funds in freely convertible currency was maintained at the current level of 30.0 percent of the calculation base. According to the National Bank of Moldova, the decision seeks to mitigate persistent inflationary pressures on the inflation process, creating preconditions for bringing inflation back within the range of the medium-term target range. Such measures are taken by the central banks that, following the intensification of inflation worldwide, review their inflation forecasts up for the next quarters. The Executive Board of the National Bank of Moldova at its February 15 meeting unanimously decided to increase the core rate applied to major short-term monetary policy operations by 2.00 percentage points from 8.50 percent to 10.50 percent annually, and to increase the interest rates on overnight loans by 2.00 percentage points, to 12.50 percent annually, and on overnight deposits by 2.00 percentage points, to 8.50 percent annually.
Responsible committee approves Gherțescu for Competition Council chief
The Parliament’s committee on economy, budget and finance accepted Alexei Gherțescu for the post of chairman of the Competition Council after interviewing the candidate. The committee’s head Dumitru Alaiba said Alexei Gherțescu is a lawyer by profession and is one of the few lawyers who specialized in competition law. Alexei Gherțescu hasn’t held public posts until now. The candidate said he examined the situation at the Competition Council and ascertained that this faces the same problems as most of the state institutions. The low salaries are one of the problems that generate the migration of staff there. The Council’s capacity to investigate cases of abuse of dominant position and anti-competition agreements on the domestic market is yet the most serious challenge that should be dealt with.
Andrei Spînu announces launch of Modem Transport Program: It will basically change area
Deputy Prime Minister Andrei Spînu, Minister of Infrastructure and Regional Development, has announced the launch of the Modern Transport Program that is designed to fundamentally change the transport sector. “The program is courageous and is designed to bring things in order so that we have higher transport services standards. We aim to support the connectivity and mobility of the people,” the official stated in a news conference. According to Andrei Spînu, a serious reform of the transport sector so as to fight illegal transportation services, to introduce a system to issue sales slips to everyone, to invest in new buses and minibuses and to bring things at bus stations in order wasn’t wanted in time. The program includes the launch of a national program to assist carriers to renew the park. For the purpose, it is considered the possibility of offering loan guarantee funds and preferential loans, reducing import duties on new buses and minibuses and attracting European funds. There will also be launched a national program to fight illegal passenger transportation services, including in the taxi services sector. The campaign to combat illegal transportation services has been designed since January and is to be launched in March.
Rise in electricity rates can generated new price rises, “Franzeluța” director
The largest bakery of Moldova “Franzeluța” increased prices as a result of the rise in natural gas rates that generated subsequent price rises, including of raw material. If bread prices hadn’t been raised, the company towards the end of the year would have sustained losses of over 73 million lei, “Franzeluța” acting director general Victor Matcov stated in the meeting of the Parliament’s committee on economy, budget and finance. He noted that the higher prices applied as from February 3 enabled to diminish the losses and to work out a financial plan for this year, with a profit of 2.8 million lei. Victor Matcov said the bakery last November suffered losses of over 5 million lei, in Decembrist – of over 3 million lei. Initially, it was decided to increase the prices of biscuits, cakes and pretzels, except bread. But the losses could not be covered given that the bread and other baked goods represent 85% of the production of “Franzeluța”. “We proposed increasing the price of bread as we could not identify other solutions. If the state had provided 10,000 tonnes of wheat (50 million lei) in assistance, we could have maintained the old prices,” stated the acting director general. According to him, the price of flour increased significantly. The price of flour of the highest quality grew from 5.90 lei to 7.00 lei/kg. If electricity rates are raised, flour suppliers will be unable to keep the price of 7.00 lei/kg and a new wave of price rises will be provoked.
Legislation enabling workplace child care services to be introduced
The Labor Code and the Education Code will be amended to include provisions enabling employers to provide child care services to employees with children under 3. With some recommendations for adjustment, the Government today approved a draft amendment to this effect introduced by a group of MPs. Social Protection Minister Marcel Spatari recommended that the Law on Entrepreneurship and Enterprises be supplemented with the same provisions. In promoting the new regulations, it is also advised that employers must be required to adhere to the educational and child care rules contained in the sector-specific documents so that the best interests of the child are served, reads the Government’s note.
●THURSDAY, Febryary 17
Bilateral British Chamber of Commerce for Moldova established in the UK
he British Chamber of Commerce Moldova was incorporated at Companies House UK. The establishment of Britcham Moldova was endorsed by the British Embassy Chisinau on the 1st of November 2021 and the Moldovan Embassy London on the 14th of January 2022. According to a press release of Britcham, the establishment of the British Chamber of Commerce Moldova provides a fantastic opportunity to connect UK and Moldovan Businesses in bilateral trade opening new doors and opportunities for both countries. The chamber will provide Business to Business services including, matchmaking services, assistance with product and brand awareness and market access and is currently running a survey for Moldovan Businesses that either currently trade with the UK or are looking to trade with the UK with the purpose of better understanding what and how the British Chamber of Commerce Moldova can really help businesses explore the new markets available to them. There are currently around 160+ UK Charities that work in Moldova or with Moldovan Charities, BCCM will provide free membership and tools to support more impactful donations and awareness of our Charity Members. Education and the ability for students to reach new courses, employers and opportunities is key to building long term trading relationships and Britcham Moldova will be partnering with a range of online and offline providers for Student Members accessible 24×7 through the online members portal. Both Charity and Student Members can apply for Free of Charge Honorary Membership.
Andrei Spînu says electricity rate of 3 lei would be an optimistic scenario
After the natural gas rates were increased, the electricity rates are also expected to be raised. Deputy Prime Minister Andrei Spînu said that it would be a rise of up to 3 lei in the best case. He noted that the rise is inevitable as the electricity tariff in the region is 4-5 times higher than in the Republic of Moldova. The higher rate will start to be applied on April 1, 2022. Minister of Understructure and Regional Development Andrei Spînu said that tender contests to choose companies that will supply electrical energy were announced as the current contracts expire at the end of this March. In the current regional context, the maintaining of the current electricity rate is highly improbable. “The Government’s interest is to offer the best prices of energy resources for our citizens. The tender contests are underway. There was adopted a law that obliges those who hold tender contests to buy electricity from at least two sources so as to ensure diversity. If we look at the electricity prices in the neighboring country, we can see that they are much higher than the price we pay now under the contract with the Kuchurgan power plant. For example, the contract stipulates US$54 per 1 megawatt, while in Romania the price is US$220-260,” Andrei Spînu stated in the program “Secrets of the Power” on JurnalTV channel.
Buyback liability management operations to be performed as from 2022
The development of the domestic state securities market, management of the operational risk associated with the state debt and raising of foreign government loans by taking into account the cost-risk ratio were set as specific objectives for managing the state debt in 2022-2024. The Medium-Term State Debt Management Program for 2022-2024 was approved by the Cabinet. The Ministry of Finance will take measures to keep under control the state debt portfolio by limiting exposure to the currency risk, financing risk and interest rate risk, extending the maturity of the debt portfolio and diversifying the institutional basis, monitoring and assessing the performance of primary dealers and other actions. As from 2022, there will be performed buyback liability management operations and then switch operations.
Alexei Gherțescu confirmed as chairman of Competition Council
Lawyer Alexei Gherțescu was appointed chairman of the Competition Council for a five-year term by the votes of 54 MPs of the Party of Acton and Solidarity on February 17. Alexei Gherțescu was present in the assembly hall, but the MPs didn’t have questions for the candidate proposed by the Parliament Speaker. After being voted in, Gherțescu took the oath of office. The new chairman said that he banks on the support of the MPs and he will propose having discussions with representatives of all the parliamentary groups. “I hope a lot we will be able to work together so as to improve things at this institution and to see the expected results,” he stated.
Employers to provide child care services at workplace
The business entities will be able to provide child care services at the company. The MPs gave a first reading to a bill providing for this. The bill is to be adopted after being given a final reading. One of the sponsors of the bill, PAS MP Dan Perciune said that this is a first step towards solving a problem faced by parents with small children. “We have a major shortage of places at crèches. In such conditions, many young parents experience a significant reduction in the family income. Currently, only 16% of the children aged between one and two attend crèches or kindergartens. This also leads to a low employment rate among women. In 2019, the working women with a child under six represented only 39%, as opposed to 60% in the case of men,” stated the MP. The rules and requirements for providing child care services at the workplace will be worked out in the near future. This way, parents with children under three will be able to return to work faster. The costs associated with these services will be covered by employers.
Higher district and inter-district transport fares as from March 1
The district and inter-district passenger transport fares will rise in a differentiated way as from March 1. The order was signed by Minister of Infrastructure and Regional Development Andrei Spînu. On regular inter-district routes, for comfort category II, the tariff will increase to 0.70 lei/km per passenger, while for comfort category I – to 0.80 lei/km per passenger. On district routes, for comfort category II, the tariff will increase to 0.80 lei/km per passenger, while for comfort category I – to 0.90 lei/km per passenger. Transport operators, by the decision of the local councils of the local public authorities of the first level, can apply tariffs of up to 1 leu/km.
Temporary moratorium on construction of filling stations
Parliament has imposed a temporary moratorium on the construction of new filling stations, “given that the excessive number of stations leads to rising costs and greater pressure on prices at the pump”. The restriction will remain in force until the authorities develop stricter criteria for the construction of such stations. The provision is contained in the amendments to the Law on the Petroleum Products Market, the Fiscal Code and the Contravention Code adopted by Parliament in final reading. The amendment also provides for the reduction of the license fee for the import and wholesale of fuels, from 260,000 to 3,250 lei per year. The fines applied to petroleum companies will increase up to ten times; currently they range from 3,000 to 15,000 lei. The authors consider that these amounts are symbolic in comparison with the profits reaped by many companies, but also the potential damages that such violations can cause.
●FRIDAY, February 18
Trade unions concerned over non-approval of new minimum salary in real sector
The National Confederation of Trade Unions is concerned about the delay in the approval of the new guaranteed minimum salary in the real sector in the amount of 3,500 lei as from February 1 this year. In a statement, trade unions say the given subject wasn’t included in the agenda of the February 16 meeting of the Cabinet even if the bill was drafted by the Ministry of Labor and Social Protection and was proposed for endorsement at the start of 2022. “We consider it is inacceptable to violate the principles of social partnership when the socioeconomic conditions of the population in the country are difficult. For 12 months of 2021, inflation was 13.94% and the National Bank of Moldova anticipated that this year it will be 18.8%. This will seriously affect the living conditions of the people,” runs the statement. According to trade unionists, the rise in the minimum guaranteed salary will be an important measure to motivate the personnel from the real sector, primarily the 17.4% of the employees of the real sector who, according to the National Bureau of Statistics, in September 2021 benefitted from a monthly salary lower than 4,000 lei.
New owner invested 180m lei in infrastructure of UNIC
The new owner so far invested 180 million lei in the infrastructure of the shopping center UNIC. The money went to improve the appearance of the square in front of the shopping center and the adjoining area situated on Ismail St, director general Leonid Sidorov informed in a press briefing at IPN. The director said that some of the most important architects in Europe since 2016 have been involved in the designing of the concept and the new imagine of the UNIC shopping center. The image on the main facade located on Ismail St, which can be seen now, corresponds to the concept created by architects of Chapman Taylor firm based in Germany. The modernization concept that will be applied later was worked out by architects of this renowned company. Important investments were made in the infrastructure of the building. No such investments had been made for 25 years. The 180 million lei went to revamp the square in front of the shopping center and the adjoining area. There were demolished all the easily dismantled structures set up nearby, such as the flower market and the summer terrace. As a result, this area in central Chisinau became much more attractive, said Leonid Sidorov.
Investments of over 250m lei to be made in infrastructure of UNIC store
The owner of the shopping center UNIC intends to invest over 250 million lei in the store’s infrastructure at the next stage, after having invested 180 million lei by now. It is planned to build a square near the store and an underground parking lot.
Vitalie Malachi, a member of the Administration Board, in a press briefing at IPN said the shopping center started to be reconstructed in 2019 with the construction of the parking place on Ismail St, where all the flower kiosks were taken away and the square was revamped, with the store’s façade being refurbished. The façade is to be renovated in two stages. The first stage included the works executed until now, while the second stage will be implemented during the next three-four years. When works on the façade are over, a parking lot under the square will be set up. This will enable to create 150 more parking places and to develop an underground parking lot behind the store. The square will be built according to the European standards. It will be greened and will include a fountain and rest areas.
New parking places to be set up near shopping center UNIC
Only 60 parking places of the necessary 240 are now available near the shopping center UNIC. The short- and medium-term development plans of the owner include the creation of parking places by building also an underground car park. “We will create these parking places without affecting the square in front of the shopping center. Only a part of these places will be set up under the square,” Leonid Sidorov, director general of the Central Universal Store UNIC, stated in a press briefing hosted by IPN. Vitalie Malachi, a member of the Administration Board, said the shopping center will be modernized in two stages. The first stage included the revamping of the square and restoration of the façade. The second stage that will be implemented during the next three-four years will consist of the building of the underground car park. This will enable to create 150 more parking places and to develop an underground parking lot behind the store.
