Veaceslav Ionita: Moldovan economy is still uncompetitive

2007 was a difficult year. The agricultural sector that has been stagnant for over 17 years witnessed an enormous decline of 20%. The industry has not yet recovered from the shock caused by the Russian ban imposed in 2006, the economic expert Veaceslav Ionita said, cited by Info-Prim Neo. According to the analyst, the Republic of Moldova has an uncompetitive economy, where the returns on employee are ten times lower than in Central and South-Eastern Europe. The national companies, regardless of the form of ownership, are by 50% more inefficient than the foreign ones. In 2007, Moldova missed a one-time possibility of reforming the inefficient enterprises by using the bankruptcy procedures, the expert says. The fiscal amnesty extended the agony of the inefficient companies for another two-three years and placed hindrances to the faithful taxpayers. The business environment remains a victim of the bureaucracy that is not restricted by legal provisions that would regulate the relations between business and authorities. A relevant proof is the huge number of inspection bodies and of inspection procedures that are irrational and unsound and reflect the mood of the bureaucrats who can use their posts for personal purposes or to defend the interests of the institutions they represent, Veaceslav Ionita said. Yet, the analyst says, Moldova becomes known in Europe, understood and less dangerous for investments. A relevant example is the large capital inflow in 2007 that will further increase in 2008. But the long expected capital found an unprepared economy. Consequently, the National Bank had to withdraw over 200 million USD from the market and to sterilise a sum of over 2 billion lei that the economy could not assimilate. Speaking about the forecasts for 2008, Ionita voiced hope that in 2008, or at the latest in 2009, the aberrant legislative provision that bans the foreign investors from purchasing agricultural land will be cancelled. According to him, if the investors purchase 3-5% of the agricultural land, its price will grow at least ten times. This will lead to a better capitalisation of agriculture, to the appearance of new technologies and new champions in the area that will bring it at least to the level of the agricultural sectors of the region’s countries. Given that Moldova becomes more and more attractive for foreign investors, the expert says that the inflow of investments will significantly grow, but the largest part of these investments will be channelled into the internal consumption sectors like trade, banks, mobile telephony etc. At the same time, the expert says that he believes in Moldovans’ capacity to solve their problems. In 2000-2002, the Moldovans solved the problem of poverty; in 2008-2009 they will start to solve the problem of economy and will then solve the problem of government quality.